In re Objections to Tax Levies of Freeport School District No. 145

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State: Illinois

Court: 2nd District Appellate

Docket No: 2-06-0250 & 2-06-0258 cons. Rel

Case Date: 03/27/2007

Preview:Nos. 2--06--0250 & 2--06--0258 cons.

Filed: 3-27-07

IN THE APPELLATE COURT OF ILLINOIS SECOND DISTRICT

In re OBJECTIONS TO TAX LEVIES OF FREEPORT SCHOOL DISTRICT No. 145, FREEPORT PARK DISTRICT, PEARL CITY SCHOOL DISTRICT No. 200, and HIGHLAND COMMUNITY COLLEGE DISTRICT No. 519, For the Year 2000 (Tax Objectors, Plaintiffs-Appellants, v. Pearl City School District No. 200 and Highland Community College District No. 519, Intervenors-Appellees (Freeport School District No. 145 and Freeport Park District, Intervenors)).

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Appeal from the Circuit Court of Stephenson County. No. 01--TX--29

Honorable Val Gunnarsson, Judge, Presiding.

In re OBJECTIONS TO TAX LEVIES OF FREEPORT SCHOOL DISTRICT No. 145, FREEPORT PARK DISTRICT, PEARL CITY SCHOOL DISTRICT No. 200, and HIGHLAND COMMUNITY COLLEGE DISTRICT No. 519, For the Year 2000

) ) ) ) ) ) ) (Tax Objectors, Plaintiffs-Appellees, v. Freeport) School District No. 145 and Freeport Park ) District, Intervenors-Appellants (Pearl City ) School District No. 200 and Highland ) Community College District No. 519, ) Intervenors)). )

Appeal from the Circuit Court of Stephenson County. No. 01--TX--29

Honorable Val Gunnarsson, Judge, Presiding.

JUSTICE CALLUM delivered the opinion of the court: I. INTRODUCTION

Nos. 2--06--0250 & 2--06--0258 cons. The tax objectors, over 2,000 property owners in Stephenson County, filed a tax objection complaint (35 ILCS 200/23--10 (West 2000)) directed against levies under the Local Governmental and Governmental Employees Tort Immunity Act (Tort Immunity Act or Act) (745 ILCS 10/9-107(b) (West 2000)) for the 2000 tax year by Freeport School District No. 145, Freeport Park District, Pearl City School District No. 200, and Highland Community College District No. 519 (collectively, the taxing districts). The tax objectors paid the challenged taxes and commenced this proceeding in 2001. The taxing districts intervened. 35 ILCS 200/23--15 (West 2000). The general issue before the trial court was whether the taxing districts' expenditures of their tort levies were authorized by the Tort Immunity Act. Following a bench trial in which the issue of liability was bifurcated from the damages issue,1 the trial court found as to liability: in favor of the tax objectors and against Freeport School District and Freeport Park District; partially in favor of the tax objectors and partially in favor of Highland Community College; and against the tax objectors and in favor of Pearl City School District. The court reserved the damages issue. On February 21, 2006, the trial court certified the following questions for interlocutory appeal pursuant to Supreme Court Rule 308 (155 Ill. 2d R. 308): (1) Whether the use of the tort immunity levy to partially fund the compensation of taxing bodies' employees is authorized by the Tort Immunity Act;

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At trial, the parties agreed that the trial court would initially assess only the legal issues

presented. If the tax objectors prevailed on any issues, then the court would, in the damages phase, consider the factual issues to determine the refund amounts owed to individual tax objectors. -2-

Nos. 2--06--0250 & 2--06--0258 cons. (2) Whether the use of revenue generated by Highland Community College's tort immunity levy to pay for safety- and security-related expenditures is authorized by the Tort Immunity Act; and (3) Whether the use of the tort immunity levy by Freeport School District to partially fund its equity program is authorized by the Tort Immunity Act. The tax objectors, Freeport School District, and Freeport Park District timely filed separate applications for leave to appeal under Rule 308. On May 24, 2006, this court granted the petitions. II. BACKGROUND A. Tax Objectors' Suit and Trial Court's Order On October 2, 2001, the tax objectors filed a tax objection complaint against the taxing districts relating to property taxes levied in 2000 in Stephenson County. In count I, which was directed against Freeport School District No. 145, the tax objectors alleged that the district's year 2000 tort fund levy (for the 2001-02 fiscal year), which equaled $1,299,990.52, was illegal to the extent that it was used for purposes other than procuring liability insurance, unemployment insurance, payment of claims for compensatory damages, payment for legal expenses incurred in connection with claims for compensatory damages, and payment for necessary risk management. They further alleged that the levy was illegal to the extent that it funded an equity program with funds used, in part, for operating expenses for the district and not for compensatory damages or risk management payments. The objectors also alleged that the levy was illegal to the extent it was used to pay for risk management services that were actually services provided by employees as part of their normal duties.

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Nos. 2--06--0250 & 2--06--0258 cons. In count II, directed against Freeport Park District, the tax objectors alleged that over $100,000 of the district's $329,198.75 year 2000 tort fund levy was illegal in that it was used for improper purposes. In count III, the tax objectors alleged that Pearl City School District No. 200 improperly used $187,000 of its $218,139.47 tort fund levy in that it paid for claimed risk management services that were not actually related to risk management and that it paid for risk management services that were actually services provided by employees as part of their normal duties. In count IV, the objectors alleged that Highland Community College District No. 519 illegally used $550,000 of its $655,008 year 2000 tort fund levy. At the bench trial on May 2, 2005, the parties jointly filed 719 "stipulations" and 21 exhibits.2 They also stipulated to the issues presented. On August 15, 2005, the trial court issued a 42-page memorandum opinion. The court found that the use of tort fund levies by Freeport School District, Freeport Park District, and Highland Community College District to partially pay salaries was not authorized by the Tort Immunity Act. It further found that Pearl City School District's practices were authorized by the Act. The court found that Highland Community College District's use of tort monies to pay for certain safety-related expenses was permissible and that Freeport School District's use of tort monies to pay for its equity program was not authorized by the Act. On October 25, 2005, the court issued an order consistent with its memorandum opinion. In appeal No. 2--06--0250, the tax objectors appeal the trial court's findings that Pearl City School District was authorized to use tort funds to pay salaries pursuant to its risk management plan (first certified question) and that Highland Community College District's use of tort fund monies to

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The parties agreed that the stipulations would not be taken as proven, but only that

competent testimony could be presented as to them, including authentication of the exhibits. -4-

Nos. 2--06--0250 & 2--06--0258 cons. pay for certain safety services was authorized under the Act (second certified question). In appeal No. 2--06--0258, Freeport School District and Freeport Park District appeal the court's findings that it was improper for those districts to pay certain salaries with tort funds (first certified question), and Freeport School District additionally appeals the court's finding that it illegally used tort funds to pay for its equity program (third certified question). B. Pearl City School District's Tort Fund Levy In response to a series of budget deficits, Pearl City School District adopted a risk management plan (Plan) in 1997. Its goal was to reduce and prevent the district's tort liability exposure. Beginning in 1997 and in each subsequent year, the district levied an amount in its tort immunity fund to cover expenditures consistent with its Plan. The district's year 2000 tort fund levy equaled $218,139.47, or about 3.7% of its total expenditures for the 2001-02 fiscal year, which is consistent with Illinois school district practices. The fund is made up of the following subfunds: education, operations and maintenance, and transportation. During the 2001-02 school year, the district spent $196,937 from the tort immunity fund to pay a portion of the compensation to its employees for the risk management duties they performed. It is common practice for a school district to allocate a single expenditure, such as a salary, from multiple funds. In developing the Plan, the district's superintendent analyzed which employee positions were best suited to prevent exposure to tort liability. The district identified specific liability-prevention responsibilities in the job descriptions of certain personnel. The superintendent reviewed employee job descriptions, observed employees in their jobs, and discussed with employees their responsibilities. The superintendent then recommended to the school board percentages of certain positions that were attributable to risk management functions. The percentages ranged from 5% to

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Nos. 2--06--0250 & 2--06--0258 cons. 45%, and they reflected the part of each employee's compensation that the district funded with the tort levy. Employees were not required to document the time they spent performing their employment responsibilities. They received training in risk prevention and safety functions and communicated regularly with the building administrators about safety and tort-prevention topics. If an employee did not perform assigned risk management functions, the district would not retain the employee. Not all employees with risk management duties under the Plan had portions of their salaries paid with tort funds during the 2001-02 fiscal year. The district's independent auditors did not report the district's 2000 levy for noncompliance with the Act. C. Freeport School District's Levy Since 1997, Freeport School District has levied an amount in its tort immunity fund to cover expenditures consistent with its risk management plan and goals. The district's 2001-02 tort fund levy represented 3.7% of its total budget of $35 million, which is consistent with Illinois school district practices. The levy funded risk management plans, goals, and objectives. During the 200102 school year, the district used the tort fund levy monies to further its risk management plans by paying about: (1) $333,000 to purchase insurance and related legal services; (2) $691,000 to partially fund its equity program; and (3) $130,000 to pay a portion of the salaries of some of its employees. The district's tort immunity fund is made up of subfunds, including the education and the operations and maintenance funds. The district determined what percentages of various employees' positions were attributable to risk management and then used tort immunity fund revenue to pay that portion of the compensation attributed to risk management. To determine the appropriate percentages, the district

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Nos. 2--06--0250 & 2--06--0258 cons. reviewed employee job descriptions, observed employees in their jobs, and talked with employees about their job responsibilities and performance. Employees received training in safety and specific tort-prevention procedures and regularly communicated with building administrators about safety and tort-prevention topics. The use of tort fund monies to partially fund salaries for risk

management purposes is consistent with Illinois school district practices. The district's independent auditors did not report the district's 2000 levy for noncompliance with the Act. The levy monies used to pay portions of certain employees' salaries constituted between 7% and 15% of their total salaries. The district's equity program was designed to close the achievement gap between AfricanAmerican and Caucasian students within the district. It is available to all students, irrespective of race. The program consists primarily of educational programs and initiatives that assist the district in ensuring attainment of achievement outcomes of African-American students comparable to such outcomes of Caucasian students. The equity program is funded by the tort fund, the general education fund, and federal funds and grants. About 65% ($620,000) of the budget ($950,000) for the equity program for the 2001-02 fiscal year came from the tort levy and constituted 1.8% of the district's budget. The program's primary expenditures are salaries and benefits. The district instituted the equity program pursuant to a memorandum of understanding (MOU) entered into in 1997 with a group--the Freeport African-American Ministers United for Change (FAAMUC)--that had threatened class action litigation on behalf of minority students. The district investigated the charges and determined that its practices were a substantial cause of conditions that disparately impacted minority students. In exchange for entering into the MOU, the FAAMUC agreed to forgo the threatened litigation; however, it reserved the right to pursue litigation

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Nos. 2--06--0250 & 2--06--0258 cons. in the event that it determined the agreed-upon improvements did not cure the civil rights violations. The parties entered into a substantially similar agreement in 2001 that included the same representations by FAAMUC concerning future litigation. Also at this time, the Office of Civil Rights (OCR) of the United States Department of Education initiated a compliance review of the district that focused on opportunities for minorities in the district. The district subsequently entered into a settlement agreement with the OCR, in which it agreed to provide improved conditions for minority students and in which the OCR agreed to suspend its investigation. According to the district, it believed that the threatened lawsuit could have resulted in it being liable for compensatory damages, as well as attorney fees. It further believed that the funding of the equity program was permissible under the Act if it constituted a settlement of a tort claim. D. Freeport Park District's Tort Fund Levy Since at least the late 1990s, the Freeport Park District has levied an amount in its tort immunity fund to cover expenditures consistent with its risk management plans and goals. The district's 2001-02 tort fund levy, which equaled about $329,000, represented about 12% of its total revenues for that period, which is consistent with the practices of Illinois park and school districts. The district used the revenue to fund its risk management plans, goals, and objectives. Specifically, the district used $188,000 to purchase insurance and related legal services and $140,000 to pay a portion of the salaries of some of its employees. The tort levy was expended to pay for activities and programs consistent with the district's risk management objectives. As part of its plan to limit exposure to tort liability, the district reviewed the amount of time its employees performed risk management activities and determined

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Nos. 2--06--0250 & 2--06--0258 cons. what percentages of the various employee positions involved risk management functions and responsibilities. The levy funded between 11% and 25% of certain employees' total salaries. Employees were not required to document the time they spent on their job responsibilities. They received training and specific instruction in safety and specific tort-prevention procedures. The district's independent auditors did not report the district's 2000 levy for noncompliance with the Act. In 1998, the district adopted a safety policy manual administered by a safety committee. Its goal is to eliminate, reduce, or control the various hazards and exposures that cause incidents, and it includes policies on training personnel in safety and loss control practices. In 1999, the district adopted a written risk-management policy. E. Highland Community College District's Tort Fund Levy Highland Community College District No. 519 has a risk management program that is designed to "reduce the exposure of liability risk" to the college and to prevent loss, injury, and illness to anyone who may be on the campus or in the college's buildings at any time. In addition to insurance, claims services, and legal services, the program provides monies for a portion of designated employees' salaries and it pays for procurement and maintenance of safety and security items, equipment, and services and for the training of designated employees to handle loss reduction and prevention issues. Its employees received training and specific instruction in health and safety and tort-prevention procedures. Prior to approval of its 2000 tax levy, the district conducted a time-to-task study to determine whether the portions of certain employees' salaries that were partially paid from its tort fund accurately reflected the time those employees devoted to risk management activities. As part of the

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Nos. 2--06--0250 & 2--06--0258 cons. study, the employees kept time records of their work activities. The district determined the amount of its 2000 tax levy based on the results of its study. The district levies and collects taxes from several counties. Its Stephenson County tort fund levy, which equaled $269,459.74, constituted 11% of its total Stephenson County levy for the 2000 tax year and represented about 1.5% of the district's budget. About $96,000 of the levy was allocated to pay portions of the salaries and benefits of approximately 35 employees. The district allocated approximately $57,000 of the levy to pay for security- and safety-related services, items, and training (including first aid equipment, road salt, emergency radios, and ergonomics training), and it allocated about $67,000 to purchase insurance. The district's independent auditors did not report the district's 2000 levy for noncompliance with the Act. F. Expert Testimony 1. Peter Saxton-Williams Peter Saxton-Williams's deposition and reports were admitted into evidence. SaxtonWilliams, a marketing representative for an insurance company, testified that he is a certified insurance counselor and an associate in underwriting. He has worked in the insurance industry for 25 years. He testified on the tax objectors' behalf that risk management is a process that consists of the following steps: (1) identifying and analyzing loss exposures; (2) selecting a technique or combination of techniques to be used to handle each exposure; (3) implementing the chosen technique; and (4) monitoring the decisions made and implementing appropriate changes. Addressing Pearl City School District's tort expenditures, Saxton-Williams opined that school teachers and various other employees engage in safety practices as part of their normal duties and by using common sense. Based on a review of job descriptions and other documents, he further

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Nos. 2--06--0250 & 2--06--0258 cons. opined that he did not have any information that any of the employees did anything extra to avoid loss exposures; that there was no documentation specifying the risk management activities taken by any employees; and that no documentation indicated what procedures were in place to implement any techniques to obtain a reduction in loss exposure. Saxton-Williams noted that the school superintendent's job description did not reflect that he is responsible for analyzing or implementing a risk management plan. Addressing the district's Plan, Saxton-Williams opined that it does not appear to be a risk management plan within the commonly accepted principles of the insurance industry because it does not identify the actual loss exposures, existing losses, or potential losses against which it is attempting to protect, and it does not delineate personnel responsibilities, including when the responsibilities are performed, their frequency, the actual responsibilities to be performed, and who is monitoring performance. Saxton-Williams further opined that the assigned salary percentages appear to be arbitrary and do not appear to have any relation to any real risk management activities undertaken by any employees. In his view, the district does not engage in any claims services and risk management activities that are not provided for by its insurance policies. He noted that the district's only claims services and risk management activity directly attributable to loss prevention and loss reduction was its purchase of property and liability insurance to protect itself against potential losses. Addressing Freeport Park District's activities, Saxton-Williams opined that the district does not have a risk management plan. He noted that the district has a safety policy manual and that many safety-related activities are typically included in policies that would be enacted to direct employees in the safe methods of performing their normal work duties. He, however, did not review the safety policy. Saxton-Williams also noted that there is no documentation identifying loss exposures,

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Nos. 2--06--0250 & 2--06--0258 cons. procedures to reduce such exposures, and activities taken to monitor decisions made to handle loss exposures. Saxton-Williams also addressed Freeport School District's practices. He opined that the district's equity program should be funded by the general operating fund because the program does not protect the district against liability or loss for a tortious act. He conceded that, if the program's funding were part of a settlement of a tort claim, then it would be an appropriate use of the tort fund levy. Addressing salaries, Saxton-Williams opined that the district does not have a risk management plan, because there is no documentation of such plan. Accordingly, he further opined that the district's salary expenditures are not risk-management-related expenditures. Saxton-Williams noted that employee salaries paid from the tort fund were paid for the time employees spent on their normal safety practices and that the employees did not receive extra money for performing any risk management activities. Addressing Highland Community College District's expenditures, Saxton-Williams opined that the district did not have a formal risk management plan, as evidenced by the lack of documentation of such. He noted that the employees did not receive extra money for performing any risk management activities and that it is impossible to determine the time that employees spent on such activities. Saxton-Williams opined that the portions of salaries paid to employees from the district's tort fund reflect estimates of the time those employees engage in their normal safety practices. Saxton-Williams also took issue with the taxing districts' expenditures for legal fees, noting that there was no documentation establishing that the money was spent for legal services directly

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Nos. 2--06--0250 & 2--06--0258 cons. attributable to the taxing districts' insurance, self-insurance, or joint self-insurance programs. Accordingly, he opined that the fees were not authorized by the Act. 2. Mark J. Browne Mark J. Browne's deposition and reports were admitted into evidence on the taxing districts' behalf. Browne, a professor of risk management and insurance, opined that risk management includes activities undertaken to reduce both the frequency of loss (loss prevention) and the severity of loss (loss reduction); that the scope of risk management is not limited to simply the development of a risk management program; that the actual implementation of a program on a day-to-day basis also constitutes risk management; and that risk management includes safety activities. Addressing Saxton-Williams's definition, Browne characterized it as a process and opined that any of the four parts of Saxton-Williams's definition constitutes risk management on its own. Browne further opined that school personnel regularly engage in risk management activities and that it is immaterial that employees engage in these activities as part of their normal duties. Time records are not required. Addressing Pearl City School District's Plan, Browne noted that it is beneficial to the

district's risk management program and goes beyond the Act's requirements. Addressing Freeport School District, Browne opined that whether or not the district has a written plan, it faces many potential losses on a daily basis and has addressed potential loss situations by assigning employees risk management responsibilities as part of their jobs. Turning to the district's equity program, Browne opined that, because it decreased the likelihood that FAAMUC would pursue class action litigation against the district, the expenses associated with its implementation are risk management expenses.

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Nos. 2--06--0250 & 2--06--0258 cons. Addressing Freeport Park District's expenditures, Browne opined that district personnel regularly engage in risk management activities; that the district gave significant consideration to risk management; that employee job descriptions specify the percentages of time that employees should engage in risk management; and that the district has a safety policy manual, a confined-space entry policy, a hazard communication document, and a risk management policy. Highland Community College District, in Browne's view, has employees who engage regularly in risk management activities. Job descriptions show that certain employees must be actively involved in risk management. He opined, contrary to Saxton-Williams's view, that the district considered the amounts of time employees spent on risk management activities. 3. Robert G. Grossi Robert G. Grossi's deposition and report were admitted into evidence. Grossi is a treasurer for 12 schools, a financial consultant to municipalities, a chief executive officer for a school finance authority, and an adjunct professor. He opined on the taxing districts' behalf that it is common practice for a school district to allocate a single expenditure, such as a salary, to multiple funds and that this is established in state policy. Effective risk management requires implementation of a program on a day-to-day basis, and risk management includes safety activities. Grossi relied on a text that noted that risk management has a broader meaning now than it had 15 years ago and that insurance is not the only way to manage risk; risk can be reduced by, for example, investing in safety and quality control. All of the 17 school districts he currently advises use tort fund monies to pay portions of their employees' salaries. In carrying out a risk management program, teachers and custodians are the first line of defense in identifying and preventing risk-related situations. Grossi opined with respect to Pearl City

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Nos. 2--06--0250 & 2--06--0258 cons. School District's expenditures that it is appropriate to charge a reasonable percentage of an employee's salary to the tort fund when the employee has an objective or duty of risk management or safety. Addressing Freeport School District's salary expenditures, Grossi reiterated the foregoing opinions. As to the district's equity program, he opined that it resulted from a settlement and, therefore, funding it with the tort levy was appropriate because it protects the district from potential losses. As to Freeport Park District's expenditures, Grossi opined that it is common practice for an employee's salary to be allocated to multiple funds and that the district's actions were proper. The employees have risk management functions as part of their employment duties, and risk management includes safety activities. Finally, addressing Highland Community College District's expenditures, Grossi opined that the district's employees perform certain duties with the objective of risk management and that fund accounting concepts permit the district to classify and allocate expenditures into various funds, including the tort fund, based on objectives. If the employees' duties encompass multiple objectives, then their salaries can be divided into multiple funds. III. STANDARD OF REVIEW The scope of review of an interlocutory appeal under Rule 308 is ordinarily limited to the questions certified by the trial court, which, because they must be questions of law, are reviewed de novo. Bauer v. Giannis, 359 Ill. App. 3d 897, 902 (2005). This case involves construction of a statute, which is in any case a question of law reviewed de novo. City of Chicago v. Illinois Commerce Comm'n, 286 Ill. App. 3d 557, 559 (1997). Except where interests of judicial economy and equity lie, we must answer the certified questions without ruling on the propriety of any

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Nos. 2--06--0250 & 2--06--0258 cons. underlying order. P.J.'s Concrete Pumping Service, Inc. v. Nextel West Corp., 345 Ill. App. 3d 992, 998-99 (2004). IV. ANALYSIS A. First Certified Question: Whether Use of the Tort Immunity Levy to Partially Fund Taxing Bodies' Employees' Compensation is Authorized by the Tort Immunity Act The first certified question addresses whether the use of the tort immunity levy to partially fund certain taxing bodies' employees' compensation is authorized by the Tort Immunity Act. The tax objectors, in their appeal as to Pearl City School District, answer the question in the negative. Freeport School District and Freeport Park District, in their appeal, argue that the Act authorizes such expenditures. We begin by reviewing the relevant statutory provisions. Section 9--103(a) of the Tort Immunity Act, which addresses insurance contracts, states, in relevant part: "(a) A local public entity may protect itself against any property damages or against any liability or loss which may be imposed upon it or one of its employees for a tortious act under Federal or State common or statutory law, or imposed upon it under the Workers' Compensation Act, the Workers' Occupational Diseases Act, or the Unemployment Insurance Act by means including, but not limited to, insurance, individual or joint self-insurance, including all operating and administrative costs and expenses directly associated therewith, claims services and risk management directly attributable to loss prevention and loss reduction, legal services directly attributable to the insurance, self-insurance, or joint selfinsurance program, educational, inspectional, and supervisory services directly relating to

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Nos. 2--06--0250 & 2--06--0258 cons. loss prevention and loss reduction ***." (Emphasis added.) 745 ILCS 10/9--103(a) (West 2000). Section 9--107(a) of the Tort Immunity Act provides: "(a) The General Assembly finds that the purpose of this Section is to provide an extraordinary tax for funding expenses relating to tort liability, insurance, and risk management programs. Thus, the tax has been excluded from various limitations otherwise applicable to tax levies. Notwithstanding the extraordinary nature of the tax authorized by this Section, however, it has become apparent that some units of local government are using the tax revenue to fund expenses more properly paid from general operating funds. These uses of the revenue are inconsistent with the limited purpose of the tax authorization. Therefore, the General Assembly declares, as a matter of policy, that (I) the use of the tax revenue authorized by this Section for purposes not expressly authorized under this Act is improper and (ii) the provisions of this Section shall be strictly construed consistent with this declaration and the Act's express purposes." (Emphasis added.) 745 ILCS 10/9--107(a) (West 2000). Section 9--107(b) of the Tort Immunity Act provides, in relevant part: "(b) A local public entity may annually levy or have levied on its behalf taxes upon all taxable property within its territory at a rate that will produce a sum that will be sufficient to: (I) pay the cost of insurance, individual or joint self-insurance (including reserves thereon), including all operating and administrative costs and expenses directly *** attributable to loss prevention and loss reduction, legal services directly attributable to the insurance, self-insurance, or joint self-insurance program, and educational, inspectional, and

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Nos. 2--06--0250 & 2--06--0258 cons. supervisory services directly relating to loss prevention and loss reduction, participation in a reciprocal insurer as provided in Sections 72, 76, and 81 of the Illinois Insurance Code, or participation in a reciprocal insurer, all as provided in settlements or judgments under Section 9--102, including all costs and reserves directly attributable to being a member of an insurance pool, under Section 9--103; (ii) pay the cost of and principal and interest on bonds issued under Section 9--105; (iii) pay judgments and settlements under Section 9--104; and (iv) discharge obligations under Section 34--18.1 of The School Code, as now or hereafter amended, and to pay the cost of risk management programs. *** Funds raised pursuant to this Section shall only be used for the purposes specified in this Act, including protection against and reduction of any liability or loss described hereinabove and under Federal or State common or statutory law, the Workers' Compensation Act, the Workers' Occupational Diseases Act and the Unemployment Insurance Act." (Emphasis added.) 745 ILCS 10/9--107(b) (West 2000). The trial court, applying the foregoing provisions, focused on the following language found in both sections 9--103 and 9--107 of the Tort Immunity Act: "risk management directly attributable to loss prevention and loss reduction." The court found first that the term "risk management" does not have a common usage, as it does not appear in popular dictionaries. Next, the court found that the term is commonly used in the insurance industry and has meaning in that context. The tax objectors' expert, Saxton-Williams, defined it as a process involving several steps. The court found that the taxing districts' expert, Browne, proposed a "vague" definition that is inconsistent with the overall legislative purpose of an extraordinary and limited tax. To construe the term "to include all actions deliberately taken to reduce risk--meaning, therefore[,] that all actions deliberately taken to

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Nos. 2--06--0250 & 2--06--0258 cons. reduce risk could be paid from the Tort Immunity Levy--would destroy the legislature's purpose." According to the trial court, the more limited definition proposed by the tax objectors more closely serves the legislature's intention. The trial court found that the term "risk management directly attributable to loss prevention and loss reduction" means more than deliberate actions intended to reduce risk or the performance of duties with care. It adopted the four-part definition of "risk management" proposed by the tax objectors: (1) the prior identification and analysis of loss exposures; (2) the selection of techniques to be used to handle each exposure; (3) the implementation of the chosen techniques; and (4) the periodic monitoring of the implementation of the techniques, including the making of adjustments as appropriate. As to Pearl City School District, the trial court found that the district did undertake a risk management process, which resulted in the challenged salary expenditures, and that the process comported with the criteria for risk management under sections 9--102 and 9--107 of the Act. The court noted that the presence of written records justifying time spent was not a factor in its determination. It further noted that the tax objectors did not challenge the district's levy as to individual uses, but instead framed the issue as whether any use of the levy was lawful. As to Freeport School District, the trial court found that the tax objectors established the absence of any formal risk management process that would permit the district to use its levy to defray portions of employee salaries. The court noted that the district had not performed pursuant to the Act any study or analysis of its risks, developed any techniques by which it expected to reduce or eliminate such risks, or established a process to periodically review the techniques' effectiveness. Addressing the fact that some district employees are required to assign risk management duties to other employees, the court found that none of these responsibilities are part of a risk management

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Nos. 2--06--0250 & 2--06--0258 cons. process and are simply manifestations of the duty to perform their job duties with due care. The trial court also found that the district, in an attempt to justify its use of the tort levy, conducted a retrospective estimation of the time employees used to perform tasks that might reduce risk. It then designated those tasks as risk management. Addressing Freeport Park District's levy, the trial court found that, like Freeport School District, the challenged expenses were "retrospective justifications for using the Tort Immunity levy to supplement other levies from which salaries are more appropriately paid." Acknowledging the district's safety policy manual, the court found that, "while it may be part of a process of risk management, [it] is not itself the process." It further found that, although the district's safety committee might have engaged in a form of risk management, the district did not base its use of the levy upon compliance with the committee's recommendations. Rather, the district, like Freeport School District, appears to have reviewed the job descriptions and work performed by certain employees to determine the time these employees spend maintaining a safe environment, and it then characterized those activities as risk management activities. The court found that the manual and the committee did not control the district's determinations as to whether the employees were performing tasks that could be paid for with funds raised under the Act. The parties take issue with the trial court's interpretation of the Act. Specifically, the tax objectors argue that the term "risk management" is not defined in the Act. They assert that there is no plain and ordinary meaning of the term and thus it is ambiguous. Noting that the parties' experts defined "risk management" in different ways, the tax objectors also contend that it is ambiguous because the term is capable of being understood by reasonably well-informed people in two or more different ways. Accordingly, they next argue that every rule of statutory construction supports their

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Nos. 2--06--0250 & 2--06--0258 cons. position that the term "risk management" relates to the analysis and recommendation of methods that can be used to reduce loss and that it does not involve the actual expense of implementing the risk management recommendation. According to the tax objectors, risk management is essentially what professional risk managers do and the implementation of risk management recommendations are operational expenses that cannot be funded under the Tort Immunity Act. Relying on the policy in section 9--107(a) of the Act, they assert that salaries should be paid from the education fund that provides for payment of employees' salaries. They further contend that Pearl City School District is doing what the legislature sought to prevent--using the tort fund to pay for ordinary expenses such as salaries. The tax objectors also argue that it is impermissible for the district to pay for educational and operational expenses that "might" result in a reduction in liability claims, whether or not they actually result in a reduction of liability claims. They contend that the district's use of tort funds in this way can potentially result in the use of the levy to fund virtually any activity that is safety related. The tax objectors posit that, under this reasoning, there is nothing to stop the use of tort funds to replace an old parking lot or to pay all of a school bus driver's salary because he or she is constantly providing safety for students. Pearl City School District responds that the issue in this appeal is whether the Act authorizes taxing bodies to pay any portion of their employees' compensation that is directly related to their risk management functions. The district also takes issue with the tax objectors' contention that the Tort Immunity Act permits only the development of a risk management plan and not the implementation of such a plan. They suggest that the tax objectors' four-step process contradicts this assertion and that the statute contains no language limiting the scope of risk management to only the development of such a program. According to the district, the language "educational, inspectional and supervisory

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Nos. 2--06--0250 & 2--06--0258 cons. services directly related to loss prevention and loss reduction" in section 9--107(b) necessarily encompasses the implementation of a risk management program, including employees' activities undertaken to reduce or prevent tort losses. According to the district, the tax objectors' proposed interpretation to limit tort expenditures to the management component of hiring an expert renders superfluous the statute's language providing for "educational, instructional and supervisory services directly relating to loss prevention and loss reduction" and "risk management directly attributable to loss prevention and loss reduction." Pearl City School District further argues that the evidence demonstrated that it used the levy proceeds to fund parts of its employees' compensation for educational, inspectional, and supervisory services directly related to loss prevention and loss reduction and to support the district's risk management Plan. It asserts that the plain language of the Tort Immunity Act authorizes such expenditures. The district further contends that its Plan was developed pursuant to the Act; that it was directed at reducing and preventing tort losses as defined by the Act; that it required district employees to perform specific risk management services; and that it provided that employees may be compensated from the tort fund for those portions of their educational, inspectional, and supervisory services that are directly related to their risk management responsibilities. The district notes that its superintendent continuously monitors how employees perform risk management activities and recommends any adjustments. In their appeal addressing the first certified question, Freeport School District and Freeport Park District argue that using their levies to pay portions of their employees' salaries is consistent with risk management principles embodied in the Act. They contend that they examined their employees' job duties to determine which employees were best suited to assist them in reducing or

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Nos. 2--06--0250 & 2--06--0258 cons. preventing exposure to tort liability. The districts also assert that their experts' opinions should have been given more weight than Saxton-Williams's opinions. They argue that Saxton-Williams was unqualified to testify in this matter, that his testimony and reports were inconsistent, and that some of his testimony actually supports the districts' positions. The districts note that Saxton-Williams testified that every employee's job contains some risk management function if properly performed and that risk management takes place when employees are instructed through written job descriptions that part of their jobs is to help their districts avoid losses. According to the districts, this occurred in each of their cases. In the alternative, the districts argue that, even assuming that SaxtonWilliams's interpretation of risk management is correct, their practices fall within those parameters. Freeport Park District asserts that it had a formal process that was designed to identify, address, and reduce or eliminate tort exposure. The districts also note that the Act does not contain language supporting the tax objectors' position that it is permissible under the Act to pay for advice but impermissible to implement that advice. Freeport School District and Freeport Park District also contend that there are no significant differences between their risk management practices, which the trial court found lacking, and Pearl City School District's Plan, which the trial court approved. They argue that, although Pearl City School District's plan was in writing, the trial court found that a written plan was not required. The Freeport districts assert that, in all other respects, their risk management practices mirror Pearl City School District's Plan: in developing their risk management plans and objectives, they reviewed the time employees spent performing risk management duties; they paid portions of salaries with their tort levies; and they trained employees in safety and tort-prevention procedures. The Freeport districts reason that this court should reverse the trial court's findings as to their practices.

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Nos. 2--06--0250 & 2--06--0258 cons. The primary rule of statutory construction is to ascertain and give effect to the legislature's intent. Paszkowski v. Metropolitan Water Reclamation District of Greater Chicago, 213 Ill. 2d 1, 6 (2004). Our analysis begins with the statutory language, which remains the best indication of that intent. Metzger v. DaRosa, 209 Ill. 2d 30, 34-35 (2004). The language must be afforded its plain, ordinary, popularly understood meaning. Moore v. Green, 219 Ill. 2d 470, 479 (2006). When the language is unambiguous, the statute must be applied as written, without resorting to other aids of construction. Moore, 219 Ill. 2d at 479. We may not depart from the plain language of the statute by reading into it exceptions, limitations, or conditions that conflict with the express legislative intent. Hood v. Illinois High School Ass'n, 359 Ill. App. 3d 1065, 1069 (2005). "Legislative intent can be ascertained from a consideration of the entire [statute], its nature, its object and the consequences that would result from construing it one way or the other." Fumarolo v. Chicago Board of Education, 142 Ill. 2d 54, 96 (1990). Legislative intent remains the paramount

consideration: "Traditional rules of statutory construction are merely aids in determining legislative intent, and these rules must yield to such intent." Paszowski, 213 Ill. 2d at 7. In this regard, we may properly consider the statute's purpose, the problems it targets, and the goals it seeks to achieve. Moore, 219 Ill. 2d at 479-80. The Tort Immunity Act's purpose is to "protect local public entities and public employees from liability arising from the operation of government." 745 ILCS 10/1--101.1 (West 2000). In promulgating the Tort Immunity Act, the legislature "sought to prevent the dissipation of public funds on damage awards in tort cases." Van Meter v. Darien Park District, 207 Ill. 2d 359, 368 (2003).

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Nos. 2--06--0250 & 2--06--0258 cons. Section 9--103(a) of the Act permits a local public entity to protect itself against tort liability via "risk management directly attributable to loss prevention and loss reduction" and "educational, inspectional, and supervisory services directly relating to loss prevention and loss reduction." 745 ILCS 10/9--103(a) (West 2000). Section 9--107(b) of the Act sets forth the tax levy power at issue here. See In re Consolidated Objections to Tax Levies of School District No. 205, 193 Ill. 2d 490, 497 (2000) (People Who Care). It provides that a local public entity may levy a sum to pay the cost of, inter alia, "educational, inspectional, and supervisory services directly relating to loss prevention and loss reduction" and "to pay the cost of risk management programs." 745 ILCS 10/9--107(b) (West 2000). The parties rely to varying degrees on one or both of the foregoing. We agree with the tax objectors that the meaning of the term "risk management" as used in section 9--107(b) is ambiguous. A plain reading of the relevant statutory provisions does not aid in answering the first certified question. The term is not defined in the Act or, as the trial court noted, in popular or legal dictionaries. As further support for our conclusion that the term is ambiguous, we note that two experts whose testimony was admitted by the trial court provided different definitions. "A statute is ambiguous if it is capable of being understood by reasonably well-informed persons in two or more different ways." Krohe v. City of Bloomington, 204 Ill. 2d 392, 395-96 (2003). The tax objectors turn next to the legislative history of the Tort Immunity Act to argue that the term "risk management" relates to analysis and recommendations relating to loss control and risk management and does not relate to the actions needed to implement the recommendations. Where the meaning of a statute is unclear or ambiguous from the statutory language itself, a court may consider aids of statutory construction, including legislative history, to determine legislative intent.

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Nos. 2--06--0250 & 2--06--0258 cons. In re B.L.S., 202 Ill. 2d 510, 517 (2002). In doing so, a court should presume that the legislature did not intend absurdity, inconvenience, or injustice. B.L.S., 202 Ill. 2d at 517. The tax objectors assert that the Senate debates clarify that tort funds cannot be used to implement safety-related recommendations or for operations or maintenance expenses, including custodians' and food service workers' salaries. Pearl City School District responds that the legislature left open to interpretation what specific risk management expenditures are appropriate, relying instead on the taxing bodies' judgment and leaving the matter to elected officials and not to the courts. Freeport School District and Freeport Park District also criticize the tax objectors' reliance on legislative history, arguing that, here, it is not insightful. They note that the history upon which the tax objectors rely does not consist of legislative debates, but of proceedings where legislators were presenting summaries of amendments; thus, it is unreliable. As to the legislative history, we reject the tax objectors' argument that it clearly shows that the payment of salaries with the tort levy is impermissible. In our view, the history is ambiguous. During the 1999 House debates on an amendment that added the preamble to section 9--107 of the Act (i.e., section 9--107(a)) and language to section 9--103(a) requiring taxing bodies to include in their audits or annual reports expenditures made from the tort levy, the bill's sponsor, Senator Klemm, noted that the bill would preclude use of the tort levy to pay for custodians, food service workers, and districts' lawyers' salaries. However, upon being questioned whether a community college district could pay for its security officers with the tort monies, Senator Klemm responded that the question had been forwarded to the Attorney General for guidance. 91st Ill. Gen. Assem., Senate Proceedings, March 23, 1999, at 256. The tax objectors have not identified any subsequent guidance from the Attorney General. Therefore, the question remains unanswered. The bill's sponsor in the

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Nos. 2--06--0250 & 2--06--0258 cons. House, Representative Winters, explained that the amendment was targeted at cases where districts had funded with their tort levies the painting of lot lines in parking lots, the purchase of football helmets, and the construction of running tracks. He further explained that the bill precluded building new facilities "on the chance that they might reduce injuries." 91st Gen. Assem., House Proceedings, May 26, 1999, at 53-54 (Statement of Rep. Winters). However, later in the proceedings, upon being asked if tort monies could be used for construction, Representative Winters responded that it was up to the courts to decide. 91st Gen. Assem., House Proceedings, May 26, 1999, at 57. The legislature included a preamble within section 9--107 of the Act. Although a preamble is not itself a part of the act, "[a] preamble has long been recognized as one of the quintessential sources of legislative intent." Atkins v. Deere & Co., 177 Ill. 2d 222, 232 (1997). Further, it "constitutes a stronger expression of intent than does a passing comment made by a single legislator during legislative debates." Atkins, 177 Ill. 2d at 232-33. Section 9--107(a) instructs that section 9--107's provisions are to be strictly construed and that the purpose of the section is to provide an "extraordinary tax for funding expenses relating to tort liability, insurance, and risk management programs." 745 ILCS 10/9--107(a) (West 2000). With that policy declaration in mind, we turn to the definitions of "risk management" offered by the parties' experts. Preliminarily, we note that an expert witness may not render an opinion as to a question of law, including statutory construction. Town of the City of Bloomington v. Bloomington Township, 233 Ill. App. 3d 724, 735 (1992). However, if the common meaning and the legal meaning are the same, the testimony is generally proper. M. Graham, Cleary & Graham's Handbook of Illinois Evidence

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