Special District Governments:The Accountability Frontier

AAA Government and Non-Profit SectionLarita J. Killian, Ed.D., CPA

Indiana University at Columbus

Overview

Growth of special districts Major advances in performance

reporting and accountability Why special districts are a concern Disconnect: Indiana example Suggested research agenda

Special Districts Defined

US Census Bureau criteria Exist as organized entity Governmental character Substantial autonomy

▪ Plus 7 “disqualifiers”

Business of Special Districts Small – cemeteries and diking districts Large - ports, regional utilities and

transportation systems Over 90% serve a single function Multiple functions often relate to water Most common = Natural resources

Flood control, irrigation, conservation Second most common – Fire districts

Source: US Census Bureau Census of Governments, 2002, Volume 1, “Government Organization”

Explosive Growth

284% increase in special districts 12,340 (1952) to 35,052 (2002)

Opposite trend for other government forms

Lessons learned NOT homogenous subject Diverse in scope and financing

Source: US Census Bureau Census of Governments, 2002, Volume 1, “Government Organization”

Growth in Special Districts: 1952-2002

Source of data: US Census Bureau Census of Governments, 2002, Volume 1, “Government Organization”

Advances in Accountability: GASB

1987 “The taxpayer has a right to know”

1994 “SEA reporting …to provide more

complete information about an entity’s performance”

2003 Suggested Criteria for performance

reporting

Advances in Accountability: AGA

SEA awards Certificate of Excellence in Service Efforts and

Accomplishments Reporting▪ No special districts among 15 winners, some repeats

(caveat)

Citizen-Centric reporting program Encourages and publishes 4-page reports that

answer, “Are we better off today than we were last year?” ▪ A debatable advance

Sidebar: Example US Government Citizen-Centric Report FY2007

Outlays by National Objective (in billions) To establish justice 39.8 1%To ensure domestic tranquility 30.4 1%To provide for the common defense 674.5 23%To promote the general welfare 1,795.7 62%To secure the blessings of liberty 369.6 13% Total Outlays – Accrual Basis $2,910.0

100%

Unofficial report prepared by Financial Management Services, Inc

Other Performance Reporting Promoters

American Accounting Association Slaon Foundation International City/County

Management Association IBM Endowment for the Business of

Government

Why Special District Accountability is a Concern

Less visible and less responsive to general public Some consider this a positive value

Ability to incur debt and other long-term liabilities away from public view

Why Special District Accountability is a Concern

“Too many entities issuing too much debt.”

Grady Patterson, former So. Caroline Treasurer

“When government becomes more cumbersome, redundant and complex,

both accountability and efficiency suffer.” ICLGR,

2007

Disconnect: Indiana Example Indiana Commission on Local

Government Reform Gov. Mitch Daniels

Focus on Townships Final report 12/2007

“Recommend changes to structure, organization, and number of local government units to achieve efficiencies and reduce financial burden.”

Excerpts: ICLGR Final Report Redundancy, overlapping jurisdictions, and

confused lines of government authority impede efficiency and the basic ability of citizens to hold government accountable.

We have spent the last six months asking whether Indiana’s patchwork of local government delivers the most effective service at the lowest possible expense. The answer is NO.

Excerpts: ICLGR Final Report

Moreover, it is all so complicated that voters and taxpayers have an extremely difficult time maneuvering their way through the maze and making their will felt.

Only elected officials should have the power to levy taxes.

Excerpts: ICLGR Final Report

When it comes to local government in Indiana, few of us know where the buck stops. Our many complex layers of government are often difficult to understand, monitor and hold accountable.

As Reported: ICLGR

Type NumberTownships 1,008Special Districts 886Towns 451Schools 293Libraries 239Cities 117Counties 92

As Classified - US Census Bureau

ICLGR Report

Townships 1,008

Special Districts 886Towns 451Schools 293Libraries 239Cities 117Counties 92

With Census Classification

Townships 1,008

Special Districts 1,125Towns 451Schools 293

Cities 117Counties 92

Suggested Research Areas

What local factors mitigate for - against creation of special districts?

“Almost all local government services in New York City are classified as part of the city government (the school system, several libraries, transit, and so forth). There are more than 100 dependent agencies in New York City alone. By contrast, many of these services in Chicago are classified as functions of independent school district or special district governments.”

Source of data: US Census Bureau Census of Governments, 2002, Volume 1, “Government Organization”

Suggested Research Areas

Do performance reporting practices of special districts differ by subtype? Recommend improvements

Suggested Research Areas

What is the public’s level of awareness of special districts as compared to general purpose districts? Are special districts truly less visible and

less subject to competitive political processes?

Suggested Research Areas

Are services more or less costly when performed by special district governments as compared to general purpose governments ?

Suggested Research Areas

How does the growth of special district governments impact overall governmental accountability?

Thank you

Larita J. Killian. Ed.D., CPA Indiana University at Columbus

812.348-7219ljkillia@iupuc.edu