State auditor finds big ‘blunders’ by Lancaster County treasurer, who takes ‘blanket’ responsibility

LINCOLN — A newly released state audit alleges nearly $1 billion in accounting “blunders” and a “gross mishandling” of local tax revenues by the Lancaster County Treasurer’s Office.

The 37-page report from Nebraska State Auditor Mike Foley details what he called “systematic issues” and accounting errors in the public office that has custody and control of roughly $200 million on a daily basis.

While Foley used words like shocking, he told the Nebraska Examiner that the findings pointed to “gross incompetency” — not embezzlement.

“The money is there, but maybe in the wrong spot or with the wrong agency,” he said.

County Treasurer Rachel Garver, in response, said she takes “blanket responsibility” for all oversights and appreciated the auditor bringing items to her attention. However, she said “misstatements” in the office’s semiannual report “created the appearance” of nearly $1 billion in discrepancies which, she said, did not affect distribution of property taxes.  

“It is important for taxpayers to know that our office did not misallocate anywhere close to a billion dollars in taxpayer funds or property tax credit money,” Garver, who was elected in 2018 and re-elected in 2022, said in a statement. “No taxpayer money was lost.”

She acknowledged roughly $3 million in payments that were either over or under the amount due. Errors have been corrected and reconciled, Garver said, though the county is awaiting the return of certain funds that were overpaid.

Back next year

Foley said he was told Tuesday that problems uncovered by his auditing team have been resolved, but “given the magnitude,” he believes taxpayers will expect him to review the treasurer’s books in another year.

Of particular note, Foley said, was the treasurer’s improper distribution of property tax credit money from the State of Nebraska. He said that resulted in an overpayment to every local taxing authority in the county — “not to mention a corresponding $1,272,295 underpayment” to the state from 2023 to 2025.

Foley said the money was supposed to be returned to the state and placed in the Property Tax Credit Cash Fund, which is available for property tax relief. 

Garver said procedures were corrected and the money was returned to the state.

“There is no telling how long this problem would have continued if my office had not found it,” Foley wrote in a news release.

Another error highlighted by the auditor involved incorrectly calculated tax collections from the Lincoln Airport Authority. The result, he said, shorted Lancaster County out of $214,539 between 2021 and 2025. The airport authority, meanwhile, reportedly was overpaid by a corresponding amount.

Foley said that while some of the treasurer’s tasks are complex, the computational error related to the airport was not. He said state statute requires the county treasurer to retain a 2% commission on Lincoln Airport Authority property tax collections, but only 1% was retained. 

“This really isn’t rocket science,” he said.

Garver said the matter has been discussed with airport officials. She said they are reviewing but that she expects the overpayment will soon be returned.

Among other issues cited in the treasurer audit:

• Distributions of homestead exemption to local taxing entities were reportedly calculated incorrectly, resulting in overpayments totaling $75,220 to multiple tax-increment financing projects within three municipalities and corresponding underpayments to 21 other local taxing entities.
• A percentage of the fee from collecting motor vehicle sales and use taxes totaling $613,076 from 2020 through 2025 was recorded improperly in the county’s general fund and not deposited to the county’s road fund, as required by statute.

County Clerk’s Office examined too

The auditing team also looked at the Lancaster County Clerk’s Office. Foley said it flagged 128 instances of employees having increased hours “worked” by a total of 501 more than recorded in the timekeeping system.

He said the office, run by County Clerk Matt Hansen, elected in 2022, provided “limited evidence” to help corroborate the work hours in question — but only after “significant time and effort.”

Foley took issue with the clerk staff’s remote work practices, though Hansen said remote work policies were developed with approval by county officials.

Hansen, a former Nebraska state senator, said Foley has a “much more conservative view” about remote work than his county team.

Both Hansen and Garner are Democrats. Foley, who is running for re-election, is a Republican.

Overall, Hansen said, he was pleased with the outcome of the audit, which he said was extensive and reflected a “clean financial statement.” 

Foley said he hopes that Lancaster County officials will take the findings in the report “as seriously as I do.” 

“As the second most populous county in Nebraska, as well as the seat of state government, Lancaster County needs to do better,” he said.