Legislation for Hazel Crest School District 152.5 School Finance Authority

Amended Sections 18-50.1
Amended Sections 18-92
Amended Sections 18-101.47
Amended Section 1B-6
Amended Section 1B-8Article F. Downstate School Finance Authority For Elementary Schools

5/1F-1 Short Title
5/1F-5 Findings; purpose; intent
5/1F-10 Definitions
5/1F-15 Establishment of Authority: duties of district
5/1F-20 Members of Authority, meetings
5/1F-25 General Powers
5/1F-30 Chief executive officer
5/1F-35 Chief educational officer
5/1F-40 Chief fiscal officer
5/1F-45 Collective bargaining agreements
5/1F-50 Deposits and investments
5/1F-55 Cash accounts and bank accounts
5/1F-60 Financial, management, and budgetary structure
5/1F-62 School District Emergency Financial Assistance Fund; loans
5/1F-90 Tax anticipation warrants
5/1F-115 State or district not liable on obligations
5/1F-120 Obligations as legal investments
5/1F-130 Reports
5/1F-135 Audit of Authority
5/1F-140 Assistance by State agencies, units of local government, and school districts
5/1F-145 Property of Authority exempt from taxation
5/1F-150 Sanctions
5/1F-155 Abolition of Authority
5/1F-160 Limitations of actions after abolition; indemnification; legal representation

5/17-11.2

An ACT with regard to 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 adding Sections 18-50.1, 18-92 and 18-101.47 as follows:

(35 ILCS 200/18-50.1 new)
Sec. 18-50.1. Notwithstanding any other law to the contrary, any levy adopted by a School Finance Authority created under Article 1F 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 in sufficient time to allow the county clerk to include the levy in the extension for the taxable year.

(35 ILCS 200/18-92 new)
Sec. 18-92. Downstate School Finance Authority for Elementary Districts Law. The provisions of the Truth in Taxation Law are subject to the Downstate School Finance Authority for Elementary Districts Law.

(35 ILCS 200/18-101.47 new)
Sec. 18-101.47. Downstate School Finance Authority for Elementary Districts Law. The provisions of the Cook County Truth in Taxation Law are subject to the Downstate School Finance Authority for Elementary Districts Law.

Section 10. The School Code is amended by changing Sections 1B-6 and 1B-8 and adding Article 1F and Section17-11.2 as follows:

(105 ILCS 5/1B-6) (from Ch. 122, par. 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 1 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; and.

(t) to recommend the creation of a school finance authority pursuant to Article 1F of this Code.
(Source: P.A. 91-357, eff. 7-29-99.)

(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, 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 and for the purposes of Section 1F-62 of this Code. 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 one-year Constant Maturity Treasury (CMT) yield as last published by the Board of Governors of the Federal Reserve System before 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/Art. 1F heading new)

ARTICLE 1F. DOWNSTATE SCHOOL FINANCE AUTHORITY FOR ELEMENTARY DISTRICTS

(105 ILCS 5/1F-1 new)

Sec. 1F-1. Short title. This Article may be cited as the Downstate School Finance Authority for Elementary Districts Law.

(105 ILCS 5/1F-5 new)
Sec. 1F-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 school finance authorities 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 education within the State, consistent with the requirements for satisfying the public policy and purpose set forth in this Article.

(105 ILCS 5/1F-10 new)

Sec. 1F-10. Definitions. As used in this Article:

"Authority" means a School Finance Authority created under this Article.

"Bonds" means bonds authorized to be issued by the Authority under Section 1F-65 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 Authority.

"District" means any elementary school district having a population of not more than 500,000 that prior to December 1, 2002 has had a Financial Oversight Panel established for the district under Section 1B-4 of this Code following the district's petitioning of the State Board of Education for the creation of the Financial Oversight Panel.

"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.

"State Board" means the State Board of Education.

"State Superintendent" means the State Superintendent of Education.

"Obligations" means bonds and notes of the Authority.

(105 ILCS 5/1F-15 new)

Sec. 1F-15. Establishment of Authority; duties of district.

(a) A Financial Oversight Panel created under Article 1B of this Code for a district may petition the State Board for the establishment of a School Finance Authority for the district. The petition shall cite the reasons why the creation of a School Finance Authority 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 an Authority without a petition from a Financial Oversight Panel. In any event, an Authority may only be established by resolution of the State Board within 5 days after the effective date of this amendatory Act of the 92nd General Assembly.

(b) Upon establishment of the Authority, 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) School Finance Authority", which in this name shall exercise all authority vested in an Authority by this Article.

(2) The Financial Oversight Panel is abolished, and all of its rights, property, assets, contracts, and liabilities shall pass to and be vested in the Authority.

(3) The duties and obligations of the district under Article 1B of this Code shall be transferred and become duties and obligations owed by the district to the School Finance Authority.

(c) In the event of a conflict between the provisions of this Article and the provisions of Article 1B of this Code, the provisions of this Article control.

(105 ILCS 5/1F-20 new)

Sec. 1F-20. Members of Authority; meetings.

(a) Upon establishment of a School Finance Authority under Section 1F-15 of this Code, the State Superintendent shall within 15 days thereafter appoint 5 members to serve on a School Finance Authority for the district. Of the initial members, 2 shall be appointed to serve a term of 2 years and 3 shall be appointed to serve a term of 3 years. Thereafter, each member shall serve for a term of 3 years and until his or her successor has been appointed. The State Superintendent shall designate one of the members of the Authority to serve as its Chairperson. In the event of vacancy or resignation, the State Superintendent shall, within 10 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.

Members of the Authority shall be selected primarily on the basis of their experience and education in financial management, with consideration given to persons knowledgeable in education finance. Two members of the Authority shall be residents of the school district that the Authority serves. A member of the Authority 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.

Authority members shall serve without compensation, but 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 1F-65 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 1B-8 of this Code.

The Authority may elect such officers as it deems appropriate.

(b) The first meeting of the Authority shall be held at the call of the Chairperson. The Authority 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.

Three members of the Authority shall constitute a quorum. When a vote is taken upon any measure before the Authority, a quorum being present, a majority of the votes of the members voting on the measure shall determine the outcome.

(105 ILCS 5/1F-25 new)

Sec. 1F-25. General powers. The purposes of the Authority 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 Authority 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 Authority shall have no power to terminate any employee without following the statutory procedures for such terminations set forth in 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 1F-45 of this Code. The Authority may at a regular or special meeting find that the district has insufficient or inadequate funds with respect to any contract, other than collective bargaining agreements.

(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 Authority, is no longer necessary for its purposes.

(4) To appoint officers, agents, and employees of the Authority, including a chief executive officer, a chief fiscal officer, and a chief educational officer; to define their duties and qualifications; and to fix their compensation and employee 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.

(6.5) To levy all property tax levies that otherwise could be levied by the district, and to make levies pursuant to Section 1F-62 of this Code. This levy or levies shall be exempt from the Truth in Taxation Law and the Cook County Truth in Taxation Law.

(7) Subject to the provisions of any contract with or for the benefit of the holders of its obligations, to purchase or redeem its obligations.

(8) To procure all necessary goods and services for the Authority in compliance with the purchasing laws and requirements applicable to the district.

(9) To do any and all things necessary or convenient to carry out its purposes and exercise the powers given to it by this Article.

(10) To recommend annexation, consolidation, dissolution, or reorganization of the district, in whole or in part, to the State Board if in the Authority's judgment the circumstances so require. No such proposal for annexation, consolidation, dissolution, or reorganization shall occur unless the Authority and the school boards of all other districts directly affected by the annexation, consolidation, dissolution, or reorganization have each approved by majority vote the annexation, consolidation, dissolution, or reorganization. Notwithstanding any other law to the contrary, upon approval of the proposal by the State Board, the State Board and all other affected entities shall forthwith implement the proposal. When a dissolution and annexation becomes effective for purposes of administration and attendance, the positions of teachers in contractual continued service in the district being dissolved shall be transferred to the annexing district or districts, pursuant to the provisions of Section 24-12 of this Code. In the event that the territory is added to 2 or more districts, the decision on which positions shall be transferred to which annexing districts shall be made by giving consideration to the proportionate percentage of pupils transferred and the annexing districts' staffing needs, and the transfer of teachers in contractual continued service into positions shall be based upon the request of those teachers in contractual continued service in order of seniority in the dissolving district. The status of all teachers in contractual continued service transferred to an annexing district shall not be lost, and the board of the annexing district is subject to this Code with respect to teachers in contractual continued service who are transferred in the same manner as if the person were the annexing district's employee and had been its employee during the time the person was actually employed by the board of the dissolving district from which the position was transferred.

(105 ILCS 5/1F-30 new)

Sec. 1F-30. Chief executive officer. The Authority may appoint a chief executive officer who, under the direction of the Authority, shall supervise the Authority'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 Authority.

(105 ILCS 5/1F-35 new)

Sec. 1F-35. Chief educational officer. The Authority 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 Authority is established. If there is no superintendent, then the Authority shall, following consultation with the district, 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 Authority in accordance with this Code. The chief educational officer shall report to the Authority or the chief executive officer appointed by the Authority. 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 shall hold a certificate with a superintendent endorsement issued under Article 21 of this Code.

(105 ILCS 5/1F-40 new)

Sec. 1F-40. Chief fiscal officer. The Authority may appoint a chief fiscal officer who, under the direction of the Authority, 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 Authority, 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 may but is not required to hold a certificate with a chief school business official endorsement issued under Article 21 of this Code.

(105 ILCS 5/1F-45 new)

Sec. 1F-45. Collective bargaining agreements. The Authority shall have the power to negotiate collective bargaining 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 Authority, and the district 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 5/1F-50 new)

Sec. 1F-50. Deposits and investments.

(a) The Authority 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 Authority may invest any funds not required for immediate use or disbursement, as provided in the Public Funds Investment Act.

(105 ILCS 5/1F-55 new)

Sec. 1F-55. Cash accounts and bank accounts.

(a) The Authority 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 Authority may prescribe.

(b) The Authority shall have the power to assume exclusive administration of the cash accounts and bank accounts of the 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 5/1F-60 new)

Sec. 1F-60. Financial, management, and budgetary structure. Upon direction of the Authority, the district shall reorganize the financial accounts, management, and budgetary systems of the district in whatever manner the Authority deems appropriate to achieve greater financial responsibility and to reduce financial inefficiency.

(105 ILCS 5/1F-62 new)

Sec. 1F-62. School District Emergency Financial Assistance Fund; 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 emergency financial assistance loans to an Authority that petitions for emergency financial assistance. An emergency financial assistance loan to an Authority 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 amount of an emergency financial assistance loan that may be allocated to an Authority under this Article, including moneys necessary for the operations of the Authority, and borrowing from sources other than the State shall 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 by the State Board of the petition for emergency financial assistance, as certified to the school board and the Authority by the State Superintendent. However, this limitation does not apply to borrowing by the district secured by amounts levied by the district prior to establishment of the Authority.

(c) The payment of a State emergency financial assistance loan shall be subject to appropriation by the General Assembly. State emergency financial assistance allocated and paid to an Authority under this Article may be applied to any fund or funds from which the Authority is authorized to make expenditures by law.

(d) Any State emergency financial assistance proposed by the Authority and approved by the State Superintendent may be paid in its entirety during the initial year of the Authority's existence or spread in equal or declining amounts over a period of years not to exceed the period of the Authority's existence. The State Superintendent shall not approve any loan to the Authority unless the Authority has been unable to borrow sufficient funds to operate the district.

All loan payments made from the School District Emergency Financial Assistance Fund to an Authority shall be required to be repaid not later than the date the Authority 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 Authority's loan is approved by the State Board.

The Authority shall establish and the State Superintendent 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. Repayment shall 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. When moneys are repaid as provided in this Section, they shall not be made available to the Authority for further use as emergency financial assistance under this Article at any time thereafter. All repayments required to be made by an Authority 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 Authority, the Authority shall annually determine whether a separate local property tax levy is required to meet that obligation. The Authority shall provide for a separate tax levy for emergency financial assistance repayment purposes. This tax levy shall not be subject to referendum approval. The amount of the levy shall not exceed the amount necessary to meet the annual emergency financial repayment obligations of the district, including principal and interest, as established by the Authority.

(105 ILCS 5/1F-90 new)

Sec. 1F-90. Tax anticipation warrants. An Authority shall have the same power to issue tax anticipation warrants as a school board under Section 17-16 of this Code. Tax anticipation warrants are considered borrowing from sources other than the State and are subject to Section 1F-62 of this Code.

(105 ILCS 5/1F-115 new)

Sec. 1F-115. 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 Authority 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 Authority 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 Authority to levy any form of taxation therefor or to make any appropriation for their payment. Nothing in this Section shall prevent or be construed to prevent the Authority from pledging its full faith and credit to the payment of obligations. Nothing in this Article shall be construed to authorize the Authority 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 Authority 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 Authority or for the performance of any pledge, obligation, or agreement of any kind whatsoever that may be undertaken by the Authority. 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 5/1F-120 new)

Sec. 1F-120. 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 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 5/1F-130 new)

Sec. 1F-130. Reports.

(a) The Authority, 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, an approved financial plan, and a statement of the major steps necessary to accomplish the objectives of the financial plan.

(b) Annual reports shall be submitted on or before March 1 of each year.

(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 5/1F-135 new)

Sec. 1F-135. Audit of Authority. The Authority shall be subject to audit in the manner provided for the audit of State funds and accounts. A copy of the audit report shall be submitted to the State Superintendent, the Governor, the Speaker and Minority Leader of the House of Representatives, and the President and Minority Leader of the Senate.

(105 ILCS 5/1F-140 new)

Sec. 1F-140. 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 Authority at no charge as may be requested by the Authority. Any State agency, unit of local government, or school district may, within its lawful powers and duties, render such services to the Authority as may be requested by the Authority. Upon request of the Authority, any State agency, unit of local government, or school district is authorized and empowered to loan to the Authority such officers and employees as the Authority may deem necessary in carrying out its functions and duties. Officers and employees so transferred shall not lose or forfeit their employment status or rights.

(105 ILCS 5/1F-145 new)

Sec. 1F-145. Property of Authority exempt from taxation. The property of the Authority is exempt from taxation.

(105 ILCS 5/1F-150 new)

Sec. 1F-150. 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 Authority unless the contract or other obligation has been approved by the Authority.

(c) No member, officer, employee, or agent of the district may take any action in violation of any valid order of the Authority, 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 Authority or any of its agents that is false or misleading, or, upon learning that any such information is false or misleading, may fail promptly to advise the Authority 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 Authority, including, if warranted, suspension from duty without pay, removal from office, or termination of employment.

(105 ILCS 5/1F-155 new)

Sec. 1F-155. Abolition of Authority. The Authority 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 Authority and if no obligations are outstanding, may abolish the Authority at any time after the Authority has been in existence for 3 years. Upon the abolition of the Authority, all of its records shall be transferred to the State Board and any property of the Authority shall pass to and be vested in the State Board.

(105 ILCS 5/1F-160 new)

Sec. 1F-160. Limitations of actions after abolition; indemnification; legal representation.

(a) Abolition of the Authority pursuant to Section 1F-155 of this Code shall bar any remedy available against the Authority, 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.

(b) The Authority 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 or she was a member, officer, employee, or agent of the Authority, 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 Authority 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 interest of the Authority 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 Authority has been successful, on the merits or otherwise, in the defense of any such action, suit, or proceeding referred to in this subsection (b) 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 incurred by him or her in connection therewith. Any such indemnification shall be made by the Authority 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 Authority 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 Authority in advance of the final disposition of the action, suit, or proceeding, as authorized by the Authority 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 Authority 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, executors, and administrators of any member, officer, employee, or agent of the Authority.

The Authority may purchase and maintain insurance on behalf of any person who is or was a member, officer, employee, or agent of the Authority 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 Authority would have the power to indemnify him or her against the liability under the provisions of this Section.

The Authority shall be considered a State agency for purposes of receiving representation by the Attorney General. Members, officers, employees, and agents of the Authority shall be entitled to representation and indemnification under the State Employee Indemnification Act.

(105 ILCS 5/17-11.2 new)

Sec. 17-11.2. Notwithstanding any other law to the contrary, any levy adopted by a School Finance Authority created under Article 1F of this Code is valid and shall be extended by the county clerk if it is certified to the county clerk by the Authority in sufficient time to allow the county clerk to include the levy in the extension for the taxable year.

Section 99. Effective date. This Act takes effect upon becoming law.