KNOXVILLE, Tenn. (WOKI / WVLT) — Knox County Schools is facing a $7.8 million budget deficit after recent reductions in both state and local funding, prompting district leaders to propose employee furloughs, staffing reductions and spending cuts ahead of the upcoming school year.
School officials announced they received final figures from the State of Tennessee on June 30 confirming a $3.8 million reduction in funding through the Tennessee Investment in Student Achievement, or TISA, funding formula. The amount exceeded the district’s earlier estimate of roughly $3 million.
The state funding reduction comes on top of a separate $4 million cut approved by the Knox County Commission on June 15. District leaders said commissioners removed what amounts to “two pennies” from property tax revenue designated for schools.
According to Knox County Schools, that latest reduction brings the total amount diverted from school property tax funding to 13 pennies since 2023, representing an estimated $26 million reduction over that period.
Superintendent Jon Rysewyk said the state’s reduction stems from a recalculation of Knox County’s fiscal capacity, which determines how much local funding the state believes a county can generate for education.
“Fiscal capacity is basically the state looking at different counties and saying, ‘what is their potential to pay?’” Rysewyk explained. “What they did in April was they readjusted that and basically said that they believe Knox County has the ability to contribute more at the local level — and so they withheld more of the state dollars that we would have gotten.”
Education advocate JC Bowman, Executive Director of Professional Educators of Tennessee, said the adjustment reflects how the TISA formula is designed to operate.
“The state’s saying Knox County has the ability to pay more money for their schools,” Bowman said. “Subsequently, they should be paying more money.”
Proposed Budget Reductions
To address the $4 million reduction approved by county leaders, Knox County Schools plans to ask the Board of Education to approve several cost-saving measures at its July 6 meeting, including:
- Five furlough days for employees on 255-day and 260-day contracts, including principals, central office staff and certain custodial and maintenance personnel.
- Reducing elementary assistant principal contracts from 221 days to 216 days.
- Eliminating one teaching position at every middle school and high school, limited to one position per school this year.
To offset the additional $3.8 million state funding loss, district leaders are proposing:
- A one-year pause on new technology purchases.
- Redirecting unspent summer program funding.
- Using approximately $400,000 in one-time fund balance dollars for vehicle replacement costs.
Officials estimate the staffing reductions will impact approximately 29 teaching positions. However, district leaders said they hope retirements, vacancies and staffing adjustments can reduce or eliminate the need for layoffs.
“Our hope is that we’re able to not have 29 people, that it’s 29 positions,” Rysewyk said.
Why Officials Aren’t Using Reserves
District leaders said simply pulling the entire $7.8 million from reserve funds would create long-term financial challenges because much of the deficit involves recurring expenses such as salaries.
“If we absorb the full $8 million, then what you’re saying is next year’s budgetary starts $8 million in the hole before we even start,” Rysewyk said.
The district currently has about $71 million in reserve funds, which officials said amounts to slightly more than one month of operating expenses. School leaders noted that financial best practices recommend maintaining at least two months of reserves.
Bowman agreed that reserve funds could temporarily solve the problem but would not address the underlying funding issues.
“You could fix it this year with going into the rainy day fund and everything will be fine,” Bowman said. “But still, eventually, you’re going to have to address the elephant in the room.”
Impact on Students and Families
School officials said bus transportation is not currently targeted for reductions.
District leaders also said classroom impacts are expected to be limited. High school student-to-teacher ratios are projected to increase by about half a student per classroom, with schools relying on schedule changes and course consolidations rather than eliminating classes.
“I don’t think they’re going to feel a huge impact just because our folks are working hard to get that done,” Rysewyk said.
Looking Ahead
Knox County Schools officials said this marks the fourth consecutive year of funding reductions and acknowledged that the cumulative effect is now reaching classroom operations after years of efforts to shield students and teachers from major impacts.
Bowman said enrollment trends and changes within the state’s education funding formula could create similar challenges for other Tennessee school districts in the future.
The Knox County Board of Education is expected to vote on the revised budget plan during its July 6 meeting.
