The Tennessee Department of Education decided last month to withhold the funding after the city's school board voted 5-4 not to approve Great Hearts Academy's application. Opponents of the charter school said its proposal lacked a plan for promoting diversity.
Chris Henson, the district's chief financial adviser, told The Tennessean (http://tnne.ws/UZRgoh) that preliminary discussions have taken place on how the district would handle the funding loss.
He said a possible hiring freeze was one option, even though it might be difficult to implement.
Because of state-mandated student-teacher ratios -- which vary for elementary, middle and high schools -- Henson said teaching positions would seemingly be shielded. He said a halt on hiring would probably affect positions that become vacant over the course of the year, and it would still not cover the entire $3.4 million gap.
"Typically, we're fairly limited in which positions we can actually leave unfilled because of the requirements that we have," Henson said, adding that another possibility would be to dip into the school district's rainy day fund.
The state Education Department has characterized the withheld funding as targeting administrative functions of the school system, not classroom instruction. But the school system has responded that the money goes to a variety of operations ranging from transportation to maintenance -- each has an effect on students.
The withheld funding is the equivalent of about 1.5 percent of the annual total the city receives under the state's school funding formula.
Under that formula, the city's October allotment of funds would typically arrive electronically on Monday.
School board chairwoman Cheryl Mayes last week asked state Education Commissioner Kevin Huffman for a meeting before Monday to revisit the financial punishment. The two talked by phone instead, according to a state education official.
"There was nothing new proposed and the status remains the same," Education spokeswoman Kelli Gauthier said.
Will Pinkston, who chairs the school board's Budget and Finance Committee, said as of Thursday the board hadn't discussed any scenarios to absorb the state's $3.4 million cut.
"We've got time in the budget cycle to figure out how we would deal with this if the funds are actually withheld," Pinkston said.
Information from: The Tennessean, http://www.tennessean.com