CSDA - Frequently Asked Questions

FREQUENTLY ASKED QUESTIONS

What's the difference between independent and dependent districts?
What's the difference between enterprise and non-enterprise districts?
What's ERAF?
What's LAFCo?
Can special districts tax without consent?
How does a special district get formed?

What's the difference between independent and dependent districts?
Independent districts have their own separate boards of directors elected by the districts' own voters. Independent districts also include districts where the appointed boards of directors serve for fixed terms. The cemetery districts are independent districts with this governance structure. Special districts' governing boards can vary with the size and nature of the district. Most districts have five-member governing boards. Other governing boards vary from three to 11 members. The Metropolitan Water District of Southern California, which has 37 board members, is unique.

Dependent districts are governed by other, existing legislative bodies (either a city council or a county board of supervisors). All County Service Areas, for example, are dependent districts because their county boards of supervisors govern them. The Yucca Valley Recreation and Park District is governed by the San Bernardino county Board of Supervisors, making it a dependent district. The Oceanside Small Craft Harbor District is another dependent district that is run by the Oceanside City Council. Back to top.

What's the difference between enterprise and non-enterprise districts?
Enterprise districts render services that are run like a business enterprise; they provide services that are used by individual customers. For example, hospital districts charge room fees paid by patients, not other residents of the district. Virtually all water, waste, and hospital districts are enterprise districts.

Non-enterprise districts provide services that don't lend themselves to fees. Activities such as fire protection and mosquito abatement benefit the entire community, not just individual citizens. No direct cost/benefit relationship exists in the services provided by non-enterprise district. Consequently, non-enterprise districts generally cannot charge user fees for their services. Non-enterprise districts rely overwhelmingly on property taxes for their operational expenses. Services usually provided by non-enterprise districts include fire protection, cemeteries, libraries, and police protection. Though non-enterprise districts rely primarily on non-fee revenue, certain services, such as a park district's pool, can generate a small amount of revenue. Back to top.

What's ERAF?
Education Revenue Augmentation Fund (ERAF) The State budget for 1992-93 included a $1.3 billion shift in property tax revenues from local governments to the Education Revenue Augmentation Fund (ERAF), established in each county for the allocation to school districts, county offices of education and community college districts. Through three local government budget trailer bills (SB 617, SB 844 and AB 3027), it was required that the amount of property tax revenue deemed allocated from special districts in the prior fiscal year be reduced by a total of $375 million. There is no cap on ERAF and growth also continues to be shifted along with the original amount. Back to top.

What's LAFCo?
Local Agency Formation Commissions (LAFCo) are responsible for coordinating logical and timely changes in local governmental boundaries, conducting special studies that review ways to reorganize, simplify and streamline governmental structure and preparing a Sphere of Influence for each city and special district within each county. The Commission's efforts are directed to seeing that services are provided efficiently and economically while agricultural and open-space lands are protected. Link here for more information
Back to top.

Can special districts tax without consent?
No. Prop. 13 (1978) limited property taxes to 1 percent of property value. Many special districts get a share of these revenues. If a special district wants additional taxes, Prop. 13 and state law require 2/3 voter approval for "special taxes." A general obligation bond that raises property taxes also requires 2/3 voter approval. ("What's So Special About Special Districts?"; Senate Local Government Committee, Third Edition, February 2002, Page 12.) Back to top.

How does a special district get formed?
There are typically five steps in the formation of a special district:

Apply - Registered voters in the proposed district apply to the Local Agency Formation Commission (LAFCo). The application must detail the proposed district's boundaries and services, any environmental effects, and financing options.

Review & approval - The LAFCo's staff studies the application and schedules a public hearing. The LAFCo can approve or deny the proposal. If the LAFCo approves, the next step is to measure protests.

Protest hearing - The LAFCo holds a second public hearing, this time to measure formal protests from voters and property owners. A majority protest will stop the proposal. Otherwise, there's an election.

Election - Only the voters inside the proposed district's boundaries are eligible to vote at this election which usually requires a majority voter approval. If the proposal involves new special taxes, the measure needs 2/3 voter approval.

Formal filing - If the voters approve the proposed district, the LAFCo and other officials file the formal documents to start the new district.

("What's So Special About Special Districts?"; Senate Local Government Committee, Third Edition, February 2002, Page 11 & 12.) Back to top.


	FREQUENTLY ASKED QUESTIONS What's the difference between independent and dependent districts? What's the difference between enterprise and non-enterprise districts? What's ERAF? What's LAFCo? Can special districts tax without consent? How does a special district get formed? What's the difference between independent and dependent districts? Independent districts have their own separate boards of directors elected by the districts' own voters. Independent districts also include districts where the appointed boards of directors serve for fixed terms. The cemetery districts are independent districts with this governance structure. Special districts' governing boards can vary with the size and nature of the district. Most districts have five-member governing boards. Other governing boards vary from three to 11 members. The Metropolitan Water District of Southern California, which has 37 board members, is unique. Dependent districts are governed by other, existing legislative bodies (either a city council or a county board of supervisors). All County Service Areas, for example, are dependent districts because their county boards of supervisors govern them. The Yucca Valley Recreation and Park District is governed by the San Bernardino county Board of Supervisors, making it a dependent district. The Oceanside Small Craft Harbor District is another dependent district that is run by the Oceanside City Council. Back to top. What's the difference between enterprise and non-enterprise districts? Enterprise districts render services that are run like a business enterprise; they provide services that are used by individual customers. For example, hospital districts charge room fees paid by patients, not other residents of the district. Virtually all water, waste, and hospital districts are enterprise districts. Non-enterprise districts provide services that don't lend themselves to fees. Activities such as fire protection and mosquito abatement benefit the entire community, not just individual citizens. No direct cost/benefit relationship exists in the services provided by non-enterprise district. Consequently, non-enterprise districts generally cannot charge user fees for their services. Non-enterprise districts rely overwhelmingly on property taxes for their operational expenses. Services usually provided by non-enterprise districts include fire protection, cemeteries, libraries, and police protection. Though non-enterprise districts rely primarily on non-fee revenue, certain services, such as a park district's pool, can generate a small amount of revenue. Back to top. What's ERAF? Education Revenue Augmentation Fund (ERAF) The State budget for 1992-93 included a $1.3 billion shift in property tax revenues from local governments to the Education Revenue Augmentation Fund (ERAF), established in each county for the allocation to school districts, county offices of education and community college districts. Through three local government budget trailer bills (SB 617, SB 844 and AB 3027), it was required that the amount of property tax revenue deemed allocated from special districts in the prior fiscal year be reduced by a total of $375 million. There is no cap on ERAF and growth also continues to be shifted along with the original amount. Back to top. What's LAFCo? Local Agency Formation Commissions (LAFCo) are responsible for coordinating logical and timely changes in local governmental boundaries, conducting special studies that review ways to reorganize, simplify and streamline governmental structure and preparing a Sphere of Influence for each city and special district within each county. The Commission's efforts are directed to seeing that services are provided efficiently and economically while agricultural and open-space lands are protected. Link here for more information Back to top. Can special districts tax without consent? No. Prop. 13 (1978) limited property taxes to 1 percent of property value. Many special districts get a share of these revenues. If a special district wants additional taxes, Prop. 13 and state law require 2/3 voter approval for "special taxes." A general obligation bond that raises property taxes also requires 2/3 voter approval. ("What's So Special About Special Districts?"; Senate Local Government Committee, Third Edition, February 2002, Page 12.) Back to top. How does a special district get formed? There are typically five steps in the formation of a special district: Apply - Registered voters in the proposed district apply to the Local Agency Formation Commission (LAFCo). The application must detail the proposed district's boundaries and services, any environmental effects, and financing options. Review & approval - The LAFCo's staff studies the application and schedules a public hearing. The LAFCo can approve or deny the proposal. If the LAFCo approves, the next step is to measure protests. Protest hearing - The LAFCo holds a second public hearing, this time to measure formal protests from voters and property owners. A majority protest will stop the proposal. Otherwise, there's an election. Election - Only the voters inside the proposed district's boundaries are eligible to vote at this election which usually requires a majority voter approval. If the proposal involves new special taxes, the measure needs 2/3 voter approval. Formal filing - If the voters approve the proposed district, the LAFCo and other officials file the formal documents to start the new district. ("What's So Special About Special Districts?"; Senate Local Government Committee, Third Edition, February 2002, Page 11 & 12.) Back to top.

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