Legislation Extends “Sunset Date” for School Districts To Make Certain Interfund Transfers

Thanks to Public Act 99-713 effective on August 5, 2016, boards of education in school districts outside Chicago may continue to rely on School Code Section 17-2A which confers broad authority to make permanent transfers of assets among key operating funds.

For many years, Section 17-2A has authorized school boards in “downstate” districts to permanently transfer money from the educational fund to the operations and maintenance (O&M) or transportation funds; from O&M to the educational or transportation funds; and from the transportation fund to the educational or O&M funds. Such transfers may be made only after the school board holds a public hearing. The hearing must be preceded by a notice of the time, date, place and subject matter of the hearing, published in a newspaper of general circulation in the district at least seven and no more than 30 days before the hearing. The notice must also be posted at least 48 hours before the hearing, at the school board’s principal office or (if there isn’t one) at the building where the hearing will be held. 

However, until 2003, these interfund transfers were to be made “solely for the purpose of meeting one-time, non-recurring expenses.” In 2003, the statute was amended to lift that restriction until June 30, 2005, thereby affording districts short-term latitude to make Section 17-2A transfers for a wider range of purposes during that period. Subsequent amendments extended the “sunset” date for the less restrictive transfer authority up to June 30, 2016.

Passed by overwhelming majorities in the House and Senate and signed by the Governor earlier this month, P.A. 99-713 has now pushed the sunset date back to June 30, 2019, subject to the same notice-and-hearing requirements as before.  Therefore, districts may continue to make these less restrictive interfund transfers through June 30, 2019.   

If you have any questions regarding amended Section 17-2A, or about other types of school district interfund transfers, please feel free to contact your Robbins Schwartz attorney.

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