Yearly taxable value audits (TVA) found almost $600 million in reductions.
|T2* Reduction for 2017 in 2021
|Estimated Taxable Value Audits (TVA) Returns
This chart explained
mvba conducts administrative audits, called TVAs, for each tax year for each client.
Upon joining the firm in early 2020 as our Director of Taxable Value Audits, Phil Green, formerly of the State Comptroller’s office, began his rigorous methodical review for each of our Texas school district clients, comparing the State’s certified value to actual local tax rolls. In 2021, Phil completed his review of the 2017 tax year. The timeline for submitting any discrepancies found, through a process of certifying to the Texas Education Agency (TEA), closes for each tax year after three years have passed.
Property taxes directly impact Texas school district funding.
School district funding is a complicated calculation combining state and local funds. The local tax effort is “an essential component of the state’s school finance formulas,” according to the TEA’s website.
A district’s total property tax rate includes their rate for maintenance and operations (M&O) as well as, where applicable, for interest and sinking (I&S). The I&S rate is for payments on a district’s facilities debt. These rates are per $100 of taxable property valuation. The combined total comprises the local funding for each school district.
According to the Comptroller, 54.1% of all property taxes levied in tax year 2017 were levied by Texas school districts to the tune of $32.1 billion. During that time, property values were rising which meant that many school districts were able to cover their M&O costs without raising rates.
Property tax situations in a district change throughout the tax year.
“When the appraisal district (AD) reports the tax roll to the TEA, it’s as a snapshot in time. But the situation on the ground is in constant flux. Homesteads are added as new housing stock is built. More, or fewer, over-65 households move into the district, or leave. Other exemptions we look at include veteran’s and agricultural. So, the AD snapshot is a solid base to work from, but we can create a more accurate, granular school district taxable value, called a T2 value, for our clients. When it’s gone down, it means they didn’t receive that money from their tax base, even though that’s what the TEA was expecting based on the snapshot. We certify the reduction in their T2 taxable value to the TEA, which results in money coming back to them or less money they have to pay in, depending on their situation.”
For the 2017 tax year, mvba certified 60 TVAs to the TEA amounting to $598M in T2 reductions.
“Comparing that number to the $32.1 billion total tax bill that Texas property owners paid in 2017 may seem insignificant, but you have to put it in perspective,” says Bryant Smith, mvba’s Executive Director. “Texas had 1,018 school districts in 2017. The top 3, Houston, Austin, and Dallas, each levied over $100 billion in property taxes. The next 50 or so levied $10 billion or more. The next 250 or so school districts were above $1 billion. The bottom 500 school districts assess about a third of that or less. So, $598 million may not seem like much for the big rich districts, but even for them it wouldn’t be nothing. The funds coming out of those reductions could be used to pay for more faculty, staff, or other resources. We all know every little bit helps.”
You can find all of the facts listed above in the TEA’s Property Tax Assistance Division’s (PTAD) Final Tax spreadsheet for 2017 (used for school funding in school year 2018-2019) on their website in Excel or pdf format. The site also provides final worksheets for tax years 2007-2019 and the preliminary worksheet for 2020.
While other companies charge up 10% of the dollars returned to the ISD. We charge nothing.
mvba performs TVAs, among other services, as part of our regular ongoing client care. We do not assess a contingency fee, or any other fee, for conducting these audits or for certifying the results to the TEA so that school funding can be corrected in our clients’ favor. This is just part of how we serve our client communities.