Auditor: specials districts spend $2.7B in Ky.

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Associated Press

Posted on November 15, 2012 at 10:01 AM

Updated Thursday, Nov 15 at 10:01 AM

LOUISVILLE, Ky. (AP) — Kentucky has more than 1,200 special districts that spend $2.7 billion a year while operating with little oversight or accountability, the state auditor said Wednesday.

Auditor Adam Edelen said the state had never before been able to determine how many of the special districts exist and whether they are compliant with state law. His office spent six months compiling the first-ever database of the districts, which include libraries, fire protection and trash collection districts that have the ability to collect taxes and fees.

"The problem is we have an enormous layer of government that has been allowed to operate in a way that isn't directly accountable to the public" Edelen said at a news conference in Frankfort Wednesday to announce the release of the database and a report.

The report found that there were 1,268 special districts operating in Kentucky at the end of October, collecting $1.5 billion in taxes and fees along with $1 billion in grants, corporate sponsorships and fundraising.

The districts are also holding $1.3 billion in reserves, which the auditor noted was twice the contingency funds of all the state's 174 school districts.

Edelen said it's a "scandal" that Kentucky has never before been able to provide an accurate count of the districts and whether they are compliant with state laws. But he added that the "vast majority are honest stewards of the tax dollars they spend."

The report found that about 40 percent of the special districts required to submit budgets in fiscal year 2011 did not, and just 55 percent of districts with revenues or expenditures exceeding $750,000 had a required annual audit performed. Edelen said the lack of audits amounts to $461 million in revenue that had no oversight.

The report, "Ghost Government: A Report on Special Districts in Kentucky," also found that Jefferson County leads the state in special districts with 33, followed by Floyd County with 24; Marshall with 23; Henderson, 22; and Boyd, 20. Fayette County, the state's second most populous county behind Jefferson, had just nine special districts by the report's count.

Richard Beliles, executive director of Common Cause of Kentucky, called the report a significant service to public interest.

"This is a major, major improvement in government for the people," Beliles said in a statement Wednesday.

The report recommends creating an online centralized registry for special districts and establishing education and ethics training for special district board members and staff.

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The database can be found at www.citizenauditor.ky.gov .

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