City of Oak Ridge
Strategic Plan Update Issues
By Ron Darden, Municipal Management Consultant
The University of Tennessee’s Municipal Technical Advisory Service
Introduction
MTAS was asked to provide a facilitator to assist with the update of the City of
Oak Ridge’s Strategic Plan. Prior to the beginning of any facilitation process, the city
would be wise to develop a strategic planning process and re-examine the goal that limits
the property tax rate to at or below the 75th percentile level of comparable cities.
This report will discuss strategic planning, identify a group of comparable cities,
review property tax rate percentiles, and present an analysis of basic services in the City
of Farragut with those provided by the City of Oak Ridge from public funds. This report
will show that the City of Oak Ridge operating departments operate at a tax rate below
the 25th percentile level of comparable cities, when the property tax rate is adjusted to
exclude the general fund appropriations for education. Recommendations for improving
the planning process are included.
Methodology
Using Tennessee cities with populations and assessed property valuations within
plus or minus 16% of those same values for the City of Oak Ridge, this report will
identify the 75th percentile level of their property tax rates and compare that rate with the
property tax rate for the City of Oak Ridge. Since some of the comparable cities own and
operate city schools systems at substantial costs, their property tax rates are adjusted by
excluding their direct general fund appropriations to schools. Percentile ranges are then
calculated for comparable cities using the new adjusted tax rates. The costs of fire,
police, solid waste, and public education provided by the City of Oak Ridge are
compared to similar services purchased by City of Farragut homeowners or provided by
county funding.
Data Sources
Data was taken from the 2000 Federal Census, 2003 reports from the State
Comptroller’s Office, 2003 reports from the State Board of Education, and data was
obtained from city finance directors.
The Strategic Planning Process
The strategic planning process that identified the present goals and objectives for
the city was a “top down” decision making process. The goals and objectives developed
were, for the most part, well thought out and good for the city. The city council, in
cooperation with the acting city manager and a local facilitator, developed the city’s
strategic plan.
Prior to the development of the present strategic plan, the planning process
included the city council, the city manager, city operating departments, city agencies, and
representatives from the community. The planning process was cited in a textbook as an
example for effective planning.
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The planning process should be a continuous process. The group should meet on
a regular basis to accomplish the following:




Develop or update the mission statement
Identify five or ten specific goals that can be achieved
Review and update the goals on a regular basis
Report the goals and accomplishments to the citizens on an annual basis
A good strategic planning process should promote understanding within the
community and serve as a vehicle for promoting flexibility and compromise. It should
develop a community vision for the future and outline the best means of achieving it.
When the community is more actively involved in developing the community’s plan, they
should be more likely to support its goals.
The council and staff should develop specific objectives directed at meeting the
goals in the budget process. While a facilitator may be helpful during the strategic
planning process (in guiding the discussion), the facilitation process should not function
as a substitute for an effective planning process. A frequent error is to permit
preconceptions or other pre-established perspectives to be incorporated into plans without
being thoroughly questioned.
It is important that the city decide which services to provide and which services
not to provide from current or anticipated revenues. City goals should be clear, concise,
and easily understood by the city staff, city officials, and citizens. The strategic goal that
limits the property tax rate to at or below the 75th percentile of comparable cities is
ambiguous. It is doubtful that citizens, the city staff, and perhaps some council members,
know which cities are comparable to the City of Oak Ridge and how to calculate the 75th
percentile from property tax rates. The city should consider revising, restating or deleting
this strategic goal.
Comparable Cities
A review of the populations of Tennessee’s 348 cities indicates that six cities are
within plus or minus 16% of Oak Ridge’s population. Five of these cities have assessed
property valuations that are within plus or minus 16% of the property valuations in the
City of Oak Ridge. The five comparable cities that meet both the population and the
assessed property valuation criteria, plus or minus 16% of the Oak Ridge values, are the
cities of Maryville, Bristol, Morristown, Smyrna, and Cookeville.
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The property tax rate, population, and assessed property valuations for comparable cities
and the City of Oak Ridge are:
Maryville
Bristol
Morristown
Smyrna
Cookeville
Oak Ridge
Tax Rate
$2.15
$2.35
$1.09
$ .69
$ .83
$2.87
Population
23,120
24,821
24,965
25,569
23,923
27,387
Assessed Property Value
$500,947,369
$416,241,454
$561,505,976
$496,995,701
$507,125,668
$521,648,389
Percentile Ranges
Excluding the City of Oak Ridge from the percentile calculations for the
comparable cities, the percentile ranges for property tax rates are:
75th percentile
50th percentile
25th percentile
$2.25
$1.09
$ .76
The City of Oak Ridge’s property tax rate of $2.87 is clearly above the 75th
percentile for comparable cities.
Two of the comparable cities, Maryville and Bristol, also operate city school
systems. These cities and the City of Oak Ridge make significant appropriations from
the city’s general fund to their city school systems. The Oak Ridge and Maryville school
systems are among the best in the state. These cities are proud of the achievements of
their school systems. While this report discusses the effects that local appropriations to
local schools have upon the local property tax rate of comparable cities, it does not
advocate for or against cities having their own schools systems. The following graph
illustrates the significance of the appropriations to schools as they are compared to other
comparable cities that do not have city school systems. The cities of Oak Ridge,
Maryville, and Bristol make local appropriations to city school systems. The cities of
Morristown, Smyrna, and Cookeville do not operate city school systems.
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Four Year Property Tax Rate
3.5
3
2.5
2
Rate
2000
2001
2002
2003
1.5
1
0.5
0
Oak Ridge
Maryville
Bristol
Morristown
Smyrna
Cookeville
In order to comply with the city imposed property tax limitation goal, the city
would need to reduce the current property tax rate of $2.87 (2003) to $2.25 or by $.62,
which equates to an approximate reduction of $3,239,066. Since state regulations
prohibit any annual reduction in the local education appropriation, any reduction in the
property tax rate must come from the city’s operating budgets. The city would need to
reduce departmental expenditures by approximately 16% (net of the school
appropriation) in order to meet the city’s strategic goal, while property taxes would need
to be reduced approximately 10%.
When the education appropriations and the school bond payments are removed
from the city’s tax rate, the city’s operating departments are in the lower 25th percentile
of property tax rates for comparable cities. The adjusted rates, with school appropriations
adjusted, are as follows:
Oak Ridge
Maryville
Smyrna
Cookeville
Morristown
Bristol
$ .44
$ .44
$ .69
$ .83
$1.09
$1.55
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The percentile ranges for these adjusted tax rates, excluding Oak Ridge, are:
75th percentile
50th percentile
25th percentile
$1.32
$ .83
$ .57
The City of Oak Ridge and its adjusted rate of $ .44 is clearly below the 25th
percentile for comparable cities and the adjusted tax rate is an indication of the operating
efficiency of Oak Ridge’s operating departments in comparison to other comparable
cities. The comparison of tax rates, current tax rate vs. the tax rate less the education
appropriation, is presented in the following graph:
Tax Rate Com parison -Current verses Adjusted
3.50
3.00
2.50
2.00
Current Tax Rat e
Less Educat ion
1.50
1.00
0.50
0.00
Brist ol
Smyrna
Morrist own
Cookeville
Maryville
Oak Ridge
The city may need to consider an alternative to the goal that in effect calls for the
reduction of the service level of operating departments that are already operating below
the 25th percentile level for comparable cities.
The Farragut Example
Farragut is an attractive, affluent city in West Knox County where many Oak
Ridge area employees live. The City of Farragut does not provide police service, fire
service, garbage service, or public education. It does not provide utilities. The average
home value is approximately $200,000 and the average family income greatly exceeds
that of other cities in the area, including the City of Oak Ridge. The city has 36
employees and does not charge a property tax. It provides limited services funded in part
by state shared revenues.
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The City of Oak Ridge is a full service city providing police service, fire service,
garbage service, utilities, public education, and other services. The city has 308
employees and the tax rate is $2.87, including schools, and $ .44 when the school
appropriation is removed.
During budget development, citizens often point to the City of Farragut and their
no property tax status. Using the average home values in each city, Oak Ridge
homeowners currently pay approximately $717.50 annually in the form of property taxes
for basic city services including education. Farragut property owners pay approximately
$416.00 for similar services excluding any appropriation for education. When the Oak
Ridge rate is adjusted to the $ .44 rate (a rate minus the school appropriation) the city
property tax is $110.00 annually, compared to the $416.00 cost of services in Farragut.
The following chart illustrates the comparative costs:
City Tax Rate 2003
Average Home Value
Property Tax on Average
Home Value
Annual Garbage Fees
Annual Fire Service Fees
Police Service
Total Expense
Number of Employees
Farragut
$0.00
$200,000.00
Oak Ridge
$2.87
$100,000.00
$0.00
$204.00
$212.00
$0.00
$416.00
$717.50
$0.00
$0.00
$0.00
$717.50
36
308
Oak Ridge less
Ed.
$0.44
$100,000.00
$110.00
$0.00
$0.00
$0.00
$110.00
Note: The cost of fire service in Farragut increases as the square footage of the home increases.
There is a $30 first time registration fee for fire service with Rural Metro.
The annual fire service fee is based upon a 2400 S.F. house including garage.
When Oak Ridge is evaluated on a comparable level, without the education
appropriation from the general fund, it provides basic city services using a tax rate that
costs less than the costs paid by Farragut home owners for similar services.
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Recommendations:
1. Revise the property tax limitation goal that is directed at operating budgets
already operating below the 25th percentile level for comparable cities and
make the goal less ambiguous or delete the goal.
2. Develop a strategic planning process that involves the community on a regular
basis.
3. Use a facilitator to guide the planning process, but do not substitute a
facilitator for the planning process.
4. Identify the services that the city will provide and those that the city will not
provide. Fund desirable services with available and anticipated revenues.
5. Review all operating departments to ensure that they are operating at the
appropriate level of service and that they are operating efficiently and
effectively.
6. Increase non- property tax revenue where possible.
7. If the city thinks that it is important to minimize the effect of the local
property tax rate, consider limiting the annual school appropriation by some
agreed upon percentage.
Summary
The city needs to develop an effective and continuous strategic planning process
with goals that are clear, concise, and understood by the staff and citizens. The school
system, one of the academically, very best in the state, requires substantial appropriations
from the city’s general fund. This is the primary reason that the city’s property tax rate is
above the 75th percentile level for comparable cities. When city operating departments
are compared with comparable cities, less the education appropriation, they operate
below the 25th percentile level for comparable cities. City services may suffer if the
departmental budgets are reduced by 16% in meeting the stated strategic goal of limiting
the property tax rate to the 75th percentile level of comparable cities. The city would be
wise to explore other alternatives in the strategic planning process.
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