Findings of the Appraisal Standards Review
This chapter of the report addresses the findings, commendations and recommendations from the appraisal standards review of the Rains County Appraisal District in five sections:
The quality of the local property tax system depends largely on the appraisal district's board of directors. Individuals serving on the board of directors bring to the board knowledge, judgment and expertise in establishing policies and procedures for the district's organization and operation.
Rains CAD was formed in 1980 at the same time as most other appraisal districts. It produced its first appraisal roll in 1982. The Rains CAD Board of Directors consists of 6 members, including the county tax assessor-collector. Members of the board are listed in Exhibit 4 .
Board of Directors Members
Board Member Represents Length of Service Paul Foley, Chair Rains ISD 2 years Catalina Kerr, Secretary Rains ISD, City of Point 2 years Gordon Krantz Rains ISD, City of Emory 2 years Bob Russell Rains ISD, City of Emory 2 years Dan Sheffield Rains ISD, City of Emory 4 years Source: Rains CAD, March 2005.
Section 6.063, Tax Code requires appraisal districts to undergo at least annually an audit of their financial affairs by an independent certified public accountant. The Tax Code also makes the report of the audit a public record.
Financial audits have been prepared in accordance with Section 6.063 of the Property Tax Code. Scott, Singleton, Fincher and Company, P.C., Certified Public Accountant from Palestine conducted independent audits of the 2002 and 2003 fiscal years. The auditor's opinion contained no findings of material weaknesses. The independent auditor did include a management letter each year. In the 2002 management letter he addressed the need to process tax collections in a timely manner. The auditor noted the same issue in the 2003 fiscal year report. The management letter the auditor sent after the 2003 audit also included a reminder about a new Government Accounting Standards Board requirement. The auditor recommended the appraisal district develop a plan to implement this new standard.
The appraisal district's budget does not fully comply with the provisions of Section 6.06, Tax Code, that require detailed information about employee salaries, benefits and capitol expenditures.
Section 6.06 requires each appraisal district budget to include a listing of each proposed position including the salary and benefits for the position, each proposed capital expenditure and an estimate of the amount of the budget allocated to each taxing unit. Section 6.06 also requires the appraisal district board of directors to hold a public hearing to consider the budget. Taxing units are required to ratify the budget and to maintain a copy of it for public inspection at their principal administrative office.
The Rains CAD 2004 budget hearing was August 14, 2003. The budget hearing was convened but the minutes do not reflect any comments and the budget was adopted at that meeting. The 2005 budget hearing was July 8, 2004 and that budget was also adopted that day without public comment.
The reviewer examined copies of the 2004 and 2005 budgets. The Rains CAD budget does not comply with Section 6.06, Tax Code as it contains only summary level information about benefits for appraisal district staff, instead of the actual benefits paid for each position.
The budgets did not include a capital expenditure caption so it is unclear whether the district planned any capital expenditures. The budgets do include a caption for operational expenses and equipment and furniture and mapping related expenses that occur in each year's budgets but without detail to describe whether the expenses are for capitol expenditures or normally expected maintenance expenses. Exhibit 5 is a display of the 2005 budget.
Budgets are plans that communicate the purposes of proposed spending. The budget that is summarized in Exhibit 5 appears to be comprehensive in listing planned expenditures, but some of the captions do not give a clear indication of the purpose of planned expenses. Some of the captions in the budget are sufficiently obscure as to create a potential for miscommunication about spending which could result in hesitancy by taxing units in approving the budget. The budget need to clearly communicate the purposes of all proposed spending.
Rains CAD Budget for Fiscal Year 2005
2005 Line Item Category Budget Allocated to Appraisal Percent of Total Allocated to Collections Percent of Total Salaries Chief Appraiser 42,924 34,339 4.89% 8,584 2.02% Senior Appraiser 20,800 20,800 5.83% Cartographer 24,804 24,804 4.9% Administrative Assistant 26,059 20,847 4.47% 5211 1.23% Collector 19,000 19,000 3.58% Research/Data Entry 19,000 15,200 4.89% 3,800 .89% Appraiser 20,800 20,800 1.16% Temp/Ind Cont/OTTotal 4,952 4,952 37.81% Subtotal 178,339 160,742 8.03% 17,596 4.14% Human Resources Human Resources 42,670 34,136 .19% 8,534 2.01% Workman's Comp 1,000 800 .28% 200 .05% Unemployment 1,500 1,200 2.82% 300 .07% Retirement 11,800 8,548 2.01% 3,252 .77% Medicare 2,690 2,056 .48% 634 .15% Disability 2,400 1,920 .45% 480 .11% Subtotal 62,060 48,660 11.45% 13,400 3.15% Administration BOD Expenses 450 450 .11% ARB Expenses 4,500 3,600 .85% 900 .21% Legal Notices 800 640 .15% 160 .04% Prof. Liability Ins 2,000 2,000 .47% Bond Premium 900 900 .21% Liability Insurance 700 0 0% 700 .16% Banking Misc 100 80 .02% 20 .00% Contingency Fund 5,000 5,000 1.18% Insurance Contents 0 0 0 Subtotal 14,450 12,670 3.00% .4% Building CAD Office Property Insurance 2,000 2,000 .47% Electric Bill 4,400 4,400 1.04% Nat. Gas Bill 600 600 .14% Water/Sewer 1,500 1,500 .35% Telephone 5,000 5,000 1.18% Bldg/Grounds Maint 16,000 16,000 3.76% Janitorial Svc & Supply 2,850 2,850 .67% Subtotal 32,350 32,350 7.61% Outside Services Annual Audit 3,400 1,700 .40% 1,700 .4% Legal/Prof. Services 25,000 25,000 5.88% Appraisal Engineers* 11,000 11,000 2.59% Deed Reporting 2,200 2,200 .52% Equip Maintenance 6,030 6,030 1.42% Informix Support/Ardent 1,300 1,300 .31% Reappraisal Service 0 0 0 0 Subtotal 48,930 47,230 11.11% 1,700 .4% Training-Educational Professional Books & Subscriptions 2,200 2,200 .52% Professional Dues 900 720 .17% 180 .04% Education Expenses 5,000 4,000 .94% 1,000 .24% Subtotal 8,100 6,920 1.63% 1,180 .28% Operational Expenses Office Supplies 4,000 3,200 .75% 800 .19% Equip/Furniture 10,000 10,000 2.35% Postage 15,000 7,500 1.76% 7,500 1.77% Film Processing 0 0 0 Misc Supplies 500 500 .12% Printing 0 0 0 Comp. Software Maint 28,000 22,400 5.27% 5,600 1.31% Map Equip/Software 3,000 3,000 .71% Appraiser Veh. Expense 15,480 15,480 3.64% Mineral Conversion 1,900 950 .22% 950 .22% Mileage Expense 3,000 3,000 .71% 0 Subtotal 80,880 66,030 15.53% 14,850 3.15% Budget Summary Salaries 178,339 160,742 37.81% 17,596 4.14% Human Resources 62,060 48,660 11.45% 13,400 3.15% Administration 14,450 12,670 3.0% 1,780 .42% Building Office 32,350 32,350 7.61% Outside Services 48,930 47,230 11.11% 1,700 .4% Training & Education 8,100 6,920 1.63% 11,180 2.62% Operational Expenses 80,880 66,030 15.53% 14,850 3.49% Grand Total $425,109 $355,602 88.12% $69,506 11.88% Source: Rains CAD, fiscal year2005 budget.
* Capital Appraisal Group.
Expand the budget document that is distributed to taxing units to include the salary and benefits for each position and a list of each proposed capital expenditure.
The budget document the appraisal district sends to taxing units for them to display should contain the specific information required by Section 6.06, Tax Code, and be sufficiently detailed to give all readers a clear indication of the purposes of proposed spending.
The appraisal district's contract for appraisal services with the Capitol Appraisal Group, Inc. (CAG) does not include key components needed for proper monitoring of services delivered.
The CAG contract, which was signed on January 8, 2004, covers the 2004 and 2005 tax years. The contract ends on December 31, 2005. The contract requires the appraisal district to pay CAG $11,000 for appraisal services for each tax year in equal quarterly payments on January 1, April 1, July 1 and October 1.
The contract requires CAG to appraise "...all producing oil and gas leases, telephone companies, cable television systems, electric utility systems, gas utility systems, pipeline systems, railroad companies, and related properties and industrial properties...". The contract requires CAG to defend the appraised values of properties it appraises before the appraisal review board and to secure all available information for the chief appraiser and appraisal review board to use in determining the value of a property or in equalizing values. CAG is also required to provide a list of all record owners of all producing oil and gas leases it is responsible for appraising.
The contract contains no provisions for renegotiating fees or failure to deliver penalties if CAG does not deliver contracted services or is late delivering services causing the appraisal district to fail to meet statutory deadlines. The contract with CAG does not contain any stated provisions tying delivery of services to payments. The contract has no provisions to address the possibility that work products will not be delivered in time for the appraisal district to comply with the certification mandates in the Tax Code.
Although there is no indication that delivery dates were missed, in order to get the appraisal roll ready each year the appraisal district needs to have all appraisal information completed and in the appraisal district system before the appraisal notices are produced for mailing. Appraisal notices are usually mailed in May of each year. Without appraisal delivery dates, the district has no recourse to compel CAG to perform the services within its most advantageous timeframe. IAAO's Standard on Contracting for Assessment Services, Section 4, requires contracts to have specific provisions, including the timeframes when services or goods are to be delivered.
The IAAO standard for monitoring contract performance requires the tax appraiser to monitor the provisions in the contract. IAAO's standard also recommends establishing a project review committee for projects that affect several departments or that have multiple objectives. A project review committee can provide the CAD with an effective mechanism for coordination, monitoring, and review. Section 5.5 states that contract monitors are generally a party hired by the agency to review the services and products provided under the contract (the monitor may also be an independent third party) An effective monitor must be thoroughly familiar with the RFP and successful bid, and, in fact, may also have served as a consultant in developing the RFP or selection of the successful bidder. The contract monitor must stay in close contact with the project and review major tasks in a timely manner.
Revise the appraisal services contract to reflect the guidelines in the IAAO Standard on Contracting for Assessment Services.
In organizing and administering an appraisal district, the chief appraiser is responsible for hiring, firing, and training personnel, for ensuring compliance with a wide range of legal requirements and for the maintenance of policies and procedures for effective appraisal district office operations. The district is also required to comply with Comptroller Rules concerning application forms and appraisal records. Specific responsibilities of the chief appraiser include: discovering, listing and appraising property; determining exemption and special use requests; organizing periodic reappraisals; and notifying taxpayers and taxing units about matters that affect their property values.
The chief appraiser is required by law to prepare and certify an appraisal roll for each taxing unit participating in the district. The 2003 and 2004 appraisal roll certifications were completed according to the law. Appraisal records and value notices were reviewed during the on-site portion of the ASR and were in compliance with State law and Comptroller Rules. In addition, the chief appraiser said that the appraisal district uses the Comptroller model forms for property reports and exemptions and special use applications.
The appraisal district has adopted a policy manual. The manual, which the district titled a policy manual, is limited to the district's employment policies and practices. Examples of the contents of this manual include the district's wage and salary policies; employee attendance and leave policies; the employee grievance procedure; definition of employment classes; and some general provisions that address employment activity and conduct at and away from the appraisal district. The manual was last revised in 2001.
Rains CAD does not have a written policy and procedures manual to guide employees in performing administrative operations.
The appraisal district does not have a procedure manual even though some operating policies and procedures are listed in the employee handbook as well as in individual job descriptions. The Rains CAD policy and procedures manual is actually an employee handbook. The manual only sets out employment guidelines, practices and employee benefits. It does not contain procedures to guide employees in performing the appraisal district's administrative tasks such as, internal accounting and purchasing nor does it include procedures for responding to taxpayer inquiries for information and assistance and managing the flow of data into the appraisal system.
The Software Group, the appraisal district's computer software provider, has provided an operator's manual for the automated system. The chief appraiser and bookkeeper, who work closely with the non-appraisal staff, rely on verbal directions and instructions about how to perform these tasks. The bookkeeper is the longest tenured employee at the appraisal district and, as such, the chief appraiser and non-appraisal staff rely on her institutional experience to help ensure they know what administrative tasks need to be done, how it is to be done and when it is to be done. The district, however, has not organized these procedures into a manual that employees can reference.
Only one of the appraisal district's full-time staff has more than three years tenure at the appraisal district and the chief appraiser has been at the district less than two and a half years. During the ASR the chief appraiser made it clear that the staff is hard-working and committed, but inexperienced. An administrative operations policies and procedures manual would be a significant aide in overcoming their inexperience. An administrative operations manual would also improve the consistency and quality in delivery of service.
A good administrative operations manual explains the procedures used to complete each administrative and non-appraisal task. A comprehensive and up-to-date manual can help alleviate inconsistencies and improve overall work quality as it serves as a ready reference in determining whether every one of the district's established procedures and policies have been adhered to in completing a specific task.
Develop a policies and procedures manual for performing administrative activities.
Appraisal districts across the state have begun to use technology to provide detailed property and appraisal records that are easily accessible to staff and the public. These information technology systems allow staff to effectively manage data on individual properties and make decision-making in the appraisal process more efficient. Automated systems enable the appraiser to consider several variables simultaneously in completing an appraisal, usually resulting in a more thorough and accurate appraisal.
Rains County Appraisal District does not have a written plan or target date to complete the integration of its geographic information system with its appraisal system.
To complete appraisals, Rains CAD appraisers access property data from the appraisal system via an appraisal card and physically match it to a map of the individual property to locate it and to identify the property's characteristics used to develop its appraised value. This is an accepted procedure but it does not take advantage of all available information pertaining to the property.
Rains CAD has not conducted ratio studies or property stratification analyses. As a result the CAD has not identified its various markets or the characteristics that influence value in those markets.
The Rains CAD cartographer was hired in September 2003. The chief appraiser's goal in hiring the cartographer was to develop a GIS with a complete set of property maps. Since beginning the cartographer has developed maps of the entire county and has verified the property boundaries of properties outside of the City of Emory, City of Point and City of East Tawakoni against the properties' deeds. Only verification of property boundaries with their deeds in the City of Emory remains before the appraisal district can begin to integrate the maps with its appraisal records to fully implement its GIS.
The district's goal is to integrate the appraisal system with the geographic information system. Once integrated, the system will allow appraisers to visually analyze properties in relation to nearby or similar properties and to identify the traits and characteristics that influence value and define market areas. Currently the appraisal district does not plot sales on maps or stratify land by similar characteristics in order to analyze and identify markets and the factors that influence them so, the system, when complete, will be a tool that will assist the district to appraise at market.
The integrated system will allow appraisers to make more accurate appraisals since the appraiser will be able to review all of the available data on a property as it is layered over a map or aerial photograph of the property and surrounding properties. This will ease compliance with Section 23.01, Tax Code, which requires appraisers to consider the individual property characteristics of a property in performing an appraisal.
The integrated system will also encourage more efficient sales and market analyses. Using the automated appraisal system, the appraisal district can quickly perform ratio studies by grouping or stratifying properties with similar physical characteristics, regardless of their geographic location in the appraisal district. An additional benefit from more effective market analysis is quick updates to the CAD's appraisal schedules. An integrated system and aerial photographs will even allow appraisers to measure properties and make appraisal decisions on individual properties without physically inspecting the property. This will be particularly useful in cases where the appraiser's access to a property is limited. Likewise, the integrated system can aid the appraiser's analysis of properties in an area by comparing a previous year's maps and photos to current maps and photos.
Lastly, an integrated system can be an aid for appraisal review boards. Review board members can examine properties and analyze them in relation to surrounding properties during hearings and deliberations.
Develop an implementation plan and timeline to complete the integration of the district's appraisal software and geographic information systems.