NASHVILLE (AP) - Gov. Bill Haslam acknowledges that a $3.4 million fine on Nashville's public school system will affect students, but insists that the fault lies with school board members who refused to approve a charter school.

The Republican governor told reporters after a groundbreaking ceremony in Nashville on Wednesday that withholding the money was the state's only option for enforcing state law.

But Haslam said his administration wasn't obligated to inform the city school board, before it voted last week on an application from Great Hearts Academy, about the specific punishment it would face for not following a ruling from the state school board.

The penalty is the equivalent of 1.5 percent of the annual total the city receives under the state's school funding formula.