>La Grande Observer | Union and Wallowa Counties' News Leader

A long running financial issue involving 41 Eastern Oregon school districts, including nine in Union and Wallowa counties, the Union-Baker Education Service District and the Oregon Department of Education is a big step closer toward being settled.

The Department of Education Wednesday released a payment plan for the $1.951 million it says the school districts owe. The money must be paid, the state says, because of alleged misreporting of enrollment between 1999 and 2004 involving the Union-Baker ESD’s alternative schools.

The sum had been listed at $2.2 million. But the state reduced it to $1.951 million after the Union-Baker ESD agreed to pay $256,000 of this amount, said Ed Dennis, Oregon’s deputy superintendent for public instruction.

The Department of Education’s repayment plan gives school districts up to five years to pay what they owe. The department arrived at its repayment plan after months of discussions with representatives of the ESD and the school districts.

Following is what the department says districts in Union and Wallowa counties owe and how many years they have been granted for repayment: Cove School District, $15,762, two years; Elgin School District, $172,316, four years; Enterprise School District, $102,111, three years; Imbler School District, $113,739, four years; Joseph School District, $252,131, five years; North Powder School District, $117,445, four years; Union School District, $39,736, two years; and the Wallowa School District, $38,509, two years.

The issue of repayments has been hanging over many districts since July 2007 when an Office of the Secretary of State Audits Division report was released. The report said 40 Oregon school districts that had students in the ESD’s alternative schools benefited financially because of the alleged misreporting.

The 2007 Office of the Secretary of State Audits Division report listed how much each of the school districts affected by the ESD alternative school issue owed. At the time 40 school districts were listed as owing $3.4 million.

Since July 2007, Eastern Oregon school district superintendents have asked the state to reconsider what it says they owe. The Oregon Department of Education responded by releasing two revised listings of repayment obligations. The revised calculations provided good news for the La Grande School District. The initial report indicated La Grande owed $247,458, but a second, which came out this spring, said it owed $181,913.

A report released in July provided much better news. It indicated that the state actually underpaid La Grande $114,710. Information released by the Oregon Department of Education Wednesday indicates that the state now owes $111,018 to the La Grande School District.

La Grande is the only one of the 41 school districts involved in the ESD alternative school issue that the state now says it underpaid for alternative school students. Thirty-eight of the other school districts owe money and two, Helix and Ione, do not owe anything.

The Oregon Department of Education will collect from schools that owe money by withholding varying amounts of state funding over the time specified in repayment plans. This process will start in January, Dennis said.

School districts that owe money can appeal the timeline the state is setting for them, Dennis said.

The Union-Baker ESD will make its payments by taking 5 percent from its operating budget each year and pay this to the Oregon Department of Education. This would be about $12,000 in 2008-09 since the ESD’s operating budget is almost $240,000. Should the ESD annually give the state an amount that is 5 percent of its operating budget, it would end up paying $256,000 in 15 years when anticipated growth and inflation are factored in.