Over the summer, Governor Pritzker signed Public Act 103-0394, creating Section 17-1.10 of the School Code. The new law requires school boards that do not receive federal impact aid funding to present annually a written operational funds expenditure report at a board meeting starting in the 2024-2025 school year. The report must include the annual average expenditures of the school district’s operational funds for the previous three fiscal years, as reported in the school district’s most recently audited annual financial reports. The calculation of “operational funds” must include the school district’s educational, transportation, and operations and maintenance funds.  

The new law also requires school districts whose combined cash reserve balance of its operational funds exceeds 2.5 times the annual average expenditures of its operational funds for the prior three fiscal years to file a written operational funds reserve reduction plan with ISBE by December 31. The operational funds reserve reduction plan must aim to reduce, within three years, the school district’s combined cash reserve balance of its operational funds to an amount at or below 2.5 times the annual average expenditures of its operational funds for the prior three fiscal years. If applicable, the first of such reports would be due December 31, 2024. Any plans received by ISBE will be posted on ISBE’s website. 

The calculations in this new statute resemble the precedent for excess accumulation tax rate objections established by the Illinois Supreme Court in Central Illinois Public Service Co. v. Miller.  However, the calculation of excess accumulation for tax rate objections are based on individual funds while this statute aggregates the operational funds for its calculations. We will continue to monitor relevant guidance regarding the contents and format of the operational funds expenditure report and operational funds reserve reduction plan and will issue updates accordingly.