state special-purpose entities, special purpose entities, SPEs, corporate SPEs, public finance, bonds, debt limits
States increasingly are raising financing indirectly through special-purpose entities (SPEs), variously referred to as authorities, special authorities, or public authorities. Notwithstanding their long history and increasingly widespread use, relatively little is known or has been written about these entities. This article examines state SPEs and their functions, comparing them to SPEs used in corporate finance. States, even more than corporations, use these entities to reduce financial transparency and avoid public scrutiny, seriously threatening the integrity of public finance. The article analyzes how regulation could be designed in order to control that threat while maintaining the legitimate financing benefits provided by these state entities.
Steven L. Schwarcz, The Use and Abuse of Special-Purpose Entities in Public Finance, 97 Minnesota Law Review 369-406 (2012)