When a Mississippi county sets the wrong millage rate for a school district by mistake, can the county correct the levy mid-year, and can it use general-county tax revenue to bail out the shortfall?

Plain-English summary

Clarke County set the millage for one of its consolidated school districts in September 2025 for the 2025-2026 fiscal year. Due to an inadvertent error, the millage was set too low to generate the dollar amount the school district had requested. The error was caught before September 30, 2025 (the end of the prior fiscal year), but there was not enough time to comply with the statutory notice and public-hearing requirements (Sections 27-39-203 and 27-39-317) to amend the levy before the new fiscal year began on October 1.

The county attorney asked the AG three questions, all about how to fix the resulting projected revenue shortfall.

Question 1: Can the county now hold an emergency hearing and amend the school district's levy mid-year?

The AG's answer: No. Section 37-57-104 lays out the procedure for school districts to request ad valorem taxes and for the levying authority (the county) to determine the millage. Section 27-39-317 fixes the September board meeting as the time for setting the levy. Section 27-39-203 sets the notice and hearing rules. None of those statutes provides a mid-year amendment procedure. Once the fiscal year begins, the levy is set; the school district's remedy is a shortfall note under Section 37-57-108, not a do-over of the levy.

Question 2: Can the county use revenue from the general county special levy under Section 27-39-329(2)(b) to bail out the school district?

No. Section 27-39-329(2)(b) requires every county to levy 1 mill in escrow until the Department of Revenue certifies compliance with state reappraisal standards; once certified, the county can use the revenue for any purpose for which it is authorized to levy ad valorem taxes. But Section 27-39-317 imposes a critical restriction on school taxes: "[t]he levy for schools shall apply to the assessed value of property in the respective school districts . . . and a distinct and separate levy shall be made for each school district." That means revenue from a countywide levy cannot be diverted to a school district that does not encompass the entire county. The general county special levy is countywide; the school district at issue isn't. So the funds cannot legally cross over to fill that school district's shortfall.

Question 3 (paying surplus directly to the school district or to its shortfall note): rendered moot by the answer to Question 2.

This is a sharp opinion. It tells the county its preferred path doesn't work and points it at the shortfall-note remedy as the only real option.

What this means for you

If you are a county board of supervisors

Get the millage right at the September meeting. There is no mechanism to fix it once the fiscal year starts. If you spot an error before October 1 but don't have time for a 27-39-203 hearing, the only solution is for the school district to use a shortfall note under Section 37-57-108. There is no emergency hearing path that the AG will bless.

The bigger lesson is procedural: build redundancy into your millage-setting process. Have the county attorney, the tax assessor, and the school district's business manager all confirm the calculation before the September vote. A small mismatch ($1,000 in the rate, perhaps) can become a million-dollar revenue shortfall over the year.

If you are a school district business manager or superintendent

Confirm the dollar request and the corresponding millage in writing with the county before the county's September meeting. Verify the assessed-value base the county is using; that is the input that drives the millage calculation, and an out-of-date base is a common error source. After the meeting, run the math yourself and confirm the projected revenue.

If a shortfall does happen, the shortfall note under Section 37-57-108 is your remedy. Plan the cash-flow impact and engage your bond counsel early. The note will create debt service the district will pay down through future levies. The AG opinion makes clear that no mid-year levy correction is available.

If you are a county attorney

The Hammack 2025 opinion is essentially the operating manual for what to do (and not do) when this happens. Counties have tried various creative remedies in the past (transferring from other line items, using countywide special levy revenue, holding out-of-cycle hearings); the AG has now closed those routes. The remedies are the school district's shortfall note plus better calendar discipline next September.

If you are a tax assessor

Coordinate with the county finance officer and the school district's business manager well before the September meeting. The millage calculation depends on accurate assessed values; if your roll is off, the levy is off, and there is no good way to fix it after the year starts.

If you are a state-level school finance practitioner

This opinion identifies a structural problem with Mississippi's school finance machinery: errors in the September levy-setting process create year-long revenue effects with no correction mechanism. A legislative fix would be straightforward (e.g., a statutory mid-year correction procedure with notice requirements), but until that happens the shortfall-note workaround is the operative answer. Point counties at this opinion when they ask about creative remedies.

Common questions

Q: Why can't the county just hold a fast hearing and fix the levy?
A: Because Section 27-39-317 fixes the levy at the September meeting and Section 27-39-203 requires notice and a public hearing under specific procedural rules. The statutes don't include an emergency-amendment provision, and the AG won't read one in. The legislature could add one but hasn't.

Q: What is a "shortfall note" under Section 37-57-108?
A: It's a debt instrument the school district can issue when actual ad valorem revenue falls below the budgeted request. The note is repaid through future levies. It is the statutorily intended remedy for exactly this situation.

Q: Why can't general county tax revenue cross over to fund a particular school district?
A: Section 27-39-317(c) requires school taxes to apply only to "the assessed value of property in the respective school districts" and requires "a distinct and separate levy . . . for each school district." A countywide levy includes property outside the school district's boundaries; using its revenue to fund the district would impose tax on non-district property for the district's benefit, which violates the statutory framework.

Q: What if a special county levy is collected within a school district's territory?
A: The opinion does not address that scenario directly. The Section 27-39-329(2)(b) levy at issue here was countywide. If a county had a levy whose territory matched the school district's, the analysis might differ; that's a fact-specific question outside this opinion's reach.

Q: Can the county budget for next year include extra millage to make up the shortfall?
A: Probably yes, by following the normal process for the next fiscal year. The school district would request more, the county would set a higher millage at the September meeting subject to the notice and hearing rules, and the higher revenue would flow in starting the following October. The shortfall note bridges the cash-flow gap until that catch-up.

Q: What if the error was caused by the school district's request, not the county?
A: This opinion treats the error as inadvertent and within the county's calculation; it doesn't address fault allocation. If the school district provided wrong inputs, that's a separate question. Either way, the procedural answer is the same: no mid-year fix; the district uses a shortfall note.

Background and statutory framework

Mississippi school districts are funded primarily through state appropriations and local ad valorem taxes. The local ad valorem piece runs on a fixed annual cycle:

1. The school district's board adopts its budget and identifies the dollar amount it needs from local ad valorem taxes (Section 37-57-104).
2. The district transmits its dollar request to the county (the levying authority).
3. The county holds a public hearing on its proposed budget and levies, with statutory notice (Section 27-39-203).
4. At the September meeting, the county board sets the millage rates for the upcoming fiscal year, including separate millages for each school district (Section 27-39-317).
5. Tax bills go out, revenue flows during the year, and the district uses the funds to operate.

When the millage is set too low to generate the requested dollars, the district has a structural revenue gap for the year. Section 37-57-108 lets the district issue a shortfall note to cover the gap, with repayment through future levies.

The AG's 2025 Hammack opinion confirms that there is no mid-year correction mechanism for the levy itself. That preserves the predictability of the September deadline (and the strict notice requirements) at the cost of locking in errors when they happen. The shortfall note is the legislatively intended pressure valve.

The county special levy under Section 27-39-329(2)(b) is a separate mechanism designed to incentivize compliance with state reappraisal standards. The 1-mill levy is held in escrow until the county is certified; on certification, the county can use the funds as it would any general-purpose ad valorem tax revenue. But the school district's separate-and-distinct levy structure under Section 27-39-317(c) means countywide revenue cannot legally fill a less-than-countywide school district's shortfall. That structural separation between county and school district levies is a hard line the AG opinion makes explicit.

Citations and references

Statutes:
- Miss. Code Ann. § 27-39-203 (public hearing on tax levies)
- Miss. Code Ann. § 27-39-317 (tax levy setting; school district levies separate)
- Miss. Code Ann. § 27-39-329(2)(b) (county special levy)
- Miss. Code Ann. § 37-57-104 (school district ad valorem request)
- Miss. Code Ann. § 37-57-108 (school district shortfall note)

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2025/12/W.-Hammack-December-16-2025-Correction-of-Error-in-Consolidated-School-District-Tax-Levy.pdf

Original opinion text

December 16, 2025

William C. Hammack, Esq.
Attorney, Clarke County Board of Supervisors
Post Office Drawer 5514
Meridian, Mississippi 39302-5514

Re: Correction of Error in Consolidated School District Tax Levy

Dear Mr. Hammack:

The Office of the Attorney General has received your request for an official opinion.

Background

According to your request, due to an inadvertent error, the millage set for Fiscal Year 2025-2026 for one of Clarke County's ("County") consolidated school districts ("School District") will generate significantly less funds than the dollar amount requested by the School District. The error was discovered before September 30, 2025; however, there was not sufficient time for the Clarke County Board of Supervisors ("Board") to comply with the statutory notice and hearing requirements to amend the levy under Mississippi Code Annotated Sections 27-39-203 and 27-39-317. As a result, it is anticipated that the School District will have a substantial shortfall in revenue for the current fiscal year. You further state that the School District does not encompass the entire county.

Questions Presented

1. May the Board now provide notice and hold a hearing to consider amending the School District's levy on an emergency basis as the applicable statute mandates the levying authority set a millage rate sufficient to generate the funds requested by the School District?

2. If the Board cannot amend the levy for the School District, may funds generated from the general county special levy under Section 27-39-329(2)(b) for Fiscal Year 2024-2025 and Fiscal Year 2025-2026, if properly declared surplus, be utilized to avoid or mitigate the School District having to issue a shortfall note under Section 37-57-108?

3. If the response to Question 2 is "yes," may the surplus funds be paid directly to the School District, and, if not, may the funds be utilized to pay the School District's shortfall note?

Brief Response

1. There is no mechanism to hold a hearing and amend the School District's levy after the fiscal year has begun.

2. Ad valorem taxes collected pursuant to Section 27-39-329(2)(b), which are collected from the entire County, cannot be used to avoid or mitigate the School District, which only encompasses part of the County, having to issue a shortfall note under Section 37-57-108.

3. The answer to Question 2 renders this question moot.

Applicable Law and Discussion

Section 37-57-104 provides the procedure for local school districts to request ad valorem taxes to the levying authority, in this case the County. "Upon receipt of the school board's order requesting the ad valorem tax effort in dollars, the levying authority shall determine the millage rate necessary to generate funds equal to the dollar amount requested by the school board." Id. This section further provides detailed notice and referendum requirements depending upon any increase of the millage rate. Id. The county board of supervisors levies the ad valorem tax rate for the upcoming fiscal year, including setting the rate for local school districts, at its regular September meeting each year. Miss. Code Ann. § 27-39-317. Prior to this September meeting, the county must "hold a public hearing at which time the budget and tax levies for the upcoming fiscal year will be considered" in accordance with Section 27-39-203. This section also provides specific notice requirements for the public hearing and further states that "[a]ny governing body of a tax entity shall be prohibited from expending any funds for the applicable fiscal year until it has strictly complied with the advertisement and public hearing requirements set forth in this section." Id. at (9).

If it is later determined during the fiscal year that the ad valorem taxes to be collected are less than the amount requested in the school district budget, the school district may issue a shortfall note in accordance with Section 37-57-108. However, there is no procedure in the above-cited statutory schemes for the Board to amend the millage rate after it has been set and the new fiscal year has begun.

Your second question asks whether the Board can use funds generated from the general county special levy under Section 27-39-329(2)(b) to avoid or mitigate the School District having to issue a shortfall note under Section 37-57-108. Section 27-39-329(2)(b) requires each county to levy an ad valorem tax of one mill, which the county then holds in escrow until the Department of Revenue certifies that the county is in compliance with state reappraisal standards. Upon certification, the county may use the revenue from the levy for any purpose for which counties are authorized to levy ad valorem taxes. Id. Section 27-39-317 outlines the purposes for which ad valorem taxes may be used. With respect to school districts, this section provides as follows:

(c) For schools, including the total funding formula levy and the levy for each school district including special municipal separate school districts, but not including other municipal separate school districts, and for an agricultural high school, county high school or community or junior college (current expense and maintenance taxes), as authorized by Chapter 57, Title 37, Mississippi Code of 1972, and any other applicable statute. The levy for schools shall apply to the assessed value of property in the respective school districts, including special municipal separate school districts, but not including other municipal separate school districts, and a distinct and separate levy shall be made for each school district, and the purpose for each levy shall be stated.

Id. at (c) (emphasis added). In your request, you indicate that the School District is a consolidated district that does not encompass the entire County. Accordingly, ad valorem taxes collected pursuant to Section 27-39-329(2)(b), which are collected from the entire County, cannot be used to avoid or mitigate the School District having to issue a shortfall note under Section 37-57-108.

If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,

LYNN FITCH, ATTORNEY GENERAL

By: /s/ Beebe Garrard
Beebe Garrard
Special Assistant Attorney General