KNOX COUNTY, Tenn. (WOKI / WVLT) — Knox County Schools will head into the next fiscal year with $4 million less than expected, forcing district leaders to revisit a budget that had already been approved.
The funding change comes after Knox County Commissioners voted to increase pay raises for county employees from 3% to 6%. To cover the additional cost, commissioners reduced the school district’s fiscal year 2027 budget from $717.7 million to $713.7 million.
County Chief Financial Officer Chris Caldwell said the decision falls within the commission’s authority, noting that while commissioners cannot dictate how the district spends its money, they do determine the total amount allocated.
“Commission has say over the lump sum that is funded,” Caldwell said. “They cannot tell the schools how to spend their money, but they can say this is the amount of money that is getting allotted.”
Caldwell added the revised budget still meets state requirements for maintaining funding levels for schools, even with the reduced increase—from $17 million down to $13 million.
School officials said they learned of the potential funding change the same day commissioners took action, leaving little time to prepare for the adjustment. The cut affects the district’s general operating budget, which supports day-to-day expenses including staffing and classroom resources.
The Knox County Schools finance department is now evaluating different scenarios to offset the shortfall. While leaders say they will aim to minimize impacts on students, they acknowledge that staffing ratios may need to be adjusted to fully balance the budget.
Despite the reduction, the district does have reserve funds. Knox County Schools currently holds about $71 million in reserves—roughly $20 million above the amount required by the state. Caldwell said commissioners likely considered that cushion when making their decision, adding that midstream budget adjustments are not uncommon.
District leaders say their next step will be to identify internal cost-saving measures before presenting a revised budget plan to the school board.
The Knox County Board of Education is expected to review and vote on the updated budget in July.
