At least two school divisions in the province say they are owed hundreds of thousands of dollars in unpaid tuition fees for First Nations students who attend schools off-reserve.

It's believed the money will come through eventually, but late payments are costing school boards money and creating tensions between them and First Nations.

They're also likely the tip of the iceberg in a problem that, according to the school boards association, is widespread.

The Battlefords’ Living Sky public school division says by the end of August, First Nations owed $673,000 for the previous school year, while the federal department of Aboriginal Affairs and Northern Development had an outstanding bill of $1,227,000.

Together it amounts to a third of the fees invoiced and close to three per cent of the division’s total operating budget.

So why is this happening?

Living Sky director of education Randy Fox said he's been told it stems from a dispute between First Nations and Ottawa over over per-student funding.

"Typically, the concern we get from them is that the funding they receive isn't satisfactory or sufficient to cover tuition costs," Fox said. "And so I think in some cases it may be forcing them to move money from other categories of their budgets. And that obviously isn’t very easy to do."

The chief of the Saulteaux First Nation in Cochin confirms it’s behind on payments.

Velma Night says Saulteaux is slow to pay because money from Aboriginal Affairs is slow to arrive. She says it has been the same problem year after year.

"How can we commit to paying these bills when [Aboriginal] Affairs funding isn’t coming quick enough? " she asked. "And yeah, sometimes we did use other program dollars to pay these tuition bills to manage the cash flow."

When the bills go unpaid there is a cascading effect with school divisions having to borrow money to cover the cash shortfall until the overdue bills are eventually paid.

"It’s not a terrible hardship but it is a cost to us in interest payments of course, especially if we’re talking about fairly large sums of money," says Fox. "So it does affect our cash flow. It strains line of credits and things like that."

So far the situation hasn’t resulted in staff or program cuts, but Fox says it could happen if the debts start to pile up from year to year.

Exactly how many school divisions are owed money is unclear. Neither the Saskatchewan School Boards Association nor the provincial Ministry of Education have been tracking the total.

But the ministry’s director of education financial policy Angela Chobanik says she is aware of the issue.

"School divisions did identify this as one of the areas of concern that they’d like the ministry to look at," she said.

School boards are also aware that when property taxpayers fall into arrears, the province backfills the money so school divisions don't have to absorb the losses. But this isn’t the case when it comes to tuition arrears for First Nations students.

The ministry hasn’t yet figured out to handle the discrepancy.

"We are right now doing research on it," says Chobanik. "And we’re just trying to get an idea of what the situation is."

The government will probably hear more on the issue from the Saskatchewan School Boards Association after its assembly in mid-November. Resolutions are on the agenda.

Executive director Darren McKee says the overdue accounts are "deemed a chronic situation for many jurisdictions because it’s been happening for many, many years now."

And he says its straining working relationships between school divisions and First Nations.

"It’s hard when the call that you’re having to the First Nation is 'When is the bill going to get paid?' as opposed to 'Are we doing what’s right for your kids?'"

While school divisions bill some First Nations directly, invoices for others go straight to Aboriginal Affairs.

The department says it suspended those direct payments while it drafts the template for new agreements to be signed across the country.

Living Sky now expects to collect from Aboriginal Affairs with the signing of an interim funding agreement, while the new longer-term agreement is still being worked out.