Knox County Commission approves FY2027 budget after debate over school funding and county raises

The Knox County Commission approved the fiscal year 2027 budget and related measures on June 15 after extended debate over school spending, capital plans and pay increases for county employees.

The commission adopted the overall budget and a five‑year capital improvement plan after a series of motions and roll‑call votes. Chair Commissioner Oster offered a substitute motion that raised the proposed salary adjustment for general county employees from 3% to 6% and shifted two pennies of the property tax distribution from the general purpose school fund to the general fund to help finance the raises. That substitute motion passed on a roll call after several members voted in favor and a few commissioners passed or abstained.

Why it matters: Commissioners clashed over large increases in school-related spending that have outpaced other county budgets in recent years. Commissioner Russell led the challenge, saying the school budget growth warranted closer examination and proposing a $13.325 million reallocation to roads and other county needs.

Commissioner Russell said the school budget increase was disproportionate: “The school budget from 2020 to 2026 increased $209.9 million, which is 41%,” he said, adding that student enrollment had declined roughly 3% in the same period. That comparison helped drive his motion to reduce the FY2027 school increase and to remove a $64.661 million capital allocation for a new school pending further research.

Schools and staff pushed back that much of the increase reflected state-directed changes. Jennifer Hemelgarn of Knox County Schools said the shift from the old BEP funding formula to TISA produced a substantial one‑time increase in state funding for the district: “When we moved from BEP to TISA, it was about a $60 million or 24% increase,” she said, and she noted the district had already spent design and early construction funds on the consolidated Mechanicsville‑Lonsdale‑Beaumont (MLB) project.

Votes and outcomes: The commission took a roll‑call on Russell’s initial amendment to limit the schools’ operating increase and to remove the $64.661 million capital project; that amendment failed on the roll call (recorded 7–3 against, one member absent). The chair’s substitute motion to increase county employee salary adjustments to 6% and to shift two pennies from the school fund to the general fund then passed on roll call (the chair announced the substitute motion passed). The commission later approved a companion tax‑rate resolution that kept the overall rate unchanged (1.5540) but adjusted the cents distributed to funds to reflect the shift; that distribution passed unanimously on roll call (10–0).

On capital spending, a separate vote on adopting the five‑year CIP (FY2027–2031) and appropriating first‑year funds also passed, 7–3, after commissioners again considered and rejected an effort to remove the $64.661 million school facility allocation.

What commissioners said about trade‑offs: Supporters of the employee pay amendment framed the move as recognition of frontline county workers and a tool to address recruitment and retention. Commissioner Oster argued the county must show employees “we care about them and their families.” Opponents voiced concern about reducing school funding and said the school board and administration should be consulted before cutting recurring funds; several commissioners emphasized that the commission budgets a lump sum to the schools but does not control internal school spending decisions.

Budget details and clarifications: Staff and school officials clarified that the $64.661 million figure represents the capital plan amount for the new consolidated MLB facility and that design and early spending (roughly $3.4 million in FY24 and $1.8 million in FY25) are already committed. Director Caldwell and school staff also explained that a large share of the district’s FY27 increase is for personnel costs (teacher‑pay adjustments to meet the state’s $50,000 minimum, step increases, and related insurance and contractor cost growth).

Other appropriations: The commission approved R‑26‑6‑104, appropriating $8.759 million to nonprofit organizations for FY2027 (motion passed 7–3 after an amendment to cut certain general‑fund grants failed). The county also approved opioid‑settlement fund appropriations of about $2.68 million to nonprofits unanimously (10–0).

Next steps: With budget adoption and the CIP approved, the county will implement the distribution and agencies will reconcile how recurring costs and capital timing align with the approved appropriations. Schools indicated they will review staffing allocations and revenue timing to meet the revised maintenance‑of‑effort and fund‑balance expectations.

The commission adjourned after completing the agenda and announced that zoning business would begin later in the evening.