A late-day announcement from the governor's office came as an unwelcome surprise for those talking about the Knox County School budget Monday night.

Governor Bill Haslam said, thanks to a decline in state revenue collections, he will not be giving pay raises to state employees and teachers.

The announcement came as the Board of Education work session about the district's next budget was already underway. Superintendent Dr. Jim McIntyre's proposal includes two priorities, including teacher pay increases.

It's a plan that may now require some reworking.

"It's a potential, unexpected wrinkle," he said. "And we'll work through that, and see what the implications are, and continue the conversation that we're having here locally about the importance of this budget."

His proposed budget included a three percent salary increase for teachers, about half of that based on the governor's original proposal.

Dr. McIntyre said he doesn't have a clear idea yet what Monday's announcement from Nashville will mean for his budget.

"We're going to have to dig into the details of that and see what it looks like. Does it have implications for basic education program and level of funding there? Does it have implications for that particular funding source? I think that's a key question," he said.

Board member Indya Kincannon said she was disappointed to learn of the governor's news.

"This governor has said he wants Tennessee to be one of the fastest increasing teacher salaries in the country. And yet, he's not keeping up with that promise," she said after the meeting.

Kincannon was the only board member to bring up the issue during the meeting. She said that's likely the case because board members were still learning about the announcement at that time, and hadn't yet fully read the details.

Despite the potential "wrinkle," the board spent about two hours discussing other items within the budget, including what Dr. McIntyre called his "pain points" – his planned reductions.

"You know, we have limited revenue. In particularly when we look at projections for next year. Right now, we're looking at an expected zero dollar increase in sales tax. So budget to budget, were not forecasting any increase in sales tax revenue," McIntyre said before the meeting. "So it makes for a tight budget, it makes for a lean budget… a 'no frills' budget."

READ: The school districts' budget documents

Several board members defended one program where McIntyre proposed reductions: A 15 percent cut to Project Grad resources.

"I'm on the Project Grad board. I have a lot of Project Grad schools in my district, including the one my younger child attends," said Kincannon. "So I see, on a daily basis, the positive impact Project Grad has."

"There are a lot of pieces in schools that have higher needs that don't necessarily fit into traditional puzzles," added board member Pam Trainor, who also defended the program. "I have personally seen these people work for a lot of years now."

In his memo to the board, Dr. McIntyre also mentioned the challenges ahead. As the district develops its next five year strategic plan, he says it's important for school leaders and community members to talk about investments and trade-offs.

"What I'm trying to make sure that we do as a community – is make sure that we have a conversation about that," he said. "And what is it going to take to make those investments in public education over the long term and what are the potential trade-offs that we might have to consider in order to make that happen."

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