2023 Illinois Compiled Statutes › Chapter 105 - SCHOOLS › 105 ILCS 5/ - School Code. › Article 1H - Financial Oversight Panels

(105 ILCS 5/Art. 1H heading)
ARTICLE 1H.  FINANCIAL OVERSIGHT PANELS
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-1)
Sec. 1H-1. Short title. This Article may be cited as the Financial Oversight Panel Law.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-5)
Sec. 1H-5. Findings; purpose; intent.
(a) The General Assembly finds all of the following:
(1) A fundamental goal of the people of this State,     as expressed in Section 1 of Article X of the Illinois Constitution, is the educational development of all persons to the limits of their capacities. When a board of education faces financial difficulties, continued operation of the public school system is threatened.
(2) A sound financial structure is essential to the     continued operation of any school system. It is vital to commercial, educational, and cultural interests that public schools remain in operation. To achieve that goal, public school systems must have effective access to the private market to borrow short and long term funds.
(3) To promote the financial integrity of districts,     as defined in this Article, it is necessary to provide for the creation of financial oversight panels with the powers necessary to promote sound financial management and to ensure the continued operation of the public schools.
(b) It is the purpose of this Article to provide a secure financial basis for the continued operation of public schools. The intention of the General Assembly, in creating this Article, is to establish procedures, provide powers, and impose restrictions to ensure the financial and educational integrity of public school districts, while leaving principal responsibility for the educational policies of public schools to their boards of education, consistent with the requirements for satisfying the public policy and purpose set forth in this Article.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-10)
Sec. 1H-10. Definitions. As used in this Article:
"Budget" means the annual budget of the district required under Section 17-1 of this Code, as in effect from time to time.
"Chairperson" means the Chairperson of the Panel.
"District" means any school district having a population of not more than 500,000 that has had a Financial Oversight Panel established under this Article.
"Financial plan" means the financial plan of the district to be developed pursuant to this Article, as in effect from time to time.
"Fiscal year" means the fiscal year of the district.
"Obligations" means notes or other short-term debts or liabilities of the Panel.
"Panel" means a Financial Oversight Panel created under this Article.
"State Board" means the State Board of Education.
"State Superintendent" means the State Superintendent of Education.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-15)
Sec. 1H-15. Establishment of Financial Oversight Panels; duties of district.
(a) A school district may petition the State Board for the establishment of a Financial Oversight Panel for the district or the State Board may establish a Panel without a petition from the district. The petition shall cite the reasons why the creation of a Financial Oversight Panel for the district is necessary. In determining whether or not to place a district under a Panel, the State Board shall consider all of the following:
(1)  If a Panel is in the best educational and     financial interests of the district.
(2)  If a Panel is in the best interest of other     schools in the area and the educational welfare of all the pupils therein.
(3)  Whether the board of education has complied with     the requirements of Section 1A-8 of this Code.
(b) Upon establishment of a Financial Oversight Panel, all of the following shall occur:
(1) There is established a body both corporate and     politic to be known as the "(Name of School District) Financial Oversight Panel", which in this name shall exercise all authority vested in a Panel by this Article.
(2) The powers and duties of a Financial Oversight     Panel established pursuant to this Article shall include the duties and obligations of financial oversight panels established under Article 1B of this Code, in addition to any duties and obligations established under this Article.  However, if there is any conflict between the provisions of this Article and the provisions of Article 1B of this Code, the provisions of this Article control.
(3) The Financial Oversight Panel, the school board,     and the district superintendent or chief executive officer shall develop goals and objectives to assist the district in obtaining financial stability.  The goals and objectives must be developed as part of the financial plan that the school board is required to develop, adopt, and submit to the Panel in accordance with Section 1B-12 of this Code.  The goals and objectives must be formally reviewed at agreed to intervals, but at least one time per year.  Review shall include progress made and recommendations and modifications needed to achieve abolition of financial oversight provided for under Section 1H-115 of this Code.
(c)  Any school district having a Financial Oversight Panel established under Article 1B of this Code or any Financial Oversight Panel established under Article 1B may petition the State Board for the establishment of a Financial Oversight Panel under this Article and concurrent dissolution of the Article 1B Panel.  All records, papers, books, funds, or other assets or liabilities belonging to the dissolving Financial Oversight Panel shall be transferred to the newly established Financial Oversight Panel.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-20)
Sec. 1H-20. Members of Panel; meetings.
(a) Upon establishment of a Financial Oversight Panel under Section 1H-15 of this Code, the State Superintendent shall within 15 working days thereafter appoint 5 members to serve on a Financial Oversight Panel for the district. Members appointed to the Panel shall serve at the pleasure of the State Superintendent. The State Superintendent shall designate one of the members of the Panel to serve as its Chairperson. In the event of vacancy or resignation, the State Superintendent shall, within 10 days after receiving notice, appoint a successor to serve out that member's term.
(b) Members of the Panel shall be selected primarily on the basis of their experience and education in financial management, with consideration given to persons knowledgeable in education finance. Two members of the Panel shall be residents of the school district that the Panel serves. A member of the Panel may not be a member of the district's school board or an employee of the district nor may a member have a direct financial interest in the district.
(c) Panel members may be reimbursed by the State Board for travel and other necessary expenses incurred in the performance of their official duties. The amount reimbursed members for their expenses shall be charged to the school district as part of any emergency financial assistance and incorporated as a part of the terms and conditions for repayment of the assistance or shall be deducted from the district's general State aid or evidence-based funding as provided in Section 1H-65 of this Code.
(d) With the exception of the chairperson, who shall be designated as provided in subsection (a) of this Section, the Panel may elect such officers as it deems appropriate.
(e) The first meeting of the Panel shall be held at the call of the Chairperson. The Panel shall prescribe the times and places for its meetings and the manner in which regular and special meetings may be called and shall comply with the Open Meetings Act. The Panel shall also comply with the Freedom of Information Act.
(f) Three members of the Panel shall constitute a quorum. A majority of members present is required to pass a measure.
(Source: P.A. 100-465, eff. 8-31-17.)
(105 ILCS 5/1H-25)
Sec. 1H-25. General powers.
(a) The purposes of the Panel shall be to exercise financial control over the district and to furnish financial assistance so that the district can provide public education within the district's jurisdiction while permitting the district to meet its obligations to its creditors and the holders of its debt. Except as expressly limited by this Article, the Panel shall have all powers granted to a voluntary or involuntary Financial Oversight Panel and to a Financial Administrator under Article 1B of this Code and all other powers necessary to meet its responsibilities and to carry out its purposes and the purposes of this Article, including without limitation all of the following powers, provided that the Panel shall have no power to terminate an employee without following the statutory procedures for such terminations set forth in this Code:
(1) To sue and to be sued.
(2) To determine at a regular or special meeting that     the district has insufficient or inadequate funds or other financial resources with respect to any contract (other than collective bargaining agreements), leases, subleases, and other instruments or agreements applicable to or binding upon the school board, and to make, cancel, modify, or execute contracts (other than collective bargaining agreements), leases, subleases, and all other instruments or agreements necessary, convenient, or otherwise beneficial to the district and consistent with the powers and functions granted by this Article or other applicable law.
(3) To lease or purchase real or personal property     necessary or convenient for its purposes; to execute and deliver deeds for real property held in its own name; and to sell, lease, or otherwise dispose of such of its property as, in the judgment of the Panel, is no longer necessary for its purposes.
(4) To employ officers, agents, and employees of the     Panel, to define their duties and qualifications, and to fix their compensation and benefits.
(5) To transfer to the district such sums of money as     are not required for other purposes.
(6) To borrow money, including without limitation     accepting State loans, and to issue obligations pursuant to this Article; to fund, refund, or advance refund the same; to provide for the rights of the holders of its obligations; and to repay any advances.
(7) To levy all property tax levies that otherwise     could be levied by the district if the district fails to certify and return the certificate of tax levy to the county clerk on or before the first Tuesday in November, and to make levies pursuant to Section 1H-65 of this Code.
(8) Subject to the provisions of any contract with or     for the benefit of the holders of its obligations, to purchase or redeem its obligations.
(9) To procure all necessary goods and services for     the Panel in compliance with the purchasing laws and requirements applicable to the district.
(10) To do any and all things necessary or convenient     to carry out its purposes and exercise the powers given to it by this Article.
(11) To recommend any type of reorganization of the     district, in whole or in part, pursuant to Article 7 or 11E of this Code or Section 10-22.22b  or 10-22.22c of this Code to the General Assembly if in the Panel's judgment the circumstances so require.
(b)  Notwithstanding the provisions of subsection (a) of this Section, the Panel shall have no power to do any of the following:
(1) Unilaterally cancel or modify any collective     bargaining agreement in force upon the date of creation of the Panel.
(2) Lease, sublease, buy, build, or otherwise acquire     any additional school buildings or grounds for or on behalf of the district without prior approval by referendum held pursuant to Section 19-2 or 19-3 of this Code.
(3) Authorize payments for or incur any debt for any     additional school buildings or grounds as specified in subdivision (2) of this subsection (b) without prior approval via referendum pursuant to the provisions of Sections 19-2 through 19-7 of this Code, the provisions of Section 10-22.36 of this Code to the contrary notwithstanding.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-30)
Sec. 1H-30. Employees. The Panel may employ individuals under this Section if it is so warranted. These individuals may include any of the following:
(1) A chief executive officer who shall supervise the     Panel's staff, including the chief educational officer and the chief fiscal officer, and shall have ultimate responsibility for implementing the policies, procedures, directives, and decisions of the Panel. The chief executive officer shall have the authority to determine the agenda and order of business at school board meetings, as needed in order to carry forward and implement the objectives and priorities of the school board and Financial Oversight Panel in the administration and management of the district.  This individual is not required to hold any license issued under Article 21B of this Code.  The chief executive officer shall have the powers and duties as assigned by the Panel in accordance with this Code.
(2)  A chief educational officer, who may be employed     by the Panel if there is no superintendent in the district or if the Panel, at a regular or special meeting, finds that cause exists to cancel the contract of the district's superintendent who is serving at the time the Panel is established. Cancellation of an existing superintendent contract may be done only pursuant to the same requirements and in the same manner as the school board may cancel the contract.  A chief educational officer employed under this subdivision (2) shall have the powers and duties of a school district superintendent under this Code and such other duties as may be assigned by the Panel in accordance with this Code.
(3)  A chief fiscal officer, who may be employed by     the Panel. This individual shall be under the direction of the Panel or the chief executive officer employed by the Panel and shall have all of the powers and duties of the district's chief school business official and any other duties regarding budgeting, accounting, and other financial matters that are assigned by the Panel, in accordance with this Code.
(4)  A superintendent, who shall be under the     direction of the Panel or the chief executive officer employed by the Panel and shall have all of the powers and duties of a school district superintendent under this Code assigned by the Panel and such other duties as may be assigned by the Panel in accordance with this Code.
(5)  A chief school business official, who shall have     all of the powers and duties of a chief school business official under this Code assigned by the Panel and such other duties as may be assigned by the Panel in accordance with this Code.
An individual employed by the Panel as a superintendent or a chief school business official under this Section must hold the appropriate license for these positions. Individuals employed by the Panel as a chief executive officer, chief educational officer, or chief fiscal officer under this Section are not required to hold licensure. A chief educational officer under this Section must not be employed by the Panel during a period a superintendent is employed by the district and a chief fiscal officer under this Section must not be employed by the Panel during a period a chief school business official is employed by the district.
Individuals employed under subdivision (2), (3), (4), or (5) of this Section shall report to the Panel or to the chief executive officer under this Section if there is one.
(Source: P.A. 102-894, eff. 5-20-22.)
(105 ILCS 5/1H-35)
Sec. 1H-35. School treasurer.
(a) In Class I county school units and in each district that forms part of a Class II county school unit but that has withdrawn from the jurisdiction and authority of the trustees of schools of the township in which the district is located and from the jurisdiction and authority of the township treasurer in the Class II county school unit, the Panel may, in its discretion, remove the treasurer appointed or elected by the school board of the district and appoint a new treasurer to succeed the removed treasurer as provided in Section 8-19 of this Code.
(b) In the case of a district located in a Class II county school unit where such district is subject to the jurisdiction and authority of township trustees and the jurisdiction and authority of the township treasurer, the Panel may require production of bank reconciliations and other reports or statements as required under Sections 8-6 and 8-13 through 8-15 of this Code.
(c) All school treasurers appointed or elected pursuant to this Section shall be subject to the provisions of Sections 8-2 through 8-20 and other applicable provisions of the School Code.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-45)
Sec. 1H-45. Collective bargaining agreements. In conjunction with the district, the Panel shall have the power to negotiate collective bargaining agreements with the district's employees. Upon union ratification, the district and the Panel shall execute the agreements negotiated by the Panel, and the district shall be bound by and shall administer the agreements in all respects as if the agreements had been negotiated by the district itself.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-50)
Sec. 1H-50. Deposits and investments.
(a) The Panel shall have the power to establish checking and whatever other banking accounts it may deem appropriate for conducting its affairs.
(b) Subject to the provisions of any contract with or for the benefit of the holders of its obligations, the Panel may invest any funds not required for immediate use or disbursement, as provided in the Public Funds Investment Act.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-55)
Sec. 1H-55. Cash accounts and bank accounts.
(a) The Panel shall require the district or any officer of the district, including the district's treasurer, to establish and maintain separate cash accounts and separate bank accounts in accordance with such rules, standards, and procedures as the Panel may prescribe.
(b) The Panel shall have the power to assume exclusive administration of the cash accounts and bank accounts of the district, to establish and maintain whatever new cash accounts and bank accounts it may deem appropriate, and to withdraw funds from these accounts for the lawful expenditures of the district.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-60)
Sec. 1H-60. Financial, management, and budgetary structure. Upon direction of the Panel, the district shall reorganize the financial accounts, management, and budgetary systems of the district in a manner consistent with rules adopted by the State Board regarding accounting, budgeting, financial reporting, and auditing as the Panel deems appropriate to remedy the conditions that led the Panel to be created and to achieve greater financial responsibility and to reduce financial inefficiency.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-65)
Sec. 1H-65. School district emergency financial assistance; grants and loans. 
The Panel may prepare and file with the State Superintendent a proposal for emergency financial assistance for the school district and for the operations budget of the Panel, in accordance with Section 1B-8 of this Code. A school district may receive both a loan and a grant.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-70)
Sec. 1H-70. Tax anticipation warrants, tax anticipation notes, revenue anticipation certificates or notes, general State aid or evidence-based funding anticipation certificates, and lines of credit. With the approval of the State Superintendent and provided that the district is unable to secure short-term financing after 3 attempts, a Panel shall have the same power as a district to do the following:
(1)  issue tax anticipation warrants under the     provisions of Section 17-16 of this Code against taxes levied by either the school board or the Panel pursuant to Section 1H-25 of this Code;
(2) issue tax anticipation notes under the provisions     of the Tax Anticipation Note Act against taxes levied by either the school board or the Panel pursuant to Section 1H-25 of this Code;
(3) issue revenue anticipation certificates or notes     under the provisions of the Revenue Anticipation Act;
(4) issue general State aid or evidence-based funding     anticipation certificates under the provisions of Section 18-18 of this Code; and
(5) establish and utilize lines of credit under the     provisions of Section 17-17 of this Code.
Tax anticipation warrants, tax anticipation notes, revenue anticipation certificates or notes, general State aid or evidence-based funding anticipation certificates, and lines of credit are considered borrowing from sources other than the State and are subject to Section 1H-65 of this Code.
(Source: P.A. 100-465, eff. 8-31-17.)
(105 ILCS 5/1H-75)
Sec. 1H-75. Tax for emergency Financial Oversight Panel financial aid. If the Panel is unable to secure short-term borrowing pursuant to Section 1H-70 of this Code, the Panel:
(1) based upon an original or amended budget filed by     a Financial Oversight Panel and approved by the State Board of Education, may levy a one-time-only tax, in an amount not to exceed 75% of the amount expended by the school district subject to the oversight of the Panel in the immediately preceding year for educational, operations and maintenance, transportation, and municipal retirement purposes;  as reflected in the most recently filed annual financial report, and as adjusted by the CPI most recently under the Property Tax Extension Limitation Law;
(2) following approval by the State Board of     Education, shall file a certificate of tax levy with the county clerk or clerks with whom the school district must file tax levies, such taxes to be extended against all the property of the school district upon the value of the taxable property within its territory, as equalized or assessed by the Department of Revenue; and
(3) may issue warrants, or may provide a fund to meet     the expenses by issuing and disposing of warrants, drawn against and in anticipation of the tax levied pursuant to this Section, for the payment of the necessary expenses of the district, either for transportation, educational, or all operations and maintenance purposes or for payments to the Illinois Municipal Retirement Fund, as the case may be, to the extent of 75% of the total amount of the tax so levied. The warrants shall show upon their face that they are payable in the numerical order of their issuance solely from such taxes when collected, and shall be received by any collector of taxes in payment of the taxes against which they are issued, and such taxes shall be set apart and held for their payment; every warrant shall bear interest, payable only out of the taxes against which it is drawn, at a rate not exceeding the maximum rate authorized by the Bond Authorization Act, as amended at the time of the making of the contract, if issued before July 1, 1971 and if issued thereafter at the rate of not to exceed the maximum rate authorized by the Bond Authorization Act, as amended at the time of the making of the contract, from the date of its issuance until paid or until notice shall be given by publication in a newspaper or otherwise that the money for its payment is available and that it will be paid on presentation, unless a lower rate of interest is specified therein, in which case the interest shall be computed and paid at the lower rate.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-85)
Sec. 1H-85. Obligations as legal investments. The obligations issued under the provisions of this Article are hereby made securities in which all public officers and bodies of this State, all political subdivisions of this State, all persons carrying on an insurance business, all banks, bankers, trust companies, savings banks, and savings associations (including savings and loan associations, building and loan associations, investment companies, and other persons carrying on a banking business), and all credit unions, pension funds, administrators, and guardians who are or may be authorized to invest in bonds or in other obligations of the State may properly and legally invest funds, including capital, in their control or belonging to them. The obligations are also hereby made securities that may be deposited with and may be received by all public officers and bodies of the State, all political subdivisions of the State, and public corporations for any purpose for which the deposit of bonds or other obligations of the State is authorized.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-90)
Sec. 1H-90. Reports. The Panel, upon taking office and annually thereafter, shall prepare and submit to the State Superintendent a report that includes the audited financial statement for the preceding fiscal year prepared and audited in compliance with the provisions of Sections 3-7 and 3-15.1 of this Code, an approved financial plan, and a statement of the major steps necessary to accomplish the objectives of the financial plan. This report must be submitted annually by March 1 of each year and must detail information from the previous school year. The school board must be allowed to comment on the annual report of the Panel, and the comments of the school board shall be included as an appendix to such annual report of the Panel.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-95)
Sec. 1H-95. Audit of Panel. The State Superintendent may require a separate audit of the Panel, otherwise the activities of the Panel must be included in the scope of the audit of the school district. A copy of the audit report covering the Panel must be submitted to the State Superintendent.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-100)
Sec. 1H-100. Assistance by State agencies, units of local government, and school districts. The district shall render such services to and permit the use of its facilities and resources by the Panel at no charge as may be requested by the Panel. Any State agency, unit of local government, or school district may, within its lawful powers and duties, render such services to the Panel as may be requested by the Panel. Upon request of the Panel, any State agency, unit of local government, or school district is authorized and empowered to loan to the Panel such officers and employees as the Panel may deem necessary in carrying out its functions and duties. Officers and employees so transferred shall not lose or forfeit their employment status or rights.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-105)
Sec. 1H-105. Property of Panel exempt from taxation. The property of the Panel is exempt from taxation.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-110)
Sec. 1H-110. Sanctions.
(a) No member, officer, employee, or agent of the district may commit the district to any contract or other obligation or incur any liability on behalf of the district for any purpose if the amount of the contract, obligation, or liability is in excess of the amount authorized for that purpose then available under the financial plan and budget then in effect.
(b) No member, officer, employee, or agent of the district may commit the district to any contract or other obligation on behalf of the district for the payment of money for any purpose required to be approved by the Panel unless the contract or other obligation has been approved by the Panel.
(c) No member, officer, employee, or agent of the district may take any action in violation of any valid order of the Panel, may fail or refuse to take any action required by any such order, may prepare, present, certify, or report any information, including any projections or estimates, for the Panel or any of its agents that is false or misleading, or, upon learning that any such information is false or misleading, may fail promptly to advise the Panel or its agents.
(d) In addition to any penalty or liability under any other law, any member, officer, employee, or agent of the district who violates subsection (a), (b), or (c) of this Section is subject to appropriate administrative discipline as may be imposed by the Panel, including, if warranted, suspension from duty without pay, removal from office, or termination of employment.
(Source: P.A. 97-429, eff. 8-16-11.)
(105 ILCS 5/1H-115)
Sec. 1H-115. Abolition of Panel.
(a) Except as provided in subsections (b), (c), (d), and (e) of this Section, the Panel shall be abolished 10 years after its creation.
(b) The State Board, upon recommendation of the Panel or petition of the school board, may abolish the Panel at any time after the Panel has been in existence for 3 years if no obligations of the Panel are outstanding or remain undefeased and upon investigation and finding that:
(1) none of the factors specified in Section 1A-8 of     this Code remain applicable to the district; and
(2) there has been substantial achievement of the     goals and objectives established pursuant to the financial plan and required under Section 1H-15 of this Code.
(c) The Panel of a district that otherwise meets all of the requirements for abolition of a Panel under subsection (b) of this Section, except for the fact that there are outstanding financial obligations of the Panel, may petition the State Board for reinstatement of all of the school board's powers and duties assumed by the Panel; and if approved by the State Board, then:
(1) the Panel shall continue in operation, but its     powers and duties shall be limited to those necessary to manage and administer its outstanding obligations;
(2) the school board shall once again begin     exercising all of the powers and duties otherwise allowed by statute; and
(3) the Panel shall be abolished as provided in     subsection (a) of this Section.
(d) If the Panel of a district otherwise meets all of the requirements for abolition of a Panel under subsection (b) of this Section, except for outstanding obligations of the Panel, then the district may petition the State Board for abolition of the Panel if the district:
(1) establishes an irrevocable trust fund, the     purpose of which is to provide moneys to defease the outstanding obligations of the Panel; and
(2) issues funding bonds pursuant to the provisions     of Sections 19-8 and 19-9 of this Code.
A district with a Panel that falls under this subsection (d) shall be abolished as provided in subsection (a) of this Section.
(e)   The duration of a Panel may be continued for more than 10 years after the date of its creation if the State Board extends the Panel's duration under paragraph (3) of subsection (e) of Section 18-8.15 of this Code.
(Source: P.A. 101-643, eff. 6-18-20.)
(105 ILCS 5/1H-120)
Sec. 1H-120. Indemnification; legal representation; limitations of actions after abolition.
(a) The Panel may indemnify any member, officer, employee, or agent who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, by reason of the fact that he or she was a member, officer, employee, or agent of the Panel, against expenses (including attorney's fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit, or proceeding) if he or she acted in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the Panel and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, or conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith in a manner that he or she reasonably believed to be in or not opposed to the best interests of the Panel and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.
To the extent that a member, officer, employee, or agent of the Panel has been successful, on the merits or otherwise, in the defense of any such action, suit, or proceeding referred to in this subsection (b) or in defense of any claim, issue, or matter therein, he or she shall be indemnified against expenses, including attorney's fees, actually and reasonably incurred by him or her in connection therewith. Any such indemnification shall be made by the Panel only as authorized in the specific case, upon a determination that indemnification of the member, officer, employee, or agent is proper in the circumstances because he or she has met the applicable standard of conduct. The determination shall be made (i) by the Panel by a majority vote of a quorum consisting of members who are not parties to the action, suit, or proceeding or (ii) if such a quorum is not obtainable or, even if obtainable, a quorum of disinterested members so directs, by independent legal counsel in a written opinion.
Reasonable expenses incurred in defending an action, suit, or proceeding shall be paid by the Panel in advance of the final disposition of the action, suit, or proceeding, as authorized by the Panel in the specific case, upon receipt of an undertaking by or on behalf of the member, officer, employee, or agent to repay the amount, unless it is ultimately determined that he or she is entitled to be indemnified by the Panel as authorized in this Section.
Any member, officer, employee, or agent against whom any action, suit, or proceeding is brought may employ his or her own attorney to appear on his or her behalf.
The right to indemnification accorded by this Section shall not limit any other right to indemnification to which the member, officer, employee, or agent may be entitled. Any rights under this Section shall inure to the benefit of the heirs, executors, and administrators of any member, officer, employee, or agent of the Panel.
The Panel may purchase and maintain insurance on behalf of any person who is or was a member, officer, employee, or agent of the Panel against any liability asserted against him or her and incurred by him or her in any such capacity or arising out of his or her status as such, whether or not the Panel could have the power to indemnify him or her against liability under the provisions of this Section.
(b) The Panel shall be considered a State agency for purposes of receiving representation by the Attorney General. Members, officers, employees, and agents of the Panel shall be entitled to representation and indemnification under the State Employee Indemnification Act.
(c) Abolition of the Panel pursuant to Section 1H-115 of this Code shall bar any remedy available against the Panel, its members, employees, or agents for any right or claim existing or any liability incurred prior to the abolition, unless the action or other proceeding is commenced prior to the expiration of 2 years after the date of the abolition.
(Source: P.A. 97-429, eff. 8-16-11.)