Texas to investigate spending at Austin, El Paso, Prosper, Barbers Hill ISDs

The State of Texas will review spending by the Austin, Barbers Hill, El Paso and Prosper independent school districts (ISDs) under a public funds investigation requested by Gov. Greg Abbott, who directed Comptroller Don Huffines to examine whether school district money is being used for its “lawful, intended purposes.” 

Abbott sent Huffines a letter in August citing Texas Tax Code Section 111.003(a)(1) and (2), which allows the governor to request comptroller investigations related to public funds. The letter asked Huffines to review up to four independent school districts of varying enrollment size and geography, giving the \comptroller latitude to choose the districts. 

Chapter 111 of the Tax Code, titled “Collection Procedures,” governs state tax collection and includes the comptroller’s authority to examine records and investigate public funds. It is not part of the education code or the state’s traditional school performance review process. 

Huffines announced Monday that his office selected Austin ISD, Barbers Hill ISD, El Paso ISD and Prosper ISD for what it is calling a “performance review.” The review will examine whether district spending complies with state law and is directed toward students, classrooms and teachers rather than “administrative expansion or non-instructional bureaucracy,” according to the comptroller’s office. 

The selected districts vary widely in size and profile. Austin is the largest, with 69,074 students in 2025-26, followed by El Paso with 46,244, Prosper with 33,583 and Barbers Hill with 8,088, according to the comptroller’s announcement. 

The comptroller’s office did not say whether specific financial concerns led Huffines to choose the four districts. But each district has faced some form of financial pressure, public scrutiny or rapid budget change. 

The districts’ state financial accountability ratings were generally strong. In TEA’s preliminary 2025-26 Financial Integrity Rating System of Texas (FIRST) ratings, which are based on 2024-25 financial data, Barbers Hill earned an A and a score of 100, Prosper earned an A with a score of 94 and El Paso earned an A with a score of 92. Austin earned a B, or “above standard achievement,” with a score of 88.  

FIRST measures the quality of a district’s financial management practices, including audit results, debt compliance, financial reporting accuracy and other indicators. 

Austin ISD and El Paso ISD have dealt with the most visible budget stress. Austin has said it expects to end the current budget year with a $49 million deficit and projected a $181 million shortfall for 2026-27, citing declining property values, enrollment decline, delayed real estate revenue and state funding limits. 

El Paso approved financial stability measures in June, including a declaration of financial exigency and a reduction in force. The district said it had reduced a projected 2025-26 shortfall from about $52 million to $47 million before bringing staffing recommendations to the board. District leaders said enrollment trends played a major role in the staffing changes. 

El Paso ISD’s enrollment decline is long running. The district now enrolls 46,244 students, down roughly a quarter from earlier enrollment levels of about 61,700 students. 

Prosper ISD represents a different kind of financial pressure. The fast-growing North Texas district adopted a 2026-27 budget with $408.3 million in projected revenue and $433.4 million in expenses, leaving a $25.1 million deficit to be covered by the fund balance. District officials said slowing enrollment growth, employee compensation and attendance-based state funding contributed to the gap. 

Barbers Hill ISD, the smallest of the four, has drawn attention for public spending and governance questions. Voters approved a $95 million athletics bond this year, and a Texas House committee separately scrutinized the Barbers Hill ISD Education Foundation over funds directed to the private nonprofit, real estate investments and potential conflicts of interest. 

The review by Huffines differs from the state’s traditional school performance review process, though the comptroller’s office once played a larger role in that work. The Texas School Performance Review program began in 1990 under then-Comptroller John Sharp and reviewed school district budgets and operations for efficiency.  

The program later operated under Comptroller Carole Keeton Strayhorn, but lawmakers moved school performance reviews to the Legislative Budget Board (LBB) in 2003 after Strayhorn’s office became increasingly outspoken in state budget and school finance fights. 

The LBB now describes its school performance reviews as examinations of a district’s educational, financial and operational services and programs, with recommendations intended to improve efficiency, effectiveness and accountability. 

By contrast, Abbott’s request frames the Huffines review as a comptroller investigation into whether public funds are being used for their lawful, intended purposes. In his letter, Abbott wrote that taxpayer dollars should reach “students, classrooms, and teachers” instead of being absorbed by “central office growth, administrative bloat, consultants and the web of noninstructional bureaucracy.” 

The findings could feed into a larger school finance debate next session. Abbott has already proposed requiring districts to spend at least 70 percent of their funds in classrooms. The review gives the comptroller’s office a chance to examine spending patterns across two shrinking urban districts, a fast-growing suburban district and a smaller, property-rich district that has drawn questions over debt and foundation spending.

Logo courtesy of the Austin Independent School District