Three years into the HISD takeover, the costs are coming into focus.

Approximately three years after the state seized control of Houston ISD, Texas officials have increasingly held up the district as evidence that state intervention works. There’s numbers they can point to as HISD had 56 F-rated campuses before the takeover and has five this year, while many schools operating under state-appointed Superintendent Mike Miles’ New Education System (NES) have posted significant gains under the state accountability system. 

But three years is also enough time to look beyond a single measure of success. 

A new Texas Tribune investigation into the sustainability of the takeover shows just how expensive the transformation of HISD has been. The district has lost 21,000 students since the takeover began, costing it roughly $190 million in state funding, and Miles’ signature NES model costs substantially more to operate than traditional campuses. HISD also pulled nearly $450 million from its reserves during the first two years of the takeover. And we need to look no further for administrative salary bloat—Miles was paid $462,000 and bonused $173,660 in 2025. 

Those numbers raise a question that Houston educators have been asking from the beginning: What happens when the money runs out? 

Higher ratings, at a higher price 

NES now operates in roughly half of HISD schools, combining longer school days, additional classroom staff, higher teacher pay, frequent assessments, and significant investments in technology and equipment. When HISD expanded the model to 45 additional campuses in the 2024-25 school year, district officials estimated it would cost another $31.7 million, or about $704,000 per campus. This year, HISD budgeted about $8,500 per student at NES campuses compared with roughly $6,300 elsewhere in the district. 

The state can point to improved accountability ratings in return for that investment, and supporters of the takeover argue those gains justify its cost. 

But educators and other community members have consistently warned that accountability ratings don't capture everything happening inside a school. Texas AFT and HFT have documented concerns about daily testing, highly scripted and tightly paced instruction, reductions in student support, and significant educator turnover under the takeover. More recent Texas AFT materials have also raised questions about whether changes in course placement and STAAR participation have skewed the picture presented by the state's ratings. 

Meanwhile, the financial pressures surrounding those gains are becoming harder to ignore. HISD ended the 2024-25 school year with a $311 million budget shortfall, its first in a decade. To free up money during the takeover, the district has eliminated roughly 1,500 central-office positions, more than 200 wraparound specialist positions and 85 bus routes. 

The cuts are now reaching campuses after the school year has already begun. This week, HISD directed some schools to cut staff and spending after enrollment fell further below projections. Lamar High School, for example, faces a roughly $500,000 shortfall affecting programs including choir and debate, while T.H. Rogers Middle School is losing an assistant principal and librarian through reassignment. HISD described the changes as part of its normal campus-leveling process, but also acknowledged a broader environment of declining enrollment and limited resources. 

The enrollment trend may be the most difficult problem to solve. HISD was losing students before the takeover, and urban districts across Texas face declining birth rates, charter competition, and other demographic pressures. But the Tribune found HISD's losses have accelerated every year since the takeover and are occurring faster than in comparable urban districts. Miles has acknowledged the takeover played some role in the decline, though he characterized that role as small. 

This isn't an entirely new warning. As far back as 2023, HFT planning materials were already questioning whether Miles' spending plans were sustainable. Three years later, that question remains unanswered after millions have been spent.  

AI offers another test of the takeover model 

The same questions about cost, quality, and educator voice are now following HISD into its next experiment: artificial intelligence (AI). 

Miles is rolling out AI-focused "Future 2" schools as part of another round of instructional changes, but AI isn't new to the takeover. Materials from January 2025 reported that teachers at NES campuses were required to use district-provided, AI-generated instructional slides that educators said contained errors. Those materials also described classrooms built around scripted lessons and multiple timed assessments each day. 

It also presents a striking contrast with the approach educators are taking nationally. As we reported last week, AFT, the United Federation of Teachers, and Microsoft recently announced a National AI Safety & Privacy Standard that puts enforceable protections around the use of Microsoft's technology in schools. The agreement prohibits Microsoft from using student and educator data to train its AI models or for advertising, and it requires human oversight for consequential decisions. AFT's larger AI framework also calls for educator involvement and independent research into the effects of technology on children and limits on screen use and student-facing AI. 

This isn't about being "for" or "against" AI, it’s about thoughtfully introducing new technology with educators involved and safeguards in place. Not allowing untested or poor-quality AI-generated materials to make their way into classrooms before those questions have been answered is a critical practice in this moment. For Houston educators who’ve already dealt with AI-generated instructional materials under the takeover, that's not a theoretical concern. 

Houston isn't the only district at stake 

All of this would already matter if HISD were the only district involved, but it matters even more because state leaders are increasingly treating Houston as a blueprint. 

Texas now leads the country in school district takeovers prompted by academic performance, and former HISD administrators have moved into leadership roles in other districts under state control. Fort Worth ISD is already implementing a classroom model influenced by NES, while Austin ISD faces the possibility of state intervention. That makes the question of sustainability even more important to answer.  

Texas AFT and HFT have opposed the takeover throughout its three years, repeatedly calling for local control and educator input to be restored. When TEA announced in June 2025 that state control would continue for another two years, HFT President Jackie Anderson pointed specifically to layoffs, reductions in wraparound services, and educator micromanagement as consequences Houston students and employees had endured. 

Houston voters have registered their own dissatisfaction. In 2024, roughly 58% of voters rejected HISD's $4.4 billion bond proposal. They have continued electing trustees who will eventually regain governing authority when TEA restores local control. And as previously mentioned, parents are voting with their feet and enrolling their students in other districts or charters. 

Three years into the takeover, HISD does have better state accountability ratings. That is part of the story.  So are 21,000 fewer students, $190 million in lost state funding, nearly $450 million pulled from reserves, continuing educator turnover, cuts to student services, and new reductions reaching campuses only weeks into the school year. 

If Houston ISD and Third Future/NES/”Future 2” is going to be the model that TEA installs in other districts, the state shouldn't get to measure that model only by the numbers that make it look successful. The real test is whether the improvements are educationally meaningful, financially sustainable, and capable of surviving after state control ends. Three years in, Houston is starting to get an answer.