by Robert A. Stuart General Counsel

WHAT IS THE "WORKING CASH FUND" AUTHORIZED UNDER ARTICLE 11.2 OF THE PARK DISTRICT CODE

On August 12, 1976 Governor Walker signed into law Senate Bill 1930, the provisions of which add to The Park District Code a new Article (Article 11.2) which authorizes a park district to create a "Working Cash Fund" 'for the purpose of enabling the district to have in its treasury at all times sufficient money to meet demands thereon for ordinary and necessary expenditures for corporate purposes.'

From the numerous questions which have been asked it appears there is some misunderstanding or question as to the nature and purpose for which such a fund may be created. It must be borne in mind that the creation of a "Working Cash Fund" under the new Article does not mean the levy of an additional tax for corporate purposes and the revenues received from such a levy are not revenues which can be used in the same manner as those received from the general corporate levy extended under the provisions of Article 5-1. The authorized tax levied for the creation of a "Working Cash Fund" may only be used for the purpose of establishing a fund from which the park district may borrow from time to time to meet current demands for ordinary and necessary corporate expenditures prior to receiving the general corporate tax revenues. The amount borrowed from the fund must immediately be repaid to the fund upon receipt of the annual tax revenues from the County Treasurer. The major benefit to be gained from the establishment of the "Working Cash Fund" is to eliminate the interest which a great many of the park districts are paying on anticipation tax warrants issued in connection with borrowing in anticipation of the receipt of tax revenues. The sole and only other benefit which may be derived from the creation of such a fund would be the interest which could be earned from the fund when invested and in the event no borrowing in anticipation of the receipt of tax revenues is required. Such interest earned upon the corpus of the fund may be transferred to the general fund. In the event a park district has not been required in the past, or will not be required to issue anticipation tax warrants in the foreseeable future, the levy of a "Working Cash Fund Tax" under the provisions of Article 11.2 would be difficult to justify to the residents of such a district. However, in those districts which are issuing anticipation tax warrants annually and paying some 5% to 6% interest on the warrants a substantial tax savings to the residents of the district might well result, or at least those funds which are now going to the payment of such interest could be channeled to other more productive general corporate uses.

In summary, the general provisions of the new Article 11.2 are:

(1) A park district may levy an annual tax known as the "Working Cash Fund Tax" for the years 1976,1977, 1978 and 1979 only on all taxable property of the district at a rate not to exceed .025% of the equalized assessed value of all property within the district.

(2) The park district must adopt a resolution authorizing the levy and collection of the tax.

(3) Within 10 days after the adoption of the resolution a copy of the resolution must be published once in a newspaper published and having a general circulation in the park district, or if there is no such newspaper then in a newspaper having a general circulation in the county wherein such district or the greater or greatest portion in area of the district lies.

(4) If within 30 days after the publication of the resolution a petition signed by not less than 5% of the number of electors voting for the office of park commissioner at the last general park district election is filed with the Secretary of the Board requesting a referendum on the question of levying and collecting the tax, the Board must call a special election on the question.

(5) If a general, state, municipal, or park district election is to be held within a period of not less than 30 or more than 90 days from the date such petition is filed, the park district must submit the question at such election. (Inasmuch as a general election will be held in November, 1976, any such referendum called must be voted on at the general election in November 1976.)

(6) If no petition calling for a referendum is filed within 30 days after the publication of the resolution, the resolution is then in effect and the tax may be extended.

(7) No tax anticipation warrants may be drawn against such a tax.

(8) If the resolution becomes effective either with or without referendum, such a tax may be levied by separate resolution by the last Tuesday in each September of 1976, 1977, 1978 and 1979.

Section 11.2-3 of the new Article provides that:

Illinois Parks and Recreation 8 September/October, 1976

(1) All monies received from such tax must be set apart in the "Working Cash Fund" and may be used only for the purposes of providing monies to meet ordinary and necessary disbursements for salaries and other corporate purposes and may be transferred in whole or in part to the general corporate fund of the park district for those purposes only in anticipation of the collection of taxes lawfully levied for general corporate purposes (thus the issuance of tax anticipation warrants and the payment of interest thereon may be eliminated thereby resulting in a substantial savings to the district).

(2) Monies advanced from the "Working Cash Fund" must immediately be reimbursed to the Fund upon receipt of taxes received.

Section 11.2-4 of Article 11 provides:

(1) Monies may be transferred from the "Working Cash Fund" to the general corporate fund of the district only upon the authority of the governing board by separate resolution directing the treasurer to make such transfers.

(2) Such resolution for transfer must set forth:

(a) The taxes in anticipation of which such transfer is made.

(b) The entire amount of taxes extended for any year by the county clerk upon the books of the collectors of state and county taxes within the park district.

(c) The aggregate amount of warrants theretofore issued in anticipation of the collection of such taxes together with the amount of interest accrued or which the governing board estimates will accrue thereon.

(d) The aggregate amount of monies theretofore transferred from the "Working Cash Fund" to the general corporate fund.

(e) The amount which any resolution may direct the treasurer to transfer from the "Working Cash Fund" is limited to 75% of the actual or estimated amount of such taxes as set forth in the resolution.

(3) Monies retained in the "Working Cash Fund" may be invested as directed by the governing board of the park district and interest earnings on such investments may, at the option of the board be transferred permanently to the general corporate fund or be allowed to remain in the "Working Cash Fund."

(4) If interest earnings are retained in the "Working Cash Fund," they will serve to increase the allowance of the "Working Cash Fund" available for loans, but the balance of the Fund may not be allowed to exceed the statutory maximum for the Fund established under this Section.

Section 11.2-5 provides for penalties for a violation of the provisions of Article 11.

Section 11.2-6 provides that in the event any "Working Cash Fund" shall be abated or abolished that park district may not again create such a "Working Cash Fund" until at least 10 years have elapsed since such abatement or abolition.

*Note: It Should be pointed out, however, that no provision is contained within Article n which would permit the establishment of a "Working Cash Fund," or the levy of a "Working Cash Fund Tax" in any year or years other than 1976, 1977, 1978 and 1979, Likewise, no provision is contained within Article 11 which specifically provides for the distribution or disposition of the funds which may have been placed in a "Working Cash Fund" in the event of its abatement or abolition.

REQUIRED PROCEDURES TO BE TAKEN IN CREATION OF A "WORKING CASH FUND"

Any park district wishing to create a "Working Cash Fund" under the provisions of Article 11.2 in 1976 must immediately take the following action:

(1) Adopt a resolution under the provisions of Section 11.2-2 authorizing the levy and collection of a tax in an amount not to exceed .025% for the year 1976.

(2) Publish the resolution in a newspaper having a general circulation in the county within 10 days after its adoption.

(3) File said resolution with the office of the County Clerk on or before Tuesday. September 28, 1976.

As noted, Senate Bill 1930 was not signed by the Governor until August 12, 1976. Therefore, the effective date of the Act is October 1, 1976. The question is, therefore, raised as to whether or not the tax may be extended for the tax year 1976 in view of the fact that pursuant to the provisions of the Article the resolution must be adopted and filed with the office of the County Clerk on or before the last Tuesday in September of 1976. While tax objections should be anticipated on this basis as well as a question by the County Clerk and State's Attorney, the following facts should be considered by counsel:

(1) In the event the tax is extended and collected (and no unfavorable referendum held) the question could be raised only by the filing of tax objections which in most cases would result only in the loss of a small portion of the tax in most cases.

(2) In the event the question as to the legality of the extension of the tax because of the effective date of the Act is raised by the County Clerk and an unfavorable opinion is secured from the State's Attorney, it is possible that the tax may not be collected for the district for the year 1976.

(3) In the event the question is raised by the County Clerk and the State's Attorney, it may be argued that the General Assembly in setting forth the years 1976, 1977, . 1978 and 1979 clearly intended that, notwithstanding the effective date of the Act, the tax for the year 1976 was clearly anticipated and authorized.

*Note: It is suggested that in the event the foregoing provisions have been followed and the resolution to levy the tax for 1976 has been filed with the office of the County Clerk on or before the last Tuesday in September, 1976 park district counsel consider the possibility of adopting a confirming resolution immediately after October 1 at a special or regular meeting of the board of commissioners and to refile the same in the office of the County Clerk immediately after its adoption. While such a procedure would furnish no guaranty of validating an act which might be held void or invalid, it might furnish a basis upon which a County Clerk could reasonably extend the levy and which might be acceptable to the office of the State's Attorney who might have rendered an unfavorable opinion relative to the validity of the original resolution.

TEXT OF ARTICLE 11.2 AS APPROVED BY THE GOVERNOR ON AUGUST 12,1976

ARTICLE 11.2 WORKING CASH FUND

(Ch. 105, new par. 11.2-1)

Sec. 11.2-1. In each park district a fund to be known as a "Working Cash Fund" may be created, set apart, maintained and administered in the manner prescribed in this Article, for the purpose of enabling the district to have in its treasury at all time sufficient money to meet demands thereon for ordinary and necessary expenditures for corporate purposes.

Illinois Parks and Recreation 9 September/October, 1976

(Ch. 105, new par. 11.2-2)
Sec. 11.2-2. For the purpose of providing monies for a working cash fund, the governing board of any park district may levy an annual tax, known as the "working cash fund tax;" for the years 1976, 1977, 1978 and 1979 only on all the taxable property of their district at a rate not to exceed .025% of the value, as equalized or assessed by the Department of Local Government Affairs, to provide monies for the working cash fund. Prior to the levy and collection of such a tax, a park district shall adopt a resolution authorizing the levy and collection of the tax, and, within ten days after the adoption of such a resolution, it shall be published once in a newspaper publislied and having a general circulation in the park district, or, if there is no such newspaper, then in some newspaper having a general circulation in the county wherein such district or the greater or greatest portion in area of said district lies.

If no petition is filed with the Secretary of the Board, as hereinafter provided in this Section, within 30 days after the publication of the resolution, the resolution shall be in effect. But, if within that 30 day period a petition is filed with the Secretary of the Board, signed by electors numbering not less that 5% of the number of electors voting for the office of park commissioner at the last general park district election, asking that the question of levying and collecting; such tax be submitted to the electors of the district, the board shall call a special election in the manner provided by law to vote upon that question, or, if a general. State, municipal, or park district election is to be held within a period of not less than 30 or more than 90 days from the date such petition is filed, shall submit the question at the next general, State, municipal, or park district election. If it appears upon the canvas of the election by the governing board of the district that a majority of electors voting upon the question voted in favor of the levy and collection of the tax provided for, such district shall be authorized and empowered to levy and collect such tax annually for the years 1976, 1977, 1978 and 1979 only, but if a majority of the electors voting upon the question are not in favor thereof, the resolution shall not take effect.

Temporarily idle monies in the working cash fund may be invested as directed by the governing board of the park district, and the interest earnings on such investments may. at the option of the board, be either transferred permanently to the general corporate fund or be allowed to remain in the working cash fund. if such interest earnings remain in the working cash fund, they will serve to increase the balance of the working cash fund available for loans, but in no event may the balance of that fund be allowed to exceed the statutory maximum for the fund established in this Section.

(Ch. 105, new par. 11.2-5)

Sec. 11.2-5. Any member of the governing board of any park district to which this Article is applicable, or any other person holding any office, trust, or employment under such park district who wilfully violates any of tlic provisions of this Article shall be guilty of a business offense and fined not exceeding $ 10,000, and shall forfeit his right to his office, trust or employment and shall be removed therefrom. Any such member or other person shall be liable for any sum that may be unlawfully diverted from the working cash fund or otherwise used, to be recovered by such park district or by any taxpayer in the name and for the benefit of such park district in an appropriate action at law: provided that the taxpayer shall file a bond for all costs and be liable for all costs taxed against the park district in such suit, and judgment shall be rendered accordingly. Nothing herein shall bar any other remedies at law or in equity.

(Ch. 105, new par. 11.2-6)

Sec. 11.2-6. If any park district which has created a working cash fund under this Act abates or abolishes that fund, that park district may not again create such a working cash fund until at least 10 years have elapsed after the date that fund was abated or abolished. No such working cash fund shall be abated or abolished unless the governing board of the park district has by adoption of a resolution provided and directed the transfer of any balance in such fund to the general corporate fund of the district at the close of the then current year. Any outstanding loans shall be paid to the general funds of the district at the close of the then current year. Thereafter, all outstanding taxes of such park district levied

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Illinois Parks and Recreation 10 September/October, 1976

pursuant to this Article shall be collected and paid into the general funds of the district. Any obligation incurred by such park district pursuant to this Article shall be discharged as therein provided.

The collection of a tax levied under this Section shall not be anticipated by the issuance of any warrants drawn against the tax. The tax shall be levied and collected, except as otherwise provided in this Section, in like manner as the general taxes of the district, shall be in addition to the maximum of all other taxes now or hereafter to be levied for park purposes, and may be levied by separate resolution by the last Tuesday in September in each year.

(Ch. 105, new par. 11.2-3)

Sec. It.2-3. This Section shall not apply in any park district which docs not operate a working cash fund.

All monies received from any tax levied pursuant to this Article shall be set apart in the working cash fund and shall be used only for the purposes and in the manner hereinafter provided. Such fund, and the monies therein, shall not be regarded as current assets available for appropriation nor appropriated by the governing; board in the annual appropriation ordinance but, in order to provide monies with which to meet ordinary and necessary disbursements for salaries and other corporate purposes and may be transferred in whole or in part to the general corporate fund of the park district and so disbursed therefrom in anticipation of the collection of taxes lawfully levied for general corporate purposes. Monies so transferred shall be deemed to be transferred in anticipation of the collection of that part of the taxes so levied which is in excess of the amount thereof required to pay any warrants and the interest thereon theretofore and thereafter issued in anticipation of tlie collection thereof and such taxes levied for general corporate purposes when collected shall be applied first, to the payment of any such warrants and the interest thereon, and then to the reimbursement of such working cash fund as hereinafter provided.

Upon receipt by the park district of any taxes in anticipation of the collection whereof monies of the working cash fund have been so transferred for disbursement, the fund shall immediately be reimbursed therefrom until the full amount so transferred has been retransferred to the fund. Unless the taxes so received and applied to the reimbursement of the working cash fund prior to the first day of the eighth month following the month in which due and unpaid real property taxes begin to bear interest are sufficient to effect a complete reimbursement of such fund for any monies transferred therefrom in anticipation of the collection of such taxes, the working cash fund shall be reimbursed for the amount of the deficiency therein from any other revenues accruing to the general fund, and the governing board shall make provisions for the immediate reimbursement of the amount of any such deficiency in its next annual tax levy.

(Ch. 105, new par. 11.2-4)

Sec. 11.2-4. This Section shall not apply in any park district which does not operate a working cash fund. Monies shall be transferred from the working cash fund to the general funds of the district only upon the authority of the governing board which shall from time to time by separate resolution direct the treasurer to make transfers of such sums as may be required for the purposes herein authorized.

Every such resolution shall set forth (a) the taxes in anticipation of which such transfer is to be made and from which the working cash fund is to be reimbursed; (b) the entire amount of taxes extended, for any year, by the county clerk upon the books of the collectors of State and county taxes within the park district in anticipation of the collection of all or part of which such transfer is to be made; (c) the aggregate amount of warrants theretofore issued in anticipation of the collection of such taxes together with the amount of interest accrued or which the governing board estimates will accrue thereon, and (d) the aggregate amount of monies theretofore transferred from the working cash fund to the general corporate fund of the district in anticipation of the collection of such taxes. The amount which any such resolution shall direct the treasurer to transfer, in anticipation of tlie collection of taxes levied for any year, together with the aggregate amount of such anticipation tax warrants theretofore drawn against such taxes and the amount of interest accrued and estimated to accrue thereon and the aggregate amount of such transfers to be made in anticipation of the collection of such taxes shall not exceed 75% of the actual or estimated amount of such taxes extended or to be extended as set forth in such resolution. At any time monies are available in the working cash fund they shall be transferred to the general funds of the district and disbursed for the payment of salaries and other corporate expenses so as to avoid, whenever possible, the issuance of anticipation tax warrants.

WHEREAS, Article 11.2 of The Park District Code, as amended (Ch. 105 Ill. Rev. Stats. 1975), authorises the ..................................... Park District to create a "Working Cash Fund" and to levy a tax for said purpose; and

WHEREAS, the Board of Park Commissioners of ..................................... Park District has determined that it is in the best interests of the said ........................................ Park District to create such a fund and to levy such a tax for said purpose.

NOW, THEREFORE BE IT REVOLVED by the Board of Park Commissioners of .......................................... Park District that:

Section 1. The Board of Park Commissioners of .................................. Park District shall, and it does hereby authorize the levy and collection of an annual tax known as the "Working Cash Fund Tax" for the years 1976, 1977, 1978 and 1979 on all the taxable property of the District at a rate of .............* % of the value, as equalized or assessed by the Department of Local Government Affairs to provide monies for said "Working Cash Fund."

Section 2. The Board of Park Commissioners of ................................. Park District shall, and it does hereby levy a tax to be known as the "Working Cash Fund Tax" for the year 1976 at a rate of ............,...* % of the value of all the taxable property of the District as equalized or assessed by the Department of Local Government Affairs to provide monies for said "Working Cash Fund."

Section 3. The Secretary of the Board of Park Commissioners of ......................................... Park District shall publish a copy of this resolution once in the ............................................ (name of newspaper) within 10 days of the date hereof, and shall file a certified copy thereof in the Office of the County Clerk of .............................. County on or before the last Tuesday in September 1976.

Section 4. That this Resolution be and become effective upon its passage and approval.

*not to exceed .025%

Illinois Parks and Recreation 30 September/October, 1976