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RIPEC: Special districts useful but seen as under-regulated

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PROVIDENCE – While many of Rhode Island’s 91 special districts perform valuable services, their lack of mandated financial controls leaves them open to charges of poor fiscal management, according to a report released by the Rhode Island Public Expenditure Council late Monday.

Special districts, which RIPEC says are defined by the U.S. Census Bureau as “independent, special-purpose governmental entities (other than school district governments), that exist as separate entities with substantial administrative and fiscal independence from general-purpose local governments,” have grown significantly in number in the last 50 years – by more than 200 percent nationally and by 85.7 percent in Rhode Island.

Recently fire districts, which account for 43 of the 91 in the state, have come under scrutiny, as the Central Coventry Fire District fell into receivership and residents rejected a requested tax increase to fund operations. RIPEC noted in its report that special districts often have independent taxing and bonding authority to fund operations, but they are not subject to the same transparency, regulatory or budget increase limitations that towns and cities are, leading many of the districts to set tax levy increases that exceed the yearly municipal limits (the levy increase limit was set at 5.5 percent for fiscal year 2007 and has been declining to a maximum increase of 4 percent in the current fiscal year, except in specific circumstances).

Pending legislation in the General Assembly would attempt to deal with that issue by expanding the 4 percent cap that applies to municipalities to fire districts as well. In addition, the legislation would establish financial reporting requirements that would bring the special districts more in line with the requirements of towns and cities, including having to conduct independent audits annually.

The RIPEC report also noted that the make-up of Rhode Island’s special districts was not in line with the rest of the country. While 40.7 of the state’s special districts were fire districts, 15.9 percent of special districts nationally were fire districts. Housing and community development districts make up 27.5 percent of Ocean State special districts, compared with 9.5 percent nationally. And while 16.5 percent of the state’s special districts are designed to provide water, the national percentage is 10.2.

RIPEC also looked at employment figures, calculating that special districts that provide health services account for 36.4 percent of all full-time equivalents in the nation, compared with 0 for Rhode Island, which has no health services special districts. Housing and community development special districts account for 55.1 percent of all FTEs in Rhode Island special districts, compared with 7.9 percent nationally. Fire districts, the second largest employers in Rhode Island, at 28.9 percent, account for 4.6 percent of FTEs nationally.

To view the complete RIPEC report, click HERE.

ripec, rhode island public expenditure council, special districts, fire districts, housing and community development districts, water supply districts, tax levy cap

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