Jefferson County Board of Education approves FY25-26 working budget as leaders warn of looming cash shortfall

The Jefferson County Board of Education on Sept. 16 approved the district’s working budget for fiscal year 2025–26 and a set of professional services contracts after a wide-ranging presentation from district finance staff that described a multi-year deficit and warned the district could need to draw on investments to meet payroll as soon as the 2026–27 fiscal year.

The budget approval came after district leaders told the board the current working budget shows expenses exceed revenues by $188,500,000 and projected that “our cash will reach 0 in October 2026,” a forecast presented by the district finance team. Superintendent Dr. Yearwood said addressing the imbalance will require “some hard decisions, unfortunately. Some very unpopular decisions,” and asked for the board’s support as administrators pursue budget reductions and new controls.

The deficit and cash‑flow forecasts were the focus of the meeting because they determine whether the district must sell investments or take other steps to meet payroll next fall. Board President Scholl framed the situation for members, noting Superintendent Yearwood inherited the condition while urging the district to move quickly to correct it.

Why it matters: Jefferson County Public Schools (JCPS) relies heavily on local revenue—property taxes make up the majority of general fund receipts—and district leaders said recent increases in assessments and a one‑time boost from federal ESSER funds masked structural gaps that have grown as recurring programs and salary increases were added. Without durable reductions or new revenue, the district’s financial officers said, JCPS will exhaust available expendable cash and begin liquidating investments to pay operating costs.

What the board heard - District finance staff presented multi‑year deficit figures: roughly $47 million in FY21–22; $81 million in FY22–23; $243 million in FY23–24; a peak of $295 million in FY24–25; and a current working‑budget deficit of $188,500,000 for FY25–26. (Figures presented by district staff.) - The district reported that roughly 72% of general‑fund expenditures go directly to schools; local revenues account for about 61.8% of general‑fund revenue; state SEEK formula funding was shown as about 14% and business/administration at about 5.2% of general‑fund spending. - The district emphasized that personnel costs (salaries plus fringe benefits) account for about 87% of general‑fund spending in the current year, limiting short‑term flexibility. - Leadership described steps already in place: a hiring pause, a review of nonessential spending, division‑level reductions being proposed by cabinet, tightened procurement rules for certain noncompetitive contracts, and planned external financial reviews and audits.

Actions, board direction and votes - Motion: Approve the working budget for fiscal year 2025–26. Moved by Board Member Craig; seconded by Board Member Duncan. Outcome: approved (voice vote: “Ayes have it”). - Motion: Approve the consent calendar (minus item H). Moved by Board Member Craig; seconded by Board Member Duncan. Outcome: approved (voice vote). - Motion: Approve consent item H (professional services contracts). Moved by Board Member Craig; seconded by Board Member Everett. Outcome: approved (voice vote).

Board members asked detailed questions about revenue opportunities, contract renegotiation, vendor spend and reporting. Several members pressed the administration for monthly cash‑flow updates at every board meeting and for a one‑page summary of the taxes available to school districts in Kentucky and which the district currently levies.

Selected direct quotes (as spoken during the meeting) - Eddie, the district’s chief financial officer, describing the working budget: “Revenues, expenses exceed revenues by $188,000,000 in the current working budget.” - On the cash forecast, Eddie told the board: “We are currently forecasting that our cash will reach 0 in October 2026.” - Superintendent Dr. Yearwood: “It’s gonna require some hard decisions, unfortunately. Some very unpopular decisions.” - Board President Scholl, placing the problem in context: “This is not of Dr. Yearwood’s creation,” and adding that Yearwood will have to lead the district through the correction.

Discussion highlights and planned next steps - Near‑term actions: cabinet and divisions are identifying reductions now, with an emphasis on central‑office savings first and protecting classroom resources and employee pay. A district hiring pause already is in effect. - Procurement and contracts: administration said it will roll out a tightened process for noncompetitive professional services (sole source / licensed professional) that will require documented due diligence and references for higher‑value awards; board members asked for a standing list of active professional services contracts attached to consent agendas. - Audit and oversight: the administration confirmed plans to engage an external financial auditor and to involve the board’s Risk Management and Audit Committee (RMAC) in ongoing monitoring; board members requested an oral cash‑flow update at each meeting. - Revenue options: members discussed the district’s tax tools (property taxes, occupational tax, motor vehicle taxes and the possibility of a utility tax). Administration noted some taxes are capped by state law and said changes to tax law (for example, a compensating‑rate definition change) would require action at the state level.

Numbers and other clarifications presented at the meeting - Multi‑year deficit trend (figures presented by staff): FY21–22 ≈ $47,000,000; FY22–23 ≈ $81,000,000; FY23–24 ≈ $243,000,000; FY24–25 ≈ $295,000,000; FY25–26 working budget ≈ $188,500,000. - Cash forecast: staff presented a model that, under current assumptions, reaches zero cash in October 2026 and reaches a more acute “fiscal cliff” if additional steps are not taken by the January 2026 draft budget cycle. - Major cost drivers cited: recurring cost-of-living adjustments (COLAs), expanded programs (racial equity funds, ESL and early childhood expansion, athletic and facilities projects), transportation costs and other programmatic additions.

What the vote does and does not do - The board’s approval established the district’s working budget for FY25–26, enabling the district to operate under the proposed appropriations for the current year. The approval does not itself adopt final reductions for FY26–27; district leaders said the January draft budget will be the forum for required reductions to avoid the deeper shortfall forecast for fall 2026–27.

What to watch next - The administration committed to delivering a monthly cash‑flow update at each board meeting, producing a one‑page legal/tax reference for board members, completing the external financial audit engagement and presenting specific reduction options in the draft budget cycle in January. Board members requested continued transparency and quicker delivery of detailed division‑level financial information.

Ending note: Board members repeatedly framed the choices as a balance between preserving programs that serve students and restoring long‑term financial discipline. Several members said they do not regret past spending decisions that expanded services for students but stressed the urgency of the current forecasting and the need for new controls to prevent recurrence.