29 June, 2017
Lang Bill Seeking School District Borrowing Reforms Heads to Governor's Desk
The legislation, House Bill 760, establishes transparency and accountability criteria that local school districts need to follow in order to secure any future debt limit exemption by the General Assembly when they seek to issue bond debt that would exceed the district's debt limit.
The House on Wednesday approved, 69-40, a version of the legislation tweaked by the Illinois Senate, 51-1, on May 26.
“Over the years, the legislature has approved school district debt limit exemptions that have not been backed by voters through referenda or have not disclosed critical financial information about bond debt issuances,” Lang said. “This bill changes that.”
Lang's proposal requires that any school bond debt proposals that need an exemption from the state legislature first must be approved by voters through referendum prior to issuance. And the public hearing required under current law on bond debt must now include detailed financial information, such as:
• A description of the project for which the bonds will be issued;
• An estimate of the number of years during which the bonds will be outstanding;
• An estimate of the total debt service to be paid on the bonds, including principal, interest, and costs of issuing the bonds;
• An estimate of the average annual property tax needed to pay the principal of and interest on the bonds extendable against property containing a single-family residence and having a fair market value of $100,000.
Additionally, a notice of the hearing must be published in a local newspaper and posted on the school district's website at least 10 days prior to the hearing.
“Detailed financial disclosure and referenda approval will inject transparency and accountability in the issuance of school bond debt,” said Lang. “This is an important reform.”
In addition to the transparency and accountability reform provisions, the legislation also includes a debt limit exemption to the debt-limit law for suburban East Prairie School District 73 that needs legislative approval for a $47.3 million bond issue to build a new school.
The Skokie-based district held a referendum on the proposal won support from 65 percent of the 1,827 voters in November. East Prairie also disclosed the financial information at its public hearing that is being required in Lang's bill.
“East Prairie School District 73's bond issue sets the standard for transparency and account
ability for school districts across the state because the district took each step demanded by this bill,” Lang said. “East Prairie will become a statewide model of responsible financial management.”