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Wednesday, October 5, 2016

Reminder to Adopt an Expense Reimbursement Policy

We previously reported on the new law that places new obligations on local governments regarding reimbursement of local officials' expenses. P.A. 99-604 goes into effect on January 1, 2017, so we want to remind units of government that are required to comply with the new law that they need to adopt a local policy on expense reimbursement that incorporates these new obligations and limitations. 

The Local Government Travel Expense Control Act applies to school districts, community college districts, counties, municipalities, townships, special districts (i.e., park districts, library districts, fire protection districts, etc), and various other units of local government. Home-rule units of government are not subject to the new law.

The law places two new obligations on covered units of local government: (1) to adopt by ordinance or resolution a local policy on expense reimbursements (section 10) and (2) to approve by roll call vote of the corporate authorities any expenses that exceed the maximum allowable reimbursement established by the local policy (section 15). The new law also prohibits any unit of local government from reimbursing entertainment expenses. (section 25)

Although the law takes effect on January 1, 2017, local governments have 180 days in which to adopt the local expense reimbursement policy (June 30, 2017), and 60 days to begin approving expenses that exceed the maximum reimbursement established by the local policy and expenses by members of the corporate authorities (March 1, 2017). These time-frames are somewhat inconsistent - without having a policy in place to establish the maximum allowable reimbursement (section 10), it is not clear what expenses will have to be approved by the corporate authorities as required by section 25. Because of this, it may be advisable to have a policy in place sooner rather than later, and at the very least no later than March 1, 2017.

The various provisions of the law are summarized below.

1.   Adoption of Local Expense Reimbursement Policy

The first requirement takes effect on January 1, 2017, so covered local governments should make sure that they have adopted a local expense reimbursement policy by the end of the year. That policy must include, at a minimum, the following:

1.  The types of official business for which travel, meal, and lodging expenses are allowed.
2.  The maximum allowable reimbursement for travel, meal, and lodging expenses.
3.  A standardized form for submission of travel, meal and lodging expenses that includes spaces for the following information:
  • an estimate of the cost of travel, meals or lodging if the expense has not yet been incurred or receipts for those expenses if they have already been incurred;
  • the name and job title or position of the individual requesting reimbursement;
  • the dates and nature of the official business in which the expenses were or will be expended.
If a government fails to adopt a local reimbursement policy, the law provides that no travel, meal or lodging expenses may be paid by the government.

2.  Approval of Expenses

In addition to adopting a formal policy, the new law requires covered units of local government to formally approve any expense that exceeds the maximum allowed under the local policy and to approve all expenses incurred by members of the corporate authorities. These approvals must be by the corporate authorities and by roll call vote at an open meeting.

3.  Prohibition on Entertainment Expenses

Section 25 of the new law prohibits a covered unit of local government from reimbursing any government official or employee for "any entertainment expense." These are defined to include the following:
  • shows
  • amusements
  • theaters
  • circuses
  • sporting events
  • any other place of public or private entertainment or amusement unless ancillary to the purpose of the program or event
So, covered units of local government will have to put together and approve a local reimbursement policy, and ensure that any expenses reimbursed by the government comply with that policy as well as the statutory ban on entertainment expenses.

Post Authored by Julie Tappendorf


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