Houston ISD superintendent didn’t illegally funnel state money to out-of-state schools, TEA says

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The Texas Education Agency has cleared acting Houston school district Superintendent Mike Miles of wrongdoing after he was accused of improperly diverting millions of dollars in state funds to his Colorado charter school system.

After reporting from Spectrum News and The Texas Observer prompted calls for an investigation earlier this year, the education agency concluded on Tuesday that neither Miles — who the agency picked to lead the state’s largest school district last year — nor his charter school network, Third Future Schools, “violated any applicable Texas laws,” according to the 29-page investigation report.

The investigation found, in part, that checks directed from a partnering Texas school district to Third Future Schools’ Colorado address went there because the Colorado location handles accounting services for the network’s Texas branch, which is run independently. But, the checks were eventually deposited in the Texas branch’s bank account.

"Based on the evidence obtained and analyzed during the investigation, there is no merit to the allegations contained in the media reports that state funds were being inappropriately diverted from public school students in Texas," the report notes.

The agency is closing the investigation, and “no further action will be taken” at this time, the report says.

In an email sent to the Houston school district community on Tuesday, Miles called the earlier reporting “a baseless distraction and an attempt to undermine and discredit the good work happening” in the schools.

“Now we can do what we always do and move forward on behalf of our students,” Miles said.

Earlier this year, Spectrum News reported that the Texas branch of Third Future Schools — which receives funding from multiple Texas school districts to run campuses in the state — was potentially using public funds from its school in Odessa to offset financial losses at a sister school in Colorado.

The Texas Observer later reported that it had identified “additional irregularities” related to the disclosure of expenses by the charter network.

Miles denied wrongdoing and accused the previous reporting of mischaracterizing “common place financial arrangements between charter schools and the charter management organizations that support them” and welcomed an investigation into the network’s activities.

The state’s investigators agreed with Miles, saying they found no evidence that Texas school districts deposited funds into the bank account of Third Future Schools in Colorado. Third Future Schools-Texas reimburses the Colorado location for administrative services it provides to all of the charter network, the report says.

The report also states that there is generally no state or local policy requiring Third Future Schools-Texas to disclose any agreements with the Colorado office regarding the purchasing of services, though it adds that there was no effort to hide the partnership from Texas school districts.

The allegations “cannot be substantiated, or have been proven to be false,” the report says.

Miles has been a polarizing figure since the Texas Education Agency charged him and an unelected school board with taking the helm of the Houston school district last year. Rationalizing the takeover, the state pointed to misconduct by the previous board and the unsatisfactory academic performance rating of Wheatley High School located in Houston’s Fifth Ward, where an overwhelming majority of students are Black and Hispanic and reside in low-income households.

Under Miles’ leadership, the district has experienced extraordinary staff turnover and plummeting student enrollment. Miles has faced accusations of shepherding a military-style schooling environment where teachers have limited freedom to teach in ways they see fit and children are exhausted and disengaged from learning.

Miles, on the other hand, has touted student improvement on the state’s standardized tests as proof that his model is effective, an achievement that Texas Education Agency Commissioner Mike Morath has also publicly acknowledged and commended. In November, Houston voters will decide on whether to approve $4.4 billion in academic and infrastructure improvements for the school district — the largest proposal of its kind in state history — which some see as a litmus test for Miles’ support among the public.

Correction: The story has been updated to reflect that the Houston school district bond proposal is $4.4 billion, not $4.4 million as previously reported.