LA GRANDE – Mediation sessions held in La Grande last week produced a settlement in the long-standing dispute over who pays what for the Union-Baker Education Service District overbilling debacle.

During an intense day of negotiations Dec. 9 at Eastern Oregon University, representatives of three parties – the Union-Baker Education Service District, the Oregon Department of Education and a cadre of Eastern Oregon school districts – hammered out an agreement that reimburses the state for $1.8 million in overpayments made from 1999 to 2004.

The agreement calls for the 41 local school districts to pay $700,000 to the State School Fund. The districts include several in Grant County.

The UBESD will be responsible for $1.1 million in repayments to the state. The repayments will be in installments beginning in May 2009.

The settlement largely reversed the division of responsibility proposed in earlier talks with the state, when the local districts faced taking on up to 80 percent of the costs.

Newell Cleaver, superintendent of Grant School District #3, said the settlement significantly reduced the districts’ burden.

“I felt like it was ultimately a victory for the 41 school districts,” he said.

Grant School District, which originally was told it owed ODE as much as $97,261 for the over-reporting of student numbers, is now expected to pay back $16,142 within one year.

Dayville School District also had fared better than in the early negotiations. Originally hit for $123,313, the district is now expected to pay $34,275 within five years. Long Creek, originally charged $59,414 will pay $15,432 in three years. Monument, assessed $75,172 has had its debt reduced to $18,620 to be paid within three years. Prairie City, which ODE said would owe $32,362, now faces a $7,088 tab within one year.

Cleaver, who participated in the talks, said part of that victory came in the fact that the districts were relieved of a “double payment” – repaying the state for services when they had already paid the UBESD for them.

“We were trying to get a fair settlement, and I think we did,” he said.

Ed Dennis, Oregon Department of Education, said state officials also were pleased with the settlement, which has been the subject of talks for more than a year.

“I’m thrilled about this being done – and that we reduced the burden on the districts,” he said. The districts don’t actually write a check to pay off the debt. Instead, the ODE will withhold a certain percentage of the amount due from the district’s state funds each month until it’s paid in full.

Dennis said that for some districts repayment may take a couple of months; for others, the repayment will spread out over several years.

The problem had its roots from the period from 1999 to 2003 and focused on some $3.3 million that the UBESD spent on alternative education programs throughout the region. Auditors found the state had overpaid the local districts based on the ESD’s reporting.

At the time, the UBESD also had drawn scrutiny for lavish spending practices and shoddy accounting work. One ESD employee was accused of a crime in connection with the scandal, but was found innocent at trial.