State of Illinois
92nd General Assembly
Legislation

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[ House Amendment 002 ]


92_SB0616eng

 
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 1        AN ACT concerning  school  district  financial  oversight
 2    panels.

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

 5        Section 5.   The  School  Code  is  amended  by  changing
 6    Sections 1B-4, 1B-5, and 1B-8 as follows:

 7        (105 ILCS 5/1B-4) (from Ch. 122, par. 1B-4)
 8        Sec.   1B-4.    Establishment   of   Emergency  Financial
 9    Assistance and Financial Oversight Panel.  When  approved  by
10    the  State  Board  under  this Article there is established a
11    body both corporate and politic to be known as the "(Name  of
12    School  District)  Financial  Oversight Panel" which, in such
13    name, shall exercise all authority vested in such  Panels  by
14    this Article.
15        Upon  the affirmative vote of not less than a majority of
16    its full membership, a local board of education of  a  school
17    district   that   has  been  certified  to  be  in  financial
18    difficulty under Section 1A-8 may petition the State Board of
19    Education  for  emergency  financial   assistance   and   the
20    establishment of a Financial Oversight Panel for the district
21    as  provided  under  this  Article.   In  addition, the State
22    Superintendent of Education may petition the State  Board  of
23    Education  for  the  establishment  of  a Financial Oversight
24    Panel, with or without emergency  financial  assistance,  for
25    any  district  that  has  failed to comply with its financial
26    plan and has had the plan rescinded by  the  State  Board  as
27    provided   in   Section  1A-8.   No  petition  for  emergency
28    financial assistance shall be approved  by  the  State  Board
29    unless there is also established a Financial Oversight Panel.
30        In  determining  whether  to allow the petition the State
31    Board shall consider the following factors among others  that
 
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 1    it deems relevant:
 2        (a)  whether  the  petition  is  in  the best educational
 3    interests of the pupils of the district;
 4        (b)  whether the petition is in the near  and  long  term
 5    best financial interests of the district;
 6        (c)  whether the district has sufficient pupil enrollment
 7    and  assessed  valuation  to  provide and maintain recognized
 8    schools;
 9        (d)  whether the petition is in the best interests of the
10    other schools of the area and the educational welfare of  all
11    of the pupils therein; and
12        (e)  whether the board of education has complied with the
13    requirements of Section 1A-8.
14        The  State  Board  may  vote  to either grant or deny the
15    petition  based  upon  the  recommendation   of   the   State
16    Superintendent  of  Education  and  any  other  testimony  or
17    documentary  evidence  the  State  Board deems relevant.  The
18    decision of the State Board whether  to  grant  or  deny  the
19    petition  shall  be  final.  If an approved petition requests
20    emergency financial assistance, the school district shall  be
21    eligible for emergency State financial assistance, subject to
22    the other provisions of this Article.
23        A   Financial  Oversight  Panel  created  pursuant  to  a
24    petition filed by a school district may  petition  the  State
25    Board  of Education to be reconstituted as a Panel having the
26    powers, duties, legal  status,  and  privileges  of  a  Panel
27    established  by  the  State Board for a district that has had
28    its financial plan rescinded by the State Board for violating
29    that plan as provided in Section 1A-8.  The State  Board  may
30    grant  such  petition  upon  determining that approval of the
31    petition is in the best financial interests of the  district.
32    Upon  approval of the petition, the Panel shall have the same
33    powers, duties, legal  status,  and  privileges  of  a  Panel
34    established  for  a  district that has had its financial plan
 
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 1    rescinded by the State  Board  for  violating  that  plan  as
 2    provided  in  Section 1A-8.  The changes made to this Section
 3    by this amendatory Act of the 92nd General Assembly apply  to
 4    all  Financial  Oversight Panels, whether created before, on,
 5    or after the effective date of this amendatory Act.
 6    (Source: P.A. 88-618, eff. 9-9-94.)

 7        (105 ILCS 5/1B-5) (from Ch. 122, par. 1B-5)
 8        Sec. 1B-5.   Appointment  of  Panel;  meetings;  reports;
 9    dissolution   of   Panel.  When  a  petition  establishing  a
10    Financial Oversight Panel for emergency financial  assistance
11    for  a  school  district  is allowed by the State Board under
12    Section 1B-4, the State Superintendent shall within  10  days
13    thereafter  appoint  5  3  members  to  serve  at  the  State
14    Superintendent's  pleasure on a Financial Oversight Panel for
15    the district, or for a Panel in which  3  members  have  been
16    appointed before the effective date of this amendatory Act of
17    the  92nd  General  Assembly,  the State Superintendent shall
18    appoint 2 additional members. The State Superintendent  shall
19    designate  one  of  the  members of the Panel to serve as its
20    Chairman.  In the event of vacancy or resignation  the  State
21    Superintendent  shall  appoint  a successor within 10 days of
22    receiving notice thereof.
23        Members of the Panel shall be selected primarily  on  the
24    basis   of   their  experience  and  education  in  financial
25    management, with consideration given to persons knowledgeable
26    in education finance.  A member of the Panel  may  not  be  a
27    board  member or employee of the district for which the Panel
28    is constituted, nor may a  member  have  a  direct  financial
29    interest in that district.
30        Panel  members  shall serve without compensation, but may
31    be  reimbursed  for  travel  and  other  necessary   expenses
32    incurred  in  the performance of their official duties by the
33    State Board.  The amount reimbursed Panel members  for  their
 
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 1    expenses  shall  be charged to the school district as part of
 2    any emergency financial assistance and incorporated as a part
 3    of the terms and conditions for repayment of such  assistance
 4    or shall be deducted from the district's general State aid as
 5    provided in Section 1B-8.
 6        The  first meeting of the Panel shall be held at the call
 7    of the Chairman.  The Panel may elect such other officers  as
 8    it  deems  appropriate.   The Panel shall prescribe the times
 9    and places for its meetings and the manner in  which  regular
10    and special meetings may be called, and shall comply with the
11    Open Meetings Act.
12        Three Two members of the Panel shall constitute a quorum,
13    and  the  affirmative  vote of 3 2 members shall be necessary
14    for any decision or action to be taken by the Panel.
15        The Panel and the State  Superintendent  shall  cooperate
16    with  each  other in the exercise of their respective powers.
17    The Panel shall report not later than September 1 annually to
18    the State Board and the State Superintendent with respect  to
19    its  activities  and the condition of the school district for
20    the previous fiscal year.
21        Any Financial  Oversight  Panel  established  under  this
22    Article  shall  remain in existence for not less than 3 years
23    nor more than 10 years from the date the State  Board  grants
24    the petition under Section 1B-4.  If after 3 years the school
25    district  has  repaid  all  of its obligations resulting from
26    emergency State  financial  assistance  provided  under  this
27    Article  and  has improved its financial situation, the board
28    of education may, not more frequently than  once  in  any  12
29    month  period,  petition  the  State  Board  to  dissolve the
30    Financial   Oversight   Panel,   terminate   the    oversight
31    responsibility, and remove the district's certification under
32    Section  1A-8  as  a  district  in  financial difficulty.  In
33    acting  on  such  a  petition  the  State  Board  shall  give
34    additional  weight  to  the  recommendations  of  the   State
 
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 1    Superintendent and the Financial Oversight Panel.
 2        The  changes  made to this Section by this amendatory Act
 3    of the 92nd General Assembly apply to all Financial Oversight
 4    Panels, whether created before, on, or  after  the  effective
 5    date of this amendatory Act.
 6    (Source: P.A. 88-618, eff. 9-9-94.)

 7        (105 ILCS 5/1B-8) (from Ch. 122, par. 1B-8)
 8        Sec. 1B-8. School District Emergency Financial Assistance
 9    Fund;  loans  and  grants.   There  is  created  in the State
10    Treasury a special fund to be known as  the  School  District
11    Emergency Financial Assistance Fund (the "Fund").  The School
12    District Emergency Financial Assistance Fund shall consist of
13    appropriations,   grants  from  the  federal  government  and
14    donations from any public or private source.  Moneys  in  the
15    Fund  may  be  appropriated  only  to the State Board for the
16    purposes of this Article.  The appropriation may be allocated
17    and expended by the State Board as grants or loans to  school
18    districts  which  are the subject of an approved petition for
19    emergency financial assistance under Section 1B-4.  From  the
20    amount allocated to each such school district the State Board
21    shall  identify  a sum sufficient to cover all approved costs
22    of  the  Financial  Oversight  Panel  established   for   the
23    respective  school  district.   If  the State Board and State
24    Superintendent  of  Education  have  not  approved  emergency
25    financial assistance in conjunction with the appointment of a
26    Financial Oversight Panel, the Panel's approved  costs  shall
27    be  paid  from  deductions  from the district's general State
28    aid.
29        The Financial Oversight Panel may prepare and  file  with
30    the  State  Superintendent a proposal for emergency financial
31    assistance for the school district  and  for  the  operations
32    budget  of the Panel.  No expenditures shall be authorized by
33    the State Superintendent until he has approved  the  proposal
 
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 1    of  the  Panel,  either as submitted or in such lesser amount
 2    determined by the State Superintendent.
 3        The maximum amount of an emergency  financial  assistance
 4    loan which may be allocated to any school district under this
 5    Article, including moneys necessary for the operations of the
 6    Panel,  shall  not  exceed  $1000  times the number of pupils
 7    enrolled in the school district during the school year ending
 8    June 30 prior to the date of approval by the State  Board  of
 9    the petition for emergency financial assistance, as certified
10    to the local board and the Panel by the State Superintendent.
11    An emergency financial assistance grant shall not exceed $250
12    times the number of such pupils.  A district may receive both
13    a  loan and a grant.  Any moneys provided to a local board of
14    education as a loan shall not be subject to any limitation on
15    debt established under Article 19 of this Code.
16        The payment of an emergency  State  financial  assistance
17    grant  or  loan  shall  be  subject  to  appropriation by the
18    General  Assembly.  Emergency  State   financial   assistance
19    allocated  and  paid  to a school district under this Article
20    may be applied to any fund or  funds  from  which  the  local
21    board  of  education  of  that district is authorized to make
22    expenditures by law.
23        Any  emergency  financial  assistance  proposed  by   the
24    Financial   Oversight   Panel   and  approved  by  the  State
25    Superintendent may be paid in its entirety during the initial
26    year of the Panel's existence or spread in equal or declining
27    amounts over a period of years not to exceed  the  period  of
28    the  Panel's  existence.   All  loan  payments  made from the
29    School District Emergency Financial  Assistance  Fund  for  a
30    school  district  shall be required to be repaid, with simple
31    interest over the term of the loan at a rate equal to 50%  of
32    the discount rate on one-year United States Treasury Bills as
33    determined  by  the last auction of those one-year bills that
34    precedes the date on which the district's loan is approved by
 
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 1    the State Board of Education, not later  than  the  date  the
 2    Financial  Oversight  Panel ceases to exist.  The Panel shall
 3    establish and the  State  Superintendent  shall  approve  the
 4    terms  and conditions, including the schedule, of repayments.
 5    The schedule shall provide for repayments commencing  July  1
 6    of each year. Repayment shall be incorporated into the annual
 7    budget  of  the school district and may be made from any fund
 8    or funds of the district in which there are moneys available.
 9    When moneys are repaid as provided herein they shall  not  be
10    made  available  to  the  local  board  for  further  use  as
11    emergency financial assistance under this Article at any time
12    thereafter.   All  repayments required to be made by a school
13    district shall be received by the State Board  and  deposited
14    in the School District Emergency Financial Assistance Fund.
15        The  board  of  any  school district that receives a loan
16    authorized under this Section shall provide  for  a  separate
17    tax  for  emergency  financial assistance repayment purposes.
18    The separate tax levy shall be in  an  amount  sufficient  to
19    repay  the emergency financial assistance under the terms and
20    conditions set  by  the  Panel  and  approved  by  the  State
21    Superintendent.  Notwithstanding any law to the contrary, the
22    separate   tax   levy   for  emergency  financial  assistance
23    repayment shall not be subject to referendum approval.
24        The changes made to this Section by this  amendatory  Act
25    of the 92nd General Assembly apply to all Financial Oversight
26    Panels,  whether  created  before, on, or after the effective
27    date of this amendatory Act.
28        In  establishing  the  terms  and  conditions   for   the
29    repayment  obligation  of the school district the Panel shall
30    annually determine whether a separate local property tax levy
31    is required.  The board of any school  district  with  a  tax
32    rate for educational purposes for the prior year of less than
33    120%  of the maximum rate for educational purposes authorized
34    by Section 17-2 shall provide for a  separate  tax  levy  for
 
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 1    emergency  financial assistance repayment purposes.  Such tax
 2    levy shall not be subject to referendum approval.  The amount
 3    of the levy shall be equal to the amount  necessary  to  meet
 4    the   annual   repayment   obligations  of  the  district  as
 5    established by the Panel, or 20% of  the  amount  levied  for
 6    educational  purposes  for the prior year, whichever is less.
 7    However, no district shall be required to levy the tax if the
 8    district's operating tax rate  as  determined  under  Section
 9    18-8  or  18-8.05 exceeds 200% of the district's tax rate for
10    educational purposes for the prior year.
11    (Source: P.A. 90-548, eff. 1-1-98; 90-802, eff. 12-15-98.)

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

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