As FCPS dips into rainy day fund, Kentucky gives ‘technical assistance’

The Kentucky Department of Education says it’s assisting Fayette County Public Schools as the district navigates a depleted contingency fund that it is seeking to dip into to cover expenses.

KDE typically monitors the amounts in a school district’s contingency, or rainy day, fund to determine whether the state agency should step in to help manage finances.

FCPS this week listed an item on a Fayette County Board of Education agenda indicating it needs to use the contingency fund to make ends meet for the 2026 fiscal year, but can’t yet say how much of the money in the fund will be used.

KDE is still monitoring FCPS’ situation, the agency said in a statement to the Herald-Leader.

“KDE staff is providing regular technical assistance to the district as they work to establish a sound financial future and continue to provide a high-quality education to all their students. As KDE monitors their financial situation, the level of technical assistance could change if necessary,” KDE spokesperson Jennifer Ginn said. In response, FCPS district spokesperson Miranda Scully said, “We appreciate the ongoing partnership with KDE and their shared commitment to supporting FCPS in maintaining a high-quality education for all of our students. We welcome their ongoing support and will continue to work with them to ensure our steps are sound, compliant, and aligned with state standards.”

Fayette County Public School officials said Monday the school district still doesn’t know how much money it will take from its contingency or rainy day fund to balance its books for the fiscal year that ends June 30. FCPS Acting Executive Director of Finance Amy Smith said during the board’s Monday planning meeting the current contingency fund is $27 million.

However, that figure will likely change as the district tries to fix several years worth of misstated financial statements.

Smith said it may not be known until July.

The school must maintain a contingency fund of about 2% by state law. It’s not known if using the contingency fund will drop the district below that 2% threshold.

The move comes as FCPS — Kentucky’s second-largest school district — tries to right its finances after discovering earlier this year they had been misstated for nearly two decades. The district recently approved a $711.4 million tentative general fund budget and an $880 million total budget for the fiscal year that begins July 1. The 2027 budget has a contingency fund of $11.4 million. That budget includes the elimination of 120 positions and cuts to other staff working days.

The district has said teacher positions have not been affected by the cuts to positions and working days.

In addition to cuts, the school district is also borrowing money. The Fayette County Board of Education recently approved a $95 million short-term loan to help it cover its payroll for the fiscal year that begins July 1.

That loan will be repaid when property and other tax collections come in this fall, district officials have said. Smith and Acting Chief Financial Officer Kyna Koch said the district will have to restate its financial statements for fiscal year 2025 and 2026. Koch was hired to fix the district’s finances after repeated questions were raised about its bookkeeping and financial health over the past two years.

KDE has a management improvement program for districts with deficiencies. A state administrative regulation outlines how KDE must operate in those cases. KDE first evaluates data from school districts — if that review indicates significant deficiencies, KDE staff will do an on-site review of the problems.

Further examinations can lead the state’s commissioner of education to determine whether a district should have a management audit, which can lead to KDE either assisting or taking over management of a district in order to rectify problems and get the district back on the right track.

Ginn told the Herald-Leader in May that KDE was not talking about state assistance or state management for Fayette County Public Schools at that point.

This story was originally published June 9, 2026 at 2:25 PM.