Idaho adds more oversight to $2B in special districts

BOISE– Idaho officials are praising a new system designed to add accountability and transparency involving the more than $2 billion that flows through hundreds of the state’s special districts, but they caution they are still working out kinks.

Special districts are a form of local government designed to meet a specific need inside a community. The districts can include urban renewal, emergency protection services and community colleges.

In Idaho, these districts are funded either with a portion of property taxes or with assessments and fees.

“We’ve made little tweaks here and there, but overall it is accomplishing what we set out to accomplish,” said Shelley Sheridan with the Legislative Services Office. The office’s audit division is in charge of the new registry system.

In 2014, legislative auditors released a 21-page report detailing a frustrating lack of information available to the public if they wanted to find out more on how special districts spend their money in their community.

The report identified 1,556 districts that offered 38 different services. Out of the districts that used tax dollars, the total amount budgeted in fiscal year 2012 was more than $2 billion.

“In an era of increased transparency and access to financial information, these special districts have been out of sight, but not out of mind for many,” auditors wrote.

Just three months after the report was released, lawmakers unanimously signed off on legislation creating a new registry to identify just how many special districts there are in Idaho, as well as monitor their finances.

Under the new system, all special districts must register with the state and submit financial audits if needed.

Districts with under $100,000 in expenditures do not have to be audited. However, Idaho’s districts with $100,000 to $250,000 in expenditures have to undergo a biennial audit and districts with budgets with more than $250,000 require an annual audit – these are the most common districts, according to the state.

Legislative staffers now say the registry has been successful in holding districts accountable, but they still face some challenges.

For example, currently almost half the districts on the 2016 registry have been flagged as “incomplete.”

Districts are supposed to renew their registration status – which requires submitting updated audits – with the state every year on Dec. 1. Yet if that doesn’t happen, the state doesn’t automatically inflict a penalty. Instead, the state allows districts until Sept. 1 to submit the required information. If that doesn’t happen, the state notifies the county commission and the Idaho State Tax Commission of an entity’s compliance failure.

In Twin Falls, the College of Southern Idaho is aware it hasn’t updated its 2016 registration, but that doesn’t mean it’s not complying with financial audits, said spokeswoman Kimberlee Lapray. A recent employee turnover has delayed updating the state system.

Furthermore, it’s also unclear if the state has a complete record of every district currently operating despite the registry being in place for nearly two years. It’s up to the counties to track what districts operate in their region, but auditors have found that it’s not uncommon for county officials don’t.

Water districts in the scantly populated Owyhee County don’t have websites, while cemetery districts in Teton County aren’t listed in the phone book.

“We still believe there are more districts out there we don’t know about,” Sheridan said. “We just don’t know how many.”