I was recently invited to speak to the Anderson County Tea Party. The following were my talking points. Critical documents are hyper-linked in blue.
Why Your City’s Financial Matters Matter
- Just about anything that happens (or doesn’t) in Oak Ridge has a direct tie to money, your money.
- Local government spending directly impacts your wallet. Think not only property taxes, but sales taxes, utilities, fees, permits, fines, etc.
- The growth or decline of our community, in very large part, can be tied back to how government spends yourmoney
- You have the greatest potential to influence local spending than any other level of government
Census Snapshot
- Population: 29,330
- Households: 12,686
- Medium Household Income: $48,716
- Persons Below Poverty Level: 16% (up from 11% in 2000) 2010 State: 16.5%
- Retail Sales Per Capita: $17,450 State: $12,563
City of Oak Ridge Financials
Revenues: $168 M Expenditures: $174 M ——-> $6M Deficit
- Utility Operations: $71M
- Oak Ridge School Budget: $55.4M (part of the $174M total city budget)
- Annual Debt Service Payments: $11M(~$6.5M pays on school project debt)
- Fire $6.8M
- Police $6.6M
- Public Works: $6M
Note: Utility Operations are paid for by your utility bills and not your property taxes. When utilities are deducted from total expenditures, total school funding, including debt, accounts for nearly 62% of city spending.
Debt: $186M ($6,350 per person/$14,693 per household)
Why Is Attention to City Debt Important?
– Municipalities across the country are starting to file bankruptcy; something previously thought to be impossible
– Annual Debt Service payments are subsidized by your tax dollars to the tune of $4.3M in 2014
Key Upcoming Dates
September
- 17th – LWV Forum for BOE Candidates
- 25th – LWV Forum for City Council Candidates
- 30th – Chamber of Commerce forum for City Council Candidates
October
- 2nd – Chamber of Commerce forum for BOE Candidates
- 9th – DFET Candidate Forum – both races
- 15-30 – Early Voting
- November 4th – City Council and BOE Election Day
Trina Baughn 
I cannot get 62%. Let’s do the math using your numbers and the approved budget for schools.
City expenditures using your figure: $174M
Subtract utilities: -$71M
and total school budget for over which 70% does not come from the city -$55.4M.
That gives us city tax spending at $47M without schools. Now add let’s add the school funding from city of $14.6M for a total outlay of $61.6M.
So the schools portion is $14.6M (General fund contribution) + $6.6M (debt) for a total of $21.2M. That gives us percentage: (21.2/61.6) x 100, or 34.4% of city expenditures.
By the way I couldn’t get to $174M by adding your numbers ($71M+$55.4M+$11M+$6.8M+$6.6M+$6M). I assume some expenditures were not included for brevity.
Regardless of the flow of the monies, it all originated from the same source: the taxpayer. My math is as follows: $174M-$71M = $103M. Total school funds are $55.4M+$6.5M = $61.9M which is about 60% of $103M.
Your math stops short of 62% though close. However it is disingenuous to suggest local taxpayers are paying all of the taxes for Oak Ridge Schools coming from state and federal. We are not. In no way are ORers paying anything close to 60% of the city budget to schools. Further, albeit small, some of the funds used by OR Schools are from private grants.
The variance is likely due to rounding, but, yes, my math may be off by 1-2%.
I presume Oak Ridgers who pay city and county taxes pay what they owe to the state and feds as well.
Then again, not all people who pay Oak Ridge taxes are actually residents, so feel free to parse it anyway you like.
As you stated, the % of private grants/funds is very, very small. In fact, if one were to delve further into the root source, I’m betting that some are actually derived from government contractors, so even those dollars could not be considered “purely private.”
Great info Trina.
What is the dollar figure of the poverty level?
It is interesting that Trina Baughn sums current year school expenditures with long term school debt. This use of lumped element quantities has not traditionally been used, such as to think about the risks of ongoing budgets comingled with the servicing of existing debt loads. Traditionally things have been treated more parametrically, or separately, especially current year cash flows and long term liabilities. It raises the level of abstraction to think about the significance of these lumped element quantities in such a matter.
What is even more interesting to me, is who else does this kind of thing. For reference, I follow risk models for municipal bonds, to assess the likelihood of a default or worse a municipal Chapter-9 bankruptcy filing. This is primarily for my considerations of muni investments, but I do indeed think about it for the city in which I live too, Oak Ridge. One thing became clear a few years ago in many parts of the U.S. The old muni default risk models didn’t work as well as expected. Many cities that defaulted or filed bankruptcy proceedings were not at the top of the risk rankings for highest probability either to default or to file Chapter-9, and the ones that did default or go bankrupt were frequently further down the list. Most the old models used CAFR parametrics verbatim.
Over the last five years a crop on new and more sophisticated risk models have been devised that, when ‘back tested’, agreed more closely to reality. What is singularly worth noting is that many of these newer risk models incorporated unusual and non-traditional lumped element parameters to assess bond default risks, and many employ some of the same abstract thinking Trina Baughn used to think about school fiscal matters.
In parting, I have never seen Oak Ridge rated by these newer models, but I would like to see it done someday. Getting timely data is somewhat daunting. Most new models were devised in places like California or Michigan. I would also question their applicability to Tennessee without careful scrutiny. Maybe Trina just hasn’t been sufficiently straight-jacketed into conventional thinking.
In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.
Theodore Roosevelt