We continue to believe in the government’s power to do good. But seriously, California, some things seem to have gotten completely out of hand.
We speak again of that near-invisible form of local government called “special districts” — usually single-purpose agencies that form an awe-inspiring patchwork quilt above, below and alongside your higher-profile city and county governments. Some special districts deliver your water. Others cart away your sewage. Still others handle regional transportation, fire services, health care, cemeteries … heck, some even battle mosquitos and rats! Heaven knows we need separate little governments for that.
Anyway, the money these districts amass can truly take one’s breath away. So much so that the state’s earnest (but unfortunately toothless) watchdog agency — the Little Hoover Commission — convinced officials to publish financial details on the 250 flushest special districts each and every year. To what end, now, we’re not so sure. But we pore over that data regularly, and erupt in hives each time.
Consider, first, the tremendous growth in their cash and investments:
-In 2007, special districts had amassed $17.9 billion in liquid accounts.
-In 2017, that total soared to $47.1 billion.
-And in 2024, it ballooned to $73.2 billion.
Which is to say, special district cash and investments more than quadrupled between 2007 and 2024 (up 309%), while inflation rose just 54%.
On average, they hold cash and investments equal to what they spend over 17 months, according to data from the state Controller.
Their revenues and expenses have exploded as well — but more on that in a minute.
Where does the money come from? From you, their customers, in the form of rates and fees; and for some districts, from a cut of your property taxes as well. And, often, from meaty returns on those large investments.
Vital? Or redundant?
We confess: Special districts have left us personally agog since Orange County’s 1994 bankruptcy revealed that some still had money in the bank even though they’d technically ceased to exist decades before. (Local governments in the infamously “small-government” O.C. grew that year, despite those agencies losing $1.64 billion in bad investments.)
Critics will argue that many districts are abusing the public trust by hoarding vast sums of money. Their jobs could be easily absorbed by larger city or county governments, increasing efficiency and saving Jo Citizen money, they’d say.
The districts will argue that they are sentinels, safeguarding vital water, sewer, transportation systems — and that the money they sit on is essential to build, repair and replace the public infrastructure on which life and limb depend. Their financial resources would be squandered in the hands of larger governments with competing demands, they’d say.
It appears clear whose argument is winning.
Inertia is the power of a body in motion to stay in motion, and of a body at rest to stay at rest. Change is ridiculously hard, and consolidations are exceedingly rare among California’s 2,000 or so independent special districts (despite the existence of the Local Agency Formation Commission, a special little agency formed to ensure the logic and efficiency of other local agencies. Go figure).
‘Parochialism’
“Believe it or not,” a retired exec once told us, “special districts sometimes don’t want to consolidate. If you look it up in your dictionary, it’s something called ‘parochialism.’ Sometimes they pay their board of directors’ members a stipend. Sometimes the directors don’t want to give up that stipend, or the status that goes with it. Sometimes they’re opposed even if it would be logical. Sometimes.”
Orange County, for example, has 75 special districts, according to the State Controller. That includes four California water districts, seven county water districts, one municipal water district, one water authority, one irrigation district, three “sanitary” (i.e. sewer) districts, one county sanitation district, five community service districts, one cemetery district, one mosquito abatement district, two library districts, one storm water drainage district, one recreation and park district, four nonprofit corporations, one transportation planning agency and 41 “joint exercise of powers authorities,” which are new governments formed when other governments join forces.
Whew. That’s in addition to the city and county governments, many of which already handle just about every task listed above.
Santa Clara County has 20 special districts. Alameda County, 29. Contra Costa County, 77. San Mateo County, 72. And so on.
Way outpacing inflation
Yes, everything costs more these days. But, this much?
The annual revenue of special districts nearly tripled between 2007 and 2024, from $29 billion to $86.6 billion, and their annual spending more than tripled, from $27.4 billion to $82.8 billion.
Again, we’ll remind you that inflation increased during that time by about 54%. So special district spending and revenues galloped way beyond the rate of inflation.
They’ve staffed up as well. While California’s population increased about 9% between 2009 and 2024, special district staffing rose at double that rate, 18.4%.
Which is to say, special districts employed 154,233 people and paid total wages of $6.8 billion in 2009 (the most recent year in the Controller’s database), while they employed 182,539 people and paid total wages of $13.6 billion in 2024.
Long our favorite example of having, perhaps, too much money, is the Irvine Ranch Water District’s real estate arm. (Yes, you read that correctly.)
Its incarnation as a real estate investor/land baron began decades ago, when then-state Sen. Marian Bergeson carried legislation allowing Irvine Ranch to invest millions (reserved for rebuilding vital infrastructure) in real estate. Irvine Ranch formed a nonprofit company – Bardeen Partners – to handle those transactions, and its investments included Wood Canyon Villas in Aliso Viejo, Sycamore Canyon Apartments in Anaheim Hills and Irvine Technology Center.
In 2008, we reported that those real estate investments were valued at nearly $40 million. Since then, Irvine Ranch’s portfolio has grown, and was valued at, gulp, $326 million last year.
How much?
In raw dollars, the districts clocking more than $1 billion in cash and investments are dominated by transportation agencies, which have big capital needs, with airport and public power authorities sprinkled in alongside water behemoths and others.
The Los Angeles County Metropolitan Transportation Authority is at the top of this list, with $3.3 billion in cash and investments. Its investment income was $198 million last year, according to an audit. Its chief executive earned $607,632 in wages with health and pension benefits worth $151,940, according to Controller’s data.
The giant Metropolitan Water District of Southern California, which supplies water to some 19 million people in our desert, had cash and investments of $1.4 billion and investment income of $54.2 million, according to an audit.
More than a half-billion in cash and investments were held by many others in 2024, including the San Joaquin Hills Transportation Corridor Agency ($920.6 million cash and investments, with investment income of $33 million).
You can see our spreadsheet on all 250 special districts, along with their totals for cash and investments, unrestricted funds, revenue and expenses here: https://bit.ly/47TsWBU. We ranked them by “cash and investments” as a percentage of what they spend each year. First on that list is the Los Angeles County Regional Park and Open Space District, with cash and investments equal to 2,206.6% of its spending in 2024.
Yes, special districts do big projects. Yes, big projects cost big money. But they did big jobs back in 2007 as well, with a lot less of it.
As we said at the start … some things appear to have gotten completely out of hand.