Tommy Kranz, Hamilton County Schools chief financial officer. Staff Photo by Patrick Smith

Hamilton County Schools officials proposed "a very aggressive budget strategy" Thursday, which included closing three schools.

The move is in response to the Hamilton County Commission's decision to hold in escrow about $6 million in payment-in-lieu-of-taxes money. The school system had planned to use it for its operating budget.

Commissioners plan to use the PILOT money for school construction.

Hamilton County Schools Superintendent Jim Scales refused to name the schools slated for potential closure.

"Keep in mind, I don't care how inefficient a school might be on paper, these are live bodies in there, and it's pretty late in the year to do that," Scales told Hamilton County Board of Education members during a finance committee meeting Thursday. "But we can put our finger on three schools we could reasonably close without a lot of construction."

Closing the schools would save a little more than $1 million.

School system Chief Financial Officer Tommy Kranz, whose last day is today after accepting a job with ERMC, had prepared two budget proposals for the board last month. "Plan A" used the PILOT money as part of the system's operating budget, and "Plan B" assumed the commission would use the money for building schools.

After the Tennessee attorney general released an opinion earlier this week saying the commission was not legally bound to hand the money directly to the school system, the board decided Thursday to proceed with budget discussions assuming they had to cut the $6 million.

"Given the attorney general's opinion, and I want to stress opinion, we need to tentatively move away from Plan A and switch to Plan B," said Finance Committee Chairwoman Linda Mosley. "We've got a huge deficit that we're looking at, and it's just going to exponentially get larger."

The potential budget cuts also included eliminating a $2 million reserve for hiring extra teachers needed throughout the school year, cutting $300,000 in central office personnel and an assumed $2 million reduction in health care expenses.

Kranz said more than not receiving the PILOT money this year, the bigger issue would be missing out on similar funds generated in the future.

"The real issue isn't what's going to be lost this year, it's in the future ... when Amazon comes on board, any new [Volkswagen] suppliers that come on board, any new growth that TVA or EPB does," he said.

Immediately following the Finance Committee meeting, board members discussed more budget-related issues during a work session.

School system officials presented various contracts for custodial workers, transportation companies and independent bus drivers - a topic that has sparked heated debate in recent years.

Hamilton County Schools employs 49 independent bus drivers, in addition to those provided by Durham School Services.

In the past, every time an independent driver has retired, they are replaced with one from Durham. School board members asked Deputy Superintendent Rick Smith to complete a price analysis on whether it would cost the same to hold any spots vacated by an independent driver for another independent.

Board members also asked Smith to see whether Durham would be interested in a two-year contract instead of a four-year one, so it would match the contract length for that of the independent drivers.

Contact staff writer Kelli Gauthier at kgauthier@timesfreepress.com or 423-757-6249.