Special Service District Dissolution Process: Checklist

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Introduction

The Office of the State Auditor (“Office”) has observed that some special service districts are perpetually noncompliant with state statute. This noncompliance hinders essential public accountability and transparency and often indicates poor operational effectiveness.

The Office recommends the creating entity dissolve any special service district that fails to correct continuous noncompliance with state requirements using the steps enumerated on page two. The Office of the Legislative Auditor General recommended dissolution of persistently non-compliant entities in its June 2017 report, 2017-05: A Review of Best Practices for Internal Control of Limited Purpose Entities. In addition to ongoing noncompliance, there are other valid reasons the creating entity should dissolve a special service district.

Dissolution Determination

The Office recommends dissolution when at least one of the following conditions exist:

• Circumstances have changed that make the district unnecessary.
• Circumstances make for more efficient service delivery by another government or private entity.
• The district board or staff are unable or unwilling to comply with statutory requirements: separation of duties, financial reporting, training & public meeting requirements.
  • Note these conditions in (1) audit findings of larger entity’s audited Financial Report or (2) questions answered “NO” on the annual Self Evaluation Form of smaller entities. These reports may be found at reporting.auditor.utah.gov/SearchReport.
• The creating entity or appointing body is unable to identify individuals willing & qualified to serve as district board members.

Continuation of Services

The creating entity may choose to terminate, assume, or transfer the public services previously provided by the dissolved district to another government or private entity.

District Dissolution Process: Special Service District

Below is the process for the creating entity (county or municipality) to dissolve a special service district. See Utah Code 17D-1-601 for additional information.