Special-purpose districts provide specialized services only to those persons who live within them. Special districts possess fiscal and administrative autonomy. They often are empowered to tax residents of the district, usually by a property tax but sometimes an excise or sales tax, for the services that they provide. They often cross the lines of towns, villages, and hamlets but less frequently cross city or county lines. Increasingly, however, regional special districts are being created that may serve a large portion of a state or portions of more than one state.
Districts are created by legislative action, court action, or public referendum and are governed by a board of directors, commissioners, supervisors, or the like. The board serves as a district board of directors and may be appointed by public officials, appointed by private entities, popularly elected, or elected by benefited citizens (typically property owners). Sometimes, one or more public officials will serve ex officio on the board. Also, the board of a private entity may serve as the board of a special district (however, such a board could not be given the power to set a tax). The board serves primarily as a legislative board and appoints a chief executive for day to day operations and decision making and policy implementation. Most districts have employees, but some districts exist solely to raise funds by issuing bonds and/or by providing tax increment financing.
Districts typically have some corporate powers. They must be able to set their own budget without line item modification by another government. The authorizing legislation may give them the power to tax, issue bonds, or set fees; and/or the authorizing legislation may establish revenues via taxes or fees on behalf of the district; and/or the authorizing legislation may require contributions by participating local governments.
Special districts are sometimes created to provide fire protection, sewer service, transit service or to manage water resources, among many other possible functions. In many states in the USA, school districts operate the public schools (as opposed to dependent school systems, which are dependent on the state or a local government for administrative and/or fiscal direction). All special-purpose districts are founded by some level of government in accordance with state law and exist in all states.