House Bill 1347 – The Facts

1. House Bill 1347 – The Facts Joseph J. Perkoski Robbins, Schwartz, Nicholas, Lifton & Taylor, Ltd. 20 North Clark Street, Suite 900 Chicago, IL 60602 p. (312) 332-7760 f. (312) 332-7768 jperkoski@rsnlt.com www.rsnlt.com ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.

2. PA 095-0241 • This new measure significantly limits the practice of school districts contracting out for non-instructional services. • Signed into law on August 17, 2007, places restrictions on a school district’s ability to contract with a third party to perform non-instructional services. • The School Code is amended by changing Section 10-22.34c. ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.

3. Sec. 10-22.34c: Third Party Non-Instructional Services (a) A Notwithstanding any other law of this State, nothing in this Code prevents a board of education may enterfrom entering into a contract with a third party for non-instructional services currently performed by any employee or bargaining unit member or layfrom laying off those educational support personnel employees upon 9030 days written notice to the affected employees, provided that: (1) a contract must not be entered into and become effective during the term of a collective bargaining agreement, as that term is set forth in the agreement, covering any employees who perform the non-instructional services; (2) a contract may only take effect upon the expiration of an existing collective bargaining agreement; ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.

4. (3) any third party that submits a bid to perform the non-instructional services shall provide the following: (A) evidence of liability insurance in scope and amount equivalent to the liability insurance provided by the school board pursuant to Section 10-22.3 of this Code; (B) a benefits package for the third party's employees who will perform the non-instructional services comparable to the benefits package provided to school board employees who perform those services; ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.

5. (C) a list of the number of employees who will provide the non-instructional services, the job classifications of those employees, and the wages the third party will pay those employees; (D) a minimum 3-year cost projection, using generally accepted accounting principles and which the third party is prohibited from increasing if the bid is accepted by the school board, for each and every expenditure category and account for performing the non-instructional services; ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.

6. (E) composite information about the criminal and disciplinary records, including alcohol or other substance abuse, Department of Children and Family Services complaints and investigations, traffic violations, and license revocations or any other licensure problems, of any employees who may perform the non-instructional services, provided that the individual names and other identifying information of employees need not be provided with the submission of the bid, but must be made available upon request of the school board; and (F) an affidavit, notarized by the president or chief executive officer of the third party, that each of its employees has completed a criminal background check as required by Section 10-21.9 of this Code within 3 months prior to submission of the bid, provided that the results of such background checks need not be provided with the submission of the bid, but must be made available upon request of the school board. ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.

7. (4) a contract must not be entered into unless the school board provides a cost comparison, using generally accepted accounting principles, of each and every expenditure category and account that the school board projects it would incur over the term of the contract if it continued to perform the non-instructional services using its own employees with each and every expenditure category and account that is projected a third party would incur if a third party performed the non-instructional services; (5) review and consideration of all bids by third parties to perform the non-instructional services shall take place in open session of a regularly scheduled school board meeting, unless the exclusive bargaining representative of the employees who perform the non-instructional services, if any such exclusive bargaining representative exists, agrees in writing that such review and consideration can take place in open session at a specially scheduled school board meeting; ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.

8. (6) a minimum of one public hearing, conducted by the school board prior to a regularly scheduled school board meeting, to discuss the school board's proposal to contract with a third party to perform the non-instructional services must be held before the school board may enter into such a contract; the school board must provide notice to the public of the date, time, and location of the first public hearing on or before the initial date that bids to provide the non-instructional services are solicited or a minimum of 30 days prior to entering into such a contract, whichever provides a greater period of notice; (7) a contract shall contain provisions requiring the contractor to offer available employee positions pursuant to the contract to qualified school district employees whose employment is terminated because of the contract; and ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.

9. (8) a contract shall contain provisions requiring the contractor to comply with a policy of nondiscrimination and equal employment opportunity for all persons and to take affirmative steps to provide equal opportunity for all persons. (b) Notwithstanding subsection (a) of this Section, a board of education may enter into a contract, of no longer than 3 months in duration, with a third party for non-instructional services currently performed by an employee or bargaining unit member for the purpose of augmenting the current workforce in an emergency situation that threatens the safety or health of the school district's students or staff, provided that the school board meets all of its obligations under the Illinois Educational Labor Relations Act. ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.

10. (c) The changes to this Section made by this amendatory Act of the 95th General Assembly are not applicable to non-instructional services of a school district that on the effective date of this amendatory Act of the 95th General Assembly are performed for the school district by a third party. (Source: P.A. 90-548, eff. 1-1-98.) Section 90. The State Mandates Act is amended by adding Section 8.31 as follows: (30 ILCS 805/8.31 new) Sec. 8.31. Exempt mandate. Notwithstanding Sections 6 and 8 of this Act, no reimbursement by the State is required for the implementation of any mandate created by this amendatory Act of the 95th General Assembly. Section 99. Effective date. This Act takes effect upon becoming law. ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.

11. Scenario One • James K. Polk School District has subcontracted its bus services with Round & Round Bus Company since 2002. The District’s current contract with the Round & Round Bus Company expires on June 30, 2008. • In September 2007, the District encountered problems with two of its rural routes. Specifically, there were numerous missed pickups and several parents complained directly to the Board. The District’s attempts to resolve the matter with Round & Round were unsuccessful. • As a stop-gap measure, in December 2007, the District deployed two of its custodians (who happen to be certified) to run the routes while the District continued to work out the problem with Round & Round. The parents are happy again. Now, the District has decided that because of Round & Round’s failure to address the problems, it would end its relationship with the company when the contract expires on June 30th and re-bid the entire bus contract – and in the meantime continue to use the two custodians on the rural routes until the new bus company come into service. • Are there any implications in light of the new law? ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.

12. Scenario Two • Zachary Taylor School District (home of the “Fighting Whigs”) has three middle schools and seven elementary schools in its system. Each school in the District has one non-certified nurse aide on staff. As of August 2007, two of the middle schools and three of the elementary schools were using subcontracted nurse aides from the “Merry Aides Nurse Company.” The other schools in the District were using nurse aides directly employed by the District. • Due to the influx of new students, and MSRA outbreaks, the District has decided that it needs to increase its nurse aide staff. It contacts Merry Aides to immediately send over three additional nurse aides. Merry Aides has none available. The District turns to a Merry Aides competitor, “NA on the Spot.” On the Spot quickly provides four nurse aides to the Zachary Taylor School District. • Should the District have reviewed the new subcontracting law before it retained the additional nurse aides? ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.

13. Scenario Three • Martin Van Buren Consolidated School District decided to subcontract its food service employees in December 2007 despite the new subcontracting law. The ESP collective bargaining agreement which covers the food service employees is about to expire on June 30, 2008. • The District provided the proper notice under the new subcontracting law to the Union and followed the bidding procedures. The District also complied with providing a three-year cost projection and all of the other requirements under the new law. Despite all of the hurdles in complying with the new law, the District was able to show a slight cost savings in using a subcontractor, Yum Yum Foods (YYF) – primarily because YYF could provide comparable benefits at a lower price due to its ability to acquire lower cost workers’ compensation insurance and health insurance for its employees. A two-year contract was then executed with YYF. • Unfortunately, as the 2008-2009 school year progresses, it becomes clear that YYF is not providing edible food for the District’s students. The District decides to exercise its termination rights under the contract and proceeds to re-bid the service. ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.

14. Scenario Three • Must the District again comply with the same biding/notice requirements of the new subcontracting law? • If not, must the District comply with the three-year cost projections that were provided from the original bidding process? ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.

15. ANY QUESTIONS? ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.

16. Chicago Office – (312) 332-7760 Decatur Office – (217) 428-2100 Collinsville Office – (618) 343-3540 Joliet Office – (815) 722-6560 www.rsnlt.com ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.