ESC 1 Property Value Study The primary purpose of the PVS is to - - PowerPoint PPT Presentation

ESC 1

Property Value Study

 The primary purpose of the PVS is to help ensure

equitable distribution of state funding for public education.

 PTAD analyzes certain property categories, according to

generally accepted sampling and statistical techniques, to estimate their legally required value, which is usually market value.

 Certain property, including industrial property , special

inventory property, taxable non-business personal property, and most property categories with 5 % or less than a school district’s tested categories’ value, is excluded from the PVS.

School Districts

 May use the PVS to monitor the performance of

their appraisal districts.

 The results of the PVS can affect a school district’s

state funding .

 TEA uses the PVS to ensure equitable distribution of

education funds to school districts

If Your ISD Fails the PVS

Who Do You Feel Like Choking?

 CAD wants to “choke” PTAD  ISD wants to “choke” CAD

Purpose of PTAD

 Texas Government Code in Sec. 403.302 requires

State Comptroller to conduct annual study to estimate the total taxable value of all property within each ISD.

 The state’s distribution of several billion dollars in

school aid depends in part on the CPTD’s findings.

SB 671 (2003) Most Significant Change To PVS

 2003 was last year that PVS was conducted for every

ISD every year

 Even though a school district’s “local value” is invalid

(falls outside the confidence interval) the law requires the Comptroller to certify the local value .

 This “grace period” is given to ISD’s for two years.  Government Code requires the Comptroller to

perform an appraisal standards review of the CAD’s if an ISD is in grace

 If the state were to rely solely on the values set by the

appraisal districts, inequitable school funding could result in some school districts.

Requirements for PVS

 Independent estimate of value through the PVS by

adjusting school district appraisal roll values to market value.

 If values are within an acceptable range of the

adjusted values (state’s estimate) then PTAD certifies local value to TEA.

 PVS findings do not directly affect local property

taxes

Study Timeline

 PVS is released on January 31st of the year following

the study year

 Ex:

2015 PVS results will be released January 31, 2016

 ISDs and CADs receive copy of the study

(EMAIL)

 Commissioner of Education receives preliminary

findings

 ISDs (not CADs) can protest within 40 days after the

date of certification

 Protests are typically complete around the middle of

August

 Final values are certified to TEA on August 1st

State Education Aid

 State Education Aid is based in part on the per pupil

wealth of a school district.

 Commissioner of Education uses the CPTD estimate

• f taxable value to calculate the state funds each

district receives.

 Taxable Value is the estimated property wealth of

each ISD for state funding purposes. It equals the market value of all property in a district, minus certain exemptions and deductions.

Exemptions and Deductions

 State mandated homestead  Disabled veterans  Value limitations  Reinvestment zones  Freeport exemptions  Productivity appraisal of qualified ag land  Tax ceiling for over 65 homeowners  Any other state mandated exemptions

Items that are not Deducted

 20% Local Optional homestead**  In 2012

A G Opinion Requested

 RQ-0082-KP  Go to:  https:/ / www.texasattorneygeneral.gov/ opinions/ opinion

s/ 51paxton/ rq/ 2015/ pdf/ RQ0082KP.pdf

 Received: Tuesday, December 15, 2015  Re: Whether a school district, municipality, or county

may reduce or repeal the local option homestead exemption from the amount that was adopted for the 2014 tax year through the 2019 tax year

 Requestor: The Honorable Jane Nelson

From Senator Nelson



The Legislature passed Senate Bill 1 (84R), and the voters approved the related Proposition 1, increasing the homestead exemption for school district taxes. In addition, Senate Bill 1 prohibits school districts, municipalities, and counties from reducing or repealing the local option homestead exemption from the amount that was adopted for the 2014 tax year through the 2019 tax year. The Legislature clearly intended that no taxpayers may have their local option homestead exemption reduced or. eliminated from the 2014 tax year amount through the 2019 tax year. On September 9, 2015, First Assistant Attorney General Charles E. Roy sent a letter to Comptroller Hegar stating that a local government may not repeal or reduce a local option homestead exemption from the level it was in tax year 2014 through tax year 2019 and any repeal or reduction in the local option homestead exemption has no effect. This interpretation is consistent with the intent of Senate Bill 1.

 However, in order to provide clear guidance to local governments and taxpayers, I

respectfully request your formal opinion on whether a school district, municipality, and county may reduce or repeal the local option homestead exemption from the amount that was adopted for the 2014 tax year through the 2019 tax year.

 Please do not hesitate to contact me or my office if I can provide further

information.

Certified Value v.s. CPTD Taxable Value

 Differences occur due to:  Freeze Loss  Deferrals  Local Optional Exemptions  Timing of Submission of Tax Roll  Chapter 313’s, etc

Timeline

 July 25th, 2015

2015 Values Certified to ISD’s

 Sept/ Oct

CAD sends Values to PTAD

 Jan 31st, 2016

PVS released

 March 11, 2016

Appeals Due to PTAD

 August 1st, 2016

Values Certified to TEA

Example of What Can Happen with Value

 Spring ISD

 Value Submitted to PTAD from HCAD $ 8,332,879,764  Actual Value

$ 7,928,354,707

 (404,525,057) Reduction in Value  Impact of School Funding

$1,643,572

 LaPoynor ISD

 Value sent to PTAD from Henderson CAD

$ 362,549,343

 Actual Value

$ 336,823,191

 $(25,664,009) Reduction in Value  Impact on School Funding

$12,530

Preliminary Vs Certified Value

Example of an ISD Preliminary Estimate $205,255,698 Certified Value $177,683,893 Prelim value on Minerals $146,721,130 Certified value on Minerals $105,871,440

Importance of Looking at CPTD Value

 Are the category values on the summary worksheet the same as those reported on

the self-report?

 •Are the homestead exemptions reported in the PVS correct?  Are the pollution control, freeport and other exemptions and deductions reported

correctly in the PVS?

 Are current and base year values in tax increment- financing zones reported

correctly?

 Is the levy lost to the age 65 or older or disabled tax freeze reported correctly in the

PVS?

 Is the levy lost to the 10 percent homestead value increase limitation correct?  Are market and value limitations correctly reported for properties subject to value

limitation agreements?

CAD’s that have Invalid Findings

 Supervisors and team leads will obtain a copy of the

preliminary findings for all CADs that have invalid findings.

 Beginning on the day the PVS is released and

continuing for no more than two weeks, supervisors and team leads will personally visit the individual CADs and discuss the preliminary results with the chief appraiser.

 The law allows only school districts to appeal the

result of their protest to district court. Gov’t Code 403.303 (d)

Types of Protest

 There are TWO types of protest  School district (can sue in district court)  Property owner protest (cannot sue in district court)

ISD’S IN REGION 1 and 2 THAT DID NOT PASS

Freer ISD Year 1 Grace $323 VS $351 LaSara ISD Year 1 Grace $35 VS $37 Lyford ISD Year 1 Grace $224 VS $237 Raymondville ISD Year 1 Grace $239 VS $253 Orange Grove ISD Year 2 Grace $289 VS $343 San Diego ISD State Assigned Value $18 3 VS $219 Jim Hogg ISD State Assigned Value $324 VS $360 Alice ISD State Assigned Value $1.50 4 VS $1.563 Rio Grande City ISD State Assigned Value $1.28 8 VS $1.48 8 Roma ISD State Assigned Value $368 VS $511 San Perlita ISD State Assigned Value $8 2 VS $94

If I Have Invalid Values

 An ISD has 40 days to file an appeal after the study is

released

 March 11 is deadline to submit appeal

Questions about Appealing

 Whenever “grace” started for ISDs, the question of

appealing or not appealing started.

 If there is no funding at stake, should the ISD

appeal? Should the CAD appeal?

 These are local decisions that must be reached by the

Chief Appraiser and Superintendent and/ or Business Manager of the school.

 What happens if CAD and ISD are in conflict?

 Should I file the appeal myself (CAD) or should I

consult (the so called) experts?

 The CAD and ISD should actually already have an

idea before the study is released that if they would have to appeal, what do they want to do

 Neither entity can wait to decide  Appeals are due to the Comptroller’s office 40 days

after the release of the study ( unless an extension is granted) Rule 9.4307 Texas Administrative Code

Who Can Appeal

 Only an ISD has the right to appeal  ISD’s Control the entire process  ISD can select their agent  Remember there can only be one agent for each

protest **********

 SR appeal and full PVS appeal may have different

agents

Hearings

 Formal hearings are conducted by hearing examiners

at SOAH

Example of Impact on School Funding

 CAD/ ISD Local Value $756,993,400  ISD Assigned Value (state) $799,546,785  State Aid Impact $ 626,026 *****  Assigned Value after appeal $ 748,794,790  ***indicates the amount of aid the ISD received by the

T2 value being reduced, but because state value was still assigned the ISD did not receive another $500,00 +

 CAD/ ISD Local Value $314,066,951  ISD Assigned Value (state) $330,311,221  State Aid Impact

$ 293,026

 Assigned Value after appeal $ 309,621,074

 Sabinal ISD ( Uvalde County)  2014 Local Value

$237,847,115

 2014 Assigned Value$310,659,140  About a $301,000 impact on both the 14/ 15 and $133,000 on 15/ 16 

Uvalde CISD ( Uvalde County)

 2014 Local Value

$934,879,362

 2014 Assigned Value$1,099,461,119  About a $2,900,000 impact on both the 14/ 15 and $2,900,000 on

15/ 16

Past PVS Results

 2009 PVS—the last PVS where every CAD was

studied the same year

 113 ISD’s in Year one of Grace  11 ISD’s in Year two of Grace  51 ISD’s at State Value  29 ISD’s at State Value Lower than Local  Out of the 113 ISD’s in year one of grace 23 ISD’s are split

districts (due to HB1010)

 These results involved 123 CAD’s  254 appeals were filed. This does not include taxpayer

appeals.

2009 PVS Appeals

 116 Self Report only appeals were filed  Consultants filed 54 these SR appeals  CADs filed 62 SR appeals 

100 out of 254 appeals were filed by CAD’s.

 147 appeals were filed by consultants ( law firms,

appraisal firms, school finance consultants, etc)

 1 ISD filed their own appeal

2014 PVS

 153 ISD’s had Invalid Value  118 Appeals ( full appeals) were filed  72 Self Report Only Appeals were filed  4 requests were sent to SOAH for rulings on evidence  5 appeals requested a hearing at SOAH  1 ISD actually had a hearing at SOAH ( SOAH judge

ruled in favor of PTAD)

2015 PVS

 15 ISD’s State Value Lower Than Local ***  56 ISD’s Year 1 of Grace ***  14 ISD’s Year 2 of Grace***  26 ISD’s at State Value

What If You Procrastinate?

Taxable Value Audits

 Rule §9.103: Audits of School District Taxable

Property Values

 Avenue to adjust the local values for school districts  Filed after CPTAD’s certification of data to TEA  June or July of PVS year  TEA will not fund until the Final SOF for that year

has been released

Taxable Value Audit Examples

 PVS Errors not caught by school:  Olney ISD (Chapter 313) – 2013 audit

 Before: 562,969,933  After: 272,569,780  Adjustment: (290,400,153)  Funding: $1,275,423

 Adjustments made to appraisal roll after certification  Hidalgo ISD -

 Before: $415,118,381  After: $389,116,294  Adjustment: (26,002,087)  Funding: $ 564,215  McAllen ISD

• Before : $5,853,960,161
• After : $5,816,461,229
• Adjustment: (37,498,932)
• Funding : $461,770

Lawsuits Huntsville ISD – 2006, 2007, 2008, 2009, 2010, 2011 Total Adjustment: (129,682,766) Funding: $1,182,763

PVS and MAP Review

 Can I have both at one time?

 ABSOLUTELY

Remember … … … ..