Bill Amendment: IL SB3391 | 2025-2026 | 104th General Assembly

NOTE: For additional amemendments please see the Bill Drafting List

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Bill Title: SCH CD-CHARTER SCHOOL-CLOSURE

Status: 2026-05-28 - Alternate Chief Sponsor Changed to Rep. Aarón M. Ortíz [SB3391 Detail]

Download: Illinois-2025-SB3391-Senate_Amendment_002.html

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Sen. Celina Villanueva

Filed: 5/5/2026

 

 

 

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AMENDMENT TO SENATE BILL 3391
AMENDMENT NO. ______. Amend Senate Bill 3391 by replacing
everything after the enacting clause with the following:
"Section 1. This Act may be referred to as the Charter
School Closure Financial Accountability Law.
Section 5. Findings. The General Assembly finds and
declares all of the following:
(1) Public funds and public property provided to
charter schools must be protected and used for students'
education.
(2) Charter schools in this State may close during a
school year, and when they do there is a risk that
students, employees, and public assets will suffer harm
while the charter operator faces no meaningful financial
accountability.
(3) Current law and administrative guidance address

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closure procedures but do not uniformly require a
prefunded financial mechanism sufficient to cover
transition costs, severance, and the return of publicly
funded property.
(4) It is, therefore, necessary to require charter
operators to maintain closure reserves, require return of
public assets purchased with public funds, provide
remedies to recover costs incurred by authorizers and
students' home districts, and impose penalties for
mid-year abandonment that is negligent or in bad faith.
Section 10. The School Code is amended by changing
Sections 27A-3 and 27A-9 and by adding Sections 27A-9.5,
27A-10.15, and 27A-10.20 as follows:
(105 ILCS 5/27A-3)
Sec. 27A-3. Definitions. For purposes of this Article:
"At-risk pupil" means a pupil who, because of physical,
emotional, socioeconomic, or cultural factors, is less likely
to succeed in a conventional educational environment.
"Authorizer" means an entity authorized under this Article
to review applications, decide whether to approve or reject
applications, enter into charter contracts with applicants,
oversee charter schools, and decide whether to renew, not
renew, or revoke a charter.
"Charter holder" means the entity that has entered into a

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charter agreement with an authorizer under this Article and is
legally responsible for the operation of the charter school.
"Charter school" means a school operated under an
agreement between an authorizer and a charter holder.
"Closure event" means any termination, revocation,
nonrenewal, or voluntary cessation of operations of a charter
school resulting in the charter school's permanent cessation
of instruction to enrolled pupils that occurs during the
school year.
"Closure security" means a financial instrument listed
under subsection (a) of Section 27A-10.15.
"District signed-agreement requirements" means any
standard provisions that are required in any agreement entered
into by an authorizer.
"Financial distress" means one or more of the following
conditions, as determined by an authorizer based on documented
evidence:
(1) failure to timely meet payroll, benefits, or other
operating obligations;
(2) material audit findings indicating insolvency,
negative cash flow, or substantial doubt as to a charter
school's ability to continue as a going concern;
(3) default or imminent default on debt or lease
obligations;
(4) failure to maintain required closure security or
other financial reserves required under this Article;

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(5) evidence of misuse or misappropriation of public
funds; or
(6) any financial condition that poses an imminent
risk to the continued operation of a charter school or to
the orderly transition of enrolled pupils.
"Financial intervention" means a temporary, limited
assumption of financial oversight authority by an authorizer
for the purpose of stabilizing a charter school and protecting
students, employees, and public assets.
"Local school board" means the duly elected or appointed
school board or board of education of a public school
district, including special charter districts and school
districts located in cities having a population of more than
500,000, organized under the laws of this State.
"Public assets" means equipment, furniture, books,
instructional technology, real estate, or any other real or
personal property purchased or leased with public funds or
purchased with funds subject to public oversight.
"State Board" means the State Board of Education.
"Union neutrality clause" means a provision whereby a
charter school agrees: (1) to be neutral regarding the
unionization of any of its employees, such that the charter
school will not at any time express a position on the matter of
whether its employees will be unionized and such that the
charter school will not threaten, intimidate, discriminate
against, retaliate against, or take any adverse action against

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any employees based on their decision to support or oppose
union representation; (2) to provide any bona fide labor
organization access at reasonable times to areas in which the
charter school's employees work for the purpose of meeting
with employees to discuss their right to representation,
employment rights under the law, and terms and conditions of
employment; and (3) that union recognition shall be through a
majority card check verified by a neutral third-party
arbitrator mutually selected by the charter school and the
bona fide labor organization through alternate striking from a
panel of arbitrators provided by the Federal Mediation and
Conciliation Service. As used in this definition, "bona fide
labor organization" means a labor organization recognized
under the National Labor Relations Act or the Illinois
Educational Labor Relations Act. As used in this definition,
"employees" means non-represented, non-management, and
non-confidential employees of a charter school.
(Source: P.A. 103-175, eff. 6-30-23; 103-416, eff. 8-4-23;
103-605, eff. 7-1-24.)
(105 ILCS 5/27A-9)
Sec. 27A-9. Term of charter; renewal.
(a) An initial charter shall be granted for a period of 5
school years. A charter may be renewed in incremental periods
not to exceed 10 school years. Authorizers shall ensure that
every charter granted on or after January 1, 2017 includes

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standards and goals for academic, organizational, and
financial performance. A charter must meet all standards and
goals for academic, organizational, and financial performance
set forth by the authorizer in order to be renewed for a term
in excess of 5 years but not more than 10 years. If an
authorizer fails to establish standards and goals, a charter
shall not be renewed for a term in excess of 5 years. Nothing
contained in this Section shall require an authorizer to grant
a full 10-year renewal term to any particular charter school,
but an authorizer may award a full 10-year renewal term to
charter schools that have a demonstrated track record of
improving student performance.
(b) A charter school renewal proposal submitted to the
local school board or the State Board, as the chartering
entity, shall contain:
(1) a report on the progress of the charter school in
achieving the goals, objectives, pupil performance
standards, content standards, and other terms of the
initial approved charter proposal; and
(2) a financial statement that discloses the costs of
administration, instruction, and other spending categories
for the charter school that is understandable to the
general public and that will allow comparison of those
costs to other schools or other comparable organizations,
in a format required by the State Board.
(c) A charter may be revoked or not renewed if the local

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school board or the State Board, as the chartering entity,
clearly demonstrates that the charter school did any of the
following, or otherwise failed to comply with the requirements
of this law:
(1) Committed a material violation of any of the
conditions, standards, or procedures set forth in the
charter.
(2) Failed to meet or make reasonable progress toward
achievement of the content standards or pupil performance
standards identified in the charter.
(3) Failed to meet generally accepted standards of
fiscal management.
(4) Violated any provision of law from which the
charter school was not exempted.
(5) Failed to execute a charter contract after good
faith negotiations in accordance with Section 27A-9.5.
In the case of revocation, the local school board or the
State Board, as the chartering entity, shall notify the
charter school in writing of the reason why the charter is
subject to revocation. The charter school shall submit a
written plan to the local school board or the State Board,
whichever is applicable, to rectify the problem. The plan
shall include a timeline for implementation, which shall not
exceed 2 years or the date of the charter's expiration,
whichever is earlier. If the local school board or the State
Board, as the chartering entity, finds that the charter school

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has failed to implement the plan of remediation and adhere to
the timeline, then the chartering entity shall revoke the
charter. Except in situations of an emergency where the
health, safety, or education of the charter school's students
is at risk, the revocation shall take place at the end of a
school year. Nothing in this Section shall be construed to
prohibit an implementation timetable that is less than 2 years
in duration. No local school board may arbitrarily or
capriciously revoke or not renew a charter. Except for
extenuating circumstances outlined in this Section, if a local
school board revokes or does not renew a charter, it must
ensure that all students currently enrolled in the charter
school are placed in schools that are higher performing than
that charter school, as defined in the State's federal Every
Student Succeeds Act accountability plan. In determining
whether extenuating circumstances exist, a local school board
must detail, by clear and convincing evidence, that factors
unrelated to the charter school's accountability designation
outweigh the charter school's academic performance.
(d) (Blank).
(e) Notice of a local school board's decision to deny,
revoke, or not renew a charter shall be provided to the State
Board.
The State Board may reverse a local board's decision to
revoke or not renew a charter if the State Board finds that the
charter school or charter school proposal (i) is in compliance

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with this Article and (ii) is in the best interests of the
students it is designed to serve. The State Board may
condition the granting of an appeal on the acceptance by the
charter school of funding in an amount less than that
requested in the proposal submitted to the local school board.
The State Board must appoint and utilize a hearing officer for
any appeals conducted under this subsection. Final decisions
of the State Board are subject to judicial review under the
Administrative Review Law.
(f) Notwithstanding other provisions of this Article, if
the State Board on appeal reverses a local board's decision or
if a charter school is approved by referendum, the State Board
shall act as the authorized chartering entity for the charter
school and shall perform all functions under this Article
otherwise performed by the local school board. The State Board
shall report the aggregate number of charter school pupils
resident in a school district to that district and shall
notify the district of the amount of funding to be paid by the
State Board to the charter school enrolling such students. The
charter school shall maintain accurate records of daily
attendance and student enrollment and shall enter data on the
students served, their characteristics, their particular
needs, the programs in which they participate, and their
academic achievement into the statewide student information
system established by the State Board. The State Board shall
withhold from funds otherwise due the district the funds

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authorized by this Article to be paid to the charter school and
shall pay such amounts to the charter school in quarterly
installments, calculated as follows:
(1) The amount of the first quarterly payment shall be
based on the projected number of students who will be
enrolled in the charter school in the upcoming school
year, multiplied by one-fourth of the resident district's
per capita tuition amount. Each charter school shall
submit its projected enrollment by no later than August 1
of each year on a form provided by the State Board for this
purpose.
(2) The amount of the second quarterly payment shall
be calculated such that the aggregate amount of the first
and second quarterly installments is equal to the number
of students reported as enrolled at the charter school on
October 1 in the State Board's student information system,
multiplied by one-half of the resident district's per
capita tuition amount.
(3) The amount of the third quarterly payment shall be
based on the number of students enrolled in the charter
school on January 1, multiplied by one-fourth of the
resident district's per capita tuition amount. Each
charter school shall submit its January 1 enrollment by no
later than January 5 of each year on a form provided by the
State Board for this purpose.
(4) The amount of the fourth quarterly payment shall

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be calculated such that the aggregate amount of the third
and fourth installments is equal to the number of students
reported as enrolled at the charter school on March 1 in
the State Board's student information system, multiplied
by one-half of the resident district's per capita tuition
amount.
(g) (Blank).
(h) The State Board shall pay directly to a charter school
it authorizes any federal or State funding attributable to a
student with a disability attending the school.
(Source: P.A. 103-175, eff. 6-30-23.)
(105 ILCS 5/27A-9.5 new)
Sec. 27A-9.5. Charter renewal; timely execution; funding
consequences.
(a) This Section applies to all charter renewals approved
on or after the effective date of this amendatory Act of the
104th General Assembly.
(b) For an initial agreement, no public funds may be
disbursed to a charter holder unless and until a charter
agreement has been fully executed by both the charter holder
and the authorizer.
After the initial agreement, the charter holder and the
authorizer shall negotiate the terms of the charter renewal
agreement within 90 days after the authorizer's passage of a
renewal resolution consistent with applicable State law and

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district policy. In no circumstance may the charter holder
operate under an expired agreement at the start of a school
year that begins more than 90 days after the authorizer's
passage of the renewal resolution. No public funds may be
distributed after 90 days until an agreement is reached.
A charter operator's refusal to execute a charter renewal
agreement that incorporates the requirements of State law or
district signed-agreement requirements constitutes grounds for
nonrenewal.
(105 ILCS 5/27A-10.15 new)
Sec. 27A-10.15. Closure financial accountability.
(a) Every charter operator shall maintain, while its
charter is in effect, one or more of the following financial
instruments to secure closure obligations:
(1) an escrow account held in a financial institution
in this State in the name of the charter school, funded in
cash;
(2) a surety bond or irrevocable letter of credit
issued by a financial institution authorized to do
business in this State; or
(3) a segregated reserve fund reflected on the charter
school's audited financial statements and held in a manner
acceptable to the authorizer.
A charter holder in operation on the effective date of
this amendatory Act of the 104th General Assembly must comply

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with this Section within 2 fiscal years after the effective
date of this amendatory Act of the 104th General Assembly.
(b) The closure security under subsection (a) for a
charter school in operation for at least one fiscal year must
equal 3 months of the charter school's average operating
expenditures based on its last audited fiscal year. If the
closure security is below the required amount, the authorizer
may require a remediation plan to reach compliance within 2
fiscal years. Failure to timely comply is grounds for
suspension of enrollment growth and may be considered in a
charter renewal determination.
For a charter holder in operation for less than one fiscal
year, the closure security must equal 3 months of the charter
school's projected annual budget, as approved by the charter's
authorizer. The closure security for such a charter holder
must be established and funded to at least 50% of the required
amount, based on the charter holder's projected budget, at the
time the charter is granted or, for a charter granted before
the effective date of this amendatory Act of the 104th General
Assembly, within 30 days after the effective date of this
amendatory Act of the 104th General Assembly and must reach
the full required amount by the end of the charter's second
full fiscal year.
(c) Closure security shall be used, in priority order, to
pay:
(1) the direct costs of transitioning students, such

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as transportation, records transfer, and student placement
assistance, incurred by the authorizer or receiving school
district;
(2) any outstanding payroll for employees for time
worked through the closure date, including legally
required benefits, and severance if contractually required
under the charter holder's collective bargaining
agreements or employment contracts;
(3) any costs reasonably incurred for the storage or
transfer of student records and special education
documents required to ensure continuity of services;
(4) any costs to return public assets to the
authorizer or otherwise account for disposition of public
assets purchased with public funds;
(5) any reasonable administrative costs incurred by
the authorizer or the State Board to supervise and execute
the closure and student transition; and
(6) any costs related to emergency expenditures not
created by the negligence or mismanagement of the charter
holder and agreed to by the authorizer.
Closure security may not be used to pay any preexisting,
unrelated debt of the charter operator that is not connected
to the operating obligations to students, employees, or public
property, except as permitted under this subsection.
Any remaining closure security funds after satisfaction of
the obligations described in this subsection shall be returned

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to the authorizer and shall remain public funds in accordance
with State and federal law.
(d) A charter operator must provide the authorizer and the
State Board written notice of the charter operator's intent to
close a charter school no fewer than 90 days before the planned
closure and must provide immediate notice upon any involuntary
closure action, insolvency event, or cessation of operations.
Within 30 days after a closure event, the authorizer shall
publish a closure action statement that lists amounts from the
closure security disbursed and the uses.
(e) Failure to maintain closure security as required under
this Section is a basis for:
(1) the authorizer to withhold a portion of per-pupil
payments until compliance is achieved; and
(2) consideration in denying a charter renewal or
revoking the charter or ineligibility to operate
additional charter campuses.
For purposes of this Section, the State Board may act in
its regulatory oversight capacity for all authorizers and in
its capacity as an authorizer for charter schools it directly
authorizes under this Article.
If the closure security is insufficient to cover the costs
of a closure event as set forth in subsection (c), the
authorizer or the State Board may:
(1) bring a civil action against the charter operator
to recover the unpaid amounts; and

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(2) seek to impose a lien on any property owned by the
charter operator that is located in this State to secure
recovery.
In cases in which a closure results from gross negligence,
willful misconduct, or intentional misappropriation of public
funds by the charter operator or its officers or directors,
the authorizer or State Board may seek recovery from
individual officers, directors, or persons who knowingly
caused the gross negligence, willful misconduct, or
intentional misappropriation, including civil penalties not to
exceed $50,000 per violation and reasonable attorney's fees.
(f) Upon closure, any public assets purchased with public
funds shall be returned to the authorizer or otherwise
disposed of in accordance with applicable State and federal
law governing property acquired with public funds. Proceeds
from any sale of such assets shall be applied first to
outstanding obligations to students and employees, and then to
the reimbursement of public funds.
(g) The State Board shall adopt rules to implement this
Section within one year after the effective date of this
amendatory Act of the 104th General Assembly, including
acceptable forms of closure security, procedures for claims on
closure security, and documentation standards for authorizers
to approve closure security.
(105 ILCS 5/27A-10.20 new)

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Sec. 27A-10.20. Financial distress; charter school
financial intervention.
(a) If an authorizer determines that a charter school is
in financial distress, the authorizer may require the charter
operator to submit a financial remediation plan for approval
within 30 days after that determination. The remediation plan
shall include, at a minimum:
(1) current cash-flow projections;
(2) corrective actions to address identified
deficiencies;
(3) a timeline for achieving fiscal stability; and
(4) enhanced financial-reporting requirements as
specified by the authorizer.
Failure to timely submit a remediation plan or implement
an approved remediation plan constitutes grounds for financial
intervention under subsection (b).
(b) If the authorizer determines that (i) the charter
school has failed to implement an approved remediation plan or
(ii) the financial distress presents an immediate risk to
students, employees, or public funds, the authorizer may
initiate financial intervention.
(c) The authorizer may exercise authority, limited to
financial matters, over the charter school, including:
(1) approval and oversight of expenditures and
disbursements;
(2) oversight of payroll, benefits, and required

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employee payments;
(3) reviewing, modifying, or terminating any vendor
contracts necessary to ensure fiscal stability;
(4) protection, inventory, and preservation of public
assets; and
(5) ensuring compliance with financial reporting and
audit requirements.
(d) Financial intervention under this Section is temporary
and may not exceed 180 days, except that the authorizer may
extend the intervention once for good cause. The intervention
shall terminate upon a determination by the authorizer that
fiscal stability has been restored or upon charter revocation,
surrender, nonrenewal, or closure.
(e) Prior to initiating financial intervention, the
authorizer shall provide written notice to the charter
operator describing the basis for the intervention and provide
an opportunity to respond, except in cases in which immediate
action is required to protect students or public funds.
(f) An authorizer's exercise of authority under this
Section:
(1) does not constitute operation or management of the
charter school;
(2) does not create financial or legal liability for
the authorizer or its members; and
(3) shall be deemed an oversight and regulatory
function for purposes of immunity under Section 27A-7.10.

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(g) Financial intervention under this Section does not
preclude charter revocation, nonrenewal, or closure and may be
used to stabilize operations pending an orderly closure
pursuant to this Article.
Section 97. Severability. The provisions of this Act are
severable under Section 1.31 of the Statute on Statutes.
Section 99. Effective date. This Act takes effect upon
becoming law.".