Statutes > Illinois Statutes > CHAPTER 105 SCHOOLS > 105 ILCS 5/ School Code. > Article 1B - School District Financial Oversight Panel And Emergency Financial Assistance

Article 1B - School District Financial Oversight Panel And Emergency Financial Assistance


      (105 ILCS 5/Art. 1B heading)
ARTICLE 1B. SCHOOL DISTRICT FINANCIAL
OVERSIGHT PANEL AND EMERGENCY
FINANCIAL ASSISTANCE

    (105 ILCS 5/1B‑1) (from Ch. 122, par. 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) (from Ch. 122, par. 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) (from Ch. 122, par. 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) (from Ch. 122, par. 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) (from Ch. 122, par. 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) (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 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;
    (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; 92‑855, eff. 12‑6‑02.)

    (105 ILCS 5/1B‑7) (from Ch. 122, par. 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‑7.5)
    Sec. 1B‑7.5. Hiring of a district superintendent or chief executive officer.
    (a) Upon expiration of the contract of the school district's superintendent who is serving at the time the Financial Oversight Panel is established, a school district under the authority of a Financial Oversight Panel, after consultation with the Financial Oversight Panel, shall have the authority to appoint a district superintendent with a type 75 certificate or a chief executive officer who has the skills of school operations and school finance and who shall have the ultimate responsibility for implementing the policies, procedures, directives, and decisions of the school board and the Financial Oversight Panel.
    (b) The chief executive officer shall have the authority to determine the agenda and order of business at school board meetings, as needed in order to carry forward and implement the objectives and priorities of the school board and Financial Oversight Panel in the administration and management of the school district.
    (c) The chief executive officer 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 school board and Financial Oversight Panel, in accordance with this Code. The district shall not thereafter employ a superintendent during the period that a chief executive officer is serving the district.
    (d) The Financial Oversight Panel shall have the final approval of the superintendent or chief executive officer position under this Section as well as the person, based upon his or her skills to fulfill the position.
(Source: P.A. 96‑401, eff. 8‑13‑09.)

    (105 ILCS 5/1B‑7.10)
    Sec. 1B‑7.10. Hiring of a chief fiscal officer.
    (a) In lieu of a Financial Oversight Panel Financial Administrator under Section 1B‑7 of this Code, a school district under the authority of a Financial Oversight Panel, after consultation with the Financial Oversight Panel, may appoint a chief fiscal officer who, under the direction of the school board and Financial Oversight Panel, shall have 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 school board or Financial Oversight Panel in accordance with this Code. The district may not employ a chief school business official during the period that the chief fiscal officer is serving in the district. The chief fiscal officer may but is not required to hold a certificate with a chief school business official endorsement issued under Article 21 of this Code.
    (b) The Financial Oversight Panel shall have the final approval of the chief fiscal officer position under this Section as well as the person, based upon his or her skills to fulfill the position.
(Source: P.A. 96‑401, eff. 8‑13‑09.)

    (105 ILCS 5/1B‑8)(from Ch. 122, par. 1B‑8)
    Sec. 1B‑8. There is created in the State Treasury a special fund to be known as the School District Emergency Financial Assistance Fund (the "Fund"). The School District Emergency Financial Assistance Fund shall consist of appropriations, loan repayments, grants from the federal government, and donations from any public or private source. Moneys in the Fund may be appropriated only to the Illinois Finance Authority and the State Board for those purposes authorized under this Article and Article 1F of this Code. The appropriation may be allocated and expended by the State Board as grants to provide technical and consulting services to school districts to assess their financial condition and by the Illinois Finance Authority as loans to school districts which are the subject of an approved petition for emergency financial assistance under Section 1B‑4 or 1F‑62 of this Code. Neither the State Board of Education nor the Illinois Finance Authority may collect any fees for providing these services. From the amount allocated to each such school district 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 its operations budget. No expenditures shall be authorized by the State Superintendent until he or she has approved the proposal of the Panel, either as submitted or in such lesser amount determined by the State Superintendent.
    The maximum amount of an emergency financial assistance loan which may be allocated to any school district under this Article, including moneys necessary for the operations of the Panel, shall not exceed $4,000 times the number of pupils enrolled in the school district during the school year ending June 30 prior to the date of approval by the State Board of the petition for emergency financial assistance, as certified to the local board and the Panel by the State Superintendent. An emergency financial assistance grant shall not exceed $1,000 times the number of such pupils. A district may receive both a loan and a grant.
    The payment of an emergency State financial assistance grant or loan shall be subject to appropriation by the General Assembly. Emergency State financial assistance allocated and paid to a school district under this Article may be applied to any fund or funds from which the local board of education of that district is authorized to make expenditures by law.
    Any emergency financial assistance proposed by the Financial Oversight Panel and approved by the State Superintendent may be paid in its entirety during the initial year of the Panel's existence or spread in equal or declining amounts over a period of years not to exceed the period of the Panel's existence. All loan payments made from the School District Emergency Financial Assistance Fund for a school district shall be required to be repaid, with simple interest over the term of the loan at a rate equal to 50% of the one‑year Constant Maturity Treasury (CMT) yield as last published by the Board of Governors of the Federal Reserve System before the date on which the district's loan is approved by the State Board of Education, not later than the date the Financial Oversight Panel ceases to exist. The Panel shall establish and the Illinois Finance Authority shall approve the terms and conditions, including the schedule, of repayments. The schedule shall provide for repayments commencing July 1 of each year or upon each fiscal year's receipt of moneys from a tax levy for emergency financial assistance. Repayment shall be incorporated into the annual budget of the school district and may be made from any fund or funds of the district in which there are moneys available. Default on repayment is subject to the Illinois Grant Funds Recovery Act. When moneys are repaid as provided herein they shall not be made available to the local board for further use as emergency financial assistance under this Article at any time thereafter. All repayments required to be made by a school district shall be received by the State Board and deposited in the School District Emergency Financial Assistance Fund.
    In establishing the terms and conditions for the repayment obligation of the school district the Panel shall annually determine whether a separate local property tax levy is required. The board of any school district with a tax rate for educational purposes for the prior year of less than 120% of the maximum rate for educational purposes authorized by Section 17‑2 shall provide for a separate tax levy for emergency financial assistance repayment purposes. Such tax levy shall not be subject to referendum approval. The amount of the levy shall be equal to the amount necessary to meet the annual repayment obligations of the district as established by the Panel, or 20% of the amount levied for educational purposes for the prior year, whichever is less. However, no district shall be required to levy the tax if the district's operating tax rate as determined under Section 18‑8 or 18‑8.05 exceeds 200% of the district's tax rate for educational purposes for the prior year.
(Source: P.A. 94‑234, eff. 7‑1‑06.)

    (105 ILCS 5/1B‑9) (from Ch. 122, par. 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) (from Ch. 122, par. 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) (from Ch. 122, par. 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) (from Ch. 122, par. 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) (from Ch. 122, par. 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) (from Ch. 122, par. 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