On Aug. 23, 2006, the superintendents of Paint Rock Independent School District and Eden Consolidated Independent School District and the Concho County Judge asked the Comptroller's office to conduct a performance audit of the Concho County Appraisal District (Concho CAD). In a letter dated Sept. 7, 2006, the Comptroller agreed to conduct a discretionary audit of the CAD as authorized by Property Tax Code Section 5.12(h).
The county judge and superintendents requested the review, citing problems between the CAD and the taxing units, specifically the late submission and certification of the appraisal roll.
PTD held preliminary meetings with the Concho CAD chief appraiser, a board representative and the county judge on Oct. 4, 2006. After collecting and analyzing preliminary data submitted by Concho CAD, the Comptroller's Property Tax Division (PTD) began its on-site review of the CAD, using protocols developed for appraisal standards reviews. The site visit took place on Dec. 13 and 14, 2006.
The audit (also referred to as a "review") is designed to identify problems and recommend changes to improve appraisal accuracy and enhance the management of district operations. The audit is also intended to identify operational best practices that other appraisal districts may adopt.
PTD's review evaluated five broad functional areas of CAD operations: governance and management; generally accepted appraisal practices; resources and management; information processing and data collection; and assessment administration. The review methodology included a self-assessment questionnaire completed by the appraisal district; staff interviews; reviews of written policies, procedures and plans; review of existing financial and management audits; and assessments of the CAD's manual and automated records systems.
At the time of the request for the discretionary audit, Concho CAD's overall values were within the acceptable ranges of the Comptroller's Property Value Study (PVS); because of this, the review's primary focus was organization and management and appraisal administration. Subsequent to the site visit, however, the preliminary 2006 PVS released on Jan. 31, 2007 found Paint Rock ISD values to be invalid. Paint Rock ISD informed the CAD that it would not file a protest. The CAD board of directors, however, gave the chief appraiser permission to file a protest and the CAD hired a consultant to do so. After the CAD protested on the school district's behalf, Paint Rock ISD was awarded local value.
While the review team found that Concho CAD has a dedicated management and staff and identified some commendable practices, the CAD also faces some significant challenges, including improving its operations and planning and improving and documenting its appraisal procedures and practices.
The recommendations in this report are voluntary, although implementing them would significantly improve the CAD's appraisal practices and operational efficiency and effectiveness. PTD employees are available to assist Concho CAD in understanding and implementing the recommendations.
This executive summary identifies some of Concho CAD's best practices and summarizes PTD's key findings and recommendations. The recommendations are explained in more detail in Chapter 2 of this report. The findings provide Concho CAD information on implementing the recommendations and contacts for additional information.
PTD conducted this review under the authority of Property Tax Code Section 5.12 (h), concerning performance auditing of appraisal districts. Again, this review was not conducted as the result of PVS findings, and thus the appraisal district is under no legal obligation to implement its recommendations.
A final draft of this report including the findings and 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.
The review team identified best practices used in Concho CAD that other county appraisal districts should consider adopting to meet the many challenges they face.
Concho CAD has well-written job descriptions for staff members and a systematic approach for annual performance evaluations. Concho CAD has developed written job descriptions for all staff members. The job descriptions and annual work plans submitted by each staff member provide a basis for objective and systematic performance evaluations. The evaluations include employee comments and goals and objectives agreed upon by the employees and their supervisors.
The chief appraiser has implemented an employee orientation process that effectively communicates her expectations. 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 that is given to all employees upon hiring. In addition, new employees receive a copy of the Concho CAD handbook detailing board and employee policies.
Concho CAD created internal forms for tracking its internal operations. It retrieves and prints most appraisal forms straight from the Comptroller's Web site, but the Comptroller does not offer forms for internal use. The CAD has created its own forms for internal office use to assist with checks and balances and efficiency.
Key Findings and Recommendations
Below is a summary of this report's key findings and associated recommendations. The recommendations are designed to address the challenges identified in the detailed findings in Chapter 2 of this report. In all, PTD makes 14 recommendations, several of which address key problems associated with the CAD's activities; others would improve general efficiency and effectiveness.
Improve and Document Appraisal Procedures and Practices
Reappraise all properties in Concho County at least once every three years, as required by law. Concho CAD has not conducted a complete reappraisal of the county since 2003 and, until recently, had no written reappraisal plan. After reviewing the preliminary draft of this report, the chief appraiser added that a complete reappraisal of the county took place in 2005. 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. By conducting a complete reappraisal based on an organized plan, the CAD can help ensure that all property is evaluated equitably and that all property owners will be evaluated against a set of equitable standards.
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 County appraisal rolls for 2004, 2005 and 2006 were certified late to the taxing units, thereby failing to comply with Property Tax Code Section 26.01(a). When a certified appraisal roll is late, it can delay the county and school district budgeting processes, jeopardizing their ability to provide services to taxpayers and students. By developing a plan to guarantee that the appraisal roll is certified on time, Concho CAD can provide its taxing entities with the appraisal roll they need to set their budgets according to statutory deadlines.
Mail notices of appraised value on time as required by Property Tax Code Section 25.19. In 2004, 2005 and 2006, Concho CAD mailed notices of appraised value to taxpayers late, thereby failing to comply with Property Tax Code Section 25.19. Failure to meet the deadline extends the protest period farther into the summer, jeopardizing the chief appraiser's ability to certify the appraisal roll on time. A plan to guarantee that the appraisal notices are sent out in a timely fashion would meet the requirements of state law and give taxpayers adequate time to protest their notices.
Consider whether to continue and/or expand the current appraisal services contract or hire new CAD appraisers. Concho CAD has a contract with an outside firm for the appraisal of residential and commercial real properties, in part because the CAD has found it difficult to recruit and hire its own qualified appraisers. After a recent retirement and a staff termination, the CAD entered into a temporary contract with an appraisal services firm for appraisals within the CAD. Since PTD's site visit, the CAD board has expanded the contract for appraisal services through 2008. By performing a cost-benefit analysis on continuing the appraisal service contract versus hiring new appraisers, the CAD can determine the most cost-effective and efficient approach.
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. Concho CAD is not using ratio studies effectively to improve its appraisal performance. The chief appraiser uses Excel spreadsheets to perform ratio studies, rather than the ratio study subsystem of the CAD's appraisal software, because she has not been trained in its use. Since 2004, PVS results indicate the CAD is appraising properties inconsistently. Improved ratio studies produced by the appraisal district's software would give the CAD a powerful tool for adjusting cost schedules and appraisal practices as needed to ensure consistency.
Improve Operations and Planning
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. The board does not have a written process for hiring or evaluating the chief appraiser or a board-approved, written job description for the position. Concho CAD has had the same chief appraiser for almost four years, but she still does not have a board-approved job description and has never been evaluated formally. During her tenure, the chief appraiser has delivered the appraisal roll to the taxing entities later each year, yet she has received no written feedback on her performance. A written job description and evaluation measures would allow the board of directors to evaluate the chief appraiser objectively, based upon her performance, and would provide her with effective feedback for making changes in her overall performance, if necessary.
Develop written administrative policies and procedures to guide day-to-day operations. Concho CAD has not developed documented policies and procedures to guide its payroll processing, accounting, purchasing, budget writing and other regular tasks. The CAD has experienced significant staff turnover in the last three years. Written procedures would help guarantee that vital tasks are performed correctly and would provide useful training tools for new employees. A written policy and procedures manual would help the district ensure consistency in its daily functions and would act as an internal control mechanism.
Establish written procedures based on IAAO standards for gathering and analyzing sales data. Concho CAD does not have written procedures for gathering and analyzing sales. Without written guidelines for verifying, confirming and adjusting sales, the CAD risks using sales for appraisal maintenance that do not accurately reflect current market values. 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.
Revise the CAD board manual to thoroughly and completely document all procedures the board must follow to comply with the Property Tax Code.
Prepare budgets for Concho CAD that comply with Property Tax Code Section 6.06.
Update the employee personnel handbook to reflect all current laws and appraisal district policies related to employment.
Develop and implement a plan and timeline for completing the Geographic Information System (GIS).
Develop, implement and test a plan for disaster recovery.