A number of municipalities operate school systems under either their charters or general laws. In both cases, they are subject to considerable state regulation. A moratorium on the creation of new school systems was in place from May 19, 1998 until April 24, 2013. The ban was lifted by the Tennessee General Assembly with the passage of Public Chapter No. 256.

Pursuant to T.C.A. § 49-2-106, a city school system may be created or reactivated provided the school system is large enough to offer adequate educational opportunities for the pupils of grades one through twelve (1-12) in keeping with standards established by the state board of education, including: (1) the scholastic population of the city district according to the most recent census; (2) the financial ability per pupil of scholastic population; and (3) the expressed willingness of the people of the city school district, as indicated by a majority of its legal voters in a referendum, to raise local funds, which, together with school funds received from the state and other sources, will be sufficient to provide adequate educational opportunities for their children. Cities operating public schools under their charters and levying an additional elementary school tax for operating expenses (other than for grounds, buildings, and equipment) are empowered to continue those operations under their charters, provided there is no transfer of children between city and county schools except by agreement between the respective boards of education. T.C.A. § 49-2-404.

Municipalities that have school systems may, by referendum, levy a municipal school tax above the county school tax. City schools also are entitled to their proportionate share of state funds and county school taxes on the basis of average daily attendance. T.C.A. § 49-2-103, T.C.A. § 49-2-403.