Findings of the Appraisal Standards Review
This chapter of the report addresses the findings, commendations and recommendations from the appraisal standards review of the Anderson County Appraisal District in five sections:
The quality of the local property tax system depends largely on the appraisal district's board of directors. Individuals serving on the board of directors bring to the board knowledge, judgment and expertise in establishing policies and procedures for the district's organization and operation.
Anderson CAD was formed in 1980 and produced its first appraisal roll in 1982. The Anderson CAD Board of Directors consists of 11 members, including the county tax assessor-collector. The county tax assessor-collector serves as the Anderson County representative and, therefore, is a voting board member. Each school district and each incorporated city also have a representative on the board of directors. Members of the board are listed in Exhibit 4.
Board of Directors Members
Board Member Represents Length of
Paul Barnett, Chair City of Elkhart 8 years Carol Bayless, Secretary Westwood ISD 2 years Mike Dear Slocum ISD 9 years Jon Greg City of Palestine 8 years Jeffery Gunnels Cayuga ISD 2 years Carl House Frankston ISD 2 years Clydell Klein Neches ISD 7 years Terri Garvey, Anderson County Tax Assessor-Collector At Large First Year Larry Thomas Elkhart ISD 5 years Dyna Tutt Palestine ISD 2 years Eugene Brooks City of Frankston First Year Source: Anderson CAD, October 2004.
Even though Anderson CAD responded to the 2003-2004 Appraisal District Operations Survey that eight of its 11 board members are elected, only Terri Garvey is an elected official serving on the board.
The Board of Directors has the following primary responsibilities:
- Establish the appraisal district's appraisal office;
- Adopt the appraisal district's annual operating budget;
- Contract for necessary services;
- Hire a chief appraiser;
- Hire a taxpayer liaison officer (districts in counties having a population of over 125,000);
- Appoint appraisal review board members; and
- Make general policy on the appraisal district's operation.
The Board of Directors hires a chief appraiser as the chief operating officer of the district.
Board of Directors received a written survey about board activities. Three of the eleven board members responded. The survey was broken down into board policies and procedures, chief appraiser and staff, property appraisals, appraisal review boards, and budgeting and financial management. Board members generally gave themselves and the district good marks with a couple of exceptions. One board member noted that the board does not evaluate the chief appraiser, although the other two disagreed. One board member said the board does not review its policies biennially, although the other two disagreed with that assessment.
Section 6.063, Tax Code requires appraisal districts to undergo at least annually an audit of their financial affairs by an independent certified public accountant. The Tax Code also makes the report of the audit a public record. Financial audits have been prepared in accordance with Section 6.063.
Frank Campos, Certified Public Accountant from Palestine conducted independent audits of the 2002 and 2003 fiscal years. The auditor's opinion contained no findings of material weaknesses. Neither year's audit contained recommendations to strengthen internal controls.
The appraisal district's budget lacks the detail necessary to comply with Section 6.06 of the Tax Code.
Section 6.06 requires each appraisal district budget to include a listing of each proposed position including the salary and benefits for the position, each proposed capital expenditure and an estimate of the amount of the budget allocated to each taxing unit. Section 6.06 also requires the appraisal district board of directors to hold a public hearing to consider the budget. Taxing units are required to ratify the budget and to maintain a copy of it for public inspection at their principal administrative office.
The Anderson CAD 2004 budget hearing was on July 28, 2003. No one was present for the 2004 hearing and, following a motion by Board Member Jones and a second by Board Member Adams, the 2004 budget was adopted. The 2005 budget was adopted on August 2, 2004 following the budget hearing at the same meeting of the board of directors.
The reviewer examined copies of the 2003 and 2004 budgets. The budget document includes summary information about salaries and benefits and capital expenditures but not the degree of detail required by Section 6.06, Tax Code. Exhibit 5 displays the extent of the detail contained in the distributed and adopted budgets.
Anderson CAD Budgets for Fiscal Years 2003 and 2004
Line Item Category 2004 2003 Budget Percent of Total Budget Percent of Total Personnel services $524,184 67.53% $533,956 67.54% Consumable supplies 20,500 2.64% 20,500 2.60% Capital outlay 7,500 0.96% 10,000 1.26% Contractual services 150,800 19.43% 153,700 19.44% Travel 40,400 5.20% 40,400 5.11% Educational requirements 16,000 2.06% 16,000 2.02% Utilities 12,750 1.64% 12,250 1.54% District liability 4,000 0.51% 3,750 .47% Total $776,134 $790,556 Source: Anderson CAD, fiscal years 2003 and 2004 budgets.
The chief appraiser said that at each quarterly meeting of the appraisal district board of directors, he makes a detailed financial report to the board. In this report the chief appraiser provides a year-to-date summary of activities in each of the budget's line items. The chief appraiser said the purpose of the financial report is to not only provide the board of directors a current status on the CAD's finances and spending, but to also allow for discussion of anticipated spending.
Exhibit 6 is an example of the detail used to develop the chief appraiser's financial reports and amounts for budget line items.
Quarterly Financial Report
Budget Line Item Category Detail
Contractual Services, July 2004
Total Computer Hardware Maintenance $0 Computer Software Maintenance $30,000 Copier Maintenance $4,000 Copier Lease $3,800 Fire Extinguisher Maintenance $100 Security System Maintenance $300 Air Conditioning Repair $1,500 Miscellaneous Repair $1,500 Postage Meter Rental $600 Postage Machine Lease $2,000 Janitorial Services $3,500 Yard work $1,000 Subtotal $48,300 Professional Fees Capitol Appraisal Group $78,000 Audit $2,500 Data Processing $3,000 Newspaper Notices $1,000 Legal Counsel $10,000 Subtotal $94,500 Appraisal Review Board $8,000 $8,000 Line Item Category Total $150,800 Source: Anderson CAD, July 2004.
The chief appraiser's financial reports contain sufficient detail to comply with the provisions of Section 6.06. This level of detail would give taxing units more information about the district's spending plans and would allow them to make more informed decisions about ratifying or rejecting the appraisal district's budget. This would be particularly helpful in the taxing units' decision making with respect to staffing levels and compensation since almost 68 percent of the budget is devoted to staff salaries.
Regularly sharing information about appraisal district finances with the board of directors is a sound business practice. The detail contained in these reports enhances the transparency of appraisal district operations and could be applied to the budget document distributed to taxing units for ratifying and publication in their offices. The level of detail contained in the chief appraiser's financial reports is also appropriate for the budget.
Expand the budget document that is distributed to taxing units to include the salaries and benefits for each position, a list of each proposed capital expenditure and all activities with a planned expenditure in each budget line item.
The budget document the appraisal district sends to taxing units for them to display should contain the specific information required by Section 6.06, Tax Code and be similar in detail to what is contained in the chief appraiser's financial reports to the board of directors.
The appraisal district's contract for appraisal services with the Capitol Appraisal Group, Inc. (CAG) does not include the dates when services will be delivered to the appraisal district nor does it contain adequate monitoring provisions.
The CAG contract covers the 2004 and 2005 tax years. The contract ends on December 31, 2005, the end of the 2005 tax year. The contract contains no provisions for renegotiating fees or failure to deliver penalties if CAG does not deliver contracted services or is late delivering services and the appraisal district subsequently fails to meet statutory deadlines.
Outside of the contract period, there is no automatic renewal of the contract and the appraisal district may choose to contract with another firm for the 2006 tax year. The contract requires the appraisal district to pay CAG $78,000 for appraisal services for each tax year. The contract stipulates that the appraisal district pay CAG in equal quarterly payments on January 1, April 1, July 1 and October 1. Payments are not directly tied to the delivery of services, making contract monitoring difficult.
The contract requires CAG to appraise "...all producing oil and gas leases, telephone companies, cable television systems, electric utility systems, gas utility systems, pipeline systems, railroad companies, and related properties and industrial properties designated by the chief appraiser." The contract requires CAG to defend the appraised values of properties it appraises before the appraisal review board and to make available copies of appraisals and supporting data to the appraisal district. CAG is also required to provide a list of all record owners of all producing oil and gas leases it is responsible for appraising.
The contract with CAG does not contain any stated provisions tying delivery of services to payments. The contract has no provisions to address the possibility that work products will not be delivered in time for the appraisal district to comply with the certification mandates in the Tax Code. In order to get the appraisal roll ready each year the appraisal district needs to have all appraisal information completed and in the appraisal district system before the appraisal notices are produced for mailing. Appraisal notices are usually mailed in May of each year. Without appraisal delivery dates, the district has no recourse to compel the vendor to perform the services within its most advantageous timeframe.
IAAO's Standard on Contracting for Assessment Services, Section 4, requires contracts have specific provisions, including the timeframes when services or goods will be delivered. The IAAO standard for monitoring contract performance requires the tax appraiser to monitor the provisions in the contract. IAAO's standard also recommends establishing a project review committee for projects that affect several departments or that have multiple objectives. A project review committee can provide the CAD with an effective mechanism for coordination, monitoring, and review. Section 5.5 states that contract monitors are generally hired to review the services and products provided under the contract (the monitor may also be an independent third party) An effective monitor must be thoroughly familiar with the request for proposal (RFP) and successful bid, and, in fact, may also have served as a consultant in development of the RFP or selection of the successful bidder. The contract monitor must stay in close contact with the project and review major tasks in a timely manner.
Revise the appraisal services contract to reflect the guidelines in the IAAO Standard on Contracting for Assessment Services.
In organizing and administering an appraisal district, the chief appraiser is responsible for hiring, firing, and training personnel, for ensuring compliance with a wide range of legal requirements and for the establishing and maintaining policies and procedures for effective appraisal district office operations. The district is also required to comply with Comptroller Rules concerning application forms and appraisal records. Specific responsibilities of the chief appraiser include: discovering, listing and appraising property; determining exemption and special use requests; organizing periodic reappraisals; and notifying taxpayers and taxing units about matters that affect their property values.
The chief appraiser is required by law to prepare and certify an appraisal roll for each taxing unit participating in the district. Certification of the appraisal roll for the 2003 tax year by the district was completed according to the law.
The Anderson County Appraisal District does not have well documented policies and procedures to guide the day-to-day operations of the district in areas such as payroll processing, accounting, purchasing and the like. Some policies and procedures are listed in the employee handbook as well as in individual job descriptions. In addition, the Software Group, the appraisal district's computer software provider, has provided an operator's manual to the district but it is a stepwise reference to show how to enter data for end users and generate reports. The chief appraiser said the appraisal district has some written policies and procedures but most are communicated verbally and the district relies on one-on-one-training in applying its policies and procedures.
Instead of working with detailed written procedures, long time employees of the district have a series of memos, notes or long term memory to guide them through the day-to-day processes. Policies adopted by the board are recorded in board minutes, but it is unclear how certain policies are translated into practice in the district, nor is it clear that the chief appraiser or any other employee is responsible for monitoring day-to-day operations to insure that policy decisions of the board are carried out.
A policy tells a person, department, group of individuals what they must do, whereas as procedure enumerates how it can be accomplished.
Well-written and organized procedures:
- implement and assure compliance with board policies as well as documenting the intent of those policies;
- protect the institutional knowledge of an organization, so that as experienced employees leave, new employees have the benefit of the others' years of experience;
- provide the basis for training new employees; and
- offer a tool for evaluating employees based on their adherence to procedures.
In the absence of well documented procedures and policies, the work of the appraisal district may come to an abrupt stop if key personnel leave a position as a result of sudden illness, death or other personal tragedies. Other examples abound of whole departments without trained back-ups for critical positions like payroll, and of poor training techniques that show new employees how to perform a task, but not why.
To be effective, policy and procedure manuals are updated and kept current at all times. This means setting up a system for regular updates and distribution, as well as periodic reviews to ensure that all old policies are removed when no longer needed.
The Jefferson appraisal district, recently reviewed by the comptroller's office, maintains a current and comprehensive policy and procedure manual detailing procedures for payroll, accounting, purchasing, and related operations procedures.
Develop administrative policies and procedures to guide day-to-day operations.
Appraisal districts across the state have begun to use technology to develop detailed property and appraisal records that are easily accessible to staff and the public. These information technology systems allow staff to effectively manage data on individual properties and make decision-making in the appraisal process more efficient. Automated systems enable the appraiser to consider several variables simultaneously in completing an appraisal, usually resulting in a more thorough and accurate appraisal.
Anderson CAD does not have a written plan or target date to complete the integration of its geographic information system with its appraisal system.
Anderson CAD began this mapping project in 1999. Maps of the entire county are available and about 30 percent of the work necessary to match parcel information with the maps is complete.
Since the systems have not been integrated, appraisers have to access the data from the appraisal system via an appraisal card and physically match it to a manual map of the individual property. This makes completion of an appraisal longer and less efficient. An integrated system will allow appraisers to locate property faster, perform a more detailed review of the property more often, and better document appraisals of similar properties.
The district's goal is to integrate the appraisal system with the geographic information system. Once integrated, the system will allow appraisers to visually analyze properties in relation to nearby properties and their traits and characteristics that influence value. The system will allow the appraiser to access all the data needed in order to analyze sales and make comparisons to similar properties. The integrated system will allow appraisers to make more accurate appraisals since the appraiser will be able to review all of the available data on the property as it is layered over an actual photograph or map of the property. This will ease compliance with Section 23.01, Tax Code, which requires appraisers to consider the individual property characteristics of a property in performing an appraisal.
The integrated system will encourage more effective sales and market analyses. The appraisal district can quickly perform ratio studies by grouping or stratifying properties with similar physical characteristics, regardless of their geographic location in the appraisal district. An additional benefit from more effective market analysis is quick updates to the CAD's appraisal schedules.
Combined with detailed aerial photographs, the integrated system can allow appraisers to measure properties and make appraisal decisions on individual properties without physically inspecting the property. This would be particularly useful in cases where the appraiser's access to a property is limited. Likewise, an integrated system can aid the appraiser's analysis of properties in an area by comparing a previous year's maps and photos to current maps and photos.
Lastly, the integrated system can be an aid for appraisal review boards. Review board members can examine properties and analyze them in relation to surrounding properties during hearings and deliberations.
Develop an implementation plan and timeline to complete the integration of the district's appraisal and geographic information systems.