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Abstract
As the local government sector in the United States has become extremely fragmented with the proliferation of many special districts in the last seven decades, monitoring the financial condition of special districts should be a priority for both state and local governments. Although financial condition indicators of general-purpose local governments have been widely developed, such indicators for special district governments are currently emerging. This study draws on a conceptual framework adapted from the works of Crosby and Robbins (2013) and Trussel and Patrick (2013) and proposes a 9-point financial condition system to monitor and assess the fiscal health of special districts in the state of Illinois. Such a system could be easily applied to other states that want to monitor the fiscal condition of their special-purpose entities.
Keywords: special districts; financial condition indicators; fiscal health; special-purpose governments.
Special districts are an important part of the United States local governance system. They have been created to provide public services that general-purpose governments such as counties, cities, towns or villages are unable or unwilling to provide. These special-purpose governments are known under numerous names such as public authorities, commissions, government corporations and special districts, and are created outside the traditional structure of government with the purpose of providing one or a limited number of public services. In 1957, John Bollens referred to special districts as "the new dark continent of American politics" (p. 1). Over sixty years after Bollens made his original claim, the operation and finances of special districts appear nearly as dark as they were in 1957. Today, special districts comprise over 40 percent of local governments (Killian & Le, 2012) and they operate with limited public oversight, enjoying varied administrative and financial autonomy from their establishing general-purpose governments (Eger III, 2006; Foster, 1996; Scutelnicu, 2014). To provide public services, special districts are granted special powers. Most notably, they are authorized to issue tax-exempt municipal revenue bonds to fund new and existing facilities that serve a public interest. The bonds are to be repaid from revenues of the facility and/or from annual appropriations of the parent government of general purpose.
The consensus among many scholars and practitioners is that special districts are created to allow local governments of general purpose to address public...
