Alberta's largest home-schooling agency is back in business but on a tight financial leash following a messy court dispute involving allegations of misspending of public funds.

The Alberta government and the Trinity Christian School Association struck a deal agreed to in court Thursday – but not before the presiding judge took both sides to task.

Justice Eldon Simpson told all sides they were needlessly emotional and confrontational, comparing the case to "a matrimonial property fight" at the expense of students and taxpayers.

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"Two reasonable people could have worked this out," Justice Simpson said.

Education Minister David Eggen defended the government's decision to withdraw accreditation and funding from the group following an audit in the fall.

"Our priority has been ensuring that the funding we provide for education is being used to support students," Mr. Eggen said in a release. "I stand behind the actions we have taken."

The lawyer for Trinity, Jay Cameron, agreed with Justice Simpson's comments.

"I think that the parties are able to reset the relationship, have a clean slate," he said.

Under the new deal, Trinity is accredited once again but its non-profit partner agency, Wisdom Home Schooling Society, cannot have any role.

Funding will begin flowing again but it must all be approved by a financial administrator picked by the government following good-faith consultation with Trinity.

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The financial administrator will be in place for a year, but that time could be extended if necessary. The will also help Trinity as it overhauls its bylaws, policies and operations.

The agreement marks a new phase in long simmering dispute that dates back two decades involving the government, Trinity Christian, and Wisdom Home Schooling Society.

The province gives Trinity $5-million a year to oversee home schooling for 3,500 students along with 13 students who learn in a classroom setting in Cold Lake, northeast of Edmonton.

That represents about one-third of all home-schooled students in Alberta.

However, for two decades, Trinity has not run the home-schooling program. Instead, it has been transferring almost all the public money to Wisdom Home Schooling to administer the programs. Wisdom has no legal standing with the province.

A report completed by the government last year revealed that both Wisdom and Trinity are honeycombed with people from the same two families headed up by Richard Schienbein, principal at Trinity, and Ken Noster, who is the associate principal at Trinity and the administrator of Wisdom.

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The report alleged sweetheart land deals between the two entities, exorbitant salaries and little oversight on questionable expenses for gifts and travel.

The report says that over the past three years the two families have shared about $2.7-million in total compensation.

Court documents show Ken Noster earns nearly $300,000 a year in pay and benefits.

Trinity and Widsom deny any wrongdoing.

The documents reveal that for years, the former Progressive Conservative government questioned Trinity's relationship with Wisdom and bookkeeping practices but did not take action.

However, under the NDP government, Mr. Eggen ordered an audit of Trinity's operations and, following that report, terminated the accreditation of Trinity without notice on Oct. 25.

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That day, the government urged parents of the 3,500 students to sign up with a new school provider to continue to receive funding.

Trinity then took the province to court, arguing the government had allowed it to operate under its current model for years and that the decision to terminate without notice wasn't fair because Trinity didn't have time to give its side.

Opposition parties have also criticized Mr. Eggen, saying he moved too rashly and that he should have had a transition plan in place for students before cutting Trinity off.