Bill
SB 3391
SB3391 requires charter operators to secure closure funding, sets 90-day renewal execution deadlines with funding consequences, and empowers intervention for financial distress to
Title: SCH CD-CHARTER SCHOOL-CLOSURE
Jurisdiction: Illinois
Sponsor: Sen. Celina Villanueva (co-sponsors: Cristina Castro, Karina Villa, Ram Villivalam)
Status: Introduced February 4, 2026. Includes Floor Amendment No. 1 filed April 17, 2026. Referenced to Assignments and later calendar steps. Effective date: immediate upon law.
Purpose and overall aim
- Create a Charter School Closure Financial Accountability framework intended to protect students, employees, and public assets when a charter school closes, is nonrenewed, or experiences financial distress.
- Establish explicit requirements for renewal execution timelines, enforcement consequences for nonexecution, and mechanisms to secure and recover public funds/assets during and after closure.
Key provisions and changes
1) Renewal execution timeline and funding consequences (new Section 27A-9.5)
- Upon renewal approval by an authorizer, the charter operator must execute the renewal agreement within 90 days of the authorizer’s final renewal decision.
- If the renewal agreement is not executed within 90 days:
- It is treated as a refusal/nonrenewal of the charter for all purposes.
- The charter school becomes ineligible to receive any payments from the district after expiration of the current charter term (including per-pupil funding, district-administered funds, and any pass-through or discretionary funds).
- The authorizer must notify the charter operator of these deadlines and consequences at the time renewal is granted.
- A charter operator’s disagreement over terms cannot delay the 90-day deadline or funding consequences.
2) Closure financial accountability and closure security (new Section 27A-10.15)
- Every charter operator must maintain closure security during the charter term, using one of three options:
- An escrow account funded in cash.
- A surety bond or irrevocable letter of credit.
- A segregated reserve fund, as approved by the authorizer and the State Board.
- Timing:
- Charters in operation on the Act’s effective date must comply within 2 fiscal years.
- For existing charters: closure security must equal 3 months of the charter’s average operating expenditures (based on last audited year). If below, an remediation plan to meet the target within 2 fiscal years is required; failure to comply can affect enrollment growth and renewal determinations.
- For charters less than 1 year old: closure security must equal 3 months of projected annual budget, with initial funding at 50% of that amount, ramping to full by end of the second full fiscal year.
- Priority uses of closure security:
1) Direct transition costs for students (transportation, records transfer, placement assistance).
2) Unpaid payroll and severance as required.
3) Records/education documents storage or transfer costs.
4) Returning public assets to the authorizer or accounting for disposition.
5) Reasonable administrative costs of closure oversight.
- Closure notice and reporting:
- Operators must notify at least 90 days before planned closure; immediate notice is required for involuntary closures or insolvency.
- Within 30 days of closure, the authorizer must publish a closure action statement detailing disbursements and uses.
- Remedies for failing to maintain closure security:
- Withholding per-pupil payments.
- Consideration in renewal denial or charter revocation/ineligibility for future campuses.
- Civil actions to recover unpaid amounts; potential liens on charter operator property within Illinois.
- If closure results from gross negligence or misappropriation, individuals (officers/directors) may be liable with civil penalties up to $50,000 per violation plus attorneys’ fees.
- Asset disposition on closure:
- Public assets purchased with public funds must be returned or disposed per State Board/authorizer rules.
- Proceeds applied first to student/employee obligations, then to reimbursement of public funds.
3) Financial distress and intervention (new Sections 27A-10.20)
- If an authorizer determines financial distress, it may require a remediation plan within 30 days.
- If the plan is not implemented or distress poses an immediate risk, the authorizer may appoint an independent fiscal manager (approved by the authorizer and the State Board) to oversee financial matters.
- Scope of fiscal manager:
- Limited to financial matters (excludes curriculum/instruction or personnel decisions unrelated to finances).
- Expires within 180 days, extendable once for good cause; ends at restoration of fiscal stability or charter termination/closure.
- Procedures:
- Prior notice and response opportunity before intervention, except in urgent cases.
- Intervention is supervisory, not managerial of all operations, and does not create liability for the authorizer.
- Interventions do not preclude renewal/closure actions and may precede an orderly closure if needed.
Effective date
- The bill states it takes effect immediately upon becoming law.
Impact and who is affected
- Charter operators and authorizers (local school boards, State Board of Education) are directly affected.
- Charter schools must establish and maintain closure security, implement remediation plans, and may be subject to financial intervention.
- Public school districts and students/parents benefit from enhanced protections around closure costs, asset recovery, and continuity of services for transitioning students.
- Individuals (officers/directors) could face civil penalties if public funds are misused during closure.
Procedural notes
- The bill adds definitions to clarify terms such as closure event, closure security, financial distress, and financial intervention.
- It includes enforcement mechanisms (withholding funds, liens, civil actions, and penalties) and a State Board rulemaking mandate to implement the provisions.
Overall, SB3391 establishes a comprehensive framework to ensure financial accountability and orderly, well-funded closures of charter schools, with explicit timelines for renewal execution, mandatory closure reserves, and a formal process for financial intervention when distress is detected.
Compiled from official sources — confirm details with the bill’s official record.
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