FCPS Approved a $95 Million Loan. Now the Public Needs to Track What Comes Next.

Fayette County Public Schools is borrowing against future tax revenue while trying to rebuild trust in its budget, payroll, staffing decisions, and public financial reporting.

May 29, 2026

Fayette County Public Schools’ John D. Price Administration Building at 450 Park Place, where the Fayette County Board of Education approved a $95 million short-term loan and FY27 tentative budget. **Photo/source: Fayette County Public Schools**.

The Board Approved Debt and a Budget in One Night

On May 27, the Fayette County Board of Education voted unanimously to approve a balanced $880.5 million tentative budget for the 2026-27 school year. The same night, the board approved a short-term loan of up to $95 million to help Fayette County Public Schools cover costs before expected fall revenue arrives.

That number is smaller than the $110 million short-term borrowing plan presented earlier in May, but the basic issue remains the same. FCPS expects a cash-flow gap between July and October, before major tax receipts arrive in the fall. Interim Chief Financial Officer Kyna Koch told the board earlier this month that the district needed the loan to make payroll, including the second payroll in July.

The tentative budget includes a $711,383,670 general fund, an $11.4 million contingency, and anticipated revenue from the sale of surplus property. FCPS says the contingency meets the Kentucky Department of Education’s 2% requirement, but the district’s own preferred reserve level is 6%.

This is the part Fayette County residents need to follow closely.

The board authorized borrowing backed by public revenue while the district is still working through years of financial reporting problems, staff cuts, reduced work calendars, audit scrutiny, and a damaged relationship with many employees and families.

The Loan Covers a Cash-Flow Gap Before Fall Revenue Arrives

The May 27 meeting put several financial decisions before the Fayette County Board of Education. The public agenda included tax revenue anticipation notes, the FY27 salary schedule, the FY27 tentative budget, and the monthly financial report. Koch, the district’s interim CFO, was the named presenter for the borrowing proposal, budget, and monthly financial report.

A tax revenue anticipation note, often called a TRAN, is a form of short-term borrowing. A school district uses it when expenses arrive before expected revenue comes in. In this case, FCPS says the loan covers costs from July through October, before tax revenue arrives in the fall.

That borrowing authority matters because FCPS is not entering the new budget year from a stable place. The district has said it is dealing with financial reporting problems that may go back to 2008. Koch has said that adjustments to prior-year numbers affect projections for FY26 and FY27, and she told the board she does not believe it has received reliable information in the past.

The tentative budget also reflects cuts. FCPS’s own budget summary indicates that more than 115 district support positions have been reduced between the 2025-26 and 2026-27 school years. It also says reduced work calendar days will save an estimated $1.9 million, while classroom teacher and paraeducator calendars are unchanged.

FCPS says the budget preserves classroom resources and district-allocated school-based positions. Board Chair Tyler Murphy said the plan prioritizes reduced district-level spending while keeping classroom resources and staff in place. That is the district’s argument for the budget. The public question now is whether the monthly financial reports, loan documents, audit findings, and final working budget support that claim.

How the loan works

The board’s borrowing plan uses public revenue as the repayment source. The bond resolution for the General Obligation Tax and Revenue Anticipation Notes, Series 2026, authorizes short-term notes under Kentucky’s short-term borrowing law. The resolution identifies the notes as obligations of the Board of Education of Fayette County, Kentucky, and ties repayment to district revenue.

The resolution reviewed for the board authorized up to $110 million, with a true interest cost not to exceed 5% and a maturity date of June 15, 2027. Public reporting after the May 27 meeting says the board approved up to $95 million instead.

The resolution also names outside financial and legal participants. Compass Municipal Advisors is listed as a financial advisor. Stoll Keenon Ogden PLLC and Rubin & Hays are listed as bond counsel. The notes are to be sold through a private negotiated sale to an underwriter selected through a solicitation process.

That does not make the loan improper. Short-term borrowing is a recognized tool for public entities with timing gaps between expenses and revenue. The concern here comes from the circumstances: FCPS is borrowing while trying to reconstruct reliable financial information, reduce payroll costs, preserve school-level staffing, satisfy state budget requirements, and restore a reserve level the board already said should be higher.

The Tentative Budget Meets the State Minimum, But Not FCPS’s Own Reserve Goal

Kentucky school districts follow a budget calendar. Local boards adopt tentative budgets in May, then final working budgets are due later in the year. FCPS says its final working budget for 2026-27 is due at the end of September.

The May vote, therefore, did not end the budget story. It created the public baseline for the next stage. Between now and September, FCPS has to move from a tentative plan to a working budget while managing the short-term loan, the sale of surplus property, staffing reductions, and ongoing financial review.

The tentative budget summary identifies several planned expenditures. It includes $4.2 million for Chromebooks, $1.8 million for school security cameras, $3.1 million for school buses, $400,000 for dual credit, $2.3 million from the general fund for preschool, and $4.1 million for district-wide curriculum. It also includes support for the new Rise STEM Academy for Girls building and the new Helen Caise Wade Elementary School.

Those budget lines are worth tracking because they show where FCPS continues to spend money even as it cuts jobs and shortens some work calendars.

A budget crisis does not eliminate choices. It makes those choices more visible.

Why this matters in Kentucky

Fayette County Public Schools serves Lexington and is one of Kentucky’s largest school districts. Its budget decisions affect students, families, teachers, classified staff, administrators, taxpayers, vendors, and neighborhoods across Fayette County.

The Kentucky connection is also legal and administrative. KDE sets the minimum contingency requirement FCPS says it has met. The district’s final working budget must be submitted in accordance with the state school budget calendar. The Kentucky Auditor’s office has also been involved through a special examination of FCPS finances, which adds state-level review to local board oversight.

FCPS has already reduced district support positions. It has also reduced the work calendar days for some employee groups, lowering pay for workers who did not create the budget problem. WEKU reported that affected workers include librarians, 12-month employees, child nutrition workers, and others, and that KY 120 United-AFT held a rally outside FCPS headquarters before a May planning meeting.

Families may experience the budget through school staffing, transportation, technology, nutrition services, library services, building support, security, curriculum, and central-office response times. Taxpayers may experience it through debt costs, future tax-rate decisions, property sales, and the long effort to rebuild the district’s contingency fund.

Public trust is also part of the impact in Kentucky.

A school board can vote on a budget only if it receives the information it needs.

If prior financial information was inaccurate, the public needs more than reassurance. Residents need documents, monthly reports, audit findings, loan terms, and clear explanations that connect numbers to decisions.

Share this with Fayette County taxpayers, parents, and school staff.

The Next Test Comes Before the September Working Budget. Actions You Can Take Now.

Start with the May 27 board documents. Compare the posted bond resolution, which refers to borrowing up to $110 million, with the final approval reported as up to $95 million. Ask FCPS for the final executed note documents, including the note purchase agreement, final principal amount, interest rate, maturity date, repayment schedule, underwriter selection, and cost-of-issuance breakdown.

Track the monthly financial reports before the September working-budget vote. The useful questions are specific: How much of the loan has FCPS drawn? How much has been spent? What expenses did it cover? What interest cost has accrued? What cash balance remains? How does the district plan to repay the notes by June 2027?

Track the surplus property assumptions. The tentative budget indicates it is balanced, with anticipated revenue from the sale of surplus property. WKYT reported that the proposed budget estimated roughly $3 million from property sales, including the former district administration building on East Main Street and the building behind it on Walton. Those sales should be tracked through appraisals, board votes, purchase agreements, and final sale prices.

Compare the tentative budget to what you experience in schools this fall. If a service is slower, a position is missing, a library schedule changes, a bus route is affected, or a department cannot respond, document the practical change and connect it to the budget line or staffing decision.

The next major date is the September working budget. Before that vote, ask the board to publish a plain-language update that shows the loan status, contingency level, staffing reductions, property-sale revenue, audit progress, and any differences between the May tentative budget and the September working budget.

The central accountability question is clear enough to ask at every board meeting between now and September:

What will FCPS show the public each month so taxpayers can tell whether the $95 million loan is stabilizing the district or carrying it through a deeper financial reckoning?

Dispatches from Kentucky

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