RESOLUTION NO. 125

Presented by Representative Mary Kay O'Brien

          WHEREAS, the Illinois grain industry comprises a significant and vital part of the State's economy;

          WHEREAS, the Department of Agriculture is responsible for licensing and inspecting the operations of grain dealers and warehouse operations and administering the Illinois Grain Code in order to protect the property of grain producers and residents of Illinois;

          WHEREAS, the Director of the Department serves as president of the Illinois Grain Insurance Corporation which, among other duties, is responsible for administering the Illinois Grain Insurance Fund;

          WHEREAS, the Grain Insurance Fund was established to protect producers in the event of the failure of a licensed grain dealer or warehousemen and to ensure the existence of an adequate resource so the persons holding valid claims may be compensated for losses occasioned by such failures;

        WHEREAS, the Grain Insurance Fund had a balance of $4.8 million at the end of Fiscal Year 2001;

        WHEREAS, in August 2001, a grain elevator surrendered its Illinois Grain Dealer's license and relinquished control of its grain-handling facilities to the Department of Agriculture. The Department estimates that after liquidation of the assets, claims totaling approximately $15 million are protected under the Illinois Grain Code, of which $5 million is anticipated to be funded by the Grain Insurance Fund, while the remaining $10 millions is anticipated to be funded from a appropriation from the General Assembly;

        WHEREAS, effective oversight and regulation of grain dealers and warehouseman is essential not only to protect grain producers, but also to protect the State of Illinois and other grain dealers who may be required to pay additional assessments to cover the shortfall in the Grain Insurance Fund, therefore

        BE IT RESOLVED, by the Legislative Audit Commission that the Auditor General is directed to conduct a management audit of the Illinois Department of Agriculture and Illinois Grain Insurance Corporation with regard to the regulation of grain dealers and warehousemen and the administration of the Grain Insurance Fund; and be it further

        RESOLVED, that the audit include but need not be limited to the following determinations:

• Whether there are sufficient resources in the Grain Insurance Fund, and if shortages exist, the plans to obtain funds needed to pay valid claims;

• Whether the rules established for processing claims flies against grain dealers and warehousemen who chose or become insolvent are adequate; and

• Whether oversight of grain dealers and warehousemen, including the conduct of any audits, site examinations, or other reviews, is sufficient to protect the interests of grain producers, other grain dealers and warehousemen, and the State of Illinois.

        RESOLVED, that the Department, the Corporation, and any other entity that may have relevant information pertaining to this audit cooperate fully and promptly with the Auditor General's Office in the conduct of this audit; and be it further

        RESOLVED, that the Auditor General commence this audit and report his findings and recommendations upon completion to the Legislative Audit Commission, the Governor and members of the General Assembly.

        Adopted this 11th day of December, 2002.