Certification of a School District Deemed in Financial Difficulty
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(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 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 orders for wages as permitted
in Sections 8-16, 32-7.2 and 34-76 of this Code, or the district
has issued funding bonds to retire teacher orders in 3 of the 5
last years;
(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;
(3) The district has for 2 consecutive years shown an excess of
expenditures and other financing uses over revenues and other financing
sources and beginning fund balances on its annual financial report
for the aggregate totals of the Educational, Operations and Maintenance,
Transportation, and Working Cash Funds;
(4) The district had an enrollment of no fewer than 4,000 pupils
during the 1997-1998 school year, has been previously certified
to be in financial difficulty and requests to be recertified as
a result of continuing financial problems. No recertification may
be made under this item (4) after December 31, 1999.
No school district shall be certified to be in financial difficulty
by reason of any of the above circumstances arising as a result
of the failure of the county to make any distribution of property
tax money due the district at the time such distribution is due;
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 in financial
difficulty, except those districts subject to Article 34A, to develop,
adopt and submit a financial plan within 45 days after certification
of financial difficulty. The financial plan shall be developed according
to guidelines presented to the district by the State Board of Education
within 14 days of certification. Such guidelines shall address the
specific nature of each district's financial difficulties. Any proposed
budget of the district shall be consistent with the financial plan
approved by the State Board.
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 assure compliance with the financial plan. The district
shall produce such budgetary data, financial statements, reports
and other information and comply with such directives. If the State
Board of Education determines that a district has failed to comply
with its financial plan, the State Board of Education may rescind
approval of the plan and appoint a Financial Oversight Panel for
the district as provided in Section 1B-4. This action shall be taken
only after the district has been given notice and an opportunity
to appear before the State Board of Education to discuss its failure
to comply with its financial plan.
No bonds, notes, teachers orders, tax anticipation warrants or other
evidences of indebtedness shall be issued or sold by a school district
or be legally binding upon or enforceable against a local board
of education of a district certified to be in financial difficulty
unless and until the financial plan required under this Section
has been approved by the State Board of Education.
Any financial watch list distributed by the State Board of Education
pursuant to this Section shall designate those school districts
on the watch list that would not otherwise be on the watch list
were it not for the inability or refusal of the State of Illinois
to make timely disbursements of any 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. 89-235, eff. 8-4-95; 90-802, eff. 12-15-98.)
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