LEXINGTON, Ky. (WKYT) – Facing resignation calls and multiple investigations, Fayette County Public Schools released a 28-page financial document defending its spending decisions and insisting a projected $16 million budget shortfall has been resolved.
The district’s “Budget and Finance Facts” document shared with WKYT aims to counter months of scrutiny from state lawmakers, community groups and a whistleblower lawsuit that have targeted Superintendent Demetrus Liggins and Board Chair Tyler Murphy.
[READ THE FULL DOCUMENTS BELOW]
BUDGET SHORTFALL EXPLAINED
During the 2025-26 budget cycle, FCPS projections indicated a potential $16 million gap between revenues and expenses. The district characterized this as a planning figure, not missing money, citing challenges faced by school districts across Kentucky and the nation.
Rather than pursue a tax increase that the community rejected, the district said it reduced its contingency fund from 6% to 3.9%, froze spending, cut district administration by $8.9 million and began liquidating real estate assets.
“The working budget is now balanced. There is no shortfall,” the document states.
The move came after weeks of controversy and intervention from the state’s attorney general. At the end of May, the board voted 3-2 to ask the fiscal court to raise the occupational license tax. However, Kentucky Attorney General Russell Coleman voided the vote for lacking proper public notice.
ACCOUNTING DISCREPANCIES
A school board member alleged the district’s contingency fund was more than $10 million less than claimed. The discrepancy stemmed from the gap between a May projection of a $42 million fund balance and the actual audited figure of $28.4 million released in December.
FCPS attributed the variance to multiple factors: salary estimates that were lower than actual costs because new hires had more experience, 179 additional staff members not anticipated in the original budget, and higher-than-expected costs for substitute teachers and employee benefits.
The district said it has restructured its budgeting process, moving to “actual salary costs” rather than averages and implementing “zero-based budgeting” where every department must justify every dollar based on current needs.
CONTROVERSIAL EXPENDITURES
The district provided detailed explanations for several spending decisions that drew public scrutiny:
The superintendent’s November 2022 trip to Australia cost more than expected because he had to change flights at the last minute after returning to campus when shots were fired near a school entrance. The trip was part of an established international professional learning network. Dr. Liggins did not fly first class, the document states.
A $52,000 leadership retreat at the Galt House in July 2024 included 112 principals and district leaders attending the Kentucky Association of School Administrators conference combined with FCPS-specific sessions.
A $32,000 ice cream social in October 2024 was entirely funded by community donations from local construction and architecture firms, not district funds, according to the document.
GOVERNANCE CHANGES
FCPS restructured its Audit Committee to include five voting members external to the district with finance and auditing expertise, including CPAs, a bank vice president and auditors from local companies.
The district also created a reimagined Board Finance and Accountability Committee with representation from business experts, community leaders, families and school staff, tasked with reviewing financial reports and publishing quarterly financial health assessments.
Their first meeting is Tuesday, January 13th at 5:30 p.m.
INDEPENDENT AUDITS
The district’s routine annual independent auditors report identified two technical issues: a categorization error involving a 2007 tax revenue and a 30-day timing error on bond liability recording. Despite these, auditors issued a “clean, unmodified opinion,” the highest level of assurance possible.
In December, the school board voted 3-2 to award an external operational audit contract to Weaver and Tidwell, a Texas-based accounting firm selected by the independent Audit Committee among nine applicants. The State Auditor’s office had expressed concerns that the audit might duplicate her work, but declined to provide details about her scope of examination.
BROADER CONCERNS
The district’s budget director has filed a whistleblower lawsuit claiming retaliation for exposing alleged financial mismanagement, including attempts to conceal the deficit and violations of contingency reserve policies. An independent investigator has been hired to probe specific claims against Liggins.
In October, FCPS spokesperson Miranda Scully told WKYT that the district “welcomes the voice of its community and is committed to building public trust” and asked the community to “allow for these processes to be completed and the facts to be fully determined before drawing final conclusions.”
STAFF COMPENSATION
Despite financial challenges, FCPS highlighted its competitive compensation, noting it was the first district in Kentucky to start teacher salaries above $50,000 and the only district in the state fully staffed in critical classroom and transportation positions for the 2024-25 and 2025-26 school years.
The district has not provided a timeline for resolution of the various investigations and audits.
Fayette County Public Schools has provided budget and finance facts to serve as a trusted source of information. This communication reinforces the district’s commitment to accountability, transparency, and fiscal integrity.
We believe our community deserves access to clear, verified facts. By providing this level of transparency, we continue our efforts to build trust and ensure the community understands how every dollar is invested to support student achievement.
The information shared emphasizes that FCPS is operating under a balanced working budget for 2025-26. This includes key facts:
Looking ahead, FCPS is proactively examining every aspect of our operations—from staffing formulas to building usage—to maximize our impact. We began collaborative work tonight, January 13, with the Board Finance & Accountability Committee (BFAC) as part of our commitment to transparent and responsible financial management.
We invite our community to explore information firsthand by visiting our Community Transparency & Accountability hub at fcps.net/transparency.
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