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Evaluating the Five Largest Appraisal

By Paul Pennington

In order to determine how five counties performed in assessing
real and personal property, the author analyzed their operations-from
budget cost-effectiveness, staff productivity, and accuracy
of their tax rolls to lawsuits per parcel ratio.

GREAT 17TH-CENTURY economist Adam Smith once said, "It
is the highest impertinence and presumption, therefore, in
kings and ministers to pretend to watch over the economy of
private people, and to restrain their expense. . . . They
are themselves always, and without any exception, the greatest
spendthrifts in the society." Is old Adam Smith right?
Well, we are all seeing a lot in the media these days about
attempts to cut government spending at all levels (i.e., federal,
state, and local). This analysis limits its scope to those
government entities that are responsible for the property
tax assessments on real and personal property-specifically,
the five largest Texas appraisal districts. Are they spendthrifts
or prudent stewards of your tax dollars?

examining the operations of government entities, you are confronted
with the old adage that governments are not run like businesses.
Therefore, the argument goes, they cannot be evaluated in
the same manner as private sector companies. What to do? You
either throw your hands up in the air and ask, "Why ask
why?" or you develop parameters that impartially measure
the effectiveness and productivity of the government entities
you wish to study

the last three years I have examined the operations of the
five largest appraisal districts in the State of Texas (Bexar,
Dallas, Harris, Tarrant, and Travis counties). This article
discusses the results of my research on the performance of
these districts during tax year 1992 and should not be considered
a reflection of their operations for tax year 1993. The statistics
used in this survey were obtained from the 1992 Texas Property
Tax Appraisal District Survey, the Open Records Act, and questionnaires
sent to the chief appraisers of each of the five appraisal
districts. All sources were used in compilation of this analysis.

generic categories are examined and commented on:

Tax roll analysis,

Budget analysis/cost effectiveness,

Budget analysis/staff productivity,

Lawsuits/effectiveness of the administrative remedy,

State ratio study/accuracy of appraisals,

Appraisal Review Board budget comparison/cost benefit.


analyzing the five tax rolls involved in this analysis, I
looked at three areas:

The total taxable value,

The total number of tax parcels administered,

The percentage of change between tax year 1991 and 1992.                   

In analyzing the top five appraisal districts (Table 1) strictly
on the guidelines noted above, the following rankings were
achieved. Harris County tops the list both in terms of the
size of tax roll and total number of tax parcels, followed
in descending order by Dallas, Tarrant, Bexar, and Travis
Counties. It is interesting to observe that, whereas each
district added additional tax parcels between 1991 and 1992,
their respective tax rolls decreased. Obviously, these counties
were still experiencing loss in taxable values due to the
savings and loan debacle, overbuilding, and other economic
factors that adversely affected Texas during the late 1980s
and early 1990s.         



Tax Roll
Tax Roll
Harris $125,219,669,000 $133,652,252,289 6.309
Dallas $104,379,260,000 $105,779,402,720 1.324
Tarrant $
Bexar $
Travis $



Number of
Tax Parcels
Number of Tax Parcels
Harris 1,305,599 1,227,359 6.375


ANALYSIS (Cost Effectiveness)

ranking the cost effectiveness and productivity of each of
the districts in question, I have examined three major areas
of operation:

The 1992 operating budgets,

Number of employees during 1992

1992 cost per parcel.

cost per parcel. As noted in Table 2, each district’s 1992
budget has been divided by the total number of parcels administered
by that district. This calculation indicates the average cost
for each district to administer its tax parcels. The chart
clearly shows Dallas County administering its roll at a significantly
lower rate per parcel than the other districts, with Bexar
County registering the highest per parcel cost.

one considers the cost to administer a tax parcel in Dallas
County ($15.46) and compares it to Bexar County ($20.45),
one finds a difference of 32 percent. Why does such a budget
disparity exist? Can the 32 percent difference be accounted
for as an economy of scale, based on the fact that Dallas
is a larger district, with more employees and greater resources?
Apparently, economies of scale have nothing to do with it.
Looking at Harris County, the largest of all of the Texas
appraisal districts, shows that their cost to administer a
tax parcel is 22 percent higher than that of Dallas County.
Evidently, Dallas’ lower administrative costs must be attributable
to more effective use of resources. Thus, Dallas County taxpayers
are realizing lower administrative cost than their counterparts
in Bexar, Harris, Tarrant, and Travis Counties

Table 2

Administrative Cost Per Parcel Rating


Number of Tax Parcels
Dallas $11,638,770   
Harris $24,599,369 1,305,599
Tarrant $
Bexar $9,502,893   


ANALYSIS (Productivity)

parcel employee ratio (productivity).   If we take
this process one step further, it is possible to determine
a ratio between the number of tax parcels and the number of
employees per district; in other words, to rank the productivity
of the district’s employees. As shown in Table 3, this can
be achieved by dividing the total number of tax parcels per
district by the total number of each district’s employees.
Using this comparison, we find Dallas County with the highest
ranking and Tarrant County with the lowest. There is also
an unexpected finding. As can be seen above, the cost to administer
tax parcels and the tax parcel/employee ratio do not necessarily
correspond. For example, Bexar County had the highest average
tax parcel administrative cost, but is ranked second in the
tax parcel/employee ratio. Thus, a district’s cost to administer
its tax parcels does not appear to be connected to its respective
budgets and staffing.

interesting observation is the range of disparity of productivity
in comparing the districts. The management team at the Dallas
Central Appraisal District is getting higher productivity
out of its staff, based on the average tax parcel/employee
ratio of 3,124 parcels per employee; whereas Tarrant County
has a tax parcel/employee ratio of 2,452 tax parcels per employee,
or 27 percent less productivity than Dallas.


Table 3

Tax Parcel / Employee Ratio Ranking



Tax Parcels

of Employees

Per Employee  

241 3,124
165 2,816
Harris 1,305,599      487 2,681
108 2,598
205 2,452



to parcels ratio (effective appeal process).   Several
years ago I heard a chief appraiser say that, when a property
tax appeal reaches the courthouse, the system has failed.
There is a lot of truth in that statement. Certainly, most
chief appraisers would agree that only appeals involving points
of law and real valuation disagreements need to reach the
courthouse. Clearly, the whole concept of mass appraisal is
not a science. Rather, it is an attempt to reach fair and
equitable assessments on a mass scale. Thus, appraisal districts
should agree that the number of lawsuits filed against them
acts as a barometer, indicating the effectiveness of the administrative
remedy, which is the appeal process prior to judicial review.
In reality, when there is a large upsurge in the number of
suits filed against a district, it does indicate a problem
within the system.

I have developed a lawsuit-to-parcel ratio ranking, for the
purpose of identifying those districts with the most effective
administrative remedy system. The ranking is achieved by dividing
the total number of tax parcels by the total number of lawsuits
filed. We discovered a telling statistic regarding the effectiveness
(or ineffectiveness) of the "administrative remedy"
for a particular district. As can be seen in Table 4, the
lower the number of parcels per lawsuit, the greater the potential
for taxpayers being forced to seek legal remedy. In 1992,
Travis County gained the highest score for an effective administrative
remedy, with Harris County scoring the lowest. Harris County
set an all-time lawsuit record (state wide) with 654 lawsuits
filed against it in 1992. As also noted in the above chart,
Harris County also scored the highest percentage increase
in lawsuits (105.66%).


Table 4

Lawsuits to Parcel Ratio Ranking

District 1991


to Parcel Ratio
Travis 100 106    
Dallas 277 235  
Bexar 186 165  
Tarrant 204 230  
Harris 654 318 105.660 1,996



to Sec. 5.10 of the Texas Property Tax Code, "The comptroller
shall conduct an annual study in each appraisal district to
determine the degree of uniformity of and the median level
of appraisals by the appraisal district within each major
category of property. The comptroller shall publish a report
of the findings of the study, including in the report the
median levels of appraisal for each major category of property,
the coefficient of dispersion around the median level of appraisal
for each major category of property. 

one could argue that the cost associated with administering
a tax roll in a district that engages in an aggressive reappraisal
program might be costlier than that of a district that is,
historically, not as aggressive. Or, one might argue that
it costs more to produce a more accurate tax roll on a per
parcel basis. These are fair arguments; thus, Table 5 shows
the findings of the Comptroller of Public Accounts, Property
Tax Division 1991 and 1992 property valuation study. However,
when the administration cost per parcel rankings are noted,
cost does not necessarily equate to a higher rating by the
Comptroller’s office, as noted in Table 5. As a matter of
fact, administrative costs do not appear to have a correlation
on the tax rolls rated in Table 5.

Table 5

Ratio Study Ranking 

(Accuracy of Tax Rolls)

District Median
of Dispersion
Cost Per parcel
  1991 1992 1991 1992  
Dallas 100% 99% 12.00 10.70 $15.46
Bexar 100% 100% 13.33 14.91 $20.45
Travis 100% 100% 13.43  9.68 $18.41
Tarrant 99% 98% 14.83 13.87 $19.24
Harris 94% 97% 17.01 81.09 $18.84


The median level is the median appraisal ratio of a reasonable
and representative sample of properties in an appraisal district.
Districts would ideally like to get as close to 100 percent
on the median ratio as possible and as low a number as possible
on the coefficient of dispersion.

BUDGET COMPARISON (COST BENEFIT) Do you get what you pay for?
There is a growing tendency for professional Appraisal Review
Board (ARB) members to serve up to three consecutive terms,
or as long as six years (Table 6). The rationale behind this
tendency is twofold. First, the assumption is made that, if
members are fairly compensated for their part-time participation
in the administrative remedy, then appraisal districts will
be able to attract qualified members. Second, when districts
are unable or unwilling to attract qualified members, they
encourage their board members to take appraisal courses to
enhance their knowledge of appraisal methodology. Thus, in
theory, if an ARB member is fairly compensated for his expertise
in dealing with valuation disputes, fair and equitable rulings

should be the result. Unfortunately, theory does not resemble
reality when ARBs are closely examined. Those districts that
spend more money on their ARBs do not necessarily obtain more
equitable rulings or raise the ranking of their tax rolls
as a whole.     For example, the
comparison noted in Table 7 illustrates the effect funds budgeted
per ARB member has on the lawsuit to parcels ratio and the
state ratio study ranking. The table shows that the amount
of funds budgeted for ARB members does not necessarily have
a correlation to the effectiveness of the appeal process or
the accuracy of the tax rolls they are charged by law to review.

Table 6

ARB Budget Comparison

District  Members 1992
Budget Per Member
Harris 45 $600,000 $13,333
Tarrant 30 $368,011 $12,267
Travis 20 $185,230
Dallas 45 $272,962
Bexar 30 $150,000

Table 7

District Average
Budget Per Member
Ranking (Effective Appeal Process)
Ratio Study Ranking (Accuracy of Tax Rolls)
Harris $13,333 Travis Dallas
Tarrant $12,2676 Dallas Bexas
Bexar Travis
Tarrant Tarrant
Harris Harris


does the Code say about ARBs?   The Texas Property
Code requires each county to have an appraisal district and
to establish an appraisal review board. Although ARBs may
vary in size, the Code gives some guidelines. ARBs must have
at least three members and, depending on the county’s population,
they may have as many as 45 members. ARB members are appointed
by the appraisal district Board of Directors to serve two-year
terms, which begin at the first of the year. The Code has
some restrictions on the eligibility of potential members,
which deal mainly with conflicts of interest, nepotism, and
residency requirements. The Code is remiss, however, in that
it does not have any requirements relating to possession of
even a general knowledge of the appraisal of real or personal

what’s wrong with ARBs?  In the last ten years,
four disturbing scenarios have developed among ARBs:

I am told that carved into the stone above one of the entrances
to the Justice Department building in Washington, D.C., is
the inscription: "The Government wins when justice is
served." It doesn’t say: "Justice is served when
the Government wins." Some ARBs seem to have trouble
with that concept, because of the built-in structural problems
in their appointments and association with appraisal districts.
ARB members are appointed by appraisal district Boards of
Directors, some of whom are elected public officials, while
others are members of the private sector. Once appointed,
the ARB member is trained by the district’s staff and compensated
from the district’s coffers. This process in itself tends
to create a bias in favor of the district. As an example,
the Tarrant Appraisal District in fiscal year 1990 spent $973,451
in legal fees, approximately 10 percent of their operating
budget, defending themselves against taxpayer lawsuits. The
onslaught of suits was generated in large part by their ARB’s
bias during the formal hearing process. The Texas Legislature
recognized the problem, singled out Tarrant County, and passed
legislation that forced the ARB to relocate to separate facilities
from the Tarrant Appraisal District offices. In response to
the legislative mandate, they moved one door down in the same
office complex. The good news is that the hand slap by the
legislature apparently had an effect: Tarrant County reported
spending $59,485 in legal fees in fiscal 1991 versus $973,451
in fiscal 1990.

ask "why?"
In Sec. 6.43, the Code provides for
the ARB to ". . . employ legal counsel as provided by
the district budget or use the services of the county attorney
who may use the staff of the appraisal office for clerical
assistance." The problem with partiality towards the
district is added to when the ARB, acting as an "independent
body," retains the same legal counsel as the district.
For example, both Dallas and Tarrant see no conflict of interest
in using the same counsel as their respective ARBs. However,
there are occasions when administrative and legal disputes
arise-between taxpayers or their agents and the appraisal
district. When an issue is brought before the ARB, and their
legal counsel and that of the district is one and the same,
how can one reasonably expect an impartial resolution? The
answer to this dilemma is apparently, why ask "why?"

The next scenario that inevitably develops is that "pork
barrel syndrome." This syndrome raises its ugly head
whenever public funds can be doled out to friends and associates,
regardless of qualifications. A classic example of this has
evolved in Harris County. In October of 1992, the Houston
Business Journal ran a series of articles about the amount
of cronyism used to select Harris County Appraisal Review
Board members. Apparently, their ranks were saturated with
former city and school district employees. Being true to their
new governmental employer, the Harris County Appraisal Review
Board satisfied it by recommending questionable valuations,
which resulted in taxpayers filing a statewide record of 654

A property owner in Texas has the right to file an appeal
if the owner feels the appraised value is in excess of the
property’s market value. Typically, after an appeal has been
filed, a property owner is given an opportunity to discuss
and, hopefully, resolve the dispute informally with a member
of the appraisal district staff. If an appeal cannot be resolved
at this level, the taxpayer is given an opportunity to appeal
the disputed assessment to the ARB. For some unknown reasons,
be it a lack of confidence in the appraisal district’s staff,
turf battles, or an attempt to establish their own identity,
some professional ARBs have felt it necessary to micromanage
the informal appeal process. A case in point would be the
actions of the Travis County ARB. The ARB’s involvement grew
to the point that any valuation agreement reached between
a staff appraiser and property owner at the informal level
was subject to constant scrutiny. If the ARB didn’t agree
with a valuation agreement, they would kick it back, forcing
the property owner to bring the appeal before them formally
for resolution. The legislature recognized the problem and,
during the 1993 session, passed legislation (S.B. 893) to
remedy the situation. Effective September 1, 1993, any agreements
reached during the informal appeal process between the taxpayer
and the district’s staff are final and not subject to review
by the ARB.

Table 8

Evaluation Ranking

Roll Size Ranking (Certified Assessments and Number of Parcels)

Harris    (2) Dallas    (3)
Tarrant    (4) Bexar    (5)

Cost per Parcel Ranking (Most Cost Effective)

Dallas    (2) Travis    (3)
Harris    (4) Tarrant   (5)Bexar

Tax Parcel per Employee Ratio (Highest Staff Productivity)

Dallas    (2) Bexar    (3) Harris
   (4) Travis    (5)Tarrant

Lawsuits per Parcel Ratio (Most Effective Appeal Process)

Travis    (2) Dallas    (3)
Bexar    (4) Tarrant    (5)Harris

State Ratio Rating (Most Accurate Tax Roll)

Dallas    (2) Bexar    (3) Travis
   (4)Tarrant    (5)Harris

ARB Budget Cost per Member (Lease Cost Beneficial)

Harris    (2) Tarrant    (3)
Travis    (4) Dallas    (5)Bexar


do these statistics mean? Certain trends emerge. Noted in
Table 8 are the rankings of each district, by each of the
categories originally set forth in this analysis. In 1992
the Dallas Central Appraisal District had the highest ratings
in terms of budget cost effectiveness, staff productivity,
and accuracy of their tax roll. The Travis County Appraisal
District, by virtue of its excellent rating of lawsuits per
parcel ratio, showed its effective administrative remedy program
in 1992.

as old Adam Smith would put it, are there spendthrifts within
the five largest appraisal districts? The answer is both yes
and no. For example, by examining the above charts, one is
automatically struck by the fact that Harris County, the largest
appraisal district, does not appear to benefit from any economies
of scale. The vast amount of moneys it spends does not seem
to equate to a more efficient appraisal district or more accurate
tax roll. On the other hand, Bexar County, which has the highest
administration cost per parcel, also has the second highest
rating by the state on the accuracy of its tax roll and ranks
second in staff productivity. Therefore, it appears that money
in itself is not the question, rather the manner in which
appraisal districts strive to effectively manage their resources.

of the appraisal districts noted in this analysis perform
mammoth appraisal tasks, and I’m sure for the most part, theirs
is a thankless job. Criticizing the administration of these
districts is an easy thing to do; however, that is not my
objective. Rather, the purpose of this analysis has been to
applaud the efforts of the most efficient districts and hope
that the others will find the analysis constructive and commentary


PENNINGTON is President, P.E. Pennington & Co., Inc.,
a regional property tax consulting firm in Dallas, TX.

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