SB3681 96TH GENERAL ASSEMBLY

LRB096 18677 NHT 34061 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
SB3681

Introduced 2/11/2010, by Sen. Deanna Demuzio

SYNOPSIS AS INTRODUCED:

See Index

Creates the Financial Oversight Panel Law of the School Code. Allows a school district (other than the Chicago school district) to petition the State Board of Education for the establishment of a Financial Oversight Panel for the district. Allows the State Board to establish a Financial Oversight Panel without a petition from a district. Contains provisions concerning duties of the district; members and meetings of a Panel; powers of a Panel; officers of a Panel; collective bargaining agreements; deposits and investments; cash and bank accounts; the financial, management, and budgetary structure; the School District Emergency Financial Assistance Fund; grants and loans; the issuance of bonds; a tax levy; a debt service fund; a debt service reserve fund; bond anticipation notes; tax anticipation warrants and other certificates and notes; reports; a Panel audit; Panel property being exempt from taxation; sanctions; and abolition of a Panel. Makes related changes in the School Code, the Property Tax Code, and the Illinois Pension Code. Further amends the School Code with respect to districts in financial difficulty, the custody of school funds, bank reconciliation reports, and deficit reduction plans. Effective immediately.

FISCAL NOTE ACT MAY APPLY	HOUSING AFFORDABILITY IMPACT NOTE ACT MAY APPLY	PENSION IMPACT NOTE ACT MAY APPLY
	STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT 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 Property Tax Code is amended by changing Sections 18-50.1, 18-92, and 18-241 as follows:

(35 ILCS 200/18-50.1)

Sec. 18-50.1. School Finance Authority and Financial Oversight Panel levies. Notwithstanding any other law to the contrary, any levy adopted by a School Finance Authority created under Article 1F of the School Code or a Financial Oversight Panel established under Article 1H of the School Code is valid and shall be extended by the county clerk if it is certified to the county clerk by the Authority or Panel in sufficient time to allow the county clerk to include the levy in the extension for the taxable year.

(Source: P.A. 92-855, eff. 12-6-02.)

(35 ILCS 200/18-92)

Sec. 18-92. Downstate School Finance Authority for Elementary Districts Law and Financial Oversight Panel Law. The provisions of the Truth in Taxation Law are subject to the Downstate School Finance Authority for Elementary Districts Law and the Financial Oversight Panel Law of the School Code.

(Source: P.A. 95-331, eff. 8-21-07.)

(35 ILCS 200/18-241)

Sec. 18-241. School Finance Authority and Financial Oversight Panel.

(a) A School Finance Authority established under Article 1E or 1F of the School Code shall not be a taxing district for purposes of this Law. A Financial Oversight Panel established under Article 1H of the School Code shall not be a taxing district for purposes of this Law.

(b) This Law shall not apply to the extension of taxes for a school district for the levy year in which a School Finance Authority for the district is created pursuant to Article 1E or 1F of the School Code. This Law shall not apply to the extension of taxes for a school district for the levy year in which a Financial Oversight Panel for the district is created pursuant to Article 1H of the School Code.

(Source: P.A. 92-547, eff. 6-13-02; 93-501, eff. 8-11-03.)

Section 10. The Illinois Pension Code is amended by changing Sections 7-105 and 7-109 as follows:

(40 ILCS 5/7-105) (from Ch. 108 1/2, par. 7-105)

Sec. 7-105. "Municipality": A city, village, incorporated town, county, township; a financial oversight panel established pursuant to Article 1H of the School Code; and any school, park, sanitary, road forest preserve, water, fire protection, public health, river conservancy, mosquito abatement, tuberculosis sanitarium, public community college district, or other local district with general continuous power to levy taxes on the property within such district; now existing or hereafter created within the State; and, for the purposes of providing annuities and benefits to its employees, the fund itself.

(Source: P.A. 84-1308.)

(40 ILCS 5/7-109) (from Ch. 108 1/2, par. 7-109)

Sec. 7-109. Employee.

(1) "Employee" means any person who:

(a) 1. Receives earnings as payment for the performance of personal services or official duties out of the general fund of a municipality, or out of any special fund or funds controlled by a municipality, or by an instrumentality thereof, or a participating instrumentality, including, in counties, the fees or earnings of any county fee office; and

2. Under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee with a municipality, or any instrumentality thereof, or a participating instrumentality, including aldermen, county supervisors and other persons (excepting those employed as independent contractors) who are paid compensation, fees, allowances or other emolument for official duties, and, in counties, the several county fee offices.

(b) Serves as a township treasurer appointed under the School Code, as heretofore or hereafter amended, and who receives for such services regular compensation as distinguished from per diem compensation, and any regular employee in the office of any township treasurer whether or not his earnings are paid from the income of the permanent township fund or from funds subject to distribution to the several school districts and parts of school districts as provided in the School Code, or from both such sources.

(c) Holds an elective office in a municipality, instrumentality thereof or participating instrumentality.

(d) Is a chief executive officer, chief educational officer, chief fiscal officer, or other employee of a financial oversight panel established pursuant to Article 1H of the School Code, other than a superintendent or certified school business official.

(2) "Employee" does not include persons who:

(a) Are eligible for inclusion under any of the following laws:

1. "An Act in relation to an Illinois State Teachers' Pension and Retirement Fund", approved May 27, 1915, as amended;

2. Articles 15 and 16 of this Code.

However, such persons shall be included as employees to the extent of earnings that are not eligible for inclusion under the foregoing laws for services not of an instructional nature of any kind.

However, any member of the armed forces who is employed as a teacher of subjects in the Reserve Officers Training Corps of any school and who is not certified under the law governing the certification of teachers shall be included as an employee.

(b) Are designated by the governing body of a municipality in which a pension fund is required by law to be established for policemen or firemen, respectively, as performing police or fire protection duties, except that when such persons are the heads of the police or fire department and are not eligible to be included within any such pension fund, they shall be included within this Article; provided, that such persons shall not be excluded to the extent of concurrent service and earnings not designated as being for police or fire protection duties. However, (i) any head of a police department who was a participant under this Article immediately before October 1, 1977 and did not elect, under Section 3-109 of this Act, to participate in a police pension fund shall be an "employee", and (ii) any chief of police who elects to participate in this Fund under Section 3-109.1 of this Code, regardless of whether such person continues to be employed as chief of police or is employed in some other rank or capacity within the police department, shall be an employee under this Article for so long as such person is employed to perform police duties by a participating municipality and has not lawfully rescinded that election.

(3) All persons, including, without limitation, public defenders and probation officers, who receive earnings from general or special funds of a county for performance of personal services or official duties within the territorial limits of the county, are employees of the county (unless excluded by subsection (2) of this Section) notwithstanding that they may be appointed by and are subject to the direction of a person or persons other than a county board or a county officer. It is hereby established that an employer-employee relationship under the usual common law rules exists between such employees and the county paying their salaries by reason of the fact that the county boards fix their rates of compensation, appropriate funds for payment of their earnings and otherwise exercise control over them. This finding and this amendatory Act shall apply to all such employees from the date of appointment whether such date is prior to or after the effective date of this amendatory Act and is intended to clarify existing law pertaining to their status as participating employees in the Fund.

(Source: P.A. 90-460, eff. 8-17-97.)

Section 15. The School Code is amended by changing Sections 1A-8, 1B-8, 8-6, and 17-1 and by adding Article 1H and Section 10-16.9 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, or (iv) is determined to be likely to fail to fully meet any or all payroll expenses when due or any debt service payments when due or both. 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.

(5) The district is likely to fail to fully meet any or all payroll expenses when due or any debt service payments when due or both.

No school district shall be certified by the State Board of Education to be in financial difficulty solely by reason of any of the above circumstances arising as a result of (i) the failure of the county to make any distribution of property tax money due the district at the time such distribution is due or (ii) the failure of this State to make timely payments of general State aid or any of the mandated categoricals; or 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 profile compiled and distributed by the State Board of Education in Fiscal Year 2009 or any fiscal year thereafter shall incorporate such adjustments as may be needed in the profile scores to reflect the financial effects of the inability or refusal of the State of Illinois to make timely disbursements of any general State aid or mandated categorical aid 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. 96-668, eff. 8-25-09.)

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

Sec. 1B-8. There is created in the State Treasury a special fund to be known as the School District Emergency Financial Assistance Fund (the "Fund"). The School District Emergency Financial Assistance Fund shall consist of appropriations, loan repayments, grants from the federal government, and donations from any public or private source. Moneys in the Fund may be appropriated only to the Illinois Finance Authority and the State Board for those purposes authorized under this Article and Articles Article 1F and 1H of this Code. The appropriation may be allocated and expended by the State Board for contractual services as grants to provide technical assistance and consultation consulting services to school districts to assess their financial condition and to Financial Oversight Panels that petition for emergency financial assistance grants. The and by the Illinois Finance Authority may provide as loans to school districts which are the subject of an approved petition for emergency financial assistance under Section 1B-4, or 1F-62, or 1H-65 of this Code. Neither the State Board of Education nor the Illinois Finance Authority may collect any fees for providing these services.

From the amount allocated to each such school district under this Article the State Board shall identify a sum sufficient to cover all approved costs of the Financial Oversight Panel established for the respective school district. If the State Board and State Superintendent of Education have not approved emergency financial assistance in conjunction with the appointment of a Financial Oversight Panel, the Panel's approved costs shall be paid from deductions from the district's general State aid.

The Financial Oversight Panel may prepare and file with the State Superintendent a proposal for emergency financial assistance for the school district and for its operations budget. No expenditures shall be authorized by the State Superintendent until he or she has approved the proposal of the Panel, either as submitted or in such lesser amount determined by the State Superintendent.

The maximum amount of an emergency financial assistance loan which may be allocated to any school district under this Article, including moneys necessary for the operations of the Panel, shall not exceed $4,000 times the number of pupils enrolled in the school district during the school year ending June 30 prior to the date of approval by the State Board of the petition for emergency financial assistance, as certified to the local board and the Panel by the State Superintendent. An emergency financial assistance grant shall not exceed $1,000 times the number of such pupils. A district may receive both a loan and a grant.

The payment of an emergency State financial assistance grant or loan shall be subject to appropriation by the General Assembly. Emergency State financial assistance allocated and paid to a school district under this Article may be applied to any fund or funds from which the local board of education of that district is authorized to make expenditures by law.

Any emergency financial assistance proposed by the Financial Oversight Panel and approved by the State Superintendent may be paid in its entirety during the initial year of the Panel's existence or spread in equal or declining amounts over a period of years not to exceed the period of the Panel's existence. All loan payments made from the School District Emergency Financial Assistance Fund for a school district shall be required to be repaid, with simple interest over the term of the loan at a rate equal to 50% of the one-year Constant Maturity Treasury (CMT) yield as last published by the Board of Governors of the Federal Reserve System before the date on which the district's loan is approved by the State Board of Education, not later than the date the Financial Oversight Panel ceases to exist. The Panel shall establish and the Illinois Finance Authority shall approve the terms and conditions, including the schedule, of repayments. The schedule shall provide for repayments commencing July 1 of each year or upon each fiscal year's receipt of moneys from a tax levy for emergency financial assistance. Repayment shall be incorporated into the annual budget of the school district and may be made from any fund or funds of the district in which there are moneys available. Default on repayment is subject to the Illinois Grant Funds Recovery Act. When moneys are repaid as provided herein they shall not be made available to the local board for further use as emergency financial assistance under this Article at any time thereafter. All repayments required to be made by a school district shall be received by the State Board and deposited in the School District Emergency Financial Assistance Fund.

In establishing the terms and conditions for the repayment obligation of the school district the Panel shall annually determine whether a separate local property tax levy is required. The board of any school district with a tax rate for educational purposes for the prior year of less than 120% of the maximum rate for educational purposes authorized by Section 17-2 shall provide for a separate tax levy for emergency financial assistance repayment purposes. Such tax levy shall not be subject to referendum approval. The amount of the levy shall be equal to the amount necessary to meet the annual repayment obligations of the district as established by the Panel, or 20% of the amount levied for educational purposes for the prior year, whichever is less. However, no district shall be required to levy the tax if the district's operating tax rate as determined under Section 18-8 or 18-8.05 exceeds 200% of the district's tax rate for educational purposes for the prior year.

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

(105 ILCS 5/Art. 1H heading new)

ARTICLE 1H. FINANCIAL OVERSIGHT PANELS

(105 ILCS 5/1H-1 new)

Sec. 1H-1. Short title. This Article may be cited as the Financial Oversight Panel Law.

(105 ILCS 5/1H-5 new)

Sec. 1H-5. Findings; purpose; intent.

(a) The General Assembly finds all of the following:

(1) A fundamental goal of the people of this State, as expressed in Section 1 of Article X of the Illinois Constitution, is the educational development of all persons to the limits of their capacities. When a board of education faces financial difficulties, continued operation of the public school system is threatened.

(2) A sound financial structure is essential to the continued operation of any school system. It is vital to commercial, educational, and cultural interests that public schools remain in operation. To achieve that goal, public school systems must have effective access to the private market to borrow short and long term funds.

(3) To promote the financial integrity of districts, as defined in this Article, it is necessary to provide for the creation of financial oversight panels with the powers necessary to promote sound financial management and to ensure the continued operation of the public schools.

(b) It is the purpose of this Article to provide a secure financial basis for the continued operation of public schools. The intention of the General Assembly, in creating this Article, is to establish procedures, provide powers, and impose restrictions to ensure the financial and educational integrity of the public schools, while leaving principal responsibility for the educational policies of public schools to the boards of education within the State, consistent with the requirements for satisfying the public policy and purpose set forth in this Article.

(105 ILCS 5/1H-10 new)

Sec. 1H-10. Definitions. As used in this Article:

"Bonds" means bonds authorized to be issued by the Panel under Section 1H-70 of this Code.

"Budget" means the annual budget of the district required under Section 17-1 of this Code, as in effect from time to time.

"Chairperson" means the Chairperson of the Panel.

"District" means any school district having a population of not more than 500,000 that has had a Financial Oversight Panel established under this Article.

"Financial plan" means the financial plan of the district to be developed pursuant to this Article, as in effect from time to time.

"Fiscal year" means the fiscal year of the district.

"Obligations" means bonds and notes of the Panel.

"Panel" means a Financial Oversight Panel created under this Article.

"State Board" means the State Board of Education.

"State Superintendent" means the State Superintendent of Education.

(105 ILCS 5/1H-15 new)

Sec. 1H-15. Establishment of Financial Oversight Panels; duties of district.

(a) A school district may petition the State Board for the establishment of a Financial Oversight Panel for the district. The petition shall cite the reasons why the creation of a Financial Oversight Panel for the district is necessary. The State Board may grant the petition upon determining that the approval of the petition is in the best educational and financial interests of the district. The State Board may establish a Financial Oversight Panel without a petition for a school district deemed to be in financial difficulty pursuant to Section 1A-8 of this Code.

(b) Upon establishment of a Financial Oversight Panel, all of the following shall occur:

(1) There is established a body both corporate and politic to be known as the "(Name of School District) Financial Oversight Panel", which in this name shall exercise all authority vested in a Panel by this Article.

(2) The duties and obligations of the districts under Financial Oversight Panels established pursuant to this Article shall be the same duties and obligations of districts under Financial Oversight Panels established under Article 1B of this Code.

(c) In the event of a conflict between the provisions of this Article and the provisions of Article 1B of this Code, the provisions of this Article control.

(d) Any school district having a Financial Oversight Panel established under Article 1B of this Code or any Financial Oversight Panel established under Article 1B may petition the State Board for the establishment of a Financial Oversight Panel under this Article and concurrent dissolution of the Article 1B Panel. All records, papers, books, funds, or other assets or liabilities belonging to the dissolving Financial Oversight Panel shall be transferred to the newly established Financial Oversight Panel.

(105 ILCS 5/1H-20 new)

Sec. 1H-20. Members of Panel; meetings.

(a) Upon establishment of a Financial Oversight Panel under Section 1H-15 of this Code, the State Superintendent shall within 15 working days thereafter appoint 5 members to serve on a Financial Oversight Panel for the district. Members appointed to the Panel shall serve at the pleasure of the State Superintendent. The State Superintendent shall designate one of the members of the Panel to serve as its Chairperson. In the event of vacancy or resignation, the State Superintendent shall, within 10 working days after receiving notice, appoint a successor to serve out that member's term. The State Superintendent may remove a member for incompetence, malfeasance, neglect of duty, or other just cause.

(b) Members of the Panel shall be selected primarily on the basis of their experience and education in financial management, with consideration given to persons knowledgeable in education finance. Two members of the Panel shall be residents of the school district that the Panel serves. A member of the Panel may not be a member of the district's school board or an employee of the district nor may a member have a direct financial interest in the district.

(c) Panel members may be reimbursed by the State Board for travel and other necessary expenses incurred in the performance of their official duties. Unless paid from bonds issued under Section 1H-70 of this Code, the amount reimbursed members for their expenses shall be charged to the school district as part of any emergency financial assistance and incorporated as a part of the terms and conditions for repayment of the assistance or shall be deducted from the district's general State aid as provided in Section 1H-65 of this Code.

(d) With the exception of the chairperson, who shall be designated as provided in subsection (a) of this Section, the Panel may elect such officers as it deems appropriate.

(e) The first meeting of the Panel shall be held at the call of the Chairperson. The Panel shall prescribe the times and places for its meetings and the manner in which regular and special meetings may be called and shall comply with the Open Meetings Act.

(f) Three members of the Panel shall constitute a quorum. A majority of members present is required to pass a measure.

(105 ILCS 5/1H-25 new)

Sec. 1H-25. General powers. The purposes of the Panel shall be to exercise financial control over the district and to furnish financial assistance so that the district can provide public education within the district's jurisdiction while permitting the district to meet its obligations to its creditors and the holders of its debt. Except as expressly limited by this Article, the Panel shall have all powers granted to a voluntary or involuntary Financial Oversight Panel and to a Financial Administrator under Article 1B of this Code and all other powers necessary to meet its responsibilities and to carry out its purposes and the purposes of this Article, including without limitation all of the following powers, provided that the Panel shall have no power to terminate any employee without following the statutory procedures for such terminations set forth in this Code, nor to incur debt or otherwise take action to lease, buy, or build or otherwise acquire additional school buildings or grounds without front door referenda approval under Sections 19-2 through 19-7 of this Code:

(1) To sue and to be sued.

(2) To make, cancel, modify, and execute contracts, leases, subleases, and all other instruments or agreements necessary or convenient for the exercise of the powers and functions granted by this Article, subject to Section 1H-45 of this Code. The Panel may at a regular or special meeting find that the district has insufficient or inadequate funds with respect to any contract; however, final collective bargaining agreements may not be cancelled or modified without the express written consent of the exclusive bargaining representative and the Panel.

(3) To purchase real or personal property necessary or convenient for its purposes; to execute and deliver deeds for real property held in its own name; and to sell, lease, or otherwise dispose of such of its property as, in the judgment of the Panel, is no longer necessary for its purposes.

(4) To employ officers, agents, and employees of the Panel; to define their duties and qualifications; and to fix their compensation and benefits.

(5) To transfer to the district such sums of money as are not required for other purposes.

(6) To borrow money, including without limitation accepting State loans, and to issue obligations pursuant to this Article; to fund, refund, or advance refund the same; to provide for the rights of the holders of its obligations; and to repay any advances.

(7) To levy all property tax levies that otherwise could be levied by the district, and to make levies pursuant to Section 1H-65 of this Code. This levy or levies shall be exempt from the Truth in Taxation Law.

(8) Subject to the provisions of any contract with or for the benefit of the holders of its obligations, to purchase or redeem its obligations.

(9) To procure all necessary goods and services for the Panel in compliance with the purchasing laws and requirements applicable to the district.

(10) To do any and all things necessary or convenient to carry out its purposes and exercise the powers given to it by this Article.

(11) To recommend any type of reorganization of the district, in whole or in part, pursuant to Article 7 or 11E of this Code or Section 10-22.22b or 10-22.22c of this Code, to the State Board if in the Panel's judgment the circumstances so require. No such proposal for reorganization shall occur unless the Panel and the school boards of all other districts directly affected by the reorganization have each approved by majority vote the reorganization. Upon approval by the Panel and all other districts directly affected and notwithstanding any other law to the contrary, upon approval of the proposal by the State Board, by a majority vote, the State Board and all other affected entities shall forthwith implement the proposal in accordance with applicable provisions of this Code.

(105 ILCS 5/1H-30 new)

Sec. 1H-30. Chief executive officer. The Panel may employ a chief executive officer who, under the direction of the Panel, shall supervise the Panel's staff, including the chief educational officer and the chief fiscal officer, and shall have ultimate responsibility for implementing the policies, procedures, directives, and decisions of the Panel. The chief executive officer shall have the authority to determine the agenda and order of business at school board meetings, as needed in order to carry forward and implement the objectives and priorities of the school board and Financial Oversight Panel in the administration and management of the district. The chief executive officer is not required to hold any certificate issued under Article 21 of this Code. The chief executive officer shall have the powers and duties as assigned by the Panel in accordance with this Code.

(105 ILCS 5/1H-35 new)

Sec. 1H-35. Chief educational officer. The Panel may at a regular or special meeting find that cause exists to cancel the contract of the school district's superintendent who is serving at the time the Panel is established for the same reasons and in the same manner as the school board may cancel the contract. If there is no superintendent, then the Panel may employ a chief educational officer for the district, who shall have all of the powers and duties of a school district superintendent under this Code and such other duties as may be assigned by the Panel in accordance with this Code. The chief educational officer shall report to the Panel or the chief executive officer employed by the Panel. The district shall not thereafter employ a superintendent during the period that a chief educational officer is serving in the district. The chief educational officer is not required to hold any certificate issued under Article 21 of this Code.

(105 ILCS 5/1H-40 new)

Sec. 1H-40. Chief fiscal officer. The Panel may employ a chief fiscal officer who, under the direction of the Panel or the chief executive officer employed by the Panel, shall have all of the powers and duties of the district's chief school business official and any other duties regarding budgeting, accounting, and other financial matters that are assigned by the Panel, in accordance with this Code. The district may not employ a chief school business official during the period that the chief fiscal officer is serving in the district. The chief fiscal officer is not required to hold a certificate issued under Article 21 of this Code.

(105 ILCS 5/1H-41 new)

Sec. 1H-41. Superintendent. The Panel may employ a superintendent who, under the direction of the Panel or the chief executive officer employed by the Panel, shall have all of the powers and duties of a school district superintendent under this Code assigned by the Panel and such other duties as may be assigned by the Panel in accordance with this Code. The superintendent shall report to the Panel or the chief executive officer employed by the Panel. The superintendent shall hold a certificate with a superintendent endorsement issued under Article 21 of this Code.

(105 ILCS 5/1H-42 new)

Sec. 1H-42. Chief school business official. The Panel may employ a chief school business official who, under the direction of the Panel or the chief executive officer employed by the Panel, shall have all of the powers and duties of a chief school business official under this Code assigned by the Panel and such other duties as may be assigned by the Panel in accordance with this Code. The chief school business official shall report to the Panel or the chief executive officer employed by the Panel. The chief school business official shall hold a certificate with a chief school business official endorsement issued under Article 21 of this Code.

(105 ILCS 5/1H-43 new)

Sec. 1H-43. School treasurer.

(a) In Class I county school units and in each school district that forms a part of a Class II county school unit but has withdrawn from the jurisdiction and authority of the trustees of schools of the township in which the school district is located and from the jurisdiction and authority of the township treasurer in the Class II county school unit, the Panel may, in its discretion, remove the treasurer appointed or elected by the school board of the district and appoint a new treasurer to succeed the removed treasurer, as provided in Section 8-19 of this Code.

(b) In the case of a school district located in a Class II county school unit where such school district is subject to the jurisdiction and authority of township trustees and the jurisdiction and authority of a township treasurer, the Panel may, in its discretion, withdraw the district from the jurisdiction and authority of the township trustees and the jurisdiction and authority of the township treasurer, notwithstanding any provision of Section 8-1 of this Code other than subsection (f) to the contrary, and appoint or elect a school treasurer for the school district. Subsection (f) of Section 8-1 of this Code shall govern the transfer from the township treasurer to the school treasurer.

(c) All school treasurers appointed or elected pursuant to this Section are subject to the provisions of Sections 8-2 through 8-20 of the School Code and other applicable provisions of the School Code.

(105 ILCS 5/1H-45 new)

Sec. 1H-45. Collective bargaining agreements. The Panel shall have the power to negotiate collective bargaining agreements with the district's employees in lieu of and on behalf of the district. Upon concluding bargaining, the district shall execute the agreements negotiated by the Panel, and the district and the Panel shall be bound by and shall administer the agreements in all respects as if the agreements had been negotiated by the district itself.

(105 ILCS 5/1H-50 new)

Sec. 1H-50. Deposits and investments.

(a) The Panel shall have the power to establish checking and whatever other banking accounts it may deem appropriate for conducting its affairs.

(b) Subject to the provisions of any contract with or for the benefit of the holders of its obligations, the Panel may invest any funds not required for immediate use or disbursement, as provided in the Public Funds Investment Act.

(105 ILCS 5/1H-55 new)

Sec. 1H-55. Cash accounts and bank accounts.

(a) The Panel shall require the district or any officer of the district, including the district's treasurer, to establish and maintain separate cash accounts and separate bank accounts in accordance with such rules, standards, and procedures as the Panel may prescribe.

(b) The Panel shall have the power to assume exclusive administration of the cash accounts and bank accounts of the district, to establish and maintain whatever new cash accounts and bank accounts it may deem appropriate, and to withdraw funds from these accounts for the lawful expenditures of the district.

(105 ILCS 5/1H-60 new)

Sec. 1H-60. Financial, management, and budgetary structure. Upon direction of the Panel, the district shall reorganize the financial accounts, management, and budgetary systems of the district in whatever manner that is consistent with the rules adopted by the State Board of Education regarding accounting, budgeting, financial reporting, and auditing as the Panel deems appropriate to achieve greater financial responsibility and to reduce financial inefficiency.

(105 ILCS 5/1H-65 new)

Sec. 1H-65. School District Emergency Financial Assistance Fund; grants and loans.

(a) Moneys in the School District Emergency Financial Assistance Fund established under Section 1B-8 of this Code may be allocated and expended by the State Board for contractual services to provide technical assistance and consultation to school districts to assess their financial condition or to Panels that petition for emergency financial assistance grants and by the Illinois Finance Authority as loans to school districts that are the subject of an approved petition for emergency financial assistance under Section 1B-4, 1F-62, or 1H-65 of this Code. Neither the State Board nor the Illinois Finance Authority may collect any fees for providing these services. From the amount allocated to each such school district, the State Board shall identify a sum sufficient to cover all approved costs of the Panel established for the respective school district. If the State Board and State Superintendent have not approved emergency financial assistance in conjunction with the appointment of a Panel, the Panel's approved costs shall be paid from deductions from the district's general State aid. An emergency financial assistance loan to a Panel or borrowing from sources other than the State shall not be considered as part of the calculation of a district's debt for purposes of the limitation specified in Section 19-1 of this Code.

(b) The Panel may prepare and file with the State Superintendent a proposal for emergency financial assistance for the district and for its operations budget. The State Superintendent may not authorize any expenditures until he or she has approved the proposal of the Panel, either as submitted or in such lesser amount as determined by the State Superintendent. A district may receive both a loan and a grant. State emergency financial assistance allocated and paid to a Panel under this Article may be applied to any fund or funds from which the Panel is authorized to make expenditures by law. Any State emergency financial assistance proposed by the Panel and approved by the State Superintendent may be paid in its entirety during the initial year of the Panel's existence or spread in equal or variable amounts over a period of years not to exceed the period of the Panel's existence.

(c) The amount of an emergency financial assistance grant that may be allocated to a Panel under this Article must not exceed $1,000 times the number of pupils enrolled in the district during the school year ending June 30 prior to the date of approval of the petition for emergency financial assistance by the State Board. The payment of a State emergency financial assistance grant is subject to appropriation by the General Assembly.

(d) The amount of an emergency financial assistance loan that may be allocated to a Panel under this Article, including (i) moneys necessary for the operations of the Panel and (ii) borrowing from sources other than the State, must not exceed, in the aggregate, $4,000 times the number of pupils enrolled in the district during the school year ending June 30 prior to the date of approval of the petition for emergency financial assistance by the State Board. However, this limitation does not apply to borrowing by the district secured by amounts levied by the district prior to establishment of the Panel. The State Superintendent may not approve any loan to the Panel unless the Panel has been unable to borrow sufficient funds to operate the district.

All loan payments made from the School District Emergency Financial Assistance Fund to a Panel must be required to be repaid not later than the date the Panel ceases to exist, with simple interest over the term of the loan at a rate equal to 50% of the one-year Constant Maturity Treasury (CMT) yield as last published by the Board of Governors of the Federal Reserve System before the date on which the Financial Oversight Panel's loan is approved by the State Superintendent.

The Panel shall establish and the Illinois Finance Authority shall approve the terms and conditions of the loan, including the schedule of repayments. The schedule shall provide for repayments commencing July 1 of each year or upon each fiscal year's receipt of moneys from a tax levy for emergency financial assistance. Repayment must be incorporated into the annual budget of the district and may be made from any fund or funds of the district in which there are moneys available. Default on repayment is subject to the Illinois Grant Funds Recovery Act. When moneys are repaid as provided in this Section, they must not be made available to the Panel for further use as emergency financial assistance under this Article at any time thereafter. All repayments required to be made by a Panel shall be deposited into the School District Emergency Financial Assistance Fund.

In establishing the terms and conditions for the repayment obligation of the Panel, the Panel shall annually determine whether a separate local property tax levy is required to meet that obligation. The Financial Oversight Panel shall provide for a separate tax levy for emergency financial assistance repayment purposes. This tax levy is not subject to referendum approval. The amount of the levy must not exceed the amount necessary to meet the annual emergency financial repayment obligations of the district, including principal and interest, as established by the Panel, and is not subject to the provisions of the Property Tax Extension Limitation Law.

(105 ILCS 5/1H-70 new)

Sec. 1H-70. Power to issue bonds.

(a) The Panel may incur indebtedness by the issuance of negotiable full faith and credit general obligation bonds of the Panel in an outstanding amount not to exceed at any time, including existing indebtedness, 15% of the district's most recent equalized assessed valuation, excluding Bonds of the Panel that have been refunded, for (i) the purpose of providing the district with moneys for ordinary and necessary expenditures and other operational needs of the district; (ii) payment or refunding of outstanding debt obligations or tax anticipation warrants of the district, the proceeds of which were used to provide financing for the district; (iii) payment of fees for arrangements as provided in subsection (b) of Section 1H-75 of this Code; (iv) payment of interest on Bonds; (v) establishment of reserves to secure Bonds; (vi) the payment of costs of issuance of Bonds; (vii) payment of principal of or interest or redemption premium on any Bonds or notes of the Panel; and (viii) all other expenditures of the Panel incidental to and necessary or convenient for carrying out its corporate purposes and powers.

(b) The Panel may from time to time (i) issue Bonds to refund any outstanding Bonds or notes of the Panel, whether the Bonds or notes to be refunded have or have not matured or become redeemable, and (ii) issue Bonds partly to refund Bonds or notes then outstanding and partly for any other purpose set forth in this Section.

(c) Bonds issued in accordance with subsection (a) of this Section are not subject to any other statutory limitation as to debt, including without limitation that established by the Local Government Debt Limitation Act, and may be issued without referendum.

(105 ILCS 5/1H-75 new)

Sec. 1H-75. Terms of bonds.

(a) Whenever the Panel desires or is required to issue Bonds as provided in this Article, it shall adopt a resolution designating the amount of the Bonds to be issued, the purposes for which the proceeds of the Bonds are to be used, and the manner in which the proceeds shall be held pending the application thereof. The Bonds shall be issued in the corporate name of the Panel and shall bear such date or dates and shall mature at such time or times, not exceeding 20 years from their date, as the resolution may provide. The Bonds may be issued as serial bonds payable in installments, as term bonds with sinking fund installments, or as a combination of these as the Panel may determine in the resolution. The Bonds shall be in such denominations as the Panel may determine. The Bonds shall be in such form, carry such registration privileges, be executed in such manner, be payable at such place or places, and be subject to such terms of redemption at such redemption prices, including premium, as the resolution may provide. The Bonds shall be sold by the Panel at public or private sale, as determined by the Panel.

(b) In connection with the issuance of its Bonds, the Panel may enter into arrangements to provide additional security and liquidity for the Bonds. These may include without limitation municipal bond insurance, letters of credit, lines of credit by which the Panel may borrow funds to pay or redeem its Bonds, and purchase or remarketing arrangements for ensuring the ability of owners of the Panel's Bonds to sell their Bonds or to have their Bonds redeemed. The Panel may enter into contracts and may agree to pay fees to persons providing the arrangements, including from Bond proceeds, but only under circumstances in which the total interest paid or to be paid on the Bonds, together with the fees for the arrangements (being treated as if interest), would not, taken together, cause the Bonds to bear interest, calculated to their absolute maturity, at a rate in excess of the maximum rate allowed by law.

The resolution of the Panel authorizing the issuance of its Bonds may provide that interest rates may vary from time to time depending upon criteria established by the Panel, which may include without limitation a variation in interest rates as may be necessary to cause the Bonds to be remarketable from time to time at a price equal to their principal amount, and may provide for appointment of a national banking association, bank, trust company, investment banker, or other financial institution to serve as a remarketing agent in that connection. The resolution of the Panel authorizing the issuance of its Bonds may provide that alternative interest rates or provisions shall apply during such times as the Bonds are held by a person providing a letter of credit or other credit enhancement arrangement for those Bonds.

(105 ILCS 5/1H-80 new)

Sec. 1H-80. Tax levy.

(a) Before or at the time of issuing any Bonds, the Panel shall provide by resolution for the levy and collection of a direct annual tax upon all the taxable property located within the district, without limit as to rate or amount, sufficient to pay and discharge the principal thereof at maturity or on sinking fund installment dates and to pay the interest thereon as it falls due. The taxes as levied shall also include additional amounts to the extent that the collections in the prior years were insufficient to pay and discharge the principal thereof at maturity, sinking fund installments, if any, and interest thereon as it fell due, and the amount so collected shall be placed in the debt service reserve fund. The tax shall be in addition to and exclusive of the maximum of all taxes that the Panel or the district is authorized by law to levy for any and all school purposes. The resolution shall be in force upon its adoption.

(b) The levy shall be for the sole benefit of the holders of the Bonds, and the holders of the Bonds shall have a security interest in and lien upon all rights, claims, and interests of the Panel arising pursuant to the levy and all present and future proceeds of the levy until the principal of and sinking fund installments and interest on the Bonds are paid in full. All proceeds from the levy shall be deposited by each county collector directly into the debt service fund established pursuant to Section 1H-85 of this Code, shall be applied solely for the payment of principal of and sinking fund installments and interest on the Bonds, and shall not be used for any other purpose.

(c) Upon the filing in the office of the county clerk of each county where the school district is located of a duly certified copy of the resolution, it shall be the duty of each county clerk to extend the tax provided for in the resolution, including an amount determined by the Panel to cover loss and cost of collection and also deferred collections and abatements in the amount of the taxes as extended on the collectors' books. The tax shall be separate and apart from all other taxes of the Panel or the district and shall be separately identified by the collectors.

(105 ILCS 5/1H-85 new)

Sec. 1H-85. Debt service fund. The Panel shall establish a debt service fund for the Bonds, to be maintained by a paying agent, escrow agent, depository, or corporate trustee, which may be any trust company or bank having the power of a trust company within this State, separate and segregated from all other funds and accounts of the Panel and the district. All moneys on deposit in the debt service fund shall be held in trust in the debt service fund for the benefit of the holders of the Bonds, shall be applied solely for the payment of the principal of and sinking fund installment, redemption premium, if any, and interest on the Bonds, and shall not be used for any other purpose. The holders of the Bonds shall have a security interest in and lien upon all such moneys.

(105 ILCS 5/1H-90 new)

Sec. 1H-90. Debt service reserve fund.

(a) The Panel may create and establish a debt service reserve fund to be maintained by a paying agent, escrow agent, depository, or corporate trustee, which may be any trust company or bank having the power of a trust company within the State, separate and segregated from all other funds and accounts of the Panel. The Panel may pay the following into the debt service reserve fund:

(1) any proceeds from the sale of Bonds to the extent provided in the resolution authorizing the issuance of the Bonds; and

(2) any other moneys that may be available to the Panel for the purpose of the fund.

(b) The amount to be accumulated in the debt service reserve fund shall be determined by the Panel, but shall not exceed the maximum amount of interest, principal, and sinking fund installments due in any succeeding calendar year.

(c) All moneys on deposit in the debt service reserve fund shall be held in trust for the benefit of the holders of the Bonds, shall be applied solely for the payment of principal of and sinking fund installments and interest on the Bonds to the extent not paid from the debt service fund, and shall not be used for any other purpose.

(d) Any moneys in the debt service reserve fund in excess of the amount determined by the Panel pursuant to a resolution authorizing the issuance of Bonds may be withdrawn by the Panel and used for any of its lawful purposes.

(e) In computing the amount of the debt service reserve fund, investments shall be valued as the Panel provides in the resolution authorizing the issuance of the Bonds.

(105 ILCS 5/1H-95 new)

Sec. 1H-95. Bond anticipation notes.

(a) After the issuance of Bonds has been authorized, the Panel shall have power to issue from time to time, pursuant to a resolution or resolutions of the Panel, negotiable bond anticipation notes of the Panel in anticipation of the issuance of Bonds.

(b) Bond anticipation notes shall mature not later than 2 years after the date of issuance, may be made redeemable prior to their maturity, and may be sold in such manner, in such denominations, and at such price or prices and shall bear interest at such rate or rates not to exceed the maximum annual rate authorized by law as a resolution authorizing the issuance of the bond anticipation notes may provide.

(c) The bond anticipation notes may be made payable as to both principal and interest from the proceeds of the Bonds. The Panel may provide for payment of interest on the bond anticipation notes from direct annual taxes upon all of the taxable property located within the district that are authorized to be levied annually for that purpose, without limit as to rate or amount, sufficient to pay the interest as it falls due, in the manner, subject to the security interest and lien, and with the effect provided in Section 1H-80 of this Code.

(d) The Panel is authorized to issue renewal notes in the event it is unable to issue Bonds to pay outstanding bond anticipation notes, on terms the Panel deems reasonable.

(e) A debt service fund shall be established in the manner provided in Section 1H-85 of this Code by the Panel for the bond anticipation notes, and the proceeds of any tax levy made pursuant to this Section shall be deposited into the fund upon receipt.

(105 ILCS 5/1H-100 new)

Sec. 1H-100. Vesting powers in trustee or other authorized agent. The resolution authorizing issuance of the Bonds shall vest in a trustee, paying agent, escrow agent, or depository such rights, powers, and duties in trust as the Panel may determine and may contain such provisions for protecting and enforcing the rights and remedies of the holders of the Bonds and limiting such rights and remedies as may be reasonable and proper and not in violation of law, including covenants setting forth the duties of the Panel in relation to the exercise of its corporate powers and the custody, safeguarding, and application of all moneys. The resolution shall provide for the manner in which moneys in the various funds and accounts of the Panel may be invested and the disposition of the earnings on the investments.

(105 ILCS 5/1H-105 new)

Sec. 1H-105. Discharge of bonds.

(a) If the Panel pays or causes to be paid to the holders of all Bonds then outstanding the principal, redemption price, if any, and interest to become due on the Bonds, at the times and in the manner stipulated therein and in the resolution authorizing the issuance of the Bonds, then the covenants, agreements, and other obligations of the Panel to the Bondholders shall be discharged and satisfied.

(b) Bonds or interest installments for the payment or redemption of which moneys have been set aside and held in trust by the trustee or other authorized agent provided for in Section 1H-100 of this Code, through deposit by the Panel of funds for the payment, redemption, or otherwise, at the maturity or redemption date, are deemed to have been paid within the meaning and with the effect expressed in subsection (a) of this Section. All outstanding Bonds of any series, prior to the maturity or redemption date, are deemed to have been paid within the meaning and with the effect expressed in subsection (a) of this Section if (1) there has been deposited with the trustee or other authorized agent either (A) moneys in an amount that is sufficient or (B) direct obligations of the United States of America the principal of and the interest on which, when due, will provide moneys that, together with the moneys, if any, deposited with the trustee or other authorized agent at the same time, are sufficient to pay, when due, the principal, sinking fund installment, or redemption price, if applicable, of and interest due and to become due on the Bonds on and prior to the redemption date, sinking fund installment date, or maturity date, as the case may be, and (2) the Panel has given the trustee or other authorized agent, in form satisfactory to it, irrevocable instructions to give notice to the effect and in accordance with the procedures provided in the resolution authorizing the issuance of the Bonds. Neither direct obligations of the United States of America, moneys deposited with the trustee or other authorized agent, or principal or interest payments on the securities shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal or redemption price, if applicable, and interest on the Bonds.

(105 ILCS 5/1H-110 new)

Sec. 1H-110. Pledge of the State. The State of Illinois pledges to and agrees with the holders of Bonds that the State will not limit or alter the rights and powers vested in the Panel by this Article with respect to the issuance of obligations so as to impair the terms of any contract made by the Panel with these holders or in any way impair the rights and remedies of these holders until the Bonds, together with interest on the Bonds, interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceedings by or on behalf of these holders, are fully met and discharged or provisions made for their payment. The Panel is authorized to include this pledge and agreement of the State in any resolution or contract with the holders of Bonds.

(105 ILCS 5/1H-115 new)

Sec. 1H-115. Statutory lien. Any pledge, assignment, lien, or security interest for the benefit of the holders of Bonds or bond anticipation notes, if any, created pursuant to this Article are valid and binding from the time the Bonds are issued, without any physical delivery or further act, and are valid and binding as against and prior to any claims of all other parties having claims of any kind in tort, contract, or otherwise against the State, the Panel, the district, or any other person, irrespective of whether the other parties have notice.

(105 ILCS 5/1H-120 new)

Sec. 1H-120. State or district not liable on obligations. Obligations shall not be deemed to constitute (i) a debt or liability of the State, the district, or any political subdivision of the State or district other than the Panel or (ii) a pledge of the full faith and credit of the State, the district, or any political subdivision of the State or district other than the Panel but shall be payable solely from the funds and revenues provided for in this Article. The issuance of obligations shall not directly, indirectly, or contingently obligate the State, the district, or any political subdivision of the State or district other than the Panel to levy any form of taxation therefor or to make any appropriation for their payment. Nothing in this Section shall prevent or be construed to prevent the Panel from pledging its full faith and credit to the payment of obligations. Nothing in this Article shall be construed to authorize the Panel to create a debt of the State or the district within the meaning of the Constitution or laws of Illinois, and all obligations issued by the Panel pursuant to the provisions of this Article are payable and shall state that they are payable solely from the funds and revenues pledged for their payment in accordance with the resolution authorizing their issuance or any trust indenture executed as security therefor. The State or the district shall not in any event be liable for the payment of the principal of or interest on any obligations of the Panel or for the performance of any pledge, obligation, or agreement of any kind whatsoever that may be undertaken by the Panel. No breach of any such pledge, obligation, or agreement may impose any liability upon the State or the district or any charge upon their general credit or against their taxing power.

(105 ILCS 5/1H-125 new)

Sec. 1H-125. Obligations as legal investments. The obligations issued under the provisions of this Article are hereby made securities in which all public officers and bodies of this State, all political subdivisions of this State, all persons carrying on an insurance business, all banks, bankers, trust companies, savings banks, and savings associations (including savings and loan associations, building and loan associations, investment companies, and other persons carrying on a banking business), and all credit unions, pension funds, administrators, and guardians who are or may be authorized to invest in bonds or in other obligations of the State may properly and legally invest funds, including capital, in their control or belonging to them. The obligations are also hereby made securities that may be deposited with and may be received by all public officers and bodies of the State, all political subdivisions of the State, and public corporations for any purpose for which the deposit of bonds or other obligations of the State is authorized.

(105 ILCS 5/1H-130 new)

Sec. 1H-130. Complete authority. This Article, without reference to any other law, shall be deemed full and complete authority for the issuance of Bonds and bond anticipation notes as provided in this Article.

(105 ILCS 5/1H-135 new)

Sec. 1H-135. Tax anticipation warrants, tax anticipation notes, revenue anticipation certificated or notes, general State aid anticipation certificates, and lines of credit. A Panel shall have the same power as a school district to do the following:

(1) issue tax anticipation warrants under Section 17-16 of this Code;

(2) issue tax anticipation notes under the Tax Anticipation Note Act;

(3) issue revenue anticipation certificates or notes under the Revenue Anticipation Act;

(4) issue general State aid anticipation certificates under Section 18-18 of this Code; and

(5) establish and utilize lines of credit under Section 17-17 of this Code.

Tax anticipation warrants, tax anticipation notes, revenue anticipation certificates or notes, general State aid anticipation certificates, and lines of credit are considered borrowing from sources other than the State and are subject to Section 1H-65 of this Code.

(105 ILCS 5/1H-140 new)

Sec. 1H-140. Reports.

(a) The Panel, upon taking office and annually thereafter, shall prepare and submit to the Governor, General Assembly, and State Superintendent a report that includes the audited financial statement for the preceding fiscal year prepared and audited in compliance with the provisions of Sections 3-7 and 3-15.1 of this Code, an approved financial plan, and a statement of the major steps necessary to accomplish the objectives of the financial plan.

(b) Annual reports must be submitted on or before March 1 of each year.

(c) The requirement for reporting to the General Assembly shall be satisfied by filing copies of the report as provided in Section 3.1 of the General Assembly Organization Act and by filing additional copies with the State Government Report Distribution Center for the General Assembly as required under subdivision (t) of Section 7 of the State Library Act.

(105 ILCS 5/1H-145 new)

Sec. 1H-145. Audit of Panel. The State Superintendent may require a separate audit of the Panel, otherwise the activities of the Panel must be included in the scope of the audit of the school district. A copy of the audit report covering the Panel must be submitted to the State Superintendent.

(105 ILCS 5/1H-150 new)

Sec. 1H-150. Assistance by State agencies, units of local government, and school districts. The district shall render such services to and permit the use of its facilities and resources by the Panel at no charge as may be requested by the Panel. Any State agency, unit of local government, or school district may, within its lawful powers and duties, render such services to the Panel as may be requested by the Panel. Upon request of the Panel, any State agency, unit of local government, or school district is authorized and empowered to loan to the Panel such officers and employees as the Panel may deem necessary in carrying out its functions and duties. Officers and employees so transferred shall not lose or forfeit their employment status or rights.

(105 ILCS 5/1H-155 new)

Sec. 1H-155. Property of Panel exempt from taxation. The property of the Panel is exempt from taxation.

(105 ILCS 5/1H-160 new)

Sec. 1H-160. Sanctions.

(a) No member, officer, employee, or agent of the district may commit the district to any contract or other obligation or incur any liability on behalf of the district for any purpose if the amount of the contract, obligation, or liability is in excess of the amount authorized for that purpose then available under the financial plan and budget then in effect.

(b) No member, officer, employee, or agent of the district may commit the district to any contract or other obligation on behalf of the district for the payment of money for any purpose required to be approved by the Panel unless the contract or other obligation has been approved by the Panel.

(c) No member, officer, employee, or agent of the district may take any action in violation of any valid order of the Panel, may fail or refuse to take any action required by any such order, may prepare, present, certify, or report any information, including any projections or estimates, for the Panel or any of its agents that is false or misleading, or, upon learning that any such information is false or misleading, may fail promptly to advise the Panel or its agents.

(d) In addition to any penalty or liability under any other law, any member, officer, employee, or agent of the district who violates subsection (a), (b), or (c) of this Section is subject to appropriate administrative discipline as may be imposed by the Panel, including, if warranted, suspension from duty without pay, removal from office, or termination of employment.

(105 ILCS 5/1H-165 new)

Sec. 1H-165. Abolition of Panel. The Panel shall be abolished 10 years after its creation or one year after all its obligations issued under the provisions of this Article have been fully paid and discharged, whichever comes later. However, the State Board, upon recommendation of the Panel and if no obligations are outstanding, may abolish the Panel at any time after the Panel has been in existence for 3 years. Upon the abolition of the Panel, all of its records shall be transferred to the State Board and any property of the Panel shall pass to and be vested in the State Board.

(105 ILCS 5/1H-170 new)

Sec. 1H-170. Indemnification; legal representation; limitations of actions after abolition.

(a) The Panel may indemnify any member, officer, employee, or agent who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, by reason of the fact that he or she was a member, officer, employee, or agent of the Panel, against expenses (including attorney's fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit, or proceeding) if he or she acted in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the Panel and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, or conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith in a manner that he or she reasonably believed to be in or not opposed to the best interests of the Panel and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

To the extent that a member, officer, employee, or agent of the Panel has been successful, on the merits or otherwise, in the defense of any such action, suit, or proceeding referred to in this subsection (a) or in defense of any claim, issue, or matter therein, he or she shall be indemnified against expenses, including attorney's fees, actually and reasonably incurred by him or her in connection therewith. Any such indemnification shall be made by the Panel only as authorized in the specific case, upon a determination that indemnification of the member, officer, employee, or agent is proper in the circumstances because he or she has met the applicable standard of conduct. The determination shall be made (i) by the Panel by a majority vote of a quorum consisting of members who are not parties to the action, suit, or proceeding or (ii) if such a quorum is not obtainable or, even if obtainable, a quorum of disinterested members so directs, by independent legal counsel in a written opinion.

Reasonable expenses incurred in defending an action, suit, or proceeding shall be paid by the Panel in advance of the final disposition of the action, suit, or proceeding, as authorized by the Panel in the specific case, upon receipt of an undertaking by or on behalf of the member, officer, employee, or agent to repay the amount, unless it is ultimately determined that he or she is entitled to be indemnified by the Panel as authorized in this Section.

Any member, officer, employee, or agent against whom any action, suit, or proceeding is brought may employ his or her own attorney to appear on his or her behalf.

The right to indemnification accorded by this Section shall not limit any other right to indemnification to which the member, officer, employee, or agent may be entitled. Any rights under this Section shall inure to the benefit of the heirs, executors, and administrators of any member, officer, employee, or agent of the Panel.

The Panel may purchase and maintain insurance on behalf of any person who is or was a member, officer, employee, or agent of the Panel against any liability asserted against him or her and incurred by him or her in any such capacity or arising out of his or her status as such, whether or not the Panel would have the power to indemnify him or her against liability under the provisions of this Section.

(b) The Panel shall be considered a State agency for purposes of receiving representation by the Attorney General. Members, officers, employees, and agents of the Panel shall be entitled to representation and indemnification under the State Employee Indemnification Act.

(c) Abolition of the Panel pursuant to Section 1H-165 of this Code shall bar any remedy available against the Panel, its members, employees, or agents for any right or claim existing or any liability incurred prior to the abolition, unless the action or other proceeding is commenced prior to the expiration of 2 years after the date of the abolition.

(105 ILCS 5/8-6) (from Ch. 122, par. 8-6)

Sec. 8-6. Custody of school funds.

The school treasurer shall have custody of the school funds and shall keep in a cash book separate cash balances. In the cash book he shall enter in separate accounts the balance, total of all moneys received in each fund, and the total of the orders countersigned or checks signed with respect to each fund, and extend the balances and the aggregate cash balance for all funds balance at least monthly. The treasurer and shall reconcile such balances balance with the accounting or bookkeeping department of the district in conformity with a template provided by the State Board of Education monthly, and a copy of such a reconciliation must be submitted by the school board to the State Board of Education within 30 days after receipt from the treasurer.

(Source: Laws 1961, p. 31.)

(105 ILCS 5/10-16.9 new)

Sec. 10-16.9. Bank reconciliation reports. Within 30 days after receipt of the book reconciliation reports from the school treasurer as required pursuant to Section 8-6 of this Code, the school board shall submit to the State Board of Education a reconciliation report in conformity with the template provided by the State Board of Education.

(105 ILCS 5/17-1) (from Ch. 122, par. 17-1)

Sec. 17-1. Annual Budget. The board of education of each school district under 500,000 inhabitants shall, within or before the first quarter of each fiscal year, adopt and file with the State Board of Education an annual balanced budget which it deems necessary to defray all necessary expenses and liabilities of the district, and in such annual budget shall specify the objects and purposes of each item and amount needed for each object or purpose.

The budget shall be entered upon a School District Budget form prepared and provided by the State Board of Education and therein shall contain a statement of the cash on hand at the beginning of the fiscal year, an estimate of the cash expected to be received during such fiscal year from all sources, an estimate of the expenditures contemplated for such fiscal year, and a statement of the estimated cash expected to be on hand at the end of such year. The estimate of taxes to be received may be based upon the amount of actual cash receipts that may reasonably be expected by the district during such fiscal year, estimated from the experience of the district in prior years and with due regard for other circumstances that may substantially affect such receipts. Nothing in this Section shall be construed as requiring any district to change or preventing any district from changing from a cash basis of financing to a surplus or deficit basis of financing; or as requiring any district to change or preventing any district from changing its system of accounting.

To the extent that a school district's budget is not balanced, the district shall also adopt and file with the State Board of Education a deficit reduction plan to balance the district's budget within 3 years. The deficit reduction plan must be filed at the same time as the budget, but the State Superintendent of Education may extend this deadline if the situation warrants.

If, as the result of an audit performed in compliance with Section 3-7 of this Code, the resulting annual financial report required to be submitted pursuant to Section 3-15.1 of this Code reflects a deficit, as defined for purposes of the preceding paragraph; then the district shall, within 30 days after acceptance of such audit report, submit a deficit reduction plan.

The board of education of each district shall fix a fiscal year therefor. If the beginning of the fiscal year of a district is subsequent to the time that the tax levy due to be made in such fiscal year shall be made, then such annual budget shall be adopted prior to the time such tax levy shall be made. The failure by a board of education of any district to adopt an annual budget, or to comply in any respect with the provisions of this Section, shall not affect the validity of any tax levy of the district otherwise in conformity with the law. With respect to taxes levied either before, on, or after the effective date of this amendatory Act of the 91st General Assembly, (i) a tax levy is made for the fiscal year in which the levy is due to be made regardless of which fiscal year the proceeds of the levy are expended or are intended to be expended, and (ii) except as otherwise provided by law, a board of education's adoption of an annual budget in conformity with this Section is not a prerequisite to the adoption of a valid tax levy and is not a limit on the amount of the levy.

Such budget shall be prepared in tentative form by some person or persons designated by the board, and in such tentative form shall be made conveniently available to public inspection for at least 30 days prior to final action thereon. At least 1 public hearing shall be held as to such budget prior to final action thereon. Notice of availability for public inspection and of such public hearing shall be given by publication in a newspaper published in such district, at least 30 days prior to the time of such hearing. If there is no newspaper published in such district, notice of such public hearing shall be given by posting notices thereof in 5 of the most public places in such district. It shall be the duty of the secretary of such board to make such tentative budget available to public inspection, and to arrange for such public hearing. The board may from time to time make transfers between the various items in any fund not exceeding in the aggregate 10% of the total of such fund as set forth in the budget. The board may from time to time amend such budget by the same procedure as is herein provided for its original adoption.

Beginning July 1, 1976, the board of education, or regional superintendent, or governing board responsible for the administration of a joint agreement shall, by September 1 of each fiscal year thereafter, adopt an annual budget for the joint agreement in the same manner and subject to the same requirements as are provided in this Section.

The State Board of Education shall exercise powers and duties relating to budgets as provided in Section 2-3.27 of this Code and shall require school districts to submit their annual budgets, deficit reduction plans, and other financial information, including revenue and expenditure reports and borrowing and interfund transfer plans, in such form and within the timelines designated by the State Board of Education.

By fiscal year 1982 all school districts shall use the Program Budget Accounting System.

In the case of a school district receiving emergency State financial assistance under Article 1B, the school board shall also be subject to the requirements established under Article 1B with respect to the annual budget.

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

Section 20. The Illinois Educational Labor Relations Act is amended by changing Section 2 as follows:

(115 ILCS 5/2) (from Ch. 48, par. 1702)

Sec. 2. Definitions. As used in this Act:

(a) "Educational employer" or "employer" means the governing body of a public school district, including the governing body of a charter school established under Article 27A of the School Code or of a contract school or contract turnaround school established under paragraph 30 of Section 34-18 of the School Code, combination of public school districts, including the governing body of joint agreements of any type formed by 2 or more school districts, public community college district or State college or university, a subcontractor of instructional services of a school district (other than a school district organized under Article 34 of the School Code), combination of school districts, charter school established under Article 27A of the School Code, or contract school or contract turnaround school established under paragraph 30 of Section 34-18 of the School Code, and any State agency whose major function is providing educational services. "Educational employer" or "employer" does not include (1) a Financial Oversight Panel created pursuant to Section 1A-8 of the School Code due to a district violating a financial plan or (2) an approved nonpublic special education facility that contracts with a school district or combination of school districts to provide special education services pursuant to Section 14-7.02 of the School Code, but does include a School Finance Authority created under Article 1E or 1F of the School Code and a Financial Oversight Panel created under Article 1B or 1H of the School Code. The change made by this amendatory Act of the 96th General Assembly to this paragraph (a) to make clear that the governing body of a charter school is an "educational employer" is declaratory of existing law.

(b) "Educational employee" or "employee" means any individual, excluding supervisors, managerial, confidential, short term employees, student, and part-time academic employees of community colleges employed full or part time by an educational employer, but shall not include elected officials and appointees of the Governor with the advice and consent of the Senate, firefighters as defined by subsection (g-1) of Section 3 of the Illinois Public Labor Relations Act, and peace officers employed by a State university. For the purposes of this Act, part-time academic employees of community colleges shall be defined as those employees who provide less than 3 credit hours of instruction per academic semester. In this subsection (b), the term "student" includes graduate students who are research assistants primarily performing duties that involve research or graduate assistants primarily performing duties that are pre-professional, but excludes graduate students who are teaching assistants primarily performing duties that involve the delivery and support of instruction and all other graduate assistants.

(c) "Employee organization" or "labor organization" means an organization of any kind in which membership includes educational employees, and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, employee-employer disputes, wages, rates of pay, hours of employment, or conditions of work, but shall not include any organization which practices discrimination in membership because of race, color, creed, age, gender, national origin or political affiliation.

(d) "Exclusive representative" means the labor organization which has been designated by the Illinois Educational Labor Relations Board as the representative of the majority of educational employees in an appropriate unit, or recognized by an educational employer prior to January 1, 1984 as the exclusive representative of the employees in an appropriate unit or, after January 1, 1984, recognized by an employer upon evidence that the employee organization has been designated as the exclusive representative by a majority of the employees in an appropriate unit.

(e) "Board" means the Illinois Educational Labor Relations Board.

(f) "Regional Superintendent" means the regional superintendent of schools provided for in Articles 3 and 3A of The School Code.

(g) "Supervisor" means any individual having authority in the interests of the employer to hire, transfer, suspend, lay off, recall, promote, discharge, reward or discipline other employees within the appropriate bargaining unit and adjust their grievances, or to effectively recommend such action if the exercise of such authority is not of a merely routine or clerical nature but requires the use of independent judgment. The term "supervisor" includes only those individuals who devote a preponderance of their employment time to such exercising authority.

(h) "Unfair labor practice" or "unfair practice" means any practice prohibited by Section 14 of this Act.

(i) "Person" includes an individual, educational employee, educational employer, legal representative, or employee organization.

(j) "Wages" means salaries or other forms of compensation for services rendered.

(k) "Professional employee" means, in the case of a public community college, State college or university, State agency whose major function is providing educational services, the Illinois School for the Deaf, and the Illinois School for the Visually Impaired, (1) any employee engaged in work (i) predominantly intellectual and varied in character as opposed to routine mental, manual, mechanical, or physical work; (ii) involving the consistent exercise of discretion and judgment in its performance; (iii) of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time; and (iv) requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study in an institution of higher learning or a hospital, as distinguished from a general academic education or from an apprenticeship or from training in the performance of routine mental, manual, or physical processes; or (2) any employee, who (i) has completed the courses of specialized intellectual instruction and study described in clause (iv) of paragraph (1) of this subsection, and (ii) is performing related work under the supervision of a professional person to qualify himself or herself to become a professional as defined in paragraph (l).

(l) "Professional employee" means, in the case of any public school district, or combination of school districts pursuant to joint agreement, any employee who has a certificate issued under Article 21 or Section 34-83 of the School Code, as now or hereafter amended.

(m) "Unit" or "bargaining unit" means any group of employees for which an exclusive representative is selected.

(n) "Confidential employee" means an employee, who (i) in the regular course of his or her duties, assists and acts in a confidential capacity to persons who formulate, determine and effectuate management policies with regard to labor relations or who (ii) in the regular course of his or her duties has access to information relating to the effectuation or review of the employer's collective bargaining policies.

(o) "Managerial employee" means an individual who is engaged predominantly in executive and management functions and is charged with the responsibility of directing the effectuation of such management policies and practices.

(p) "Craft employee" means a skilled journeyman, craft person, and his or her apprentice or helper.

(q) "Short-term employee" is an employee who is employed for less than 2 consecutive calendar quarters during a calendar year and who does not have a reasonable expectation that he or she will be rehired by the same employer for the same service in a subsequent calendar year. Nothing in this subsection shall affect the employee status of individuals who were covered by a collective bargaining agreement on the effective date of this amendatory Act of 1991.

(Source: P.A. 95-331, eff. 8-21-07; 96-104, eff. 1-1-10.)

Section 99. Effective date. This Act takes effect upon becoming law.