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Monday, December 31, 2018

New Legislation Requires Township Clerks to "Attest" to "Payouts"

Governor Rauner recently signed Public Act 100-0983 into law. This law amends the Township Code, the Highway Code and the Public Graveyards Act by adding cryptic language requiring township clerks to “attest” to certain “payouts” of funds. This law adds a new section 7-27 to the Township Code specifying that, “If a township supervisor issues a payout of funds from the township treasury, the township clerk shall attest to such payment.”  The Highway Code is amended by adding a new section 6-114.5 which states, “If a road district treasurer issues a payout from the road district’s treasury or the township treasury, the road district clerk shall attest to all moneys paid out.”  The Public Graveyards Act was amended to also include a similar provision.

Unfortunately, the legislation does not define the manner in which the clerk is to “attest” to the payouts – does that mean that the clerk is attesting that the funds were expended?  Or that they were expended for the purposes specified?  Or that there are sufficient funds available to make the payout?  Or is the clerk attesting that the township board or the Supervisor approved the expenditure of the funds?  Nor does the legislation define what a “payout” is.  Does “payout” cover credit card payments, auto payment of utility bills and electronic fund transfers?  What about townships which have passed resolutions authorizing the payment of routine utility bills?  There is no record of legislative history or substantive debate available to help determine the General Assembly’s intent behind this new law.

In the absence of clarity, townships may choose to satisfy this law in different ways based on how they interpret it.  The Township Officials of Illinois association is recommending that township clerks attest “to the signature of the supervisor on all checks written.”  Certainly, townships may do that if they would like.  However, the law does not state anything about attesting to a signature – it specifies that the attestation is to the “payout of funds,” a “payment” or “all moneys paid out.”  It does not state anything about clerks endorsing a check or a signature, nor does it require that the attestation of the payout must occur prior to the payout.  Further, even if a township clerk certifies a supervisor’s signature on a check, it is not clear whether that act would satisfy the legislation’s requirement to attest to a “payout of funds” or to “all moneys paid out.”

While the legislation was apparently intended to promote transparency – which is a good thing - and to prevent situations where township supervisors were issuing checks without township board approval, (which was already illegal), it will be challenging for townships to comply with this legislation without further clarification about the scope of a clerk’s attestation to a payout.  If the legislation was intending to require township clerks to witness the township supervisor’s signature and endorse every check, it could have said that – but that is not what this says.  We have heard from some townships whose banks have indicated that they will not accept and process checks bearing a second signature of someone who is not a signatory to a financial account.  In addition, banks that have reviewed this ambiguous new law are not interpreting it to require them to have to accept an additional signature.

Perhaps a simpler option for township clerks would be to maintain a copy of all expenditures or “payouts,” develop a separate sheet attesting that the payouts at issue were authorized by the township board, expended for the purposes specified,  provided for in the budget and directed to be paid out by the Township Supervisor.  That action would seem broad enough to comply with the requirements of this legislation, and it would perhaps be easier for clerks to accomplish. 

This law becomes effective on January 1, 2019.

Post Authored by Keri-Lyn Krafthefer, Ancel Glink


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