Houston ISD is neither efficient nor effective in how it manages its money. It regularly adopts a budget in which projected revenue is inadequate to pay for planned expenditures and so it has to keep diving into its fund balance.
In fact, the LBB audit asserts, HISD is operating several programs (teacher alternative certification for one) at a loss and could save millions of dollars a year if it just got its financial act together. A restructuring of its $125 million Nutrition Services program alone could see a savings of $21.8 million, the LBB says.
That's just the first few lines in today's release of the state's Legislative Budget Board review of how the Houston Independent School District is operating. Overall the massive report can best be described as fairly damning. Coming right after the decision by Texas Education Agency Commissioner Mike Morath to replace the contentious HISD school board with one of his own choosing, the conclusions drawn by LBB investigators will probably make for a coming weekend filled with brooding sadness for the trustees and their administration.
We contacted the HISD press office for a statement in response to the LBB audit and will update the story if we receive comment from the school district. Update 4:45 p.m.: "HISD has received the Legislative Budget Board Management and Performance Review and is in the process of evaluating it. We will seek to implement new practices and continue proven methods that maximize student achievement and promote productive and efficient operations."
In a November 8, 2019 letter directed to Interim Superintendent Grenita Lathan, LBB Assistant Director John McGeady said some of its recommendations are based on state or federal laws "and should be promptly addressed," while others are based on industry standards and accepted best practices.
The list of specifics is massive. Here are just a few notations from the LBB:
For school year 2018–19, the health insurance fund is projecting a $2.1 million loss. The workers’ compensation fund is estimated to have losses of $1.9 million during the same period. The district’s alternative certification program has operated at an annual loss of from $200,000 to more than $500,000 for the past three years, and the trend appears to be continuing. Eliminating the program would save nearly $1.2 million annually.
The district does not pay invoices on time consistently, averaging 44 days to pay, which increases the risk of paying interest on overdue invoices.
HISD doesn't have a handle on its overtime pay and paid more than $19.8 million in OT pay to the staff. Some employees received almost 50 percent of their annual salary in overtime dollars. It also doesn't have effective measures in place to cut off paychecks when someone leaves the district — as a result the district has written off more than $26 million in staff overpayments, the LBB found.
Its oversight of in-district charter schools is inadequate in terms of monitoring their effectiveness, LBB says. The HISD nutrition program lost more than $400,000 in the 2018-19 school year.
Its bus system - a constant bugaboo for the district — is not managed efficiently in terms of assigning routes to decrease costs and there's this wowser:
"Houston ISD retains 21.0 percent more buses than industry standards recommend and has kept 35 nonfunctioning vehicles in a terminal parking lot for several years."
Moving on to the district's employment structure, LBB examiners say the large number of executive leadership positions are neither effective nor efficient. There's poor communication about the many changes in organizational structure and as a result there's a duplication of services offered among some departments "resulting in poor services to students."
Because of the lack of centralization in HISD, a student at one campus can have a completely different academic experience than if he attended another campus. The School Support Offices are not consistent in the support they provide and contribute to the high turnover of principals, the report concludes. Discipline policies are not consistent throughout HISD and neither are services such as counseling, libraries and fine arts programs. Technology services are all over the map.
In some schools, "Principals schedule meal times without the cafeteria having enough seats for all students which may not provide students enough time to eat. " There's no standardization in building new schools in the district and instead each principal is tasked with choosing desks, chairs and other equipment. According to the LBB, this starting everything from scratch each time can result in higher costs.
While the district's move to offer more wrap-aound services for students with social services, it hasn't done a very good job in coordinating, planning or evaluating how it is implementing those programs.
In other communication problems, the Transportation Department often doesn't notify parents about late buses or other service interruptions.
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There is no standardized system to track donations made at different campuses and the district "lacks effective oversight over district partnerships with external organizations."
And then of course there's the board itself and this section of the LBB report tends to echo what the TEA investigators found.
"Houston ISD’s board does not function effectively as a governing unit. The board’s conduct fosters an atmosphere of distrust and animosity, resulting in a lack of confidence in leadership among district staff and the community. Board members’ actions have diminished the board’s ability to deliberate critical academic, financial, operational, and administrative issues effectively. Some board members have overstepped their oversight function, exhibiting behavior that suggests a lack of understanding or disregard for their defined roles and responsibilities. Staff stated that board members place large demands on staff time with requests for information that often is not relevant to the role of board members."
The report of more than 300 pages goes on and on. For the complete details go to the LBB website and have at it.