Auditor says libraries, health departments lack accountability - WDRB 41 Louisville News

Auditor says libraries, health departments lack accountability

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LOUISVILLE, Ky. (WDRB) -- Kentucky Auditor Adam Edelen says he has identified 1,200 "special districts" in Kentucky that represent a $2.7 billion layer of government that has the power to tax, but operates with "little oversight or accountability."

Calling the discovery a "scandal," Edelen said unelected entities such as libraries, sanitation districts and public health departments have been "operating in the shadows for decades."

"It is a scandal that for generations no Kentuckian has been able to determine how many special districts exist, how much money flows through them, where they are located and whether they are compliant with state law," Edelen stated in the news release.

After a six-month investigation, Edelen's office has created the "Citizen Auditor Initiative" database and "Ghost Government: A Report on Special Districts in Kentucky" to survey known special districts and local elected officials and examine more than 1,000 statutes that govern the most prevalent form of government in the Commonwealth.

Click HERE for a link to the database.

The effort found that special districts collect $1.5 billion in taxes and fees and another $1 billion in grants, corporate sponsorships and fundraising. In all but three counties, taxpayers pay more to special districts in property taxes than to their county governments, according to the news release.

Special districts spend $2.7 billion a year, which is about $5 less per capita than the state spends on primary and secondary education. And, they are holding another $1.3 billion in reserves – twice the contingency funds of all 174 school districts.

"To be sure, there is a difference between the districts themselves and the scandalous lack of system-wide oversight of them," Edelen said in the news release. "Their work is critical to the communities they serve, many board members put in considerable hours on a voluntary basis and the vast majority are honest stewards of the tax dollars they spend."

"The effort found that the current system treats special districts that comply with state laws the same way as those operating outside of it," the news release states. "The status quo is a muddled morass of statutes, bizarre classifications, uncertain responsibilities, confusing mandates and the absence of meaningful tools to compel compliance."

Forty percent of the special districts that should have submitted budgets to their fiscal courts did not; 15 percent that should have submitted Uniform Financial Information Reports (UFIRs) did not.

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.

"In short, the system is broken and in need of big change," Edelen said. "A reformed and modernized system will make this ghost government more accountable to the public it serves."

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