The state Department of Education has dismissed accusations that the Susanville School District in Lassen County failed to punish a teacher for alleged racial slurs.
The state withdrew its threat to withhold $3 million in aid after an administrative law judge ruled Thursday that school board member Frank Cady met a deadline to resign.
Cady's resignation was part of a negotiated agreement over the district's handling of teacher Edward Frank Murin, who parents said slurred black and American Indian students.
Susie Lange, an Education Department spokeswoman, said the state demanded Cady's resignation because he had "no sensitivity" to the racial discrimination problem and, as a board member, "he was in a position to allow it to continue."
Cady has sued over the resignation agreement, claiming that it violates his constitutional right to engage in free speech and political activity. However, he failed to win a preliminary injunction at a Dec. 12 hearing in Superior Court.
Gregory Roussere, an Education Department attorney, said the district has yet to meet other terms of the agreement: reprimanding former Supt. Marshal Leve for failing to punish Murin, and providing cultural awareness training for the teacher. Murin was also suspended from coaching for five years.
Leve's successor, Supt. Mark Evans, said the district intends to live up to the agreement.