El Paso ISD's Deficit Its Ex-CFO Didn't Report for Months
Summary
An internal audit ordered by El Paso Independent School District's Board of Trustees found the district's former chief financial officer knew about a mounting budget crisis for months before the Board learned its true size. In December 2025 she told two Board members privately the deficit was "closer to $11 million"; by an April 1, 2026 internal message, she and a colleague were discussing an estimated $21 million payroll shortfall -- which she did not mention at the Finance Committee meeting the very next day. The Board didn't learn the real number, $52.79 million, until May 2026. By then the district had already adopted a budget built on $3.99 million in savings its own staff had flagged as unworkable and a $20 million "lapsed salary" assumption with no documented math behind it. El Paso ISD has since declared financial exigency and cut its workforce.
The gap didn't surface all at once. In December 2025, the former Chief Financial Officer privately told two Board members the deficit was already "closer to $11 million"; by April 1, 2026, an internal message put a preliminary payroll shortfall alone at $21 million⧉ -- a figure she did not mention to the Finance Committee the very next day. The Board did not learn the true size of the hole until May 2026.
What she knew, and when
Texas school districts operate under a specific legal guardrail: Texas Education Code section 44.006⧉ says public money can't be spent outside the adopted budget unless the Board approves an amendment, and El Paso ISD's own Board Policy CE requires district finance staff to flag material budget variances as they emerge, not after the fact. That policy exists so elected trustees, not district administrators, decide how public money gets spent. The audit found that mechanism broken from the inside: financial risk information was "known within the District's financial management functions" well before Trustees or the current Superintendent heard about it, and the former -- who ran district finance and, for six months, doubled as Interim Superintendent -- was the person responsible for surfacing it.
The record the audit builds is granular. On April 1, 2026, a Teams conversation⧉ between the former and the district's Director of Accounting and Financial Reporting referenced an $8.3 million revenue shortfall and a preliminary $21 million payroll deficit. The next day, at the April 2 Finance Committee meeting⧉, the former told trustees about a $17 million cut to anticipated state funding -- and said nothing about the payroll number from the day before.
The Superintendent said he didn't learn the district's fund balance had fallen to about 40 days until May 1⧉; on May 7 the former CFO put the total impact at roughly $28 million⧉, attributing it to "missed checkpoints" and "insufficient follow-through." The number auditors eventually confirmed, $52.79 million, was still nearly double even the 's own belated estimate.
View data as table
| FY2022 | 166,700,000 | |
|---|---|---|
| FY2026 (projected) | 69,600,000 | Down $47.6M in FY2026 alone -- about half the five-year, $97.1M decline |
A budget built on savings that weren't there
Some of the damage was baked in before the fiscal year even started. The adopted FY2026 budget carried $3,992,349 in projected savings⧉ tied to three initiatives -- new multi-age classrooms, a teacher-reassignment plan, and a shift of Special Education costs onto a federal grant -- that district staff had already flagged as unworkable, untracked, or dependent on grant money that turned out to be exhausted. According to the district's own Director of Budget & External Financial Management, she advised removing the savings before the Board vote; the former CFO directed that they stay in⧉ instead, because dropping them would have meant presenting trustees with a larger deficit.
View data as table
| Multi-Age Classrooms | 1,407,000 | Ruled infeasible before budget adoption; never implemented |
|---|---|---|
| Teacher Certification Assignment Review | 1,005,000 | Savings never tracked or validated |
| SPED-to-IDEA-B budget shift | 1,580,349 | Grant funds it depended on were already exhausted |
The same $20 million, two years running
The larger hole came from a number the district has leaned on for over a decade: "lapsed salary" savings -- the budget cushion created when a funded position sits vacant or gets filled below its budgeted salary. El Paso ISD has built lapsed-salary savings into its budget for at least 14 straight years, and the figure has swung anywhere from $14 million to $35 million depending on actual vacancies. For FY2025 and FY2026, the district budgeted exactly $20.0 million both years⧉ -- the two highest, and only identical, figures in its own 15-year table -- with no documented method behind the number, even though the district's own vacancy analysis pointed to roughly half that. FY2026 actually delivered $13.7 million⧉, a $6.31 million gap that flowed straight into the deficit.
View data as table
| FY2012 | 28,005,224 | |
|---|---|---|
| FY2013 | 14,789,974 | |
| FY2014 | 28,633,236 | |
| FY2015 | 19,338,207 | |
| FY2016 | 26,182,047 | |
| FY2017 | 35,126,315 | |
| FY2018 | 29,493,490 | |
| FY2019 | 26,973,557 | |
| FY2020 | 16,342,564 | |
| FY2021 | 14,972,922 | |
| FY2022 | 14,157,949 | |
| FY2023 | 17,227,999 | |
| FY2024 | 17,230,000 | |
| FY2025 | 20,000,000 | Carried forward, unrecalculated |
| FY2026 | 20,000,000 | Only $13.7M realized -- a $6.31M shortfall |
Spending nobody separately approved
Auditors also found the district adding payroll it never separately funded. In September 2025, Cabinet approved changes to Special Education staffing guidelines; Human Resources first told auditors the change added 77 positions, then revised the count to 134 -- and auditors, checking against the district's own personnel system, could not independently verify which number was right. Either way, the change cost about $2.35 million⧉ in additional payroll, approved and implemented with no funding source ever identified and no budget transfer ever processed. Separately, between July 2025 and May 2026, the former and the current Superintendent approved 27 unbudgeted spending requests worth roughly $3 million⧉ -- $2.5 million of it funded by pulling money out of payroll accounts, which the district's own financial system allows even when an account doesn't have enough budget to cover it.
The takeaway
- There was a five-month gap between knowing and telling. The former had information pointing to a roughly $21 million payroll deficit by April 1, 2026 and didn't raise it at the Finance Committee meeting the very next day; the Board didn't learn the deficiency had reached $52.79 million until a month later.
- The savings that were supposed to close the gap never existed. Between $3.99 million in initiatives that were infeasible, untracked, or dependent on grant money that ran out, and a $6.31 million lapsed-salary shortfall, more than $10 million of the FY2026 budget rested on numbers the district's own staff couldn't stand behind.
- The district can't say how many people it actually added. Internal Audit's own count of new Special Education positions swung from 77 to 134 depending on who in HR was asked -- a separate breakdown from the 's non-disclosure, but the same underlying problem: an organization that can't reconcile its own headcount and spending in real time.
All findings are from El Paso Independent School District's Office of Internal Audit, "Budget Overrun Review," Final Report, Audit Plan Code 26.00-14.N (July 10, 2026)⧉ -- read directly in full, including District Leadership's point-by-point concurrence with all ten findings and its Corrective Action Plan. District Leadership concurred with every recommendation; implementation dates in the plan run from August 31, 2026 through June 30, 2027, with the Chief Financial Officer and the Deputy Superintendent of Operations and Support Systems named as the responsible officials on most items.
Internal Audit's own tally separately attributes approximately $21 million of the deficiency to "expenditure-related factors and unrealized assumptions" identified during the review -- a distinct figure from the payroll estimate referenced in the April 1 Teams message above. The report documents five further findings not detailed here: an unbudgeted $2.98 million in Health Savings Account disbursements never included in any budget since the benefit was created, $1.03 million in Teacher Retention Allotment costs shifted onto the General Fund after a federal compliance issue, $627,812 in Special Education grant expenditures that missed a federal filing deadline, a $672,000 early-retirement incentive program approved without a cost estimate, and an unplanned $5.86 million four-year Chromebook lease. Dollar figures throughout are the report's own; sums and differences in the analysis were independently recomputed and check out against the report's stated totals.
Sources(1) ▾
- El Paso Independent School District, Office of Internal Audit, Budget Overrun Review — Final Report (Audit Plan Code 26.00-14.N) (2026-07-10) — El Paso ISD's own Office of Internal Audit — reporting to the Board of Trustees under the district's 2025–2026 Internal Audit Plan — reviewing the district's FY2025–2026 budget overrun after the Board requested the review in May 2026. Source for the district's projected $52.79 million financial deficiency and 37.89-day fund balance (pp. 2, 9), the five-year enrollment, revenue, expenditure, and fund-balance trends (pp. 3–4), the timeline of what the former knew and when she disclosed it, month by month from December 2025 through May 2026 (pp. 9–13), the $3.99 million in FY2026 savings assumptions that were never feasible (pp. 15–16), the $20 million budgeted vs. $13.7 million realized 'lapsed salary' savings and the district's 15-year history of the practice (pp. 17–18), the $3 million in after-the-fact Additional Budget Requests (pp. 19–20), the unbudgeted Special Education staffing expansion Internal Audit could not even get a consistent headcount for (p. 21), and the review's interview-based methodology (p. 30). kvia.com · original document
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For months, El Paso Independent School District's own finance chief knew the budget was falling apart faster than the Board of Trustees had been told -- and mostly didn't say so. El Paso ISD's Office of Internal Audit⧉ -- the district's own auditor, which reports to the Board rather than through district management -- found the district faces a projected fiscal year 2025-2026 deficiency of approximately $52.79 million⧉, against a budget the Board had adopted in June 2025 expecting to draw down just $6 million⧉ in savings.