Draft of Fayette schools’ annual audit shows ‘weakness,’ ‘deficiency’

The firm that conducts an annual audit of Fayette County Public Schools said during a board meeting this week they found a material weakness and a significant deficiency in financial records for the fiscal year that ended this past summer.

Officials with the firm — LBMC — presented their findings from the fiscal year that ended June 30 at the Fayette County School Board’s Nov. 24 meeting.

The audit is standard for school districts in Kentucky and is separate from a special examination underway by Kentucky Auditor Allison Ball and an external audit examining financial problems in the district.

The audit’s findings come as FCPS has had months of budget troubles, including a dwindling contingency, or rainy day, fund, and a since-resolved projected budget shortfall of several million dollars. Several Republican state lawmakers have called for Superintendent Demetrus Liggins’ resignation amid the turmoil.

Meaghan Reynolds, a partner with Tennessee-based LBMC, told school board members the material weakness was a deficiency in internal controls. For bonds issued near the end of fiscal year 2025, the liabilities associated with those were not originally recorded, she said.

The firm has recommended the district make a correction.

A less severe issue, Reynolds said at the school board meeting, was described as a “significant deficiency.”

In that instance, excess funds were placed into the district’s building fund, she said. The firm is recommending the district transfer excess funds from the building fund to the budget’s general fund, Reynolds said, and a policy be implemented so that doesn’t happen again.

“We know better, we do better and we take any management comment that we get in here as an opportunity for improvement,” Rodney Jackson, the district’s executive director of financial accounting, budget and benefits services, told board members.

Monday’s findings were a departure from last year, when a news release from FCPS noted that the district had earned a “perfect external audit” for the fifth straight year.

That year’s audit, also by LBMC, “underscor(ed) the district’s commitment to financial transparency, accountability, and excellence,” the news release read.

Fayette schools’ response

In a written response to the Herald-Leader on Saturday morning, Tracy Bruno, chief of staff for the district, said the district had received a “clean, unmodified opinion — the highest level of assurance an auditor can provide. This means the auditors verified that our financial statements are presented fairly and accurately.”

“Recent media coverage has referenced terms such as ‘significant deficiency’ and ‘material weakness,’” Bruno wrote. “These are standard auditing terms used across government, education, and private industry. They do not indicate missing funds, financial mismanagement, or inaccurate reporting. Instead, these terms refer to opportunities to strengthen internal processes, and findings of this type are common in organizations of every size.”

Bruno said the audit confirmed the district’s financial statements are reliable, and the district remains on solid financial footing.

“As part of our commitment to transparency and continuous improvement, we have already begun implementing the auditors’ recommended enhancements to further strengthen our internal controls,” Bruno said, “We ... remain dedicated to responsible stewardship of public resources and to keeping our community accurately informed.”

The Nov. 24 meeting agenda did not include a copy of LBMC’s recent draft audit report, as the firm said it’s not yet in its final form.

Updated at 11:15 a.m. Saturday with response from Fayette County Public Schools.

This story was originally published November 29, 2025 at 5:00 AM.