The Texas Education Agency says Houston ISD Superintendent Mike Miles did not illegally funnel public money to out-of-state schools

HOUSTON, Texas – The Texas Education Agency has cleared Houston School District Superintendent Mike Miles of wrongdoing after he was accused of improperly diverting millions of dollars in state funds to his charter school system in Colorado.

After reports from Spectrum News and The Texas Observer led to calls for an investigation earlier this year, the Board of Education concluded Tuesday that neither Miles – whom the board appointed last year to lead the state’s largest school district – nor his Charter school network Third Future said the schools “violated all applicable Texas laws,” according to the 29-page investigative report.

The investigation determined, in part, that checks forwarded from a partner school district in Texas to Third Future Schools’ address in Colorado went there because the Colorado location handles accounting services for the network’s Texas branch, which operates independently. However, the checks were eventually deposited into the Texas branch’s bank account.

“Based on the evidence obtained and analyzed during the investigation, allegations contained in media reports that state funds were inappropriately diverted from Texas public school students are without merit,” the report said.

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The agency is completing the investigation and “will not take any further action at this time,” the report said.

In an email sent to the Houston School District community on Tuesday, Miles called the previous reporting “a baseless distraction and an attempt to undermine and discredit the good work being done in schools.”

“Now we can do what we always do and move forward on behalf of our students,” Miles said.

Earlier this year, Spectrum News reported that the Texas branch of Third Future Schools — which receives funding from several Texas school districts to operate campuses in the state — may have used public money from its Odessa school to offset financial losses at a sister school in Colorado.

The Texas Observer later reported that it had found “additional irregularities” related to the charter network’s disclosure of expenses.

Miles denied wrongdoing and accused previous reporting of “misrepresenting common financial arrangements between charter schools and the charter management organizations that support them” and welcomed an investigation into the network’s activities.

State investigators agreed with Miles and said they found no evidence that Texas school districts deposited funds into Third Future Schools’ bank account in Colorado. Third Future Schools-Texas reimburses the Colorado site for administrative services it provides to the entire charter network, the report said.

The report also says there is generally no state or local policy requiring Third Future Schools-Texas to disclose any agreements it has with the Colorado office regarding the purchase of services, but adds that no effort has been made , to hide the partnership from Texas school districts.

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The claims were “unsubstantiated or proved to be false,” the report said.

Miles has been a polarizing figure since the Texas Education Agency accused him and an unelected school board of taking over the leadership of the Houston school district last year. In justifying the takeover, the state cited the previous board’s misconduct and unsatisfactory academic performance ratings at Wheatley High School in Houston’s Fifth Ward, where the overwhelming majority of students are black and Hispanic and live in low-income households.

Under Miles’ leadership, the district experienced extraordinary staff turnover and a decline in student enrollment. Miles was accused of running a military-style school environment where teachers have limited freedom to teach in the way they see fit and children are exhausted and disengaged from learning.

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Miles, however, has touted students’ improvement on the state’s standardized tests as evidence of his model’s effectiveness, an achievement that Mike Morath, commissioner of the Texas Education Agency, has also publicly acknowledged and praised. In November, Houston voters will decide whether to approve $4.4 billion in academic and infrastructure improvements for the school district – the largest proposal of its kind in state history – which some see as a litmus test of Miles’ support in view the public.

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