Abbott Orders Review of Texas School District Spending

Estimated Time to Read: 13 minutes

Texas school finance is heading back under the microscope just months before lawmakers return to Austin.

Gov. Greg Abbott (R) has formally requested that Texas Comptroller Don Huffines (R) investigate the finances of up to four independent school districts to determine whether taxpayer dollars are being spent for their lawful and intended purposes. The review will focus particularly on whether public education dollars are reaching students, classrooms, and teachers rather than being consumed by administrative growth and other noninstructional expenses.

The investigation itself is relatively narrow, but Abbott is already signaling that the broader policy debate will go much further.

Alongside the review, the Governor announced plans to pursue legislation requiring school districts to spend at least 70 percent of their funds "in the classroom." He also proposed requiring the state's lowest-performing school districts to undergo comprehensive financial audits by the Comptroller.

Combined with a December 31 deadline for Huffines' report, the proposals position school spending, administrative growth, financial accountability, and the relationship between spending and student outcomes to become significant issues when the 90th Texas Legislature convenes in January.

Abbott Targets Texas School District Spending

Gov. Abbott's letter directs Huffines to select up to four independent school districts of varying sizes and geographic locations for review. Huffines subsequently announced what his office is calling the "Huffines Performance Review" and said districts governed by state-appointed boards will be excluded from consideration. The selected districts are expected to be announced in the coming weeks.

The Governor specifically invoked authority under Section 111.003(a)(1) and (2) of the Texas Tax Code and asked the Comptroller to determine whether district funds are being used for their "lawful, intended purposes." Abbott emphasized that the review should provide meaningful information about ISD spending patterns before lawmakers return to Austin.

The review therefore appears intended to do more than identify technical accounting problems. The administration is asking a more fundamental question about where education dollars ultimately go. Gov. Abbott argued that taxpayer dollars should "directly reach students, classrooms, and teachers" rather than be absorbed by central-office growth, consultants, administrative costs, and other noninstructional bureaucracy.

Huffines has adopted a similarly aggressive posture, saying his office will document wasteful or inappropriate spending it discovers and report its findings to lawmakers and Texans.

Texas Education Spending Has Grown

The review comes after lawmakers approved another substantial increase in public education spending during the 89th Legislative Session (2025).

House Bill 2 (HB 2) provided approximately $8.5 billion in new public education funding, including roughly $4 billion directed toward teacher and staff compensation. The legislation also made broader changes to the state's school finance system, including teacher incentives, special education funding, career and technical education, and other programs. Gov. Abbott is now explicitly connecting that increased investment with increased scrutiny.

In his letter to Huffines, the Governor said Texas schools are "funded better than ever," and teacher pay is at an all-time high. He argued that increased funding should bring increased attention to how the money is ultimately spent, pointing to $104.9 billion in K-12 education spending and questioning whether those resources are sufficiently supporting students and teachers rather than administrative growth.

The underlying question is not new. Texas Policy Research (TPR) examined similar concerns in a 2024 analysis, finding that the total Texas public school expenditures had grown approximately 53 percent over the preceding decade while student enrollment increased by only about 5.5 percent. Per-student spending increased by nearly 45 percent during the same period.

TPR also found that teaching, support, and administrative staffing grew faster than student enrollment, with administrative staffing growing the fastest among those categories.

Those statewide trends do not establish that any particular school district is wasting taxpayer dollars. They do, however, strengthen the case for examining how the composition of Texas public education spending has changed alongside repeated increases in overall funding.

Abbott Proposes a 70 Percent Classroom Requirement

Gov. Abbott is already looking beyond the Comptroller's initial investigation. The Governor said he intends to pursue legislation requiring Texas school districts to spend at least 70 percent of their funds "in the classroom," rather than on administrative expenses, staff, or bureaucracy. The proposal could transform what begins as a four-district investigation into a much broader legislative debate over how Texas defines appropriate school spending. The details will matter considerably.

A statutory requirement that a certain percentage of expenditures reach the classroom sounds straightforward, but lawmakers would first have to determine what qualifies as classroom spending. Teacher compensation would presumably qualify, but questions could arise around counselors, librarians, transportation, special education services, instructional technology, campus security, facilities, and other expenses necessary to operate a school.

Texas school districts also vary dramatically in enrollment, geography, student populations, facilities, and transportation needs. Rural districts can face costs that bear little resemblance to those of densely populated urban districts. Fast-growth districts confront different pressures than districts experiencing sustained enrollment declines.

Any percentage requirement should account for those realities without becoming another complicated state mandate that encourages districts to reclassify expenditures rather than actually reduce unnecessary costs.

The principle should remain straightforward: maximize the share of taxpayer resources supporting students and teachers while minimizing unnecessary bureaucracy.

Low-Performing Districts Could Face Financial Audits

Abbott's second proposal could add a new financial component to Texas's existing school accountability system. The Governor said he wants the state's lowest-performing school districts to undergo comprehensive financial audits by the Comptroller.

That proposal comes as Texas has only recently emerged from years of litigation and disruption surrounding its A-F accountability system. As TPR recently examined following the release of the state's 2026 ratings, district ratings generally improved even as statewide campus ratings remained comparatively flat. The accountability system can also carry significant consequences for persistently failing schools and districts.

Adding comprehensive financial audits would raise another question in that accountability debate: whether poor academic outcomes are accompanied by spending patterns that warrant additional scrutiny. The connection should not be presumed.

Low academic performance does not itself prove financial mismanagement, just as higher spending does not guarantee better educational outcomes. Examining both, however, could give lawmakers a more complete picture of how taxpayer resources are being deployed in districts where students continue to struggle.

That distinction will be important if lawmakers consider tying financial scrutiny directly to academic ratings. Financial accountability should complement academic accountability, not create an assumption that one necessarily explains the other.

Administrative Growth Deserves Scrutiny

Gov. Abbott has specifically pointed toward districts experiencing declining enrollment while administrative spending continues to increase. During his announcement, the Governor highlighted Austin and El Paso ISDs. Abbott said Austin ISD enrollment declined 14 percent between 2015 and 2025 while administrative spending per student increased 75 percent. He said El Paso ISD enrollment fell approximately 20 percent while administrative spending per student doubled. Abbott contrasted those districts with Red Oak and Dickinson ISDs, where he said administrative spending increases more closely tracked enrollment growth.

The concern also extends beyond the number of administrative positions to how districts compensate their top administrators.

Texas Policy Research examined superintendent compensation earlier this year using TEA payroll data. The analysis found that superintendent salaries continued rising even as statewide public school enrollment declined, with a growing number of superintendents receiving compensation packages exceeding $300,000 annually. More importantly, the analysis found no clear relationship between superintendent compensation and either district size or academic performance. Some leaders of comparatively small districts earned compensation rivaling or exceeding that of superintendents overseeing substantially larger school systems.

High compensation does not itself establish waste or financial mismanagement. School boards compete for executive talent, and districts vary considerably in complexity and circumstances. But the findings reinforce the broader question now confronting policymakers: whether administrative spending is sufficiently connected to enrollment, responsibilities, performance, and ultimately the educational services taxpayers are financing.

Those comparisons point toward a potentially more useful measure than administrative spending alone.

A district adding administrators while enrollment is rapidly growing may be responding to legitimate operational demands. Continued administrative expansion during sustained enrollment declines raises a different question about whether staffing and spending have adjusted to the number of students the district actually serves.

That is precisely where the Comptroller's review could be valuable.

Rather than simply producing another statewide spending total, the investigation can examine how expenditures change relative to enrollment, staffing, academic performance, and other district characteristics. It should also examine the causes of administrative growth. Some noninstructional costs may result from decisions made by local school boards, while others may be driven by state or federal mandates, reporting requirements, and compliance obligations.

If unnecessary government requirements are contributing to administrative growth, lawmakers should be willing to eliminate those mandates rather than blaming districts for complying with them.

That same standard should apply beyond local school districts. A recently released state audit found that the TEA itself had a management-heavy structure that did not comply with the statutory management-to-staff ratio. That finding reinforces a broader principle: scrutiny of administrative growth should apply consistently across the public education system, including the state agencies overseeing it.

School Financial Transparency Could Improve

Texas school districts are already subject to significant financial reporting requirements. The existence of large amounts of financial data, however, does not necessarily mean taxpayers can easily understand where their money goes or evaluate what they receive in return. The Huffines review presents an opportunity to examine whether Texas school financial reporting provides parents, taxpayers, and policymakers with information that is useful, comparable, and accessible.

That objective aligns directly with the Texas Liberty Compact, TPR's legislative agenda for the 90th Legislature. We argue that transparency without context does not necessarily produce accountability and calls for clearer comparisons of government spending, growth, and outcomes over time.

For school districts, that principle could mean clearer distinctions between instructional and noninstructional spending, greater disclosure of administrative and consulting expenses, and easier district-to-district comparisons of spending, enrollment, staffing, and academic outcomes. Those comparisons are particularly important because a dollar figure viewed in isolation says relatively little. Administrative spending may rise because enrollment is increasing, new mandates require additional staff, or districts face legitimate operational demands. The more important question is whether spending growth can be explained by changes in enrollment, responsibilities, and results.

The goal should not be another layer of paperwork. Transparency should make government easier to evaluate, not create additional compliance costs that themselves require more administrative staff. Better financial information could help lawmakers distinguish between actual administrative bloat and legitimate expenses associated with educating students. That distinction will become particularly important if Texas moves toward statutory classroom-spending ratios or expanded financial audits.

School Spending Matters to Property Tax Reform

The investigation also arrives as Texas continues debating the future of school property taxes. Gov. Abbott has proposed eliminating school property taxes on Texas homesteads, with the state assuming greater responsibility for replacing revenue currently collected locally. That makes the trajectory of school spending increasingly important to the feasibility and durability of property tax reform.

Replacing local property tax collections with state revenue does not by itself reduce the underlying cost of government. If school expenditures continue growing rapidly, taxpayers could simply finance the same spending through different revenue sources.

That concern is central to the Texas Liberty Compact's call to eliminate property taxes. The Compact argues that lasting property tax relief requires structural reform rather than temporary or narrow relief measures. It calls for a phased elimination of school maintenance and operations (M&O) property taxes accompanied by surplus-driven rate buy-downs, enforceable spending limits to prevent spending from rebounding, and broader relief rather than policies that simply shift the tax burden among property owners.

The Compact separately calls for limits on local spending and debt, recognizing that property tax reform becomes increasingly difficult when the underlying cost of local government continues growing faster than taxpayers' ability to finance it.

The Huffines review could therefore inform more than the education budget debate. It could help lawmakers better understand the spending side of the property tax equation.

If Texas intends to reduce and ultimately eliminate school property taxes, policymakers need to know how rapidly school expenditures are growing, what is driving that growth, how much reaches classrooms, and whether administrative costs are expanding faster than enrollment or educational needs. Spending restraint should not mean indiscriminate cuts. It means ensuring that additional resources are justified by actual needs and that taxpayer-funded systems do not automatically consume every dollar made available to them.

A sustainable path toward eliminating school property taxes requires lawmakers to address both sides of the equation. Texas must determine how existing property tax revenue will be replaced while ensuring that continued expenditure growth does not continually move the goalposts.

Greater transparency, spending discipline, reduced unnecessary administrative overhead, and elimination of costly government mandates should therefore be considered part of property tax reform rather than separate policy conversations.

School Spending Joins Abbott's 2027 Education Agenda

The school finance review is also becoming part of a much broader education agenda taking shape ahead of the 90th Legislature.

Gov. Abbott recently charged the Texas Classroom Commission with developing recommendations involving math and reading outcomes, teacher recruitment and retention, parental involvement, classroom technology and screen time, and other education policies ahead of the 2027 legislative session. As TPR previously examined, several of those priorities build upon education initiatives pursued during previous legislative sessions.

The Huffines Performance Review adds another dimension to that developing agenda: whether the resources already flowing into Texas public education are being spent effectively. The December 31 deadline therefore matters. Gov. Abbott explicitly said the investigation should be completed before the legislative session so lawmakers have information necessary to consider potential reforms.

That gives Huffines only a few months to select districts, examine their finances, identify meaningful patterns, and develop recommendations. The eventual report should be judged by the quality of its evidence rather than simply the amount of waste it claims to uncover.

Four districts cannot represent more than a thousand Texas school districts. They can, however, provide detailed case studies that identify practices worthy of further examination. If the review documents unnecessary administrative growth, lawmakers should address it. If state mandates are driving unnecessary expenses, those requirements should be reconsidered. If taxpayers lack meaningful ways to compare how districts spend their money, financial transparency should be improved.

The same scrutiny should apply to Gov. Abbott's proposed 70 percent classroom-spending requirement. The objective should be getting more resources to students and teachers, not creating an arbitrary accounting standard that districts learn to satisfy on paper. Texas's education debate heading into 2027 is increasingly about more than funding levels. Academic accountability, classroom outcomes, teacher compensation, parental choice, property taxes, and now administrative spending are converging into a larger question about what Texans receive for their investment in public education.

Texas has repeatedly increased that investment. As lawmakers prepare for the 90th Legislature, asking where the money goes and what taxpayers receive in return is not an alternative to supporting teachers and students. It is an essential part of ensuring that the money intended for them actually reaches them.

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