The head of Oak Ridge Schools says officials will meet next week to discuss how they can avoid a district-wide shutdown.
City council members are also scheduled to meet Tuesday evening to discuss the issue and vote on a resolution that could potentially resolve the issue.
The problems began during the approval process of the fiscal year 2013 city budget, which includes funding for the school system.
According School Board Chairman Keys Fillauer, during the budget process the city decided to use some of the money previously allocated to the school system to directly fund school-related projects, rather than turning it over to the school's annual budget.
Fillauer says that made it appear to the state the city had not fulfilled it's "maintenance of effort" funding, which is a state regulation requiring municipalities to fund school systems at a consistent level year-to-year.
Without fulfilling the maintenance of effort funding, the state could pull nearly $2 million in funding per month, forcing the district to shut down temporarily.
The school board is scheduled to meet next Monday to discuss the issue.