By Tannistha Sinha
A Spectrum News investigation revealed that Houston Independent School District (HISD) Superintendent Mike Miles moved millions of Texas public school tax dollars from his public charter schools in Texas into his network of charter schools in Colorado that were in need of cash. The news outlet reported
that the network charged its schools in Texas, which went into a general fund that subsidized one of the Colorado charter schools before it closed.
The report surfaced soon after Miles announced a $450 budget shortfall at HISD, for which the school district is conducting mass layoffs. Parents and teachers staged protests this week to advocate for well-liked principals and teachers who were given the option to resign or face termination.
What the investigation revealed
The reporting alleged that in 2020 when Miles started to face financial struggles in Colorado, he began to expand his network to Texas. These included Midland Sam Houston Elementary, Ector College Prep in Odessa, and Austin Mendez Middle School. By the end of the 2023 school year, his Texas schools were also nearly $2.7 million in debt. To remedy this, he sent more than $2 million from the charter school in Odessa to the one in Aurora to recover from the Colorado network’s losses, per public documents obtained by Spectrum News.
Spectrum News reported that the Texas schools received $25 million in taxpayer dollars, around $15 million went to teachers and supplies, and $10 million was listed as unspecified administrative costs and services.
Miles said the article “badly misunderstands, or worse, intentionally misrepresents” the financial condition of his Third Future Schools. “I find the piece irresponsibly inaccurate, and I cannot let this kind of misinformation go uncorrected,” he said.
“Third Future Schools have been very careful, and they’ve always passed their audits easily,” Miles told the Houston Chronicle. “They do audits in Texas. They do audits in Colorado. … so they’re a good organization. They’re very careful about not commingling funds. They follow the law very carefully, and anything else is just to be dismissed out of hand.”
Some teachers called for Miles’ resignation days after he said principals, teachers, wraparound resource specialists, custodians and administrative jobs may face layoffs. The Houston Federation of Teachers also called for Miles’ resignation in a vote of “no confidence” earlier in May.
“Just days after learning that Mike Miles is laying off hundreds of custodians, librarians and removing popular principals from our schools, we are now learning that he’s treating our public school system as his own personal piggy bank,” Jackie Anderson, president of the Houston Federation of Teachers, said in a statement to the Defender. “The diversion of Texas public funds to shore up his private charter school company in Colorado is an outrageous betrayal of trust and requires a federal criminal 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. 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.”
Political leaders chimed in, shedding light on the role of race in the major overhaul HISD underwent the past year.
“He [Miles] literally fired certified teachers and principals, and he’s not even certified,” Texas State Representative (district 147)
a local news station. “He’s created this very system. He has eviscerated HISD…I hate that we’re losing a generation of children because of Mike Miles and he needs to go.
“The one thing he did to cause people to look at it is he did the same thing to white people just now that he had been doing to Black and Brown schools and nobody said anything,” Jones added. “So, I’m glad that he’s so arrogant that he thought that he could go to Meyerland and these other schools because now we have people paying attention.”
Harris County Commissioner Rodney Ellis expressed his “shock” regarding the allegations against Miles through a statement.
“This also calls into question every dollar he has spent as superintendent,” Ellis said. “While teacher benefits are being slashed, libraries are being closed, and support staff are being let go, HISD parents and taxpayers deserve a robust and timely investigation to ensure that tax dollars are being used appropriately and ethically. This is especially true at a time when the district is under the direct control of the State and not accountable to a locally elected board.”
Meanwhile, in a letter addressed to Mike Morath, the commissioner of the Texas Education Agency who appointed Miles, State Representative Ana Hernandez (D-Houston) asked for a detailed investigation into the whereabouts of state funds used in out-of-state schools and a clarification on whether such transfers are legal.
“At a time when Texas school districts are facing significant budget deficits and are laying off staff, it is imperative that we ensure transparency and accountability for all public funds,” Hernandez
A coalition of parents, teachers and students called for a reversal of the takeover of HISD altogether, Miles’ resignation, and a federal criminal investigation into Spectrum News’ allegations.
“The results of this bombshell investigation should serve as a wakeup call for parents, students and teachers who aren’t already outraged about Greg Abbott’s takeover of our school system,” said Ruth Kravetz, a former HISD chemistry teacher and co-founder of the Community for Voices of Public Education. “Houston deserves a public education system run by competent, democratically elected representatives who share our values and are in it for the right reasons. We won’t stop fighting until that happens.”
The foundation of the investigation
When Miles took over as the superintendent of HISD last year, he also served as a paid consultant, earning $40,000 for the Texas charter school network.
Miles, who no longer served as the CEO in June 2023, urged his old board of directors to find ways to repay the debt in the Colorado schools during a Zoom meeting. He recommended the board close Coperni 2, saying subsidizing the school “to the tune of maybe $500,000 per year” for its 180 students had become “untenable.”
From publicly available financial audit records that Spectrum News obtained, the auditor’s notes said that the charter school network in Texas ran into a deficit due to debts to “other TFS network schools and to TFS corporate.” During an investors’ call, the network confirmed that deficits in the Colorado charter schools were being balanced by the Texas charter schools, ie. the “general fund.”
Renea Ostermiller, the then-TFS chief of finances, said such funds or a network fee are pumped into whichever school needs funding at any moment.
The other side: Miles clarifies
Miles issued an email statement to provide clarity on the allegations made against him:
“Friends, Partners, and Board Members:
“I had initially planned not to respond to an article circulating that badly misunderstands, or worse, intentionally misrepresents the financial practices of Third Future Schools. While I have not worked at the Third Future Schools network for more than a year, I find the piece irresponsibly inaccurate, and I cannot let this kind of misinformation go uncorrected.
“I have an obligation to make very clear that during my tenure Third Future Schools was always a responsible steward of every public dollar received, all financial agreements and obligations were approved by local boards of directors, authorizers, and in our Texas schools, the school district with which TFS partnered. Eight different districts in three states have trusted Third Future Schools with the education of their most underserved students and have overseen TFS’s overall financial health and propriety. Third Future Schools has a consistent track record of clean audits year over year, and I have no reason to believe that is any different now. These baseless claims cheapen the hard work and dedication of thousands of staff and students.
“The budgets of all Third Future Schools in Texas are attached to the management agreement with the local school district and are part of the approval process. Administrative fees are applied to all schools in all states in order for the central office to oversee and monitor the schools as well as provide network-wide supports (such as finance and human resources) from people and departments in the central office, which is located in Colorado. This is common practice for charters and other independent partnership schools and is not only allowed, but anticipated by Texas’ education law. Spectrum News either intentionally or, through gross incompetence, mischaracterized these commonplace financial arrangements between charter schools and the charter management organizations that support them.
“The Spectrum News reporter also worked to undermine the progress we made in Dallas ISD. It appears he is resurrecting old tactics that are not worth more time and attention. I do not intend to comment further on these spurious assertions. I am committed to staying focused on the tremendous challenge of improving Texas’ largest district.
“We have an obligation to finish the year strong for our students and staff, and that is where I will direct my time and attention. I thank you for your partnership and ask that you do the same as we look ahead to the 24-25 school year and beyond. We’ve accomplished a great deal and there is even more left to do.”
The TEA said it is currently reviewing the matter.
