Patterns in Special District Creation and Dissolution

Abstract

Special districts are a numerous and unique form of local government in the United States. Unlike cities, counties, and towns, special districts are created and dissolved often. Using tools from the industrial organizations literature, this analysis examines patterns in creation and dissolution of special districts using Census of Governments data from 1972 to 2017. Overall, the rate of entry (creation) has been declining over time while the rate of exit (dissolution) has remained steady. New districts tend to be small relative to existing districts and and exhibit slow growth over time. Lastly, special districts do not appear susceptible to the “liability of newness” or exhibit high levels of infant organizational mortality that is common in the private sector.

Are special districts strategic complements or strategic substitutes?

“…The first official Census of Governments survey reported 12,340 special districts in the U.S. in 1952 (Goodman, 2020). By the 2017 Census of Governments survey, there were 38,542 independent special districts in the United States (U.S. Census Bureau, 2019), constituting a 212% increase or annualized growth rate of 1.7% (Goodman, 2020). This proliferation compares to the growth in general-purpose governments (e.g., counties, municipalities, and towns/townships) of only 4.64% overall or 0.07% annually (Goodman, 2020).…”

“…By the 2017 Census of Governments survey, there were 38,542 independent special districts in the United States (U.S. Census Bureau, 2019), constituting a 212% increase or annualized growth rate of 1.7% (Goodman, 2020). This proliferation compares to the growth in general-purpose governments (e.g., counties, municipalities, and towns/townships) of only 4.64% overall or 0.07% annually (Goodman, 2020). Much of this growth in special districts occurred between 1962 and 1992-a 68% increase in the number of special districts overall and a 152% increase in the number of special districts in metropolitan areas, including both single-purpose special districts (57% increase) and multipurpose special districts (713% increase)-when there was a commensurate increase in functional responsibilities and professionalization of governments (Stephens & Wikstrom, 1998).…”

“…The first official Census of Governments survey reported 12,340 special districts in the U.S. in 1952 (Goodman, 2020). By the 2017 Census of Governments survey, there were 38,542 independent special districts in the United States (U.S. Census Bureau, 2019), constituting a 212% increase or annualized growth rate of 1.7% (Goodman, 2020).…”

“…These districts are often single‐function in nature, providing a single service 1 to a fixed geographic area by spending resources levied from within its boundaries. Additionally, special districts are dynamic—many are created each year, and a percentage of existing districts are eliminated each year by dissolution or merger (Goodman, 2020). The special district landscape changes often; however, even with its prominence in U.S. federalism, little is known about the systematic effects on spending for service delivery in local areas.…”

Local Government Fragmentation: What Do We Know?

“…However, this number belies a large amount of churn in special districts. These governments are created and destroyed often, so the gross change hides a large growth in the creation of these governments over time (Goodman 2019a). Taken together, the growth in these two broad forms of government, general and special purpose, has been largely a steady state of horizontally arranged local government and strong growth (both negative and positive) in vertically arranged governments.…”