HISD freezes funding for a top magnet school in test of autonomy deal

Houston ISD’s state-appointed leaders promised four top-performing magnet schools more independence in exchange for handing control of school operations to outside boards. Now one school says the district is withholding the first payments of its annual $6 million funding and is demanding some of the extra state money the school is supposed to receive.

Two months into the new fiscal year, HISD hasn’t given Energy Institute High School’s outside nonprofit, Friends of Energy Institute, any operating funds. The district also removed the nonprofit’s access to its Chase bank account after the nonprofit granted HISD limited access to transfer funds, Kathy Kahanek, the nonprofit’s treasurer, told the board Wednesday evening.

HISD is also trying to claw back some of Energy’s extra state funding plus other monies previously committed to the school — totaling over $754,600 more per year – before the school can receive any money in its bank account, Kahanek said.

The financial dispute offers the first major test of HISD’s new autonomy model for schools. State-appointed Superintendent Mike Miles pitched the partnerships as a way for high-performing schools to win more control over operations, including their calendar and curriculum. The schools can also receive more state funding — an estimated $1,400 per student HISD said in the spring — as an extra incentive. It’s not clear how much autonomy the schools have in their new partnerships if they cannot access their funding.

“We do not have basic purchasing power as a normal school,” Energy principal Elizabeth Harris told the board Wednesday.

HISD said in a statement that it was excited to launch its partnerships at the top-performing high schools and that all four schools are “open, fully operational, and successfully serving students” and “all employees have continued to receive their pay.”

“As with any new partnership, the District and its operating partners are working through new processes, roles, and responsibilities,” the district said. “Staff are meeting regularly with their leadership and working together to address questions and issues as they arise. The District expects processes and coordination to continue to be refined as these new relationships evolve and remains committed to supporting the continued success of each school.”

DEPARTURE: HISD executive who led Mike Miles’ school autonomy plan resigns after three years

HISD said that school autonomy is still a “central feature” of the partnerships so that schools with a strong record of success can have “greater flexibility to make decisions based on the needs of their students and communities.”

The operators of the other three schools — Kinder High School for the Performing and Visual Arts, or HSPVA, Challenge Early College High School and Houston Academy for International Studies — did not respond to requests for comment.

However, Energy principal Harris said the other partnership schools are also “completely iced out of funding.” Together, the four campuses are expected to receive $25 million for the 2026-27 school year, and the schools were supposed to receive the first installments in July, according to their state-approved agreements. 

HISD is still paying for some basic operations, including payroll for teachers and staff, at Energy Institute High School, which prepares its 750-plus students for careers in the energy industry.  

But the school’s nonprofit is digging into its own reserves to pay for student activities such as a camp for incoming freshmen, Harris told the board. The school received $40,000 for busing for such activities, she said. But even receiving that money took “a long time,” said the school’s founding principal Lori Lambropoulos.

CLOSURE: HISD closed McReynolds Middle School due to its aging facilities. Now, it’s reopened as an alternative campus.

After the state took over HISD in June 2023, most schools gave up some or all decision-making authority to the district’s central office. Under Miles, schools like Energy Institute can only achieve the highest level of autonomy if they partner with an external group and contract out operations, such as school calendars, curriculum and class schedules.

The state’s largest school district handed over management of four A-rated magnet high schools after negotiating contracts in February and March. Under the agreements, the outside boards can make decisions on school operations and principals can have more control over innovative programs.

The nonprofits can also opt into the district providing services, such as professional development for school leaders, grounds maintenance and assessments. In total, the four magnet schools enroll around 2,400 students combined.

Lambropoulos said earlier this year that Energy Institute High School has been seeking this kind of partnership for years.

“If you’ve ever stepped foot on our campus, you know that innovation is the soul of Energy,” Lambropoulos told the HISD appointed board of managers in March.

In the spring, Miles said the partnerships were to “provide more autonomy and allow them to have more innovation.”

“This is not an attempt for us to get more money or anything like that, so you’re going to see in the performance contract that every one of (the schools) will have more money next year than they did this year — and fairly significantly more,” Miles said then.

BRIDGE: After HISD student’s death, a pedestrian bridge is coming to Milby High School in his honor

Senate Bill 1882, the 2017 law governing these partnerships, allows schools to receive additional state funding per student as an incentive to hand over operations to an outside group, such as a nonprofit, charter or university.

HISD estimated that extra funding would be about $1,400 and in March, when the board approved the partnerships, Miles said that Energy and other campuses could receive 80% of that funding. The remaining portion would go to schools outside those partnered schools.

But now district employees have told Energy’s school leadership they do not know how much state funding Energy Institute High School will receive, Harris told the board.

HISD is seeking that 20% of the additional state funding, or around $249,000, designated for Energy’s operator — plus money for services worth around $505,000 the district had committed to covering for Energy, Kahanek said.

HISD’s attorney told the nonprofit that because the contract does not forbid HISD from taking that 20% cut, “they felt like it was okay to do so,” Kahanek recounted.

The district is seeking that money in addition to a 5% administration fee school operators must pay, totaling more than $1.2 million across the four high schools, according to the contracts.

The contract does not explicitly authorize HISD to retain 20% of the extra state funding, according to the Energy contract reviewed by the Houston Chronicle. 

During negotiations, the nonprofit did not agree to that 20% to HISD, which is reflected in the contract’s budget. Kahanek said this was negotiated with the former Chief of Strategic Initiatives Orlando Riddick, who recently resigned from HISD.

The district’s accountant for Energy Institute told school leadership that “a budget is just imaginary dollars,” Harris told the board. “Those dollars don’t actually exist,” she recounted.

When the board asked if other school operators are having financial issues, Harris responded: “They are all completely iced out of funding.”

The contracts’ budgets outline the annual school payments as $7.3 million for HSPVA; $7.5 million for Energy Institute High School; $5.2 million for Challenge Early College High School $5.2 million; and nearly $5.2 million for Houston Academy for International Studies.

The Friends of Energy Institute has not finished its final budget with HISD, which is why the district is not giving the school any of its money, Kahanek said.

Meanwhile, only HISD has access to the bank account now, despite Kahanek contacting multiple district employees for access to the account she opened. A district accountant told Kahanek HISD was “working on it.”

AC ISSUES: As HISD schools battle heat, parents say they struggle to get answers on AC issues

The contract negotiations have not affected students, Energy parent Naomi Doyle-Madrid said. 

“As a parent, I haven’t felt any negative impact in that process, just by whatever’s happening in the district,” Doyle-Madrid said. “On the flip side, I’m certainly not surprised to kind of know that HISD is asking for a contract amendment. It just doesn’t surprise me because of where they are financially, overall.”

She said what she feels right now, under this partnership for autonomy, is more creativity for her daughter.

“It makes my heart happy as a parent to know that her academic experience is not being mired in these worksheets that can just bring you down,” said Doyle-Madrid, describing state-appointed leadership’s reforms. “If you’re constantly doing these worksheets and the pacing and all of the stress — I just feel like we’re having a much better experience, and I think that is coming with the autonomy that we have as an 1882 school.”

As Energy navigates HISD’s request to retain more money, the school has requested a budget showing its expected additional state funding because the current budget documents show the money “mixed together,” Harris told the board.

“But there should be the full budget, and then the 1882 revenue that’s the monthly disbursement,” Harris said. “And so, the cuts are off of these different accounts, but you never see what the 1882 disbursement was. And then today, they (HISD representatives) told us they don’t even know what the state funding will look like.”