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105 ILCS 5/34-43.1

    (105 ILCS 5/34-43.1) (from Ch. 122, par. 34-43.1)
    Sec. 34-43.1. (A) Limitation of noninstructional costs. It is the purpose of this Section to establish for the Board of Education and the general superintendent of schools requirements and standards which maximize the proportion of school district resources in direct support of educational, program, and building maintenance and safety services for the pupils of the district, and which correspondingly minimize the amount and proportion of such resources associated with centralized administration, administrative support services, and other noninstructional services.
    For the 1989-90 school year and for all subsequent school years, the Board of Education shall undertake budgetary and expenditure control actions which limit the administrative expenditures of the Board of Education to levels, as provided for in this Section, which represent an average of the administrative expenses of all school districts in this State not subject to Article 34.
    (B) Certification of expenses by the State Superintendent of Education. The State Superintendent of Education shall annually certify, on or before May 1, to the Board of Education and the School Finance Authority, for the applicable school year, the following information:
        (1) the annual expenditures of all school districts
    
of the State not subject to Article 34 properly attributable to expenditure functions defined by the rules and regulations of the State Board of Education as: 2210 (Improvement of Instructional Services); 2300 (Support Services - General Administration) excluding, however, 2320 (Executive Administrative Services); 2490 (Other Support Services - School Administration); 2500 (Support Services - Business); 2600 (Support Services - Central);
        (2) the total annual expenditures of all school
    
districts not subject to Article 34 attributable to the Education Fund, the Operations, Building and Maintenance Fund, the Transportation Fund and the Illinois Municipal Retirement Fund of the several districts, as defined by the rules and regulations of the State Board of Education; and
        (3) a ratio, to be called the statewide average of
    
administrative expenditures, derived by dividing the expenditures certified pursuant to paragraph (B)(1) by the expenditures certified pursuant to paragraph (B)(2).
    For purposes of the annual certification of expenditures and ratios required by this Section, the "applicable year" of certification shall initially be the 1986-87 school year and, in sequent years, each succeeding school year.
    The State Superintendent of Education shall consult with the Board of Education to ascertain whether particular expenditure items allocable to the administrative functions enumerated in paragraph (B)(1) are appropriately or necessarily higher in the applicable school district than in the rest of the State due to noncomparable factors. The State Superintendent shall also review the relevant cost proportions in other large urban school districts. The State Superintendent shall also review the expenditure categories in paragraph (B)(1) to ascertain whether they contain school-level expenses. If he or she finds that adjustments to the formula are appropriate or necessary to establish a more fair and comparable standard for administrative cost for the Board of Education or to exclude school-level expenses, the State Superintendent shall recommend to the School Finance Authority rules and regulations adjusting particular subcategories in this subsection (B) or adjusting certain costs in determining the budget and expenditure items properly attributable to the functions or otherwise adjust the formula.
    (C) Administrative expenditure limitations. The annual budget of the Board of Education, as adopted and implemented, and the related annual expenditures for the school year, shall reflect a limitation on administrative outlays as required by the following provisions, taking into account any adjustments established by the State Superintendent of Education: (1) the budget and expenditures of the Board of Education for the 1989-90 school year shall reflect a ratio of administrative expenditures to total expenditures equal to or less than the statewide average of administrative expenditures for the 1986-87 school year as certified by the State Superintendent of Education pursuant to paragraph (B)(3); (2) for the 1990-91 school year and for all subsequent school years, the budget and expenditures of the Board of Education shall reflect a ratio of administrative expenditures to total expenditures equal to or less than the statewide average of administrative expenditures certified by the State Superintendent of Education for the applicable year pursuant to paragraph (B)(3); (3) if for any school year the budget of the Board of Education reflects a ratio of administrative expenditures to total expenditures which exceeds the applicable statewide average, the Board of Education shall reduce expenditure items allocable to the administrative functions enumerated in paragraph (B)(1) such that the Board of Education's ratio of administrative expenditures to total expenditures is equal to or less than the applicable statewide average ratio.
    For purposes of this Section, the ratio of administrative expenditures to the total expenditures of the Board of Education, as applied to the budget of the Board of Education, shall mean: the budgeted expenditure items of the Board of Education properly attributable to the expenditure functions identified in paragraph (B)(1) divided by the total budgeted expenditures of the Board of Education properly attributable to the Board of Education funds corresponding to those funds identified in paragraph (B)(2), exclusive of any monies budgeted for payment to the Public School Teachers' Pension and Retirement System, attributable to payments due from the General Funds of the State of Illinois.
     The annual expenditure of the Board of Education for 2320 (Executive Administrative Services) for the 1989-90 school year shall be no greater than the 2320 expenditure for the 1988-89 school year. The annual expenditure of the Board of Education for 2320 for the 1990-91 school year and each subsequent school year shall be no greater than the 2320 expenditure for the immediately preceding school year or the 1988-89 school year, whichever is less. This annual expenditure limitation may be adjusted in each year in an amount not to exceed any change effective during the applicable school year in salary to be paid under the collective bargaining agreement with instructional personnel to which the Board is a party and in benefit costs either required by law or such collective bargaining agreement.
    (D) Cost control measures. In undertaking actions to control or reduce expenditure items necessitated by the administrative expenditure limitations of this Section, the Board of Education shall give priority consideration to reductions or cost controls with the least effect upon direct services to students or instructional services for pupils, and upon the safety and well-being of pupils, and, as applicable, with the particular costs or functions to which the Board of Education is higher than the statewide average.
    For purposes of assuring that the cost control priorities of this subsection (D) are met, the State Superintendent of Education shall, with the assistance of the Board of Education, review the cost allocation practices of the Board of Education, and the State Superintendent of Education shall thereafter recommend to the School Finance Authority rules and regulations which define administrative areas which most impact upon the direct and instructional needs of students and upon the safety and well-being of the pupils of the district. No position closed shall be reopened using State or federal categorical funds.
    (E) Report of Audited Information. For the 1988-89 school year and for all subsequent school years, the Board of Education shall file with the State Board of Education the Annual Financial Report and its audit, as required by the rules of the State Board of Education. Such reports shall be filed no later than February 15 following the end of the school year of the Board of Education, beginning with the report to be filed no later than February 15, 1990 for the 1988-89 school year.
    As part of the required Annual Financial Report, the Board of Education shall provide a detailed accounting of the central level, district, bureau and department costs and personnel included within expenditure functions included in paragraph (B)(1). The nature and detail of the reporting required for these functions shall be prescribed by the State Board of Education in rules and regulations. A copy of this detailed accounting shall also be provided annually to the School Finance Authority and the public. This report shall contain a reconciliation to the board of education's adopted budget for that fiscal year, specifically delineating administrative functions.
    If the information required under this Section is not provided by the Board of Education in a timely manner, or is initially or subsequently determined by the State Superintendent of Education to be incomplete or inaccurate, the State Superintendent shall, in writing, notify the Board of Education of reporting deficiencies. The Board of Education shall, within 60 days of such notice, address the reporting deficiencies identified. If the State Superintendent of Education does not receive satisfactory response to these reporting deficiencies within 60 days, the next payment of general State aid due the Board of Education under Section 18-8, and all subsequent payments, shall be withheld by the State Superintendent of Education until the enumerated deficiencies have been addressed.
    Utilizing the Annual Financial Report, the State Superintendent of Education shall certify on or before May 1 to the School Finance Authority the Board of Education's ratio of administrative expenditures to total expenditures for the 1988-89 school year and for each succeeding school year. Such certification shall indicate the extent to which the administrative expenditure ratio of the Board of Education conformed to the limitations required in subsection (C) of this Section, taking into account any adjustments of the limitations which may have been recommended by the State Superintendent of Education to the School Finance Authority. In deriving the administrative expenditure ratio of the Chicago Board of Education, the State Superintendent of Education shall utilize the definition of this ratio prescribed in subsection (C) of this Section, except that the actual expenditures of the Board of Education shall be substituted for budgeted expenditure items.
    (F) Approval and adjustments to administrative expenditure limitations. The School Finance Authority organized under Article 34A shall monitor the Board of Education's adherence to the requirements of this Section. As part of its responsibility the School Finance Authority shall determine whether the Board of Education's budget for the next school year, and the expenditures for a prior school year, comply with the limitation of administrative expenditures required by this Section. The Board of Education and the State Board of Education shall provide such information as is required by the School Finance Authority in order for the Authority to determine compliance with the provisions of this Section. If the Authority determines that the budget proposed by the Board of Education does not meet the cost control requirements of this Section, the Board of Education shall undertake budgetary reductions, consistent with the requirements of this Section, to bring the proposed budget into compliance with such cost control limitations.
    If, in formulating cost control and cost reduction alternatives, the Board of Education believes that meeting the cost control requirements of this Section related to the budget for the ensuing year would impair the education, safety, or well-being of the pupils of the school district, the Board of Education may request that the School Finance Authority make adjustments to the limitations required by this Section. The Board of Education shall specify the amount, nature, and reasons for the relief required and shall also identify cost reductions which can be made in expenditure functions not enumerated in paragraph (B)(1), which would serve the purposes of this Section.
    The School Finance Authority shall consult with the State Superintendent of Education concerning the reasonableness from an educational administration perspective of the adjustments sought by the Board of Education. The School Finance Authority shall provide an opportunity for the public to comment upon the reasonableness of the Board's request. If, after such consultation, the School Finance Authority determines that all or a portion of the adjustments sought by the Board of Education are reasonably appropriate or necessary, the Authority may grant such relief from the provisions of this Section which the Authority deems appropriate. Adjustments so granted apply only to the specific school year for which the request was made.
    In the event that the School Finance Authority determines that the Board of Education has failed to achieve the required administrative expenditure limitations for a prior school year, or if the Authority determines that the Board of Education has not met the requirements of subsection (F), the Authority shall make recommendations to the Board of Education concerning appropriate corrective actions. If the Board of Education fails to provide adequate assurance to the Authority that appropriate corrective actions have been or will be taken, the Authority may, within 60 days thereafter, require the board to adjust its current budget to correct for the prior year's shortage or may recommend to the members of the General Assembly and the Governor such sanctions or remedial actions as will serve to deter any further such failures on the part of the Board of Education.
    To assist the Authority in its monitoring responsibilities, the Board of Education shall provide such reports and information as are from time to time required by the Authority.
    (G) Independent reviews of administrative expenditures. The School Finance Authority may direct independent reviews of the administrative and administrative support expenditures and services and other non-instructional expenditure functions of the Board of Education. The Board of Education shall afford full cooperation to the School Finance Authority in such review activity. The purpose of such reviews shall be to verify specific targets for improved operating efficiencies of the Board of Education, to identify other areas of potential efficiencies, and to assure full and proper compliance by the Board of Education with all requirements of this Section.
    In the conduct of reviews under this subsection, the Authority may request the assistance and consultation of the State Superintendent of Education with regard to questions of efficiency and effectiveness in educational administration.
    (H) Reports to Governor and General Assembly. On or before May 1, 1991 and no less frequently than yearly thereafter, the School Finance Authority shall provide to the Governor, the State Board of Education, and the members of the General Assembly an annual report, as outlined in Section 34A-606, which includes the following information: (1) documenting the compliance or non-compliance of the Board of Education with the requirements of this Section; (2) summarizing the costs, findings, and recommendations of any reviews directed by the School Finance Authority, and the response to such recommendations made by the Board of Education; and (3) recommending sanctions or legislation necessary to fulfill the intent of this Section.
(Source: P.A. 86-124; 86-1477.)