rye grass is a cool season grass man. http://homeguides.sfgate.com/temperature-kills-ryegrass-65740.html

were do you live?

I live by Portland, OR. Temperatures have been cool here, nothing past 80 degrees for quite some time, mostly 60s and 70s.

Have you had you're soil tested?

PH is a little acidic, but still there are lots of areas nice and green. Does any of that look like it's diseased/fungus?

PH acidity na. and no

I hate to ask this...but are you sure you didn't accidentally use annual ryegrass? It craps out in summer and it doesn't come back. And like the above, you always get some tufts that decided that the annual lifestyle just wasn't for them, so they're going to live longer just to spite you.

Perennial rye tends to look kind of not so great in hotter summers (here in PA it's very tired-looking in July and August), but it should be OK in the Portland area. 80 isn't that hot as far as rye is concerned.

It's possible (but doesn't look like) it's a water shortage. Still, if you're watering less than an inch a week, step it up. Water's best applied all at once, or at most twice a week--and that should be more than sufficient at 80.

This doesn't look like insect or disease damage

Came from the local feed store and was told that I have fungus on my grass - rust. I'll try out some fungicide and see if that takes it out. The grass is definitely not dry. We've been having a moist summer compared to last year.

Run your hand over the grass (or walk through it in white shoes). If your shoes/hand don't come away orange, it's not rust.

I suppose there's no harm in trying a gentle fungicide, and worth a shot in this instance.