Houston ISD superintendent accused of funneling tax dollars out of state

Mike Miles, the state-appointed superintendent of Houston ISD, discusses public education in Texas' largest city with Jacob Carpenter, team leader of the Houston Landing, at The Texas Tribune Festival in Austin on Sept. 23, 2023. (Eddie Gaspar/The Texas Tribune, Eddie Gaspar/The Texas Tribune)

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A state lawmaker and Houston teachers are calling for Houston Independent School District Superintendent Mike Miles to be investigated after a Spectrum News report revealed that millions in Texas public school tax dollars may have been funneled to a failing school in his Colorado charter school system.

These findings come less than two weeks after the state-appointed administrator announced a $450 million gap in funding at HISD, resulting in districtwide layoffs for the upcoming school year.

Miles has denied any wrongdoing and said all financial transactions were legal.

A Texas Education Agency spokesperson said on Tuesday that agency officials are “aware of the report and are reviewing the matter.”

In March 2023, TEA Commissioner Mike Morath took over the district with a temporary board of trustees. The stated rationale was because of misconduct by the HISD board of trustees and the poor performance rating of Phyllis Wheatley High School. Three months later, Morath appointed Miles, the former superintendent of Dallas ISD, as HISD’s superintendent.

Spectrum News reported on Monday that the Third Future Schools charter school network, based in Colorado and founded by Miles, was using funds from the network’s Odessa school to offset losses at its Aurora, Colorado school. Miles’ sister now runs Third Future Schools.

Spectrum also reported that Miles received $40,000 last year consulting for Third Future Schools, which was dealing with deep financial setbacks leading to the closure of a Colorado school and $5 million in unpaid debt.

In a statement, Third Future Schools said "no Texas funds have ever been diverted to subsidize schools in Colorado."

"Some of the confusion in the media coverage stems from the fact that the network organization applies administrative fees to all schools in order to provide centralized support services, such as payroll, accounting, human resources, and school leadership. This is standard practice for such partnerships," the statement said.

Third Future Schools added that since Miles left his role as the organization's CEO nearly a year ago, he has served as a consultant "in a manner that does not violate his employment contract with Houston ISD."

In a letter to the community on Wednesday, Miles labeled Spectrum's report as "irresponsibly inaccurate,” stating that he “cannot let this kind of misinformation go uncorrected.”

He asserts that all administrative fees for schools in both Texas and Colorado are directed to their central office.

“There is no wrongdoing and not even a specific allegation of wrongdoing,” Miles wrote in a separate statement addressed to the HISD board. "These contractual relationships, where districts pay charter networks to manage and improve their schools are both legal and commonplace, and if a TEA investigation into these issues provides greater clarity for the HISD community then I believe it is a positive next step."

Third Future Schools was created in 2016 after Miles left the superintendent’s job at Dallas ISD. The charter school chain expanded into Texas in 2020, opening three schools in Odessa, Midland and Austin. The Texas expansion, according to Spectrum News, occurred about the time the Colorado schools were showing signs of financial distress.

By the end of 2023, the Texas schools had already accumulated more than $2.5 million dollars in debt, Spectrum News reported in its monthslong investigation.

The news outlet reported that the three Texas schools received $25 million in taxpayer dollars. About $15 million went to teachers and staff. But another $10 million was listed by Third Future Schools as unspecified administrative costs. Subsequent public documents obtained by Spectrum News revealed that more than $2 million went from Third Future Schools’ Texas operation to help cover losses at a Colorado school.

In a letter addressed to Morath on Tuesday, State Rep. Ana Hernandez, D-Houston, urged the state agency to conduct an investigation to clarify whether Texas public school tax dollars had been sent out of state.

“These alleged actions cast doubt on his ability to lead HISD and his commitment to providing the best education for our students,” Hernandez told The Tribune. “Texans deserve transparency, accountability, and responsiveness.”

Jackie Anderson, president of the Houston Federation of Teachers, accused Miles of using the tax dollars as his own “personal piggy bank,” echoing Hernandez’s request for an immediate investigation.

“The corruption of this deal stretches beyond just Mike Miles - the board of managers is also complicit in this shadowy scheme by failing to provide oversight and transparency,” she said. “Greg Abbott’s takeover of our schools has failed. Teachers, students and their families deserve better and in response we are demanding the immediate resignation of Mike Miles and the immediate exit of the TEA from HISD.”

In response on Wednesday, Morath said Spectrum's report left out "some significant context.”

He says Third Future Schools is not recognized as a Texas charter school and relies on performance contracts with school districts — not state funding.

Morath says the TEA will conduct a review of Midland ISD, Ector County ISD, and Austin ISD, which are the districts that partnered with Third Future School to improve its chronically low-performing or F-rated campuses. He added that within the first year, all of those schools had performed at the equivalent of a B, indicating that the nonprofit organization "has been successfully executing its core obligation for those districts and positively impacting their students."

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