The Nebraska Department of Education (NDE) is under scrutiny after a recent audit revealed that three school districts were asked to repay equalization aid due to a miscalculation. The audit questions the decision, raising concerns about the logic and authority behind the repayment demand.
Last autumn, NDE discovered that Omaha Public Schools, Grand Island Public Schools, and Southern School District in Wymore received excess funds, with Omaha Public Schools receiving the largest overpayment of $30.5 million. The error originated from a miscalculation in the “poverty allowance” component of the Tax Equity and Educational Opportunity Support Act (TEEOSA) formula.
To address the overpayment, NDE plans to reduce state aid for these districts in the 2026-27 allocation. However, the state auditor’s office expressed skepticism about this approach. The audit questioned the rationale, stating, “We question not only the logic of reallocating funds that should not have been paid out in the first place, effectively giving school districts a windfall for two years, but also the specific authority for doing so.”
NDE referred to state law as justification for the repayment, but the state auditor pointed out that the cited law pertains to correcting errors related to student enrollment numbers, which was not the case here. The audit also highlighted that the overpayment miscalculation issue has persisted for several years.
The auditor recommended that NDE collaborate with the Nebraska attorney general and the Legislature to establish guidelines for redistributing state aid in cases of errors and to prevent future miscalculations. NDE acknowledged the findings, stating, “The NDE made all the noted changes in the 2025/26 TEEOSA Recalculation which was made public in November of 2025.”
Additionally, the audit identified issues with special education reimbursements. In 2023, the legislature increased the reimbursement rate for special education programs from 40% to 80%. NDE did not meet this threshold, leading the legislature to adjust the law to reimburse schools based on a proportional amount of the allocated funds. The audit found that NDE’s calculation method was flawed, resulting in incorrect payments to all 247 school districts.
These errors led to overpayments and underpayments across districts, including a $5,142,285 overpayment to Omaha Public Schools and a $994,863 underpayment to Lincoln Public Schools. NDE responded by updating their system to ensure accurate proportional reimbursements in the future.
The State Board of Education is scheduled to discuss and evaluate the audit findings at its upcoming meeting on May 8 in Bellevue.
