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Kingsport officials say Sullivan County tax reallocation cut district receipts by about $950,000
Summary
At its Nov. 11 meeting the Kingsport City Schools board was told a county certified tax-rate reallocation reduced the district's share of property-tax revenue by about $949,000 this year, a consequence of a shift in county fund allocations though the county met maintenance-of-effort on a budget-to-budget test.
At the Nov. 11 Kingsport City Schools Board of Education meeting, finance staff described how Sullivan County's reappraisal and certified tax rate changed the distribution of local property-tax dollars and reduced Kingsport's property-tax receipts by roughly $949,000 for fiscal year 2026.
Mr. Fry, presenting the district's financial update, said the county's certified total tax rate went from $2.49 to $1.61 after reappraisal and that the school portion of the rate fell from about 98¢ to 59¢. "That reduction in the school tax rate equates to approximately $2,596,000 countywide," Fry said, "and we share in that percentage, which results in about $949,000 less for Kingsport City Schools this year."
The change was not a single new tax increase, Fry said; rather, he explained the county adjusted the share of the total tax rate devoted to different county funds. "The certified tax rate is intended to produce the same total revenue for the county as the prior year," he said, "but the way the total is divided among funds shifted, and the school fund's share dropped by about 3.8¢."
Board members pressed whether the district actually lost real dollars or whether the county simply satisfied the state's maintenance-of-effort (MOE) test on a budget-to-budget basis. Fry said the state's MOE calculation compares budget estimates year to year, and that if a county increases its sales-tax estimate while lowering its property-tax estimate it can meet MOE on paper even if the net distribution among school systems changes. He added that counties with declining enrollment may meet MOE on a per-pupil basis, which further complicates multi-system counties.
"We lost $4,000,000 from '23 to '25," Fry said in describing multiyear effects, and later summarized the countywide total as about $10,000,000 taken from all schools in Sullivan County over that span. Several board members called the development "very frustrating" and said they had not been notified in advance that the county's allocation percentages would change.
Board members raised practical concerns: smaller activity accounts and program budgets, the district's ability to offer pay increases without offsetting cuts, and the need for clearer county-level communication. One board member noted that sales-tax increases and fund-balance draws at the county level had been used to fund teacher raises, a practice Fry confirmed while cautioning that continued use of fund balance is not sustainable.
Fry suggested legislative change: requiring county commissions that oversee multiple school systems to meet maintenance-of-effort for all students in the county, not just the county-run system. He also directed the board to the state's ePlan website for maintenance-of-effort calculations.
The board did not take formal action at the meeting beyond receiving the report. Members said they will continue budget planning, review options for next year's salary negotiations and consider discussions with the county commission about revenue allocation and transparency.
