Page 2 of 3

Planning for Success (Part 1)

In a previous post, I mentioned objective and subjective data along with the NCDOR’s new reappraisal standards. That information will be helpful when reading this post. The new reappraisal standards have been in development for over two years and have involved committees with members from the NCDOR, UNC School of Government, and NCAAO. In August, the NCDOR emailed a draft of those standards to all assessors for review and comment. Some comments from local tax officials have been related to the need for additional staff in order to meet the new standards. Chapter 5 of Assessment Administration. Chicago, IL: IAAO, 2003 is a well written chapter detailing the management tasks needed for an assessment office to meet requirements and goals.  This post focuses on how planning well includes an effective justification of the assessor’s need for staff and resources. Understand first that we all engage in planning almost every day. It’s either done formally or informally. So if we’re going to plan anyway, we should plan well and be exposed to the best practices. Regarding planning, Albert Einstein is rumored to have said, “If I had 20 days to solve a problem, I would take 19 days to define it.” Our objective in this post is really to turn staff and resource concerns into math problems, without requiring Albert Einstein’s help for the solution.

These new reappraisal standards, if followed, will alter your goals and plan objectives. For example, checking and updating property characteristics data at a designated level of accuracy is an example of a plan objective tied to the goal of meeting the NCDOR reappraisal standards. That objective requires specific activities. Activities require people and resources. We hope all local tax officials desire to do quality appraisal and reappraisal work for the public they serve. Our taxpayers deserve competency, fairness, and equity. No doubt, high standards are needed and the NCDOR should be applauded for issuing them. NCGS 105-273(10a) defines a local tax official as including a member of a county board of commissioners. And while all local tax officials most likely desire to do a good job and meet standards, raising standards undoubtedly can require more staff or other resources, which in turn requires adequate funding.

“[T]he budget becomes an expression of public policy in terms of the resources a government is willing to allocate for equitable property taxation. The budget is also a reflection of how much political support exists for accurate and equitable assessments. Legal and administrative responsibilities cannot be met if resources are inadequate.”  Assessment Administration, 119.

Continue reading

Yay!! I’m Certified!!  Now What?

certified-stamp1 In my previous post, Are You Certifiable?, I reviewed the North Carolina Finance Officers’ Certification program, sponsored by the North Carolina Government Finance Officers Association (NCGFOA).  As was probably clear in the post, the process is challenging but certainly doable, and those that become certified finance officers in North Carolina should definitely be proud of their achievement.  But after the months (or years) of classes, studying, and testing, what happens after the success?  Is the certification permanent (just like an appointment on the United States Supreme Court)? Does it expire? DO I HAVE TO TAKE THE TESTS AGAIN?? This blogpost will summarize the “post-certification” years and how certified finance officers must continue maintaining the high standards that got you where you are in the first place.

Getting the Results

As a quick review, once one passes all four exams and has completed all educational and work experience requirements, they are eligible to apply for certification.  The certification itself is not “automatic”, though admittedly at this point, the application serves as a final “checks and balances” to ensure that all requirements have been met. Otherwise, the actual certification is relatively assured.  With the final successful results letter, the individual will receive an application for certification.  It is to be completed and remitted as instructed on the form.  The  form is then returned to the UNC School of Government for processing, along with a check for $50, made payable to the North Carolina Finance Officers Certification Program.

Once the application is approved, the individual will be considered certified as of the following January 1st.  Certification is for a five-year period which begins on the January 1st following the successful completion of the certification and approval process.  The certification expires on December 31st of the fifth year.

While the term for certification begins on January 1st, new certifications (as well as renewals, but that will be discussed later) are recognized publicly at the NCGFOA Spring Conference, typically held in early March.  Thus, the actual certificates themselves will be available a few months after the actual certification period begins.

ttr

The Certification Period

As has been noted numerous times (and yet the question will still be raised!), a certification period lasts for five years.  Thus, individuals have to renew their certification at the end of each five-year period, assuming they have met and continue to meet all the necessary requirements.  Be assured, however, the renewal does NOT involve testing (there is still some humanity left in the world!).

To be eligible to successfully renew one’s certification, the following requirements must be met:

  • The individual must continue to be employed in an eligible position (see Are You Certifiable?).
  • The individual should be a member of the NCGFOA.
  • The individual must be have accumulated at least 100 hours of professional training during the five-year certification period just ended.

These requirements are relatively self-explanatory (or at least they should be).  However, the third requirement listed above, related to the professional training requirement, does raise questions, so let’s explore that a bit further.

Professional Training Requirements

During the certification period, one is expected to continue to remain up-to-date about the governmental finance profession by attending and/or taking relevant live and self-study courses, conferences, webinars, etc. that are available from many different venues, such as, but certainly not limited to:

Certainly, taking relevant courses during the certification period in community colleges, undergraduate, or graduate degree programs would count toward this requirement as well. In addition, professional service contributions, such as service on professional association boards or presenting at training events, courses, or conferences may count for up to 25% of the total hours required to be accumulated during the five-year period.

Often, the question is raised as to what is considered “relevant”.  Actually, the standard for this is quite flexible.  While training in governmental accounting and financial reporting is always recommended, at least to a certain degree, training related to management and leadership, information technology, and other similar topics are also considered relevant and often necessary in today’s financial management environment.

As for the 100-hour professional training requirement, the “industry” standard is 1 professional training hour per 50 minutes of instruction.  This is the same standard that is used for continuing professional education (CPE) standards for Certified Public Accountants.  Thus, when attending any courses or conferences that advertise the number of CPE hours being offered, that number would apply exactly the same way for the certified finance officer requirements.

Finally, individuals should maintain their own records supporting the number of hours of professional training that they have accumulated during each five-year certification period.  While the NCGFOA does not require that copies of “certificates of completion” be submitted when applying for certification renewal, the applicant is required to provide a listing with the renewal application that includes:

  • Nature of course, conference, webinar, etc. taken during the five-year period
  • Date(s) taken and location (if applicable)
  • Number of professional training hours for each event
  • Grand total of professional training hours for the five-year period

There may be circumstances where an individual has been unable to meet their professional training requirements during their certification period.  While the certification may not be renewed then, once the number of required hours have been met, they may apply for renewal at that time.  Assuming all other requirements have been met, the renewal will be approved and the new certification period will begin the following January 1st.

Currently, there are no provisions for professional training hours to “carryover” to the next five-year period.  Thus, if one accumulates more than 100 hours in one period, they may not apply the overage to the next period.

Lapses in Active Service

Occasionally, a certified finance officer ceases to work in a position eligible for certification, most commonly when they leave local government service altogether or move out-of-state (even if they still remain in local government).  At that time, their certification status is considered inactive (or suspended).  The certification is not revoked and can potentially be reactivated, depending on the following potential scenarios:

  1. If one re-enters eligible government employment in North Carolina during their inactive five-year certification period, they may reactivate their status, assuming they are able to meet the three requirements for renewal (referenced earlier in this post).
  2. If one re-enters eligible government employment during their inactive five-year certification period but is unable to meet the professional training requirements within that period, they have two years (from the date of eligible employment reinstatement) to complete the requirements. If they re-enter eligible employment after the original certification period has ended, they also have two years to meet the requirements to renew the certification.

It should be noted that qualifying professional training may have been accumulated even during the period of time that the certification was inactive.  While those training hours may be counted, at least 40 hours of the total must have been accumulated during the most recent two years leading up to the renewal/reactivation date.

Use of Professional Title

Currently, there are no committee guidelines on how the title of certified finance officer may be used.  I am often asked what letters one could put behind their names for business cards, bios, resumes, etc.  After I resist the urge to say things I should not, I advise that the most common combination that I see is CLGFO (Certified Local Government Finance Officer).  This is not required, nor is it discouraged.

Who you gonna call? A lawyer.

So I joke that when I get calls it is almost always someone wanting to see what the law says about the implementation of some revenue related issue.  To which I respond you need to talk to Chris, Kara, or Frayda.  The legality of government’s actions and the scope of the law are critical, but that is not what I am going to be able to help you with.

So what should you call me about?  Oh, the good stuff of course! In the next few blog posts I am going to discuss some of the non-legal issues surrounding financing government at the local level.  I will be blogging on issues like tax incidence (i.e., who is paying the tax), some of the perhaps unintended consequences of the policy, criteria that we should be using when we think about tax policy, revenue forecasting, and more!  Also, if there is something you would like to see discussed please let me know!

Before getting in to any one of those topics I want to open up a dialogue about why we need to talk about some these issues.  I think there is a temptation to be very pragmatic, which is not a bad thing, and to focus on what we have control over and what we can do.  I believe this largely explains why so many of the questions folks have are with regard to the legality of actions.  Budget officers, finance officers, managers, etc are tasked with difficult jobs—to find a way to provide the services their constituents want and need with limited resources.  Often this means that we have to get creative and think outside the box (so we ask “can we do this?”) and it always means saying no to some requests.  Unfortunately, there is no one right way to make those decisions once we move past the legality of them.  In 1940 V.O. Key asked his fellow economists how we can decide to spend money on activity A rather than activity B?  This question is still posed in every budgeting class in public administration courses.  We still do not have a scientific rational answer.  There are a lot of considerations, possibilities, and concerns that need to be weighed and they are often very value laden.

Can we think of all of them? Nope.  Not to immediately get too academic with you all, but I would say the budget process is an exercise in bounded rationality.

 

Bounded rationality is an economic theory that simply says that people are not able to make completely rational decisions.  This is because we are constrained by incomplete information, limited time, and frankly our brains cannot process all the relevant data, figure out all the alternatives, and calculate the potential outcomes of different decisions.

I can’t get no satisficing

Therefore we do something called satisficing.  Satisficing leads us (humans) to outcomes that are good enough.  “Good enough”, hmm.  That does not sound great, but it is actually not an inherently bad thing as long as people are considering some of the most relevant information and alternatives.

I suspect you can already see why this is potentially an important topic for budgeting.  We CANNOT consider every possible expenditure item, cut, consequence of our actions… So we live in a bounded rationality and satisficing world (like everyone else).

Imagine trying to create a budget for your community.  Imagine that you have a budget office of 2 or 3 people.  Now imagine trying to understand every EVERY single possible option for appropriations.  Completely eliminating certain areas, increasing property taxes and increasing expenditures, creating new programs, overhauling departments, etc.  I cannot even imagine all the ways you could do it!  Imagine how hard it would be to make the list of possibilities.  Now imagine how hard it would be to evaluate them all—including the ridiculous ones!  Think of the man power, the time, the resources that an exercise like that would require.  It is completely infeasible and foolish!  We do not want to live in that reality.  Bounded rationality and satisficing are our friends, the trick is to consider the right information, alternatives, and consequences.

**If you want to see an outcome that I was not considering, look at what you get when you google images of satisficing ridiculous.**

This series is going to highlight some of the information that is relevant and should be a part of the satisficing exercise.  That does not mean that you have control over some of these issues.  It does not mean that this knowledge will ultimately change what you choose or are able to do.  Many of these topics are out of your control, but by understanding them hopefully you will be able to foresee some problems, understand how these choices effect your community, and help you to discuss finances with elected officials, managers, departments, and citizens.

This series will be a mix of practical knowledge that impacts revenues and budgeting and hopefully thought provoking considerations involved in how we pay for government.  I am exciting about this series and hope that you will continue to pop on over to Death & Taxes over the next few months to see the next few installments.

Are all North Carolina County Property Tax Appraisers Subject to USPAP?

This is the exact question that I was asked recently.

“Are all North Carolina, county, ad valorem, real estate appraisers subject to the Uniform Standards of Professional Appraisal Practice (USPAP)?”

This could be a very short blog post. The answer to the question is, “no”. But a different question, “Should all North Carolina county ad valorem appraisers comply with USPAP?” leads to a more in depth discussion.  The answer to that question is, “yes”.  I believe if you act as an appraiser, you should comply with USPAP.

Continue reading

Are You Certifiable?        

The above question has been posed to me time and again over the years, probably for obvious reasons!  (And the quick answer is…yes, I am! But I digress…)  However, it was not posed from the perspective of how I am using it in this context. One of the most common phone calls or e-mails that I receive on a regular basis relates to the North Carolina Finance Officers Certification Program.  As more and more baby boomers have their retirement lunches and collect their gold watches (click here for more on that topic!), the turnover in local government finance across the state and the infusion of newly minted local government finance employees has contributed to the exploding interest in this program.  This blog focuses on the specifics of the program, educational and testing requirements, and other frequently asked questions.  A future blog post will address post-certification life – continuing education, employment requirements, and the like.

Continue reading

LOST: Finally explained! Mysteries Solved! Secrets Revealed! Part 3

Previously on Death &Taxes, we learned that LOSTs and North Carolina’s local governments have a complicated relationship and that LOSTs favor some counties more than others.

There are many important characters in the story of LOSTs and North Carolina.  There are the earmarks, the revenue that goes to the municipalities, the revenue that is distributed on a per capita basis, and the tax on food.  I will let you decide which is Jack, Kate, Sawyer, and Locke.  However, I am going to just come out and say, the black smoke monster is the issue of equity across the counties. Continue reading

The Increasing Difficulty in Financing Cities

It’s getting harder to fund city government in North Carolina.

On the one hand, that might seem hard to believe. People continue to flock to many cities and towns across the state. More than half of the state’s population lives in a municipality. One recent projection from American City Business Journals sees the Raleigh and Charlotte metropolitan areas alone adding nearly 3 million people in the next 25 years. Those newcomers who choose to live in city limits will join existing city residents in paying city property taxes, and join all those who shop in North Carolina in paying sales taxes that cities receive a share of. Continue reading

Are You Sure We Don’t Have Tax Abatements?

Tax Abatement, visual by Ruth Lerner

Tax Abatement, visual by Ruth Lerner

I’m here to help alleviate fears.  In August 2015, the Governmental Accounting Standards Board (GASB) issued GASB Statement No. 77, Tax Abatement Disclosures.  The guidance, which if it were applicable to North Carolina governments, would be effective for fiscal year end June 30, 2017.  The requirements are relatively simple – if a government has any tax abatement agreements, as defined in the standard, there are certain note disclosure requirements that must be made regarding the agreement(s). A tax abatement in is defined in the standard as follows: Continue reading

Speaking the Same Language with Data

It is comforting to know that as assessors and appraisers, we speak the same language. We had a great learning experience last week in IAAO 331, Mass Appraisal Practices and Procedures. Our instructor was David Cornell, CAE, MAI. David is from New Hampshire and brought fantastic discussions to our group of 23 North Carolinians. The discussions and examples we experienced can be used for improving appraisal equity and uniformity in individual jurisdictions throughout our state. One of the items that we discussed was a worthy repeat from other mass appraisal courses: The importance of data in the assessor’s office. Not only do we need to collect the right data for model specification, but we have to collect it accurately.

At the upcoming NCAAO Fall Conference, the NCDOR will be conducting sessions on their new reappraisal standards, to be published later this year. Continue reading

LOST: Finally explained! Mysteries Solved! Secrets Revealed! Part 2

Previously on Death &Taxes, we learned that LOSTs and North Carolina’s local governments are important to each other, but dare I say it, have a complicated relationship.

LOSTs are an important source of revenue and some of that revenue is earmarked, but that is not why they have been receiving so much attention.  The reason they have suddenly been a part of the tax reform discussion is the perceived inequity of the revenue raising capacity of different counties across the state. Continue reading

« Older posts Newer posts »

© 2017 Death and Taxes

Theme by Anders NorenUp ↑