Special Districts

What are Independent Special Districts?

Special districts are a form of local government created by each community to meet specific needs for services. Insufficient tax bases and competing demands for existing taxes make it difficult for cities and counties to provide all the services their citizens desire. When residents or landowners want new services or higher levels of services all ready existing, they may form a district to pay for and administer them.

What Do They Do?

Approximately 85% of California's special districts perform a single function such as sewage, water, fire protection, pest abatement or cemetery management. Multi-function districts, like community services districts, provide multiple services within a common area.

How Do They Operate?

There are nearly 2,300 independent special districts in California, governed by an independent board of directors elected by the districts' voters, or appointed to a fixed term of office by either the city council or board of supervisors. Dependent districts are governed by existing legislative bodies like a city council or board of supervisors. Larger independent districts have a professional manager, similar to a county administrator or city manager, to assist the governing officials. The governing boards adopt policies for the general managers to carry out.

How are they Funded?

Over a quarter of California's independent special districts are enterprise districts. Enterprise districts operate much like a business, charging customers for their services. An example would be a hospital district charging room fees just to their patients, not the district's other residents. Water districts charge water rates to their customers. Virtually all water, waste and hospital districts are enterprise districts.

Non-enterprise districts provide services that don't lend themselves to fees because they benefit the entire community, not just certain residents. These districts provide services like parks, fire and police protection, libraries, pest abatement, and cemeteries. They rely overwhelmingly on property taxes to fund their operating budgets. Some non-enterprise districts like parks and libraries may charge fees for certain services, however, these fees typically generate very little revenue.

Both enterprise and non-enterprise districts can issue either general obligation or revenue bonds to help pay for capital improvements.

Accountability

Special districts are accountable primarily to the voters who elect their boards of directors and the customers who use their services. Although they are not functions of the state, the state provides critical oversight to special district operations. Special districts must submit annual financial reports to the State Controller and must follow state laws pertaining to public meetings, bonded debt, record keeping and elections. When special districts wish to expand their services, merge, dissolve or proceed with reorganization actions, they must receive approval from LAFCo.