LM March 2021_lg

Illinois SchoolDistricts MustAcquire aSuretyBond for theDistrictTreasurer: Don’tAcceptAnUnlawful Substitute. By James Woodard, The Sandner Group

The Latin expression, ignorantia juris non excusat (ignorance of the law does not excuse) may be ancient, but it still provides relevance today. For Illinois school superintendents, school board members and business officials, this maxim particularly applies to statutory duties regarding school treasurers’ bonds. Undoubtedly, educational leaders are aware that the Illinois School Code requires that school treasurers be properly bonded with these special surety bonds. However, what some of these leaders might not realize is that the Illinois School Code sets forth very specific statutory requirements that these treasurers’ bonds must possess. The financial well-being of Illinois schools depends upon school leaders’ strict compliance with the School Code’s provisions regarding treasurers’ bonds. Section 8-2 of the School Code provides that treasurers’ bonds shall be “payable…to the school board of each district for which he or she is treasurer or its successor in office… and conditioned upon the faithful discharge of his or her duties...” The bonds are statutorily required to be issued on a yearly basis. The penalty of the bond is statutorily required to be “25% of the amount of all bonds, notes, mortgages, moneys and effects of which (the treasurer) is to have the custody, whether individuals act as sureties or whether the surety given is by a surety company authorized to do business in this State...” Notably, the bond is to be increased or decreased from time to time, as the increase or decrease of the amount of notes, bonds, mortgages, moneys and effects may require. The increase or decrease of the bond is one of the few provisions that is not specifically articulated: “Time to time” is not defined.

We suggest that school officials re-evaluate the increase or decrease of the bond every year as they apply for the bond’s renewal. During this yearly re-evaluation of its treasurer’s bonds, districts may also want to consider purchasing “special purpose” surety bonds. When districts borrow money to acquire buildings or land for school use or to improve schools buildings, playgrounds or athletic fields, these special purpose surety bonds are required. The yearly execution of a treasurer’s bond is imperative for schools to perform their educational mission. Without the treasurer’s bond, a school simply cannot function because the school district may not receive funds or assets from the state or any designated school fund until the bond is properly filed. The bond must be approved by a majority of the school board or township trustees, whichever is applicable to the district. Next, the bond must be filed with the Regional Superintendent of Schools. The Regional Superintendent of Schools “shall file with the State Board of Education before September 1 in each year an affidavit showing which treasurers of school districts under his supervision and control are properly bonded.” What ExactlyShould theTreasurer’sBond LookLike? Fortunately, the Illinois Legislature spelled out the exact wording and format treasurer’s bonds must possess. Section 8-2 of the Illinois School Code (105 ILCS 5/8-2) unequivocally states that “ the bond shall be in the following form ”:

26 LM March 2021

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