Fayette schools will end year in the red. More cuts likely coming, staff say
AI-generated summary reviewed by our newsroom.
- District expects a budget shortfall for the fiscal year that ended June 30.
- District discovered $8.5 million in overstated property tax collections from prior years.
- District cut more than $20 million and eliminated 120 positions from the current budget.
Fayette County school officials said Monday the district will likely end its fiscal year in the red and additional cuts to the current-year budget will likely be needed to offset the budget shortfall.
Acting Director of Finance and Benefits Amy Smith told the Fayette County Public School Board’s Finance and Accountability Committee the district believes it will have a budget shortfall for the fiscal year that ended June 30.
However, the size of that shortfall will not be known until at least September, Smith said.
The district still has both outstanding receipts — tax collections — and bills to pay before it knows how much it will be in the red, Smith said.
That means additional cuts to the current-year budget, which began July 1, will likely be necessary, finance officials told the committee, which consists of school personnel, finance and business leaders. The committee was created in January to help advise the district on financial issues.
“Any amount that we are in deficit, that is the amount we will have to cut from the current-year budget,” Interim Chief Financial Officer Kyna Koch said.
Koch was hired in March to try to fix the district’s money woes. Smith has been hired to assist with cleaning up decades of financial missteps.
The district is still working to correct its books from the 2024 and 2025 fiscal years. The district has discovered millions in mistakes and misstatements, including overstating tax collections by $8.5 million.
Those mistakes and misstatements carry over to the last fiscal year, which is creating the deficit, Smith said.
The district has cut more than $20 million from its $711.3 million general fund budget for the current fiscal year, which began July 1. That includes eliminating 120 positions and cutting work days for other employees. In addition, it will seek a $95 million short-term loan to help cover its expenses until tax receipts are collected in the fall.
In addition, the district will need to sell surplus buildings to generate at least $3 million in cash to balance its books this fiscal year.
Koch asked the Budget, Finance and Accountability Committee to help the district examine the current-year budget to find more places it could cut or generate savings once the district determines the current-year budget shortfall.
That meeting will take place Aug. 5 and is expected to last two hours.
Any potential cuts will not be easy, Koch cautioned.
“ I’m sure everyone understands that with so much of our budget tied up in personnel in the current year, we have very little flexibility,” Koch said.
