To improve its financial oversight, the El Paso Independent School District should implement regular reporting to trustees of budget risks such as declining enrollment and revenue shortfalls, adopt stricter controls to ensure budget assumptions are validated, and end relying on projected payroll savings to balance the budget, according to a corrective action plan released Monday.
In all, 14 recommendations are included in the 33-page internal audit conducted after breakdowns in the district’s budget reporting led it to declare financial exigency and lay off dozens of employees over the summer. El Paso ISD published the complete audit dated July 10 on its website Monday, though district leaders had previously presented preliminary findings to the school board.
EPISD Trustee Jack Loveridge, the chair of the school board’s Audit Committee, said the report gives the board and administration guidance on how to proceed after years of poor budget practices erased 58% of EPISD’s savings in four years, dropping from $166.7 million in 2022 to $69.6 million in 2026. Nearly half of the decline occurred during the last school year.
“I think that it really is about looking forward, making sure that systems are in place, making sure that budgeting is done in a much more scientific way, and not just attributed to one person or two people,” Loveridge said.
“I really want the public to know that this is the beginning of a new approach to public education in El Paso. And I think the public should hold this administration and should hold this board accountable moving forward because we are committing to a very high standard of financial transparency and responsibility,” he added.
Superintendent Brian Lusk said the district has already taken steps toward adopting this new approach.
“Over the last few months, El Paso ISD has already moved towards implementing processes and strengthening systems already in place that will ensure appropriate oversight and fortify the financial health of the district,” Lusk said in a statement. “We are committed to continue to do so in a transparent manner that collaborates with our communities and stakeholders.”
Loveridge said the board will meet in August to discuss its role in the plan and potentially decide if any legal action could be taken against employees who contributed to the crisis. The report from Chief Internal Auditor Mayra Martinez doesn’t make any recommendations on potential legal actions.
The audit, which included interviews with former Chief Financial Officer Martha Aguirre and her staff, found that finance staff were aware of the district’s financial issues and declining enrollment for months before they became public, but did not inform the superintendent or the board.
SEE ALSO: In emotional meeting, EPISD board approves financial exigency and starts steep budget cuts
Loveridge said he is not sure what kind of action the board can take, particularly against former employees such as Aguirre, who resigned in early May, shortly before the budget issues became public.
“We want to make sure that if there is an avenue to pursue charges, then we understand that that is something that is at our disposal. If it’s something that is not possible, then we at least want to know that we’ve investigated whether that can happen or not,” Loveridge said.
Corrective action recommendations
The audit recommends the district establish a reporting system for staff to notify the board or superintendent of potential budget issues. The system will include monthly and quarterly financial reports and a process that outlines when leadership should be notified of financial issues.
EPISD’s budget problems were caused by a combination of factors, according to the audit, including planning for savings that never came to fruition and making purchases that were never approved by the board, which increased expenses by about $21 million during the 2025-26 school year.
In response, auditors recommend that the district develop written procedures on how it develops budget assumptions, such as revenues generated from enrollment and attendance.
Auditors recommend the district require a written financial impact analysis any time it implements a new program or has unforeseen expenses.
The analysis must determine all prospective funding sources, evaluate the long- and short-term impacts, determine if the board needs to vote on a budget amendment and outline when they will be presented to trustees.
The recommendation comes after the board approved expenses that were never added to the budget. That included $459,000 in leadership transition costs to pay former Superintendent Diana Sayavedra a retirement settlement, as well as relocation benefits for Lusk, who was hired in December.
Other expenses not added to the budget included $672,000 for a separation incentive program that offered employees a $3,000 buyout to notify the district early of their plan to retire or resign at the end of the last school year.
The audit also recommends that the district, within the next two years, stop relying on lapsed salaries, which are funds budgeted for a job that remained vacant, to balance the budget. The district last year budgeted to save $20 million with lapsed salaries, but only saved $13.7 million.
Other recommendations include establishing a formal approval process for staffing changes, creating a procedure to monitor district’s inventory and developing a system to more accurately distribute grant funding.
The post El Paso ISD audit outlines corrective action plan to improve financial oversight after budget crisis appeared first on El Paso Matters.
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