Houston's Turnaround Raised the Grades. Can the District Afford to Keep It?
Featured photo: Annie Mulligan for The Texas Tribune
Three years ago, Texas took control of the Houston Independent School District and handed it to a state-appointed superintendent with a mandate to fix failing schools. By the state's own letter grades, it worked.
The bill is now coming due. According to reporting from The Texas Tribune, republished by The Hechinger Report, HISD has lost about 21,000 students since the takeover began, and the reform model behind its gains costs far more to run every year than the district's traditional schools.
For any district leader weighing an ambitious turnaround, Houston is a case study worth reading closely.
The results: real academic gains
Fonville Middle School in north Houston serves nearly all low-income students. Three years ago it was rated an F. This year it earned its first-ever A.
Fonville is not an outlier:
HISD had 56 F-rated campuses three years ago. This year it has five.
In 2025 and 2026, eight times more campuses in the reform program earned an A or B than in 2023.
Those gains are tied to Superintendent Mike Miles's New Education System (NES), now in place at about 130 campuses, roughly half of HISD's schools.
What the model actually costs
NES is staffing-heavy by design. It adds learning coaches and teacher apprentices, longer school days, higher teacher pay, new classroom technology such as webcams and smart boards, frequent testing, and tightly scripted instruction. NES teachers earn an extra $3,000 or $9,000 on top of a higher starting salary, depending on subject, to account for the longer day.
The numbers add up quickly:
Year one: about $700,000 per school in added cost, then about $2,200 more per student each year after.
The 2024-25 expansion to 45 more schools was projected at $31.7 million for the first year, about $704,000 per campus.
Per-pupil spending: for 2026, HISD budgeted about $8,500 per student for roughly 63,000 students at NES schools, compared with $6,300 at other HISD campuses.
Startup purchases: in the first year of the takeover, the district budgeted more than $96 million for technology, furniture and equipment, mostly for 85 NES schools.
Miles told reporters the higher spending is a cost he expects to continue "well into the future," and that the district can carry it: "It is expensive, but we already know we can fund it."
Texas did not provide extra money for the takeover. Texas Education Commissioner Mike Morath said HISD "is operating under the same finance system as anyone else."
The complication: students are leaving
Texas funds schools mainly by attendance, so every student who leaves takes money with them.
HISD has lost about 21,000 students since 2023: roughly 5,800 in year one, 7,400 in year two, and nearly 8,000 last year.
A Texas Tribune analysis puts the cost at about $190 million in lost state funding over the first three years.
At Fonville, nearly 1 in 5 students have left, worth about $1 million in state funding.
The steepest declines were at NES campuses, and Houston had the largest enrollment drop among comparable urban districts in Texas.
Some of that decline reflects pressures every big-city district faces: lower birth rates, more competition and an exodus of immigrant students. But the reporting finds "significant signs" the takeover made it worse. Families who left cited constant testing, the loss of school community and the removal of principals they valued. Most went to charter networks such as YES Prep and KIPP, while charter enrollment in the Houston area rose; others moved to neighboring districts like Klein ISD.
Paying for it: reserves, property and cuts
With costs up and revenue down, the district has leaned on one-time money:
HISD runs on a budget of about $2 billion. Its 2024-25 audited year ended with a $311 million shortfall, its first in a decade, and budget gaps have been projected every year since.
Miles drew down nearly $450 million in reserves. The cushion went from covering seven months of spending to three, just above the state's recommended minimum.
The district has sold about 30 buildings or parcels since 2025. Miles said the sales did not close the gap.
Cuts included about 1,500 central-office positions, more than 200 wraparound specialists and 85 bus routes.
Voters rejected a $4.4 billion bond in 2024, the largest failed school bond in Texas history.
Staffing churn adds a hidden cost. Teacher turnover hit 33% in 2025-26, nearly double the state average, and the Learning Policy Institute estimates replacing a teacher costs about $25,000 in a large district.
School finance experts quoted in the piece were blunt about relying on reserves for recurring costs. "That's just a gamble," said Jonathan Travers, CEO of Education Resource Strategies. Texas A&M researcher Lori Taylor put it more simply: "Once those reserves are gone, they're gone."
What this looks like beyond Houston
The state has taken over seven districts since 2023, and about a dozen more are at risk. Houston's model is already spreading:
Fort Worth ISD adopted a rebranded version called ELEVATE at about 24 campuses in its first takeover year, with $25 million allocated. About 800 teachers resigned in the first three months, and enrollment is below projections.
Austin ISD, on the brink of a takeover, closed 2024-25 with just over three months of reserves and faced a $105 million deficit last year. It lacks the size Houston has used to shift resources internally.
History offers a caution about durability. A Tennessee middle-school reform posted strong test gains that stalled once funding and leadership changed, and the benefits faded by high school. In Denver, graduation rates rose from 43% to 71% under a choice-and-closure strategy, but policies were partly rolled back about a decade later, and enrollment decline eventually forced closures.
Meanwhile, Texas is preparing to return HISD to its elected board, a process expected to take years. That board will decide whether to keep Miles and his model.
What leaders should actually do
Price the whole model before you adopt it. Separate one-time startup costs from recurring costs, and include turnover and recruiting. At roughly $25,000 per departing teacher, a 33% turnover rate is a budget line, not a footnote.
Never fund recurring costs with one-time money. Reserves, property sales and grants buy time. If a program can't live inside your operating budget by year three, plan for that now.
Treat enrollment as a revenue forecast. In attendance-funded states, families leaving is a budget event. Track where departing students go and why, and build those numbers into multiyear projections.
Watch the experience families actually have. Testing load, school culture and leadership changes drove departures in Houston. Survey families early, before they leave.
Build for the handoff. Gains that depend on one leader or one funding stream tend to fade. Document the practices that work, and make sure your board understands what keeping them will cost.
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Source & credit
This post summarizes and builds on "High costs, dwindling enrollment: What happened to one school district after a state takeover," by Sneha Dey and Rob Reid. The story was produced by The Texas Tribune and republished by The Hechinger Report on September 29, 2026. All enrollment, budget, staffing and academic figures, as well as the quotes from Mike Miles, Mike Morath, Jonathan Travers and Lori Taylor, come from their reporting; the "What leaders should actually do" section is YOSS's own analysis. Our thanks to Sneha Dey, Rob Reid, The Texas Tribune and The Hechinger Report for this in-depth reporting. The featured photo, which shows HISD Superintendent Mike Miles with Fonville Middle School administrators, is by Annie Mulligan for The Texas Tribune.
