In July 2005, the Texas Comptroller of Public Accounts identified Jasper Independent School District, located in Jasper County, Texas, as one of 34 Texas school districts meeting the criteria that initiate an Appraisal Standards Review (ASR) of the appraisal district that serves them. In February 2006, the Comptroller's Property Tax Division, with the assistance of contractors, began its review of the Jasper County Appraisal District (Jasper CAD).
School Districts, the Property Value Study and Appraisal Standards Reviews
Texas public education is funded by a combination of state and local funds. Local funding comes from property taxes assessed by a school district's board of trustees. State funding is based on the amount of money that can be raised locally on the total taxable property value within each school district. Each school district in the state is served by a county appraisal district that is charged with appraising property in the school district at market value. The chief appraiser of each appraisal district determines the property values that are used by the district to set tax rates, which allocates the tax burden among taxpayers.
The Texas Comptroller's Property Tax Division (PTD) annually conducts a Property Value Study (PVS) that assigns a value to all taxable property within each school district for state funding purposes. The PVS, an independent estimate mandated by the Legislature, is designed to ensure equitable school funding. The PVS ensures equity by detecting instances where school property values are inaccurate and adjusting property values to market value in the state's funding formula. The state's formula sends more money to those districts that are less able to raise money locally because of lower taxable property value.
The Comptroller's values do not directly affect local values or property taxes, which are set by local authorities. However, when local values are more than 5 percent below state values, the school district could receive fewer state dollars because the formulas will use state values to calculate funding. Through an appeals process, a district can contest the state values, but understanding the reasons for the differences in the valuations is critical for school districts and the appraisal districts that serve them.
In 2003, a new law, recommended by the Comptroller's Property Tax Division Technical Advisory Committee, was enacted to grant a "grace period" for schools negatively impacted by PVS findings. The Comptroller does not believe schools should be punished for the actions or inaction of their appraisal districts. The grace period permits schools to receive full state funding while the Comptroller performs ASRs.
By law, to be eligible for this state funding grace period, a school district must have an invalid local value in the current year, valid local values in the two preceding years and an aggregate local value in the current year that is not less than 90 percent of the lower limit of the margin of error.
If the aggregate local value is less than 90 percent of state value, the school district is not eligible for a grace period and the state value will be used to determine financial aid.
Appraisal Standards Reviews
Appraisal standards reviews of CADs are conducted by the Comptroller's office when one or more school districts within the CAD is eligible for the grace period. By conducting ASRs, the Comptroller's office helps school districts understand the reason for the invalid finding, so they can work with the appraisal district to correct problems and ensure that all properties in the district are fairly and accurately valued. ASRs identify problems and recommend changes in procedures or methods to improve appraisal accuracy and compliance with state law and appraisal standards.
An ASR examines and evaluates appraisal practices including planning, procedures and methodology and the application of and adherence to appraisal standards. The major criteria the Comptroller's office uses to measure appraisal district performance are the Texas Property Tax Code and Comptroller Rules.
The Texas Property 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. The International Association of Assessing Officer's (IAAO) Standards on Assessment Practice also is used as the professional and industry standard.
The two principal focuses of the ASR are to determine why the local value is deemed invalid and to recommend improvements in appraisal practices. The review evaluates five functional areas of operations: governance and management; generally accepted appraisal practices; resources and management; information processing and data collection; and assessment administration.
Upon completion of the review process, the Comptroller issues a report of findings that includes commendations for exemplary appraisal practices and recommendations for change. The appraisal district is required by law to comply with the recommendations within one year of the release of the report.
By law, if the CAD fails to comply with the recommendations in the report and the Comptroller finds that the board of directors of the CAD failed to take remedial action within a year from when the report was issued, the Comptroller is required to notify the judge of each district court in the county for which the CAD is established. The district judge(s) must appoint a five-member board of conservators to implement the recommendations. The board of conservators exercises supervision and control over the operations of the CAD until each school district is determined to have a valid local value in an annual PVS. The CAD bears the costs related to the supervision and control of the CAD by the board of conservators.
In February 2006, PTD began its ASR of the Jasper CAD. While the review team found a number of commendable practices implemented by hardworking and dedicated appraisal district employees, Jasper CAD faces a number of challenges in achieving and maintaining current market valuations.
Key Findings and Recommendations
- Appoint an agricultural appraisal advisory board as required by Section 6.12, Tax Code. Jasper CAD does not have an agricultural advisory board. An Ag board was not available to assist Jasper CAD in resolving agricultural land issues in the 2004 PVS, which contributed to the CAD receiving an ASR and put Jasper ISD at risk of future school funding loss. By appointing an Ag board and conducting the required annual meetings, the CAD can ensure continuing assistance for maintaining accurate appraisals and classifying agricultural land, as required by law.
- Develop and use a complete tracking system for property value protests. Though the ARB is statutorily responsible for handling protests, in most areas, the CAD takes responsibility for handling administrative matters. Jasper CAD does not have a systematic process for tracking property value protests. By not tracking protests and their total value, the chief appraiser puts the CAD at risk of not knowing when the appraisal roll is eligible for approval or if all protests have been handled. A systematic tracking system for protests will help ensure that each protest is addressed.
- Adopt and implement a biennial reappraisal plan that complies with USPAP Standard 6 and Sections 6.05(i) and 25.18, Tax Code. At the time of the review, Jasper CAD lacked a complete, written reappraisal plan that meets board policy and Tax Code requirements. As a result, four of five school districts have misappraised residential property, and Jasper ISD received an invalid finding in the 2004 PVS and is at risk of future school funding loss without improved appraisal accuracy. By developing and properly executing a complete reappraisal plan, the CAD can help assure that taxpayers are treated equitably in valuing property while reappraising on schedule and complying with the Tax Code.
- Improve methods of using ratio studies to eliminate unequal levels of appraisal and make certain that all categories of property are appraised at current market value. Jasper CAD does not effectively use ratio studies to measure appraisal performance. The 2004 and 2005 PVS coefficient of dispersion results show that Jasper CAD is not treating similar properties the same in most tested categories. Misappraising residential and commercial property contributed to Jasper ISD's invalid finding in the 2004 PVS. By improving ratio study methods, the CAD will be able to make necessary adjustments to produce values at or near the market value.
- Establish written procedures aligned with industry-accepted standards for gathering and analyzing sales data. Jasper CAD does not have written procedures for gathering and analyzing sales. The lack of consistent sales confirmation and validation led to Jasper ISD's 2004 PVS invalid finding, primarily because its single-family residences category tested with a weighted mean ratio of 0.8665. By providing comprehensive, written guidance to appraisal staff, Jasper CAD can help assure that sales data are applied consistently as valid indicators in achieving market value, particularly for single-family residences.
- Develop and implement a plan and timeline for completing computerized mapping of the county and train staff to use the software properly. Jasper CAD lacks a written plan and timeline for completing computerized mapping of the county. Without a fully functioning computerized mapping system, the CAD staff cannot fully capture and verify available sales information for more accurate property valuations. Computerized maps provide both the appraiser and appraisal review board members access to more comprehensive information visually, promoting timely and more efficient reappraisal work.
Jasper CAD has some commendable practices that might prove useful for other county appraisal districts.
- Jasper CAD adapted several tools to provide commendable public service to its taxpayers. Jasper CAD identified unique geographic customer service needs and implemented low-cost solutions to improve taxpayer access and communications. To better accommodate all county taxpayers regardless of location, in addition to the central office in downtown Jasper, the CAD operates tax collection offices in the cities of Kirbyville and Buna. The CAD also maintains a toll-free telephone number to accommodate taxpayers living in the southern part of the county and others who reside in neighboring appraisal districts with shared property who would otherwise be forced to make a long distance call for property tax questions. As a result, Jasper CAD is able to provide commendable customer service to the taxpayers in Jasper County.
- Jasper CAD has an excellent records management plan, records control schedule and procedures for storing, retaining and destroying documents. Jasper CAD has a records retention plan and a records control schedule on file with the Texas State Library and written procedures for document storage, retention and destruction. The Jasper County Appraisal District Records Management Plan serves as the CAD's policy on records management and states as its purpose "efficient, economical and effective controls over the creation, distribution, organization, maintenance, use and disposition" of CAD records. The plan defines appraisal district records; names and describes the duties of the records management officer; and discusses how the county develops records control schedules. The CAD's records management officer maintains a computerized inventory of all records in the records center and can generate lists by scheduled destruction date, retention period, department, alphabetically by record name, item number and volume in cubic feet of records scheduled for destruction.
- Use complete, written and executed contracts with industry-accepted criteria when procuring professional services.
- Evaluate the chief appraiser annually using a written process that includes measurable criteria corresponding with the job description.
- Conduct a formal staffing analysis and hire enough appraisal staff to handle ongoing countywide reappraisal work and the Evadale special reappraisal project.
- Develop job descriptions and an annual personnel performance evaluation system to evaluate all CAD staff.
- Develop administrative policies and procedures.
- Develop a budget plan and timeline for complying with Comptroller Rule 9.3059.
- Develop and implement a plan for disaster recovery and periodically test the plan.
- Certify appraisal rolls timely as required by Section 26.01, Tax Code.