A school district in Oregon accused by two LGBTQ students of harassment praised a settlement of the case, but the allegations and a state investigation have revealed pervasive discrimination that a new group will be tasked with combating.

The settlement was reached late Monday.

Under its terms, Bill Lucero, the principal at North Bend High School, must be gone by the start of the 2018-19 academic year begins. The school district also must ask the police department to remove a school police officer who told one of the students, Liv Funk, that she's going to hell because of her sexual orientation. A diversity and inclusion committee composed of an administrator, staff and current and former students will be created to train staff and students.

In return, Hailey Smith and Funk agreed to dismiss all their complaints.

"I am glad that I was finally able to start positive change in this school district," Funk, a senior, said when the settlement was announced late Monday by the American Civil Liberties Union of Oregon, which represents her and Smith, who graduated last year. "All I want is a safe learning environment for current and incoming students from any and all walks of life."

The case in North Bend, located on the Oregon coast 175 miles (280 kilometers) southwest of Portland, underscores that, even in a generally liberal state, discrimination persists against those identifying as lesbian, gay, bisexual, transgender and queer.

"I think there are a lot of teachers, staff, and community members in North Bend who do support LGBTQ students," Smith said. "Under a more supportive school administration, I hope they will no longer be afraid to show their support."

School District Superintendent Bill Yester, who signed the settlement, had been aware that the principal forced students to read passages from the Bible as punishment, yet did nothing to stop it, the Oregon Department of Education told him in a March 6 letter. The investigation also found that the evidence showed that the district discriminated against LGBTQ students and disregarded their complaints.

Funk and Smith cited several incidents of harassment and abuse. The two, who at the time were an openly gay couple, said they were walking in the school parking lot when the principal's son drove up, veered away at the last second and shouted an anti-gay slur at them. The school district did nothing beyond asking the principal to discuss it with his son, the investigation by the Oregon Department of Education found.

And Funk claimed that a student struck her with his skateboard, saying he hated gays.

Investigators also noted that Yester appeared to retaliate against a mental health counselor at the school who had told state education officials that previous attempts to report and enact change had fallen on deaf ears. When the school district learned about the counselor's action, it transferred the counselor to another building — away from Funk. Yester quizzed the counselor's supervisor, and district staff raised concerns about the counselor with the county mental health organization.

"There are serious allegations of retaliation," said Mat dos Santos, ACLU of Oregon legal director, who said his group is also working with the unidentified counselor.

After the Funk and Smith case became public, allegations from other North Bend High students surfaced. The allegations were: a transgender boy was not allowed to play ono the boys' basketball team; a black student was forced to line up with his swim teammates from lightest to darkest skin color; and an exchange student from Spain was given a "Best Mexican" award by the swim team, dos Santos said.

The state education department is reviewing the settlement, education department spokeswoman Victoria Nguyen said Tuesday. Because the parties reached a voluntary settlement, the department will issue a final order dismissing the case, she said.

The state could have halted part or all of its funding for the school district if there was a determination it had violated anti-discrimination laws.

___

Follow Andrew Selsky on Twitter at https://twitter.com/andrewselsky