Final answer:
Special districts are a form of local government designated to provide specific services within a geographical area, like school districts or public transportation systems.
Step-by-step explanation:
Special districts are a specific form of government that handle particular functions within a geographical area. The most recognized type of special district is the local school district, but there are also other varieties, which are becoming more prevalent in densely populated regions. Their establishment is often an indication that existing county or city governments may be overburdened.
Federations is another term used for federal-style governments that may delegate certain powers to these local units of government within a multi-ethnic or multi-national country. In essence, special districts are local governments created to meet specific service needs.
The correct answer to the student's question, 'Special districts are a form of government' is therefore B) local.