The primary purpose of the PVS is to help ensure equitable distribution of state funding for public education. Texas funds public education through state and local funds. Local funding comes from property taxes. The Chief Appraiser of each county appraisal district (CAD) determines local property values and school districts set tax rates that determine the amount of local tax revenue. Texas bases its funding on the total taxable property value within each school district, as determined by the PVS. School districts may use the PVS to monitor the performance of their county appraisal district.
The secondary purpose of the PVS is to collect data to provide taxpayers, school districts, county appraisal districts, and the legislature with measures of CAD performance. Tax Code Section 5.10 requires the Comptroller’s office to measure CAD at least once every two years and to publish the results. The Comptroller’s Property Tax Assistance Division (PTAD) measures the level and uniformity of property tax appraisals using data collected in the school district ratio study. The level of appraisal shows whether the CAD has appraised properties at 100 percent of the legally required level—normally the market value. The uniformity of appraisal indicates how much the percentage of market value varies from property to property.
The Comptroller’s office tests the values the CAD assigns to each tested property category by constructing a statistical margin of error around the Comptroller’s estimate of value for selected property categories in each school district. PTAD uses the actual margin of error if it is greater than 5 percent. In all other instances, PTAD has an allowable error of 5 percent, even if the actual margin of error is much smaller. The actual margin of error and the allowable error are both referred to as the margin of error. PTAD considers values valid, or acceptable, when they are within the margin of error. PTAD considers values outside this margin of error invalid. This means that generally CAD’s are required to appraise property between 95 and 105 percent of market value in order to be considered acceptable.