FCPS: Painful cuts ahead for Fayette schools without new money

Fayette County Public Schools is in dire need of more money to operate the 40,000-plus-student district.

If the funds don’t come, painful staff cuts, reductions in student services and other notable slashes to the district’s operations could occur, a top Fayette County Public Schools official told a work group of community leaders Tuesday night:

The district with an $848 million budget has a projected $16 million deficit for fiscal year 2026, which started July 1, said Deputy Superintendent Houston Barber.

What are some of the options for new revenue? The district’s budget solutions work group recommended 10 potential moves, from taking $16 million from FCPS’ contingency fund to raising Fayette County’s occupational license tax rate.

However, one thing is clear: Without new revenue, Fayette County Public Schools could face layoffs of key staff, administrators, teachers, counselors, social workers and paraeducators.

There also could be larger class sizes, fewer support services, elimination of intervention programs for struggling readers, English language learners and students with disabilities, Barber said.

He also said there could be the possibility of cuts to career and technical, arts and electives courses; risks to some enrichment programs; declines in mental health support for students; more long-term substitute teachers, transportation cuts, deferred building maintenance and technology rollbacks.

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There also could be challenging outcomes for high poverty schools and students with disabilities. The long-term risks, Barber said, are lower achievement, higher dropout rates and a weaker local workforce.

The bottom line, Barber said: “We cannot sustain competitive salaries, absorb inflation, or deliver the education our students deserve without new revenue.”

The district has a shortfall, Barber said, because “as your costs rise and your revenues are flat, costs and expenditures are outpacing revenue.”

“If we aren’t bringing enough revenue we can’t cover the rising costs,“ he said. “It’s not that we are spending more money on more things, it’s the rising costs.”

In June, Superintendent Demetrus Liggins discussed the reasons for the shortfall with the Herald-Leader.

“There is no need to guess or speculate about the cause of the projected $16 million shortfall; it is well-documented and based on financial analysis and predictive factors,” he said.

“First, this is a projection for the Fiscal Year 2026 budget, not the current year. The FY2025 budget is balanced, and we remain in strong financial standing today,” Liggins said.

Liggins said looking ahead, the district faces increased costs driven by inflation, ongoing investments in competitive teacher and staff salaries, and the expiration of federal pandemic relief funds.

“These pressures are not unique to Fayette County,” he said. ‘School districts across the country are grappling with the same realities. This is a structural challenge, not a result of financial mismanagement, and we are addressing it with thoughtful planning and community engagement.”

The recommendations that will go to the school board in August in the order of preference by the budget work group were:

Take the full $16 million out of the $42 million contingency fund, or only keep 4 percent of the budget in the contingency fund, not the current 6 percent.

Freeze any spending not contractually obligated. Charge the district with making up the rest of the cuts from administrative ranks, without affecting teachers.

Other recommendations: Initiate a sponsorship program for particular programs, sections of buildings and other public-private partnerships. Reduce school maintenance costs by $1.7 million to $2 million. Liquidate real estate and other assets.

The final least-preferred recommendations: Reduce maintenance costs, increase lunch prices, raise the Occupational License Tax rate.

Raising the occupational license tax rate was a controversial proposal recently put on hold earlier this summer after some board members and Lexington residents said the school district tried to push the measure on the community without an extensive discussion.

According to an opinion from Kentucky Attorney General Russell Coleman, proper notice was not given and a public hearing was not held when school board chair Tyler Murphy, vice-chair Amy Green and board member Penny Christian asked the fiscal court to increase the tax rate from 0.5% to 0.75%.

After that ruling, state auditor Allison Ball decided to conduct a special examination of the district.

Barber told the work group Tuesday night the occupational license tax is a local payroll and business tax, paid by people who live and work in Fayette County.

It applies to net profits of businesses operating in the county, and is withheld from paychecks or filed by self-employed individuals, Barber said.

All of the revenue from the tax supports Fayette County Public Schools, he said.

Someone making an annual $66,000 salary, under the proposed rate increase, would pay $495 annually instead of $330, or $6.35 more per paycheck.

People who only live or only work in the county are exempt from the tax.

What happens next?

The budget solutions work group’s recommendations will be sent to the school board. Board members will likely review them in August.

This story was originally published July 29, 2025 at 11:44 PM.