The State-directed administration of HISD has issued an Efficiency Report that documents a long list of expenditures and practices that will leave you shaking your head. Unfortunately, the much of the report is written in educational bureaucracy word salad that makes for difficult reading, but here are some highlights.

• HISD enrollment has fallen by over 12% in the last six years (217,000→190,000). Many have attributed the decline to COVID and the largest part of it coincides with its onset. However, the decline started before the pandemic began and has continued after it was over. I am sure that there are a number of factors behind this decline, but it also part of the larger demographic transition and is reflective of Houston’s stalled population growth.

• At the same time enrollment was falling, HISD’s central office expense increased by over $100 million ($413MM→$517MM), a 25% increase. The report says that most of the increase was due to salary increases for central office personnel. Over the same period, HISD increased the amount that it spent on outside services by $155 million ($366MM→$521MM), a 42% increase.
  

• HISD received $1.2 billion in federal COVID aid. The purpose of the aid was to address learning losses during the pandemic. The money was mostly spent on giving a 9% across-the-board raise to HISD teachers. While I think most of us agree that teachers are underpaid, there is no reason to believe that across-the-board raises would address the disruption caused by closing schools and, of course, funding an on-going expense with a one-time revenue is patently irresponsible. As a result, the District is projected to fall below its required fund balance reserve in 2026.
  

• HISD appears to have extremely poor internal controls on overtime authorization and payment. The report does not quantify how much this might be costing the District but gives two jaw-dropping examples. One was an hourly employee with an annualized pay of $25,000 and receiving nearly $90,000 in overtime. In another case, a $73,000-salary employee earned $89,000 in overtime. Hopefully, the District will be able to quantify what getting overtime under control might save.
  

• One part of the report that I found fascinating was the section on HISD’s bus service (see p. 21 et seq.)  First, I was stunned that HISD only transports about 8,700 of its students to school. That is less than 5% of HISD students. The report says that the cost of the bus service is $56 million. That works out to about $12 per ride per student. According to the report, that is much, much higher than the national average and suggests that the District could perhaps give families vouchers for ride-sharing services and save money while providing door-to-door service.
  

• HISD spent $31 million on 175 large school buses and 100 small van-type buses when it already had 225 buses it was not using. According to the report, while the District was buying these buses it did not need, the facilities where the buses are stored and maintained were dilapidated and poorly maintained, and the District was using obsolete scheduling software.
  

• The District runs 520 routes with buses designed for 60 students, but the average ridership is only 17 students.
  

I need to investigate the transportation some more. One would expect HISD’s robust magnet school program to result in substantially higher transportation costs. But the report certainly takes the position that there are savings to be realized. I would like to know how long the trips are and how long the kids must sit on or wait for a bus.

There is a discussion in the report that suggests the HISD management structure had been too decentralized, resulting in a lack of standardization and some schools performing poorly. The question of the degree to which management should be centralized has been an issue in every large organization of which I have ever been a part. My experience is that there is not one answer. I do not know enough about HISD’s structure or academic management in general to have an opinion. But the extremely uneven results across schools in HISD certainly is some evidence of a lack of effective management at a minimum.

I would not describe the Efficiency Report as a blockbuster. In some ways it raises as many questions as it answers. But it certainly raised my eyebrows throughout.  At a minimum, it paints a picture of the previous leadership team as very financially undisciplined and raises serious questions regarding some expenditures which should be investigated.

The State takeover of HISD has been hugely controversial. Few seem to understand that the takeover was mandated by a 2015 state law that triggered the takeover because a number of HISD schools failed to meet minimum standards over several years. The 2015 law had the overwhelming support of the Houston area delegation, including Democrats.

We have known for years that while HISD has some wonderful schools it also has some truly awful ones as well. The State’s record in previous takeovers is somewhat of mixed bag. I think the jury is still out on how well this one will work out.  But the Efficiency Report, at a minimum, shows that there is plenty of room for improvement in the nuts and bolts of running the District and in its stewarding our tax dollars.