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91_SB0941eng SB941 Engrossed SRS91S0001PMcb 1 AN ACT to amend the Local Governmental and Governmental 2 Employees Tort Immunity Act by changing Sections 9-103 and 3 9-107. 4 Be it enacted by the People of the State of Illinois, 5 represented in the General Assembly: 6 Section 5. The Local Governmental and Governmental 7 Employees Tort Immunity Act is amended by changing Sections 8 9-103 and 9-107 as follows: 9 (745 ILCS 10/9-103) (from Ch. 85, par. 9-103) 10 Sec. 9-103. (a) A local public entity may protect itself 11 against anyliability,property damage or against any 12 liability or loss which may be imposed upon it or one of its 13 employees for a tortious act under Federal or State common or 14 statutory law, or imposed upon it under the Workers' 15 Compensation Act, the Workers' Occupational Diseases Act, or 16 the Unemployment Insurance Act by means including, but not 17 limited to, insurance, individual or joint self-insurance, 18 including all operating and administrative costs and expenses 19 directly associated therewith, claims services and risk 20 management directly attributable to loss prevention and loss 21 reduction, legal services directly attributable to the 22 insurance, self-insurance, or joint self-insurance program, 23 educational, inspectional, and supervisory services directly 24 relating to loss prevention and loss reduction, or 25 participation in a reciprocal insurer as provided in Sections 26 72, 76 and 81 of the Illinois Insurance Code. Insurance shall 27 be carried with a company authorized by the Department of 28 Insurance to write such insurance coverage in Illinois. A 29 local public entity shall not expend any revenue from taxes 30 levied under this Act for unrelated operations or for 31 maintenance or new construction. SB941 Engrossed -2- SRS91S0001PMcb 1 (a-5) A local public entity may individually or jointly 2 self-insure provided it complies with any other statutory 3 requirements specifically related to individual or joint 4 self-insurance by local public entities. Whenever the terms 5 "self-insure" or "self-insurance" are utilized within this 6 Act, such term shall apply to both individual and joint 7 self-insurance. The expenditure of funds of a local public 8 entity to protect itself or its employees against liability 9 is proper for any local public entity. A local public entity 10 that has individually self-insured may establish reserves for 11 expected losses for any liability or loss for which the local 12 public entity is authorized to purchase insurance under this 13 Act. The decision of the local public entity to establish a 14 reserve and the amount of the reserve shall be based on 15 reasonable actuarial or insurance underwriting evidence. 16 Property taxes shall not be levied or extended if the effect 17 is to increase the reserve beyond 125% of the actuary's or 18 insurance underwriter's estimated ultimate losses at the 95% 19 confidence level. Certification of the amount of the reserve 20 shall be made by the independent auditor, actuary, or 21 insurance underwriter and included in an annual report. The 22 annual report shall also list all expenditures from the 23 reserve or from property taxes levied or extended for tort 24 immunity purposes. Total claims payments and total reserves 25 must be listed in aggregate amounts. All other expenditures 26 must be identified individually. A local public entity that 27 maintains a self-insurance reserve or that levies and extends 28 a property tax for tort immunity purposes must include in its 29 audit or annual report any expenditures made from the 30 property tax levy or self-insurance reserve within the scope 31 of the audit or annual report. 32 (b) A local public entity may contract for or purchase 33 any of the guaranteed fund certificates or shares of 34 guaranteed capital as provided for in Section 56 of the SB941 Engrossed -3- SRS91S0001PMcb 1 Illinois Insurance Code. The expenditure of funds of the 2 local public entity for said contract or purchase is proper 3 for any local public entity. 4 (c) Any insurance company that provides insurance 5 coverage to a local public entity shall utilize any 6 immunities or may assert any defenses to which the insured 7 local public entity or its employees are entitled. Public 8 entities which are individually or jointly self-insured shall 9 be entitled to assert all of the immunities provided by this 10 Act or by common law or statute on behalf of themselves or 11 their employees unless the local public entities shall elect 12 by action of their corporate authorities or specifically 13 contract to waive in whole or in part such immunities. 14 (d) Within 30 days after January 1, 1991, and within 30 15 days after each January 1 thereafter, local public entities 16 that are individually or jointly self-insured to protect 17 against liability under the Workers' Compensation Act and the 18 Workers' Occupational Diseases Act shall file with the 19 Industrial Commission a report indicating an election to 20 self-insure. 21 (Source: P.A. 89-150, eff. 7-14-95.) 22 (745 ILCS 10/9-107) (from Ch. 85, par. 9-107) 23 Sec. 9-107. Policy; tax levy. 24 (a) The General Assembly finds that the purpose of this 25 Section is to provide an extraordinary tax for funding 26 expenses relating to tort liability, insurance, and risk 27 management programs. Thus, the tax has been excluded from 28 various limitations otherwise applicable to tax levies. 29 Notwithstanding the extraordinary nature of the tax 30 authorized by this Section, however, it has become apparent 31 that some units of local government are using the tax revenue 32 to fund expenses more properly paid from general operating 33 funds. These uses of the revenue are inconsistent with the SB941 Engrossed -4- SRS91S0001PMcb 1 limited purpose of the tax authorization. 2 Therefore, the General Assembly declares, as a matter of 3 policy, that (i) the use of the tax revenue authorized by 4 this Section for purposes not expressly authorized under this 5 Act is improper and (ii) the provisions of this Section shall 6 be strictly construed consistent with this declaration and 7 the Act's express purposes. 8 (b) A local public entity may annually levy or have 9 levied on its behalf taxes upon all taxable property within 10 its territory at a rate that will produce a sum that will be 11 sufficient to: (i) pay the cost of insurance, individual or 12 joint self-insurance (including reserves thereon), including 13 all operating and administrative costs and expenses directly 14 associated therewith, claims services and risk management 15 directly attributable to loss prevention and loss reduction, 16 legal services directly attributable to the insurance, 17 self-insurance, or joint self-insurance program, and 18 educational, inspectional, and supervisory services directly 19 relating to loss prevention and loss reduction, participation 20 in a reciprocal insurer as provided in Sections 72, 76, and 21 81 of the Illinois Insurance Code, or participation in a 22 reciprocal insurer, all as provided in settlements or 23 judgments under Section 9-102, including all costs and 24 reserves directly attributable to being a member of an 25 insurance pool, under Section 9-103; (ii) pay the costs of 26 and principal and interest on bonds issued under Section 27 9-105; (iii) pay judgments and settlements under Section 28 9-104; and (iv) discharge obligations under Section 34-18.1 29 of The School Code, as now or hereafter amended, and to pay 30 the cost of risk management programs. A local public entity 31 shall not expend any revenue from taxes levied under this Act 32 for unrelated operations or for maintenance or new 33 construction. Provided it complies with any other applicable 34 statutory requirements, the local public entity may SB941 Engrossed -5- SRS91S0001PMcb 1 self-insure and establish reserves for expected losses for 2 any property damage or for any liability or loss for which 3 the local public entity is authorized to levy or have levied 4 on its behalf taxes for the purchase of insurance or the 5 payment of judgments or settlements under this Section. The 6 decision of the board to establish a reserve shall be based 7 on reasonable actuarial or insurance underwriting evidence 8 and subject to the limits and reporting provisions in Section 9 9-103. 10 Funds raised pursuant to this Section shall only be used 11 for the purposes specified in this Act, including protection 12 against and reduction of any liability or loss described 13 hereinabove and under Federal or State common or statutory 14 law, the Workers' Compensation Act, the Workers' Occupational 15 Diseases Act and the Unemployment Insurance Act. Funds 16 raised pursuant to this Section may be invested in any manner 17 in which other funds of local public entities may be invested 18 under Section 2 of the Public Funds Investment Act. Interest 19 on such funds shall be used only for purposes for which the 20 funds can be used or, if surplus, must be used for abatement 21 of property taxes levied by the local taxing entity. 22 A local public entity may enter into intergovernmental 23 contracts with a term of not to exceed 12 years for the 24 provision of joint self-insurance which contracts may include 25 an obligation to pay a proportional share of a general 26 obligation or revenue bond or other debt instrument issued by 27 a local public entity which is a party to the 28 intergovernmental contract and is authorized by the terms of 29 the contract to issue the bond or other debt instrument. 30 Funds due under such contracts shall not be considered debt 31 under any constitutional or statutory limitation and the 32 local public entity may levy or have levied on its behalf 33 taxes to pay for its proportional share under the contract. 34 Funds raised pursuant to intergovernmental contracts for the SB941 Engrossed -6- SRS91S0001PMcb 1 provision of joint self-insurance may only be used for the 2 payment of any cost, liability or loss against which a local 3 public entity may protect itself or self-insure pursuant to 4 Section 9-103 or for the payment of which such entity may 5 levy a tax pursuant to this Section, including tort judgments 6 or settlements, costs associated with the issuance, 7 retirement or refinancing of the bonds or other debt 8 instruments, the repayment of the principal or interest of 9 the bonds or other debt instruments, the costs of the 10 administration of the joint self-insurance fund, consultant, 11 and risk care management programs or the costs of insurance. 12 Any surplus returned to the local public entity under the 13 terms of the intergovernmental contract shall be used only 14 for purposes set forth in subsection (a) of Section 9-103 and 15 Section 9-107 or for abatement of property taxes levied by 16 the local taxing entity. 17 Any tax levied under this Section shall be levied and 18 collected in like manner with the general taxes of the entity 19 and shall be exclusive of and in addition to the amount of 20 tax that entity is now or may hereafter be authorized to levy 21 for general purposes under any statute which may limit the 22 amount of tax which that entity may levy for general 23 purposes. The county clerk of the county in which any part of 24 the territory of the local taxing entity is located, in 25 reducing tax levies under the provisions of any Act 26 concerning the levy and extension of taxes, shall not 27 consider any tax provided for by this Section as a part of 28 the general tax levy for the purposes of the entity nor 29 include such tax within any limitation of the percent of the 30 assessed valuation upon which taxes are required to be 31 extended for such entity. 32 With respect to taxes levied under this Section, either 33 before, on, or after the effective date of this amendatory 34 Act of 1994: SB941 Engrossed -7- SRS91S0001PMcb 1 (1) Those taxes are excepted from and shall not be 2 included within the rate limitation imposed by law on 3 taxes levied for general corporate purposes by the local 4 public entity authorized to levy a tax under this 5 Section. 6 (2) Those taxes that a local public entity has 7 levied in reliance on this Section and that are excepted 8 under paragraph (1) from the rate limitation imposed by 9 law on taxes levied for general corporate purposes by the 10 local public entity are not invalid because of any 11 provision of the law authorizing the local public 12 entity's tax levy for general corporate purposes that may 13 be construed or may have been construed to restrict or 14 limit those taxes levied, and those taxes are hereby 15 validated. This validation of taxes levied applies to all 16 cases pending on or after the effective date of this 17 amendatory Act of 1994. 18 (3) Paragraphs (1) and (2) do not apply to a 19 hospital organized under Article 170 or 175 of the 20 Township Code, under the Town Hospital Act, or under the 21 Township Non-Sectarian Hospital Act and do not give any 22 authority to levy taxes on behalf of such a hospital in 23 excess of the rate limitation imposed by law on taxes 24 levied for general corporate purposes. A hospital 25 organized under Article 170 or 175 of the Township Code, 26 under the Town Hospital Act, or under the Township 27 Non-Sectarian Hospital Act is not prohibited from levying 28 taxes in support of tort liability bonds if the taxes do 29 not cause the hospital's aggregate tax rate from 30 exceeding the rate limitation imposed by law on taxes 31 levied for general corporate purposes. 32 Revenues derived from such tax shall be paid to the 33 treasurer of the local taxing entity as collected and used 34 for the purposes of this Section and of Section 9-102, SB941 Engrossed -8- SRS91S0001PMcb 1 9-103, 9-104 or 9-105, as the case may be. If payments on 2 account of such taxes are insufficient during any year to 3 meet such purposes, the entity may issue tax anticipation 4 warrants against the current tax levy in the manner provided 5 by statute. 6 (Source: P.A. 88-545; 88-692, eff. 2-4-95; 89-150, eff. 7 7-14-95.)