May 20, 2016
Since 2003, the School Code (Section 17-2A) has permitted boards of education to transfer money between the Educational, Operations and Maintenance, and Transportation Funds for any reason provided that the board first conducts a hearing on the transfer and authorizes the transfer by resolution. The authority to make transfers between those funds for any reason, however, is set to expire on June 30, 2016. Without an extension of the sun-setting provision, inter-fund transfers will be permitted only to meet a one-time, non- recurring expense in the other eligible fund.
House Bill 5529 would extend the current flexible transfer arrangement to June 30, 2019. As of publication, the bill is set for third reading in the Senate. We recommend that all business officials closely follow this bill. Although extensions have been authorized by the General Assembly in the past, given the climate in Springfield and thus the uncertainty of this bill passing before June 30, your District may be well- served to consider its inter-fund transfer needs before the current authority expires on of June 30, 2016. Please take care to schedule enough time to publish the required statutory notice of the public hearing at least 7 days before the hearing and final board action.
REMINDER: Boards of education may also transfer interest earned on district money to the fund most in need of the interest income as determined by the board under Section 10-22.44 of the School Code. Boards of education may not transfer interest that has been earmarked or restricted by the boards, or earned on Illinois Municipal Retirement Fund money, Tort Immunity money, Fire Prevention, Safety, Energy Conservation and School Security Purposes money or Capital Improvements money. Illinois State Board of Education rules require that boards of education adopt a resolution transferring the interest by June 30 of each year, otherwise the interest becomes part of the principal of the respective fund and can no longer be transferred as interest. If your school board wants to transfer eligible interest income earned during the past fiscal year, it must do so by June 30th.