Houston ISD Superintendent Mike Miles funneling money to Colorado charter schools accusations addressed
HOUSTON - Houston ISD Superintendent Mike Miles is accused of funneling Texas education tax dollars to a network of charter schools in Colorado that he founded.
According to Spectrum News Reporter Brett Shipp, Miles started three Third Future Schools in Colorado after leaving Dallas ISD in 2015, and then the charter network expanded to Texas with more schools starting in 2020.
Shipp stated that internal school records and a nationally recognized school rating agency indicate that the three Colorado schools have struggled with performance, enrollment, and finances. Shipp's report further stated that one of the Colorado schools was forced to close last summer, leaving the school with $5 million in unpaid bond debt.
Miles responded to the accusation by denying any wrongdoing.
"When asked a question about the assertions in the Spectrum report, I said publicly that I welcome a TEA investigation into this matter. There is no wrongdoing and not even a specific allegation of wrongdoing. The report was riddled with errors and does not accurately capture the relationship between charter management organization and the schools and districts they support. 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," said Miles in a statement to Fox 26 Houston.
Miles addressed those accusations in a statement sent to parents and school board members. That statement can be found below:
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 common place 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.
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MORE: Superintendent Mike Miles addresses critics, highlights HISD's positive progress
Miles was appointed by Texas Education Commissioner Mike Morath last summer to lead Houston ISD after the state took over the district. Before his appointment, he had served as CEO of Third Future Schools, a network of public charter schools in Colorado, Texas, and Louisiana.
In a statement on Wednesday afternoon, Third Future Schools released a statement, saying:
In light of recent media coverage about Third Future Schools, we want to take the opportunity to set the record straight.
No Texas funds have ever been diverted to subsidize schools in Colorado. Such an action would be in direct violation of our strict financial protocols. Each of our state networks oversees the funds for that state, and they do not cross from one state to the other.
Since our central office is located in Colorado, most paper checks and bills are sent to this location and then deposited into separate bank accounts. Each school has its own bank account. A check meant for a Texas school may arrive in Colorado, but it is promptly deposited into that school’s Texas bank account.
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.
Third Future Schools conducts annual independent audits to ensure financial accountability and transparency. All of our audits have been clean - the highest standard that can be met in public accounting.
We take our commitment to financial transparency very seriously. All of our budgets, audits, and board documents can be found HERE.
We have three schools in Texas that over the course of our partnerships have risen from a F rating to a B rating. We are proud of the work by our students and staff on these campuses.
Regarding Mike Miles’ relationship with Third Future Schools, Mr. Miles has not served as the CEO of the organization for nearly a year. He has served as a consultant in a manner that does not violate his employment contract with Houston ISD.
We welcome the scrutiny that comes from running successful schools, and we strive to always operate with the highest standards of governance, transparency, and accountability.
The Texas Education Agency also released a statement, saying:
Under state law, TEA receives complaints about allegations of violations of law among public schools operating in the state of Texas. You have asked for an investigation based on a news report about Third Future Schools and Mike Miles. However, the news report left out some significant context. I’m writing this letter to acknowledge receipt of your request to review the matter and to note that I have referred the complaint to our complaints team, although as noted below this complaint will involve a review of Midland ISD, Ector County ISD, and Austin ISD.
Third Future Schools is a non-profit 501(c)(3) based in Colorado with an affiliated non-profit 501(c)3 based in Texas, and has a non-profit mission focused on serving low-income students. It is not a charter school operating under Texas Education Code Chapter 12, Subchapter D, approved by the state of Texas, and so does not receive state funds. Instead, Third Future Schools operates schools in Texas with authority granted by performance contracts signed with Texas independent school districts.
The news story referred to three schools. Third Future Schools has run three campuses under performance contracts with Midland ISD, Ector County ISD, and Austin ISD. In all three cases, the districts engaged Third Future Schools to turn around chronically low-performing (i.e., F rated) campuses in those districts. All schools performed at the equivalent of a B within the first rating year of operation by Third Future Schools on behalf of those districts, indicating the non-profit organization has been successfully executing its core obligation for those districts and positively impacting their students.
School districts have autonomy to engage with vendors to provide educational services. As a vendor of the school district, Third Future Schools would have latitude afforded under its contract with each district to spend its funds in service of the contract. Information in the news story discusses administrative expenditures made by Third Future Schools in support of the academic turnaround of the three campuses it was operating for those districts, but no information was provided in the story related to Texas school system fund balance transfers out of state. The limited information included in the news story does not in of itself constitute evidence of a misappropriation of funds in Austin ISD, Midland ISD, or Ector County ISD nor a contracting violation by any of those districts. However, as noted above, we are referring your letter to our complaints team to review the allegation against those districts.