NBC 4 Nashville

While teens across the United States reveled in their days off from school for Columbus Day, hundreds of students in Clay County, Tenn., had the day off for a completely different reason: a funding shortfall could mean school is out for good.

The school district oversees around 1,150 students across three schools, and a years-long budget crisis may finally be reaching a boiling point. The Clay County Board of Education, and its outspoken superintendent, Jerry Strong, have asked the Clay County Commission for an increased budget to keep the school financially in step with state and federal guidelines.

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Tennessee has a system of revenue-sharing called the Basic Education Program which distributes more than $6 billion dollars across 144 school districts "that are required to share the cost based on local ability to raise revenues," according to the Memphis Daily News.

But so far, the Clay County Commission, which oversees the local government, has rejected budget proposals, even after the CCBE cut some costs by laying off some employees and offering early retirement to veteran teachers and replacing them with younger, cheaper teachers (see statement below). Strong is not alone in thinking that if the County Commission's actions are deemed acceptable, the process of funding state-run schools will "render local school boards to that of figurehead status in charge of an empty body."

Strong said that enrollment has been stagnant in recent years, exacerbating the problem, and the school district is still paying off construction costs on Clay County High School after it was rebuilt in 2002.

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According to NBC Nashville, problems for the county started three years ago as insufficient revenue from local property taxes fell behind new state and federal education guidelines, including the Affordable Care Act. The school board voted to close all three schools Oct. 8; the next day, two parents filed a lawsuit against the school district. By Oct. 12, a judge issued an injunction declaring that schools reopen Oct. 19 after a long-scheduled fall break. A Clay County official confirmed that schools did in fact re-open Monday.

Strong told me over the phone that even though a judge had ordered that schools re-open this week, that's not the issue: "We don't have much money in Clay County."

This isn't a problem native to Clay County either. There have been several lawsuits across the state. One such, in Chattanooga, features seven counties in a class-action against the state. It claims:

the state doesn't provide enough funding for expenses that include teacher pay and health insurance. The state underestimates by about $10,000 what teachers are actually paid, the lawsuit says, and the state pays only for 10 months of teachers' 12 months of insurance.

(Local, public schools in the United States are primarily funded through property taxes, which are generally set by local governing bodies, usually school boards.)

Meanwhile, the state's governor, Bill Haslam, proposed in February an additional $100 million to pay for teacher salary raises—the fastest-growing rate increase in the country.

Clay County's financial woes are symptomatic of the state's larger budgetary issues: with no state income tax to draw from, the state relies heavily on sales tax to fund its coffers, and with consumer spending down, an income tax would potentially help with budget problems elsewhere in the state that have led to between 1,500 and 2,000 state employees being laid off.

One possible solution to the funding problem is a proposed increase in property taxes in rural communities: about $30 per home. The average property tax in Clay County in 2014 was $3,100, but the county is not scheduled for a state comptroller reappraisal until 2017.  Strong tells me he doesn't want to increase property taxes necessarily, but he's running out of ways to solve the budget crisis.

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"I lost a junior high math teacher last winter because he told me 'I can go to Putnam County and make 7,000 more dollars a year.' Over a career that’s enough to buy a home," he said. Putnam County has roughly 10 times the population as Clay.

Strong himself points to the Obama Administration because of mandates required by the Affordable Care Act, which he says is costing the school district too much money. Fifteen school districts in the state of Indiana are suing the Internal Revenue Service along similar lines, and going further to claim that government employees should be exempt. Conversely, the Walpole, Mass., school district recently said implementing the Affordable Care Act would have a minor effect on their state's budget.

"Cooks and janitors and teachers are all getting the same insurance and the county commission wants us to cut insurance back, the frills, for everyone," he told me. "But that's not really an option because of the ACA."

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Unfortunately, if the schools end up closing again, it could have long-term effects for the students involved who could have their graduations delayed. “I don’t want it to close because junior year is the most important year because of all the tests,” said Autumn Boles, a junior in Clay County Schools. “It would be really hard to get caught back up.”

An earlier report on the matter incorrectly stated that Tennessee schools need to have 150 school days for students to qualify for the Tennessee Comprehensive Assessment Program tests, an end-of-year cumulative exam whose results are used to make instructional, and resource decisions at state and local levels. If a school or district cannot take the tests, they can't show improvement along with new state guidelines and could face further budget problems when they receive fewer resources from the BEP. 

Read Strong's full statement about the financial difficulties facing Clay County schools below.

David Matthews operates the Wayback Machine on Fusion.net—hop on. Got a tip? Email him: david.matthews@fusion.net