HOUSTON — Texas Education Commissioner Mick Morath has confirmed that the TEA complaints team will look into allegations against Houston ISD Superintendent Mike Miles.
A Spectrum News Texas report highlighted a pair of million dollar-plus checks allegedly sent from Third Future Schools in Texas to its campuses in Colorado. The report accused Miles of sending Texas tax dollars out of state.
Miles has issued a statement responding to the report, saying the report "either intentionally or through gross incompetence, mischaracterized commonplace financial arrangements between charter schools and the charter management organizations that support them."
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It's important to note that the Spectrum report is not about HISD money, but rather focusing on Miles and Third Futures Schools, which is based in Colorado. Miles founded the charter school system in 2015 and led it until 2020. In 2022, the Texas Education Agency appointed him to lead the state's largest school district.
The investigative report from Spectrum News Texas is raising questions about how the charter school system was funding, claiming it was millions of dollars in debt. The report also claims the charter schools in Texas were receiving millions in taxpayer funding and that debts for Third Future Schools in Colorado were being offset with money from Texas.
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KHOU 11 reached out to Miles, Math and Third Future Schools. They sent us the full statements below.
Texas Education Agency Commissioner Mike Morath responded to KHOU 11's VERIFY team with the following (received 5/15)
"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."
Third Future Schools responded to KHOU 11 with the following (received 5/15)
"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."
Mike Miles also responded on Wednesday to the Spectrum News Texas report with the following (received 5/15)
"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."
Calls for Miles' resignation
Below is from KHOU 11's coverage on Tuesday, May 14, the day we first covered the Spectrum News Texas report.
The reporting from Spectrum News Texas prompted calls from Community Voices for Public Education (CVPE) for a federal investigation into the allegations. CVPE also called for the superintendent's resignation and for TEA to reverse its takeover of HISD.
“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 CVPE. “Greg Abbott opened the door to this type of fraud by installing an unelected board of managers and putting Mike Miles in charge of our schools. We’ve warned for years that laundering taxpayer dollars and giving it to private schools was part of their plan, and now we have the receipts to prove it. This scheme goes beyond bad policy or governance, it’s corruption and we’re calling for a federal investigation into this scheme along with the immediate resignation of Miles. 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.”
In a statement, CVPE called on the community to contact their elected representatives and ask them to call for a federal investigation into how Texas public education funds are being used. It encouraged community members to speak at the next HISD Board of Managers meeting on Thursday.
The president of the Houston Federation of Teachers echoed calls for a federal investigation and demanded the resignation of Miles.
“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,” said Jackie Anderson. “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.”
Harris County Commissioner Rodney Ellis also shared a statement that reads in part:
“This also calls into question every dollar he has spent as superintendent. 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.”
State Representatives Jarvis Johnson and Gene Wu are also critical of Miles.
Wu posted on X, "The level of corruption is genuinely impressive."
KHOU 11 spoke to Johnson on Tuesday. He talked about The Houston Federation of Teachers calling for Miles' resignation and a federal criminal investigation.