Special Districts

Special districts are units of government that have elected or appointed officials and public accountability to other units of government normally within a narrowly prescribed policy area, though with significant degrees of administrative and fiscal independence. John C. Bollens (1961) remarked that special districts were “a class of governmental units that without much notice and concern have become a significant part” of U.S. government. He went on to define the characteristics of special districts as “organized entities, possessing a structural form, an official name, perpetual succession, and the rights to sue and be sued, to make contracts, and to obtain and dispose of property” (Bollens 1961, 1).

Special districts enter the scene of intergovernmental relations as key players in the provision of public services. All sovereignty in the United States is reserved for the federal government or the states, so special districts are, by definition, creatures of the federal government or the states. In many cases, special districts serve highly localized needs, and they may have a highly independent appearance (nonetheless, they must exist with the permission of a state or the federal government). Special districts are often governed by boards of directors that are appointed by local elected officials for terms of varying lengths. These boards of directors provide direct oversight of the district’s employees and operations. In many cases, there are provisions in state laws that require districts to undergo additional oversight such as accounting audits and reviews by state departments such as a public service commission. On the other hand, there are also cases where boards are elected directly by the people the district represents.

Historically, we have seen a trend of tremendous growth in the number of special districts, with the most phenomenal growth occurring in the late twentieth century (especially after 1975). The most common forms of special districts include school districts, water and sewer districts, garbage collection districts, economic development districts, and many others. These are typically very small organizations, serving limited geographic areas, with narrow focus in their activities. For example, school districts typically provide education to children whose parents or guardians reside within a fixed boundary. Such boundaries often coincide with city or county limits, but not always. Many city schools—especially in small towns—have larger districts that enable them to draw students from unincorporated areas. School boards in many places are elected directly by residents of the district. On the other hand, water districts are typically governed by appointed directors. Water districts also have a very narrow focus, usually to provide potable water to residences and businesses within the district.

Special districts solve very important problems that exist as a function of the geopolitical boundaries that divide us. Special districts overcome geographic boundaries. Special districts are able to establish service regions independent of city and county boundaries. They may provide services across these lines, thereby enabling more people to receive services at reasonable prices due to the greater economies of scale that result.

There are also examples of special districts on large scales. In response to the Economic Development Act of 1965, many states established economic development districts. The realization that economic development has positive externalities that supersede political boundaries has led to a regional outlook for development efforts that such planning districts are expected to address. Efforts cross not only county lines, but also state lines. The Port Authority of New York and New Jersey is a partnership between states that encourages trade. This special district is particularly famous—it owned and operated the World Trade Center in New York City that was destroyed by terrorist attacks on September 11, 2001. The federal government, in response to specific needs and opportunities, has, in cooperation with state governments, established multi-state special districts as well. Two prominent examples are the Tennessee Valley Authority (TVA), which generates hydroelectric power and wholesales it to electric cooperatives and providers in several states, and the Appalachian Regional Commission (ARC), which is charged with alleviating poverty and promoting economic growth in the Appalachian counties of 13 states. It is managed by the governors of the Appalachian states and a federally appointed cochair.

Districts provide their services for a fee in many cases, or they operate with tax revenues. State and local taxes fund our public schools with the assistance of federal grants. Economic development districts operate on state revenue and federal grants. Water districts operate on user fees, but they typically receive capital assistance for start-up, expansion, and renovation from state and federal government sources. Special districts often operate on a fee-for-service basis, which improves the tax position of the local government by freeing tax dollars and moving debt off its books and onto the special district’s. This typically has the effect of improving municipal bond ratings and saving taxpayers interest costs on capital debt.

The number of special districts is vast. According to the U.S. Census Bureau, as of June 30, 2002, there were 87,900 government units operating in the United States. Of this total, nearly 56 percent, or 48,878 units, are special district governments (including school districts). The number of school districts distorts the growing trend to use special district governments to provide public services. In 1942, there were 108,579 school districts operating in the United States. During the last half of the twentieth century, economies of scale led to the consolidation of small school districts into fewer large countywide or citywide organizations. Taking school districts into account, the number of special districts actually declined during a fifty-year period from 79,695 (in 1952) to 48,878 (in 2002). For comparison, however, consider the growth in the number of special district governments (excluding school districts) since 1952; in that year, there were 12,340 special district governments. Fifty years later (in 2002), there were 35,356 such government units in existence—a growth rate of almost 6 percent annually.

Special district governments present an interesting conundrum in representation and democracy in that they are most often independent of public elections. Accountability and performance are key concepts in bureaucratic studies, and both are called into question by the use of special districts to solve problems. Where the people making decisions and providing services are not directly accountable to the electorate, it has been argued that our government has become less and less democratic, less representative, and more susceptible to corruption.

The increase in special districts is consonant with the general trend in intergovernmental relations over the past 100 years toward increased complexity and diffusion of organizations in the nexus of federalism.

SEE ALSO: Local Government