Knox County Schools faces $7.8M budget shortfall, proposes furloughs and 29 teaching position cuts

KNOXVILLE, Tenn. (WVLT) - Knox County Schools is asking its board of education to approve a revised operating budget Thursday after a combined $7.8 million shortfall emerged from two separate funding reductions — one from the Knox County Commission and one from the state of Tennessee.

The school board held a work session Monday evening to present the proposed revisions to the district’s fiscal year 2027 general purpose budget, which was originally approved at $717 million in April 2026.

How the shortfall happened

Two funding reductions created the gap:

• Local reduction ($4 million): On June 15, the Knox County Commission voted to redirect two pennies in county property tax revenue away from Knox County Schools, reducing the district’s operating budget from $717 million to $713 million. District officials noted this marks the 13th penny redirected from KCS over the past four years, totaling approximately $26 million.
• State reduction ($3.8 million): On June 30, the state’s final TISA allocations, Tennessee’s public education funding formula, came in $3.8 million lower than projected. The reduction was driven by a spring reassessment of Knox County’s local fiscal capacity index, which increased from 7.72% to 7.8%. Under the state’s formula, a higher fiscal capacity index reduces the state’s share of education funding.

District officials described the situation as unprecedented, saying they were not aware of another instance in which the board was asked to revise a budget after it had already been approved.

What KCS is proposing

To close the $7.8 million gap, KCS presented a multi-pronged approach designed to distribute reductions across grade bands and the district office. The following measures are proposed:

To address the $4 million local shortfall:

• Five-day furlough of all employees on 255- or 260-day contracts, including district office staff, executive principals, and systemwide employees. Furlough days are set for Oct. 7, Dec. 21, Dec. 22, Dec. 31, and March 10.
• Reduction of elementary assistant principal contract days from 221 to 216, effective July 13–May 27.
• Secondary school staffing adjustments that will eliminate 29 teaching positions — 16 at the middle school level and 13 at the high school level — capped at one position per school.

To address the $3.8 million state shortfall:

• A one-year moratorium on device replacements for students and staff.
• Use of fund balance (reserve funds) for one-time maintenance vehicle purchases.
• Leveraging higher-than-expected sales tax revenue.
• Redirecting unspent summer learning dollars toward tutoring.

Impact on staff pay

District officials said most employees subject to the furlough will still see a net increase in pay for the year when a 2% salary increase and step increases are factored in. As an example, a custodian moving from step 9 to step 10 would lose approximately $759 to the furlough but gain $774 from the 2% raise and an additional $957 from the step increase — a net annual increase of $972.

Employees already at the top of the salary scale (step 20) may see a slight decrease.

Elementary assistant principals will see a contract reduction resulting in a $1,881 pay decrease, partially offset by the 2% raise. Those eligible for a step increase would also receive approximately $2,000 more, resulting in a net increase.

KCS said it will send individual pay impact notifications to all affected employees by the end of July. Employees with questions can contact salary@knoxschools.org.

The 29 teaching positions

Of the 29 positions being eliminated, district officials said they anticipate approximately 17 staff members will be displaced from their current buildings. Eight schools can absorb the loss through existing vacancies, and four additional schools can reassign employees internally.

KCS Superintendent Jon Rysewyk said the district’s human resources team has already identified placements for approximately 15 of the 17 affected individuals.

“It’s always state first — obviously not something that we want to do,” Rysewyk said. “We’ve worked for the last four years really trying to protect the classroom. We have to live within our means.”

Rysewyk said the district hopes to have placements confirmed for all affected employees by Thursday’s board vote.

What was considered and rejected

KCS said it evaluated and rejected several other options, including reducing or eliminating already-approved raises, altering at-risk staffing percentages, reducing preschool services, cutting campus security, eliminating Region 5 extended contracts, reducing employee benefits coverage, and reducing the planned increase to bus contracts.

Reserve funds not a full solution

KCS currently holds approximately $71 million in fund balance — just over one month of operating expenses. The Government Finance Officers Association recommends school systems maintain at least two months of operating expenses in reserve.

District officials said using reserve funds to cover recurring costs such as salaries would only delay the problem and leave the district in a deficit at the start of the next fiscal year.

Public comment and board reaction

Carter High School English teacher Michael O’Malley was the sole public commenter at Monday’s work session. He said he believes the board should use reserve funds to stabilize the budget for one year, giving the district more time to plan.

“I think having a year of just having it stabilized is helpful with the school year just starting in a month,” O’Malley said. He also said the board should take a more adversarial position with the Knox County Commission, arguing that a lack of property tax increases over 27 years has created a long-term structural funding problem.

“This problem is downstream of the fact that we’re not taxing equitably in the county,” O’Malley said.

Several board members expressed frustration that they received a 6% pay raise — set by the Knox County Commission under the Knox County charter — while district employees face furloughs and position cuts.

Board member Steve Triplett of District 7 proposed a resolution asking the board to voluntarily return their raises in solidarity with furloughed staff and to request that commissioners do the same.

“It seems completely unfair that we would do that,” Triplett said of accepting the raise while asking employees to take pay cuts. “It feels like the right thing to do is say if they’re taking a cut, it makes sense for us to do the same.”

District legal counsel clarified that board and commission salaries are set by the commission under the Knox County charter and that any formal change would require commission action. A voluntary donation back to the district was described as the most likely path forward and would not require an additional budget vote.

Looking ahead: early retirement incentive and fiscal year 2028

KCS also previewed a proposed early retirement incentive program it plans to bring to the board for a vote at the Aug. 6 meeting. The program would offer eligible employees a monthly payment of $470.80 toward medical coverage until age 65, or for a minimum of one year.

Eligibility would require at least five consecutive years of service with KCS and one of the following: 30 years of TCRS service; 15 years of TCRS service and age 55; or five years of TCRS service and age 60.

The application window would open in September, with a deadline of Nov. 9 and a final rescission date of Dec. 18.

District officials said the program is intended to proactively create budgetary flexibility for the fiscal year 28 budget cycle. KCS has reduced its district office footprint by more than 50 positions over the past two years.

The board is scheduled to vote on the revised fiscal year 27 budget on Thursday, July 9. A vote on the early retirement incentive and a fund balance designation is scheduled for Aug. 6.