2015 Oak Ridge School Budget Alternatives/Considerations

My last in-depth analysis of the school budget was in 2011. It’s interesting to see what has changed and what hasn’t. You can read for yourself here.

Dr. Borchers and Members of the Board of Education:

I have reviewed your budget proposals and would like to share my thoughts for consideration in your final deliberations.  I should clarify that because our charter forbids City Council, as a body, from “modifying or deleting any item in school estimates,” my statements do not reflect the opinions of my fellow councilmembers.

As you know, we are blessed to live in a community that actively and generously supports education. Not only do we rank 5th in the state for our level of local funding (54%), but, at $12,075 per pupil, we continue to outspend the state average of $9,2931 and the national average  of $11,0682.

Our generosity, however, has taken a toll that we can no longer ignore.  Having the third highest tax rate ($4.74) in the area has been counterproductive to attracting new residents. One need only look to the phenomenal growth in Farragut, whose property tax rate is less than half of ours ($2.32)3, to appreciate the negative impact of our high taxes.

While I cannot agree with your position that raising taxes will attract new families, as the mother of an ORHS graduate and a current Linden Lion, I agree wholeheartedly with your goal of continuously improving to serve all students. As your presentation points out, we are approaching a 50% economically disadvantaged population. Obviously, increasing our spending will put those very people at an even greater financial disadvantage.

Rather than further burdening our citizens, let’s explore alternatives by learning from comparable, high-quality systems who operate more efficiently. Maryville, for example, spends 20% less per pupil ($9,823), have 13% more students, the same number of teachers and only 21 administrators to our 311. Their overall graduation rate is 94.7% to our 85.4%; and, they have an 89.2% graduation rate among their economically disadvantaged students to our 78.4%4.

You all certainly know better than I, but the data suggests that Maryville knows something we don’t. Could we not spare teachers, teacher assistants and the services that our poorer families rely upon (transportation and the Family Resource Center) if we followed their lead and cut down on administrators?

At over $90,000 each, we are spending nearly $3 million on administrators and over $750,000 for their administrative assistants. As valuable as they all are, they  cannot possibly have a more direct impact on our students than our teachers and aides. Please consider reviewing these and other non-critical positions before carrying through with some of your proposed cuts.

Finally, I received a copy of your budget presentation (FY15_Proposed_Budget051414web) through the schools’ email system. It contains a few statements that warrant clarification. If this information was disseminated to all Oak Ridge School families, I trust that you will want to send out a correction email to avoid the appearance of presenting false or misleading information.

First, slide 41 alludes to previous budgetary cuts in the amount of $3.4 million. Since total school spending has increased 36% ($15.4 million) in the last ten years5, if left unqualified, parents may wrongly interpret this to mean that spending has been reduced.

Second, in slide 22, you cite the TEA as your source for salary information. However, their data of Oak Ridge average teacher salaries ($36,407) greatly contradicts that of the Tennessee Department of Education which places us at the very top of the scale with an average teacher salary currently being $58,8466.

While we may have our differences, I believe that we share common ground in our desires for our students and the future of our city. I thank you all for your time and your continued service to our community and I look forward to working with you. Please don’t hesitate to contact me if you would like to discuss further.

Regards,

Trina Baughn

 

REFERENCES

1. 2013 TN Dept of Education Report Card: http://www.tn.gov/education/data/report_card/2013.shtml

2. NEA Rankings of the States 2012 and Estimates of School Statistics 2013

http://www.nea.org/assets/img/content/NEA_Rankings_And_Estimates-2013_(2).pdf

3. 2013 Tennessee Property Tax Rates: https://www.comptroller.tn.gov/pa/LR.asp?W=13

4. 2013 TN Dept of Education  Attendance and Graduation Files: http://www.tn.gov/education/data/download_data.shtml

5. Oak Ridge School Budgets (see 2007 Budget for 2004 audit figures):

http://www.ortn.edu/?DivisionID=4673&DepartmentID=4546&ToggleSideNav=ShowAll

2014 ORS Budget Amendment (pdf page 71): http://cortn.org/images/uploads/documents/agendas/05_12_2014%20Agenda.PDF

6. 2013 TN Dept of Education Annual Statistical Report (Table 5): http://www.tn.gov/education/data/doc/asr_1213.pdf

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11 thoughts on “2015 Oak Ridge School Budget Alternatives/Considerations

  1. Very good comments Trina. The three budget scenerio just kind of takes my breath away. To my surprise the comments of several school board members suggests that some are not too pleased with it either. i certainly hope council will stand firm on no tax increase. As much as we all support our schools they must learn to live within our means just as each of us must do.

    Thank you for all you do.

  2. Although I fully recognize that the situation is caused by actions of the past, and therefore I can’t fully say more funds aren’t truly needed, I do agree very much with the overall analysis.

    I’ve never seen a school system ask for funding so often. We had some millages growing up to pay for some new schools, but that was about it.

    Our schools are great, the HS is an amazing place. I certainly don’t want to see budget cuts that will take away from the advances we’ve made. But I have to think something’s amiss because of the constant need for more financing.

    There are times when an organization needs some influx of funds to get over a hump and get back on the track of self-sustainability, and perhaps that’s where we are.

    I suppose my point is that I’d like to see more explanations and justifications as well. Dr Borchers is an extremely clear communicator, so I have no doubt that he could explain the big picture, the road map of how we got to where we are and how we get out of it. Obviously the details will be hard to explain, but I feel an attempt is justified, because the residents here are wondering.

  3. Trina,
    I totally agree with what you’re saying. I was on business travel this week and the Oak Ridge property tax subject came up in a discussion with a fellow employee who was traveling with me. He grew up in Oak Ridge but moved to West Knoxville after graduating college at Clemson with a degree in Electrical Engineering.

    His reasoning was

    (1) He pays less than ½ in property taxes than he would in Oak Ridge for basically the same value home

    (2) There is a lot more to do in West Knoxville and Farragut than Oak Ridge

    (3) There are a lot more jobs in Knoxville than Oak Ridge

    (4) The company we work for has an office in Knoxville

    (5) Farragut and West Knoxville is a much nicer area than Oak Ridge

    (6) Everyone in Oak Ridge is twice his age

    (7) He feels like there is no real motivators for young people to move or to stay in Oak Ridge

    (8) Knoxville is constantly trying to bring more jobs in. Not just DOE jobs or $7.00 an hour grocery store jobs. Who can raise a family on $7.00 an hour? Those jobs are for High School kids. Not grown man with mortgages and a family to feed.

    His bottom line was, why would I live in a town that is slowly becoming a ghost town, pay twice the taxes, when I can live in a town with twice as much and pay less.

    I also agree with his remark of, a good education can be had almost anywhere, if the desire is there and the parents lead by example.
    It would be interesting to see a study done on how many kids actually attend a four year college after graduating Oak Ridge compared to towns like Farragut or Maryville.

    Would be really nice if the people who we pay to run this town would get in touch with reality. If people don’t have a job or they can’t afford the property taxes then why on earth would they come to live here. If I can’t work or it cost me twice as much then the last thing I am going to do is move to a town just because the school systems are number 1 or number 10 in the state or the country. Doesn’t guarantee my kid will graduate and end up at MIT, Harvard or Yale.

    Tony Poland

    Project Software Developer/Analyst

    CRITIGEN

    Tony.Poland@critigen.com

    1 720 872 4038 Direct

    1 865 607 1028 Mobile

    1 678 579 8121 Fax

    critigen.com

    1. My husband and I are OR natives.When we retired we did not retire to OR but to Loudon, TN. The reasons your friend had for living in West Knoxville are the exact reasons we chose not to return to OR. It is a dying city and getting worse every day. This really makes us sad because we both had such a wonderful life as we grew up in OR.

  4. I have to say I hope the school gives a much more detailed look at their school budget. The information that was presented gives very little actually information and yes, it is somewhat a scare tactic with a chase students away budget, a retain budget and a attract budget. But in the information presented, I only saw what the cuts were, not where the actually money was to be spent.

  5. There are several questions or discussion items that pertain to Oak Ridge public schools latest budgeting effort, that give me pause.

    Why does it cost such an inordinate percentage increase in property tax rates to just have a parity budget? The middle scenario Superintendant Bruce Borchers proposed would entail a 17.6% city property tax increase, with a 42 cent increase for what was described as a Y/Y parity budget. That’s a huge tax increase just to stand still. It begs a significant justification. This is not CPI inflation.

    What public school staffing and operations activity changes could be made, which would result in budgetary cost reductions, and not diminish Basic Educational Program (BEP) funding from the State of Tennessee? Are there categories where we are either over staffed or spending on items well beyond the BEP algorithmic optimum level? Perhaps we need several more budgetary scenarios to explore these cases. That Mr. Borchers came out with proposed scenarios containing hard bottom line numbers, suggests his staff is very capable of running other scenarios as well, and probably in relatively short order. A perusal through the categories in the TN 2013-2014 BEP Blue Book could give some good suggestions of where to prune spending without significantly affecting state funding, and thereby minimizing adverse impact to the student’s educational experience.

    If Oak Ridge Public Schools significantly spend more money this coming year, how will that affect our out-year Tennessee Maintenance Of Effort (MOA) spending obligations? Is another property tax increase for public education going to put us on a course for even more property tax increases in the future? This could be a slippery slope. Memphis and Shelby Co. have been going down this route for years. They now have among the highest combined property tax rates in Tennessee with public education being one of the significant drivers, and with MOA obligations sitting on their shoulders, they can’t easily escape the downward slope they are on. Oak Ridge should learn from their experience.

    Over the last quarter or so, non-sales taxable consumer spending is down nationally even as total consumer spending is up. I would bet Tennessee’s experience is similar. The big driver in the last few quarters has been increased consumer spending on health care and reduced spending on discretionary items, which tend to be sales taxable; the former is generally not taxable. This is generally attributed to changes driven by the Personal Protection and Affordable Care Act (PPACA), a.k.a Obamacare, which is also non-sales taxable in Tennessee. What happens when the PPACA insurance subsidies end in a few years? Will there be another significant shift from non-taxable to taxable spending and its associated change in BEP funding to be made up by another property tax increase? This is most problematic in states like Tennessee with a heavy reliance on sales taxes, but even the TN Hall Tax could drop if we have another equities market swoon as the current bubbles bust. Another property tax increase may be in order when BEP drops once again. In general, external drivers for tax increases could never end. Perhaps we need a strategy to address externalities first.

    Last year the Government Accounting Standards Board (GASB) and Standard & Poor’s Ratings jointly came out with major revisions to public service pension reporting requirements. While these were somewhat moderated by later revisions, it appears that many civil service pension plan contributions are going to be going up significantly over the next few years. In Tennessee the implementation will be mostly decided in Nashville, but many municipalities will likely be obligated to contribute a larger percentage of municipal employee’s base compensation. Oak Ridge public schools may have to plus-up budget again and at any time over the next several years. Will municipal planners feel the compunction to suggest another property tax rate increase to meet this contingency?

    How will this assumed budgetary shortfall affect ongoing amortization of the recent Oak Ridge High School bond debt? Will municipal planers somehow become incapable of servicing any principal on that debt?

    There is a risk of letting school budgets get divorced from revenue and any remainder just gets tacked on to the next periodic refunding of the existing load of municipal debt. We don’t want to just kick the ‘can’ down the road. At some future time we will eventually find the dead end.

  6. Trina, thank you for listening, and taking action. There are many issues with the School Board. I am glad someone is asking the hard questions.

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