The suit was filed a few days after the city says it paid the district more than $1 million in the dispute.
Vandalia Butler City Schools said it found the city “failed to fulfill its obligations to the school district” as outlined under Ohio law, “resulting in significant financial losses.”
Dueling press releases from both the school district and city government Monday and Tuesday made the case for each side.
For its part, the city said it passed a resolution last month offering to pay the school district $3.35 million, having worked in “good faith” with the district since first advising them in October 2022 that “unpaid money may be owed to the school district from the city.”
The city also said it has already paid more than $1.3 million to the district in the matter. Depending on how a statute of limitations is applied, the city says it calculates that it may owe between two and six years in back payments. The city says the issue dates to a 1994 change in state law that the parties never implemented.
The school district’s lawsuit was filed in the Montgomery County Court of Common Pleas on Monday. The city says on Friday it paid the district more than $1.3 million.
The school district argues that the city must pay the schools half of the difference between the amount of taxes levied and collected on the incomes of new employees in “community reinvestment areas” — areas where investors expect tax incentives for investing in real estate improvements — mainly new buildings and infrastructure.
“Unfortunately, the city has ignored this law and kept the income taxes collected for itself,” the school district’s complaint says.
“The failure to provide adequate and fair revenue sharing has placed a financial burden on the Vandalia-Butler city school district,” the district said in its statement. “The lawsuit seeks to hold the city of Vandalia accountable for its obligation and secure the necessary funding to help support district operations.”
“We want to be good partners and support economic development in our area, but we also cannot stand by idly while the city of Vandalia neglects its responsibilities to our students, staff, and community,” school board President Holly Herbst said in the district’s release. “We regret legal action has become necessary, but after several failed attempts to solve the matter amicably, we have no other choice. Our priority is to ensure that our students receive the education they deserve, and we will work to secure the resources needed to fulfill this commitment.”
A complicating factor in the city vs. school district battle is that Richard Herbst is the mayor of the city of Vandalia, and his wife, Holly Herbst, is the president of the Vandalia-Butler school board.
Richard Herbst said given that relationship, and on advice from the city’s law director, he will not participate in any discussions or decisions regarding the city’s involvement in the lawsuit.
Vandalia-Butler school district voters rejected new school tax levies in May and November 2023. Then in February, the Vandalia-Butler district said it planned to reconfigure three schools at the start of the 2024-25 school year.
After the failure of the November 2023 tax levy request, the school board approved $1.2 million in budget cuts, starting with the 2024-25 school year, which will include the reconfiguration of elementary schools and a subsequent reduction in staffing.
The city said it has offered to involve a mediator in the dispute, and as of late March, thought it had reached “a fair agreement.”
Per a school district media release Tuesday night, Holly Herbst said the schools disagree with “several misleading and inaccurate statements” in the city’s Monday press release. She said rather than go into detail and “exacerbate an already divisive situation,” the school district would “present our evidence at the appropriate time as the litigation progresses.”
But that media release went on with further allegations from Holly Herbst.
“We have been attempting to resolve this issue for months, but information has been hard to obtain from the city. We didn’t begin to receive information until we started threatening litigation,” Herbst’s statement read. “Unfortunately, the city’s statement confirms what we believe has been the city manager’s intention all along. The city’s focus is not on how much money they have withheld from the school district, it is about how much they can get away with keeping based upon a statute of limitations.”
Asked about Herbst’s statements Tuesday night, Vandalia city spokesman Rich Hopkins said the city would make no further comments.
In addition to the Herbsts, the day-to-day leaders of Vandalia’s city and schools are not unfamiliar with each other, as both the school district and the city government have had the same leaders for the past few years.
Dan Wendt has been city manager of Vandalia for more than three years (he replaced Jon Crusey, who served from 2014-2020), and Bridgette Leiter has been city finance director for over a decade. Rob O’Leary has been superintendent of Vandalia-Butler schools for almost seven years, and district treasurer Eric Beavers has been in that role almost 10 years.
