Bill Text: IL HB4789 | 2017-2018 | 100th General Assembly | Engrossed

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Bill Title: Amends the School Code. Makes changes with regard to the limitation of administrative costs. Defines "consumer price index", "expenditures per pupil", "general administration expenditures", and "school administration expenditures". Provides that for each school year, beginning with the 2019-2020 school year, each school district shall undertake budgetary and expenditure control actions so that the increase in each of administrative expenditures (with the exception of the Chicago school district, whose limit is not changed), general administration expenditures, and school administration expenditures per pupil for that school year over the prior school year does not exceed the percentage increase, if any, in the consumer price index for the 12 months ending on the previous December 31 or 5%, whichever one is less. Makes conforming changes.

Spectrum: Moderate Partisan Bill (Republican 4-1)

Status: (Introduced - Dead) 2018-04-27 - Third Reading - Short Debate - Lost 020-066-003 [HB4789 Detail]

Download: Illinois-2017-HB4789-Engrossed.html

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AN ACT concerning education.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The School Code is amended by changing Sections
17-1.5 and 34-43.1 as follows:
(105 ILCS 5/17-1.5)
Sec. 17-1.5. Limitation of administrative costs.
(a) It is the purpose of this Section to establish
limitations on the growth of administrative expenditures in
order to maximize the proportion of school district resources
available for the instructional program, building maintenance,
and safety services for the students of each district.
(b) Definitions. For the purposes of this Section:
"Administrative expenditures" mean the annual expenditures
of school districts properly attributable to expenditure
functions defined by the rules of the State Board of Education
as: 2320 (Executive Administration Services); 2330 (Special
Area Administration Services); 2490 (Other Support Services -
School Administration); 2510 (Direction of Business Support
Services); 2570 (Internal Services); and 2610 (Direction of
Central Support Services); provided, however, that
"administrative expenditures" shall not include early
retirement or other pension system obligations required by

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State law.
"Consumer price index" means the Consumer Price Index for
All Urban Consumers for all items published by the Bureau of
Labor Statistics of the United States Department of Labor.
"Expenditures per pupil" means the total administrative
expenditures, general administration expenditures, or school
administration expenditures divided by the Average Student
Enrollment, as defined under Section 18-8.15 of this Code, of
the school district in the prior school year.
"General administration expenditures" means the sum of all
annual expenditures of a school district that are attributable
to expenditure functions that are defined by the rules of the
State Board of Education as 2300 (Total Support Services -
General Administration); however, "general administration
expenditures" does not include early retirement or other
pension system obligations required by State law.
"School administration expenditures" means the sum of all
annual expenditures of a school district that are attributable
to expenditure functions that are defined by the rules of the
State Board of Education as 2400 (Total Support Services -
School Administration); however, "school administration
expenditures" does not include early retirement or other
pension system obligations required by State law.
"School district" means all school districts having a
population of less than 500,000.
(c) For the 1998-99 school year through the 2018-2019

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school year and each school year thereafter, each school
district shall undertake budgetary and expenditure control
actions so that the increase in administrative expenditures for
that school year over the prior school year does not exceed 5%.
Each school year, beginning with the 2019-2020 school year,
each school district shall undertake budgetary and expenditure
control actions so that the increase in each of administrative
expenditures, general administration expenditures, and school
administration expenditures per pupil for that school year over
the prior school year does not exceed the percentage increase,
if any, in the consumer price index for the 12 months ending on
the previous December 31 or 5%, whichever one is less. For
purposes of this Section, for the 2018-2019 school year, the
general administration expenditures per pupil shall be assumed
to be the amount reported by the United States Census Bureau in
its 2015 Annual Survey of School System Finances as the
national average per pupil for Support Services Expenditure -
General Administration (Function 2300), increased by the
percentage increase, if any, in the consumer price index for
2016, 2017, and 2018 compounded. For purposes of this Section,
for the 2018-2019 school year, the school administration
expenditures per pupil shall be assumed to be the amount
reported by the United States Census Bureau in its 2015 Annual
Survey of School System Finances as the national average per
pupil for Support Services Expenditure - School Administration
(Function 2400), increased by the percentage increase, if any,

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in the consumer price index for 2016, 2017, and 2018
compounded. The State Board of Education shall calculate and
promulgate all amounts provided under this subsection (c).
(c-5) School districts with administrative expenditures,
general administration expenditures, or school administration
expenditures per pupil in the 25th percentile and below for all
districts of the same type, as defined by the State Board of
Education, may waive the applicable limitation imposed under
this Section for any year following a public hearing and with
the affirmative vote of at least two-thirds of the members of
the school board of the district. Any district waiving the
limitation shall notify the State Board within 45 days of such
action.
(d) School districts shall file with the State Board of
Education by November 15, 1998 and by each November 15th
thereafter a one-page report that lists (i) the actual
administrative expenditures, general administration
expenditures, and school administration expenditures for the
prior year from the district's audited Annual Financial Report,
and (ii) the projected administrative expenditures, general
administration expenditures, and school administration
expenditures for the current year from the budget adopted by
the school board pursuant to Section 17-1 of this Code.
If a school district that is ineligible to waive the
limitation imposed by subsection (c) of this Section by board
action exceeds the limitation solely because of circumstances

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beyond the control of the district and the district has
exhausted all available and reasonable remedies to comply with
the limitation, the district may request a waiver pursuant to
Section 2-3.25g. The waiver application shall specify the
amount, nature, and reason for the relief requested, as well as
all remedies the district has exhausted to comply with the
limitation. Any emergency relief so requested shall apply only
to the specific school year for which the request is made. The
State Board of Education shall analyze all such waivers
submitted and shall recommend that the General Assembly
disapprove any such waiver requested that is not due solely to
circumstances beyond the control of the district and for which
the district has not exhausted all available and reasonable
remedies to comply with the limitation. The State
Superintendent shall have no authority to impose any sanctions
pursuant to this Section for any expenditures for which a
waiver has been requested until such waiver has been reviewed
by the General Assembly.
If the report and information required under this
subsection (d) are not provided by the school district in a
timely manner, or are subsequently determined by the State
Superintendent of Education to be incomplete or inaccurate, the
State Superintendent shall notify the district in writing of
reporting deficiencies. The school district shall, within 60
days of the notice, address the reporting deficiencies
identified.

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(e) If the State Superintendent determines that a school
district has failed to comply with the administrative
expenditure limitation imposed in subsection (c) of this
Section, the State Superintendent shall notify the district of
the violation and direct the district to undertake corrective
action to bring the district's budget into compliance with the
administrative expenditure limitation. The district shall,
within 60 days of the notice, provide adequate assurance to the
State Superintendent that appropriate corrective actions have
been or will be taken. If the district fails to provide
adequate assurance or fails to undertake the necessary
corrective actions, the State Superintendent may impose
progressive sanctions against the district that may culminate
in withholding all subsequent payments of general State aid due
the district under Section 18-8.05 of this Code or
evidence-based funding due the district under Section 18-8.15
of this Code until the assurance is provided or the corrective
actions taken.
(f) The State Superintendent shall publish a list each year
of the school districts that violate the limitation imposed by
subsection (c) of this Section and a list of the districts that
waive the limitation by board action as provided in subsection
(c-5) (c) of this Section.
(Source: P.A. 100-465, eff. 8-31-17.)
(105 ILCS 5/34-43.1) (from Ch. 122, par. 34-43.1)

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Sec. 34-43.1. In this Section, "consumer price index",
"expenditures per pupil", "general administration
expenditures", and "school administration expenditures" have
the meanings given to those terms under Section 17-1.5 of this
Code.
(A) Limitation of noninstructional costs. It is the
purpose of this Section to establish for the Board of
Education and the general superintendent of schools
requirements and standards which maximize the proportion
of school district resources in direct support of
educational, program, and building maintenance and safety
services for the pupils of the district, and which
correspondingly minimize the amount and proportion of such
resources associated with centralized administration,
administrative support services, and other
noninstructional services.
For the 1989-90 school year and for all subsequent
school years, the Board of Education shall undertake
budgetary and expenditure control actions which limit the
administrative expenditures of the Board of Education to
levels, as provided for in this Section, which represent an
average of the administrative expenses of all school
districts in this State not subject to Article 34.
Each school year, beginning with the 2019-2020 school
year, the Board of Education shall undertake budgetary and
expenditure control actions so that the increase in each of

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general administration expenditures and school
administration expenditures per pupil for the school
district over the prior school year does not exceed the
percentage increase, if any, in the consumer price index
for the 12 months ending on the previous December 31 or 5%,
whichever one is less.
For purposes of this Section, for the 2018-2019 school
year, the general administration expenditures per pupil
shall be assumed to be the amount reported by the United
States Census Bureau in its 2015 Annual Survey of School
System Finances as the average of the Support Services
Expenditure - General Administration (Function 2300) per
pupil for the 10 largest school districts in the United
States, increased by the percentage increase, if any, in
the consumer price index for 2016, 2017, and 2018
compounded. The school administration expenditures per
pupil shall be assumed to be the amount reported by the
United States Census Bureau in its 2015 Annual Survey of
School System Finances as the average of the Support
Services Expenditure - School Administration (Function
2400) per pupil for the 10 largest school districts in the
United States, increased by the percentage increase, if
any, in the consumer price index for 2016, 2017, and 2018
compounded.
On or before May 1, 2019 and annually thereafter, the
State Superintendent of Education shall certify to the

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Board of Education and the School Finance Authority the
amounts under this paragraph (A).
(B) Certification of expenses by the State
Superintendent of Education. The State Superintendent of
Education shall annually certify, on or before May 1, to
the Board of Education and the School Finance Authority,
for the applicable school year, the following information:
(1) the annual expenditures of all school
districts of the State not subject to Article 34
properly attributable to expenditure functions defined
by the rules and regulations of the State Board of
Education as: 2210 (Improvement of Instructional
Services); 2300 (Support Services - General
Administration) excluding, however, 2320 (Executive
Administrative Services); 2490 (Other Support Services -
School Administration); 2500 (Support Services -
Business); 2600 (Support Services - Central);
(2) the total annual expenditures of all school
districts not subject to Article 34 attributable to the
Education Fund, the Operations, Building and
Maintenance Fund, the Transportation Fund and the
Illinois Municipal Retirement Fund of the several
districts, as defined by the rules and regulations of
the State Board of Education; and
(3) a ratio, to be called the statewide average of
administrative expenditures, derived by dividing the

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expenditures certified pursuant to paragraph (B)(1) by
the expenditures certified pursuant to paragraph
(B)(2).
For purposes of the annual certification of
expenditures and ratios required by this Section, the
"applicable year" of certification shall initially be the
1986-87 school year and, in sequent years, each succeeding
school year.
The State Superintendent of Education shall consult
with the Board of Education to ascertain whether particular
expenditure items allocable to the administrative
functions enumerated in paragraph (B)(1) are appropriately
or necessarily higher in the applicable school district
than in the rest of the State due to noncomparable factors.
The State Superintendent shall also review the relevant
cost proportions in other large urban school districts. The
State Superintendent shall also review the expenditure
categories in paragraph (B)(1) to ascertain whether they
contain school-level expenses. If he or she finds that
adjustments to the formula are appropriate or necessary to
establish a more fair and comparable standard for
administrative cost for the Board of Education or to
exclude school-level expenses, the State Superintendent
shall recommend to the School Finance Authority rules and
regulations adjusting particular subcategories in this
paragraph subsection (B) or adjusting certain costs in

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determining the budget and expenditure items properly
attributable to the functions or otherwise adjust the
formula.
(C) Administrative expenditure limitations. The annual
budget of the Board of Education, as adopted and
implemented, and the related annual expenditures for the
school year, shall reflect a limitation on administrative
outlays as required by the following provisions, taking
into account any adjustments established by the State
Superintendent of Education: (1) the budget and
expenditures of the Board of Education for the 1989-90
school year shall reflect a ratio of administrative
expenditures to total expenditures equal to or less than
the statewide average of administrative expenditures for
the 1986-87 school year as certified by the State
Superintendent of Education pursuant to paragraph (B)(3);
(2) for the 1990-91 school year and for all subsequent
school years, the budget and expenditures of the Board of
Education shall reflect a ratio of administrative
expenditures to total expenditures equal to or less than
the statewide average of administrative expenditures
certified by the State Superintendent of Education for the
applicable year pursuant to paragraph (B)(3); (2.5) for
each school year, beginning with the 2019-2020 school year,
the budget and expenditures of the Board of Education shall
reflect an annual increase in each of general

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administration expenditures and school administration
expenditures, as certified by the State Superintendent of
Education for the applicable school year under paragraph
(A) of this Section, equal to or less than the percentage
increase, if any, in the consumer price index for the 12
months ending on the previous December 31 or 5%, whichever
one is less; (3) if for any school year the budget of the
Board of Education reflects a ratio of administrative
expenditures to total expenditures which exceeds the
applicable statewide average, the Board of Education shall
reduce expenditure items allocable to the administrative
functions enumerated in paragraph (B)(1) such that the
Board of Education's ratio of administrative expenditures
to total expenditures is equal to or less than the
applicable statewide average ratio; and (4) if, for any
school year, beginning with the 2019-2020 school year, the
budget of the Board of Education reflects an annual
increase in either general administration expenditures or
school administration expenditures, as certified by the
State Superintendent of Education for the applicable
school year under paragraph (A) of this Section, greater
than the percentage increase, if any, in the consumer price
index for the 12 months ending on the previous December 31
or 5%, the Board of Education shall reduce expenditure
items allocable to general administration expenditures or
school administration expenditures to ensure they are

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equal to or less than the allowable increase amount.
For purposes of this Section, the ratio of
administrative expenditures to the total expenditures of
the Board of Education, as applied to the budget of the
Board of Education, shall mean: the budgeted expenditure
items of the Board of Education properly attributable to
the expenditure functions identified in paragraph (B)(1)
divided by the total budgeted expenditures of the Board of
Education properly attributable to the Board of Education
funds corresponding to those funds identified in paragraph
(B)(2), exclusive of any monies budgeted for payment to the
Public School Teachers' Pension and Retirement System,
attributable to payments due from the General Funds of the
State of Illinois.
The annual expenditure of the Board of Education for
2320 (Executive Administrative Services) for the 1989-90
school year shall be no greater than the 2320 expenditure
for the 1988-89 school year. The annual expenditure of the
Board of Education for 2320 for the 1990-91 school year and
each subsequent school year shall be no greater than the
2320 expenditure for the immediately preceding school year
or the 1988-89 school year, whichever is less. This annual
expenditure limitation may be adjusted in each year in an
amount not to exceed any change effective during the
applicable school year in salary to be paid under the
collective bargaining agreement with instructional

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personnel to which the Board is a party and in benefit
costs either required by law or such collective bargaining
agreement.
(D) Cost control measures. In undertaking actions to
control or reduce expenditure items necessitated by the
administrative expenditure, general administration
expenditure, and school administration expenditure
limitations of this Section, the Board of Education shall
give priority consideration to reductions or cost controls
with the least effect upon direct services to students or
instructional services for pupils, and upon the safety and
well-being of pupils, and, as applicable, with the
particular costs or functions to which the Board of
Education is higher than the statewide average.
For purposes of assuring that the cost control
priorities of this paragraph subsection (D) are met, the
State Superintendent of Education shall, with the
assistance of the Board of Education, review the cost
allocation practices of the Board of Education, and the
State Superintendent of Education shall thereafter
recommend to the School Finance Authority rules and
regulations which define administrative, general
administration, and school administration areas which most
impact upon the direct and instructional needs of students
and upon the safety and well-being of the pupils of the
district. No position closed shall be reopened using State

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or federal categorical funds.
(E) Report of Audited Information. For the 1988-89
school year and for all subsequent school years, the Board
of Education shall file with the State Board of Education
the Annual Financial Report and its audit, as required by
the rules of the State Board of Education. Such reports
shall be filed no later than February 15 following the end
of the school year of the Board of Education, beginning
with the report to be filed no later than February 15, 1990
for the 1988-89 school year.
As part of the required Annual Financial Report, the
Board of Education shall provide a detailed accounting of
the central level, district, bureau and department costs
and personnel included within expenditure functions
included in paragraphs (A) and paragraph (B)(1) of this
Section. The nature and detail of the reporting required
for these functions shall be prescribed by the State Board
of Education in rules and regulations. A copy of this
detailed accounting shall also be provided annually to the
School Finance Authority and the public. This report shall
contain a reconciliation to the board of education's
adopted budget for that fiscal year, specifically
delineating administrative functions.
If the information required under this Section is not
provided by the Board of Education in a timely manner, or
is initially or subsequently determined by the State

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Superintendent of Education to be incomplete or
inaccurate, the State Superintendent shall, in writing,
notify the Board of Education of reporting deficiencies.
The Board of Education shall, within 60 days of such
notice, address the reporting deficiencies identified. If
the State Superintendent of Education does not receive
satisfactory response to these reporting deficiencies
within 60 days, the next payment of general State aid or
evidence-based funding due the Board of Education under
Section 18-8 or Section 18-8.15, as applicable, and all
subsequent payments, shall be withheld by the State
Superintendent of Education until the enumerated
deficiencies have been addressed.
Utilizing the Annual Financial Report, the State
Superintendent of Education shall certify on or before May
1 to the School Finance Authority the Board of Education's
ratio of administrative expenditures to total expenditures
for the 1988-89 school year and for each succeeding school
year and the Board of Education's general administration
expenditures and school administration expenditures for
the 2019-2020 school year and for each subsequent school
year. Such certification shall indicate the extent to which
the administrative expenditure ratio, general
administration expenditures, and school administration
expenditures of the Board of Education conformed to the
limitations required in paragraph subsection (C) of this

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Section, taking into account any adjustments of the
administrative expenditure limitations which may have been
recommended by the State Superintendent of Education to the
School Finance Authority. In deriving the administrative
expenditure ratio of the Chicago Board of Education, the
State Superintendent of Education shall utilize the
definition of this ratio prescribed in paragraph
subsection (C) of this Section, except that the actual
expenditures of the Board of Education shall be substituted
for budgeted expenditure items.
(F) Approval and adjustments to administrative
expenditure limitations. The School Finance Authority
organized under Article 34A shall monitor the Board of
Education's adherence to the requirements of this Section.
As part of its responsibility the School Finance Authority
shall determine whether the Board of Education's budget for
the next school year, and the expenditures for a prior
school year, comply with the limitation of administrative
expenditures, general administration expenditures, and
school administration expenditures required by this
Section. The Board of Education and the State Board of
Education shall provide such information as is required by
the School Finance Authority in order for the Authority to
determine compliance with the provisions of this Section.
If the Authority determines that the budget proposed by the
Board of Education does not meet the cost control

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requirements of this Section, the Board of Education shall
undertake budgetary reductions, consistent with the
requirements of this Section, to bring the proposed budget
into compliance with such cost control limitations.
If, in formulating cost control and cost reduction
alternatives, the Board of Education believes that meeting
the cost control requirements of this Section related to
the budget for the ensuing year would impair the education,
safety, or well-being of the pupils of the school district,
the Board of Education may request that the School Finance
Authority make adjustments to the limitations required by
this Section. The Board of Education shall specify the
amount, nature, and reasons for the relief required and
shall also identify cost reductions which can be made in
expenditure functions not enumerated in paragraphs (A) and
paragraph (B)(1) of this Section, which would serve the
purposes of this Section.
The School Finance Authority shall consult with the
State Superintendent of Education concerning the
reasonableness from an educational administration
perspective of the adjustments sought by the Board of
Education. The School Finance Authority shall provide an
opportunity for the public to comment upon the
reasonableness of the Board's request. If, after such
consultation, the School Finance Authority determines that
all or a portion of the adjustments sought by the Board of

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Education are reasonably appropriate or necessary, the
Authority may grant such relief from the provisions of this
Section which the Authority deems appropriate. Adjustments
so granted apply only to the specific school year for which
the request was made.
In the event that the School Finance Authority
determines that the Board of Education has failed to
achieve the required administrative, general
administration, and school administration expenditure
limitations for a prior school year, or if the Authority
determines that the Board of Education has not met the
requirements of paragraph subsection (F) of this Section,
the Authority shall make recommendations to the Board of
Education concerning appropriate corrective actions. If
the Board of Education fails to provide adequate assurance
to the Authority that appropriate corrective actions have
been or will be taken, the Authority may, within 60 days
thereafter, require the board to adjust its current budget
to correct for the prior year's shortage or may recommend
to the members of the General Assembly and the Governor
such sanctions or remedial actions as will serve to deter
any further such failures on the part of the Board of
Education.
To assist the Authority in its monitoring
responsibilities, the Board of Education shall provide
such reports and information as are from time to time

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required by the Authority.
(G) Independent reviews of administrative
expenditures. The School Finance Authority may direct
independent reviews of the administrative and
administrative support expenditures and services and other
non-instructional expenditure functions of the Board of
Education. The Board of Education shall afford full
cooperation to the School Finance Authority in such review
activity. The purpose of such reviews shall be to verify
specific targets for improved operating efficiencies of
the Board of Education, to identify other areas of
potential efficiencies, and to assure full and proper
compliance by the Board of Education with all requirements
of this Section.
In the conduct of reviews under this paragraph (G)
subsection, the Authority may request the assistance and
consultation of the State Superintendent of Education with
regard to questions of efficiency and effectiveness in
educational administration.
(H) Reports to Governor and General Assembly. On or
before May 1, 1991 and no less frequently than yearly
thereafter, the School Finance Authority shall provide to
the Governor, the State Board of Education, and the members
of the General Assembly an annual report, as outlined in
Section 34A-606, which includes the following information:
(1) documenting the compliance or non-compliance of the

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Board of Education with the requirements of this Section;
(2) summarizing the costs, findings, and recommendations
of any reviews directed by the School Finance Authority,
and the response to such recommendations made by the Board
of Education; and (3) recommending sanctions or
legislation necessary to fulfill the intent of this
Section.
(Source: P.A. 100-465, eff. 8-31-17.)