In July 2004, the Comanche Independent School District (Comanche ISD), located in Comanche County, Texas, was identified as one of 54 school districts in the state meeting the criteria that initiate an Appraisal Standards Review (ASR) of the county appraisal district that served them. In March 2005, the Comptroller's Property Tax Division (PTD) began an Appraisal Standards Review of the Comanche Central Appraisal District (Comanche CAD). Appraisal districts refer to themselves as county or central appraisal districts. Comanche CAD specifically refers to itself only as a central appraisal district. In this report, CAD use in relation to Comanche CAD means central appraisal district. Otherwise, CAD means county appraisal district.
Appraisal Standards Reviews
The 78th Legislature, Regular Session, directed the Comptroller's office to conduct appraisal standards reviews of county appraisal districts if the Comptroller finds in its annual Property Value Study (PVS) that the appraisal district has one or more "eligible" school districts. Eligible school districts are those that meet all of the following conditions:
- the district's values are invalid in the most recent property value study;
- the district's values were valid in the two studies preceding the most recent study; and
- the district's local value is above 90 percent of the lower threshold of the margin of error.
In Texas, public education is paid for by a combination of state and local funds. Local funding comes from local property taxes. The chief appraiser of each county appraisal district (CAD) determines local property values, and school districts set tax rates that determine the amount of local tax revenue. Appraisal districts, under most circumstances, are required by law to appraise property at or near market value. Market value, in simple terms, is the price for which a property would sell under normal conditions. State funding is based on the total taxable property value within each school district as determined by the PVS.
The PVS independently estimates the taxable property value in each school district to ensure that state values reflect market value, which in turn ensures that school districts have approximately the same number of dollars to spend per student, regardless of the school district's property wealth or lack of property wealth. School districts with less taxable property value per student receive more state dollars for each pupil than districts with more value per student. The state's fair distribution of school funding depends largely on the Comptroller's taxable value findings.
By conducting appraisal standards reviews, the Comptroller's office helps school districts to understand the reason for the invalid finding so they can effectively work with the appraisal district to correct the problems and achieve market values. ASRs identify problems and recommend changes in procedures or methods to improve appraisal accuracy.
An ASR examines and evaluates a county appraisal district's appraisal practices including appraisal planning, appraisal procedures and methodology, and application and adherence to appraisal standards. The Tax Code and Comptroller rules are the major criteria used to measure the appraisal district's performance. The evaluation of the appraisal district's appraisal methods are based on a comparison of local methods and procedures to those generally accepted by the mass appraisal industry in Texas. The Tax Code dictates certain appraisal procedures or standards such as the Uniform Standards of Professional Appraisal Practice (USPAP), specifically Standard 6: Mass Appraisal and Standard 7: Personal Property. Also the International Association of Assessing Officers (IAAO) Standards on Assessment are used as guidelines on the operation of an assessment office.
The two principal focuses of the review are to determine why a school district served by the CAD was deemed eligible and to make recommendations to improve appraisal practices so the school district's values can be determined valid in future studies. The review evaluates five broad functional areas of CAD operations, including information processing systems, district staffing, property mapping and discovery, appraisals and appraisal standards.
The review methodology includes a self-assessment completed by the CAD, staff interviews, reviews of written policies, procedures, plans, financial and management audits, and assessments of manual and automated records systems.
As the result of the review process, the Comptroller is issuing this report of its findings that includes recommendations for change and commendations for exemplary district appraisal practices. The appraisal district is required by law to comply with the recommendations within one year of the release of this report. If the Comptroller determines that the appraisal district board of directors failed to take remedial action within one year after the issuance of the review, the Comptroller shall notify the district judges serving in the county, who shall appoint a five-member board of conservators to implement the recommendations. The board of conservators shall exercise supervision and control over the operations of the appraisal district until the Comptroller determines pursuant to the annual property value study, Section 403.302, Government Code, that in the same year the taxable value of each school district for which the appraisal district appraises property is the local value for the school district. The appraisal district shall bear the costs related to the supervision and control of the district by the board of conservators.
While the review team found several commendable practices implemented by dedicated and hardworking district employees, Comanche CAD is facing a number of challenges in achieving and maintaining consistent valid findings, including:
- documenting procedures and appraisal methods.
Findings and Recommendations
Document Procedures and Appraisal Methods
Develop comprehensive appraisal manuals and procedures. The Comanche CAD has not developed a comprehensive appraisal procedures manual that the appraisal staff can reference in completing their appraisals. The district does have an appraisal manual, but it contains brief descriptive guides for classing site built residential improvements, manufactured housing, mobile homes and commercial improvements, not detailed procedures for conducting appraisals. Appraisers in the district have access to the Marshall & Swift Valuation guide, but the appraisal district only has one copy. Rather than employing a procedures manual for appraisers to reference, the appraisal district relies on chief appraiser-led training in the field. Procedure manuals are useful as evidence during appraisal review board hearings and for demonstrating that the district is complying with its own policies. Section 23.01, Tax Code, mandates that property is to be appraised by applying generally accepted appraisal methods and techniques and that appraisal districts comply with the USPAP. CADs must use similar appraisal methods and techniques and apply these to the same or similar properties, while taking care to account for the contributions of individual property characteristics on value
Develop and establish a reappraisal plan. The district has a two-page reappraisal plan that is insufficient for guiding district reappraisals of property. A lack of an effective plan contributed to the Comanche ISD being declared an eligible district. Section 25.18, Tax Code, requires appraisal districts to implement a plan for reappraisal. The good reappraisal plan not only provides for reappraisal of all real property in a district at least once every three years, but also can be a roadmap for performing the work. It is also a communication tool that shows the appraisal district Board of Directors how the appraisal district staff plans to accomplish its appraisals and allows the board to direct the appraisal activities by amending the plan as presented by the chief appraiser
Develop an implementation plan and timeline and complete the integration of the district's appraisal software and geographic information systems. Comanche CAD has been trying to integrate its appraisal software and geographic information systems (GIS) for some time. When complete, the integrated systems will allow for more thorough and detailed appraisals and will provide the district with the ability to locate and appraise property more effectively. The district needs to complete this project as soon as possible and should develop a plan and a timeline for completing the software integration project.
The review team identified a commendable practice in Comanche CAD that other county appraisal districts may do well to review and implement where appropriate
The district addressed findings in its 2002 financial audit in a timely manner. Section 6.063 of the Tax Code requires districts to have annual financial audits. In 2002, the district's auditor found that invoices for Appraisal Review Board member travel and per diem and invoices for janitorial services were unsigned. The district adopted a policy of having all invoices signed and the audit finding was not noted in the district's 2003 audit.