Adherence to federal and state laws is a required component of any bond issuance for the borrowing to be binding and legally valid. Below is a sampling of current laws governing the borrowing activities of school districts.
Illinois State Law. The Code, Debt Reform Act, the Property Tax Extension Limitation Law of the State of Illinois, as amended (the “Limitation Law”), the Bond Issue Notification Act of the State of Illinois, as amended (“BINA”), the Bond Authorization Act of the State of Illinois, as amended (the “Authorization Act”), the Registered Bond Act of the State of Illinois, as amended (the “Registered Bond Act”), and the Bond Replacement Act of the State of Illinois, as amended (the “Replacement Act”) all authorize and govern the issuance of municipal bonds by school districts in the State of Illinois. The Debt Reform Act was adopted by the Illinois General Assembly to provide supplemental authority to local governmental units regarding the issuance and sale of bonds to accommodate market practices that resulted in additional costs for those citizens residing in local governmental units which were affected by higher rates than would otherwise be necessary. Pursuant to the Debt Reform Act, whenever the authorization of or the issuance of bonds is subject to either a voter referendum or a back door referendum, the approval, once obtained, remains effective (a) for five years after the date of the referendum or (b) for three years after the end of the petition period for the back door referendum. Pursuant to BINA, school districts proposing to sell nonreferendum general obligation bonds or limited bonds, except refunding bonds and certain life safety bonds, must hold at least one public hearing concerning the school district’s intent to sell the bonds. Notice of the hearing must be published in a newspaper in general circulation in the school district by the secretary of the school board not less than 7 but not more than 30 days prior to the hearing. At least 48 hours prior to the hearing, the notice must be posted at the school board’s primary office. The notice must appear above the name or title of the secretary of the school board. The governing board must then wait at least 7 days following the hearing before adopting a resolution providing for the issuance of the bonds.