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Illinois School Board Journal
March/April 2006

Proposed legislation realigns reorganization

by William H. Phillips

William H. Phillips is an associate professor of educational leadership at the University of Illinois-Springfield and conducts school reorganizational studies in Illinois.

Proposed legislation has been crafted to discuss one of the most sensitive issues involving school districts in Illinois: reorganization.

In the past, the provisions of the School Code have been complicated and lengthy. Essentially, what this draft legislation intends to do is merge four of the eight approvable reorganization methods into a single article (11-E) and, in the process, allow mergers of school districts that were not previously allowed. The proposed legislation was written by the governor's office in conjunction with the Illinois State Board of Education.

To paraphrase State Superintendent Randy Dunn, this legislation would add greater flexibility and efficiency to the reorganization process, while consolidating and streamlining provisions of the School Code.

No language in the proposed legislation is intended to be mandatory, and voters in each district would still need to approve these reorganizations.

So what are the changes, additions and implications of this lengthy proposal?

The biggest change is the combinations allowed under a new Article 11-E of the School Code, which merges the only current method of creating a unit district (Article 11-A), the only way to create a new elementary or high school district (Article 11-B), a method to make dual districts out of unit districts (Article 11-D) and small unit district conversion provisions (Article 7a), in which a unit district is dissolved and transformed into an elementary district while concurrently annexing the high school population to a contiguous high school

In this process, many of the intricacies of the previous methods have been aligned, as well as allowing some new combinations of school districts. New combinations would include:

• Elementary districts within the same high school district could consolidate to form a unit district even if the districts are not contiguous.
• A district (or districts) could consolidate within a high school district to form a unit district even if all of the elementary districts do not approve. With this provision, there is an "opt in" provision in which elementary districts can join the unit at a later date. This same "opt in" provision is also included in a possible phasing in of financial incentives for consolidating districts.
• A high school district could consolidate with a unit district as long as both districts are contiguous. Later, feeder elementary districts from the former high school districts may also "opt in" to the newly created unit district.

In addition, a "stair-step mechanism" is created in which the consolidating districts may reduce the maximum levy gradually to recognize the benefits of their consolidation. This provision would allow combination of the lowest elementary districts tax rates with the high school rates without reduction if they exceeded the maximum allowable rates by district type for two years and then reduce annually by .10 percent.

In creating Article 11-E, many of the various provisions have been standardized for uniformity. Some of the recommendations include:

• The requirements for board approval or resident signatures are standardized to 50 signatures or 10 percent of the registered voters in each affected district, whichever is less.
• The hearing requirements would be the same for all reorganization in which the Regional Superintendent would grant or deny reorganization petitions without state superintendent approval. If the ROE denies the petition, then the state superintendent may make the final decision.
• Voting requirements have also been standardized so that a successful reorganization referendum requires a majority of voters "in each affected district for passage." This is a change from original requirements for 11-B reorganizations, which required a "majority of those voting overall."

Other provisions

Section 11-E-15 would allow School District Conversion with the following guidelines:

• A small unit district, defined as fewer than 250 students in grades 9-12, may be dissolved and converted into an elementary district if the new elementary district keeps all of the former unit district territory and there is a concurrent annexation to a contiguous high school district.
• Two or more contiguous unit districts or one or more unit districts and a high school district may form a high school district and new elementary districts based upon the former boundaries of the dissolved districts.
• Districts may not use this second provision if they have more than 600 high school students. The state superintendent may grant waivers for this requirement.

Section 11-E-25 would allow unit district formation from dual district territory exclusively.

• In Section A of this provision, unit districts may be formed from territory of districts that do not encompass any unit district territory.
• In Section B of this provision, one or more unit districts that are contiguous plus any territory no part of which is included within any unit district may be organized into a unit district.

Section 11-E-30 allows partial elementary unit district formation.

• In Section A of this provision high school district(s) and unit district(s) may be dissolved and form a combined high school-unit district.
• In Section B of this provision a high school district and one or more elementary districts may organize into an "optional elementary unit district."
• In Section C, there is an "opt-in" provision for those elementary districts that may wish to join the elementary unit district at a later date.

Other issues

Other salient issues that always accompany consolidations also are discussed in this draft legislation, including requirements for petitions to initiate the reorganization process. They are standardized in Article 11-E to include petitions from school boards and citizen petitions that have 50 voter signatures from "each affected district" or 10 percent of the registered voters from "each affected district," whichever is smallest.

The petitions must also now set forth the maximum tax rates that the proposed district will be authorized to levy plus information pertaining to the Property Tax Extension Limitation Law (PTELL), including the "aggregate extension base" and the "debt service extension base" of the districts.

The allowable methods on the referendum ballot to elect board members have not changed: the "default method" is "at large" or the choice can be to divide the new district into seven equally populated areas. This second method is not newly created but does require approval at the reorganization referendum. However, new sections deal with Board of Education membership for community unit school districts formed before January 1, 1975, and for combined school districts formed before July 1, 1983. These circumstances may be rare, but they allow for different configurations of board membership.

The Committee of Ten retains many of the same responsibilities for reorganization. Article 11-E contains language that delineates vacancies on the Committee of Ten, in which the committee may replace its own members, is retained from previous statutes.

Regional superintendents will continue to hold hearings under Article 11-E, with newly expanded requirements. At this hearing, after notice has been published, there is a required agenda including:

• Evidence of school needs and conditions
• Ability of proposed district to meet standards of recognition.
• Consideration of division of funds and assets.
• Maximum tax rates for various purposes that the proposed district shall be authorized to levy including PTELL information, if appropriate, which shall have information regarding the "aggregate extension base" and the "debt service extension base."

Within 14 days after the conclusion of the hearing, the regional superintendent would either approve or deny the petition. If the regional superintendent fails to act within 21 days after the hearing or denies the petition, the petition is deemed to have been denied and petitioners may appeal to the state superintendent. If the state superintendent denies the petition, then that office issues the "specific basis for the denial." Administrative review for either denial is still possible within a one-year period after the petition by any resident of the territory described, petitioner or board member.

Election changes

The election process also has been standardized in that all elections for Article 11-E reorganization must pass with a majority of voters in each affected district. This was the same as previously required except that Article 11-B previously required a "majority of those voting overall." Election passage requirements also feature that in an "optional elementary unit district" a majority of voters in the high school district and at least one affected elementary district. In the case of voting requirements for elementary districts "opting in" later, they must also pass with a majority of voters in each affected district. Special provisions for unit district formation include that if "at least two unit districts voted in favor of consolidation" then the members of the Committee of Ten shall present an amended petition to the boards as long as the territory is contiguous.

Tax rates and the voting for these rates in a referendum are changed by Article 11-E. Previously, only the tax rates for the education; operations, buildings and maintenance (OMB); transportation; and life safety funds were included on the ballot. Now each rate is to be included on the ballot, except bond and interest, and there is also a new provision which allows the "maximum allowable rates by district type" to be exceeded for a temporary period.

The maximum allowable rates for a new district are calculated by combining the rates currently levied in education, OBM and transportation funds, with the rates of the lowest participating elementary district and the current rates of the high school district for two years after a successful reorganization and with a concurrent reduction to maximum allowable rates at .10 percent per year thereafter for a newly formed district. Therefore, this new provision allows a newly formed district to temporarily exceed the allowable tax rates by district type. This provides a necessary equalization of former tax rates for a newly merged district. A provision also allows districts forming in April elections may submit their new rates to respective county clerks and they may receive their new rates in the same calendar year in which the referendum was approved.

An additional section of Article 17-3 deals with tax rates in which districts may submit a referendum to allow them to levy a tax for a period of "not less than three years or more than 10 years." Thus, taxpayers and districts have a "temporary tax increase" authority. This may cause taxpayers to be more inclined to vote for tax increases when they know there is a sunset date for the increase. This is currently in statutes but not used extensively by school districts.

The issue of bonded indebtedness of a newly reorganized district always has been a prominent issue. Article 11-E again uses the concept that bonded indebtedness "stays with the district and its boundaries that originally issued the bonds." Also as previously allowed, bond sales may be approved at the same time in the passage of a reorganization referendum.

Teacher tenure or "contractual continued service" remains mostly the same as previously approved. The only different implications allow teachers, who for five years previous to a reorganization served in a capacity as a high school teacher or an elementary school teacher, to transfer to the board of the type of school that allows them to serve in the same capacity. In the case of a teacher who previously split teaching assignments, the teacher can request to serve in either type of district.

Financial incentives

The state has offered four financial incentives for decades for districts that consolidate. Each incentive — General State Aid Equalization; Teacher Salary Equalization; Debt Difference Payment; and $4,000 per full-time certified teacher — is still based on an ISBE "quintile system." While there are no new incentives or increases in incentive amounts, there is an "opt in" provision for elementary districts merging with the unit district at a later date. The "opt-in" provisions are allowed for four years after a successful merger with other elementary districts.

This legislation is lengthy and complicated, allowing changes in possible school district configurations, opting-in provisions, more tax rates being included on a referendum, districts to use a combined tax rate that may exceed allowable rate limits temporarily, newly expanded requirements for ROE hearings and a host of other issues.

Keep in mind that all of these changes are meant to be permissive; there are no mandatory provisions for districts to consolidate.

Changes of this magnitude to existing laws and procedures are bound to raise considerable interest and concern, if not outright skepticism. However, do not let the sheer size and number of changes keep you from a careful examination of this legislation that addresses, more than any legislation since 1985, the issue of school district reorganization in Illinois.

Be alert for changes

This proposed school reorganization legislation is now SB2795. Because a bill can be amended at any time, some of the provisions described here may have changed by the time the Journal reaches you.

According to Ben Schwarm, IASB associate executive director, governmental relations, the Association will not take an official position until the language and provisions are more finalized.

Schwarm will keep IASB members up-to-date on changes through the weekly Alliance Legislative Report, available at www.iasb.com. Those who would like to have the report e-mailed to them automatically should e-mail Schwarm at bschwarm@iasb.com.