70 ILCS 2805/12.1

(70 ILCS 2805/12.1) (from Ch. 42, par. 423.1)

Sec. 12.1. In addition to the powers and authority now possessed by it, the board of trustees of any sanitary district organized under this Act shall have the power by majority vote:

(a) To use the general funds of the sanitary district to defend, indemnify and hold harmless, in whole or in part, the board of trustees, members of the board of trustees, officials and employees of the sanitary district from financial loss and expenses, including court costs, investigation costs, actuarial studies, attorneys' fees and actual and punitive damages, arising out of any civil proceedings (including but not limited to proceedings alleging antitrust violations or the deprivation of civil or constitutional rights), claims, demands or judgments instituted, made or entered against such board, trustee, official or employee by reason of its or his wrongful or negligent statements, acts or omissions, provided that such statements, acts or omissions: (i) occur while the board, trustee, official or employee is acting in the discharge of its or his duties and within the scope of employment; and (ii) do not constitute wilful and wanton misconduct.

(b) (i) To obtain and provide for any or all of the matters and purposes described in paragraph (a) public officials' liability, comprehensive general liability and such other forms of insurance coverage as the board of trustees shall determine necessary or advisable, any insurance so obtained and provided to be carried in a company or companies licensed to write such coverage in this State, and (ii) to establish and provide for any or all of the matters and purposes described in paragraph (a) a program of self-insurance and, in furtherance thereof, to establish and accumulate reserves for the payment of financial loss and expenses, including court costs, investigation costs, actuarial studies, attorneys' fees and actual and punitive damages associated with liabilities arising out of civil proceedings, claims, demands or judgments instituted, made or entered as set forth in paragraph (a), and (iii) in connection with providing for any or all of the matters and purposes described in paragraph (a) and when permitted by law to enter into an agreement with any special district, unit of government, person or corporation for the use of property or the performance of any function, service or act, to agree to the sharing or allocation of liabilities and damages resulting from such use of property or performance of function, service or act, in which event such agreement may provide for contribution or indemnification by any or all of the parties to the agreement upon any liability arising out of the performance of the agreement.

If the board of trustees of any sanitary district organized under this Act undertakes to provide insurance or to establish a program of self-insurance and to establish and accumulate reserves for any or all of the matters and purposes described in paragraph (a), such reserves shall be established and accumulated for such matters and purposes subject to the following conditions:

(1) The amount of such reserves shall not exceed the amount necessary and proper, based on past experience or independent actuarial determinations;

(2) All earnings derived from such reserves shall be considered part of the reserves and may be used only for the same matters and purposes for which the reserves may be used;

(3) Reserves may be used only: for the purposes of making payments for financial loss and expenses, including actual and punitive damages, attorneys' fees, court costs, investigation costs and actuarial studies associated with liabilities arising out of civil proceedings, claims, demands or judgments instituted, made or entered as set forth in paragraph (a) in connection with the statements, acts or omissions of the board or of a trustee, official or employee of the board or the district which statements, acts or omissions occur while the board, trustee, official or employee is acting in the discharge of its or his duties and within the scope of employment and which statements, acts or omissions do not constitute wilful and wanton misconduct; for payment of insurance premiums; and for the purposes of making payments for losses resulting from any insured peril;

(4) All funds collected for the matters and purposes specified in subparagraph (3) above or earmarked for such matters and purposes must be placed in the reserves; and

(5) Whenever the reserves have a balance in excess of what is necessary and proper, then contributions, charges, assessments or other forms of funding for the reserves shall be appropriately decreased.

(Source: P.A. 85-782.)