Richland School District officials have agreed to give up $3.5 million in federal money if the Department of Energy will agree to a long-term payment schedule, the Benton County treasurer said Thursday.

The district also wants the contract used to equalize its contracts with school districts nationwide .

Treasurer Claude Oliver said negotiations between DOE and the county's taxing jurisdictions are caught on the issue of whether the school district has a right to $5.3 million for land taken off property tax rolls when Hanford was built in 1943.

DOE officials argue the school district already has been paid through a federal program that gives schools money when a high number of federal employees live in a community. DOE claims when it subtracts the "impact" money already paid, the district is entitled to $1.9 million.

In a five-hour closed meeting Wednesday, county taxing jurisdictions' representatives met with Tim Travelsted, special assistant to DOE's chief financial officer.

"I can't talk about any part of the negotiations, really," said Richland schools Superintendent Marge Chow. "All I can say is we've been working on it for years. Every time we feel there's been some conclusion, in fact, it's taken even longer. ..."

Chow believed progress was made Wednesday but couldn't estimate when a deal will be final.

Oliver, who was not at Wednesday's meeting, said the taxing jurisdictions and DOE want a tentative agreement before Secretary of Energy Hazel O'Leary arrives Thursday in the Tri-Cities. She is to meet with Tri-City leaders at Hanford, her first trip there since June 1994.

"I don't see why (the agreement) can't be ready for the secretary's signature next week," Oliver said.

There has been some confusion this week about how much money the school district and Benton County taxing jurisdictions should collect. The taxing jurisdictions hope to share $11.2 million and the Richland School District to get $5.3 million, according to Oliver's office.

Travelsted and the representatives agreed Wednesday on a draft agreement to take back to their boards, said Max Benitz Jr., Benton County Commission chairman.

The move comes three months after Grant and Franklin counties received $6.3 million as payment in lieu of taxes (PILT).

In January, Grant County received $4.8 million and Franklin County $1.5 million. Each county must divide the money among its coffers and road fund, and with school, fire, library, port and hospital districts.

Negotiations have been inching along for years. Chow said she's been involved since coming to Richland a decade ago.

Oliver said DOE is unjust in its attempt to mix federal "impact" program payments with the PILT issue because the federal program is driven by student numbers and PILT by property values.

Harry Culp, Richland school finance director, said he's still waiting to hear how much "impact" money Congress will allot for the district this year. The estimate is $308,000, but Culp has been told to expect only 85 percent, or $262,000. Last school year, the district got $332,159.

"It's something we budget every year as a reserve," Culp said. "We don't have any people or any things associated with it until we get the money."

The money is based on how many children have a parent who works on federal property. At least 2,000 students are needed to qualify for the "impact" money, with Richland counting 2,300 this year. The district has about 8,760 students.

Oliver said Richland has proposed DOE establish a new rule where every school district affected by a nuclear site must reapply for PILT money. The money would be deducted from each district's annual DOE payments.

School officials believe, if they are to lose the $3.5 million, then school districts nationwide must be treated the same way, Oliver said.

Near DOE's Savannah River site in South Carolina, the three affected counties received $2.54 million for 1995.

That meant $808,000 for Aiken County, which split the payment 40-60 with the Aiken County School District. The district received about $485,000. Aiken County has about 126,000 residents.

Aiken County Treasurer Margie Plunkett said the federal payment is based on about 72,000 acres of forest land, valued at $1.1 billion. The tax rate charged includes county and school district levies, but not smaller taxing districts.

"I wish we did (include the smaller jurisdictions)," she said in a phone interview Thursday.

Oliver said Washington state law doesn't let him pick and choose which property tax rates apply to Hanford, so he levied all of them - including taxes for roads, the Port of Benton and rural library.

Thursday in Kennewick, officials also discussed a Prosser hospital district that has been overlooked in the negotiations. Benton County Assessor Barbara Wagner said the district stands to gain $40,485.