Its a reference to Ralph Wiggum being told he failed English.
And, like Vizzini, I’m not sure it meant what he thought it meant.
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Listen to Tim O’Brien 56/57 seconds into the video
“It’s meant to defray trust…”.
The OED lists “to rub off or away” as a now-obsolete sense for defray. The only citation given is a metaphorical use that seems to very much fit the context of the OP:
Interestingly, it’s listed alongside “minish”, an archaic synonym of “diminish”, which @Melbourne indicated might have been a better fit.
Of course, it’s unlikely that whoever wrote the sentences in the OP was aware of this obsolete sense of “defray”.
Because of my last name, I have been followed around by the “a frayed knot” joke for a long time. I’m no longer dismayed by it, nor minished, but I’m not exactly mayed or defrayed, either.