PORTLAND — An agreement with the state will restore $1.3 million in General Assistance fund reimbursements withheld from the city in 2015.

Under terms of the settlement announced Nov. 15, the city will receive most of the $1.6 million sought by its Department of Health and Human Services from the state Department of Health and Human Services.

The settlement ends a dispute brought about by a January 2015 audit by the state DHHS into operations at the Oxford Street Shelter and Family Shelter involving granting General Assistance aid to ineligible immigrants.

Auditors found five examples of noncompliance with state regulations, including four in the manner the city officials checked eligibility standards for shelter residents, and sought reimbursements for overall shelter operating costs instead of by the number of residents.

The audit also found the city was violating state rules by seeking reimbursements for General Assistance benefits granted to immigrants. But that finding was not a part of the decision to withhold $1.6 million in reimbursements covering a period from June 2014 to February 2015.

The state DHHS also required the city to develop an action plan to address noncompliance findings at the shelter. In its Nov. 15 press release, the agency said the city has corrected the violations in shelter operations and eligibility.

The withheld reimbursements led to a lawsuit filed by the city in Cumberland County Superior Court in Portland. Justice Thomas Warren ruled in favor of the city in August.

According to the state DHHS, the court ruled that “regardless of the violations with the city’s eligibility determinations, reimbursements could not be withheld retroactively through the process we undertook.”

The state appealed Warren’s decision to the Maine Supreme Judicial Court while an agreement on reimbursements was negotiated. The settlement ended the appeal.

General Assistance benefits are provided as vouchers by towns and cities to pay for housing, food, medications, utilities and other necessities. Recipients are required to be part of municipal workfare programs.

The state now reimburses as much as 70 percent of the total of vouchers granted to recipients. The current city budget allocates $7.1 million for General Assistance benefits.

While it was not considered in the reimbursement withholding case settled last week, the city was also cited by the state for providing General Assistance benefits to immigrants who could not establish they were in the country legally.

A June 2014 policy change announced by Gov. Paul LePage and DHHS Commissioner Mary Mayhew denies reimbursements for those benefits.

The policy change was upheld in Cumberland County Superior Court. The change affected about 900 people in Portland, and the fiscal year 2016 budget set aside funding to cover some of the voucher costs before a state law was passed in 2015 allowing immigrants seeking asylum eligibility for General Assistance benefits for two years.

David Harry can be reached at 781-3661 ext. 110 or dharry@theforecaster.net. Follow him on Twitter: @DavidHarry8.

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