Fayette County schools plan for $3.4M shortfall, propose about 67.5 position reductions and a $2.5M tax note authorization

Fayette County Public Schools officials recommended a set of measures to address a projected budget shortfall for FY2026–27, telling the Budget, Finance, Transportation, Operations & IT Committee on April 23 that the district faces roughly a $3.4 million shortfall and limited fund‑balance flexibility.

Superintendent Dr. McPherson said the district’s current fiscal picture reflects a combination of declining enrollment, rising insurance costs projected at about 10 percent, higher fuel expenses, deferred maintenance and withheld bond payments that reduce available operating revenue. He told the committee the district used $3,434,589 from fund balance in the current year and that, "without additional support from the county commission, the district cannot balance the budget." The committee voted to forward the proposed budget package to the full board for consideration.

To preserve cash flow during revenue timing gaps, Dr. McPherson asked the committee to forward authorization for a Tax Anticipation Note—similar to a line of credit—allowing borrowing of up to $2.5 million if needed to cover payroll and operations before tax receipts arrive. He said the district does not expect to draw the full amount but recommended having the authorization available to avoid emergency approvals in November and December. The committee voted unanimously to forward that authorization to the full board.

Finance staff also described year‑end accounting issues and identified a transportation overage of approximately $170,000 tied to prior‑year invoices paid in the current fiscal year. "Some account balances appear unusual due to year‑end activity and import errors when accounts were loaded into the accounting system," Ms. Elliott said, noting most identified adjustments are internal corrections and that a budget amendment will be recommended to cover the transportation overage.

The superintendent proposed a package of operational restructurings and personnel reductions intended to close the district’s gap while preserving core career‑pathway programs. The proposal lists approximately 67.5 positions districtwide, including proposed reductions such as decreasing nursing staff from seven to five, counseling staff from eight to five, security staff from 13 to 10, custodial staff from 26 to 18, and reductions in pre‑K staff and multiple instructional and administrative positions. The district would also reorganize the JLC program—separating services between the Career Tech Center and East Junior High—and eliminate the JLC director position as part of that realignment. The superintendent stressed that the intent is to prioritize classroom supports and career pathways despite reductions.

The committee also moved several grant‑related budget amendments to the full board on the consent agenda. New state grants include a $16,000 Early Literacy Tutoring Grant and a $74,600 Tutoring Innovation Grant to support stipends and ELA instructional materials. Ms. Elliott reported other adjustments to special education and federal program budgets, including a reduction in the Preschool Access (AO/A) grant from $50,000 to $40,000 and internal reallocations within the IDEA special education grant.

Project Raise, a $34,999 grant intended to support school psychologists, counselors and social workers, was also presented and forwarded for board approval. The committee reviewed proposed sign‑on and retention bonuses tied to that grant—most payouts require board approval prior to disbursement.

Committee members raised no recorded objections and voted to forward the budget package, tax note authorization and grant amendments to the full board. Ms. Elliott noted stipend and career‑ladder payments scheduled for May 1 may be delayed until federal reimbursements are received; she said regular payroll is the district’s top priority.

Next steps: the full board will consider the proposed FY2026–27 budget, the Tax Anticipation Note authorization, Project Raise expenditures and the listed budget amendments at its May meeting. The committee packet and motions forwarded to the board provide the proposed reductions and grant allocations for review; specific implementation decisions and any final personnel actions will be determined by the board and district administration.