(50 ILCS 320/1) (from Ch. 85, par. 7201) Sec. 1. Short title. This Act may be cited as the Local Government Financial Planning and Supervision Act. (Source: P.A. 86-1211.)

(50 ILCS 320/2) (from Ch. 85, par. 7202) Sec. 2. Policy and purpose. (a) It is the public policy of this State, in order to provide for the public health, safety and welfare, to provide assistance to units of local government in the formulation and implementation of proper financial accounting procedures, budgeting and taxing practices. (b) The purpose of this Act is to assure fiscal integrity of all units of local government so that they may provide for the health, safety and welfare of their citizens, pay when due principal and interest on their debt obligations and meet financial obligations to their employees, vendors and suppliers. The failure of a unit of local government to so act is hereby determined to affect adversely the health and safety and welfare not only of the people of the unit of local government, but also of the people of the State of Illinois. (c) This Act is an Omnibus Bond Act within the meaning of Section 8 of the Statute on Statutes. No provision of this Act shall be deemed to apply if such application shall result in the impairment of a contract made prior to the effective date of this Act with any person, other than the governmental entities named in Section 7 of this Act. Any person not such a governmental entity shall continue to be able to enforce any rights assigned to or otherwise pledged to or for the benefit of such person by such entity. (Source: P.A. 86-1211.)

(50 ILCS 320/3) (from Ch. 85, par. 7203) Sec. 3. Definitions. As used in this Act, unless the context requires otherwise: (a) "Commission" means a financial planning and supervision commission created pursuant to this Act. (b) "Fiscal emergency" means the existence of any one or more of the following conditions: (1) The existence of a continuing default in the

payment of principal and interest on any debt obligation for more than 180 days.

(2) The failure to make payment of over 20% of all

payroll to employees of the unit of local government in the amounts and at the times required by law, ordinances, resolutions, or agreements, which failure of payment has continued for more than 30 days after such time for payment, unless at least 2/3 of the employees affected by such failure to pay, acting individually or by their duly authorized representative, consent in writing to an extension.

(3) The insolvency of the unit of local government,

being a financial condition such that the unit is (A) generally not paying its debts as they come due unless they are the subject of a bona fide dispute or (B) unable to pay its debts as they become due.

(c) "Governing body" means the board or other body of officers having authority to levy taxes, make appropriations, authorize the expenditure of public funds or approve claims for any unit of local government. (d) "Unit of local government" shall have the meaning provided as specified in Article VII, Section 1 of the Illinois Constitution, and further means only those units of local government which have a population under 25,000. (Source: P.A. 86-1211.)

(50 ILCS 320/4) (from Ch. 85, par. 7204) Sec. 4. Petition. (a) This subsection (a) applies through December 31, 1992. Any unit of local government upon a 2/3 vote of the members of its governing body may petition the Governor for the establishment of a financial planning and supervision commission if the governing body of the unit of local government determines that a fiscal emergency, as defined in Section 3, exists or will exist within 60 days. A copy of the petition shall be filed with the Illinois Finance Authority requesting the assistance of the Authority in conducting an analysis of the financial condition of the unit of local government. A petition shall include the conditions of fiscal emergency, a list of all amounts and types of indebtedness or claims known to the unit of local government, and which creditors are subject to the stay provisions of Section 7 of this Act. (b) This subsection (b) applies on and after January 1, 1993. Any unit of local government upon a 2/3 vote of the members of its governing body may petition the Governor for the establishment of a financial planning and supervision commission if the governing body of the unit of local government determines that a fiscal emergency, as defined in Section 3, exists or will exist within 60 days. A petition shall include the conditions of fiscal emergency and a list of all creditors of the unit of local government, which list shall indicate the names, addresses, amounts and types of indebtedness or claims of such creditors, and which of such creditors are subject to the stay provisions of Section 7 of this Act. (Source: P.A. 93-205, eff. 1-1-04.)

(50 ILCS 320/5) (from Ch. 85, par. 7205) Sec. 5. Establishment of commission. (a) This subsection (a) applies through December 31, 1992. (1) Upon receipt of a petition for establishment of a

financial planning and supervision commission, the Governor may direct the establishment of such a commission if the Governor determines that a fiscal emergency exists.

(2) Prior to making such determination, the Governor

shall give reasonable notice and opportunity for a hearing to all creditors of the petitioning unit of local government who are subject to the stay provisions of Section 7 of this Act. The determination shall be entered not less than 60 days after the filing of the petition. A determination of fiscal emergency by the Governor shall be a final administrative decision subject to the provisions of the Administrative Review Law. The court on such review may grant exceptions to the stay provisions of Section 7 of this Act as adequate protection of creditors' interests or equity may require. The commission shall convene within 30 days of the entry by the Governor of his or her determination of the fiscal emergency.

(3) (A) The Commission shall consist of 7 Directors. (B) One Director shall be appointed by the chief

executive officer of the unit of local government.

(C) One Director shall be appointed by the

majority vote of the governing body of the unit of local government.

(D) Five Directors shall be appointed by the

Governor, with the advice and consent of the Senate. The Governor shall select one of the Directors to serve as Chairperson during the term of his or her appointment. Of the initial Directors so appointed, 3 shall be appointed to serve for terms expiring 3 years from the date of their appointment, and 2 shall be appointed to serve for terms expiring 2 years from the date of their appointment. Thereafter, each Director appointed by the Governor shall be appointed to hold office for a term of 3 years and until his or her successor has been appointed as provided in Section 8-12-7 of the Illinois Municipal Code. Directors shall be eligible for reappointment. Any vacancy which shall arise shall be filled by appointment by the Governor, with the advice and consent of the Senate, for the unexpired term and until a successor Director has been appointed as provided in Section 8-12-7 of the Illinois Municipal Code. A vacancy shall occur upon resignation, death, conviction of a felony, or removal from office of a Director. A Director may be removed for incompetency, malfeasance, or neglect of duty at the instance of the Governor. If the Senate is not in session or is in recess when appointments subject to its confirmation are made, the Governor shall make temporary appointments which shall be subject to subsequent Senate approval.

(b) This subsection (b) applies on and after January 1, 1993. (1) Upon receipt of a petition for establishment of a

financial planning and supervision commission, the Governor may direct the establishment of such a commission if the Governor determines that a fiscal emergency exists.

(2) Prior to making such determination, the Governor

shall give reasonable notice and opportunity for a hearing to all creditors of the petitioning unit of local government. The determination shall be entered not less than 60 days after the filing of the petition. A determination of fiscal emergency by the Governor shall be a final administrative decision subject to the provisions of the Administrative Review Law. The court on such review may grant exceptions to the stay provisions of Section 7 of this Act as adequate protection of creditors' interests or equity may require. The commission shall convene within 30 days of the entry by the Governor of his or her determination of the fiscal emergency.

(3) A commission shall consist of 11 members: (A) Eight members as follows: the Governor, the

State Comptroller, the Director of Revenue, the Director of the Governor's Office of Management and Budget, the State Treasurer, the Executive Director of the Illinois Finance Authority, the Director of the Department of Commerce and Economic Opportunity and the presiding officer of the governing body of the unit of local government, or their respective designees. A designee, when present, shall be counted in determining whether a quorum is present at any meeting of the commission and may vote and participate in all proceedings and actions of the commission. The designations shall be in writing, executed by the member making the designation, and filed with the secretary of the commission. The designations may be changed from time to time in like manner, but due regard shall be given to the need for continuity. The Governor shall appoint a chairman of the commission from among the 8 members described in this subparagraph (A).

(B) Three members nominated and appointed as

follows: the governing body and chief governing officer of the unit of local government shall submit in writing to the chairman of the commission the nomination of 5 persons agreed to by them and meeting the qualifications set forth in this Act. Nominations shall accompany the petition for establishment of the financial planning and supervision commission. If the chairman is not satisfied that at least 3 of the nominees are well qualified, he shall notify the governing body of the unit of local government to submit in writing, within 5 days, additional nominees, not exceeding 3. The chairman shall appoint 3 members from all the nominees so submitted or a lesser number that he considers well qualified. Each of the 3 appointed members shall serve for a term of one year, subject to removal by the chairman for misfeasance, nonfeasance or malfeasance in office. Upon the expiration of the term of an appointed member, or in the event of the death, resignation, incapacity or removal, or other ineligibility to serve of an appointed member, the chairman shall appoint a successor pursuant to the process of original appointment.

Each of the 3 appointed members shall be an

individual:

(i) Who has knowledge and experience in

financial matters, financial management, or business organization or operations, including experience in the private sector in management of business or financial enterprise, or in management consulting, public accounting, or other professional activity; and

(ii) Who has not at any time during the 2

years preceding the date of appointment held any elected public office.

The governing body and chief governing officer of the

unit of local government, to the extent possible, shall nominate members whose residency, office, or principal place of professional or business activity is situated within the unit of local government.

An appointed member of the commission shall not

become a candidate for elected public office while serving as a member of the commission.

(4) Immediately after his appointment of the initial

3 appointed members of the commission, the chairman shall call the first meeting of the commission and shall cause written notice of the time, date and place of the first meeting to be given to each member of the commission at least 48 hours in advance of the meeting.

(5) The commission members shall select one of their

number to serve as treasurer of the commission.

(Source: P.A. 93-205, eff. 1-1-04; 94-793, eff. 5-19-06.)

(50 ILCS 320/6) (from Ch. 85, par. 7206) Sec. 6. Action by commission; financial advisor; liability. (a) The commission may adopt and alter bylaws and rules for the conduct of its affairs, and for the manner, subject to this Act, in which its powers and functions shall be exercised and embodied. (b) Six members of the commission constitute a quorum of the commission. The affirmative vote of 6 members of the commission is necessary for any action taken by vote of the commission. No vacancy in the membership of the commission shall impair the rights of a quorum by such vote to exercise all the rights and perform all the duties of the commission. Members of the commission, and their designees, are not disqualified from voting by reason of the functions of the other office they hold and are not disqualified from exercising the functions of any other office with respect to the unit of local government, its officers, or the commission. (c) The commission may retain a financial advisor. As used in this Act, "financial advisor" means a firm of certified public accountants with demonstrated professional competence in matters relating to this Act, engaged by the commission pursuant to a written contract, a copy of which shall be provided to each member of the commission and each member of the governing body of the unit of local government. (d) The financial advisor, the members of the commission, or any other person authorized to act on behalf of or assist them shall not be personally liable or subject to any action, judgment, or claim for damages resulting from the exercise of or failure to exercise the powers, duties, and functions granted to them in regard to their functioning under this Act, but the commission, the financial advisor, and such other persons shall be subject to mandamus proceedings to compel performance of their duties under this Act. (e) At the request of the commission the administrative head of any State department or agency shall temporarily assign personnel skilled in procedures relevant to assisting the commission or the financial advisor in its duties. (f) Each appointed member of the commission shall file with the commission a signed written statement setting forth the general nature of sales of goods, property, or services or of loans to the unit of local government with respect to which that commission is established, in which such member has a pecuniary interest or in which any member of his immediate family, or any corporation, partnership, or enterprise of which he is an officer, director, or partner, or of which he or a member of his immediate family owns more than 7 1/2% interest, has a pecuniary interest, and of which sale, loan and interest such member has knowledge. The statement shall be supplemented from time to time to reflect changes in the general nature of any such sales or loans. (Source: P.A. 86-1211.)

(50 ILCS 320/7) (from Ch. 85, par. 7207) Sec. 7. Judgment or lien; indebtedness. (a) No State agency, board, commission or department, no subdivision of the State, and no unit of local government (including municipalities or counties having a population of 25,000 or more, and all of the foregoing being the "stayed creditors") may enforce any judgment or lien against, or take any other action to collect any indebtedness, obligations or liabilities from, a unit of local government covered by this Act during the period provided in this Section. This prohibition of enforcement or action is hereafter referred to as the "stay". The period of the stay shall begin at the time of the determination of fiscal emergency by the Governor and end at the earlier of (1) the time of reversal of such determination by a court, (2) 2 years after the stay begins, or (3) when the commission dissolves pursuant to Section 12 of this Act. The 2 year stay so provided may be extended for an additional one year by the commission with the consent of the majority (by number and by dollar amounts) of the stayed creditors affected by the stay. The commission may upon application or upon its own initiative grant exceptions to the stay provisions of this Section as adequate protection of creditors' interests and equity may require. Any such decision shall be a final administrative decision subject to the provisions of the Administrative Review Law. The stay does not discharge the unit of local government from its indebtedness, obligations or liabilities. (b) Notwithstanding subsection (a), any indebtedness, obligation or liability incurred by a unit of local government after the beginning of the period of the stay shall not be subject to that stay. (Source: P.A. 86-1211.)

(50 ILCS 320/8) (from Ch. 85, par. 7208) Sec. 8. Financial plan. (a) Within 120 days after the first meeting of the commission, the presiding officer of the governing body of the unit of local government, in conjunction with the financial advisor provided by the commission, shall submit to the commission a detailed financial plan, as approved or amended by ordinance or resolution of the governing body, containing the following: (1) Actions to be taken by the unit of local

government to:

(A) Eliminate all fiscal emergency conditions

determined to exist pursuant to this Act;

(B) Satisfy any judgments, past due accounts

payable, and all past due and payable payroll and fringe benefits;

(C) Eliminate the deficits in all deficit funds; (D) Restore to construction funds and other

special funds moneys from such funds that were used for purposes not within the purposes of such funds, or missing from the construction funds or such special funds and not accounted for;

(E) Balance the budgets, avoid future deficits in

any funds, and maintain current payments of payroll, fringe benefits, and all accounts;

(F) Avoid any fiscal emergency condition in the

future; and

(G) Restore the ability of the unit of local

government to market long-term general obligation bonds under provisions of law applicable to such local governmental units generally.

(2) The legal authorities permitting the unit of

local government to take the action enumerated pursuant to paragraph (1) of this subsection (a).

(3) The approximate dates of the commencement,

progress upon, and completion of the actions enumerated in paragraph (1) of this subsection (a) and a reasonable period of time expected to be required to implement the plan. The unit of local government, in consultation with the commission and the financial advisor, shall prepare a reasonable time schedule for progress toward and achievement of the requirements for the financial plan, and the financial plan shall be consistent with that time schedule.

(4) The amount and purpose of any issue of debt

obligations that will be issued, together with assurances that any such debt obligations that will be issued will not exceed debt limits supported by appropriate certifications by the treasurer of the local governmental unit.

(5) Assurances that the unit of local government will

establish monthly levels of expenditures and encumbrances.

(6) Assurances that the municipality will conform to

statutes with respect to budgets and appropriation ordinances.

(7) The detail, the form, and the supporting

information that the commission may direct.

(b) The financial plan developed pursuant to subsection (a) of this Section shall be filed with the financial advisor and the financial planning and supervision commission. After consultation with the financial advisor, and upon completing the procedures and findings required by subsection (c) of this Section, the commission shall either approve or reject any initial or subsequent financial plan. If the commission rejects the initial or any subsequent financial plan, it shall forthwith inform the governing body of the unit of local government of the reasons for its rejection. Within 30 days after the rejection of any plan, the presiding officer, with the approval of the governing body by the passage of an ordinance or resolution, shall submit another plan meeting the requirements of this Section to the commission and the financial advisor for approval or rejection by the commission. (c) Prior to the approval of any initial or subsequent financial plan, the commission shall give reasonable notice and opportunity for a hearing to all creditors of the unit of local government. Any initial or subsequent financial plan passed by the unit of local government shall be approved by the commission if it complies with the requirements of this Section, and if the commission finds that (1) the plan is bona fide and can reasonably be expected to be implemented within the period specified in the plan, (2) the plan is a good faith plan reasonably anticipated to alleviate the fiscal emergency of the unit of local government and (3) the plan is in the best interest of the unit of local government and its creditors. (d) The determination of the commission under this Section to approve or deny approval of the financial plan shall be a final administrative decision subject to the provisions of the Administrative Review Law. (e) Any financial plan may be amended subsequent to its adoption in the same manner as the passage and approval of the initial or subsequent plan pursuant to this Section. (Source: P.A. 86-1211.)

(50 ILCS 320/9) (from Ch. 85, par. 7209) Sec. 9. Powers of commission and financial advisor. (a) The financial planning and supervision commission, or when authorized by the commission, the financial advisor, shall have the following powers, duties and functions: (1) To review all budgets, tax levy ordinances, bond

and note ordinances or resolutions, and appropriation ordinances of the unit of local government in order to determine whether they are consistent with the financial plan and, when considered in connection with revenue estimates, whether a balanced budget will result.

(2) To order the unit of local government to meet and

negotiate with its creditors.

(3) To inspect and secure copies of any document,

ordinance, resolution, or instrument pertaining to the effective financial accounting and reporting system, debt obligations, debt limits, financial plan, balanced appropriation ordinances, report of examination or audit, statement or invoice, or other worksheet or record of the municipality; provided that any attorney-client privilege shall remain inviolate.

(4) To inspect and secure copies of any document,

instrument, certification, records of proceedings, or other worksheet or records of any official or employee of the unit of local government or any other local governmental unit in the State.

(5) To consult with the creditors of the unit of

local government. To consult with the officials of the unit of local government regarding any necessary or appropriate steps to bring the books of account, accounting systems, and financial procedures and reports of the unit of local government into compliance with systems of accounting recommended by the State Comptroller pursuant to "An Act concerning accounting systems for units of local government", approved September 3, 1985, and regarding desirable modifications and supplementary systems and procedures pertinent to the unit of local government.

(6) To provide assistance to the unit of local

government in the structuring or the terms of, and the placement of sale of, debt obligations of the unit of local government.

(7) To perform all other powers, duties, and

functions as provided under this Act.

(8) To make and enter into all contracts and

agreements necessary or incidental to the performance of its duties and the exercise of its powers under this Act.

(9) To consult with officials of the unit of local

government and make recommendations for cost reductions or revenue increases to achieve balanced budgets and carry out the financial plan.

(b) In the event that the financial planning and supervision commission determines that the proposed budget, tax levy, bond or note issuance or revenue estimates do not comply with the financial plan of the unit of local government, the financial planning and supervision commission shall be authorized to: (1) Make any revisions to the financial plan,

appropriation ordinances, tax levy ordinance, bond or note ordinance or appropriation ordinance deemed necessary or advisable for submission to the governing body of the unit of local government for approval and implementation;

(2) Review and determine the extent of any deficiency

of revenues;

(3) Require the unit of local government to provide

documentation to substantiate to the extent and in the manner deemed necessary or advisable any item of revenue or expenditure;

(4) Recommend that the unit of local government file

a petition under Chapter 9 of the United States Bankruptcy Code. Not later than 30 days after the conclusion of its investigation, the commission shall make a written report to the unit of local government of all findings, determinations and recommendations.

(c) The governing body of the unit of local government and the officers and employees of any other governmental unit in this State are authorized and directed to diligently and promptly assist the financial planning and supervision commission in the prosecution of its duties, including the furnishing of any and all materials, including justification documents, as may be required. (d) Annually on or before the first day of April during the fiscal emergency period, the commission shall make reports and recommendations to the General Assembly concerning progress of the unit of local government in eliminating fiscal emergency conditions, failures of the unit of local government to comply with this Act, and recommendations for further actions to attain the objectives of this Act, including legislative action to make provisions of law more effective for their purposes or to enhance revenue raising or financing capabilities of the local governmental unit. The commission may make such interim reports as it may determine to be appropriate for such purposes and shall make such additional reports as may be requested by resolution of either house of the General Assembly. (Source: P.A. 86-1211.)

(50 ILCS 320/10) (from Ch. 85, par. 7210) Sec. 10. State aid. (a) This subsection (a) applies through December 31, 1992. (1) During the period of time that a unit of local

government is covered by this Act, the State shall not be required to distribute to the unit of local government any monies to which the unit of local government might otherwise be entitled except in accordance with the direction of the commission.

(2) Any State assistance in the form of a loan or

grant from appropriated funds shall be subject to the expenditure control of the commission.

(3) The commission may request the Illinois Finance

Authority to issue bonds, notes, or other evidences of indebtedness, the proceeds of which are to be used to make loans to the unit of local government for purposes of enabling that unit of local government to restructure its current indebtedness and to provide and pay for its essential municipal services. Such request may not precede the adoption of the financial plan required by Section 8 of this Act and shall be in accordance with the provisions of the Illinois Finance Authority Act.

(b) This subsection (b) applies on and after January 1, 1993. During the period of time that a unit of local government is covered by this Act, the State shall not be required to distribute to the unit of local government any monies to which the unit of local government might otherwise be entitled. (Source: P.A. 93-205, eff. 1-1-04.)

(50 ILCS 320/11) (from Ch. 85, par. 7211) Sec. 11. Expenses of commission members. The members of the financial planning and supervision commission shall serve without compensation, but shall be paid by the commission their necessary and actual expenses incurred while engaged in the business of the commission. (Source: P.A. 86-1211.)

(50 ILCS 320/12) (from Ch. 85, par. 7212) Sec. 12. Expenses incurred by commission. Any expense or obligation incurred by the financial planning and supervision commission under this Act shall be payable solely from appropriations made for that purpose by the General Assembly. The commission is authorized to maintain monies appropriated for its use in a local account for such purposes to be held outside the State Treasury. Disbursements from this account shall require the approval and signatures of the chairman of the commission and the treasurer of the commission. The commission shall be authorized to request the State Comptroller and State Treasurer to issue State warrants against appropriations made for its use, in anticipation of commission expenses, for deposit into the local account. The compensation and expenses of a financial advisor retained by the commission shall be paid from monies appropriated to the Department of Commerce and Economic Opportunity for that purpose. Those appropriations shall only be committed, obligated, and expended by the Department of Commerce and Economic Opportunity as the result of an order signed by the chairman of the commission identifying the selected "financial advisor" pursuant to subsection (c) of Section 6 of this Act and stating the maximum compensation awarded to the financial advisor under the contract. A copy of the order shall be filed with the State Comptroller prior to any disbursement of funds. (Source: P.A. 94-793, eff. 5-19-06.)

(50 ILCS 320/13) (from Ch. 85, par. 7213) Sec. 13. Termination of commission. (a) A financial planning and supervision commission with respect to a unit of local government, and its functions under this Act, shall continue in existence until such time as a determination is made pursuant to subsection (b) of this Section that each of the following exists: (1) The unit of local government has planned, and is

in the process of good faith implementation of, an effective financial accounting and reporting system in accordance with the requirements of this Act, and it is reasonably expected that such implementation will be completed within 2 years;

(2) The unit of local government has corrected and

eliminated all of the fiscal emergency conditions determined pursuant to this Act and no new fiscal emergency condition has occurred;

(3) The unit of local government has met the

objectives of the financial plan described in Section 8.

(b) The determination that all of such conditions for the termination of the existence of the commission and its functions exist shall be made by the commission and shall be certified to the General Assembly and the governing body of the unit of local government. (c) The commission shall prepare and submit with such certification a final report of its activities, in such form as is appropriate for the purpose of providing a record of its activities and assisting other commissions created under this Act in the conduct of their functions. All of the books and records of the commission shall be delivered to the State Comptroller for retention and safekeeping. (d) Upon termination of the commission, all moneys of the commission still remaining in the possession of the commission shall be paid to the State Treasurer and held in a separate fund for the payment and satisfaction of all remaining obligations of the commission. Any excess shall be paid over to the General Revenue Fund. (e) If, at the time of termination of the commission, an effective financial accounting and reporting system has not been fully implemented, the Governor shall monitor the progress of implementation and shall exercise his authority to secure full implementation at the earliest time feasible but within 2 years from such termination. (Source: P.A. 86-1211.)

(50 ILCS 320/14) (from Ch. 85, par. 7214) Sec. 14. Application of Act. A unit of local government may by contract declare that the provisions of this Act shall not apply to any indebtedness, obligation or liability incurred under such contract. (Source: P.A. 86-1211.)