Franklin County has nine special districts that spend more than $26 million a year and hold $8.5 million in reserves – with little oversight or accountability, says the state auditor.
For comparison’s sake, the county Fiscal Court has budgeted about $24 million this year, and the City of Frankfort just over $30 million.
Auditor Adam Edelen announced Wednesday that Kentucky has more than 1,200 special districts that spend $2.7 billion a year, about the same amount the state spends on primary and secondary education.
The districts hold another $1.3 billion in reserves, a number twice the rainy day funds of all 174 public school districts combined.
Edelen released an online public database and report after a six-month effort to collect information on the districts, which range from libraries to sanitation districts that have the ability to charge fees and tax.
It found that Kentucky’s special districts collect $1.5 billion in taxes and fees along with $1 billion in grants, corporate sponsorships and fundraising. Edelen says it’s “scandalous” that there is no wide-ranging oversight of the districts.
Edelen said the state had never before been able to determine how many of the special districts exist and whether they comply with state law. He compared it to a county fair game of guessing how many corn kernels are in a Mason jar.
“In short, the system is broken and in need of big change,” he said at a press conference. “A reformed and modernized system will make this ghost government more accountable to the public it serves.”
Most of the budget information is from the 2011 fiscal year, though some is from 2010, said Stephenie Steitzer, spokeswoman for the auditor’s office.
The figures for Franklin County combine eight of the special districts; Farmdale Sanitation District did not provide financial information to the state auditor’s office.
The auditor identified nine special districts in Franklin County, three of which levy taxes:
>Bluegrass Community Action Agency
>Elkhorn Water District
>Farmdale Sanitation District
>Farmdale Water District
>Franklin County Extension Taxing District
>Franklin County Library Taxing District
>Franklin County Public Health Taxing District
>Franklin County Soil and Water Conservation District
>Peaks Mill Water District
Special districts are, in general, required to file a budget and have an audit every few years. Taxing districts are also required to file regular financial reports. The auditor also noted which special districts participated in his survey this summer.
Eight of the special districts in Franklin County were in compliance in all four categories, the auditor’s office reported.
Farmdale Sanitation District failed to participate in the auditor’s survey and didn’t provide information about recent audits or details about its finances.
The auditor’s office reports that 40 percent of Kentucky’s special districts that should’ve submitted budgets to their fiscal courts did not, along with 15 percent that should’ve submitted financial reports but didn’t.
In addition, half the special districts with revenues greater than $750,000 a year failed to have required audits conducted on their financial statements. That represents $461 million in revenue that had no oversight.
The database is available online at www.citizenauditor.ky.gov for full information about special districts in Franklin County and across Kentucky.
The Associated Press contributed to this report.
This story included incorrect information in the version that appeared in Wednesday's paper. The online version has been corrected to reflect the correct information.
Stephenie Steitzer, spokeswoman for the auditor, said the Franklin County Extension Taxing District, Franklin County Library Taxing District and Franklin County Soil and Water Conservation District actually did file budgets.
“We have discovered the database has incorrect information about which districts submitted budgets,” she said, in an email to The State Journal.
“I’ve checked and the extension office, library and soil conservation actually did submit budgets.”