Houston ISD has lost roughly 21,000 students since the state takeover began in June 2023, a pace that has cost the district an estimated $190 million in state funding, according to a Texas Tribune analysis of enrollment data and budget documents. For each of the first three years under state-appointed leadership, actual enrollment fell below budget projections by an average of 1,700 students, the Tribune reported.
The enrollment shortfalls have triggered a cascade of budget adjustments. One month into the 2025-26 school year, HISD administrators directed some campuses to cut staff and reduce spending through a process the district calls campus leveling, in which schools receive adjusted funding based on how closely spring enrollment forecasts match actual fall counts. Employees affected by the cuts may be reassigned, according to district communications cited by the Tribune.
Enrollment trends and campus budgets
Data from the University of Houston's Institute for Educational Policy Research and Evaluation shows that the district's enrollment decline accelerated after the state takeover. Before the takeover, HISD lost students at an average of 2 percent per year. After the takeover, that average rose to 3.5 percent per year. In raw numbers, enrollment went from 189,901 in 2022-23 to 184,074 in 2023-24 and then to 176,693 in 2024-25, according to the institute's analysis of Texas Education Agency fall snapshot data.
The pace of loss was not uniform across campuses. Enrollment at schools in the district's New Education System declined by about 6 percent per year in the two years after the takeover, compared with about 3.7 percent per year before, according to a Houston Chronicle analysis of TEA data. Non-NES schools declined at about 1.5 percent per year both before and after. Thirteen of the 15 campuses with the largest percentage enrollment losses during the takeover were NES schools, the Chronicle reported.
The budget impact is sharpest at NES campuses. The district's 2024-25 adopted budget allocated $9,445 per student at NES schools versus $6,882 at non-NES schools, a difference of $2,563 that the district explained through higher teacher salaries and increased special education services, as reported by the Houston Chronicle. One-time costs to set up NES schools totaled roughly $96 million in the first year for technology, furniture and equipment, according to budget documents analyzed by researchers at the University of Texas at Austin. The district spent an additional $221.6 million from regular revenue and $59 million in federal ESSER funds on NES that year, and projected $253.3 million in NES spending for 2024-25.
The Tribune investigation calculated that the NES reforms cost about $700,000 per campus in the first year and about $2,200 more per student annually in subsequent years. Superintendent Mike Miles told Houston Public Media in December 2024 that the district had planned for a loss of 4,000 students in the 2024-25 budget but lost about 7,600, attributing some of the difference to what he called criticism of the district.
Budget gaps and reserve depletion
The combination of enrollment losses and NES spending has strained HISD's finances. Researchers at the University of Texas at Austin documented that the district began 2023-24 with a $900 million reserve balance but spent about $270 million more than revenue that year, leaving a $528 million budget gap driven by enrollment decline, the loss of federal ESSER funds and flat state funding. The academic paper characterized the district's budget decisions as unsustainable and noted that a lack of transparency in budgeting by the appointed board contributed to public mistrust.
In the 2024-25 budget, the district capped campus budget losses at 12 percent for non-NES schools that were no longer held harmless under attendance-based funding. About 25 schools hit that cap, generating roughly $15 million in total savings, according to a report by The 74 Million. The NES schools, which received $684 million that year, continued to receive additional per-pupil funding, while the 144 non-NES schools together received $657 million.
Comparable reform model in Dallas
The NES model closely resembles the Accelerating Campus Excellence program that Miles previously led in Dallas ISD. In Dallas, Miles' successor described the ACE program as unsustainable going forward, according to a UT Austin paper that also noted Miles had a history of overspending in Dallas, making his selection to lead Houston's takeover a surprising choice given the district's existing budget challenges. The Texas takeover of HISD was authorized under House Bill 1842, passed in 2015, which requires the education commissioner to intervene after a campus receives five consecutive unacceptable ratings. Wheatley High School had seven consecutive failing ratings between 2011 and 2019, and Kashmere High School had eight, triggering the current takeover.
Research on sustainability and academic claims
A University of Houston research report found that the state has not validated HISD's claims of academic improvement at NES schools. The same report confirmed that enrollment decline accelerated from 2 percent to 3.5 percent annually districtwide and that NES campuses experienced a steeper drop of 5.5 percent per year after the takeover for original NES schools, compared with 3.3 percent before. The paper from UT Austin researchers concluded that the budget decisions made by the state-appointed board were unsustainable, driven by enrollment loss, expiring federal funds and a flat state funding formula, and that a perceived lack of transparency in budgeting eroded public confidence.