Gov. C.L. "Butch" Otter and legislative leaders say they have reached a settlement with the vendors involved in a lengthy lawsuit over a failed public school broadband program.

Last year, the Idaho Supreme Court agreed that a $60 million state broadband contract was illegal, which resulted in lawsuits from the vendors and state arguing over who owed each other money.

Otter's office announced a $3.4 million settlement on Thursday. In return, Education Networks of America and CentruryLink have agreed to drop their federal lawsuits. The vendors had argued the state owed them millions of dollars in back payments and damages.

The settlement funds will come out of a little-known account called the Legislative Legal Defense Fund. Legislative leaders put $8 million the fund last year in anticipation of a possible broadband settlement.