SB2275 99TH GENERAL ASSEMBLY

LRB099 18961 JWD 43350 b

99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB2275

Introduced 1/27/2016, by Sen. Christine Radogno

SYNOPSIS AS INTRODUCED:

10 ILCS 5/9-37 new
105 ILCS 5/2-3.25f-5
105 ILCS 5/34-1	from Ch. 122, par. 34-1
105 ILCS 5/34-3	from Ch. 122, par. 34-3
105 ILCS 5/34-3.6 new
105 ILCS 5/34-4	from Ch. 122, par. 34-4
105 ILCS 5/34-1.05 rep.
30 ILCS 805/8.40 new

Amends the School Code. Provides that the State Superintendent of Education may remove members of the school board of any school district (currently, only districts with a population of not more than 500,000), and sets criteria for districts with a population of more than 500,000. Provides for the transition to an elected board for districts with a population of more than 500,000. Provides that the removal of appointed board members and the transition to elected board members for districts with a population of more than 500,000 shall not be construed as creating any liability on the part of the State for the debts and obligations of that school district. Restricts the sources of compensation that may be received by board members of districts with a population of more than 500,000. Prohibits political contributions to board members of districts with a population of more than 500,000 by certain businesses. Repeals a Section creating the Chicago Educational Governance Task Force. Amends the Election Code. Prohibits campaign contributions from labor organizations representing teachers and from business entities having contracts with school districts in certain school board elections. Contains a statement of legislative intent. Amends the State Mandates Act to require implementation without reimbursement. Effective immediately.

A BILL FOR

AN ACT concerning local government.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Intent and purpose. At the time of passage of this amendatory Act of the 99th General Assembly, the taxpayers of Illinois have devoted considerable and disproportionate resources to the City of Chicago and to Chicago Public Schools. Chicago Public Schools receive more than $600 million per year in funding from the State of Illinois through proceeds of the corporate personal property replacement tax, early childhood education grants, low-income households grants, the Property Tax Extension Limitation Law adjustments, and the educational services block grant than they would have received if those funds were fairly distributed among districts statewide on the basis of population or low-income population, as applicable.

Although Chicago Public Schools are responsible for paying their employer contribution to their teachers' pension fund, if the State were to cover the district's normal costs of newly-earned pension benefits as it does for other school districts, Chicago Public Schools would still receive significantly more than their fair share of total State funding to school districts.

Chicago Public Schools have more flexibility under State law to negotiate with their teachers' union than other school districts. Notwithstanding that flexibility, Chicago Public Schools have chosen to exacerbate their unfunded pension burden by agreeing with their teachers' union to pay not only the employer contribution, but also almost all of the employee contribution to the teachers' pension fund.

Previously, the General Assembly acted to alleviate the short-term burden by granting the Chicago Public Schools a 3-year "pension holiday", with the understanding that the district would use that time to make the necessary preparations to begin increasing their employer contributions to the pension fund. However, instead of becoming adequately prepared, Chicago Public Schools is now seeking another pension payment holiday or State bailout. Similarly, the City of Chicago has not fully planned for its long-anticipated increase in pension contributions and now wants to significantly reduce its short-term pension contribution requirements. Both Chicago Public Schools and the City of Chicago acknowledge they have substantial budget deficits in this fiscal year and project widening budget gaps for the foreseeable future, but have no plan for addressing the deferred debt service payments that will cripple the next generation of students and taxpayers. The deteriorating financial condition of both Chicago Public Schools and the City of Chicago is evidenced by the recent rapid decline in their credit ratings to "junk bond" levels.

While all local governments and school districts should be afforded greater freedom to contain and control their spending, the City of Chicago and Chicago Public Schools already enjoy greater flexibility under the law and more ample resources than most other units of local government and school districts across Illinois. The State of Illinois must protect Illinois taxpayers from the poor financial decisions made by Chicago politicians. The General Assembly finds that this Act will lead to fiscal stability for the State; and, thus, the State must not, directly, indirectly, or contingently, assume any debt or liability of, or make any additional payment to or on behalf of, the City of Chicago or Chicago Public Schools other than as a part of payments made fairly to all municipalities and school districts statewide.

Section 5. The Election Code is amended by adding Section 9-37 as follows:

(10 ILCS 5/9-37 new)

Sec. 9-37. Conflicts of interest in certain school board elections.

(a) As teachers' salaries and benefits constitute a significant amount of a school district's budget and are a key component of bargaining between the board of education and labor unions representing those teachers, it is the General Assembly's finding that an inherent conflict exists between an elected member of a board of education and unions representing the district's teachers. As such, it is necessary to enact the following safeguards to ensure no conflicts of interest.

(b) As used in this Section:

The terms "contract" and "contract with a school district subject to Article 34 of the School Code" both mean any contract between a business entity and a school district subject to Article 34 of the School Code.

"Contribution" means a contribution as defined in Section 9-1.4 of the Election Code.

"Declared candidate" means a person who has filed a statement of candidacy and petition for nomination or election to the school board of a school district subject to Article 34 of the School Code.

"Officeholder" means an elected or appointed member of the school board of a school district subject to Article 34 of the School Code.

"Sponsoring entity" means a sponsoring entity as defined in Section 9-3 of this Code.

"Affiliated person" means (i) any person with any ownership interest or distributive share of the bidding or contracting business entity in excess of 7.5%, (ii) executive employees of the bidding or contracting business entity, and (iii) the spouse of any such persons. "Affiliated person" does not include a person prohibited by federal law from making contributions or expenditures in connection with a federal, state, or local election.

"Affiliated entity" means (i) any corporate parent and each operating subsidiary of the bidding or contracting business entity, (ii) each operating subsidiary of the corporate parent of the bidding or contracting business entity, (iii) any organization recognized by the United States Internal Revenue Service as a tax-exempt organization described in Section 501(c) of the Internal Revenue Code of 1986 (or any successor provision of federal tax law) established by the bidding or contracting business entity, any affiliated entity of that business entity, or any affiliated person of that business entity, or (iv) any political committee for which the bidding or contracting business entity, or any 501(c) organization described in item (iii) related to that business entity, is the sponsoring entity. "Affiliated entity" does not include an entity prohibited by federal law from making contributions or expenditures in connection with a federal, state, or local election.

"Business entity" means any entity doing business for profit, whether organized as a corporation, partnership, sole proprietorship, limited liability company or partnership, or otherwise.

"Executive employee" means (i) the president, chairman of the board, or chief executive officer of a business entity and any other individual that fulfills equivalent duties as the president, chairman of the board, or chief executive officer of a business entity; and (ii) any employee of a business entity whose compensation is determined directly, in whole or in part, by the award or payment of contracts by the school district subject to Article 34 of the School Code to the entity employing the employee. A regular salary that is paid irrespective of the award or payment of a contract with a school district subject to Article 34 of the School Code shall not constitute "compensation" under item (ii) of this definition. "Executive employee" does not include any person prohibited by federal law from making contributions or expenditures in connection with a federal, state, or local election.

(c) Any business entity whose contracts with a school district subject to Article 34 of the School Code, in the aggregate, annually total more than $50,000, and any affiliated entities or affiliated persons of such business entity, are prohibited from making any contributions to any political committees established to promote the candidacy of (i) a member of the school board of a school district subject to Article 34 of the School Code or (ii) any other declared candidate for that office. This prohibition shall be effective for the duration of the term of office of the incumbent officeholders at the time the contracts were awarded or for a period of 2 years following the expiration or termination of the contracts, whichever is longer.

(d) Any business entity whose aggregate pending bids and offers on contracts with a school district subject to Article 34 of the School Code total more than $50,000, or whose aggregate pending bids and offers on contracts with a school district subject to Article 34 of the School Code combined with the business entity's aggregate annual total value of contracts with a school district subject to Article 34 of the School Code exceed $50,000, and any affiliated entities or affiliated persons of such business entity, are prohibited from making any contributions to (i) a member of the school board of a school district subject to Article 34 of the School Code or (ii) any other declared candidate for that office.

(e) The State Board of Elections shall provide by rule for the registration of business entities that are prohibited from making contributions under this Section.

(f) The State Board of Elections shall provide a certificate of registration to the business entity. The certificate shall be electronic, except as otherwise provided in this Section, and accessible to the business entity through the State Board of Elections' website and protected by a password. Within 60 days after establishment of the electronic system, each business entity that submitted a registration via e-mail attachment or paper copy pursuant to this Section shall re-submit its registration electronically. At the time of re-submission, the State Board of Elections shall provide an electronic certificate of registration to that business entity.

(g) Any business entity required to register under this Section shall provide a copy of the registration certificate, by first class mail or hand delivery within 10 days after registration, to each affiliated entity or affiliated person whose identity is required to be disclosed. Failure to provide notice to an affiliated entity or affiliated person is a business offense for which the business entity is subject to a fine not to exceed $1,001.

(h) The intentional, willful, or material failure to disclose information required for registration is subject to a civil penalty imposed by the State Board of Elections. The Board shall impose a civil penalty of $1,000 per business day for failure to update a registration.

(i) Any business entity required to register under this Section shall notify any political committee to which it makes a contribution, at the time of the contribution, that the business entity is registered with the State Board of Elections under this Section. Any affiliated entity or affiliated person of a business entity required to register under this Section shall notify any political committee to which it makes a contribution that it is affiliated with a business entity registered with the State Board of Elections under this Section.

(j) The State Board of Elections on its official website shall have a searchable database containing (i) all information required to be submitted to the Board pursuant to rules adopted under this Section and (ii) all reports filed under Article 9 of the Election Code with the State Board of Elections by all political committees. For the purposes of databases maintained by the State Board of Elections, "searchable" means able to search by "political committee", as defined in this Article, and by "officeholder", the name of each school district subject to Article 34 of the School Code, "business entity", "affiliated entity", and "affiliated person". The Board shall not place the name of a minor child on the website. However, the Board shall provide a link to all contributions made by anyone reporting the same residential address as any affiliated person. In addition, the State Board of Elections on its official website shall provide an electronic connection to any searchable database of contracts with a school district subject to Article 34 of the School Code, searchable by business entity.

(k) It is unlawful for a candidate political committee established to support a candidate seeking nomination or election to the school board of a school district subject to Article 34 of the School Code to accept contributions from: (i) any labor organization that represents employees of that district; (ii) any other labor organization of which a labor organization described in clause (i) is an affiliate; (iii) any political action committee for which a labor organization described in clause (i) or (ii) is the sponsoring entity or any tax-exempt organization described in Section 527 of the Internal Revenue Code of 1986 (or any successor provision of federal tax law) established by a labor organization described in clause (i) or (ii); or (iv) any tax-exempt organization described in Section 501(c) of the Internal Revenue Code of 1986 (or any successor provision of federal tax law) established by a labor organization described in clause (i) or (ii).

(l) A candidate political committee that receives a contribution or transfer in violation of this Section shall dispose of the contribution or transfer by returning the contribution or transfer, or an amount equal to the contribution or transfer, to the contributor or transferor or by donating the contribution or transfer, or an amount equal to the contribution or transfer, to a charity. A contribution or transfer received in violation of this Section that is not disposed of as provided in this subsection (l) within 30 days after the Board sends notification to the political committee of the contribution by certified mail shall escheat to the General Revenue Fund and the political committee shall be deemed in violation of this Section and subject to a civil penalty not to exceed 150% of the total amount of the contribution.

(m) The State Board of Elections shall have rulemaking authority to implement this Section.

Section 10. The School Code is amended by changing Sections 2-3.25f-5, 34-1, 34-3, and 34-4 and by adding Section 34-3.6 as follows:

(105 ILCS 5/2-3.25f-5)

Sec. 2-3.25f-5. Independent Authority.

(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 school board faces governance difficulties, continued operation of the public school system is threatened.

(2) Sound school board governance, academic achievement, and sound financial structure are 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 leadership.

(3) To promote the sound operation of districts, as defined in this Section, it may be necessary to provide for the creation of independent authorities with the powers necessary to promote sound governance, sound academic planning, and sound financial management and to ensure the continued operation of the public schools.

(4) It is the purpose of this Section to provide for a sound basis for the continued operation of public schools. The intention of the General Assembly, in creating this Section, is to establish procedures, provide powers, and impose restrictions to ensure the educational integrity of public school districts.

(b) As used in this Section:

"Board" means a school board of a district.

"Chairperson" means the Chairperson of the Independent Authority.

"District" means any school district having a population of not more than 500,000.

"State Board" means the State Board of Education.

"State Superintendent" means the State Superintendent of Education.

(c) The State Board has the power to direct the State Superintendent to remove a board. Boards may be removed when the criteria provided for in subsection (d) or subsection (d-5) of this Section are met. At no one time may the State Board remove more than 4 school boards and establish Independent Authorities pursuant to subsection (e) of this Section; provided that the foregoing limitation does not apply to the board of a district having a population of more than 500,000, and the removal of the board of a district having a population of more than 500,000 shall not count towards the foregoing limitation.

If the State Board proposes to direct the State Superintendent to remove a board from a district, board members shall receive individual written notice of the intended removal. Written notice must be provided at least 30 calendar days before a hearing is held by the State Board. This notice shall identify the basis for proposed removal.

Board members are entitled to a hearing, during which time each board member shall have the opportunity to respond individually, both orally and through written comments, to the basis laid out in the notice. Written comments must be submitted to the State Board on or before the hearing.

Board members are entitled to be represented by counsel at the hearing, but counsel must not be paid with district funds, unless the State Board decides that the board will not be removed and then the board members may be reimbursed for all reasonable attorney's fees by the district.

The State Board shall make a final decision on removal immediately following the hearing or at its next regularly scheduled or special meeting. In no event may the decision be made later than the next regularly scheduled meeting.

The State Board shall issue a final written decision. If the State Board directs the State Superintendent to remove the board, the State Superintendent shall do so within 30 days after the written decision. Following the removal of the board, the State Superintendent shall establish an Independent Authority pursuant to subsection (e) of this Section.

If there is a financial oversight panel operating in the district pursuant to Article 1B or 1H of this Code, the State Board may, at its discretion, abolish the panel.

(d) The State Board may require priority districts, as defined in subsection (b-5) of Section 2-3.25f of this Code, to seek accreditation through an independent accreditation organization chosen by the State Board and paid for by the State. The State Board may direct the State Superintendent to remove board members pursuant to subsection (c) of this Section in any district having a population of not more than 500,000 in which the district is unable to obtain accreditation in whole or in part due to reasons specifically related to school board governance. When determining if a district has failed to meet the standards for accreditation specifically related to school board governance, the accreditation entity shall take into account the overall academic, fiscal, and operational condition of the district and consider whether the board has failed to protect district assets, to direct sound administrative and academic policy, to abide by basic governance principles, including those set forth in district policies, and to conduct itself with professionalism and care and in a legally, ethically, and financially responsible manner. When considering if a board has failed in these areas, the accreditation entity shall consider some or all of the following factors:

(1) Failure to protect district assets by, without limitation, incidents of fiscal fraud or misappropriation of district funds; acts of neglecting the district's building conditions; a failure to meet regularly scheduled, payroll-period obligations when due; a failure to abide by competitive bidding laws; a failure to prevent an audit finding of material internal control weaknesses; a failure to comply with required accounting principles; a failure to develop and implement a comprehensive, risk-management plan; a failure to provide financial information or cooperate with the State Superintendent; or a failure to file an annual financial report, an annual budget, a deficit reduction plan, or other financial information as required by law.

(2) Failure to direct sound administrative and academic policy by, without limitation, hiring staff who do not meet minimal certification requirements for the positions being filled or who do not meet the customary qualifications held by those occupying similar positions in other school districts; a failure to avoid conflicts of interest as it relates to hiring or other contractual obligations; a failure to provide minimum graduation requirements and curricular requirements of the School Code and regulations; a failure to provide a minimum school term as required by law; or a failure to adopt and implement policies and practices that promote conditions that support student learning, effective instruction, and assessment that produce equitable and challenging learning experiences for all students.

(3) Failure to abide by basic governance principles by, without limitation, a failure to comply with the mandated oath of office; a failure to adopt and abide by sound local governance policies; a failure to abide by the principle that official action by the board occurs only through a duly-called and legally conducted meeting of the board; a failure to abide by majority decisions of the board; a failure to protect the privacy of students; a failure to ensure that board decisions and actions are in accordance with defined roles and responsibilities; or a failure of the board to protect, support, and respect the autonomy of a system to accomplish goals for improvement in student learning and instruction and to manage day-to-day operations of the school system and its schools, including maintaining the distinction between the board's roles and responsibilities and those of administrative leadership.

(4) Failure to conduct itself in a legally, ethically, and financially responsible manner by, without limitation, a failure to act in accordance with the Constitution of the United States of America and the Constitution of the State of Illinois and within the scope of State and federal laws; laws, including a failure to comply with provisions of the School Code, the Open Meetings Act, and the Freedom of Information Act and federal and State laws that protect the rights of protected categories of students; a failure to comply with all district policies and procedures and all State rules; or a failure to comply with the governmental entities provisions of the State Officials and Employees Ethics Act, including the gift ban and prohibited political activities provisions.

(d-5) The State Board may direct the State Superintendent to remove board members pursuant to subsection (c) of this Section in any district having a population of more than 500,000 that is in financial difficulty. For the purposes of this subsection (d-5), a district is in financial difficulty if it meets one or more of the criteria set out in paragraphs (1) through (5) of subsection (b) of Section 1A-8 of the School Code, regardless of whether the district is a priority district, is unable to obtain accreditation, or has been previously certified to be in financial difficulty by the State Board pursuant to Section 1A-8 of the School Code.

(e) Upon removal of the board, the State Superintendent shall establish an Independent Authority. Upon establishment of an Independent Authority, there is established a body both corporate and politic to be known as the "(Name of the School District) Independent Authority", which in this name shall exercise all of the authority vested in an Independent Authority by this Section and by the name may sue and be sued in all courts and places where judicial proceedings are had.

(f) Upon establishment of an Independent Authority under subsection (e) of this Section, the State Superintendent shall, within 30 working days thereafter and in consultation with State and locally elected officials, appoint 5 or 7 members to serve on an Independent Authority for the district. Members appointed to the Independent Authority shall serve at the pleasure of the State Superintendent. The State Superintendent shall designate one of the members of the Independent Authority to serve as its chairperson. In the event of vacancy or resignation, the State Superintendent shall, within 15 working days after receiving notice, appoint a successor to serve out that member's term. If the State Board has abolished a financial oversight panel pursuant to subsection (c) of this Section, the State Superintendent may appoint former members of the panel to the Independent Authority. These members may serve as part of the 5 or 7 members or may be appointed in addition to the 5 or 7 members, with the Independent Authority not to exceed 9 members in total.

Members of the Independent Authority must be selected primarily on the basis of their experience and knowledge in education policy and governance, with consideration given to persons knowledgeable in the operation of a school district. A member of the Independent Authority must be a registered voter as provided in the general election law, must not be a school trustee, and must not be a child sex offender as defined in Section 11-9.3 of the Criminal Code of 2012. A majority of the members of the Independent Authority must be residents of the district that the Independent Authority serves. A member of the Independent Authority may not be an employee of the district, nor may a member have a direct financial interest in the district.

Independent Authority members may be reimbursed by the district for travel if they live more than 25 miles away from the district's headquarters and other necessary expenses incurred in the performance of their official duties. The amount reimbursed members for their expenses must be charged to the school district.

With the exception of the Chairperson, the Independent Authority may elect such officers as it deems appropriate.

The first meeting of the Independent Authority must be held at the call of the Chairperson. The Independent 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.

All Independent Authority members must complete the training required of school board members under Section 10-16a of this Code.

(g) The purpose of the Independent Authority is to operate the district. The Independent Authority shall have all of the powers and duties of a board and all other powers necessary to meet its responsibilities and to carry out its purpose and the purposes of this Section and that may be requisite or proper for the maintenance, operation, and development of any school or schools under the jurisdiction of the Independent Authority. This grant of powers does not release an Independent Authority from any duty imposed upon it by this Code or any other law.

The Independent Authority shall have no power to unilaterally cancel or modify any collective bargaining agreement in force upon the date of creation of the Independent Authority.

(h) The Independent Authority 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 Independent Authority, in accordance with Section 1B-8 of this Code. A district may receive both a loan and a grant.

(i) Paragraph (1) of this subsection applies only to a district other than a district subject to Article 34 of this Code. Paragraph (2) of this subsection applies only to a district subject to Article 34 of this Code. Paragraph (3) of this subsection applies to any district.

(1) An election for board members must not be held in a district upon the establishment of an Independent Authority and is suspended until the next regularly scheduled school board election that takes place no less than 2 years following the establishment of the Independent Authority.

For this first election, 3 school board members must be elected to serve out terms of 4 years and until successors are elected and have qualified. Members of the Independent Authority are eligible to run for election in the district, provided that they meet all other eligibility requirements of Section 10-10 of this Code. Following this election, the school board shall consist of the newly elected members and any remaining members of the Independent Authority. The majority of this board must be residents of the district. The State Superintendent must appoint new members who are residents to the Independent Authority if necessary to maintain this majority. At the next school board election, 4 school board members must be elected to serve out terms of 4 years and until successors are elected and have qualified. For purposes of these first 2 elections, the school board members must be elected at-large. In districts where board members were previously elected using an alternative format pursuant to Article 9 of this Code, following these first 2 elections, the voting shall automatically revert back to the original form. Following the election, any remaining Independent Authority members shall serve in the district as an oversight panel until such time as the district meets the governance standards necessary to achieve accreditation. If some or all of the Independent Authority members have been elected to the board, the State Superintendent may, in his or her discretion, appoint new members to the Independent Authority pursuant to subsection (f) of this Section. The school board shall get approval of all actions by the Independent Authority during the time the Independent Authority serves as an oversight panel.

(2) In the case of a district subject to Article 34 of this Code, no board member, chief executive officer, general superintendent, or other officer shall be appointed pursuant to the provisions of Article 34 of this Code, as applicable.

The first election for board members shall be held after the State Board determines that the district is no longer in financial difficulty, or has taken sufficient steps to no longer be in financial difficulty within 2 years, but not earlier than the election that occurs at least 24 months after the date the Independent Authority was first appointed.

For this first election of a board in a district subject to Article 34, 3 board members must be elected to terms of 4 years and until their successors are elected and qualified, as provided in subsection (b-5) of Section 34-3. Members of the Independent Authority are eligible to run for election in the district, provided that they meet all other eligibility requirements of Article 34 of this Code. Following this first election, the board shall consist of the 3 newly elected members and 4 members of the Independent Authority designated by the State Superintendent. If some or all of the Independent Authority members have been elected to the board, the State Superintendent may, in his or her discretion, appoint new members to the Independent Authority pursuant to subsection (f) of this Section. The majority of this board must be residents of the district. The State Superintendent must appoint new members who are residents to the Independent Authority if necessary to maintain this majority.

Following this first election, the 4 members of the Independent Authority shall serve in the district as an oversight panel until additional board members have been elected and qualified pursuant to the immediately following paragraph. The board shall obtain approval of all actions by the Independent Authority during the time the Independent Authority serves as an oversight panel.

At the second board election, 4 board members must be elected to terms of 4 years and until their successors are elected and qualified.

(3) Board members who were removed pursuant to subsection (c) of this Section are ineligible to run for school board in the district for 10 years following the abolition of the Independent Authority pursuant to subsection (l) of this Section. However, board members who were removed pursuant to subsection (c) of this Section and were appointed to the Independent Authority by the State Superintendent are eligible to run for school board in the district.

(j) The Independent Authority, upon its members taking office and annually thereafter and upon request, shall prepare and submit to the State Superintendent a report on the state of the district, including without limitation the academic improvement and financial situation of the district. This report must be submitted annually on or before March 1 of each year. The State Superintendent shall provide copies of any and all reports to the regional office of education for the district and to the State Senator and Representative representing the area where the district is located.

(k) The district shall render such services to and permit the use of its facilities and resources by the Independent Authority at no charge as may be requested by the Independent Authority. Any State agency, unit of local government, or school district may, within its lawful powers and duties, render such services to the Independent Authority as may be requested by the Independent Authority.

(l) An Independent Authority must be abolished when the district, following the election of the full board, meets the governance standards necessary to achieve accreditation status by an independent accreditation agency chosen by the State Board. The abolition of the Independent Authority shall be done by the State Board and take place within 30 days after the determination of the accreditation agency or the State Board determines that the district is no longer in financial difficulty.

Upon abolition of the Independent Authority, all powers and duties allowed by this Code to be exercised by a school board shall be transferred to the elected school board.

(m) The Independent Authority must be indemnified through insurance purchased by the district. The district shall purchase insurance through which the Independent Authority is to be indemnified.

The district retains the duty to represent and to indemnify Independent Authority members following the abolition of the Independent Authority for any cause of action or remedy available against the Independent Authority, its members, its employees, or its agents for any right or claim existing or any liability incurred prior to the abolition.

The insurance shall indemnify and protect districts, Independent Authority members, employees, volunteer personnel authorized in Sections 10-22.34, 10-22.34a, and 10-22.34b of this Code, mentors of certified or licensed staff as authorized in Article 21A and Sections 2-3.53a, 2-3.53b, and 34-18.33 of this Code, and student teachers against civil rights damage claims and suits, constitutional rights damage claims and suits, and death and bodily injury and property damage claims and suits, including defense thereof, when damages are sought for negligent or wrongful acts alleged to have been committed in the scope of employment, under the direction of the Independent Authority, or related to any mentoring services provided to certified or licensed staff of the district. Such indemnification and protection shall extend to persons who were members of an Independent Authority, employees of an Independent Authority, authorized volunteer personnel, mentors of certified or licensed staff, or student teachers at the time of the incident from which a claim arises. No agent may be afforded indemnification or protection unless he or she was a member of an Independent Authority, an employee of an Independent Authority, an authorized volunteer, a mentor of certified or licensed staff, or a student teacher at the time of the incident from which the claim arises.

(n) The State Board may adopt rules as may be necessary for the administration of this Section.

(o) This Section shall not be construed to create any debt or liability of the State or to pledge the full faith and credit of the State, directly, indirectly, or contingently, or to transfer to the State any of the debts, liabilities, or obligations of the district. This subsection (o) is declarative of current law.

(Source: P.A. 98-1155, eff. 1-9-15.)

(105 ILCS 5/34-1) (from Ch. 122, par. 34-1)

Sec. 34-1. Application of article; Definitions. This Article applies only to cities having a population exceeding 500,000.

"Trustees", when used in this Article, means the Chicago School Reform Board of Trustees created by this amendatory Act of 1995 and serving as the governing board of the school district organized under this Article beginning with its appointment on or after the effective date of this amendatory Act of 1995 and continuing until June 30, 1999 or the appointment of a new Chicago Board of Education as provided in Section 34-3, whichever is later.

"Board", or "board of education" when used in this Article, means: (i) the Chicago School Reform Board of Trustees for the period that begins with the appointment of the Trustees and that ends on the later of June 30, 1999 or the appointment of a new Chicago Board of Education as provided in Section 34-3; and (ii) the new Chicago Board of Education from and after June 30, 1999 or from and after its appointment as provided in Section 34-3, whichever is later, until the applicability of clause (iii) of this definition; and (iii) if the board is removed and an Independent Authority appointed pursuant to Section 2-3.25f-5 of this Code, that Independent Authority and, upon its abolition, the board elected pursuant to Section 2-3.25f-5 and subsection (b-5) of Section 34-3 of this Code.

Except during the period that begins with the appointment of the Chicago School Reform Board of Trustees on or after the effective date of this amendatory Act of 1995 and that ends on the later of June 30, 1999 or the appointment of a new Chicago Board of Education as provided in Section 34-3: (i) the school district organized under this Article may be subject to further limitations imposed under Article 34A; and (ii) the provisions of Article 34A prevail over the other provisions of this Act, including the provisions of this Article, to the extent of any conflict.

(Source: P.A. 89-15, eff. 5-30-95.)

(105 ILCS 5/34-3) (from Ch. 122, par. 34-3)

Sec. 34-3. Chicago School Reform Board of Trustees; new Chicago Board of Education; members; term; vacancies.

(a) Within 30 days after the effective date of this amendatory Act of 1995, the terms of all members of the Chicago Board of Education holding office on that date are abolished and the Mayor shall appoint, without the consent or approval of the City Council, a 5 member Chicago School Reform Board of Trustees which shall take office upon the appointment of the fifth member. The Chicago School Reform Board of Trustees and its members shall serve until, and the terms of all members of the Chicago School Reform Board of Trustees shall expire on, June 30, 1999 or upon the appointment of a new Chicago Board of Education as provided in subsection (b), whichever is later. Any vacancy in the membership of the Trustees shall be filled through appointment by the Mayor, without the consent or approval of the City Council, for the unexpired term. One of the members appointed by the Mayor to the Trustees shall be designated by the Mayor to serve as President of the Trustees. The Mayor shall appoint a full-time, compensated chief executive officer, and his or her compensation as such chief executive officer shall be determined by the Mayor. The Mayor, at his or her discretion, may appoint the President to serve simultaneously as the chief executive officer.

(b) Within 30 days before the expiration of the terms of the members of the Chicago Reform Board of Trustees as provided in subsection (a), a new Chicago Board of Education consisting of 7 members shall be appointed by the Mayor to take office on the later of July 1, 1999 or the appointment of the seventh member. Three of the members initially so appointed under this subsection shall serve for terms ending June 30, 2002, 4 of the members initially so appointed under this subsection shall serve for terms ending June 30, 2003, and each member initially so appointed shall continue to hold office until his or her successor is appointed and qualified. Thereafter at the expiration of the term of any member a successor shall be appointed by the Mayor and shall hold office for a term of 4 years, from July 1 of the year in which the term commences and until a successor is appointed and qualified. Any vacancy in the membership of the Chicago Board of Education shall be filled through appointment by the Mayor for the unexpired term. No appointment to membership on the Chicago Board of Education that is made by the Mayor under this subsection shall require the approval of the City Council, whether the appointment is made for a full term or to fill a vacancy for an unexpired term on the Board. The board shall elect annually from its number a president and vice-president, in such manner and at such time as the board determines by its rules. The officers so elected shall each perform the duties imposed upon their respective office by the rules of the board, provided that (i) the president shall preside at meetings of the board and vote as any other member but have no power of veto, and (ii) the vice president shall perform the duties of the president if that office is vacant or the president is absent or unable to act. The secretary of the Board shall be selected by the Board and shall be an employee of the Board rather than a member of the Board, notwithstanding subsection (d) of Section 34-3.3. The duties of the secretary shall be imposed by the rules of the Board.

(b-5) Notwithstanding any provision of this Code to the contrary, if the board is removed and an Independent Authority is appointed pursuant to Section 2-3.25f-5 of this Code, the members of the board thereafter shall be elected, rather than appointed, pursuant to Section 2-3.25f-5 of this Code and the following:

(1) Board members shall be elected at-large in each odd-numbered year, each for a term of 4 years, in accordance with the general election law.

(2) For the first election pursuant to Section 2-3.25f-5 of this Code, 3 board members shall be elected to terms of 4 years and until their successors are elected and qualified. Following this election, the board shall consist of the newly elected members and 4 members of the Independent Authority designated by the State Superintendent. At the next board election, 4 board members shall be elected to terms of 4 years and until their successors are elected and qualified, after which the board shall consist of the 7 elected members.

(3) Nomination papers filed under this Section are not valid unless the candidate named therein files with the board of election commissioners a receipt from the county clerk showing that the candidate has filed a statement of economic interests as required by the Illinois Governmental Ethics Act. Such receipt shall be so filed either previously during the calendar year in which his or her nomination papers were filed or within the period for the filing of nomination papers in accordance with the general election law.

(4) When a vacancy occurs in the membership of the board, the remaining members shall, within 30 days, fill the vacancy by appointment until the next regular board election.

(c) The board may appoint a student to the board to serve in an advisory capacity. The student member shall serve for a term as determined by the board. The board may not grant the student member any voting privileges, but shall consider the student member as an advisor. The student member may not participate in or attend any executive session of the board.

(Source: P.A. 94-231, eff. 7-14-05.)

(105 ILCS 5/34-3.6 new)

Sec. 34-3.6. Prohibition on political contributions; business registration.

(a) As used in this Section:

The terms "contract", "Chicago Public Schools contract", and "contract with Chicago Public Schools" each mean any contract between a business entity and Chicago Public Schools.

"Contribution" means a contribution as defined in Section 9-1.4 of the Election Code.

"Declared candidate" means a person who has filed a statement of candidacy and petition for nomination or election to the Chicago Board of Education.

"Officeholder" means an elected or appointed member of the Chicago Board of Education.

"Sponsoring entity" means a sponsoring entity as defined in Section 9-3 of the Election Code.

"Affiliated person" means (i) any person with any ownership interest or distributive share of the bidding or contracting business entity in excess of 7.5%, (ii) executive employees of the bidding or contracting business entity, and (iii) the spouse of any such persons. "Affiliated person" does not include a person prohibited by federal law from making contributions or expenditures in connection with a federal, state, or local election.

"Affiliated entity" means (i) any corporate parent and each operating subsidiary of the bidding or contracting business entity, (ii) each operating subsidiary of the corporate parent of the bidding or contracting business entity, (iii) any organization recognized by the United States Internal Revenue Service as a tax-exempt organization described in Section 501(c) of the Internal Revenue Code of 1986 (or any successor provision of federal tax law) established by the bidding or contracting business entity, any affiliated entity of that business entity, or any affiliated person of that business entity, or (iv) any political committee for which the bidding or contracting business entity, or any 501(c) organization described in item (iii) related to that business entity, is the sponsoring entity. "Affiliated entity" does not include an entity prohibited by federal law from making contributions or expenditures in connection with a federal, state, or local election.

"Business entity" means any entity doing business for profit, whether organized as a corporation, partnership, sole proprietorship, limited liability company or partnership, or otherwise.

"Executive employee" means (i) the president, chairman of the board, or chief executive officer of a business entity and any other individual that fulfills equivalent duties as the president, chairman of the board, or chief executive officer of a business entity; and (ii) any employee of a business entity whose compensation is determined directly, in whole or in part, by the award or payment of contracts by the Chicago Public Schools to the entity employing the employee. A regular salary that is paid irrespective of the award or payment of a contract with the Chicago Public Schools shall not constitute "compensation" under item (ii) of this definition. "Executive employee" does not include any person prohibited by federal law from making contributions or expenditures in connection with a federal, state, or local election.

(b) Any business entity whose contracts with Chicago Public Schools, in the aggregate, annually total more than $50,000, and any affiliated entities or affiliated persons of such business entity, are prohibited from making any contributions to any political committees established to promote the candidacy of (i) a member of the Chicago Board of Education or (ii) any other declared candidate for that office. This prohibition shall be effective for the duration of the term of office of the incumbent officeholders at the time the contracts were awarded or for a period of 2 years following the expiration or termination of the contracts, whichever is longer.

(c) Any business entity whose aggregate pending bids and offers on Chicago Public Schools contracts total more than $50,000, or whose aggregate pending bids and offers on Chicago Public Schools contracts combined with the business entity's aggregate annual total value of Chicago Public Schools contracts exceed $50,000, and any affiliated entities or affiliated persons of such business entity, are prohibited from making any contributions to (i) a member of the Chicago Board of Education or (ii) any other declared candidate for that office.

(d) The State Board of Elections shall provide by rule for the registration of business entities that are prohibited from making contributions under this Section.

(e) The State Board of Elections shall provide a certificate of registration to the business entity. The certificate shall be electronic, except as otherwise provided in this Section, and accessible to the business entity through the State Board of Elections' website and protected by a password. Within 60 days after establishment of the electronic system, each business entity that submitted a registration via e-mail attachment or paper copy pursuant to this Section shall re-submit its registration electronically. At the time of re-submission, the State Board of Elections shall provide an electronic certificate of registration to that business entity.

(f) Any business entity required to register under this Section shall provide a copy of the registration certificate, by first class mail or hand delivery within 10 days after registration, to each affiliated entity or affiliated person whose identity is required to be disclosed. Failure to provide notice to an affiliated entity or affiliated person is a business offense for which the business entity is subject to a fine not to exceed $1,001.

(g) The intentional, willful, or material failure to disclose information required for registration is subject to a civil penalty imposed by the State Board of Elections. The Board shall impose a civil penalty of $1,000 per business day for failure to update a registration.

(h) Any business entity required to register under this Section shall notify any political committee to which it makes a contribution, at the time of the contribution, that the business entity is registered with the State Board of Elections under this Section. Any affiliated entity or affiliated person of a business entity required to register under this Section shall notify any political committee to which it makes a contribution that it is affiliated with a business entity registered with the State Board of Elections under this Section.

(i) The State Board of Elections on its official website shall have a searchable database containing (i) all information required to be submitted to the Board pursuant to rules adopted under this Section and (ii) all reports filed under Article 9 of the Election Code with the State Board of Elections by all political committees. For the purposes of databases maintained by the State Board of Elections, "searchable" means able to search by "political committee", as defined in Article 9 of the Election Code, and by "officeholder", "Chicago Public Schools", "business entity", "affiliated entity", and "affiliated person". The Board shall not place the name of a minor child on the website. However, the Board shall provide a link to all contributions made by anyone reporting the same residential address as any affiliated person. In addition, the State Board of Elections on its official website shall provide an electronic connection to any searchable database of Chicago Public Schools contracts, searchable by business entity.

(j) The State Board of Elections shall have rulemaking authority to implement this Section.

(105 ILCS 5/34-4) (from Ch. 122, par. 34-4)

Sec. 34-4. Eligibility. To be eligible for appointment or election to the board, a person shall be a citizen of the United States, shall be a registered voter as provided in the Election Code, shall have been a resident of the city for at least 3 years immediately preceding his or her appointment or election, and shall not be a child sex offender as defined in Section 11-9.3 of the Criminal Code of 2012. Permanent removal from the city by any member of the board during his term of office constitutes a resignation therefrom and creates a vacancy in the board. Except for the President of the Chicago School Reform Board of Trustees who may be paid compensation for his or her services as chief executive officer as determined by the Mayor as provided in subsection (a) of Section 34-3, board members shall serve without any compensation; provided, that board members shall be reimbursed for expenses incurred while in the performance of their duties upon submission of proper receipts or upon submission of a signed voucher in the case of an expense allowance evidencing the amount of such reimbursement or allowance to the president of the board for verification and approval. The board of education may continue to provide health care insurance coverage, employer pension contributions, employee pension contributions, and life insurance premium payments for an employee required to resign from an administrative, teaching, or career service position in order to qualify as a member of the board of education. They shall not hold other public office under the Federal, State or any local government other than that of Director of the Regional Transportation Authority, member of the economic development commission of a city having a population exceeding 500,000, notary public or member of the National Guard, and by accepting any such office while members of the board, or by not resigning any such office held at the time of being appointed or elected to the board within 30 days after such appointment or election, shall be deemed to have vacated their membership in the board. A board member may not be employed by or accept any compensation from the district in any capacity or accept any payment or other benefit from the Public School Teachers' Pension and Retirement Fund created by Article 17 of the Pension Code in which the board member is an annuitant, and by holding or accepting any such employment, compensation, payment, or other benefit while a member of the board, or by not resigning any such employment within 30 days after such appointment or election, shall be deemed to have vacated his or her membership in the board.

(Source: P.A. 97-1150, eff. 1-25-13.)

(105 ILCS 5/34-1.05 rep.)

Section 15. The School Code is amended by repealing Section 34-1.05.

Section 90. The State Mandates Act is amended by adding Section 8.40 as follows:

(30 ILCS 805/8.40 new)

Sec. 8.40. Exempt mandate. Notwithstanding Sections 6 and 8 of this Act, no reimbursement by the State is required for the implementation of any mandate created by this amendatory Act of the 99th General Assembly.

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