In July 2005, the Texas Comptroller of Public Accounts identified Lampasas Independent School District, located in Lampasas 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 January 2006, the Comptroller's Property Tax Division, with the assistance from contractors, began its review of the Lampasas County Appraisal District (Lampasas 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 charged with appraising property in the school district at market value. The chief appraiser of each appraisal district determines the property values that, after review and approval by the ARS, are used by the district to set tax rates.
The Texas Comptroller's Property Tax Division (PTD) annually conducts a Property Value (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 not at market value 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. However, when study statistics give the Comptroller a high degree of confidence that the aggregate local value for property categories tested in the study is lower than the state's estimate of the correct value, and that aggregate local value is more than 5 percent below the state's estimate, the school district may receive less state funding than expected. Districts can contest the state values though an appeals process. But understanding the reasons for the differences in valuations nevertheless can be critical for school districts and the appraisal districts that serve them.
In 2003, a law recommended by the Comptroller's Property Tax Division Technical Advisory Committee was enacted to grant a two year "grace period" for schools negatively impacted by PVS findings. The Comptroller does not believe that schools should be punished for the actions or inaction of their appraisal districts. The "grace period" permits schools to receive full state funding while ASRs are performed by the Comptroller.
By law, to be eligible for this grace period, a school district must have an invalid local value that does not exceed the state value; valid local values for the two preceding years; and a current aggregate local value for tested property categories that is at least 90 percent of the lower limit of the margin of error.
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 Texas Property Tax Code and Comptroller Rules are the major criteria used to measure appraisal district performance.
The Texas Property Tax Code dictates certain appraisal procedures or standards such as the Uniform Standards of Professional Appraisal Practice (USPAP). The International Association of Assessing Officer's (IAAO) Standards on Assessment Practice is also 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 is required to appoint a board of conservators consisting of five members to implement the recommendations. The board of conservators shall exercise supervision and control over the operations of the CAD until each school district is determined to receive valid local value in an annual PVS. The CAD shall bear the costs related to the supervision and control of the CAD by the board of conservators.
While the review team found a number of commendable practices implemented by hardworking and dedicated employees, Lampasas CAD faces a number of challenges in the following areas:
- managing the CAD and staffing effectively; and
- improving appraisal accuracy.
Key Findings and Recommendations
Develop and adopt a complete reappraisal plan in compliance with the Property Tax Code and industry standards. Lampasas CAD lacks a comprehensive reappraisal plan consistent with Property Tax Code Section 25.18 and industry standards. As a result, the staff relies on constant informal direction from the chief appraiser since no written reappraisal goals, resources or detailed plans exist, and if chief appraiser leaves or is unable to serve, there are no instructions to guide the CAD. By producing a detailed written reappraisal plan, Lampasas CAD can help ensure consistent and accurate reappraisals and that reappraisal goals are known and met, as all staff members would be guided by a single written source.
Attempt to inspect all business personal property accounts regularly and develop an independent valuation process. Lampasas CAD uses only rendered values from the property owners to value business personal property and does not routinely inspect business personal property. Without regular inspections of existing business personal property accounts and no independent valuation method, Lampasas CAD is not ensuring business personal property appraisal accuracy or equity. Effective county appraisal districts meet or exceed recommended industry practices for business personal property appraisal, ensuring accurate valuations as a basis for taxpayer assessments and the general public.
Lampasas CAD has a commendable practices that might prove useful for other county appraisal districts.
Lampasas CAD's board maintains a complete board policy manual with exceptional information about provisions for public meeting access. The board policy manual successfully informs board members and the public about Lampasas CAD's purpose, structure, operations and meeting attendance. The bottom left corner of the front page of the board manual summarizes when manual revisions were adopted and in some instances directs the reader to where the changes were made in the manual. The manual provides exceptionally helpful information about public meeting access for citizens with disabilities through the detailed contact information listings for blind, hearing impaired and limited access assistance and maps showing where the local and regional contact offices are located. Anyone with a disability who wants to attend a board meeting knows that resources are available to provide accommodations for his or her attendance.
In addition to the recommendations directly linked to the appraisal process, the following related management level recommendations are presented here for consideration by the CAD:
Annually analyze and adjust staffing levels as needed to maintain countywide coverage and accurate appraisals consistent with industry standards.
Expand the budget to include the benefits required by Property Tax Code Section 6.06 and allocate budgeted costs to match how time is typically spent between tax appraisal and collection.
Evaluate the chief appraiser annually in writing using measurable criteria corresponding with the job description.
Expand and document the existing long-range written plan using enough detail and a timeline so that the public can understand the plan and deadlines for the integrated mapping system upgrade.
Follow Lampasas CAD's adopted records control schedules as required by Property Tax Code Section 6.13.