HB1784 95TH GENERAL ASSEMBLY

LRB095 05131 NHT 31273 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB1784

Introduced 2/23/2007, by Rep. Roger L. Eddy

SYNOPSIS AS INTRODUCED:

105 ILCS 5/1A-8	from Ch. 122, par. 1A-8
105 ILCS 5/18-11	from Ch. 122, par. 18-11

Amends the School Code. Provides that a school district must not be certified by the State Board of Education to be in financial difficulty as a result of the failure of the Comptroller to disburse certain School Code reimbursements for receipt by the school district no later than June 30th of each year. Provides that if moneys are available in the Common School Fund for State aid payments, then, as soon as may be after the 10th and 20th days of each of the months of July (instead of August) through the following June (instead of July), the State Comptroller shall draw his or her warrants upon the State Treasurer. Effective July 1, 2007.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning education.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The School Code is amended by changing Sections 1A-8 and 18-11 as follows:

(105 ILCS 5/1A-8) (from Ch. 122, par. 1A-8)

Sec. 1A-8. Powers of the Board in Assisting Districts Deemed in Financial Difficulties. To promote the financial integrity of school districts, the State Board of Education shall be provided the necessary powers to promote sound financial management and continue operation of the public schools.

The State Superintendent of Education may require a school district, including any district subject to Article 34A of this Code, to share financial information relevant to a proper investigation of the district's financial condition and the delivery of appropriate State financial, technical, and consulting services to the district if the district (i) has been designated, through the State Board of Education's School District Financial Profile System, as on financial warning or financial watch status, (ii) has failed to file an annual financial report, annual budget, deficit reduction plan, or other financial information as required by law, or (iii) has been identified, through the district's annual audit or other financial and management information, as in serious financial difficulty in the current or next school year. In addition to financial, technical, and consulting services provided by the State Board of Education, at the request of a school district, the State Superintendent may provide for an independent financial consultant to assist the district review its financial condition and options.

The State Board of Education, after proper investigation of a district's financial condition, may certify that a district, including any district subject to Article 34A, is in financial difficulty when any of the following conditions occur:

(1) The district has issued school or teacher orders for wages as permitted in Sections 8-16, 32-7.2 and 34-76 of this Code;

(2) The district has issued tax anticipation warrants or tax anticipation notes in anticipation of a second year's taxes when warrants or notes in anticipation of current year taxes are still outstanding, as authorized by Sections 17-16, 34-23, 34-59 and 34-63 of this Code, or has issued short-term debt against 2 future revenue sources, such as, but not limited to, tax anticipation warrants and general State Aid certificates or tax anticipation warrants and revenue anticipation notes;

(3) The district has for 2 consecutive years shown an excess of expenditures and other financing uses over revenues and other financing sources and beginning fund balances on its annual financial report for the aggregate totals of the Educational, Operations and Maintenance, Transportation, and Working Cash Funds;

(4) The district refuses to provide financial information or cooperate with the State Superintendent in an investigation of the district's financial condition.

No school district shall be certified by the State Board of Education to be in financial difficulty by reason of any of the above circumstances (i) arising as a result of the failure of the county to make any distribution of property tax money due the district at the time such distribution is due; (ii) arising as a result of the failure of the Comptroller to disburse reimbursements authorized under Sections 14-3.01b, 14-7.03, 14-7.02, 14-7.02a, 14-13.01, 18-3, 18-11, 18-4.3, and 29-5 for receipt by the school district no later than June 30th of each year; or (iii) if the district clearly demonstrates to the satisfaction of the State Board of Education at the time of its determination that such condition no longer exists. If the State Board of Education certifies that a district in a city with 500,000 inhabitants or more is in financial difficulty, the State Board shall so notify the Governor and the Mayor of the city in which the district is located. The State Board of Education may require school districts certified in financial difficulty, except those districts subject to Article 34A, to develop, adopt and submit a financial plan within 45 days after certification of financial difficulty. The financial plan shall be developed according to guidelines presented to the district by the State Board of Education within 14 days of certification. Such guidelines shall address the specific nature of each district's financial difficulties. Any proposed budget of the district shall be consistent with the financial plan submitted to and approved by the State Board of Education.

A district certified to be in financial difficulty, other than a district subject to Article 34A, shall report to the State Board of Education at such times and in such manner as the State Board may direct, concerning the district's compliance with each financial plan. The State Board may review the district's operations, obtain budgetary data and financial statements, require the district to produce reports, and have access to any other information in the possession of the district that it deems relevant. The State Board may issue recommendations or directives within its powers to the district to assist in compliance with the financial plan. The district shall produce such budgetary data, financial statements, reports and other information and comply with such directives. If the State Board of Education determines that a district has failed to comply with its financial plan, the State Board of Education may rescind approval of the plan and appoint a Financial Oversight Panel for the district as provided in Section 1B-4. This action shall be taken only after the district has been given notice and an opportunity to appear before the State Board of Education to discuss its failure to comply with its financial plan.

No bonds, notes, teachers orders, tax anticipation warrants or other evidences of indebtedness shall be issued or sold by a school district or be legally binding upon or enforceable against a local board of education of a district certified to be in financial difficulty unless and until the financial plan required under this Section has been approved by the State Board of Education.

Any financial watch list distributed by the State Board of Education pursuant to this Section shall designate those school districts on the watch list that would not otherwise be on the watch list were it not for the inability or refusal of the State of Illinois to make timely disbursements of any payments due school districts or to fully reimburse school districts for mandated categorical programs pursuant to reimbursement formulas provided in this School Code.

(Source: P.A. 94-234, eff. 7-1-06.)

(105 ILCS 5/18-11) (from Ch. 122, par. 18-11)

Sec. 18-11. Payment of claims.

(a) Except as provided in subsection (b) of this Section, and except as provided in subsection (c) of this Section with respect to payments made under Sections 18-8 through 18-10 for fiscal year 1994 only, as soon as may be after the 10th and 20th days of each of the months of July August through the following June July if moneys are available in the common school fund in the State treasury for payments under Sections 18-8 through 18-10 the State Comptroller shall draw his warrants upon the State Treasurer as directed by the State Board of Education pursuant to Section 2-3.17b and in accordance with the transfers from the General Revenue Fund to the Common School Fund as specified in Section 8a of the State Finance Act.

Each such semimonthly warrant shall be in an amount equal to 1/24 of the total amount to be distributed to school districts for the fiscal year. The amount of payments made in June July of each year shall be considered as payments for claims covering the school year that commenced during the immediately preceding calendar year. If the payments provided for under Sections 18-8 through 18-10 have been assigned as security for State aid anticipation certificates pursuant to Section 18-18, the State Board of Education shall pay the appropriate amount of the payment, as specified in the notification required by Section 18-18, directly to the assignee.

(b) As soon as may be after the 10th and 20th days of each of the months of June, 1982 through July, 1983, if moneys are available in the Common School Fund in the State treasury for payments under Sections 18-8 through 18-10, the State Comptroller shall draw his warrants upon the State Treasurer proportionate for the various counties payable to the regional superintendent of schools in accordance with the transfers from the General Revenue Fund to the Common School Fund as specified in Section 8a of the State Finance Act.

Each such semimonthly warrant for the months of June and July, 1982 shall be in an amount equal to 1/24 of the total amount to be distributed to school districts by the regional superintendent for school year 1981-1982.

Each such semimonthly warrant for the months of August, 1982 through July, 1983 shall be in an amount equal to 1/24 of the total amount to be distributed to school districts by the regional superintendent for school year 1982-1983.

The State Superintendent of Education shall, from monies appropriated for such purpose, compensate districts for interest lost arising from the change in payments in June, 1982 to payments in the months of June and July, 1982, for claims arising from school year 1981-1982. The amount appropriated for such purpose shall be based upon the Prime Commercial Rate in effect May 15, 1982. The amount of such compensation shall be equal to the ratio of the district's net State aid entitlement for school year 1981-1982 divided by the total net State aid entitlement times the funds appropriated for such purpose. Payment in full of the amount of compensation derived from the computation required in the preceding sentence shall be made as soon as may be after July 1, 1982 upon warrants payable to the several regional superintendents of schools.

The State Superintendent of Education shall, from monies appropriated for such purpose, compensate districts for interest lost arising from the change in payments in June, 1983 to payments in the months of June and July, 1983, for claims arising from school year 1982-1983. The amount appropriated for such purpose shall be based upon an interest rate of no less than 15 per cent or the Prime Commercial Rate in effect May 15, 1983, whichever is greater. The amount of such compensation shall be equal to the ratio of the district's net State aid entitlement for school year 1982-1983 divided by the total net State aid entitlement times the funds appropriated for such purpose. Payment in full of the amount of compensation derived from the computation required in the preceding sentence shall be made as soon as may be after July 1, 1983 upon warrants payable to the several regional superintendents of schools.

The State Superintendent of Education shall, from monies appropriated for such purpose, compensate districts for interest lost arising from the change in payments in June, 1992 and each year thereafter to payments in the months of June and July, 1992 and each year thereafter. The amount appropriated for such purpose shall be based upon the Prime Commercial Rate in effect June 15, 1992 and June 15 annually thereafter. The amount of such compensation shall be equal to the ratio of the district's net State aid entitlement divided by the total net State aid entitlement times the amount of funds appropriated for such purpose. Payment of the compensation shall be made as soon as may be after July 1 upon warrants payable to the several regional superintendents of schools.

The regional superintendents shall make payments to their respective school districts as soon as may be after receipt of the warrants unless the payments have been assigned as security for State aid anticipation certificates pursuant to Section 18-18. If such an assignment has been made, the regional superintendent shall, as soon as may be after receipt of the warrants, pay the appropriate amount of the payment as specified in the notification required by Section 18-18, directly to the assignee.

As used in this Section, "Prime Commercial Rate" means such prime rate as from time to time is publicly announced by the largest commercial banking institution in this State, measured in terms of total assets.

(c) With respect to all school districts but for fiscal year 1994 only, as soon as may be after the 10th and 20th days of August, 1993 and as soon as may be after the 10th and 20th days of each of the months of October, 1993 through July, 1994 if moneys are available in the Common School Fund in the State treasury for payments under Sections 18-8 through 18-10, the State Comptroller shall draw his warrants upon the State Treasurer as directed by the State Board of Education in accordance with transfers from the General Revenue Fund to the Common School Fund as specified in Section 8a of the State Finance Act. The warrant for the 10th day of August, 1993 and each semimonthly warrant for the months of October, 1993 through July, 1994 shall be in an amount equal to 1/24 of the total amount to be distributed to that school district for fiscal year 1994, and the warrant for the 20th day of August, 1993 shall be in an amount equal to 3/24 of that total. The amount of payments made in July of 1994 shall be considered as payments for claims covering the school year that commenced during the immediately preceding calendar year.

(Source: P.A. 87-14; 87-887; 87-895; 88-45; 88-89; 88-641, eff. 9-9-94.)

Section 99. Effective date. This Act takes effect July 1, 2007.