Association for Public Policy Analysis & Management

The proliferation of special purpose districts and increasing complexity of local governance systems has been well documented. However, even as new special districts continue to be formed, others are being dissolved, annexed, or consolidated. This paper argues that the functional fragmentation and reduced scope of many special districts means that these organizations potentially lack the capacity to respond to external pressures and adapt to major service delivery challenges. Many districts play an important role in providing key public services such as drinking water, public health, and economic development. Institutional disruptions harm communities if special districts are unable to respond, and instead dissolve. Drawing upon the organizational life-cycle literature, we examine when and why special purpose districts fail.

We use the case of water provision in the state of Texas, which exemplifies the complexity of forms (from general-purpose municipal departments to single-purpose utilities and private operators) and jurisdictional fragmentation that increasingly characterizes local public service provision. Our data come from the Texas Water District Database, which contains administrative records on over 2,000 water districts in the state. These data include dates when each district was formed, the particular statute under which a district was incorporated and related institutional characteristics of the district (e.g., size, service population, ability to issue debt and levy taxes), service delivery tasks in which the district is engaged, and then, finally, major institutional events such as dissolution, reorganization, annexation, and consolidation. We match water district data to Safe Drinking Water Act monitoring data obtained from the U.S. Environmental Protection from 2000 to 2015; these data contain records for every regulated drinking water provider in the state, allowing us to assess district compliance with monitoring and reporting requirements as well as maintaining water quality and treatment standards. To model how organizational capacity and institutional characteristics interact to influence special district mortality, we use a competing risks event history model that models the probability of special district dissolution, consolidation, and annexation over time. This model is then used to test how district size and structure, local economic capacity, and organizational performance (regulatory violations) explain patterns of organizational persistence, change & reorganization, and mortality.

This study demonstrates the importance of organizational persistence and failure in polycentric governance systems. Special districts are often touted as a means for more flexible, localized, and customer-oriented public service provision; however, the limited size and scope of special districts might also mean that they are less resilient to external shocks and changing organizational environments. By examining how organizational capacity in fragmented systems relates to organizational failure (and service disruptions), this study speaks directly to how the increased role of special districts impacts community resilience.