The work of maintaining and repairing all State-aid highways, improved under the provisions of this act, or which shall have been previously reconstructed by State aid, shall be done by the Department of Highways; and fifty (50%) per centum of the cost thereof shall be paid by the several townships wherein such roads may lie; or by the county when such roads have been improved upon the petition of such county without the co-operation of the township. Whenever the obligation of any township for the cost of constructing, reconstructing, or maintaining and repairing any State-aid highways, constructed or reconstructed pursuant to an agreement between the township and the Department of Highways, or reconstructed by State aid previous to the passage of the act to which this is an amendment, remains unpaid and has been referred by the Department of Highways to the Department of Justice for collection, the Attorney General, on behalf of the Commonwealth, and with the approval of the Auditor General and State Treasurer, may enter into an agreement with the township against which the claim is outstanding for the payment of such claim in installments. Such agreement may be made whenever it appears that the township is unable to pay the claim at once by reason of its financial condition, and shall provide for the liquidation of such claim in definite payments over a period not exceeding five years. If it shall appear that the township by reason of its financial condition would be unable to pay the full amount of such claim in installments over a period of five years, the Attorney General, with the approval of the Auditor General and State Treasurer, may compound or settle such claim outstanding, before or after being reduced to judgment, for such portion thereof as such officers may find the township to be able to pay over a period of five years, and the agreement hereinbefore provided for shall be entered into on the basis of such settlement.