Section 49-2-1002 - Transfer of municipal or special district schools to county(a)(1) The city council, board of mayor and aldermen or other duly constituted governing body of any town or city in this state maintaining a separate school system is authorized and empowered to transfer the administration of the town or city school system to the county board of education of the county in which the town or city is located. Before the transfer is effectuated, however, a referendum shall first be conducted on the subject, and the school system of the town or city shall not be transferred to the county unless a majority of the voters who cast votes in the referendum vote in favor of the transfer.(2) The referendum required by subdivision (a)(1) shall be held by the county election commission when requested by the governing body of the town or city, and the expenses of the election shall be paid by the town or city.(b) A town, city or special school district transferring the administration of schools to the county board of education by authority of § 49-2-502 and this section is authorized to devote the school funds of the town, city or special school district to the payment of the proportionate part of the cost of the maintenance and operation of the schools.(c) The county board of education shall perform the same duties with respect to the schools of the town, city or special school district as they are required by law to perform with respect to county schools.(d) The county board of education shall operate the schools of any town, city, or special school district transferred to them by authority of § 49-2-502 and this section as a coordinated part of the county school system, to the end that a unified and balanced school system may be maintained in the county. All school funds belonging to the town, city or special school district, including state funds allocated to the town, city or special school district, shall be expended entirely for the benefit of the schools of the town, city or special school district. Where there is any school indebtedness owed by the town, city or special school district at the time the transfer of administration is effectuated, the indebtedness shall remain the obligation of the town, city or special school district, and existing arrangements for the retirement of the indebtedness shall be continued until the indebtedness is retired and paid in full, unless the county legislative body, by resolution adopted by a majority of the members, agrees to assume the school indebtedness owed by the town, city or special school district.(e)(1) Towns and cities transferring the administration of schools to the county board of education pursuant to this section are authorized and empowered to take such action as necessary and to make such payments as required to provide credit for service, for any or all school employees of the transferring town or city who elect to receive the credit, in any pension or retirement plan or plans in which the employees are entitled to participate after the transfer, for the period of service that was credited to the employees under the pension or retirement plan of the transferring town or city.(2) Any such school employee transferring to a new plan pursuant to the terms of subdivision (e)(1) shall not, as a result of this subsection (e), be entitled to receive a benefit from both the pension or retirement plan of the transferring town or city and any successor pension or retirement plan based upon the same credited service.(3) The towns and cities are further authorized to issue bonds or notes for the purpose of obtaining funds to make any such payments and to pay costs of effecting such payment and of issuance of such bonds or notes in accordance with title 9, chapter 21.(4) The pension board or other agency administering the pension or retirement plan of any such town or city, upon direction of the town or city by resolution of the governing body of the town or city, is authorized to transfer employee contributions of any or all of the transferring employees, together with earnings on the employee contributions, directly to the plan or plans in which the employees are entitled to participate after the transfer.(5) A transfer is authorized by this subsection (e) only if the pension or retirement plan of the town or city expressly provides for the return or refund of employee contributions and earnings on the employee contributions to employees or the transfer of such amounts to a successor plan upon an employee's termination of employment.Acts 1947, ch. 145, §§ 1, 3-5; 1949, ch. 40, §§ 1, 2; C. Supp. 1950, §§ 2397.3-2397.6 (Williams, §§ 2397.1-2397.4); Acts 1974, ch. 528, § 1; T.C.A. (orig. ed.), §§ 49-404 -- 49-407; Acts 1987, ch. 38, § 1.