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ARTICLE 1B. SCHOOL DISTRICT FINANCIAL
OVERSIGHT PANEL AND EMERGENCY
FINANCIAL ASSISTANCE
5/1B-1 Short Title
5/1B-2 Findings and purpose
5/1B-3 Definitions
5/1B-4 Establishment of Emergency Financial Assistance
and Financial Oversight Panel
5/1B-5 Members of Panel; powers; dissolution
5/1B-6 General Powers
5/1B-7 Financial Administrator; Powers and Duties
5/1B-8 School District Emergency Financial Assistance
Fund; payments
5/1B-9 Assistance by State agencies, units of local
government or school districts
5/1B-10 Approval of Financial Plan, Budget and Contracts
5/1B-11 Balanced Budget
5/1B-12 Financial Plans
5/1B-13 Budgets
5/1B-14 Contracts and Other Obligations
5/1B-15 Expenditures
5/1B-16 Cash accounts and bank accounts
5/1B-17 Hearings
5/1B-18 Limitations of actions after abolition;
indemnification
5/1B-19 Abolition of Panel
5/1B-20 Sanctions
5/1B-21 Dissolution and annexation
5/1B-22 Additional Powers of the Panel
(105 ILCS 5/1B-1)
Sec. 1B-1. Short title. This Article may be cited as the School
District Financial Oversight Panel and Emergency Financial Assistance
Law.
(Source: P.A. 88-618, eff. 9-9-94.)
(105 ILCS 5/1B-2)
Sec. 1B-2. Findings and purpose.
(a) The General Assembly finds:
(1) A fundamental goal of the people of the 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 the 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 boards of education
of school districts with a population of less than 500,000, it is
necessary to provide for emergency State financial assistance and
the creation of financial oversight panels with the powers necessary
to promote sound financial management to assure the continued
availability of educational opportunities.
(b) It is the purpose of this Article to provide financial
oversight panels and emergency State financial assistance to school
districts and establish a secure financial basis for their continued
existence. The intention of the General Assembly, in enacting this
legislation, is to establish procedures, provide powers and impose
restrictions to assure the financial and educational integrity of
the
public schools while leaving principal responsibility for the
educational policies of the public schools to the boards of education
within the State, consistent with the requirements for satisfying
the
public policy and purpose herein set forth.
(Source: P.A. 88-618, eff. 9-9-94.)
(105 ILCS 5/1B-3)
Sec. 1B-3. Definitions. As used in this Article:
(a) "Financial Oversight Panel" or "Panel" means
the Financial
Oversight Panel created under Section 1B-4;
(b) "Board" means a local board of education;
(c) "Budget" means the annual budget of the board required
under
Section 17-1 and is subject to the authority of the Panel as provided
in
this Article;
(d) "Chairman" means the chairman of the Panel appointed
pursuant
to Section 1B-5 of this Article;
(e) "District" means any school district of this State
not subject
to the provisions of Article 34;
(f) "Financial plan" means the financial plan of the board
required
to be developed pursuant to this Article;
(g) "Fiscal year" means the fiscal year of the board;
(h) "School year" means the school year of the board;
(i) "State Board" means the Illinois State Board of Education;
(j) "State Superintendent" means the State Superintendent
of
Education.
(Source: P.A. 88-618, eff. 9-9-94.)
(105 ILCS 5/1B-4)
Sec. 1B-4. Establishment of Emergency Financial Assistance and
Financial Oversight Panel. When approved by the State Board under
this
Article there is established a body both corporate and politic to
be
known as the "(Name of School District) Financial Oversight
Panel"
which, in such name, shall exercise all authority vested in such
Panels
by this Article.
Upon the affirmative vote of not less than a majority of its full
membership, a local board of education of a school district that
has
been certified to be in financial difficulty under Section 1A-8
may
petition the State Board of Education for emergency financial assistance
and the establishment of a Financial Oversight Panel for the district
as
provided under this Article. In addition, the State Superintendent
of
Education may petition the State Board of Education for the
establishment of a Financial Oversight Panel, with or without emergency
financial assistance, for any district that has failed to comply
with
its financial plan and has had the plan rescinded by the State Board
as
provided in Section 1A-8. No petition for emergency financial
assistance shall be approved by the State Board unless there is
also
established a Financial Oversight Panel.
In determining whether to allow the petition the State Board shall
consider the following factors among others that it deems relevant:
(a) whether the petition is in the best educational interests of
the pupils of the district;
(b) whether the petition is in the near and long term best
financial interests of the district;
(c) whether the district has sufficient pupil enrollment and
assessed valuation to provide and maintain recognized schools;
(d) whether the petition is in the best interests of the other
schools of the area and the educational welfare of all of the pupils
therein; and
(e) whether the board of education has complied with the
requirements of Section 1A-8.
The State Board may vote to either grant or deny the petition based
upon the recommendation of the State Superintendent of Education
and any
other testimony or documentary evidence the State Board deems relevant.
The decision of the State Board whether to grant or deny the petition
shall be final. If an approved petition requests emergency financial
assistance, the school district shall be eligible for emergency
State
financial assistance, subject to the other provisions of this Article.
(Source: P.A. 88-618, eff. 9-9-94.)
(105 ILCS 5/1B-5)
Sec. 1B-5. When a petition for emergency financial assistance for
a
school district is allowed by the State Board under Section 1B-4,
the
State Superintendent shall within 10 days thereafter appoint 3 members
to serve at the State Superintendent's pleasure on a Financial Oversight
Panel for the district. The State Superintendent shall designate
one of
the members of the Panel to serve as its Chairman. In the event
of
vacancy or resignation the State Superintendent shall appoint a
successor within 10 days of receiving notice thereof.
Members of the Panel shall be selected primarily on the basis of
their experience and education in financial management, with
consideration given to persons knowledgeable in education finance.
A
member of the Panel may not be a board member or employee of the
district for which the Panel is constituted, nor may a member have
a
direct financial interest in that district.
Panel members shall serve without compensation, but may be
reimbursed for travel and other necessary expenses incurred in the
performance of their official duties by the State Board. The amount
reimbursed Panel 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 such
assistance or shall be deducted from the district's general State
aid as
provided in Section 1B-8.
The first meeting of the Panel shall be held at the call of the
Chairman. The Panel may elect such other officers as it deems
appropriate. 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.
Two members of the Panel shall constitute a quorum, and the
affirmative vote of 2 members shall be necessary for any decision
or
action to be taken by the Panel.
The Panel and the State Superintendent shall cooperate with each
other in the exercise of their respective powers. The Panel shall
report not later than September 1 annually to the State Board and
the
State Superintendent with respect to its activities and the condition
of
the school district for the previous fiscal year.
Any Financial Oversight Panel established under this Article shall
remain in existence for not less than 3 years nor more than 10 years
from the date the State Board grants the petition under Section
1B-4.
If after 3 years the school district has repaid all of its obligations
resulting from emergency State financial assistance provided under
this
Article and has improved its financial situation, the board of education
may, not more frequently than once in any 12 month period, petition
the
State Board to dissolve the Financial Oversight Panel, terminate
the
oversight responsibility, and remove the district's certification
under
Section 1A-8 as a district in financial difficulty. In acting on
such a
petition the State Board shall give additional weight to the
recommendations of the State Superintendent and the Financial Oversight
Panel.
(Source: P.A. 88-618, eff. 9-9-94.)
(105 ILCS 5/1B-6)
Sec. 1B-6. General powers. The purpose of the Financial Oversight
Panel shall be to exercise financial control over the board of
education, and, when approved by the State Board and the State
Superintendent of Education, to furnish financial assistance so
that the
board can provide public education within the board's jurisdiction
while
permitting the board to meet its obligations to its creditors and
the
holders of its notes and bonds. Except as expressly limited by this
Article, the Panel shall have all powers necessary to meet its
responsibilities and to carry out its purposes and the purposes
of this
Article, including, but not limited to, the following powers:
(a) to sue and be sued;
(b) to provide for its organization and internal management;
(c) to appoint a Financial Administrator to serve as the chief
executive officer of the Panel. The Financial Administrator may
be an
individual, partnership, corporation, including an accounting firm,
or
other entity determined by the Panel to be qualified to serve; and
to
appoint other officers, agents, and employees of the Panel, define
their
duties and qualifications and fix their compensation and employee
benefits;
(d) to approve the local board of education appointments to the
positions of treasurer in a Class I county school unit and in each
school district which forms a part of a Class II county school unit
but
which no longer is subject to the jurisdiction and authority of
a
township treasurer or trustees of schools of a township because
the
district has withdrawn from the jurisdiction and authority of the
township treasurer and the trustees of schools of the township or
because those offices have been abolished as provided in subsection
(b)
or (c) of Section 5-1, and chief school business official, if such
official is not the superintendent of the district. Either the board
or
the Panel may remove such treasurer or chief school business official;
(e) to approve any and all bonds, notes, teachers orders, tax
anticipation warrants, and other evidences of indebtedness prior
to
issuance or sale by the school district; and notwithstanding any
other
provision of The School Code, as now or hereafter amended, no bonds,
notes, teachers orders, tax anticipation warrants or other evidences
of
indebtedness shall be issued or sold by the school district or be
legally binding upon or enforceable against the local board of education
unless and until the approval of the Panel has been received;
(f) to approve all property tax levies of the school district and
require adjustments thereto as the Panel deems necessary or advisable;
(g) to require and approve a school district financial plan;
(h) to approve and require revisions of the school district budget;
(i) to approve all contracts and other obligations as the Panel
deems necessary and appropriate;
(j) to authorize emergency State financial assistance, including
requirements regarding the terms and conditions of repayment of
such
assistance, and to require the board of education to levy a separate
local property tax, subject to the limitations of Section 1B-8,
sufficient to repay such assistance consistent with the terms and
conditions of repayment and the district's approved financial plan
and
budget;
(k) to request the regional superintendent to make appointments
to
fill all vacancies on the local school board as provided in Section
10-10;
(l) to recommend dissolution or reorganization of the school
district to the General Assembly if in the Panel's judgment the
circumstances so require;
(m) to direct a phased reduction in the oversight responsibilities
of the Financial Administrator and of the Panel as the circumstances
permit;
(n) to determine the amount of emergency State financial assistance
to be made available to the school district, and to establish an
operating budget for the Panel to be supported by funds available
from
such assistance, with the assistance and the budget required to
be
approved by the State Superintendent;
(o) to procure insurance against any loss in such amounts and from
such insurers as it deems necessary;
(p) to engage the services of consultants for rendering
professional and technical assistance and advice on matters within
the
Panel's power;
(q) to contract for and to accept any gifts, grants or loans of
funds or property or financial or other aid in any form from the
federal
government, State government, unit of local government, school district
or any agency or instrumentality thereof, or from any other private
or
public source, and to comply with the terms and conditions thereof;
(r) to pay the expenses of its operations based on the Panel's
budget as approved by the State Superintendent from emergency financial
assistance funds available to the district or from deductions from
the
district's general State aid; and
(s) to do any and all things necessary or convenient to carry out
its purposes and exercise the powers given to the Panel by this
Article.
(Source: P.A. 91-357, eff. 7-29-99.)
(105 ILCS 5/1B-7)
Sec. 1B-7. Financial Administrator; Powers and Duties. The
Financial Administrator appointed by the Financial Oversight Panel
shall
serve as the Panel's chief executive officer. The Financial
Administrator shall exercise the powers and duties required by the
Panel, including but not limited to the following:
(a) to provide guidance and recommendations to the local board and
officials of the school district in developing the district's financial
plan and budget prior to board action;
(b) to direct the local board to reorganize its financial accounts,
budgetary systems, and internal accounting and financial controls,
in
whatever manner the Panel deems appropriate to achieve greater financial
responsibility and to reduce financial inefficiency, and to provide
technical assistance to aid the district in accomplishing the
reorganization;
(c) to make recommendations to the Financial Oversight Panel
concerning the school district's financial plan and budget, and
all
other matters within the scope of the Panel's authority;
(d) to prepare and recommend to the Panel a proposal for emergency
State financial assistance for the district, including recommended
terms
and conditions of repayment, and an operations budget for the Panel
to
be funded from the emergency assistance or from deductions from
the
district's general State aid;
(e) to require the local board to prepare and submit preliminary
staffing and budgetary analyses annually prior to February 1 in
such
manner and form as the Financial Administrator shall prescribe;
and
(f) subject to the direction of the Panel, to do all other things
necessary or convenient to carry out its purposes and exercise the
powers given to the Panel under this Article.
(Source: P.A. 88-618, eff. 9-9-94.)
(105 ILCS 5/1B-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, grants from the federal government and
donations from any public or private source. Moneys in the Fund
may be
appropriated only to the State Board for the purposes of this Article.
The appropriation may be allocated and expended by the State Board
as
grants or loans to school districts which are the subject of an
approved
petition for emergency financial assistance under Section 1B-4.
From
the amount allocated to each such school district 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 assistance for
the
school district and for the operations budget of the Panel. No
expenditures shall be authorized by the State Superintendent until
he
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
$1000
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 $250 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 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 discount rate on one-year United States
Treasury Bills as determined by the last auction of those one-year
bills
that precedes 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
State Superintendent shall approve the terms and conditions, including
the schedule, of repayments. The schedule shall provide for repayments
commencing July 1 of each year. 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. 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
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. 90-548, eff. 1-1-98; 90-802, eff. 12-15-98.)
(105 ILCS 5/1B-9)
Sec. 1B-9. Assistance by State agencies, units of local government
or school districts. The local board shall render such services
to, and
permit the use of its facilities and resources by, the Financial
Oversight Panel at no charge as may be requested by the Panel. Any
State agency, unit of local government, or school district may,
within
its respective lawful powers and duties, render such services to
the
Panel as may be requested by the Panel. Upon request of the Panel
any
such agency, unit of local government or school district is hereby
authorized and empowered to loan to the Panel such officers and
employees as the Panel may deem necessary and request in carrying
out
its powers and duties. Officers and employees so transferred shall
not
lose or forfeit their employment status or rights.
(Source: P.A. 86-954.)
(105 ILCS 5/1B-10)
Sec. 1B-10. Approval of Financial Plan, Budget and Contracts. In
carrying out the purposes of this Article, the Panel shall have
the
power to approve or to reject the financial plans, budgets and contracts
of the board; provided, however, that the Panel shall have no power
to
impair any existing contract or obligation of the board.
(Source: P.A. 86-954.)
(105 ILCS 5/1B-11)
Sec. 1B-11. Balanced Budget. The local board's budget for each
fiscal year shall be balanced in accordance with an accounting system
and procedure to be prescribed by the Panel.
(Source: P.A. 86-954.)
(105 ILCS 5/1B-12)
Sec. 1B-12. Financial Plans. The local board shall develop, adopt
and submit to the Panel for approval an initial financial plan with
respect to the remaining portion of the current fiscal year and
for the
2 succeeding fiscal years. The board shall develop and adopt subsequent
financial plans as directed by the Panel. The financial plans shall
supersede any financial plan developed pursuant to Section 1A-8
of this
Act. The Panel shall require that each financial plan cover a period
of
at least 3 fiscal years. After adoption by the board, the board
shall
submit each plan to the Panel for its approval not later than the
date
required by the Panel. The Panel shall approve or reject the financial
plan within 30 days of its receipt. No financial plan shall have
force
or effect without approval of the Panel. Each financial plan shall
be
developed, submitted, approved and monitored in accordance with
the
following procedures:
(a) The board shall determine and submit to the Panel, at a time
and in a manner prescribed by the Panel, estimates of revenues available
to the board during the period for which the financial plan is to
be in
effect. The Panel shall approve, reject or amend the revenue estimates.
In the event the board fails, for any reason, to submit to the Panel
estimates of revenue as required by this paragraph, the Panel may
prepare such estimates. The financial plan submitted by the board
shall
be based upon revenue estimates approved or prepared by the Panel.
As
soon as practicable following the establishment of the Panel, the
president of the board shall, at the request of the Chairman of
the
Panel, make available to the Panel copies of the audited financial
statements and of the books and records of account of the board
for the
preceding 5 fiscal years of the board.
(b) Each financial plan for each fiscal year or part thereof to
which it relates, shall contain (1) a description of revenues and
expenditures, provision for debt service, cash resources and uses,
capital improvements, and a building utilization component requiring
maximum efficient use of all classrooms and buildings, in such manner
and detail as the Panel shall prescribe, (2) a description of the
means
by which the budget will be brought into balance, and (3) such other
matters that the Panel, in its discretion, requires. For Panels
established under Section 1B-4 for a district that had its financial
plan rescinded by the State Board for violating that plan as provided
in
Section 1A-8, the financial plan required under this Section shall
also
include the staffing plan required pursuant to subsection (e) of
Section
1B-22, provisions for addressing findings or violations identified
by
the Inspector General or the school district audit, provisions for
implementing directives of the Panel, and the plan of action to
be
followed by the district to maintain long-term financial stability,
provide for transition of the Panel's authority, and analyze the
need
for additional State funding for the district. The initial financial
plan shall also include a description of the means by which any
outstanding short-term indebtedness shall be paid or refunded by
the
board. The Panel may prescribe any reasonable time, standards,
procedures or forms for preparation and submission of the financial
plan.
(c) The Panel shall approve the initial and each subsequent
financial plan if, in its judgment, the plan is complete, is reasonably
capable of being achieved, and meets the requirements set forth
in this
Article. Otherwise, the Panel shall reject the financial plan. In
the
event of rejection, the Panel may prescribe a procedure and standards
for revision of the financial plan by the board.
(d) The board shall report to the Panel, at such times and in such
manner as the Panel may direct, concerning the board's compliance
with
each financial plan. The Panel may review the board's operations,
obtain budgetary data and financial statements, require the board
to
produce reports, and have access to any other information in the
possession of the board that it deems relevant. The Panel may issue
recommendations or directives within its powers to the board to
assure
compliance with the financial plan. The board shall produce such
budgetary data, financial statements, reports and other information
and
comply with such directives.
(e) After approval of each financial plan, the board shall
regularly reexamine the revenue and expenditure estimates on which
it
was based and revise them as necessary. The board shall promptly
notify
the Panel of any material change in the revenue or expenditure estimates
in the financial plan. The board may submit to the Panel, or the
Panel
may require the board to submit, modified financial plans based
upon
revised revenue or expenditure estimates or for any other good reason.
The Panel shall approve or reject each modified financial plan.
(Source: P.A. 89-572, eff. 7-30-96.)
(105 ILCS 5/1B-13)
Sec. 1B-13. Budgets. The board shall develop, adopt and submit to
the Panel for approval by the Panel the annual budget for each fiscal
year required by Section 17-1. After adoption by the board, the
board
shall submit each budget to the Panel for its approval not later
than 30
days prior to the commencement of the fiscal year to which the budget
relates. The Panel shall approve or reject the budget within 30
days of
its receipt from the board. No budget shall have force or effect
without approval of the Panel. Each budget shall be developed,
submitted, approved and monitored in accordance with the following
procedures:
(a) Each budget submitted by the board shall be based upon revenue
estimates approved or prepared by the Panel.
(b) Each budget shall be consistent with the budgetary structure
required by the Panel and contain such information and detail as
may be
prescribed by the Panel. The Panel may also prescribe any reasonable
time, standards, procedures or forms for preparation and submission
of
the budget. Any deficit for the prior fiscal year and for any fiscal
year thereafter shall be included as a current expense item for
the
succeeding fiscal year.
(c) The Panel shall approve each budget if, in its judgment, the
budget is complete, is reasonably capable of being achieved, will
meet
the requirements set forth in this Article, and will be consistent
with
the financial plan in effect. Otherwise, the Panel shall reject
the
budget. In the event of rejection, the Panel may prescribe a procedure
and standards for revision of the budget by the board. In the event
the
local board fails to adopt a budget approved by the Panel prior
to the
end of the first quarter of the fiscal year as required by Section
17-1,
the offices of all local board members shall be deemed vacant by
operation of law.
(d) The board shall report to the Panel and the Financial
Administrator at such times and in such manner as the Panel may
direct,
concerning the board's compliance with each budget. The Panel may
review the board's operations, obtain budgetary data and financial
statements, require the board to produce reports, and have access
to any
other information in the possession of the board that the Panel
deems
relevant. The Panel may issue recommendations or directives within
its
powers to the board to assure compliance with the budget. The board
shall produce such budgetary data, financial statements, reports
and
other information and comply with such directives.
(e) After approval of each budget, the board shall promptly notify
the Panel of any material change in the revenue or expenditure estimates
in the budget. The board may submit to the Panel, or the Panel may
require the board to submit, an amended budget. The Panel shall
approve
or reject each amended budget pursuant to this Section.
(Source: P.A. 86-954.)
(105 ILCS 5/1B-14)
Sec. 1B-14. Contracts and Other Obligations. (a) No contract or
other obligation shall be entered into by the board unless it is
consistent with the financial plan and budget in effect, including
any
employment contract or collective bargaining agreement.
(b) The Panel may identify categories and types of contracts and
other obligations that shall be subject to approval by the Panel
and the
procedure for submitting contracts for approval. Each contract or
other
obligation that is entered into by the board which requires approval
by
the Panel shall contain a provision stating that it shall not become
legally binding on the board unless and until it has received such
approval. No contract or other obligation that requires the approval
of
the Panel shall be legally binding on the board unless and until
it has
received such approval.
(c) The board shall submit to the Panel a copy of any contract or
other obligation for which the approval of the Panel is required,
along
with a cost analysis and such other information as the Panel may
require. The Panel may prescribe any reasonable time, standards,
procedures or forms for submission of the contract or other obligation.
(d) The Panel shall approve the contract or obligation if, in its
judgment, the information required to be submitted is complete and
the
contract or other obligation is consistent with the budget and financial
plan in effect. Otherwise, the Panel shall reject the contract or
other
obligation. Contracts or other obligations not rejected within 30
days
after submission to the Panel shall be considered approved. However,
the
Panel shall have an additional 30 days to approve or reject the
contract
or other obligation if it so advises the board within the initial
30 day
period.
(Source: P.A. 86-954.)
(105 ILCS 5/1B-15)
Sec. 1B-15. Expenditures. The board shall meet its debt service
obligations as they become due. No other expenditure shall be made
by
the board unless it is consistent with the financial plan and budget
in
effect.
(Source: P.A. 86-954.)
(105 ILCS 5/1B-16)
Sec. 1B-16. Cash accounts and bank accounts. (a) The Panel shall
require the board or any officer of the board, including the board's
treasurer or any person acting as the board's official or ex officio
treasurer, to establish and maintain separate cash accounts and
separate
bank accounts in accordance with such 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 board,
to
establish and maintain whatever new cash accounts and bank accounts
it
may deem appropriate, and to withdraw funds from such accounts for
the
lawful expenditures of the board.
(Source: P.A. 86-954.)
(105 ILCS 5/1B-17)
Sec. 1B-17. Hearings. To the extent feasible, the Financial
Oversight Panel shall provide for and encourage participation by
the
public in the development and review of financial policy. The Panel
shall hold public hearings as it may deem appropriate to the performance
of any of its functions. The Panel may designate one or more of
its
members or the Financial Administrator to preside over any hearing.
(Source: P.A. 86-954.)
(105 ILCS 5/1B-18)
Sec. 1B-18. Limitations of actions after abolition;
indemnification. (a) Termination of the Financial Oversight Panel
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 such abolition unless the action or other proceeding
thereon is commenced prior to the expiration of 2 years after the
date
of such termination.
(b) The Panel may indemnify any member, officer, employee, 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 was a member, officer, employee or agent of the Panel, against
expenses (including attorneys' fees), judgments, fines and amounts
paid
in settlement actually and reasonably incurred by him in connection
with
such action, suit or proceeding, if he acted in good faith and in
a
manner he 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 conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, 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 which he 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 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 or
in
defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably
incurred by him 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 has met the applicable
standard of conduct. The determination shall be made by the Panel
by a
majority vote of a quorum consisting of members who are not parties
to
such action, suit or proceeding, or 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 such 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 such amount,
unless it shall ultimately be determined that he 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 hereunder shall inure
to
the benefit of the heirs, 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 and incurred by him in
any
such capacity, or arising out of his status as such, whether or
not the
Panel would have the power to indemnify him against such liability
under
the provisions of this Section.
(Source: P.A. 86-954.)
(105 ILCS 5/1B-19)
Sec. 1B-19. Abolition of Panel. The Financial Oversight Panel
shall be abolished 10 years after approval of the petition providing
for
its creation, or at such earlier date determined by the State Board.
Upon the abolition of the Panel, all of its rights and property
shall
pass to and be vested in the State.
(Source: P.A. 86-954.)
(105 ILCS 5/1B-20)
Sec. 1B-20. Sanctions. (a) No member, officer, employee, or agent
of the board shall commit the board to any contract or other obligation
or incur any liability on behalf of the board for any purpose if
the
amount of such 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 board shall commit
the board to any contract or other obligation on behalf of the board
for
the payment of money for any purpose required to be approved by
the
Financial Oversight Panel unless such contract or other obligation
has
been approved by the Panel.
(c) No member, officer, employee or agent of the board shall take
any action in violation of any valid order of the Panel or shall
fail or
refuse to take any action required by any such order or shall prepare,
present, or certify any information (including any projections or
estimates) or report for the Panel or any of its agents that is
false or
misleading, or, upon learning that any such information is false
or
misleading, shall 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 board who violates
subsection (a), (b), or (c) of this Section shall be subject to
appropriate administrative discipline, including, if warranted,
suspension from duty without pay, removal from office, or termination
of
employment.
(Source: P.A. 86-954.)
(105 ILCS 5/1B-21)
Sec. 1B-21. Dissolution and annexation. Any school district that
before the effective date of this amendatory Act of 1994 has received
approval from its regional board of school trustees to dissolve
and
annex to an adjoining district and that has had the appointment
of a
Financial Oversight Panel under this Article 1B to assist its continued
operation during the appeal of the decision of the regional board
of
school trustees shall be dissolved and annexed to the adjoining
district
approved in the decision of the regional board of school trustees,
effective July 1, 1994. Except as otherwise provided by this amendatory
Act of 1994, the dissolution and annexation shall be governed by
Article
7 of the School Code and be treated as if the dissolution and annexation
had taken effect pursuant to the decision of the regional board
of
school trustees. The annexing district's supplementary State aid
payable under Section 18-8.3 of the School Code shall be calculated
as
of June 30 prior to the date of the decision of the regional board
of
school trustees.
(Source: P.A. 88-535.)
(105 ILCS 5/1B-22)
Sec. 1B-22. Additional Powers of the Panel. For Panels established
under Section 1B-4 for a district which had its financial plan
rescinded by the State Board for violating that plan as provided
in
Section 1A-8, the Panel shall have the following additional powers:
(a) As necessary to carry out its purposes when district resources
are not readily available or appropriate for use by the Panel, the
Panel
may make 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.
(b) As necessary to carry out its purposes when district resources
are not readily available or appropriate for use by the Panel, the
Panel
may purchase personal property necessary or convenient for its purposes;
mortgage, pledge or otherwise grant security interests in such
properties; and convey to the district such of its property as,
in the
judgment of the Panel, is no longer necessary for its purposes.
(c) As necessary to carry out its purposes when district resources
are not readily available or appropriate for use by the Panel, the
Panel
may appoint officers, agents, and employees of the Panel, define
their
duties and qualifications, and fix their compensation and employee
benefits.
(d) In order to investigate allegations of or incidents of waste,
fraud, or financial mismanagement which the Board is unable or unwilling
to properly investigate as requested by the Panel, the Panel may
appoint
an Inspector General who shall have the authority to conduct
investigations into such allegations or incidents. The Inspector
General
shall make recommendations to the Panel about its investigations.
The
Inspector General shall be independent of the operations of the
Panel
and the Board and perform other duties requested by the Panel. The
Inspector General shall have access to all information and personnel
necessary to perform the duties of the office. If the Inspector
General
determines that a possible criminal act has been committed or that
special expertise is required in the investigation, he shall immediately
notify the State's Attorney in the county in which the district
is
located. All investigations conducted by the Inspector General shall
be
conducted in a manner that ensures the preservation of evidence
for use
in criminal prosecutions. At all times the Inspector General shall
be
granted access to any building or facility that is owned, operated,
or
leased by the Panel or the Board. The Inspector General shall have
the
power to subpoena witnesses and compel the production of books and
papers pertinent to an investigation authorized by this Code. Any
person who (1) fails to appear in response to a subpoena; (2) fails
to
answer any question; (3) fails to produce any books or papers pertinent
to an investigation under this Code; or (4) knowingly gives false
testimony during an investigation under this Code is guilty of a
Class A
misdemeanor. The Inspector General shall provide to the Panel and
the
State Board of Education a summary of reports and investigations
made
under this Section for the previous fiscal year no later than January
1
of each year. The summaries shall detail the final disposition of
those
recommendations. The summaries shall not contain any confidential
or
identifying information concerning the subjects of the reports and
investigations. The summaries shall also include detailed recommended
administrative actions and matters for consideration by the State
Board
of Education or the General Assembly.
(e) No hiring or appointment of any person in any position by the
Board, the superintendent, or any other officer or employee of the
Board
shall be made or entered into unless it is consistent with the Financial
Plan and Budget in effect and the staffing plan approved by the
Panel
under this Section. The hiring or appointment of any person shall
not
be binding on the Board unless and until it is in compliance with
this
Section. The Board shall submit to the Panel for approval by the
Panel
a staffing plan for the upcoming school year at the same time as
the
submission of the Budget, except that the staffing plan for the
fiscal
year ending in 1997 shall be submitted to the Panel within 90 days
after
the effective date of this amendatory Act of 1996. The staffing
plan
shall be accompanied by a cost analysis and such other information
as
the Panel may require. The Panel may prescribe standards, procedures,
and forms for submission of the staffing plan. The Panel shall approve
the staffing plan if the information required to be submitted is
complete and the staffing plan is consistent with the Budget and
Financial Plan in effect. Otherwise, the Panel shall reject the
staffing plan. In the event of rejection, the Panel shall prescribe
a
procedure and standards for revision of the staffing plan. The Panel
shall act on the staffing plan at the same time as the approval
of the
Budget, except that the staffing plan for the fiscal year ending
in 1997
shall be acted upon within 60 days of the submission of the staffing
plan by the Board. The Board shall report to the Panel, at such
times
and in such manner as the Panel may direct, concerning the Board's
compliance with each staffing plan. The Panel may review the Board's
operations, obtaining budgetary data and financial statements, may
require the Board to produce reports, and shall have access to any
other
information in the possession of the Board that it deems relevant.
The
Panel may issue directives to the Board to assure compliance with
the
staffing plan, including the issuance of reduction in force notices,
non-renewal of employment contracts, or any other notices or actions
required by contract or law. The Board shall produce such budgetary
data, financial statements, reports, and other information and shall
comply with such directives. After approval of each staffing plan,
the
Board shall regularly reexamine the estimates on which it was based
and
revise them as necessary. The Board shall promptly notify the Panel
of
any material change in the estimates in the staffing plan. The Board
may submit to the Panel, or the Panel may require the Board to submit,
modifications to the staffing plan based upon revised revenue or
expenditure estimates or for any other good reason. The Panel shall
approve or reject each modified staffing plan within 60 days of
its
submission in a manner similar to the provisions of this subsection
for
the approval or rejection of the initial staffing plan.
(f) The Panel shall examine the business records and audit the
accounts of the Board or require that the Board examine its business
records and audit its accounts at such time and in such manner as
the
Panel may prescribe. The Board shall appoint a certified public
accountant annually, approved by the Panel, to audit its financial
statements. The audit conducted pursuant to this paragraph shall
be in
lieu of the audit that the Board is required to undertake pursuant
to
Section 3-7.
(g) The Panel shall initiate and direct financial management
assessments and similar analyses of the operations of the Board
as may,
in the judgment of the Panel, assure sound and efficient financial
management of the Board. Upon the completion of these assessments,
the
Panel shall give directives to the Board regarding improvements
and
changes that derive from these assessments, which the Board shall
implement. In conjunction with its budgetary submission to the Panel
for each fiscal year, the Board shall demonstrate to the satisfaction
of
the Panel that the directives of the Panel have been implemented
in
whole or in part or, in the alternative, are not capable of being
implemented. In consideration of whether to approve or reject the
budget for a fiscal year, the Panel shall adjudge whether the Board
has
fully considered and responsibly proposed implementation of the
Panel's
directives.
(h) The Panel shall initiate and direct a management audit of the
Board at least once every 2 years. The audit shall review the
personnel, organization, contracts, leases, and physical properties
of
the Board to determine whether the Board is managing and utilizing
its
resources in an economical and efficient manner. The audit shall
determine the causes of any inefficiencies or uneconomical practices,
including inadequacies in internal and administrative procedures,
organizational structure, uses of resources, utilization of real
property, allocation of personnel, purchasing policies, and equipment.
(i) In the event that the Board refuses or fails to follow a
directive of the Panel to issue notices of non-renewal of contracts,
to
issue notices of reduction in force to employees, to issue requests
for
bids or proposals, or to obtain financial or other information that
the
Panel finds necessary for the implementation of its responsibilities
under this Article, the Panel may take such action in the name of
the
district, and such action shall be binding the same as if the action
had
been taken by the Board. The powers established by this paragraph
do
not authorize the Panel to enter into contracts in the name of the
Board.
(j) The Panel shall meet with the Board or its designees in closed
session prior to the Board commencing any collective bargaining
negotiations to discuss the financial issues relevant to the bargaining
and for the purpose of the Panel approving the budget limitations
for
the potential collective bargaining agreement. The Board shall not
make
or consider any proposal which does not comply with the collective
bargaining budget approved by the Panel. The Board shall keep the
Panel
apprised as to the status of the bargaining. The Board shall present
any proposed change in the approved collective bargaining budget
to the
Panel in closed session for approval. Prior to the Board taking
a
final vote on any tentative agreement approved by the employee
organization, the Board shall discuss the tentative agreement with
the
Panel in closed session. Upon final approval of a collective bargaining
agreement by both the Board and the employee organization, the Board
shall submit the final collective bargaining agreement to the Panel
for
approval. At the same time that the Board submits the final agreement
to the Panel, the Board shall notify the employee organization that
the
final agreement has been submitted and the date of the Panel meeting
at
which the final agreement will be considered. The employee organization
shall be provided an opportunity to discuss the final agreement
with the
Panel prior to the Panel taking action on the agreement. No collective
bargaining agreement shall be binding upon the district unless the
Board
has followed the requirements of this paragraph and the final agreement
has been approved by the Panel.
(k) The budget of the Panel or any revisions to the budget,
including any costs to the Panel associated with the appointment
of an
Inspector General, shall be approved by the State Superintendent
upon
request of the Panel and after opportunity for response by the Board.
(Source: P.A. 89-572, eff. 7-30-96.)
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