Fayette County board hears administration plan to close $16 million budget gap without raising occupational license tax

The Fayette County Board of Education heard a presentation on the district's budget shortfall and possible responses at a special meeting, where administrators recommended preparing a working budget that does not rely on raising the occupational license tax.

Superintendent Ligon said his goal for the meeting was “to share a realistic picture of the district's current financial position” and to outline a path forward that preserves school-level investments where possible.

The superintendent told the board that, after the district completed its fiscal-year close, updated figures show a carryforward (beginning) fund balance of $26,300,000, down from the $42,000,000 figure used in the tentative budget approved in May. That tentative budget had included an anticipated $16,000,000 in additional revenue from an occupational license tax (OLT) increase to address what the administration estimates is a roughly $16,000,000 projected shortfall. With the revised close numbers, the administration said it sees a way to produce a balanced working budget without using the OLT.

Why it matters: the updated carryforward reduces the district's contingency below the 6% level set in board policy, a shortfall that board members said risks operational flexibility and could force cuts that would affect students unless other revenue or one-time remedies are identified.

What the administration proposed

- Carry forward: administrators proposed allocating the $26,300,000 carryforward to contingency. - Near-term cuts not requiring board approval: a hiring freeze on all non-classroom positions except bus drivers (estimated $2,000,000 savings); restrictions on overnight district professional learning, district-sponsored food, furniture replacement and community-table sponsorships (about $1,000,000); elimination of the superintendent's executive coach ($25,000); additional district-department budget reductions (about $2,000,000); and converting some overstaffing allocations to permanent substitute positions (about $1,200,000). The administration estimated roughly $6,000,000 in concrete, district-level reductions that do not require board action. - Programmatic changes: discontinuing the use of nontraditional instructional (NTI) days for this purpose — administrators explained using NTI days reduces cafeteria revenues while still incurring child nutrition payroll costs, shifting pressure onto the general fund.

Items that would require board approval

Administrators said several options that would require board action could further reduce the shortfall if the board elects them: selling district real estate (administrators cited the former Southside Technical Center, estimated at about $8.9 million in 2024), modest property tax (mill) increases (a 0.25-mill increase was projected to raise about $426,300; a 0.50-mill increase about $852,000), and shifting some litigation work from outside counsel to in-house attorneys to lower legal costs. The administration said its immediate objective is to restore the child nutrition fund to a positive balance so the general fund will not continue to subsidize school meals.

Board members asked for detail on how revenue and cuts would affect schools and positions. Several members pressed for transparency about staffing and prior use of one-time federal funds: multiple board members requested a position-control document and a specific list of district-level positions and salaries that were eliminated or converted, and they asked for a detailed accounting of how contingency funds were spent during the prior year. The administration said those details would be provided to the board.

Concerns about contingency level and oversight

Board members raised alarm that the updated carryforward places the contingency below the 6% required by board policy. One board member asked for clarity on “who moved money from the contingency” and was told an investigation is under way. The administration stressed that the shortfall was not discovered until year-end close and that additional review and reporting would follow.

Child nutrition and equity implications

Administrators noted that 48 schools and special programs in the district participate in the Community Eligibility Provision (CEP) and would continue to provide free meals to all students; the remaining roughly 20 sites would continue to serve students who qualify under free-and-reduced guidelines. Several board members said raising meal prices would be a last resort and urged the administration to pursue community partnerships and private support before increasing meal charges.

Timing and public engagement

Superintendent Ligon asked the board for direction on which options to include in a working budget that the administration will present at the planning meeting on Sept. 8; the board and administration discussed holding a public forum that had been scheduled for Sept. 5. Members agreed to keep the already-posted Sept. 5 forum to provide an avenue for public comment and directed the administration to post and share the working budget in advance so the public can review it before the Sept. 8 planning meeting; an action meeting on the working budget is scheduled for Sept. 22.

Formal action

No budget actions or tax changes were adopted at the special meeting. The only formal motion recorded was to adjourn, which passed 5-0.

What comes next

The administration will prepare a single working budget that, per the superintendent's recommendation, assumes balancing without an occupational license tax increase and will include the near-term district-level reductions and the board-level options described above for the board's consideration. Board members asked for additional detail on position reductions, contingency expenditures, contract reviews, and a clear communication plan for families and staff; administrators said they will supply those details ahead of the Sept. 8 planning meeting.

(Adjournment: motion to adjourn carried 5-0.)