Bill Text: IL HB6037 | 2009-2010 | 96th General Assembly | Introduced

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Bill Title: 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.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2010-02-10 - Referred to Rules Committee [HB6037 Detail]

Download: Illinois-2009-HB6037-Introduced.html

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96TH GENERAL ASSEMBLY State of Illinois 2009 and 2010 HB6037 Introduced 2/10/2010, by Rep. Roger L. Eddy 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.
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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
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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 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.

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(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

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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

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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;

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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

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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.)

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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

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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

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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

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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

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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

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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

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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

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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

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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)

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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

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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.

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(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

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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

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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.

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(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

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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.

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(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)

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.

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(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

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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

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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

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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.

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(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

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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

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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;

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(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.

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(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.

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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,

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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,

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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

HB6037 - 52 - LRB096 20045 NHT 35550 b
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,

HB6037 - 53 - LRB096 20045 NHT 35550 b
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,

HB6037 - 54 - LRB096 20045 NHT 35550 b
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

HB6037 - 55 - LRB096 20045 NHT 35550 b
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

HB6037 - 56 - LRB096 20045 NHT 35550 b
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

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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.

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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

HB6037 - 59 - LRB096 20045 NHT 35550 b
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

HB6037 - 60 - LRB096 20045 NHT 35550 b
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

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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.

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(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

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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

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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.
HB6037 - 65 - LRB096 20045 NHT 35550 b
INDEX
Statutes amended in order of appearance
35 ILCS 200/18-50.1
35 ILCS 200/18-92
35 ILCS 200/18-241
40 ILCS 5/7-105 from Ch. 108 1/2, par. 7-105
40 ILCS 5/7-109 from Ch. 108 1/2, par. 7-109
105 ILCS 5/1A-8 from Ch. 122, par. 1A-8
105 ILCS 5/1B-8 from Ch. 122, par. 1B-8
105 ILCS 5/Art. 1H heading
new
105 ILCS 5/1H-1 new
105 ILCS 5/1H-5 new
105 ILCS 5/1H-10 new
105 ILCS 5/1H-15 new
105 ILCS 5/1H-20 new
105 ILCS 5/1H-25 new
105 ILCS 5/1H-30 new
105 ILCS 5/1H-35 new
105 ILCS 5/1H-40 new
105 ILCS 5/1H-41 new
105 ILCS 5/1H-42 new
105 ILCS 5/1H-43 new
105 ILCS 5/1H-45 new
105 ILCS 5/1H-50 new
HB6037 - 66 - LRB096 20045 NHT 35550 b
105 ILCS 5/1H-55 new
105 ILCS 5/1H-60 new
105 ILCS 5/1H-65 new
105 ILCS 5/1H-70 new
105 ILCS 5/1H-75 new
105 ILCS 5/1H-80 new
105 ILCS 5/1H-85 new
105 ILCS 5/1H-90 new
105 ILCS 5/1H-95 new
105 ILCS 5/1H-100 new
105 ILCS 5/1H-105 new
105 ILCS 5/1H-110 new
105 ILCS 5/1H-115 new
105 ILCS 5/1H-120 new
105 ILCS 5/1H-125 new
105 ILCS 5/1H-130 new
105 ILCS 5/1H-135 new
105 ILCS 5/1H-140 new
105 ILCS 5/1H-145 new
105 ILCS 5/1H-150 new
105 ILCS 5/1H-155 new
105 ILCS 5/1H-160 new
105 ILCS 5/1H-165 new
105 ILCS 5/1H-170 new
105 ILCS 5/8-6 from Ch. 122, par. 8-6
105 ILCS 5/10-16.9 new
HB6037 - 67 - LRB096 20045 NHT 35550 b
105 ILCS 5/17-1 from Ch. 122, par. 17-1
115 ILCS 5/2