Koertner officially removed after all-day Lincoln County Board meeting

Ousted Lincoln County Treasurer Lorie Koertner (center) talks with other spectators Monday afternoon before county commissioners reconvened their fact-finding hearing on her office’s financial condition during her 4½ months in office.

Lincoln County commissioners Monday night ratified their May removal of County Treasurer Lorie Koertner, capping an all-day meeting and eight hours of testimony on the intimate details of handling public funds.

The County Board voted 5-0 to declare that Koertner neglected her legal duties and committed “misconduct in office” in five respects. The action was a necessary sequel to complete its unanimous May 13 vote to end Koertner’s 4½-month tenure under a rarely used 1879 state law.

The declaration, and a subsequent 5-0 tally reaffirming Koertner’s dismissal, followed an executive session of 2½ hours.

Most of the board’s specific findings tracked those made by the Nebraska Auditor of Public Accounts in an “attestation” of Treasurer’s Office finances. Its work began May 15 and continued into June.

No evidence of missing funds or criminal wrongdoing was found, Auditor’s Office staff members Mary Avery and Deann Haeffner testified.

Neither Koertner, who testified extensively to end the hearing, nor her attorney, Lincoln lawyer J.L. Spray, was present for the final vote.

She testified she’d serve as treasurer again if county officials “would let me do my job,” singling out County Board Chairman Joe Hewgley and board assistant Tammy White.

But Koertner, who served five years as Webster County treasurer before moving to North Platte, admitted under questioning to being unaware of several state laws governing deadlines for tax payments to local governments, bond payments facing particular governments and other bookkeeping requirements.

She said she hadn’t reached out to the Nebraska Association of County Officials for help and had never taken advantage of NACO classes for new treasurers, whether in Webster County or Lincoln County.

“Would you agree it’s your responsibility to know your obligations under the office?” Hewgley asked.

“That’s true,” Koertner replied. A few minutes later, she added: “I had a pile of stuff to do until, I thought, the end of June to catch everything up. ... I’d stay until 7 or 8 (p.m.) to catch stuff up.”

Koertner declined further comment as she left the courthouse after her testimony. Spray was driving back to Lincoln Monday night.

The vote ended a day that began when the State Auditor’s Office released its report on the state of Treasurer’s Office finances between January and May.

The report, available online at auditors.state.ne.us, detailed a backlog of unfinished reports, unbalanced bank accounts and undeposited property-tax checks since Koertner took office in January.

Auditor’s staff members found 363 checks totaling nearly $6.14 million “throughout the office” when they arrived two days after Koertner’s dismissal, the auditor’s report said.

“The majority of the above checks were not restrictively endorsed,” a step needed to ensure only Lincoln County could deposit them, the report said.

“All of the envelopes containing checks had been opened, and some checks without envelopes were stacked in piles on office desks.

“When money received by the County Treasurer is not receipted and deposited timely, there is an increased likelihood that it will not be distributed as directed by law.”

Stuart Simpson, the North Platte Public Schools’ finance director, outlined a steep dropoff in school tax receipts that exhausted the district’s reserves. It led the school board May 13 to issue $3.7 million in short-term “tax anticipation” bonds to meet payroll.

According to the report, the Treasurer’s Office also:

» “Did not maintain an accurate or complete check register.” Koertner fell short in reconciling the county’s checking accounts with various banks, with her office’s account with First National Bank of North Platte — the county’s largest deposit holder — going unbalanced since December, the report said.

» Failed to record 22 deposits from the state and local governments totaling just over $1.07 million, a figure not included in the $6.14 million in undeposited checks.

» Didn’t correctly distribute money from the state’s Property Tax Credit Fund to local governments to make up for credits due county taxpayers. Some local government funds received more than they were due and others less, the report said.

» Failed to distribute money from fines and licenses in a timely manner.

Those last four failings constituted “misconduct in office” by Koertner, the County Board declared. So did the failure by the Treasurer’s Office to meet a deadline to make a March bond-interest payment for Sutherland Public Schools from an account the county controlled. Superintendent Dan Keyser said he had requested in February that the payment be made.

In addition, commissioners declared, Koertner was guilty of “neglecting or refusing to render any accounting or settlement required by law” under the state law defining county treasurers’ duties.

The auditor’s report said former Treasurer Sue Fleck, who retired in January, came in to help as Auditor’s Office staff began their review.

Fleck declined the County Board’s request to return as interim treasurer, leading commissioners May 20 to give the temporary job to Treasurer’s Office real estate manager Shelli Franzen. Hewgley said commissioners haven’t yet thought about permanently filling the position.

The hearing’s peak crowd of about 35 included North Platte and Sutherland school administrators, whose alarm over tardy and lower-than-expected tax payments triggered Koertner’s removal.

Witnesses called by Spray on Koertner’s behalf highlighted the combined impact of a major accounting software upgrade and staff turnover during the transition from the retiring Fleck to Koertner.

After winning the May 2018 Republican primary, Koertner was unopposed in November’s general election. With her election assured, Koertner filled a vacancy on Fleck’s real estate staff on June 29, 2018.

Three other employees retired as Fleck finished her term, and Koertner said she let another go soon after taking office. One position was being filled when she was removed, she added.

In the first weeks of Koertner’s tenure, she had seven other employees, she said. The Treasurer’s Office had a dozen two years ago, according to hearing testimony.

Five of the remaining seven early this year had been dedicated to the treasurer’s motor vehicle department. They were beginning to be cross-trained to help with property taxes and other funds, Koertner said.

She said the County Board and especially Hewgley clashed with her over her decision to combine real-estate and motor vehicle employees in the latter’s courthouse space. Koertner unveiled her plan shortly after the November election. It was completed earlier this year.

State law denies county boards the power to supervise treasurers and other separately elected “row officials,” though they appropriate funds for all office budgets and control the courthouse’s physical space.

As Koertner sought to meet commissioners’ requirements for her offices’ physical merger, she said, “I was being hassled” by Hewgley and White. “Every time I turned around, they wanted something different.”

She admitted Hewgley apologized for his tone after one such meeting in late March. Hewgley agreed he had done so, but he had said something more, he added.

“My answer was, ‘Lorie, I’m not going to tell you what you should do. That is your job. Time management is not my thing. That’s your thing,’” Hewgley said.

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