Tarrant school districts fear consequences of new appraisal tax plan

Leon Fisher is no stranger to the economic challenges faced by Crowley ISD parents.

Around 70% of Crowley ISD students are considered economically disadvantaged. The school district’s chief financial officer said those challenges are why Crowley ISD offers an exemption allowing homeowners to reduce the taxable value of their primary residence by 10% and why it strives to keep taxes low as growth in the area explodes.

But Fisher fears the sweeping changes approved by the Tarrant Appraisal District’s board of directors July 22 — also intended to provide property tax relief to residents — could have dire consequences for public education in his community.

“Parents are kind of stuck between a rock and a hard place. They want the tax benefit from this proposal, but it’s really all about educating people on how it’s going to impact your school district,” Fisher said. “It’s going to have an adverse impact on your school district’s ability to both complete (bond) projects within the scheduled time and within the budgeted amounts that were initially identified for these bond projects.”

Many school districts are already struggling financially. A majority of Tarrant County school districts have adopted deficit budgets for the 2024-25 school year.

With federal pandemic relief funds expiring in September, districts have been forced to make a variety of budget cuts. As inflation continues to push construction and maintenance costs higher, hopes of increased funding from the Texas Legislature were dashed amid infighting over school vouchers.

Now, the latest challenge for districts comes from new policies given initial approval by the Tarrant Appraisal District’s board of directors.

The district will switch from annual residential reappraisals to once every two years; roll over current residential property values to 2025; and establish a 5% threshold to raise residential property values each appraisal cycle. Each policy will result in greater value stagnation for residential properties.

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Fort Worth Report

For Crowley ISD specifically, the changes could impact the district’s ability to complete its voter-approved $1 billion 2023 bond, Fisher said. Bonds are typically repaid over time from the district’s property tax revenues.

While high growth is expected, if property values stagnate or don’t grow as anticipated, the district could find itself unable to fund projects promised under the bond, he said. Though families should see short-term tax relief, the district might be unable to fulfill promises it gave to voters who approved the bond and were told their kids would enjoy new schools and facilities.

The changes mark — for many local school officials — the latest financial hurdle to providing quality education. Many fear stagnant property values will disrupt the complicated state funding formula schools are governed by and make it harder to complete infrastructure investments.

Northwest, Fort Worth ISD react to impact of appraisal policies

Northwest ISD, which approved a nearly $2 billion bond in 2023, expressed concerns similar to those of Crowley ISD.

“As with our peer Tarrant County school districts, Northwest ISD is deeply concerned about the drastic impact the Tarrant Appraisal District’s recent changes will have on school funding,” the district said in an emailed statement.

The statement highlighted that these changes would challenge the district’s budgeting process, costing it millions of dollars.

“School districts have historically budgeted off consistent annual appraisals and values,” the statement said. “School districts face the potential loss of millions of dollars annually because of these changes.”

Fort Worth ISD, Tarrant County’s largest school district, also sees possible consequences, chief financial officer Carmen Arrieta-Candelaria said. The changes would make it harder for the district to increase future bond capacity.

But Fort Worth ISD officials have fewer concerns than their counterparts across the county. Unlike other, smaller districts throughout the county, Fort Worth ISD could see one unexpected benefit, Arrieta-Candelaria said.

The district expects to pay the state several million dollars over the next few years because of what’s known as recapture, where property-rich districts share tax revenues with property-poor districts. Because the appraisal policy changes could generate less growth in property tax revenue, they could also lead the district to pay less in recapture funds back to the state.

“That is important for us. I think that may actually help us,” Arrieta-Candelaria said. “But we don’t know until we know.”

School officials sound alarm before, during and after vote

Before the Tarrant Appraisal District approved the changes at a specially called meeting at the Arlington ISD Administration Building July 22, school superintendents and chief financial officers from across the county penned letters and emails expressing their concerns about items on the agenda.

Hurst-Euless-Bedford ISD enlisted Janét Spurgin, chief research officer for the Texas Association of School Business Officials, to offer insight into how the board’s proposed actions could impact school districts. In her letter, Spurgin explained that stagnant property values could push districts to increase their interest and sinking, or I&S, rates — the portion of their overall property tax that goes toward making annual debt service payments.

“Stagnant property value growth could mean that a higher I&S rate is needed to meet annual debt service payments and/or could limit the ability of school districts to pay down debt to achieve lower overall cost,” Spurgin said.

Crowley ISD wasn’t the only school district to raise concerns at the TAD meeting in July. Other schools sent representatives to push the appraisal board to either reconsider or delay taking action. Officials from Azle ISD, Birdville ISD and White Settlement ISD each addressed board members, outlining how the proposed policies could impact both their long- and short-term financial stability.

While several board members asked school district officials questions and expressed sympathy for their concerns, the body emphasized their desire to help homeowners first and foremost.

“I understand the school districts are having to do more with less, but so are our taxpayers,” board member Callie Rigney, who took office this month, said. “Taxing people out of their homes needs to stop.”

School districts’ lobbying did accomplish one key change.

Initially, board members were primed to move from an annual appraisal to a once-every-three years schedule. That shift would have put the appraisal district out of sync with the state’s property value study, which is conducted every two years to determine education funding distribution. If the district’s property value estimations are too different from the state’s, school districts are at risk of losing state funding.

After hearing public comments about the importance of staying in line with the state property value study, the board opted to move to a once-every-two years schedule. Although school districts didn’t get all of the changes they were hoping for, that shift is worth celebrating, Fisher said.

“Every win for us is a great big win – we love it,” Fisher said.

Chief appraiser meets with districts to discuss policy impacts

Some area school district employees contacted by the Fort Worth Report were caught off guard by the changes.

“This information is new to us, and we are reviewing the expected negative impact on our already limited funding,” Lake Worth ISD Superintendent Rose Mary Neshyba wrote in response to questions regarding how her district feels about the changes.

Though other school districts did know of the changes, the deliberation comes during the throes of beginning a new school year. Most districts still need to consider and adopt 2024-25 tax rates.

“We’re aware of the changes, but we’re still reviewing exactly how they will impact Keller ISD,” spokesperson Bryce Nieman wrote in response to the Report’s questions.

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Fort Worth Report

Further answers, and details about specific consequences, will become clearer for districts in the coming weeks as chief appraiser Joe Don Bobbitt continues to meet with stakeholders. Bobbitt is expected to present a final appraisal policy for board approval in August.

“Bobbitt is now trying to convene a group of the (chief financial officers) in Tarrant County, to gain our perspectives on this proposed initiative,” Fisher said. He emphasized that his district appreciates its relationship with appraisal district staff and Bobbitt, and that his concerns are not a reflection on his trust in them.

Arrietta-Candelaria said Fort Worth ISD has also been a part of conversations with appraisal staff.

“We’ve had some questions; he’s answered those questions,” Arrietta-Candelaria said of Bobbitt.

She said the district shouldn’t see a change to its voter-approved $1.2 billion 2021 bond, as officials already took low growth into consideration when they established their low I&S rate.

Eagle-Mountain Saginaw trustees to appraiser: Process is ‘awful’ 

In Eagle Mountain-Saginaw ISD, school board trustees had much stronger words for the appraisal district.

Though officials with EMS ISD did not speak at the district’s July 22 meeting, board members and district leadership had many questions for chief appraiser Bobbitt that night. The chief appraiser had been scheduled to speak at the district’s board meeting to provide updates on the appraisal district’s progress on averting another ransomware attack but the questions quickly dovetailed into the new policies.

Superintendent Jim Chadwell, who recently announced his retirement, along with school district trustees said EMS ISD has previously experienced properties being grossly undervalued by the appraisal district, resulting in millions of dollars in lost revenue.

“You do understand how many millions of dollars y’all have cost us over the years?” EMS ISD trustee Tim Daughtrey asked Bobbitt. “I mean — this looks like to me — from all the screwups y’all have had on appraisals, y’all have been awful, honestly… and it’s cost this school district millions of dollars that we’ll never recoup again.”

Daughtrey told Bobbitt that the latest policies passed by the appraisal board — specifically the switch to a two-year appraisal schedule — look like another way of not doing taxes correctly.

“Once you don’t get those taxes and you’re only doing it every two years, we never gain back the losses we get,” Daughtrey continued.

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Fort Worth Report

Another trustee asked Bobbitt what drove the appraisal district to make the changes in the first place.

“That’s the campaign platform elected board members ran on,” Bobbitt replied, referring to a historic May election that seated taxpayer-elected members to the appraisal board for the first time. “I’m not sure where the original idea came from, but the idea was to hold values a little more static. That way, taxpayers can see some relief, more relief than they have in the past just because the market was moving so fast.”

EMS ISD trustee Blake Mabry asked Bobbitt to ensure the board focuses on the impact these policies are going to have at every level of school districts. Look at the dollars this will cost the school district and the community it serves, he said.

“Make sure that you look at what that impact would be on us, on the children, and the teachers, and the administrators, and the coaches, and the directors and the custodians and everyone who is sitting here and has their livelihood tied to that,” Mabry said. “Rather than a campaign promise that somebody made.”

Emily Wolf is a local government accountability reporter for the Fort Worth Report. Contact her at emily.wolf@fortworthreport.org. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.

Matthew Sgroi is an education reporter for the Fort Worth Report. Contact him at matthew.sgroi@fortworthreport.org or @MatthewSgroi1. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.

This article first appeared on Fort Worth Report and is republished here under a Creative Commons license.