Findings of the Discretionary Performance Audit
This chapter of the report addresses commendations, findings and recommendations from the discretionary performance audit of the Concho CAD in three sections:
2.1 Commendable Practices
2.2 Key Findings and Recommendations
2.3 Other Recommendations
This review was conducted by the Comptroller's office under the authority of Property Tax Code Section 5.12 (h), concerning performance auditing of appraisal districts. It was not conducted as the result of the findings of a Property Value Study, and the appraisal district is not required by law to implement its recommendations. A final draft of this report, including the findings and the recommendations, will be delivered to the chief appraiser, the Concho CAD board of directors and the governing body of each taxing unit participating in the appraisal district, as required by the Property Tax Code.
As part of the review process, PTD identifies best practices that improve efficiency or, in some instances, address previous operational weaknesses. We commend Concho CAD for its efforts and present these commendations to give other appraisal districts ideas for improving their operations.
Concho CAD has well-written job descriptions for staff members and a systematic approach for annual performance evaluations.
Each CAD employee has a written job description for his or her position, including specific duties and responsibilities. The current chief appraiser developed the job descriptions using objective, measurable criteria. For example, the job description for office assistant breaks the position's duties into collections, appraisal and administrative categories, and lists requirements and expectations for the position.
The current chief appraiser also has implemented an annual written performance evaluation system, evaluating each employee in June. The evaluation is based on a pre-printed office form that asks the reviewer to first discuss the employee's responsibilities and accomplishments over the previous year. It then calls for evaluations in eight areas, with a five-option rating system running from unsatisfactory to excellent. The eight graded categories include job knowledge, job performance, job productivity, dependability, cooperation, initiative, work environment and safety and overall performance. Finally, the evaluation requires an action plan detailing each employee's weak and strong points as well as a plan for improvements.
IAAO's Property Appraisal and Assessment Administration, Chapter 16, Elements of Administration, states that managers are responsible for employee development. They can use training, counseling and performance reviews to identify talents and help employees improve their performance. According to the chief appraiser, communication between supervisors and staff is essential.
Concho CAD has well-written job descriptions for staff members and a systematic approach for annual performance evaluations.
The CAD communicates employee expectations to new hires effectively.
The chief appraiser developed a memorandum detailing her views, plans, expectations and concerns for the operation of Concho CAD. She met with all staff on May 10, 2005, to disseminate this information. Any employees hired subsequently to the meeting have been given a copy of the memorandum.
In addition, new employees receive a copy of the Concho CAD handbook detailing board and employee policies. The employee must sign a form acknowledging receipt of the handbook. The signed form is retained in the personnel file. Another one-page memorandum given to each new employee outlines learning expectations, licensing expectations, dress code and policies concerning personal phone calls.
Communicating expectations to employees assists both management and staff in understanding their roles and responsibilities and helps promote higher employee morale through the fair administration of policies.
The chief appraiser has implemented an employee orientation process that effectively communicates her expectations.
The CAD has developed efficient forms for internal use.
For example, the CAD developed and uses a mileage voucher form. Appraisers and other employees can track the mileage of personal vehicles used for business purposes. The form details the date, description of work, starting and ending mileage, total mileage and amount due. According to the CAD's travel reimbursement policy, mileage is paid at the reimbursement rate offered by the state of Texas. This form is signed by both the employee and the chief appraiser. A copy of the reimbursement check stub is attached to the back.
The CAD retrieves and prints most appraisal forms straight from the Comptroller's Web site, downloading them as needed so they do not use outdated forms. The CAD has created its own forms for internal use to assist with checks and balances and efficiency.
The CAD also has developed a deposit report form that details monies to be deposited in denominations. It also describes the source, such as costs or fees. This is an effective and efficient way to track receipts and deposits.
Concho CAD created internal forms for tracking its internal operations.
Key Findings and Recommendations
As part of the review process, PTD makes recommendations designed to address problems identified. This section provides recommendations addressing key challenges associated with Concho CAD's activities. They can help the CAD in serving both the taxing units of Concho County and its many property owners.
Generally Accepted Appraisal Practices
Three general appraisal methods or approaches–cost, income and market–must be considered in determining the market value of property. The appraiser must use the method most appropriate to a particular property.
Additional information about the approaches to determining or appraising value can be found in appraisal textbooks and IAAO standards. Appraisers usually determine the value of producing mineral deposits, such as oil, gas and coal, and the value of many utility and commercial properties, by using the income approach to value. Most appraisal districts contract with consultants to appraise mineral and utility properties. The chief appraiser can provide information that helps the contractor decide the proper method to use to appraise these properties.
Concho CAD has not conducted a full reappraisal of the entire county since the current chief appraiser took office in 2003. Property Tax Code Section 25.18 requires all appraisal districts to conduct a complete reappraisal at least once every three years.
After reviewing the preliminary draft of the performance audit, the chief appraiser added, "schedules were addressed and some properties were appraised every year" and, "in 2005, a complete reappraisal was conducted in which property inspections of certain locations, land schedules and building class schedules were updated." In an interview, however, the chief appraiser indicated that the field appraisers were not going out and appraising property. When they did, they did not visit the properties recommended by the chief appraiser. In a review of 81 appraisal cards pulled randomly during the onsite visit, 78 cards had a 2004 appraisal date, two cards had a 2006 date and only one card had a 2005 date.
Prior to the 2007-08 reappraisal plan, Concho CAD did not have a written reappraisal plan. The chief appraiser also added to the draft of this report that she "laid out an effective reappraisal plan to the employees during staff meetings, although the plan was not a 'written adopted by the board of directors' plan it would have been effective had the appraisers carried it out; subsequently those appraisers are no longer employed at the CAD."
In 2004, 2005 and 2006, the CAD reappraised properties in response to requests from taxpayers. When reviewing the draft report, the chief appraiser also added, "this was partially the reason for the late notices it was not all that was done. Schedules were changed, sales analysis conducted, physical inspections for certain locations within the county were preformed."
The CAD, then, did not have an effective reappraisal strategy. Reappraising only upon request is not an effective or comprehensive strategy.
The chief appraiser also reported that she faced staff resistance in performing appraisals over the course of the last two years, making it difficult for the CAD to keep to an effective reappraisal schedule. The certification of the appraisal roll was delayed in large part because the chief appraiser felt that her reappraising efforts had not been adequate by the normal cut-off date. Results of the 2004, 2005 and 2006 Property Value Studies also tend to support that Concho CAD's reappraisal efforts have not been keeping up with changes in the market. Ratios that decrease over three years may indicate that cost schedules should be updated, appraisal practices should be altered or reappraisal efforts should be increased.
During her review of the draft, the chief appraiser also added that, "in 2007 a complete reappraisal was conducted by land, building and personal property schedule changes along with over 1/3 of the county being physically inspected in accordance with the adopted written reappraisal plan. Cost schedules and appraisal practices have been altered to produce an effective reappraisal effort for 2007 and subsequent years."
Property Tax Code Section 25.18 states:
(a) Each appraisal office shall implement a plan for periodic reappraisal of property approved by the board of directors under Sec 6.05(i).
(b) The plan shall provide for the following reappraisal activities all real and personal property in the district at least once every three years:
(1) identifying properties to be appraised through physical inspection or by other reliable means of identification, including deeds or other legal documentation, aerial photographs, land-based photographs, surveys, maps and property sketches;
(2) identifying and updating relevant characteristics of each property in the appraisal records;
(3) defining market areas in the district;
(4) identifying property characteristics that affect property value in each market area, including:
(A) the location and market area of property;
(B) physical attributes of property, such as size, age and condition;
(C) legal and economic attributes; and
(D) easements, covenants, leases, reservations, contracts, declarations, special assessments, ordinances or legal restrictions;
(5) developing an appraisal model that reflects the relationship among the characteristics affecting value in each market area and determines the contribution of individual property characteristics;
(6) applying the conclusions reflected in the model to the characteristics of the properties being appraised; and
(7) reviewing the appraisal results to determine value.
In 2005, for example, San Jacinto CAD took steps to address invalid findings in the 2004 PVS by reappraising the entire county. The 2004 PVS indicated that San Jacinto CAD was incorrectly appraising Category A, Single Family Residential, with a ratio of 0.8711. In the 2005 preliminary PVS, San Jacinto CAD brought Category A up to a ratio of 0.9947. San Jacinto CAD reappraises annually.
Reappraise all properties in Concho County at least once every three years, as required by law.
Concho CAD was late in certifying the tax rolls for 2004, 2005 and 2006 to the taxing units.
The current chief appraiser joined the CAD on June 3, 2003, replacing a chief appraiser whose contract was not renewed after 21 years with the CAD. At the beginning of the current chief appraiser's employment, the appraisal staff consisted of a full-time appraiser/bookkeeper with 20 years of experience and an appraiser trainee/clerk who had been with the CAD for 13 years. The chief appraiser performed appraisals in 2004, but discontinued regular fieldwork in 2005 to devote more time to administrative responsibilities.
The chief appraiser stated that when she came to the CAD, "reappraisals were not complete and the 2003 notices had not been done; certain parts of the county had been reappraised each year and others not appraised for over 10 years." The office was, in her judgment, in disarray before her employment. In trying to correct everything at once, some tasks were delayed.
According to the chief appraiser, the staff appraisers generally worked together when appraising rural property, but worked separately when working in the towns of Eden and Paint Rock. In addition, the chief appraiser stated that requests from individual property owners for property reappraisals, regardless of where they are located in the county, were part of the appraiser's work assignments.
According to the chief appraiser, long-term employees may have felt some animosity when she took office. The chief appraiser told the board on several occasions that she was finding it difficult to get the two appraisal employees to address some functions, such as reappraising on a timely basis. Consequently, the chief appraiser was unable to complete her duties in a timely manner.
The chief appraiser contends she verbally told the appraisers to complete fieldwork by certain dates. According to the chief appraiser, the staff appraisers did not complete their appraisal assignments for 2004, 2005 and 2006 in a timely manner. She began extending completion dates as it became obvious that appraisal work was delayed. According to the chief appraiser, her primary reason for extending the completion dates was to accommodate individual property owners' requests for reappraisals. She found it hard to get her staff to produce work on time, so much of the regular appraisal work was never completed.
According to Property Tax Code Section 41.12, the chief appraiser is responsible for submitting the appraisal records to the appraisal review board (ARB) by May 15 for approval by the ARB on or before July 20 of each year. After the ARB has approved the appraisal records, the chief appraiser must certify the appraisal roll to each taxing entity.
Property Tax Code Section 26.01(a) requires the appraisal roll to be certified to the assessors of each taxing unit by July 25 of each year. Section 26.01(e) requires the chief appraiser to prepare and certify an estimate of the taxable value of school district property by June 7.
According to the chief appraiser, school districts did contact the CAD and she was able to supply estimates of total taxable values for use in the school district's budgeting.
She also said the late certifications in 2004 and 2005 were due to requests for reappraisal from county residents and difficulties in getting field work completed; several deadlines were set and missed. The chief appraiser certified the 2004 appraisal roll on Aug. 12, 2004, and the 2005 appraisal roll on Aug. 3, 2005.
The chief appraiser did not certify the 2006 appraisal roll until Sept. 12, 2006. The chief appraiser cited inadequate staffing as one of the main causes for the late certification. One employee of the CAD retired early, on July 31, 2006, and the other was dismissed on Oct. 2, 2006.
Concho CAD contracts with Capitol Appraisal Group Inc. (CAG) for the appraisal of oil and gas, wells, public utilities, telephone companies, pipelines, railroad systems, television and broadcast towers and other items. All notices and renditions connected to CAG went out on time.
Performance issues were apparent in 2004 and continued in 2005. The chief appraiser waited until 2006 to confront the issue of unproductive and acrimonious employees. These issues were not formally documented until June 6, 2006, when the chief appraiser finally evaluated an employee who subsequently was dismissed. The other problem employee chose early retirement in lieu of dismissal before her evaluation was completed.
According to the board chairman, he and the rest of the board were supportive of the chief appraiser, although the board provided little oversight and made no response in board meetings to reports of difficulties with the two employees. The board has no evaluation process to assess the efficiency of the chief appraiser, and nothing in the minutes suggested that the board was directing the chief appraiser in this matter.
The board expects the chief appraiser to ensure that the appraisal rolls are certified on time in 2007, but has not developed a plan of action for ensuring that this will happen.
According to the chief appraiser, failure to complete appraisal work in a timely manner has produced numerous violations of the Property Tax Code and raised concerns among the CAD's taxing entities. Although the CAD may have been reappraising, it was not doing so in an effective manner, and it did not have a written reappraisal plan.
Ratios for the CAD declined steadily from 2004 through 2006. In the 2006 preliminary PVS, Paint Rock ISD values were invalid, but the appraisal district appealed the findings and the school district received local value.
Develop and implement a plan to certify appraisal rolls to each taxing entity in Concho County as required by Property Tax Code Section 26.01.
Concho CAD was late in mailing notices of appraised value for 2004, 2005 and 2006 to taxpayers.
According to the chief appraiser, failure to complete appraisal work in a timely manner contributed in the failure to provide notices of appraised value to taxpayers in compliance with Property Tax Code Section 25.19.
In 2004, the CAD mailed appraisal notices on June 30. According to the software contractor, while there were software system delays in printing the notices, the CAD also failed to make timely appraisal entries in the software that were needed to get the notices printed and mailed in the period allotted by the Property Tax Code.
The software vendor further stated that:
...although some of the software program problems caused delays for inputting information, the main problem was [the CAD] trying to overcome conversion problems from another software vendor in 2003. Some of these data problems caused issues with parcel splits, adding new parcels, building drawings and problems running some reports. The system would not hold codes or would not hold the removal codes.
In 2005, the CAD mailed appraisal notices on July 1. The software contractor again confirmed that software system delays occurred, but again stated that delays in obtaining the appraisal information entries in the software contributed as well. After all the entries were made, hardware problems caused further delays; the CAD's printers were not capable of handling the print job. The CAD made several attempts to print the notices, and then suspended printing. The software contractor instead printed the notices and mailed them to the CAD. The CAD sorted, stuffed and mailed the notices to taxpayers from its office.
The 2006 appraisal notices were mailed on Aug. 15, 2006. The software contractor again confirmed that software system delays occurred. The software vendor again printed the notices and, this time, drove them to the CAD for sorting, stuffing and mailing.
According to the chief appraiser, one of the software company's main programmers resigned, causing program issues that took time to correct. The CAD's server was too small for the information, causing it to freeze when running long reports such as notices of appraised value. The software company has since fixed most of these issues.
Property Tax Code Section 25.19 requires the chief appraiser to deliver a clear and understandable written notice to property owners of the appraised value of their property by May 15 or as soon as possible thereafter.
Failure to meet the deadline infringes on the time allotted for taxpayers to appeal the notices.
Mail notices of appraised value on time as required by Property Tax Code Section 25.19.
Concho CAD has a contract with an outside firm for the appraisal of residential and commercial real properties.
Concho CAD reported in its appraisal district operation survey that it had three full-time appraisers. Two appraisers subsequently left the CAD. As of the 2006 operations report, Concho CAD had 7,197 locally appraised parcels. According to IAAO's Property Appraisal and Assessment Administration, Chapter 16, "One full-time employee for each 2,500 parcels is typical, although this proportion varies greatly among jurisdictions. In smaller jurisdictions, the work load averages about 1,500 to 1,700 parcels per employee; in larger jurisdictions, about 3,000 to 3,500."
The CAD has budgeted $22,250 in 2007 for a full-time employee to replace one of the appraisers who left the CAD. With the amount budgeted, however, the CAD may not be able to attract an experienced appraiser. The only remaining CAD employee able to conduct appraisals is the chief appraiser. The two other staff members are not certified by the Board of Professional Tax Examiners (BTPE) and have yet to begin the certification process; neither is trained to perform appraisals. The chief appraiser stated that one staff member registered with BTPE in January 2007 and began the courses for certification.
For the last 20 years, Concho CAD has used in-house appraisers for the majority of its appraisal work. The CAD has struggled, however, to hire and retain qualified appraisers. Excluding the chief appraiser, the last time the CAD hired an employee trained as an appraiser was 1986. Since hiring is difficult, the CAD was training one of its in-house clerks in appraisal practices when she left the CAD. The CAD has not replaced these two employees, and has hired an appraisal firm to do its appraisal work. At the time of the site review, the appraisal services contract was for a term of one year. According to the chief appraiser, the contract has since been renewed to appraise a third of the county for 2008.
The contract with Lisco Appraisal Service requires the company to measure and classify residential and commercial real properties in a third of the CAD's area by May 1, 2007, for $12,000. The contract requires that the company devote as much time to deliverables as "reasonably necessary" for "satisfactory performance." Payments for the contract are scheduled. The first payment was made on Jan. 1, 2007, and consisted of 40 percent of the total contract. The second payment, again 40 percent of the total contract fee, was made on May 1, 2007. The contract stipulates the company not hold appraisal work until the due date of May 1, 2007, but turn in appraisal work as it is completed. The last payment is to be made on Oct. 1, 2007, before the contract terminates on Oct. 31, 2007.
Subsequent contracts with Lisco Appraisal Service could be made more beneficial by outlining specific areas the company will appraise and correlating the contract with Concho CAD's reappraisal plan.
Consider whether to continue and/or expand the current appraisal services contract or hire new CAD appraisers.
Concho CAD should consider the costs and benefits of the arrangement to decide whether it will be more beneficial, both financially and for appraisal effectiveness, for the CAD to retain the contractor or to hire two new appraisers. The board has approved a 2008 contract with Lisco Appraisal Services for $1,000 less than 2007.
If the CAD chooses not to continue the contract, it should at least conduct an annual staff needs analysis and establish staffing allocation guidelines to ensure that it can assemble a staff appropriate for its annual reappraisal plan goals.
Keeping the contract, on the other hand, might help ensure that the CAD can adhere to its biennial reappraisal plan and that there are enough appraisers on staff, or parcels contracted out to appraisal firms, to adhere to the IAAO's recommended number of parcels-per-staff member. The contract should be monitored to make sure that deliverables are on time and complete, and for satisfactory performance. The chief appraiser stated that this was done for 2007.
Ratio studies conducted by Concho CAD are not being used effectively to improve appraisal performance.
According to the chief appraiser, sales data in the area is limited; the CAD relies on taxpayers, realtors, fee appraisers and the Comptroller's office for sales information. She stated that the CAD mails sales letters to both the buyer and seller when a deed is filed with the county clerk and estimates that about 50 deeds are filed each month. According to the chief appraiser, about 20 percent respond. The chief appraiser uses an Excel spreadsheet to calculate the ratio between the sales price and the appraised value of sold properties.
The chief appraiser stated that she performs ratio studies several times throughout the year to determine appraisal performance on the properties the CAD appraises. She lacks training on the CAD's automated appraisal system's ratio study module, but hopes to start using it in the near future. She stated sales and deed information is entered into the system, which has been in use since 2005. The contract with the software provider has a clause requesting the firm to provide training at an additional fee of $500 per day, including travel expenses and out-of-pocket charges. The training can be customized as requested by Concho CAD.
Using her Excel spreadsheets, the chief appraiser can sort sales by property type, classification and jurisdiction, but not by value or by neighborhood. Calculations are performed for mean, weighted mean, median, mode and standard deviation. The chief appraiser stated that the results are used to determine appraisal maintenance and reappraisal priorities.
Results of the 2004 and 2005 PVS indicate the CAD is not using ratio studies effectively. For example, overall appraisal ratios for single-family residences (Category A) in Eden CISD fell nearly 9 percent, from 100.31 percent in 2004 to 91.46 percent in 2005. The appraised value of vacant lots (Category C) in Paint Rock ISD fell more than 10 percent, from 98.67 percent of market value in 2004 to 88.48 percent of market value in 2005. The weighted mean for rural land and improvements (Category D) in Paint Rock ISD was more than 10 percent lower in 2005 than in 2004, falling from 93.90 percent to 83.85 percent of market value.
Effective ratio study methods would have indicated the need to adjust single-family residential building schedules and land tables. The chief appraiser stated that the poor appraisal performance in 2005 was due to her staff's failure to complete the reappraisal of the city of Eden in 2005 and the high selling prices of land around O.H. Ivie Lake in Paint Rock ISD. The board chairman stated absentee landowners pay high prices for hunting land.
According to the chief appraiser, ratio studies performed in 2006 were used for appraisal maintenance and to test cost schedules for the 2006 tax year. She stated that rural land and brick home schedules were updated based on ratio study results. The success of the chief appraiser's efforts to improve appraisal performance, however, proved mixed, as Paint Rock ISD received invalid findings in the preliminary 2006 PVS. After the CAD protested, Paint Rock ISD was awarded local value. The 2006 PVS findings indicate that Eden ISD is within the confidence interval.
Property Tax Code Section 23.01 requires that a CAD appraise property at its market value. IAAO's Standard on Ratio Studies, Section 4, lists the six basic steps of ratio studies:
- definition of purpose and objectives;
- collection and preparation of market data;
- matching appraisal and market data;
- statistical analysis; and
- evaluation and use of results.
For sales analysis to be effective in measuring appraisal performance, appraisal districts should not limit such analyses to location only. They also should review property characteristics such as class, size, age and value. Stratifying sales information according to property characteristics is useful in identifying appraisal variations among property types. Moreover, while the PVS is a good tool for appraisal planning, the timing of the study and its results are not available in time to resolve current-year appraisal weaknesses. Good sales analyses can assist the CAD in preparing more accurate ratio studies.
By improving its ratio study methods, Concho CAD can ensure that it makes necessary, timely adjustments to produce values at or near the market. Effective appraisal districts conduct and apply frequent ratio studies with associated appraisal maintenance, making necessary adjustments to produce values at or near the market.
Nueces CAD, for example, has a computerized appraisal system that provides appraisal analysis through ratio studies within and among property classifications. Nueces CAD's appraisal leadership make reappraisal and value maintenance decisions based on ratio study runs within property classes at least quarterly.
Improve methods of using ratio studies to eliminate unequal appraisals and ensure that the CAD appraises all categories of property at market value; acquire the training needed to use the automated ratio study module from the software provider.
At minimum, ratio studies should be stratified by value, property type, classification and location to determine appraisal performance and uniformity. Using the automated appraisal system's ratio study module will save time, increase efficiency and provide more in-depth analysis. According to the chief appraiser, Lisco Appraisal Services is helping the CAD with this.
The board does not have a written process for hiring or evaluating a chief appraiser or a board-approved, written job description.
Like all other employees, the chief appraiser has a detailed job description, but it is one she brought with her from another CAD. Although the job description is detailed, the board has not approved it. According to the chief appraiser and board chairman, the board provides the chief appraiser with feedback at every board meeting. In their opinion, this feedback constitutes an ongoing evaluation.
The board does not formally communicate its opinion of her performance as part of a performance evaluation, however, and there is no formal documentation of the evaluation. Board surveys indicate some difference of opinion about whether the board does a formal performance evaluation. It is difficult to tell from the board minutes what performance criteria are being communicated to the chief appraiser, whether the board is satisfied with the chief appraiser's performance and what it wants corrected.
For example, while a board member stated in the PTD survey that he was dissatisfied with late certifications of the appraisal roll, the board minutes do not reflect any feedback to the chief appraiser about this issue. The chief appraiser has delivered appraisal notices and certified the appraisal roll late in the calendar year each year for the last three years. Yet the minutes do not reflect any direction from the board on this matter.
As another example of problems associated with unclear job responsibilities, the principal taxing entities were so dissatisfied with the CAD's performance in certifying the roll this year that they requested this review.
Chief appraisers should ensure that the CAD hires competent staff, documents its procedures, performs appraisals, evaluates employees and performs all other normal functions of an appraisal district. A qualified chief appraiser is important to effective operations.
Without written guidelines, no objective evaluation of the chief appraiser's performance is possible. The CAD could not provide the review team with any documentation on the chief appraiser's performance.
Without an objective performance evaluation system and agreed-upon expectations, evaluations may be subjective. The performance evaluation process allows the chief appraiser and board to discuss each party's expectations and the limitations that affect them.
In Nueces CAD, for example, the board has a well-defined job description for the chief appraiser and an objective evaluation tool for measuring the chief appraiser's job performance. The job description contains the statutory responsibilities set forth in Property Tax Code Section 6.05, as well as specific goals and expectations required by the board. The job description clearly defines the role of the chief appraiser and lays the groundwork for an objective evaluation. The chief appraiser receives an annual performance evaluation on the anniversary date of his/her hire. The evaluation tool allows for input from all board members and allows the chief appraiser to address his/her own goals and objectives during the evaluation period. In addition, the evaluation establishes goals and objectives for the next 12 months.
An objective evaluation system ensures that the board and chief appraiser agree on what is expected of the role and eliminates the possibility of subjective evaluations colored by emotion rather than actual performance.
Develop a job description and an objective set of evaluation measures for the chief appraiser position and use them to evaluate the chief appraiser annually.
Concho CAD has not developed well-documented policies and procedures for guiding its daily payroll processing, accounting, purchasing, budget writing and other tasks.
Instead, the chief appraiser handles most administrative functions for the office, although the administrative assistant handles bookkeeping. It is not clear how certain policies are translated into practice, or whether the chief appraiser or any other employee is responsible for monitoring day-to-day operations to ensure that board policy is carried out.
While it lacks written operating procedures, the CAD's job descriptions do indicate general responsibility for various duties. These descriptions, however, do not provide specific procedures for these tasks. Concho CAD has experienced 100 percent turnover in the last four years. The lack of well-documented policies and procedures could cause mistakes and inefficiencies in the work of new employees.
A policy tells a person, department or group of individuals what they must do, while a procedure describes how it should be accomplished. In the absence of documented procedures and policies, the work of the CAD is at risk due to changes in key personnel.
Well-written and organized procedures:
- ensure compliance with board policies as well as documenting their intent;
- protect the institutional knowledge of an organization, so when experienced employees leave, new employees have the benefit of their years of experience;
- provide a basis for training new employees; and
- offer a tool for evaluating employees based on their adherence to procedures.
To be effective, policy and procedure manuals must be updated regularly and kept current at all times. This requires 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 CAD's statutory responsibilities are varied. It is important that policies and procedures be developed to identify the day-to-day procedures needed to meet these obligations, as well as the staff responsible for the tasks involved.
Jefferson CAD, for example, has an excellent set of written policy and procedures manuals for daily operations. Jefferson CAD maintains a current and comprehensive policy and procedure manual detailing procedures for payroll, accounting, purchasing, budget, travel, bank reconciliations and similar procedures.
Develop written administrative policies and procedures to guide day-to-day operations.
Concho CAD does not have written procedures for gathering and analyzing sales.
According to the chief appraiser, sales letters are mailed to each buyer and seller whenever a deed is filed in Concho County. The chief appraiser estimates that about 50 letters are mailed each month, with the CAD receiving responses about 20 percent of the time. She stated that sales data also is obtained from area realtors, fee appraisers and the Comptroller's office.
The chief appraiser stated that when a sales letter is received, she reviews the information supplied and, if necessary, adjusts the sales data based on her knowledge and expertise. Local guidelines for adjusting sales are not written, but the chief appraiser stated that she refers to IAAO's Property Appraisal and Assessment Administration when necessary. The chief appraiser reviews the sales annually by performing ratio studies.
Without written guidelines for verifying, confirming and adjusting sales, however, the CAD risks using sales for appraisal maintenance that do not accurately reflect current market values. Confirmation and validation of sales is a critical step in determining local market values. In 2005, the Comptroller's PVS showed single-family residences in Eden CISD were being appraised at 91.46 percent of market value; vacant lots and rural land in Paint Rock ISD also were being appraised below current market, at 88.48 percent and 83.85 percent, respectively. The appraisal industry's acceptable range for appraisal performance is between 95 and 105 percent of current market value.
Chapter 5 of IAAO's Property Appraisal and Assessment Administration discusses the importance of gathering and analyzing sales data:
Sales data are needed for specifying and calibrating valuation models and for sales ratio studies. The reliability of any valuation model or sales ratio study depends on the quantity and quality of its data. Sales data must be collected, edited and adjusted to obtain valid indicators of market value. Ratio studies also require data on appraised (or assessed) values. Data on property characteristics are needed for stratification and the preparation of sales reports.
Written guidelines help appraisers select and adjust sales for assigning values and for use as evidence before the appraisal review board. Knowing what analysis needs to be done and when and how to perform it is key to maintaining continuity and a high level of appraisal accuracy. By providing comprehensive, written guidance to appraisal staff, Concho CAD can help ensure that sales data is applied consistently by each appraiser as valid indicators in achieving market value, particularly for single-family residences, vacant lots and rural land.
For example, Nueces CAD has a well-written Market Analysis Procedures Manual that describes the processes used to obtain and confirm sales information. Written procedures ensure the market analyses are done consistently regardless of personnel changes.
Establish written procedures based on IAAO standards for gathering and analyzing sales data.
During the course of the review process, PTD identified certain management and operational issues that may not be directly affect the appraisal process, but can have an indirect impact on the CAD's ability to carry out its mission accurately and consistently. The recommendations provided here for the CAD's consideration offer additional ways to enhance its operational effectiveness and efficiency.
Several of these recommendations involve compliance with existing laws. As Texas governmental entities, appraisal districts must comply with applicable statutes. The recommendations involve governance and management; generally accepted appraisal practices; resources and management; and information systems and data collection.
Governance and Management
The quality of the property tax system depends largely on each appraisal district's board of directors. The board should provide knowledge, judgment and expertise to establish policies and procedures for the appraisal district's organization and operation.
The Concho CAD's board of directors consists of five members (Exhibit 6).
Concho CAD Board of Directors Members
|Board Member||Entity Member Represents||Start Date||Occupation|
|Charlie Cypert, Vice-Chair||Eden CISD||9/23/1996||Retired|
|Stuart Lehr||Eden CISD||1/9/2002||Farmer/Rancher|
|Vacant||Concho County||Not applicable||Not applicable|
|Eddy Markham||City of Eden||1/9/2002||
|Ralph Willberg, Chairman||Paint Rock, ISD||1/13/2004||
Source: Concho CAD, December 2006.
The board has the following primary responsibilities under Property Tax Code:
- approve the appraisal district's annual operating budget, Section 6.06;
- approve appraisal contracts, Section 6.05(b) and Section 25.01(b);
- appoint a chief appraiser, Section 6.05 (c);
- appoint a taxpayer liaison officer (in counties with a population of more than 125,000), Section 6.052(a);
- appoint appraisal review board members, Section 6.41(d);
- contract for annual financial audit, Section 6.063; and
- designate the district depository, Section 6.09.
The Comptroller's office asked the board to complete a written survey about its activities. Three of the five board members responded. The survey concerned board policies and procedures; chief appraiser and staff; property appraisals; appraisal review boards; and budgeting and financial management. Board members who responded gave Concho CAD generally good marks. One board member, however, said that he or she was "very disappointed that our chief appraiser did not get the appraisal role delivered on time to all taxing entities. Even though one employee retired and one employee was released, it was still her responsibility. At our last meeting, it was made very clear that this cannot happen again."
The CAD arranges for outside audits of its financial records in accordance with the Property Tax Code. No adverse findings or recommendations were issued in the 2004 or 2005 audits; the 2006 audit had not been completed at the time of PTD's review. According to the chief appraiser, she will write any required management response with the approval of the board.
Concho CAD's board has developed and implemented the requirements of Property Tax Code Section 6.04; however, the manual is not sufficient to ensure consistent compliance with Property Tax Code requirements.
The CAD has one manual including policies for the board; personnel; financial and business management; general conduct; and policy addendums. The sections of the policy on the board relate to its organization, functions, responsibilities and meetings.
The manual, last revised as of Sept. 11, 2003, describes local board policies and procedures and statutory responsibilities. Section 7, "Responsibilities," states:
The board shall develop and implement policies that provide the public with reasonable opportunity to appear before the board to speak on any issue under the jurisdiction of the board. Texas Property Tax Code, Sec.6.04(d). This policy was adopted on March 14, 1991.
The board shall prepare and maintain a written plan that describes how a person who does not speak English or who has a physical, mental or developmental disability may be provided access to the board. Texas Property Tax Code, Sec.6.04(f). This policy was adopted on March 14, 1991.
The board shall prepare information of public interest describing the functions of the board and the boards procedures by which complains are filed with and resolved by the board. The board shall make the information available to the public and the appropriate taxing jurisdictions. Texas Property Tax Code, Sec.6.04(f). This policy was adopted on March 14, 1991.
While this policy outlines the board's statutory responsibilities, it does not include procedures to accomplish them. For example, the manual has no policy regarding the board's accessibility to the public, accessibility to non-English speaking taxpayers or the filing and resolution of complaints.
The statutory responsibilities of the CAD and its board are varied and complex. Specific, written board policies and procedures would help the public better understand how the board operates. To be effective, such manuals should be updated and kept current at all times. This requires a system for regular review and updates by the board.
Hidalgo CAD, for example, maintains and regularly updates a manual specific to board members. The manual lists all local board policies and procedures and statutory board responsibilities and describes how the board complies with the appropriate statutes.
Revise CAD board manual to thoroughly and completely document all procedures the board must follow to comply with the Property Tax Code.
The Concho CAD budgets for 2005, 2006 and 2007 were not prepared in accordance with Property Tax Code Section 6.06, which requires the chief appraiser to list in the proposed budget:
- each proposed position with associated salary and benefits;
- each proposed capital expenditure; and
- an estimate of the amount of the budget allocated to each taxing unit.
Copies of the 2005, 2006 and 2007 budgets initially supplied by the CAD were reviewed. These budgets did not distinguish between each proposed position, salary and benefits. All budgets merely listed and attached a lump sum to each benefit. The 2005 and 2006 budgets did not separate the CAD budget from the collection budget. The 2006 budget listed the estimated taxing entity payments. The 2007 budget separated the CAD budget from the collection budget but did not list the estimated taxing entity payments. The budgets lacked estimates of funds to be allocated to each taxing unit for collection costs and activities. The Comptroller's Appraisal District Director's Manual, issued February 2006, states:
If an appraisal district performs collection or assessment services, a separate budget is required for the main appraisal district budget. Only taxing units using these services pay for them, so the chief appraiser shall budget separately for these services. This separation requires allocating costs only to the taxing units receiving the services.
Texas Attorney General Opinion number GA-0030 confirmed this statement. The opinion GA-0030 states:
Accordingly, the appraisal district's costs for assessing or collecting taxes under contract may not be included in the budget prepared under section 6.06 for the district's operations as the entity statutorily required to appraise property for the taxing units within its boundaries.
The chief appraiser pointed out the CAD collects for all taxing entities and therefore all entities were included in the collections allocation.
After reviewing this report, the CAD subsequently supplied a more detailed budget that contained the levy amounts for each taxing entity. The 2007 budget also separated the collection budget from the appraisal budget and provided the collection amounts each taxing unit was responsible for paying. The 2007 budget also contains an estimate of the projected school tax rates for the coming year.
Section 6.06(d) states:
(d) Each taxing unit participating in the district is allocated a portion of the amount of the budget equal to the proportion that the total dollar amount of property taxes imposed in the district by the unit for the tax year in which the budget proposal is prepared bears to the sum of the total dollar amount of property taxes imposed in the district by each participating unit for that year.
In effect, this means that each taxing entity is responsible for paying a percentage of the total CAD budget amount relative to the total amount of the taxes levied in the CAD. The percentage is based on the total taxes that will be collected for the year the proposed budget is prepared. In subsequent budgets, the CAD used levies that were two years old. Only in the 2007 budget did the CAD use levies from the previous year to estimate the taxing unit appraisal payment and the collection payment.
What are still missing from the final budgets are the final amendments showing the actual amounts of payments for both appraisal and collection functions for each taxing entity, based on the current levies for the current budget year. The subsequent budgets supplied also did not list each benefit associated with each position and salary. Finally, the revised 2007 budget lists the chief appraiser's salary as appraisal only, implying that the chief appraiser has no collection duties.
The taxing units rejected the initial 2007 budget proposed to the board. Several changes were made to line items and a new line item was added for an outside appraiser; the board subsequently approved this, with only one member voting against the revised budget.
Jefferson CAD's budget document, by contrast, complies with Property Tax Code Section 6.06, listing all capital expenditures such as software; computer equipment; furniture and proposed purchases; and salaries and benefits for each position. Jefferson CAD's budget provides enough details to allow members of the taxing units and the public to understand how the money in its budget is spent.
Cooke CAD, similarly, breaks out appraisal and collection budgets, allowing taxing units to determine how much the CAD spends on each function and how it compensates its staff members.
Prepare budgets for Concho CAD that comply with Property Tax Code Section 6.06.
Concho CAD has complied with the required formats and provided proper notice, and held hearings as required by the code. Exhibit 7 presents Concho CAD's 2005-07 adopted budgets.
Concho CAD Proposed Budgets 2005-07
2007 Total Revised
|Appraiser Deputy Chief||33,120||13%||32,570||13%||0||0||0||0%|
|Auto Allowance/Chief Appr.||3,300||1%||3,000||1%||3,000||0||3,000||1%|
|Bookkeeper/Secretary to CA||0||0%||0||0%||14,250||4,750||19,000||7%|
|Mileage per diem||3,000||1%||3,000||1%||2,000||0||2,000||1%|
|Education Course Expenses||0%||3,500||1%||2,000||0||2,000||1%|
|Education-Meals, Hotel, Expenses||4,500||2%||0||0%||2,000||0||2,000||1%|
|ARB per diem||500||0%||500||0%||500||0||500||0%|
|Computer Service-Web Site||0||0%||0||0%||1,700||0||1,700||1%|
|Professional Appraisal Services||18,000||7%||18,200||7%||30,200||0||30,200||12%|
|Audit Retirement and Collecton Collection Funds||0||0%||0||0%||0||0||0||0%|
|Legal and Arbitration Fees RESERVE||500||0%||500||0%||5,000||0||5,000||2%|
|Office Equip Lease/Rental||4,250||2%||3,750||1%||4,630||0||4,630||2%|
|Repairs (Building & Equip)||500||0%||500||0%||500||0||500||0%|
|Postage Meter Rental/Box Rent||850||0%||1,000||0%||3,156||0||3,156||1%|
|General Liability/Contents Ins.||1,600||1%||1,500||1%||1,500||0||1,500||1%|
|Errors and Omissions||900||0%||900||0%||1,000||0||1,000||0%|
|Health Insurance (hosp)||20,000||8%||23,220||9%||16,000||0||16,000||6%|
|Health Insurance Savings Accts.||0||0%||0||0%||6,750||0||6,750||3%|
|Workman's Comp Ins.||430||0%||500||0%||500||0||500||0%|
|TAAO (Texas Association of Assessing Officers)||300||0%||300||0%||350||0||350||0%|
|BTPE (Board of Tax Prof. Exam.)||400||0%||300||0%||300||0||300||0%|
|TAAD (Texas Association of Appraisal Districts)||500||0%||500||0%||550||0||550||0%|
This exhibit is an actual reproduction of the CAD's board-approved budget.
Source: Concho CAD budgets for 2005, 2006 and 2007.
Resources and Management
In organizing and administering a county appraisal district, the chief appraiser is responsible for hiring, firing and training personnel; ensuring compliance with a wide range of legal requirements; and maintaining policies and procedures for the district's effective operation.
The Concho CAD staff is profiled in Exhibit 8.
Concho CAD Positions, Certifications,
Years with Concho CAD and Salaries
|Position||BTPE Certification(s)||Years With||Salary|
|Collections Clerk||Not applicable||3 1/2||18,000|
Source: Concho CAD, December 2006.
CAD employees who conduct appraisals must be registered professional appraisers (RPAs) or be working towards certification as an RPA; the latter must be certified within five years of their hire date. Interim certifications include Class II and Class III. In addition, RPAs must recertify every five years to remain registered. All Concho CAD appraisers are properly registered.
The CAD's employee policy manual is out of date.
The CAD has one manual for both board and employment policies. Each employee must acknowledge receipt of the manual in writing at the time of hiring.
The CAD last revised the manual on Sept. 11, 2003. The section of the Concho CAD policy manual pertaining to employment includes three sections: personnel policies, financial and business management and general conduct. The personnel policies section includes topics such as employment at will, equal employment opportunity, unlawful harassment, open-door policy and job classifications according to Fair Labor Standards Act (FLSA).
This manual also discusses salaries, holidays, vacations, leave, employee benefits and travel reimbursement including mileage, per diem and travel time. In addition, the employment policies include equal employment opportunity, unlawful harassment, open door policy, personnel files, classifications of employment, resignation, termination and disciplinary actions. It does not address policies concerning certain forms of harassment, the Americans with Disabilities Act, the Family Medical Leave Act or any of the many changes to personnel law made over the last decade.
Each employee is required to acknowledge receipt of the manual in writing at the time of hiring. However, having an outdated or narrowly written personnel policy that fails to adequately inform employees of their rights and responsibilities places both employees and the CAD at risk. CADs with up-to-date personnel manuals mitigate the risk for both employees and employers.
Update the employee personnel handbook to reflect all current laws and appraisal district policies related to employment.
Information Processing and Data Collection
Computers have become a necessity for all appraisal districts. The use of computers allows the district to amass large amounts of data; perform complex tasks that otherwise would take hundreds of staff hours to perform manually; and more accurately analyze trend data to ensure accurate valuation of similar properties.
Technology infrastructure is the underlying system of cabling, phone lines, hubs, switches, routers and other devices that connect the various parts of an organization through a wide area network (WAN) and a series of local area networks (LANs). Maintaining a strong infrastructure and integrating the various systems used by the appraisal district is critical to increased staff productivity, the reduction of costly data errors and better customer service for users, community members and the taxing units that depend on the appraisal district's information.
Exhibit 9 presents a list of appraisal and administrative software used in Concho CAD.
Appraisal and Administrative Software
|Name of Software||Stand-alone or Integrated||
|Appraisal Software||Integrated||1/2002||12/2006||As released|
|Mapping Software||Integrated||12/2004||12/2006||As released|
|Accounting Software||Stand-alone||8/2006||12/2006||As released|
|Office Software||Stand-alone||12/2006||12/2006||As released|
|Anti-Virus Software||Stand-alone||12/2006||12/2006||As released|
Note: CAD leased new hardware in December 2006 with anti-virus and office software applications already installed.
Source: Concho CAD, December 2006.
Concho CAD has not finished converting its paper maps to digital maps as part of its geographic information system (GIS), a project begun in 2005, and the CAD does not have a written plan or timeline for completing the project.
In 2005, the CAD contracted with Pritchard & Abbott Inc. (P&A) to begin digitizing its paper maps as part of a GIS. The chief appraiser stated that the conversion is a four–to six-year project, but she has not developed a formal timeline or work plan for it. She estimates that about 60 percent of the CAD is digitally mapped, and stated that all new parcel splits and combinations are mapped electronically as they occur; unmapped areas of the county are being mapped as better information is obtained on legal descriptions.
According to the chief appraiser, old deeds without adequate legal descriptions have prevented completion of the mapping project, and the research involved is very time-consuming. She stated that surveyors and property owners have been helpful in sharing information with the CAD, but the process is slow. In February 2007, a new employee was hired, and part of the position's duties includes collecting metes and bounds from deeds on sections of the county and sending them to the mapping vendor for insertion on the map.
Using software, the contractor enters metes and bounds of property taken from recorded deeds and plats and codes each parcel with a unique identifying number. The CAD submits deed information to the contractor when parcels are split or combined or when legal descriptions are updated. The contractor updates the map coverage and places the information on the mapping server that the CAD accesses through personal computers.
When mapped, the CAD's GIS can display parcels electronically as a single parcel or as part of a larger group such as a subdivision or neighborhood. The GIS shows parcels in relation to streets, roads, rivers, streams and other topographical features that can influence property values. The system also identifies taxing entity boundary lines. The CAD has integrated its aerial maps into the GIS, allowing these data to be displayed on aerial maps. The mapping system also is integrated into the appraisal system. While in the appraisal system, a user can view a property's appraisal information and locate the property on a digitized map with a single key stroke.
The chief appraiser stated that the CAD plans to integrate its GIS with systems of other governmental entities, in a cooperative effort to fill public and governmental information needs. The CAD does not have a written plan or timeline for the completion of this project. In the meantime, the CAD continues to rely on paper maps for areas of the county not digitally mapped.
These maps will comply with IAAO Standards and Comptroller rules when the GIS is 100 percent complete. CAD appraisers will have easy access to mapping information for use in their respective areas. A completely integrated appraisal/GIS will assist the appraisal district in gathering and verifying more sales data to improve its valuation models, and in responding quickly to data requests from the public. Both appraisers and appraisal review board members will have access to more comprehensive information on a real-time basis, which should facilitate faster and more efficient reappraisal work.
Johnson CAD, for instance, maintains an excellent multipurpose graphic system integrated with mapping technology with the aid of its management information system vendors. Johnson CAD is actively involved in multipurpose GIS, working with local governments, the county engineer, the 9-1-1 coordinator and the sheriff's department to eliminate duplication and minimize costs.
Develop and implement a plan and timeline for completing the Geographic Information System.
Concho CAD does not have a written disaster recovery plan.
According to the chief appraiser, the CAD does not have a written disaster recovery plan, but performs daily backups of the appraisal and collection systems and a weekly system backup that is kept in the CAD's fireproof vault. She stated that the CAD's software vendor, P&A, also can perform system backups from its headquarters in Fort Worth.
The review team noted that the back wall of the CAD office building is pulling away from the side walls, leaving open spaces that leak when it rains. A strong storm could easily damage the building and render it uninhabitable.
Since the site review, the chief appraiser reported that the roof and windows continue to leak and cracks are still in the back wall, but the foundation contractor feels it is stable. According to the chief appraiser, the CAD plans to continue repairs to the building.
A disaster recovery plan should address:
- immediate response;
- incident control/evaluation;
- environmental restoration; and
- resumption of critical business function.
Prudent appraisal districts have a plan to recover data and continue operations with minimal interruptions in disaster situations. Key items in the plan should include instructions for establishing alternate office locations and communications and recreating appraisal, mapping and tax collection systems.
Exhibit 10 lists some of the key elements of an effective disaster recovery plan.
Key Elements of a Disaster Recovery Plan
Build a disaster recovery team
||Identify a disaster recovery team that includes key policy-makers, building management, end users, key outside contractors and technical staff.|
Obtain and/or approximate key information
Develop an exhaustive list of critical activities performed within the district.
Develop an estimated of the minimum space and equipment necessary for restoring essential operations.
Develop a timeframe for starting initial operations after a security incident.
Develop a list of key personnel and their responsibilities.
Perform and/or delegate key duties
Develop an inventory of all computer technology assets, including data, software, hardware, documentation and supplies.
Set up a reciprocal agreement with comparable organizations to share each other's equipment or lease backup equipment to allow the district to operate critical functions in the event of a disaster.
Make plans to procure hardware, software and other equipment as necessary to ensure the district can resume critical operations to soon as possible.
Establish procedures for obtaining off-site backup records.
Locate support resources the district needs, such as equipment repair, trucking and cleaning companies.
Arrange with vendor to provide priority delivery for emergency orders.
Identify data recovery specialists and establish emergency agreements.
within the plan
Identify individual roles and responsibilities by name and job title so that everyone knows exactly what they need to do.
Define actions to be taken in advance of an occurrence or undesirable event.
Define necessary actions at the onset of an undesirable event to limit damage, loss and compromised data integrity.
Identify actions to betaken to re-establish normal operations.
Test the plan
Test the plan frequently and completely.
Analyze the results to improve the plan and identify further needs.
Deal with damage appropriately
If a disaster actually occurs, document all costs and videotape the damage.
Be prepared to overcome downtime on your own; insurance settlements can take time to resolve.
Give consideration to other significant issues
Don't make a plan unnecessarily complicated.
Make one individual responsible for maintaining the plan, but have it structured so that others are authorized and prepared to implement if it is needed.
Update the plan regularly and whenever system changes occur.
Source: Adapted from National Education Center for Statistics, "Safeguarding Your Technology."
The Texas State Library and Archives provides an example of a disaster recovery plan for use by local governments that can be accessed on its Web site at http://www.tsl.state.tx.us/slrm/recordspubs/dp.html#DisRecPlan.
Develop, implement and test a plan for disaster recovery.