Key lawmakers in the House and Senate have agreed to settle a drawn-out court fight over foster care stipends in a deal that will reduce the legal fees to be paid to the lawyers who sued the state, according to House Finance Chairwoman Sylvia Luke.

Luke announced the settlement Wednesday as she unveiled the House draft of the state supplemental budget for fiscal year 2019. The proposed House draft of the state budget totals $14.3 billion in state, federal and special funding for the fiscal year that begins July 1, and lawmakers also announced a proposed two-year, $4.48 billion construction budget.

That construction budget includes an extra $90 million in “lump sum” funding for maintenance of state Department of Education public school facilities, and $60 million for construction of the vertical-design Pohukaina Elementary School in Kakaako.

Other school construction projects slated for funding in the draft budget include the second phase of East Kapolei Middle School, which was earmarked for $13 million, and another $20.5 million for design and construction of a classroom building at Waipahu High School.

The House budget proposal also includes $30 million for “ohana zones” statewide that would be used to shelter the homeless, with about half that money earmarked for Honolulu. Those areas would be developed by the state Department of Human Services at unspecified locations, and would include toilet, shower and other facilities, according to House Bill 2281.

Luke said this year’s state budget already includes $39 million to cope with homelessness, money that is being used to fund 88 active contracts to provide services to the homeless.

The foster care stipend lawsuit accused the state of violating the federal Child Welfare Act, which requires that foster-care payments at a minimum cover the cost of providing for a foster child’s basic necessities. Hawaii’s payments are $576 to $676 a month depending on a child’s age, and are too low, the suit alleged.

The proposed settlement last year to resolve the five-year legal dispute would have raised the monthly rates to $649 per child for younger children, and to $776 for children 12 years and older. The deal also called for the state to regularly review the rates to assure they are adequate. There are about 2,800 children in foster care in Hawaii.

Luke, (D, Punchbowl-Pauoa-Nuuanu), said the original proposed settlement included more than $3 million in lawyers’ fees, which were later reduced to $1.1 million. The House Finance Committee rejected the deal last year, and Luke said at the time she objected to both the plaintiffs’ attorney fees and the courts mandating spending on state programs.

The case was scheduled to go to trial this month, but “they have now reconsidered, and have agreed to cut their lawyer’s fee even more, and the new fees are $850,000,” Luke announced to members of the Finance Committee on Wednesday.

Based on those revised settlement terms, she said the new state budget will include an extra $7.1 million to increase the foster care rates next year. Luke said Senate Ways and Means Chairman Donovan Dela Cruz was also involved in the settlement discussions, suggesting the Senate is likely to agree with the terms.

The construction budget for next year also includes $39.3 million to provide additional inmate housing for the Women’s Community Correctional Center in Kailua. The state Department of Public Safety proposed to expand that facility last year as part of a larger effort to ease overcrowding in community correctional centers.

The idea is to move all female inmates from the Oahu Community Correctional Center to WCCC, which would help to ease severe overcrowding among the male inmates at OCCC.

The proposed budget now advances to the full House for two floor votes next week, and will then move to the Senate for further amendments.