Audit: El Paso ISD knew of budget risks before financial crisis became public

EL PASO, TEXAS (KFOX14/CBS4) — An internal audit of El Paso ISD’s budget overrun found financial warning signs were known within the district well before an original projected $42 million shortfall became public in May, but those risks were not properly communicated or addressed.

Hundreds of El Paso ISD employees lost their jobs after the district discovered the budget shortfall.

Since then, the school board has reduced the projected gap to $4.3 million by declaring a financial exigency, but questions remain about how the district’s finances deteriorated.

“It’s really multiple failures and what we’re talking about in this most recent stretch, so basically from March April May onward is concealment of those multiple failures,” said Dr. Jack Loveridge, the El Paso ISD board vice president and audit committee chair.

The audit reviewed spending as far back as 2010, spanning multiple superintendents.

It found spending continued to rise even as enrollment declined.

The district’s fund balance — described as essentially its savings account — fell from more than $125 million in 2022 to a projected $60 million next year.

The audit also found that more than $10 million in projected savings never materialized, and another $11 million in spending occurred outside the board-approved budget.

“These expenditures included additional budget requests totaling 3 million dollars… health savings account contributions also 2.98 million dollars… staffing guideline revisions for special education and other significant costs,” said Mayra Martinez, El Paso ISD’s chief internal auditor.

Loveridge said the audit’s most significant finding was a lack of safeguards to prevent the situation.

“I think the most significant finding is that systems were not in place to make sure that something like this didn’t happen. There’s a lot of corrective action that needs to be taken by the administration to basically undo years and years of bad practices,” Loveridge said.

The audit also stated that former Chief Financial Officer Martha Aguirre did not effectively fulfill key responsibilities, including communicating financial information to district leadership and the board, according to Martinez.

“So the 6 million dollar budget that was presented to the board for adoption didn’t fully reflect the anticipated operating requirements that were coming out for the fiscal year 25-26…. and the former CFO didn’t affectively fulfill the key responsibilities that were assigned to her and communicating that information….” Martinez said.

Aguirre resigned in May. In her resignation letter addressed to Dr. Lusk, she wrote in part: “Your expressed lack of confidence in my technical abilities, along with repeated dismissive responses to the information I have shared has made it increasingly difficult for me to continue effectively in my role.”

When asked whether anyone should be held accountable, Loveridge said the board was beginning that discussion.

“I think that’s a discussion that we’re going to have today in closed session. The standard of that is something that we have to discuss with general counsel. I think people are being held accountable,” Loveridge said.

The audit issued 18 recommendations, including stronger financial controls, improved reporting and increased board oversight.

District leaders are expected to develop a corrective action plan as trustees work to prevent another budget crisis.

The district has not shared the preliminary budget presentation publicly yet.

You can watch the full presentation and the board’s discussion below:

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