Tennessee Code Title 6. Cities and Towns § 6-56-114

(a) This section applies to all municipalities that have established an LEA, as defined in § 49-1-103, pursuant to § 49-2-401.

(b) If the municipal legislative body and the governing body of the LEA fail to agree upon a budget for the LEA by August 31 of any year, then, by operation of law, the budget for the LEA is equal to the minimum budget required to comply with the local match and maintenance of effort provisions of the TISA, as defined in § 49-3-104.  However, if for three (3) consecutive fiscal years the municipal legislative body and the governing body of the LEA fail to agree upon a budget and the LEA receives the minimum required funding for that fiscal year in accordance with this subsection (b), then the budget for the LEA for the third fiscal year must include a mandatory increase that is equivalent to three percent (3%) of the required funding from local sources for schools;  provided, however, that this increase is not required if during any of the three (3) consecutive fiscal years the governing body of the LEA failed to submit its budget proposal to the municipal legislative body by May 1.