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A new report released by California Public Interest Research Group Education Fund found that special districts are failing to meet modern standards of spending transparency. The report looked at 79 special districts, including twelve in California, and graded them based on the accessibility of checkbook level spending data, budget information, and audited financial statements. 53 percent of all districts evaluated earned failing grades.
Special districts are government entities established by a citizen vote or other legislation. They provide a specific service or set of related services for a designated area that would otherwise typically be provided by a government entity. Such districts are defined by their ability to exercise significant fiscal autonomy, including drafting their own budgets separate from the state or local government’s legislative review process.
“Special districts play an important role in public life, providing valuable services,” said Emily Rusch, Executive Director with CALPIRG. “However, they’ve often fallen off the map when it comes to transparency because of how these districts are structured. That makes it all the more vital that districts themselves and the states in which they operate are proactive in ensuring the work they do is transparent to the public.”
Here in California, there are over 2,861 special districts. In 2013, the last year for which data was available, those special districts managed well over $51 billion. These numbers are conservative because only a fraction of special districts in each state actually report to the U.S. Census. We graded the following twelve special districts in California:
Nationally, special district spending transparency is lagging. Of the 79 special districts we reviewed, only seven special districts had detailed spending checkbooks available online. These checkbooks allow citizens to see how their tax money is spent, dollar by dollar. The districts that performed best in this study were based in states like Texas and Illinois that have taken action to pass legislation or enforce financial accountability standards for either all levels of government or certain districts.
"Across a diverse array of budget sizes, function types and geographic service areas, what most of these special districts have in common is their lack of financial transparency," says Rachel Cross of Frontier Group, co-author of the report. "And because special districts are the fastest growing form of local government in the country, what we don't know about them is also growing every day."
Quasi-public and semi-independent government bodies, like special districts, tend to lag behind the transparency standards that state governments are beginning to achieve. Last year, the California government earned an F for their spending transparency portal, largely because the state doesn’t provide data in a one-stop format and information is fragmented between departments. Special districts in the state, if they do provide data, tend to provide it independently of the state government, on their own websites.
The report offers a series of recommendations to ensure that special districts aren’t left behind as state and city governments move towards greater transparency.
States should establish clear and uniform financial reporting guidelines for all special districts.
States should open their transparency portals to local governments. Some states have already begun to do this, allowing local government bodies to upload spending data to a pre-built website.
Special districts should prioritize establishing an online checkbook database of their spending. This could be as simple as an excel document, or could be as complex as uploading data to a state database. However, it is checkbook level spending information that most informs how special districts operate, and can most efficiently decrease costs and waste and increase public confidence and engagement.
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