Updated

Students in a small South Texas town have returned to classes after a winter break was extended by three days because of a dispute over a water bill.

All four schools in the La Villa school district reopened Thursday, one day after a state agency refused to intervene, forcing the city and school district back into negotiations.

La Villa municipal leaders met Wednesday, conveying options for a compromise to the school district. The school board was expected to meet and vote on a compromise Thursday. But in a show of good faith the city restored water and sewer service overnight so classes could resume.

The city says the district owes about $58,000 on its bill because it has refused to pay a higher rate set in December 2012.