Fayette County schools has a budget crisis. How did the district get here?
AI-generated summary reviewed by our newsroom.
- FCPS faces $16M shortfall as inflation and fixed costs outpace revenue growth
- A failed tax hike and legal missteps triggered backlash and state audit scrutiny
- Budget group urges use of rainy day fund, which is half the expected size
For months now, Fayette County Public Schools has been grappling with a $16 million budget shortfall, weighing the district’s options for cost savings and cuts.
Along the way, FCPS leadership, including Superintendent Demetrus Liggins, has struggled to convincingly explain the district’s financial challenges. Issues began with a controversial — and ultimately illegal — bid to pursue a tax increase.
Now, the district is reversing itself, dropping the proposed tax hike in favor of spending cuts Liggins recommended during a special-called board meeting Aug. 29.
The months-long saga has taken several twists and turns. Most recently, the budget director for Fayette County Public Schools, Ann Sampson-Grimes, has accused her superiors of ignoring her warnings about the cash-strapped district’s budget problems and retaliating against her by placing her on administrative leave, her lawyer shared in a letter to district leaders.
Liggins and several board members were tight-lipped about updated budget figures heading into an Aug. 28 meeting, refusing to publicly discuss them.
“Unfortunately, this is something that’s happening across the nation when it comes to (public pre-school to 12th grade) P12 schools,” Liggins previously told Herald-Leader reporter Valarie Honeycutt Spears in an exclusive interview.
“We’re not the only district that’s suffering with having to try to balance the budget with fewer funds, with the inflation and all the dynamics of the economy, and so it’s just something that we’re dealing with,” Liggins said.
Here’s a condensed timeline of the FCPS budgetary issues.
What’s led up to the school board’s budget woes? Here’s the complete timeline
May 12, 2025: During a school board meeting, members discussed a $16 million budget shortfall and the “difficult decisions” ahead for the district. “How did we get here?” board member Amanda Ferguson asked.
At the time and since, Liggins pointed to inflation and rising fixed costs that have been difficult for the district to address. Revenue has generally not kept up with labor and food costs, district officials said. Contracts, insurance and utilities have increased. The number of schools and programs has increased while enrollment remained flat.
“With unprecedented inflation, ongoing uncertainties around federal funding, tariffs and market volatility, it’s clear that additional steps will be needed in the future to reduce overhead costs,” said Ann Sampson-Grimes, the district’s chief budget and officer.
Among the costs Liggins identified: staff raises. He described the district’s teachers and hourly staff as some of the highest paid in the state. That drew a rebuttal from a union that represents FCPS employees. Liggins himself is among the highest paid superintendents in Kentucky, with his total salary, pension and benefits for the 2024-25 school year totaling $381,767. Only Jefferson County’s previous and current superintendents make more.
May 25, 2025: A school board meeting agenda posted on the district’s website over Memorial Day weekend shows the district is considering asking the fiscal court to raise the occupational license tax. The proposed increase is 0.5% to 0.75% of wages for individuals and net profits of businesses.
Public schools in Kentucky are funded with a combination of state, local and federal resources. In addition to occupational license taxes at the local level, schools also benefit from property taxes and rising property values. A recent Herald-Leader review shows property tax rate increases are a common tactic for FCPS to shore up its financial position, with rates here rising 20% since 2012. Still, increases to property tax rates must be properly advertised and can be subject to recall votes in some cases.
May 27, 2025: In a split 3 to 2 decision, the school board votes to approve a resolution supporting the occupational license tax increase.
The move was met with criticism, even from some board members. At the time, board members Monica Mundy and Amanda Ferguson said they did not learn of the proposal until the preceding holiday weekend. They vote to table the vote on the tax increase to hear public comment first, but the effort failed.
The decision to pursue the increase triggered a wave of local backlash, including a recall threat from one parent.
June 4, 2025: Kentucky Attorney General Russell Coleman sides with the district’s critics, writing in an opinion that FCPS failed to provide legally required public notice of the May 27 meeting. Fayette Fiscal Court says it will not move forward with the increase as a result. The district continues to pursue the tax increase, with board chair Tyler Murphy defending it, even under threat of a state audit.
June 10, 2025: Kentucky Auditor Allison Ball follows through and opens an investigation that remains ongoing. The audit, expected by the end of 2026, will reportedly go beyond just verifying financial statements and assess the district’s performance and operations and compliance with requirements.
June 18, 2025: Seeking to regroup and move forward, FCPS begins assembling a budget work group with members recruited from the community. Its charge: delve into the district’s finances and make recommendations.
The group’s membership ranges from school-level representatives to officials at the University of Kentucky and Lexington’s Chamber of Commerce, Commerce Lexington.
July 30, 2025: After convening throughout the summer, the group ultimately advises against a tax increase.
“We can’t tax our way out of this problem,” some of its members wrote in a July 30 Herald-Leader op-ed. “The reality is that the budget is structurally imbalanced. Bringing balance to the revenues and expenses is the only way to achieve long-term stability and sustainability.”
The group’s primary recommendation is to tap the district’s contingency fund to plug its near-term $16 million budget shortfall.
Aug. 14, 2025: Liggins reveals to the Herald-Leader in an Aug. 14 interview that the contingency fund is millions of dollars smaller than anticipated. The expected $42 million fund is actually about half that size. The district will either need to find additional revenue streams or implement cuts during the 2025-26 school year.
“The district’s contingency is projected to fall below the 6% target required by FCPS policy, though we do anticipate meeting the state-required 2% minimum,” Liggins tells the Herald-Leader. “As a result, reducing contingency will not be a viable budget-balancing option this year. We will likely recommend maintaining the 2% level in the 2025-26 budget and rebuilding it over the next several years.”
Aug. 18, 2025: Despite strong opposition to raising the tax, even from some of its members, the FCPS school board votes to hold a Sept. 5 public hearing to discuss a potential increase.
The meeting would allow the board to legally propose an occupational license tax increase, while hearing public comments on the matter. Still, board chair Murphy said it would not mean the district is taking a position on the increase.
While board members Mundy and Ferguson opposed the idea, board member Penny Christian seemed to signal which way she was leaning: “We have to be realistic. ... We can’t ignore the option that may be the most unpopular.”
Aug. 19, 2025: The school board’s decision to move forward with a potential increase to the occupational license tax draws criticism. There are also concerns about the district’s near-term $16 million budget shortfall and its long-term financial health.
The $42 million contingency fund the district’s budget solutions work group wanted to tap may be as low as $15 million to $22 million. District officials aren’t certain what the current fund balance is.
Several parents and stakeholders at the Aug. 18 board meeting expressed anger over the budget crisis.
The backlash widens to include state lawmakers representing Fayette County, with criticism coming from Republican and Democratic lawmakers. The criticism also comes from additional Lexington Democratic lawmakers.
Notably, state Sen. Amanda Mays Bledsoe, who asked Kentucky’s attorney general to weigh in on the district’s first attempt to raise the tax, calls the district’s new plan “flawed.”
Meanwhile, a review by the state auditor is playing out as planned. The office will not accelerate the timeline for the “special examination” of FCPS and still plans to complete it by the end of 2026.
Aug. 27, 2025: A special virtual meeting of the FCPS school board is called for the following day at 5:30 p.m. to discuss updated budget figures, but Superintendent Liggins and several board members are tight-lipped, refusing to publicly discuss the matter.
Liggins and board members say they know more about the district’s financial picture, having received updated amounts for its budget fund balance. The fund balance is the actual, audited cash remaining in the general fund at the end of the fiscal year after revenues and expenses are finalized. The remaining amount carries over to the next budget.
The Herald-Leader’s questions to Liggins and district officials about the fund balance go unanswered, despite the fact school district budgets are public information under Kentucky law.
Earlier in the month, in an interview with the Herald-Leader, Liggins vowed to be a better communicator and level with the public about the district’s finances.
“I’m committed to working with our community to build back that trust. I know that is something that, for whatever reason, has been lost, and I think a lot of it has to do with communication or lack thereof,” he previously told the Herald-Leader.
At the Aug. 28 meeting, board members are expected to appear via video-teleconference and the meeting will be streamed online. The John D. Price Administration Building, located at 450 Park Place in room 159, is the primary location where the public can watch the virtual meeting. No votes are expected.
Aug. 27, 2025: In a letter addressed to district leaders obtained by the Herald-Leader, a lawyer for FCPS budget director Ann Sampson-Grimes accuses her superiors of repeatedly sidelining her as she tried to warn of the district’s financial challenges as far back as February 2024.
Grimes alleges she was the victim of retaliation when she was placed on administrative leave Aug. 15 for reasons that were never clearly explained. Her claims fall under Kentucky’s Whistleblower Act, relate to discrimination, harassment and alleged violations of her due process rights, but stop short of filing a lawsuit.
In the six-page letter, Grimes’ attorney claims she consistently recommended tightening district spending throughout 2024 and 2025 in the form of budget cuts. Doing so was necessary to comply with the school board’s policy of keeping 6% of the budget in its contingency fund, but also to comply with a minimum 2% contingency fund as required by the state. Running afoul of that requirement could eventually lead FCPS to be placed under state management, according to the letter.
Grimes’ attorney says she remains on administrative leave and has been instructed by district officials not to speak at board meetings or publicly discuss the district’s cash flow issues.
Aug. 28, 2025: In a surprise move at the special-called board meeting, Liggins advises against increasing the occupational license tax rate. It marks a major reversal for the district, considering top officials and a majority of school board members were publicly supportive of the increase.
Instead, Liggins proposes a package of spending cuts. Most do not require board approval and can be implemented immediately, including a hiring freeze that exempts only teacher and bus driver positions, cuts to district-level departments, reassigning staff and more. FCPS is also exploring measures that would require board approval, such as selling property.
After the meeting in a letter to parents, Liggins also makes another long-anticipated reveal: a new amount for the district’s contingency fund.
“We now have more complete calculations from the 2024-25 fiscal year, and although the numbers are not yet audited, we feel confident that we will end the year with a carry-forward balance of $26.3 million,” he told families.
The amount is much less than the $42 million district officials estimated earlier in the summer, but higher than the $15 million to $22 million Liggins previously told board members the fund could have dropped to.
Additionally, Liggins and board members do not discuss the whistleblower complaint made by the district’s budget director, Ann Sampson-Grimes.
The Herald-Leader has asked district officials multiple times about Grimes employment status and retaliation claims since she was placed on leave Aug. 15. The response from district spokesperson Miranda Scully: “FCPS does not comment on personnel matters.”
Aug. 30, 2025 Amid ongoing scrutiny of administrator pay, including his own $381,767 compensation package, Liggins announces the district will make public salary information with employee names attached.
Such information is public record in Kentucky. Several major institutions in the state, including Jefferson County Public Schools, state government agencies and public universities, publish annual databases with employee names, job titles, departments and salaries.
It’s not the first time Liggins has been asked to release more salary information for the district’s employees.
This latest request comes from board member Mundy, but email records from board member Ferguson show she’s been asking for more details on employee salaries since 2023. While Liggins has promised to provide the information in the past, he hasn’t.
Ferguson also provides an email that shows Liggins told her in December 2024 that there was no reason for concern over the budget.
Sept. 4, 2025:
The non-profit Kentuckians for the Commonwealth calls for an independent audit of Fayette County Public Schools.
Sept. 5, 2025:
Emails show that in September 2024, as the Fayette County Public Schools board was preparing to approve the fiscal year 2025 budget, Superintendent Demetrus Liggins told a school board member there was no basis for her “grave concerns” about the district’s finances. He also told Amanda Ferguson, one of five board members to whom he reports, she was making “ridiculous accusations” and “playing games.”
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With a state legislator joining the push for an independent forensic audit, Fayette Superintendent Demetrus Liggins pledged at a public hearing to “get to the bottom” of the district’s budget crisis.
Sept. 7, 2025:
The 2025-2026 proposed budget is $21.4 million less than the tentative budget presented in May.
Sept. 8, 2025:
Fayette County Schools enacts new financial controls
Sept. 9, 2025:
Fayette County Public Schools Board Chair Tyler Murphy calls a meeting for September 16 to talk about having an independent audit of the district’s finances.
Sept. 10, 2025:
Suspended budget director Ann-Sampson- Grimes files a lawsuit against Fayette County Schools, saying she was placed on leave because she repeatedly alerted her bosses that the district’s financial situation was flailing and would worsen in 2025.
Fayette school board member Monica Mundy calls for an independent forensic audit of FCPS.
Sept. 15, 2025:
Emails obtained by the Herald-Leader under the Kentucky Open Records Act confirm budget director Ann-Sampson-Grimes claims that she told her superiors that the budget needed to be cut.
Sept. 16, 2025:
Kentucky Auditor Allison Ball said she will ask the General Assembly to pay for her special examination of Fayette County Public Schools. By law, she must charge the district for the examination, which is set at $84 per hour.
At a legislative committee meeting, Sen. Lindsey Tichenor, R-Smithfield, tells Superintendent Demetrus Liggins she found the district’s credit card expenditures, especially on travel, “jaw-dropping.”
Brandon Voelker, the attorney for district budget director Ann Sampson-Grimes, files a motion for an injunction asking that Sampson-Grimes be reinstated. He said she is at risk of becoming a scapegoat for Liggins, that Liggins is blaming the budget problems on her.
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This story was originally published August 19, 2025 at 10:38 AM.