Some area school districts say they were shorted millions of dollars in property tax revenue last year because of computer problems with the Tarrant Appraisal District and are hopeful that the software glitch is indeed fixed going into the budget season.
Fort Worth school district officials estimate they lost $12 million in property tax revenue for the 2015-16 budget, which runs from July 1, 2015, through June 30. The district had expected to receive $396 million but got $384 million, officials said.
Grapevine-Colleyville school district officials say they were shorted $8 million, from an expected $161 million to $153 million.
Eagle Mountain-Saginaw had expected to draw $78 million but got $5 million less.
Because of the shortfall, some districts say they had to eliminate positions, while others say they have not been able to hire teachers to meet growth demands.
The CFOs said problems with new software prevented TAD from accurately appraising some properties in the county in 2015. As a result, entities that rely on the property taxes to make up their budgets saw little or no change in tax revenue during a time when property values were rising across the county.
“These are dollars that we can never recoup,” said Elsie Schiro, chief financial officer for the Fort Worth school district. “Everybody in Tarrant County has to be livid.”
$12 million in property tax revenue that the Fort Worth school district says it lost.
Jeff Law, chief appraiser for TAD, acknowledged that there were delays in the appraisal process in 2015. But he was adamant that appraisers have now caught up on the assessments and that everything is in place for 2016.
“I am saying that there is nothing missing and that everything is back on track,” Law said. “I’m not aware of any category of property that we have chosen not to appraise.”
TAD “went live” with the $2 million appraisal software system, known as Thomson Reuters Aumentum, in October 2014. But officials with TAD, whose job is to set equitable values on properties, didn’t anticipate that the conversion of 1.6 million property tax records would create a slowdown of appraisal activity for several months, Law said.
“It was recommended that the [appraisal] district seek an alternative system, and that’s what we did,” Law said. “Our old system was working fine. The question was about whether it would be sustainable long-term and again, it was 30 years old.”
The Star-Telegram reported in December that because of the same computer glitch, tax bills for mineral interests were being sent out much later than normal.
‘I was pretty much sick’
Property values in Tarrant County increased by more than $6 billion in 2015, to $142 billion, records showed. That’s an increase of 5 percent from 2014.
But that increase was much smaller than in neighboring counties.
Denton County’s taxable values increased 10 percent from 2014 to 2015. Dallas County’s went up 7.5 percent over the same period, records show.
Schiro said she was made aware of the new software in October 2014 and said she began to have questions about TAD’s preliminary numbers as early as last April.
“What they failed to tell us was that they were having problems,” Schiro said. “When [we] called, TAD became less and less responsive and less and less able to produce reports like they used to.”
Early on, TAD did not provide training on how to read the new reports, said DaiAnn Mooney, Grapevine-Colleyville’s chief financial officer.
“It seems TAD just jumped into implementation and forgot about the taxing entities,” Mooney said.
In July, when TAD released its preliminary list of certified values, Schiro was dismayed that Fort Worth’s valuation had dropped by almost $1 billion to $27.79 billion.
“When this number came out, I was pretty much sick,” Schiro said. “I didn’t sleep for a while.”
School districts use those values to began planning their budgets for the upcoming fiscal year.
Eagle Mountain-Saginaw school district’s CFO, Jim Schiele, said he requested a meeting with Law after it became clear that the appraisal district had not been able to accurately reflect home sale values.
“We asked what had happened, and we were told the computer software conversion from the fall of 2014 did not go well. It was described as so difficult that TAD had to shut down for two months in October and November 2014,” Schiele said.
“That is the period in which sales data is uploaded; therefore, TAD was unable to complete this responsibility because of the shutdown,” Schiele said.
Schiro said that the appraisal district was so far behind in its work that more than $1.8 billion of the district’s taxable properties had not been assessed as of July.
Law said that TAD officials have made “a lot of progress” since the July report. The numbers have been significantly reduced, and the district is processing a final 47 accounts that remained under protest in January.
We’re going to catch up next year.
Mark Youngs, Keller school district CFO
“We have since caught up and since reported a majority of that value to tax offices once we completed the appraisals,” Law said.
A ‘puzzling’ piece of information
While some districts said their property tax revenue was close to what they projected, others were counting on more as home and commercial construction sizzled. Housing starts in the county were up, and the price of existing homes soared.
Eagle Mountain-Saginaw’s demographer told school officials that the district’s value would grow by 10 percent for existing properties and new growth. But TAD determined a 3 percent increase was more like it.
Mooney said Grapevine-Colleyville also had anticipated more of a spike than TAD’s 3.6 percent growth, but it came in at closer to 1.5 percent. Mooney became curious and decided to check on the values of neighboring school districts and communities and saw higher increases.
She also went door to door to talk with homeowners to inquire about their tax bill. She learned that in cases in which homes sold at a higher value, the increase was not reflected on the tax rolls.
“The amounts just stayed the same because TAD was so far behind,” Mooney said. “That’s really how it happened. It’s very frustrating that they had to implement this new software when the market was just booming.”
The Northwest school district, one of the fastest-growing in North Texas, had expected a 7 to 10 percent increase in its property values. Instead, it came in at 5.7 percent, which Northwest CPA Jon Graswich described as “puzzling.”
Graswich later discovered, after going through an annual report by the Texas comptroller, that Northwest’s property had been “undervalued by $268 million.”
Managing the losses
Because public schools in Texas rely heavily on property tax revenue, any lack of oversight of the appraisal system can amount to a loss in funding.
As a result of the miscalculations, Eagle Mountain-Saginaw has been forced to eliminate some positions and dip into reserve funds. The district grows by 560 students a year and every year is in need of supplies, classrooms and full-time teachers.
“This negatively affected the school community and required us to modify our budget and reduce expected programming to manage this loss,” Schiele said.
In the Fort Worth district, half of an approximate $700 million annual budget is made up of property tax revenue. A 1 percent increase in value triggers $4 million in funding for Fort Worth schools and money to pay off bond debt, Schiro said.
Because the district had almost the same value in 2015 as it did in 2014, Fort Worth did not receive the $12 million it was expecting, Schiro said.
Of that, $9.3 million was expected to be poured in to the school district’s general fund, which pays for teacher salaries, school supplies and other daily operational costs. The money could have paid for the salaries of 140 full-time teachers, Schiro said.
Playing catch-up in 2016
In recent months, Law has held regular meetings with taxing authorities to answer questions and settle any issues. After a year of use, he is confident that the software system is working well.
“We had our employees learning the new system, all those things that come along with that,” Law said. “But now we have a year under our belt, a year of experience, and we’ve worked through a lot of issues.”
We’re going to catch up next year.
Mark Youngs, Keller school district CFO
Mark Youngs, chief financial officer of the Keller school district, is confident that the school districts will be able to recover any losses in the 2016 appraisal process.
“We’re going to catch up next year,” said Youngs.
Mooney and others, however, anticipate that taxpayers might be alarmed to see tax bills for 2016, as economists are predicting a slowdown in jobs growth and housing sales.
“You’ve got this domino effect,” Mooney said. “You missed a year and now you’re going to try to make it up in two years. What’s going to happen now is that TAD is going to have to increase the values so much and more people are going to be protesting their increases.”
Schiro said she’s had some “heartburn” over TAD’s recent announcement that it is upgrading the recently installed software.
But, Law said, it’s not a complicated matter. The appraisal district is simply shifting to a new version of the same software.
“We’re not converting to a new system,” Law said. “All we’re doing is going from one version to the next version and every version has more functionality and more enhancements, just like an iPhone does.”
Staff writer Sandra Engelland contributed to this report.