Some good news for Mike Miles.
The Texas Education Agency’s investigation into alleged misuse of state funds concluded Third Future Schools — a Colorado-based charter school network founded by Houston ISD Superintendent Mike Miles — did not violate any Texas laws.
The investigation also found “no evidence” of any wrongdoing by Third Future Schools Texas or Miles, who was not one of the subjects of the TEA’s investigation.
TEA officials said a special investigation began after Spectrum News Texas reported in May that Third Future Schools Texas had inappropriately diverted state funds from public school students in Texas through partnerships between three Texas school districts — Austin, Ector County, and Midland ISDs.
The outlet reported Third Future Schools charged fees to its Texas schools, which fed into a general fund that, in part, subsidized one of its schools in Colorado before it closed. According to a 2022 audit, Third Future Schools Texas also reported it had run a deficit due to debts to “other TFS network schools and to TFS corporate.”
Spectrum News’ initial story prompted outrage among HISD community members and state lawmakers, who called for an investigation into Miles’ spending practices and an audit of the charter school network, including its financial dealings and potential noncompliance with state laws.
In a 29-page report, the TEA said it was closing its investigation after concluding that the charter network and the three districts had not broken any laws. It also found the allegations in Spectrum News’s report — as well as a separate story by the Texas Observer — were either not applicable to the network’s partnerships, could not be substantiated or were proven to be false.
“TEA concludes that there is no merit to the allegations contained in the media reports that state funds were being inappropriately diverted from public school students in Texas,” David Rodriguez, the executive director of the TEA’s division of investigations, said in a letter Tuesday to the board president and superintendent of Third Future Schools Texas.
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The report found that Third Future Schools Texas has an agreement to pay Third Future Schools in Colorado for support and administrative services, but it did not find any evidence that indicates that Third Future Schools Texas had directly deposited any funds from the three Texas school districts into the bank accounts of TFS.
“Under Texas law, TEA does not have authority over what TFS does with the funds it is paid by Third Future Schools – Texas for administrative fees or shared services, just as the agency cannot broadly require any other school district vendor to identify how they expend their funds once the vendor has been paid for services provided,” the report said.
The Observer reported, based on expert analysis, that “disclosure of pre-existing business deals for administrative expenses are generally required under state law for Texas charter schools.” However, the TEA said the portion of state law that applies to Third Future Schools does not contain any mandatory reporting requirements.
The TEA’s report also found that Third Future Schools Texas continuously maintained bank accounts while operating schools in the three districts, and there was no evidence to support the allegation that TFS had transferred funds that were not for approved expenses in the partnership budgets.
See here for previous blogging, and there’s a copy of the report in the story. I don’t know enough to say if this is one of those “the real problem is with what is legal” situations, but the fact is that the TEA says that what Miles and TFS did was legal. That’s what you would want, so good for them. I’d like to hear from Spectrum News and the Observer about where their reporting went wrong, or if they stand by their stories and dispute what the TEA says. I’ll keep an eye out for that. The Trib and the Press have more.