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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB5063

Introduced 2/10/2026, by Rep. Aarón M. Ortíz

SYNOPSIS AS INTRODUCED:

105 ILCS 5/27A-3
105 ILCS 5/27A-9.5 new
105 ILCS 5/27A-10.15 new
105 ILCS 5/27A-10.20 new

Amends the Charter Schools Law of the School Code. Provides that upon
approval of a charter renewal by an authorizer, the charter operator shall
execute the renewal agreement no later than 90 days after the date of the
authorizer's final renewal approval. Provides that a charter school that
is deemed nonrenewed is ineligible to receive any payments from a school
district. Provides that a charter operator that fails to execute a renewal
agreement within a specified period may not continue to operate the
charter school beyond the expiration of the existing charter term and is
subject to closure procedures. Requires every charter operator to maintain
closure security. Provides that failure to maintain closure security is a
basis for the authorizer to withhold a portion of per-pupil payments until
compliance is achieved and for consideration in denying a charter renewal
or revoking the charter or ineligibility to operate additional charter
campuses. Provides that if the closure security is insufficient to cover
the costs of a closure event, the authorizer or the State Board of
Education may bring a civil action against the charter operator to recover
the unpaid amounts and seek to impose a lien on any property owned by the
charter operator to secure recovery. Provides that if an authorizer
determines that a charter school is in financial distress, the authorizer
may require the charter operator to submit a financial remediation plan
within 30 days. Provides that if the authorizer determines that the
charter school has failed to implement an approved remediation plan or the
financial distress presents an immediate risk to students, employees, or
public funds, the authorizer may initiate financial intervention by
appointing an independent fiscal manager approved by the authorizer and
the State Board. Allows the fiscal manager to exercise authority limited
to financial matters. Provides that financial intervention is temporary
and may not exceed 180 days, except that the authorizer may extend the
intervention once for good cause. Makes other changes. Effective
immediately.
LRB104 18287 LNS 31727 b

A BILL FOR

HB5063
LRB104 18287 LNS 31727 b
1

AN ACT concerning education.

2

Be it enacted by the People of the State of Illinois,
3
represented in the General Assembly:

4

Section 1.
This Act may be referred to as the Charter
5
School Closure Financial Accountability Law.

6

Section 5.
Findings.
The General Assembly finds and
7
declares all of the following:
8

(1) Public funds and public property provided to
9

charter schools must be protected and used for students'
10

education.
11

(2) Charter schools in this State may close during a
12

school year, and when they do there is a risk that
13

students, employees, and public assets will suffer harm
14

while the charter operator faces no meaningful financial
15

accountability.
16

(3) Current law and administrative guidance address
17

closure procedures but do not uniformly require a
18

prefunded financial mechanism sufficient to cover
19

transition costs, severance, and the return of publicly
20

funded property.
21

(4) It is, therefore, necessary to require charter
22

operators to maintain closure reserves, require return of
23

public assets purchased with public funds, provide

HB5063
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LRB104 18287 LNS 31727 b
1

remedies to recover costs incurred by authorizers and
2

students' home districts, and impose penalties for
3

mid-year abandonment that is negligent or in bad faith.

4

Section 10.
The School Code is amended by changing Section
5
27A-3 and by adding Sections 27A-9.5, 27A-10.15, and 27A-10.20
6
as follows:

7

(105 ILCS 5/27A-3)
8

Sec. 27A-3.
Definitions.
For purposes of this Article:
9

"At-risk pupil" means a pupil who, because of physical,
10
emotional, socioeconomic, or cultural factors, is less likely
11
to succeed in a conventional educational environment.
12

"Authorizer" means an entity authorized under this Article
13
to review applications, decide whether to approve or reject
14
applications, enter into charter contracts with applicants,
15
oversee charter schools, and decide whether to renew, not
16
renew, or revoke a charter.
17

"Closure event" means any termination, revocation,
18
nonrenewal, or voluntary cessation of operations of a charter
19
school resulting in the charter school's permanent cessation
20
of instruction to enrolled pupils outside the normal
21
end-of-school-year phase-out.
22

"Closure security" means a financial instrument listed
23
under subsection (a) of Section 27A-10.15.
24

"Financial distress" means one or more of the following

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LRB104 18287 LNS 31727 b
1
conditions, as determined by an authorizer based on documented
2
evidence:
3

(1) failure to timely meet payroll, benefits, or other
4

operating obligations;
5

(2) material audit findings indicating insolvency,
6

negative cash flow, or substantial doubt as to a charter
7

school's ability to continue as a going concern;
8

(3) default or imminent default on debt or lease
9

obligations;
10

(4) failure to maintain required closure security or
11

other financial reserves required under this Article;
12

(5) evidence of misuse or misappropriation of public
13

funds; or
14

(6) any financial condition that poses an imminent
15

risk to the continued operation of a charter school or to
16

the orderly transition of enrolled pupils.
17

"Financial intervention" means a temporary, limited
18
assumption of financial oversight authority by an authorizer
19
for the purpose of stabilizing a charter school and protecting
20
students, employees, and public assets.

21

"Local school board" means the duly elected or appointed
22
school board or board of education of a public school
23
district, including special charter districts and school
24
districts located in cities having a population of more than
25
500,000, organized under the laws of this State.
26

"Public assets" means equipment, furniture, books,

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1
instructional technology, real estate, or any other real
2
property purchased or leased with public funds or purchased
3
with funds subject to public oversight.

4

"State Board" means the State Board of Education.
5

"Union neutrality clause" means a provision whereby a
6
charter school agrees: (1) to be neutral regarding the
7
unionization of any of its employees, such that the charter
8
school will not at any time express a position on the matter of
9
whether its employees will be unionized and such that the
10
charter school will not threaten, intimidate, discriminate
11
against, retaliate against, or take any adverse action against
12
any employees based on their decision to support or oppose
13
union representation; (2) to provide any bona fide labor
14
organization access at reasonable times to areas in which the
15
charter school's employees work for the purpose of meeting
16
with employees to discuss their right to representation,
17
employment rights under the law, and terms and conditions of
18
employment; and (3) that union recognition shall be through a
19
majority card check verified by a neutral third-party
20
arbitrator mutually selected by the charter school and the
21
bona fide labor organization through alternate striking from a
22
panel of arbitrators provided by the Federal Mediation and
23
Conciliation Service. As used in this definition, "bona fide
24
labor organization" means a labor organization recognized
25
under the National Labor Relations Act or the Illinois
26
Educational Labor Relations Act. As used in this definition,

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LRB104 18287 LNS 31727 b
1
"employees" means non-represented, non-management, and
2
non-confidential employees of a charter school.
3
(Source: P.A. 103-175, eff. 6-30-23; 103-416, eff. 8-4-23;
4
103-605, eff. 7-1-24.)

5

(105 ILCS 5/27A-9.5 new)
6

Sec. 27A-9.5.
Charter renewal; timely execution; funding
7
consequences.
8

(a) This Section applies to all charter renewals approved
9
on or after the effective date of this amendatory Act of the
10
104th General Assembly.
11

(b) Upon approval of a charter renewal by an authorizer,
12
the charter operator shall execute the renewal agreement no
13
later than 90 days after the date of the authorizer's final
14
renewal approval.
15

(c) Failure of a charter operator to execute an approved
16
renewal agreement within the 90-day period shall constitute:
17

(1) a refusal of the renewal by the charter operator;
18

and
19

(2) a nonrenewal of the charter for all purposes under
20

this Article, without further action required by the
21

authorizer.
22

(d) A charter school that is deemed nonrenewed under
23
subsection (c) is ineligible to receive any payments from a
24
school district, including a school district organized under
25
Article 34, after the expiration of the existing charter term,

HB5063
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LRB104 18287 LNS 31727 b
1
including, but not limited to:
2

(1) per-pupil tuition or payments;
3

(2) supplemental, categorical, or grant funding
4

administered by the district; and
5

(3) any pass-through or discretionary funds controlled
6

by the district.
7

The school district shall cease payments upon expiration
8
of the charter term if a renewal agreement has not been
9
executed as required by subsection (b).
10

(e) A charter operator's refusal to execute a renewal
11
agreement under subsection (b) due to disagreement with the
12
terms approved by the authorizer, including labor-related,
13
governance, or accountability provisions, may not delay, toll,
14
or suspend the 90-day execution requirement under subsection
15
(b) or the funding consequences under subsection (d).
16

(f) A charter operator that fails to execute a renewal
17
agreement within the period specified in subsection (b) may
18
not continue to operate the charter school beyond the
19
expiration of the existing charter term and is subject to the
20
closure procedures under this Article.
21

(g) At the time an authorizer grants approval of a charter
22
renewal, the authorizer shall provide written notice to the
23
charter operator of the execution deadline under subsection
24
(b) and the funding consequences of a failure to execute under
25
subsection (d).
26

(h) Nothing in this Section shall be construed to impair

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LRB104 18287 LNS 31727 b
1
the rights of employees or labor organizations under the
2
Illinois Educational Labor Relations Act.

3

(105 ILCS 5/27A-10.15 new)
4

Sec. 27A-10.15.
Closure financial accountability.
5

(a) Every charter operator shall maintain, while its
6
charter is in effect, one or more of the following financial
7
instruments to secure closure obligations:
8

(1) an escrow account held in a financial institution
9

in this State in the name of the charter school, funded in
10

cash;
11

(2) a surety bond or irrevocable letter of credit
12

issued by a financial institution authorized to do
13

business in this State; or
14

(3) a segregated reserve fund reflected on the charter
15

school's audited financial statements and held in a manner
16

acceptable to the authorizer and the State Board.
17

A charter school in operation on the effective date of
18
this amendatory Act of the 104th General Assembly must comply
19
with this Section within 2 fiscal years after the effective
20
date of this amendatory Act of the 104th General Assembly.

21

(b) The closure security under subsection (a) for a
22
charter school in operation for at least one fiscal year must
23
equal 3 months of the charter school's average operating
24
expenditures based on its last audited fiscal year. If the
25
closure security is below the required amount, the authorizer

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1
shall require a remediation plan to reach compliance within 2
2
fiscal years. Failure to timely comply is grounds for
3
suspension of enrollment growth and may be considered in a
4
charter renewal determination.
5

For a charter school in operation for less than one fiscal
6
year, the closure security must equal 3 months of the charter
7
school's projected annual budget, as approved by the charter's
8
authorizer. The closure security for such a charter school
9
must be established and funded to at least 50% of the required
10
amount, based on the charter school's projected budget, at the
11
time the charter is granted or, for a charter granted before
12
the effective date of this amendatory Act of the 104th General
13
Assembly, within 30 days after the effective date of this
14
amendatory Act of the 104th General Assembly and must reach
15
the full required amount by the end of the charter's second
16
full fiscal year.
17

(c) Closure security shall be used, in priority order, to
18
pay:

19

(1) the direct costs of transitioning students, such
20

as transportation, records transfer, and student placement
21

assistance, incurred by the authorizer or receiving school
22

district;
23

(2) any outstanding payroll for employees for time
24

worked through the closure date, including legally
25

required benefits, and severance if contractually required
26

under the charter school's collective bargaining

HB5063
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LRB104 18287 LNS 31727 b
1

agreements or employment contracts;
2

(3) any costs reasonably incurred for the storage or
3

transfer of student records and special education
4

documents required to ensure continuity of services;
5

(4) any costs to return public assets to the
6

authorizer or otherwise account for disposition of public
7

assets purchased with public funds; and
8

(5) any reasonable administrative costs incurred by
9

the authorizer or the State Board to supervise and execute
10

the closure and student transition.
11

Closure security may not be used to pay any preexisting,
12
unrelated debt of the charter operator that is not connected
13
to the operating obligations to students, employees, or public
14
property, except as permitted under this subsection.

15

(d) A charter operator must provide the authorizer and the
16
State Board written notice of the charter operator's intent to
17
close a charter school no fewer than 90 days before the planned
18
closure and must provide immediate notice upon any involuntary
19
closure action, insolvency event, or cessation of operations.
20

Within 30 days after a closure event, the authorizer shall
21
publish a closure action statement that lists amounts from the
22
closure security disbursed and the uses.
23

(e) Failure to maintain closure security as required under
24
this Section is a basis for:

25

(1) the authorizer to withhold a portion of per-pupil
26

payments until compliance is achieved; and

HB5063
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LRB104 18287 LNS 31727 b
1

(2) consideration in denying a charter renewal or
2

revoking the charter or ineligibility to operate
3

additional charter campuses.
4

If the closure security is insufficient to cover the costs
5
of a closure event as set forth in subsection (c), the
6
authorizer or the State Board may:

7

(1) bring a civil action against the charter operator
8

to recover the unpaid amounts; and
9

(2) seek to impose a lien on any property owned by the
10

charter operator that is located in this State to secure
11

recovery.

12

In cases in which a closure results from gross negligence,
13
willful misconduct, or intentional misappropriation of public
14
funds by the charter operator or its officers or directors,
15
the authorizer or State Board may seek recovery from
16
individual officers, directors, or persons who knowingly
17
caused the gross negligence, willful misconduct, or
18
intentional misappropriation, including civil penalties not to
19
exceed $50,000 per violation and reasonable attorney's fees.
20

(f) Upon closure, any public assets purchased with public
21
funds must be returned to the authorizer or disposed of
22
according to procedures established by the State Board or the
23
authorizer. Proceeds from any sale of such assets shall be
24
applied first to outstanding obligations to students and
25
employees, and then to the reimbursement of public funds.
26

(g) The State Board shall adopt rules to implement this

HB5063
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LRB104 18287 LNS 31727 b
1
Section within 180 days after the effective date of this
2
amendatory Act of the 104th General Assembly, including
3
acceptable forms of closure security, procedures for claims on
4
closure security, and documentation standards for authorizers
5
to approve closure security.

6

(105 ILCS 5/27A-10.20 new)
7

Sec. 27A-10.20.
Financial distress; charter school
8
financial intervention.
9

(a) If an authorizer determines that a charter school is
10
in financial distress, the authorizer may require the charter
11
operator to submit a financial remediation plan for approval
12
within 30 days after that determination. The remediation plan
13
shall include, at a minimum:
14

(1) current cash-flow projections;
15

(2) corrective actions to address identified
16

deficiencies;
17

(3) a timeline for achieving fiscal stability; and
18

(4) enhanced financial-reporting requirements as
19

specified by the authorizer.
20

Failure to timely submit a remediation plan or implement
21
an approved remediation plan constitutes grounds for financial
22
intervention under subsection (b).
23

(b) If the authorizer determines that (i) the charter
24
school has failed to implement an approved remediation plan or
25
(2) the financial distress presents an immediate risk to

HB5063
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LRB104 18287 LNS 31727 b
1
students, employees, or public funds, the authorizer may
2
initiate financial intervention by appointing an independent
3
fiscal manager approved by the authorizer and the State Board.
4

(c) The fiscal manager may exercise authority, limited to
5
financial matters, over the charter school, including:
6

(1) approval and oversight of expenditures and
7

disbursements;
8

(2) oversight of payroll, benefits, and required
9

employee payments;
10

(3) reviewing, modifying, or terminating any vendor
11

contracts necessary to ensure fiscal stability;
12

(4) protection, inventory, and preservation of public
13

assets; and
14

(5) ensuring compliance with financial reporting and
15

audit requirements.
16

The fiscal manager may not exercise authority over
17
curriculum, instruction, educational programming, or personnel
18
matters unrelated to financial administration.
19

(d) Financial intervention under this Section is temporary
20
and may not exceed 180 days, except that the authorizer may
21
extend the intervention once for good cause. The intervention
22
shall terminate upon a determination by the authorizer that
23
fiscal stability has been restored or upon charter revocation,
24
surrender, nonrenewal, or closure.
25

(e) Prior to initiating financial intervention, the
26
authorizer shall provide written notice to the charter

HB5063
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LRB104 18287 LNS 31727 b
1
operator describing the basis for the intervention and provide
2
an opportunity to respond, except in cases in which immediate
3
action is required to protect students or public funds.
4

(f) An authorizer's exercise of authority under this
5
Section:
6

(1) does not constitute operation or management of the
7

charter school;
8

(2) does not create financial or legal liability for
9

the authorizer or its members; and
10

(3) shall be deemed an oversight and regulatory
11

function for purposes of immunity under Section 27A-7.10.
12

(g) Financial intervention under this Section does not
13
preclude charter revocation, nonrenewal, or closure and may be
14
used to stabilize operations pending an orderly closure
15
pursuant to this Article.

16

Section 97.
Severability.
The provisions of this Act are
17
severable under Section 1.31 of the Statute on Statutes.

18

Section 99.
Effective date.
This Act takes effect upon
19
becoming law.

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