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May/June 2011

New boards are bound by most existing contracts

The question for this issue is answered by Melinda Selbee, IASB general counsel.

Question: After a school board election, is the new board bound by the former board’s extension of the superintendent’s contract to a date well beyond the election?

Answer: The rule of law is clear: a board of education is a continuing entity even though its members come and go. As such, contracts that were entered into before a school board election are still binding after the election, with a few exceptions. This column summarizes a 2010 appellate court decision in which a newly elected board attempted to nullify a superintendent’s contract that had been extended by the prior board. It also addresses the circumstances in which a contract, entered into by a prior board, may be void.

State law permits a school board to enter into a multi-year contract, not exceeding five years, with a superintendent, provided the contract is performance-based. To be performance-based, the contract must contain goals and indicators of student performance and academic improvement. The indicators will be used by the board to measure the superintendent’s performance and effectiveness. The statute, 105 ILCS 5/10-23.8, also contains this limitation: “no performance-based contract shall be extended or rolled-over prior to its scheduled expiration unless all the performance and improvement goals contained in the contract have been met.”

The Illinois Court of Appeals addressed performance-based contracts in a 2010 decision, Board of Education v. Jackson, 401 Ill.App.3d 24, 927 N.E.2d 206 (Ill.App.1 Dist., 2010). The case involved an attempt by a school board to nullify an amendment to the superintendent’s performance-based contract. The amendment, made five months before the school board election, extended the contract’s term by five years.

In its effort to nullify the contract, the new board argued, among other things, that the contract failed to enumerate measurable goals. The court refused the invitation to second-guess the prior board’s statement of goals. The formulation of goals and indicators of student performance and academic improvement, as well as how they will be measured, are left explicitly and exclusively to the local school board’s determination. The court held that, in the absence of a clear abuse of a board’s statutorily granted discretion, it would be improper for a court to interfere with a board’s exercise of that discretion.

Here, the court found the goals and indicators to be adequately stated. For example, while the goal of “assuring students are ready for life” is very broad, the prior board could rely on criteria, such as drop-out, graduation and college acceptance rates, to measure this goal. Other goals, namely, increasing test scores, adhering to a five-year financial plan, promoting parental involvement, increasing professional growth and reducing discipline referrals, were all measurable and legitimate goals.

The new board also argued that the contract’s extension was void because the superintendent failed to accomplish the goals in the contract before the prior board extended it. The court found that the prior board was authorized to determine whether the superintendent had satisfied the performance goals. The new board failed to present sufficient evidence showing that the prior board extended the contract without requiring the superintendent to meet the contract’s goals. The evidence indicated that members of the prior board who voted in favor of extending the contract properly evaluated the superintendent’s performance and were satisfied that he had met the goals.

Another argument made by the new board goes directly to the question posed for this column: whether the contract’s extension, which renewed the superintendent’s
contract for years beyond the office terms of the prior board, is against public policy and therefore void. The court quickly dispensed with this argument finding that the statute explicitly provides for multi-year contracts without regard to the board’s composition or subsequent elections.

This decision did not involve an allegation that the contract was simply too long. The legislature has, in a few instances, limited the permissible length of certain contracts. For example, employment contracts for superintendents, principals, or other administrators may not exceed five years. As another example, certain leases of school property may not exceed 25 years. A legislated restriction on a contract’s length is just one illustration of a statutory requirement. Ignoring any requirement may make the contract subject to challenge.

Is there ever a time when a prior board’s action is void for improperly tying the hands of the subsequent board? In 1977, an appellate court decision addressed this question in Libertyville Education Association v. Board of Education, 56 Ill.App.3d 503, 371 N.E.2d 676 (Ill.App. 2 Dist., 1977). There, a board attempted to void a collective bargaining agreement with the argument that it extended beyond the office terms of the individual board members. The court found that the precedential value of cases supporting the board’s argument had been obscured by statutory changes. Its review of decisions failed to reveal a general rule of law prohibiting boards from entering into contracts extending beyond the board members’ office terms.

The court did find persuasive a rule announced in an 1877 Illinois Supreme Court decision. Specifically, multi-year contracts must be for a reasonable length (as determined by the factual context), they must be entered into in good faith, and they may not be used for wholly thwarting the will of the voters. Of course, the board attorney is the best source for additional information and analysis.

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