Steve and Dana Phillips

Steve and Dana Phillips signed a settlement with the Oregon Department of Justice over their handling of the Miss Oregon pageant.

SEASIDE — The city and the Seaside School District are standing by City Councilor Dana Phillips and Seaside School District board president Steve Phillips after a settlement with the Oregon Department of Justice over their handling of the Miss Oregon scholarship program.

The settlement was reached after the state alleged unlawful trade practices.

They agreed to pay $150,000 to the Oregon Community Foundation for the Tiffany Phillips Memorial Scholarship Fund, named for the couple’s 17-year-old daughter, who died in a 1998 car accident.

The couple had been involved with the Miss Oregon pageant for decades. They will make restitution in three installments and must permanently resign from any office, directorship or position of authority with the Miss Oregon Scholarship Program and Oregon Scholarship Foundation. They are also prohibited from being financially involved in any nonprofits or charities.

The agreement “shall not be considered an admission of a violation for any purpose.”

Dana Phillips denied that the couple personally profited from the pageant. The Oregonian reported Friday that the couple pocketed $336,584 from the scholarship fund.

“It’s not true,” Phillips said. “We did everything we possibly could and answered questions all along.”

The agreement with the state does not allege fraud, she said. “At no time did we ever use the Miss Oregon pageant for personal gain or wrongdoing. This is a situation that’s really sad and hard to swallow.”

Phillips said when she left her role as director of the pageant in 2015, financial documentation was shredded, a situation compounded by a computer crash that destroyed a system backup.

“I’m not an accountant and I ran (the pageant) as a mom-and-pop organization, and kept it afloat,” she said. “I thought I had all the documentation, but when I needed it most, when the DOJ wanted it, I didn’t have it.”

Phillips said she plans to meet with City Manager Mark Winstanley and fellow city councilors “to find out their feelings” as to whether she should retain her council position.

“If they feel I need to step aside, I will,” she said. “I don’t want to, because there are things I haven’t finished doing.”

Mayor Jay Barber said he discussed the Department of Justice agreement with Winstanley, but will not make a recommendation “until we have an opportunity to sit down with Dana and determine what her response is going to be. I think it will be totally up to her to make a decision on that.”

He said nothing in the agreement “eliminates her eligibility to stay on the council. There’s not a felony involved. It’s more whether she feels she wants to be in the public eye and serve in that situation. We’ll talk it over and say: ‘Dana, we’ll support whatever decision you make.’”

Steve Phillips declined to comment.

The school district board president “has been an excellent member of the board for over 20 years,” Superintendent Sheila Roley said. “From my understanding of the agreement, there is nothing to indicate that Steve and Dana had any personal gain from their work with the Miss Oregon pageant.”

Roley said there is no concern among school district officials of crossover between pageant management and school district business operations. “As far as I can interpret the document, it doesn’t provide any evidence there was personal gain,” she said.

Roley said she had no comment on the school district’s process moving forward. “That’s a conversation that will be among the board members,” she said.

R.J. Marx is editor of the Seaside Signal and Cannon Beach Gazette, and covers South County for The Daily Astorian. Reach him at 971-320-4557 or rmarx@seasidesignal.com.

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