SCHOOL DISTRICT REORGANIZATION OVERVIEW

A. TYPES OF REORGANIZATION

The following briefly summarizes the approaches to school district reorganization currently available.

Consolidation

Articles 11A and 11B of the School Code govern consolidation, which is the merging of the territory of two or more existing districts to create a new district. Article 11A governs the formation of unit districts from:

1. unit districts only,
2. elementary and secondary districts only, and
3. all three types of districts.

Article 11B governs the formation of elementary districts from two or more entire elementary districts and the formation of secondary districts from two or more entire secondary districts. Consolidation under Article 11A depends upon:

1. The filing by voter signatures or by the affected school boards of a petition which must set forth the maximum tax rates the new district would be authorized to levy; and
2. a public hearing by the regional superintendent followed by his recommendation to the State Superintendent to approve or deny the petition; and
3. a review by the State Superintendent of the petition, the transcript of the hearings, and evidence submitted at the hearings; and
4. a decision by the State Superintendent to approve or deny the petition; and
5. if approved by the State Superintendent, a referendum in which a majority of voters in each affected district vote "yes"; and
6. the election of a new board of education normally at the next regularly scheduled election.

Any action for circuit court review of the State Superintendent's decision must be initiated within a 35-day period as defined in the law.The same process is required for consolidation proposals under Article 11B with the exception that Article 11A propositions pass if a majority of voters in each affected district vote in favor of the proposition; the passage of an Article 11B proposition requires only a majority of those voting overall.

Annexation

Articles 7 and 7A of the School Code govern annexations. Article 7 annexations involve boundary changes ranging from detaching a small portion of territory from one district and annexing it to another to the merging into one or more districts of the entire territory of a district thereby dissolving it. This section deals only with annexations which result in the dissolution of a district. Article 7A authorizes the annexation of all the territory of a unit district into a contiguous high school district and the simultaneous dissolving of the unit district and the conversion of its territory into an elementary district. The process to be followed under these two articles is very different.

Article 7A

The Article 7A procedures resemble those of the consolidation laws. The petition may be filed by the affected boards or by a specified number of voters. The petition filed with the regional superintendent must contain the maximum tax rates for both the annexing high school district and the proposed new elementary district. If the State Superintendent approves the petition, the proposition goes to referendum, and a majority of voters in both the high school district and the unit district proposed to be converted must vote "yes" for the proposition to pass. If it passes, a new board is then elected for the newly created elementary district normally at the next regularly scheduled election.

Article 7

Under Article 7 a new district is not created, a new board is not elected, and the maximum tax rates of the annexing district are not changed. The annexation by one district of one of its neighboring districts can involve merely the filing of a joint petition by the boards of the affected school districts with the regional board of school trustees and a public hearing by the regional board, followed by a decision by the regional board. In addition to petitioning the regional board by district board action, a majority of registered voters may submit petitions.On August 17, 1997, Governor Edgar signed P.A. 90-459(HB574) into law. Consequently, any annexation of the entire territory of any district (elementary, high school, or unit) must now go to referendum and must pass in each affected district. Unlike consolidations, however, the petition does NOT go on to the State Board. Once the Regional School Trustees make the decision to approve a petition, arrangements must be made to have the proposed annexation placed on the ballot at the next regularly scheduled election.

Voluntary Dissolution

In 1989, Article 7 was amended to allow the voluntary dissolution of a small district. This amendment authorizes a district with a population of less than 5,000 to be dissolved upon petition by either the board of education or a majority of the voters to the regional board of trustees. If the petition does not specify a district or districts to which the territory is to be annexed, the regional board "shall have no authority to deny dissolution." Its decision on annexation shall give "consideration to but not be bound by the wishes expressed by the residents of the various school districts that may be affected by such annexation."

Unit District Conversions

Under Article 11D, the unit district conversion law, a single new high school district and new elementary districts based upon the boundaries of dissolved unit districts may be formed from either: 1) two or more contiguous unit districts or 2) one or more unit districts and one or more high school districts, all of which are contiguous. This reorganization option guarantees residents of existing unit districts continued control over elementary school programs, while at the same time creating higher enrollment high schools.The procedures for Article 11D reorganizations closely resemble those for consolidation. Among the requirements are: 1) the petition can be filed either by the affected boards or voter signature; 2) the petition must set the maximum tax rates for all the proposed districts; 3) the petition must provide for the division of liabilities and assets (including any state deficit difference payment) among the proposed new districts; and 4) the proposal shall pass if a majority of the voters in each affected district vote in favor of the proposition.

High School Deactivation and Cooperative High School Attendance Centers

High School Deactivation

Under Section 10-22.22b, a district can deactivate its high school facility and send its students in grades 9 through 12 to one or more other districts. Deactivation requires the approval of the board or boards of the receiving district or districts and of the majority of those voting upon the proposition in the sending district. The sending district shall pay to the receiving district an amount agreed upon by the two districts. Reactivation is allowed by vote of the people in the sending district.

Cooperative High School Attendance Centers

Under Section 10-22.22c, two or more contiguous unit or high school districts, each with grades 9-12 enrollment of fewer than 600 students, may jointly operate one or more cooperative high school attendance centers if the voters in each district approve. Upon such approval the boards shall enter into an agreement for joint operation. A cooperative attendance center advisory board shall be established, and it shall be made up of members of the cooperating school boards. The advisory board is to prepare and recommend for the cooperative attendance center a budget which must be approved by each of the participating districts.

SUPPLEMENTARY STATE AID UNDER ARTICLES 18 AND 11D

A major incentive for mergers was the authorization by the General Assembly in 1983 of three supplementary state aid payments to newly consolidated districts. This program of payments has been extended over the years to include other types of reorganizations. Except for high school deactivation and cooperative high school attendance centers, all the types of reorganization qualify for these payments.Although commonly called "incentive" payments, these three payments available to reorganized districts were in fact designed to encourage mergers by eliminating certain fiscal disincentives that had inhibited mergers. Two payments are made annually for four years. They are for:a) Any loss in general state aid resulting from a merger; and b) The difference in teacher salaries among the emerged district.A third program authorizes a one-time payment to cover fund balances deficits incurred by the districts prior to reorganization.In contrast, a fourth "incentive" program authorized in 1989 simply provides additional funds. This provides $4,000 for each certified staff member who is employed by a reorganized district on a full-time basis for the regular term for the one, two, or three years after the reorganization.

1. The General State Aid Difference Payment (Section 18-8.05(I) of the School Code).Qualifying for this payment are new school districts formed by combining property within two or more previously existing districts under Article 11A or 11B and school districts which annex all of the territory of one or more other school districts under Article 7 or 7A. If the general state aid is less for the newly consolidated/annexed district in the first year than the general state aid would have been that same year on the basis of the previously existing districts, a supplementary payment equal to the difference shall be made for the first four years to the new district/annexing district. Also eligible for this payment are the new elementary districts and the new high school district formed under Article 11D if these new districts qualify for less state aid than would have been payable to the previously existing districts.
2. Teacher Salary Difference Payment (Section 18-8.2 of the School Code). The state will make a supplementary payment for four years to the districts formed under Article 11A or 11B, or annexed under Article 7 or 7A equal to the difference between the sum of the salaries earned by each certified member of the new district while employed in one of the previously existing districts, and the sum of the salaries those certified members would have been paid if placed on the salary schedule of the previously existing district with the highest salary schedule. The salaries used in these calculations are those in effect in each of the previously existing districts on June 30 prior to the creation of the new district.The state will also make this supplementary payment to the newly formed high school district under Article 11D.
3. Deficit Difference Payment (Section 18-8.3, the School Code). Eligible for this payment are new school districts formed by combining property within two or more previously existing districts under Article 11A, 11B, or 11D and school districts which annex all of the territory of one or more entire other districts under Article 7 or 7A. The payment is made once and is equal to the difference between the larger and smaller deficits. If more than two districts are involved, the payment is equal to the sum of the differences between the smallest deficit and each of the other deficits.Based on the method set forth in Section 18-8.3(c), and subtracting out early tax distributions, deficits are calculated by totaling the audited fund balances in the educational fund, the working cash fund, the operations and maintenance fund and the transportation fund for each previously existing district, or for each of the annexing and annexed districts, as the case may be. A district with a combined fund balance that is positive will be considered to have a deficit of zero. The calculation is based on the year ending June 30 preceding the decision authorizing the reorganization. The decision authorizing the reorganization is the successful referendum.An additional calculation shall be made for the education, operations and maintenance and transportation funds to determine the average annual expenditures for certain categories for the three years prior to the year ending June 30 preceding the decision authorizing the reorganization; and for the year ending June 30 preceding the decision authorizing the reorganization. The decision authorizing the reorganization is the successful referendum. The categories are "purchased services," "supplies and materials" and "capital outlay." If the three year average is less than the district’s expenditures in these three categories for the year ending June 30 preceding the authorization of the reorganization, the three year average shall be used in the calculation of the amounts payable in place of the amounts shown in these categories for the year preceding the authorization.
4. $4,000 Payment for Certified Employee (Section 18-8.5)For one, two, or three school years, a supplementary state aid reimbursement shall be paid to a reorganized district equal to the sum of $4,000 for each certified employee who is employed by the district on a full-time basis for the regular term of a school year.Reorganized districts qualify for one, two, or three payments based on enrollment and wealth. The number of payments to a reorganized district is based on its rank by type of district (unit, high school, elementary) in 1) Equalized Assessed Valuation (EAV) per pupil by quintile and 2) average daily attendance (ADA) by quintile.The State Board shall make a one-time calculation of each reorganized district quintile ranks based on ADA and EAV data for the reorganized district’s first year.If a district results from multiple reorganizations that would otherwise qualify the district for multiple payments in any year, the district shall receive a single payment only for that year based solely on the most recent reorganization. Reorganized districts qualifying for this payment are:
1. new school districts formed under Article 11A and 11B;
2. new elementary districts formed under Article 7A;
3. one or more annexing districts following the annexation of all the territory of one or more entire school district, but only if an annexing district acquires at least 30 percent of the average daily attendance of the district being dissolved;
4. unit districts formed under Article 11A resulting from the division of a unit district or districts into two or more parts, all of which are included in the two or more unit districts resulting upon the division; and
5. the school districts formed under Article 11D.

    

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