Credit rating agency Moody’s downgraded Fayette County Public Schools this week, citing weak governance, a reliance on borrowing to meet cash-flow needs and $847 million in outstanding debt.
In a Wednesday release, Moody’s said the move reflects a “continued weakening of reserves following disclosure of inaccurate financial reporting, including inflated fund balance levels and overstated revenue projections, which will result in a deficit general fund balance in fiscal 2026.”
The district has been the subject of scrutiny for more than a year after a $16 million shortfall in 2025 led to revelations of missing contingency funds and other mismanagement.
With this week’s downgrade, FCPS’ issuer and general obligation unlimited tax ratings drop from A3 to Baa1, and its lease appropriation rating from Baa1 to Baa2, indicating moderate risk. It is the third downgrade this year.
"Fayette County Public Schools (FCPS) has received the latest report from Moody’s and are aware of the updated ratings," a spokesperson said via email. "Addressing these challenges is precisely why the Fayette County Board of Education commissioned the audit through Weaver, L.L.P. – to give us an independent, clear roadmap to guide FCPS to long-term financial stability. We remain committed to implementing those recommendations and taking all necessary steps to restore our fiscal health while keeping student success at the center of our work.”
That months-long external investigation by Weaver, delivered earlier this month, found FCPS’ finances lacked proper oversight and staff often made and approved their own budget changes, among other issues.
“The [school] Board and public receive incomplete or inaccurate information, weakening oversight and decision-making,” a summary reads, in part.
In its rating outlook, Moody’s said “the negative outlook reflects the high level of strain on the district's financial position. Despite significant efforts to reduce expenditures, the lingering effects of inaccurate financial reporting will continue to challenge the district's ability to balance operations and restore fund balance to positive levels.”
Spokesperson Miranda Scully said the rating downgrade will have no impact on the $95 million loan the district recently took to make payroll.
Students returned to class to kick off the 2026-27 school year Wednesday.
Acting Superintendent Bill Bradford, who was appointed interim in June by the Fayette County Board of Education, will lead the district, which faces another multi-million-dollar budget shortfall.
Superintendent Demetrus Liggins, who was cited for policy violations in a previous report, remains on paid administrative leave. His attorney did not respond to a request for comment this month.
