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Article 1E - Downstate School Finance Authority

      (105 ILCS 5/Art. 1E heading)ARTICLE 1E. DOWNSTATE SCHOOL FINANCE AUTHORITY

(105 ILCS 5/1E‑1)     Sec. 1E‑1. Short title. This Article may be cited as the Downstate School Finance Authority Law. (Source: P.A. 92‑547, eff. 6‑13‑02.)

(105 ILCS 5/1E‑5)     Sec. 1E‑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. (Source: P.A. 92‑547, eff. 6‑13‑02.)

(105 ILCS 5/1E‑10)     Sec. 1E‑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 1E‑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 school district having a population of not more than 500,000 that prior to the effective date of this amendatory Act of the 92nd General Assembly 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 and for which the Financial Oversight Panel has been in existence for at least one year.     "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. (Source: P.A. 92‑547, eff. 6‑13‑02.)

(105 ILCS 5/1E‑15)     Sec. 1E‑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.     (b) Upon approval of the petition by the State Board 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. (Source: P.A. 92‑547, eff. 6‑13‑02.)

(105 ILCS 5/1E‑20)     Sec. 1E‑20. Members of Authority; meetings.     (a) When a petition for a School Finance Authority is allowed by the State Board under Section 1E‑15 of this Code, the State Superintendent shall within 10 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 1E‑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. (Source: P.A. 92‑547, eff. 6‑13‑02.)

    (105 ILCS 5/1E‑25)
    Sec. 1E‑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 violate any statutory provision, to impair any contract or obligation of the district, or 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 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.

(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 administer and manage, under the direction of the Authority, the operations and educational programs of the district, in accordance with this Article and all other provisions of this Code; 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 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.

(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.

(8.5) To take action on behalf of the district as

the Authority deems necessary and in accordance with this Article and all other provisions of this Code, based on the recommendation of the chief executive officer, chief educational officer, or chief fiscal officer, and the district shall be bound by such action in all respects as if the action had been approved by the district itself.

(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.

(Source: P.A. 94‑234, eff. 7‑14‑05.)

(105 ILCS 5/1E‑30)     Sec. 1E‑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. (Source: P.A. 92‑547, eff. 6‑13‑02.)

    (105 ILCS 5/1E‑35)
    Sec. 1E‑35. Chief educational officer. Upon expiration of the contract of the school district's superintendent who is serving at the time the Authority is established, the Authority shall, following consultation with the district, employ a chief educational officer for the district. The chief educational officer shall report to the Authority or the chief executive officer appointed by the Authority.
    The chief educational officer shall have 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 Authority in the administration and management of the district.
    The chief educational 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 Authority, in accordance with this Code. 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.
(Source: P.A. 94‑234, eff. 7‑14‑05.)

(105 ILCS 5/1E‑40)     Sec. 1E‑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. (Source: P.A. 92‑547, eff. 6‑13‑02.)

(105 ILCS 5/1E‑45)     Sec. 1E‑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. (Source: P.A. 92‑547, eff. 6‑13‑02.)

(105 ILCS 5/1E‑50)     Sec. 1E‑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. (Source: P.A. 92‑547, eff. 6‑13‑02.)

(105 ILCS 5/1E‑55)     Sec. 1E‑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. (Source: P.A. 92‑547, eff. 6‑13‑02.)

(105 ILCS 5/1E‑60)     Sec. 1E‑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. (Source: P.A. 92‑547, eff. 6‑13‑02.)

(105 ILCS 5/1E‑65)     Sec. 1E‑65. Power to issue bonds.     (a) The Authority may incur indebtedness by the issuance of negotiable full faith and credit general obligation bonds of the Authority in an outstanding amount not to exceed at any time, including existing indebtedness, 13.8% of the district's most recent equalized assessed valuation, excluding Bonds of the Authority that have been refunded, for (i) the purpose of providing the district with moneys for ordinary and necessary expenditures and other operational needs of the district; (ii) payment or refunding of outstanding debt obligations or tax anticipation warrants of the district, the proceeds of which were used to provide financing for the district; (iii) payment of fees for arrangements as provided in subsection (b) of Section 1E‑70 of this Code; (iv) payment of interest on Bonds; (v) establishment of reserves to secure Bonds; (vi) the payment of costs of issuance of Bonds; (vii) payment of principal of or interest or redemption premium on any Bonds or notes of the Authority; and (viii) all other expenditures of the Authority incidental to and necessary or convenient for carrying out its corporate purposes and powers.     (b) The Authority may from time to time (i) issue Bonds to refund any outstanding Bonds or notes of the Authority, whether the Bonds or notes to be refunded have or have not matured or become redeemable, and (ii) issue Bonds partly to refund Bonds or notes then outstanding and partly for any other purpose set forth in this Section.     (c) Bonds issued in accordance with subsection (a) of this Section are not subject to any other statutory limitation as to debt, including without limitation that established by the Local Government Debt Limitation Act, and may be issued without referendum. (Source: P.A. 92‑547, eff. 6‑13‑02.)

(105 ILCS 5/1E‑70)     Sec. 1E‑70. Terms of bonds.     (a) Whenever the Authority desires or is required to issue Bonds as provided in this Article, it shall adopt a resolution designating the amount of the Bonds to be issued, the purposes for which the proceeds of the Bonds are to be used, and the manner in which the proceeds shall be held pending the application thereof. The Bonds shall be issued in the corporate name of the Authority and shall bear such date or dates and shall mature at such time or times, not exceeding 20 years from their date, as the resolution may provide. The Bonds may be issued as serial bonds payable in installments, as term bonds with sinking fund installments, or as a combination of these as the Authority may determine in the resolution. The Bonds shall be in such denominations as the Authority may determine. The Bonds shall be in such form, carry such registration privileges, be executed in such manner, be payable at such place or places, and be subject to such terms of redemption at such redemption prices, including premium, as the resolution may provide. The Bonds shall be sold by the Authority at public or private sale, as determined by the Authority.     (b) In connection with the issuance of its Bonds, the Authority may enter into arrangements to provide additional security and liquidity for the Bonds. These may include without limitation municipal bond insurance, letters of credit, lines of credit by which the Authority may borrow funds to pay or redeem its Bonds, and purchase or remarketing arrangements for ensuring the ability of owners of the Authority's Bonds to sell their Bonds or to have their Bonds redeemed. The Authority may enter into contracts and may agree to pay fees to persons providing the arrangements, including from Bond proceeds, but only under circumstances in which the total interest paid or to be paid on the Bonds, together with the fees for the arrangements (being treated as if interest), would not, taken together, cause the Bonds to bear interest, calculated to their absolute maturity, at a rate in excess of the maximum rate allowed by law.     The resolution of the Authority authorizing the issuance of its Bonds may provide that interest rates may vary from time to time depending upon criteria established by the Authority, which may include without limitation a variation in interest rates as may be necessary to cause the Bonds to be remarketable from time to time at a price equal to their principal amount, and may provide for appointment of a national banking association, bank, trust company, investment banker, or other financial institution to serve as a remarketing agent in that connection. The resolution of the Authority authorizing the issuance of its Bonds may provide that alternative interest rates or provisions shall apply during such times as the Bonds are held by a person providing a letter of credit or other credit enhancement arrangement for those Bonds. (Source: P.A. 92‑547, eff. 6‑13‑02.)

(105 ILCS 5/1E‑75)     Sec. 1E‑75. Tax levy.     (a) Before or at the time of issuing any Bonds, the Authority shall provide by resolution for the levy and collection of a direct annual tax upon all the taxable property located within the district without limit as to rate or amount sufficient to pay and discharge the principal thereof at maturity or on sinking fund installment dates and to pay the interest thereon as it falls due. The taxes as levied shall also include additional amounts to the extent that the collections in the prior years were insufficient to pay and discharge the principal thereof at maturity, sinking fund installments, if any, and interest thereon as it fell due, and the amount so collected shall be placed in the debt service reserve fund. The tax shall be in addition to and exclusive of the maximum of all taxes that the Authority or the district is authorized by law to levy for any and all school purposes. The resolution shall be in force upon its adoption.     (b) The levy shall be for the sole benefit of the holders of the Bonds, and the holders of the Bonds shall have a security interest in and lien upon all rights, claims, and interests of the Authority arising pursuant to the levy and all present and future proceeds of the levy until the principal of and sinking fund installments and interest on the Bonds are paid in full. All proceeds from the levy shall be deposited by each county collector directly in the debt service fund established pursuant to Section 1E‑80 of this Code, shall be applied solely for the payment of principal of and sinking fund installments and interest on the Bonds, and shall not be used for any other purpose.     (c) Upon the filing in the office of the county clerk of each county where the school district is located of a duly certified copy of the resolution, it shall be the duty of each county clerk to extend the tax provided for in the resolution, including an amount determined by the Authority to cover loss and cost of collection and also deferred collections and abatements in the amount of the taxes as extended on the collectors' books. The tax shall be separate and apart from all other taxes of the Authority or the district and shall be separately identified by the collectors. (Source: P.A. 92‑547, eff. 6‑13‑02.)

(105 ILCS 5/1E‑80)     Sec. 1E‑80. Debt service fund. The Authority shall establish a debt service fund for the Bonds to be maintained by a paying agent, escrow agent, depository, or corporate trustee, which may be any trust company or bank having the power of a trust company within this State, separate and segregated from all other funds and accounts of the Authority and the district. All moneys on deposit in the debt service fund shall be held in trust in the debt service fund for the benefit of the holders of the Bonds, shall be applied solely for the payment of the principal of and sinking fund installment, redemption premium, if any, and interest on the Bonds, and shall not be used for any other purpose. The holders of the Bonds shall have a security interest in and lien upon all such moneys. (Source: P.A. 92‑547, eff. 6‑13‑02.)

(105 ILCS 5/1E‑85)     Sec. 1E‑85. Debt service reserve fund.     (a) The Authority may create and establish a debt service reserve fund to be maintained by a paying agent, escrow agent, depository, or corporate trustee, which may be any trust company or bank having the power of a trust company within the State, separate and segregated from all other funds and accounts of the Authority. The Authority may pay the following into the debt service reserve fund:         (1) any proceeds from the sale of Bonds to the

extent provided in the resolution authorizing the issuance of the Bonds; and

(2) any other moneys that may be available to the

Authority for the purpose of the fund.

(b) The amount to be accumulated in the debt service reserve fund shall be determined by the Authority but shall not exceed the maximum amount of interest, principal, and sinking fund installments due in any succeeding calendar year.     (c) All moneys on deposit in the debt service reserve fund shall be held in trust for the benefit of the holders of the Bonds, shall be applied solely for the payment of principal of and sinking fund installments and interest on the Bonds to the extent not paid from the debt service fund, and shall not be used for any other purpose.     (d) Any moneys in the debt service reserve fund in excess of the amount determined by the Authority pursuant to a resolution authorizing the issuance of Bonds may be withdrawn by the Authority and used for any of its lawful purposes.     (e) In computing the amount of the debt service reserve fund, investments shall be valued as the Authority provides in the resolution authorizing the issuance of the Bonds. (Source: P.A. 92‑547, eff. 6‑13‑02.)

(105 ILCS 5/1E‑90)     Sec. 1E‑90. Bond anticipation notes.     (a) After the issuance of Bonds has been authorized, the Authority shall have power to issue from time to time, pursuant to a resolution or resolutions of the Authority, negotiable bond anticipation notes of the Authority in anticipation of the issuance of Bonds.     (b) Bond anticipation notes shall mature not later than 2 years after the date of issuance, may be made redeemable prior to their maturity, and may be sold in such manner, in such denominations, and at such price or prices and shall bear interest at such rate or rates not to exceed the maximum annual rate authorized by law, as a resolution authorizing the issuance of the bond anticipation notes may provide.     (c) The bond anticipation notes may be made payable as to both principal and interest from the proceeds of the Bonds. The Authority may provide for payment of interest on the bond anticipation notes from direct annual taxes upon all the taxable property located within the district that are authorized to be levied annually for that purpose without limit as to rate or amount sufficient to pay the interest as it falls due, in the manner, subject to the security interest and lien, and with the effect provided in Section 1E‑75 of this Code.     (d) The Authority is authorized to issue renewal notes in the event it is unable to issue Bonds to pay outstanding bond anticipation notes, on terms the Authority deems reasonable.     (e) A debt service fund shall be established in the manner provided in Section 1E‑80 of this Code by the Authority for the bond anticipation notes, and the proceeds of any tax levy made pursuant to this Section shall be deposited in the fund upon receipt. (Source: P.A. 92‑547, eff. 6‑13‑02.)

(105 ILCS 5/1E‑95)     Sec. 1E‑95. Vesting powers in trustee or other authorized agent. The resolution authorizing issuance of the Bonds shall vest in a trustee, paying agent, escrow agent, or depository such rights, powers, and duties in trust as the Authority may determine and may contain such provisions for protecting and enforcing the rights and remedies of the holders of the Bonds and limiting such rights and remedies as may be reasonable and p Copyright © 2012-2022 Laws9.Com All rights reserved. Contact Us | About Us | Terms | Privacy