LEXINGTON, Ky. (WKYT) – An independent investigation commissioned by Fayette County Public Schools found that three district administrators failed to meet professional expectations in their financial oversight roles, contributing to the unauthorized depletion of the district’s contingency fund during fiscal years 2024 and 2025.
The report, prepared by attorneys Kate L. Nash and Aigner S. Carr of the law firm Tueth Keeney Cooper Mohan & Jackstadt P.C. and dated February 27, 2026, does not find intentional misconduct by any individual. Instead, it identifies systemic failures in forecasting, financial monitoring, and internal communication.
Three administrators cited
The investigation focused on three administrators: Ann Sampson Grimes, then-Executive Director of Budgeting and Financial Planning; Rodney Jackson, Executive Director of Financial Accounting and Benefits; and Deputy Superintendent Houston Barber.
Investigators found that Grimes failed to clearly communicate the specific magnitude of projected salary shortfalls to district leadership, despite receiving internal alerts as early as October 2023. Budgeting Specialist Jessica Williams emailed Grimes that month projecting a salary shortfall of approximately $17.9 million for FY 2024. A follow-up email from Williams in April 2024 projected salaries would be approximately $23 million short by year’s end. A third email, sent in January 2025, warned that the district’s contingency fund balance was projected to fall below both state requirements and FCPS internal policy.
The report states that Grimes did not communicate the projected FY 2024 deficit with the same clarity or urgency that she later used when raising concerns about the FY 2026 budget beginning in approximately March 2025. The investigation also found that the FY 2025 budget Grimes prepared did not incorporate actual salary expenditures from FY 2024, making the growing deficit less apparent to those reviewing and approving the budget.
Grimes did not participate in the investigation despite multiple attempts to coordinate an interview through her legal counsel. Her attorney provided written statements and documentation on her behalf. Grimes has filed a lawsuit against FCPS and Superintendent Demetrus Liggins.
Investigators found that Jackson did not sufficiently collaborate with Grimes in comparing actual expenditures against projected amounts prior to finalization of the FY 2025 budget. Jackson said he was unaware that the FY 2025 budget failed to incorporate actual salary expenses from FY 2024 and reported he had no knowledge of Williams’s salary-deficit emails until after he assumed oversight of the budgeting department on July 1, 2025.
The report found that Barber did not adequately investigate or implement necessary financial adjustments, despite his awareness of factors including recent compensation increases, the expiration of federal ESSER funds, and rising inflation. Barber said he trusted that Grimes and Jackson were collaborating effectively and acknowledged he “probably should have asked better questions.” The report states Barber did not consistently hold coordination meetings among the budget, finance, and human resources departments as expected by Superintendent Liggins.
Salary overruns drove fund balance decline
According to the report, FCPS’s general fund beginning balance fell from approximately $83 million at the start of FY 2024 to approximately $42 million at the start of FY 2025 — a decline of roughly $41 million in a single year. By the start of FY 2026, the beginning balance had dropped further to approximately $26.4 million.
Investigators attributed the decline primarily to underbudgeted salary expenditures. In FY 2024, FCPS spent more than $12 million over its budgeted salary amounts. In FY 2025, the salary overage nearly doubled, with the instruction department alone exceeding its salary budget by more than $12 million. Despite those overruns, the FY 2025 budget reduced — rather than increased — salary allocations in several departments.
The report also identified approximately $8.8 million in additional special education staffing costs incurred in FY 2025 that were not included in state-funded enrollment counts. Jackson said that pattern of unbudgeted post-December 1 special education expenses had been recurring for years and should have been factored into budget projections.
Contingency fund lacked real-time tracking
The investigation found that FCPS’s contingency fund — required by district policy to equal at least six percent of general fund expenditures — was not held in a separate bank account and had no automated monitoring controls. The fund existed as a budgeted number within the general fund, and no system alerts existed to flag when expenditures approached or exceeded the reserve threshold.
Monthly financial reports published on the district’s website throughout FY 2024 and FY 2025 consistently reflected the contingency fund at its originally budgeted amount — $43,605,000.48 in FY 2025 — without disclosing whether those funds remained available. Investigators said the reports “conveyed the appearance that the Contingency Fund remained unchanged and fully available throughout the fiscal year.”
OLT vote and discovery of shortfall
In May 2025, FCPS presented a tentative FY 2026 budget projecting an approximately $16 million gap. The district’s Board of Education voted on May 27, 2025, to increase the Occupational License Tax from 0.5% to 0.75%, estimating the change would generate approximately $30 million in additional revenue.
Kentucky Attorney General Russell Coleman issued an opinion on June 4, 2025, stating the board’s OLT vote was unlawful and void because it did not comply with applicable notice requirements.
A community Budget Solutions Work Group subsequently recommended the district use its contingency fund to cover the projected gap — at which point FCPS determined the FY 2025 ending fund balance was only approximately $26 million, roughly $16 million less than the contingency fund balance reported to the board in May 2025.
Following that discovery, Superintendent Liggins placed Grimes on paid administrative leave. The district then retained outside investigators to conduct the review.
Recommendations
The report includes six recommendations for the district: adopting a clearly defined budgeting philosophy that incorporates historical and emerging spending trends; implementing a formal salary true-up process with quarterly and year-end reconciliations; establishing written escalation protocols for significant budget variances; restructuring the contingency fund to distinguish between budgeted allocations and actual available balances; updating board materials to provide greater transparency on reserve balances; and clarifying written performance expectations for key financial oversight roles.
Investigators noted that FCPS had already implemented changes to its budgeting structure as of July 1, 2025, including consolidating budget and finance functions under Jackson’s oversight.
Copyright 2026 WKYT. All rights reserved.