For lawmakers, parents, and students across the Lone Star State, the direction of public education remains a fraught issue. Many continue to voice concerns about administrative bloat, curriculum choices, palatial facilities, and misspending of every type. In this vein, a new controversy may be on the verge of erupting involving Independent School Districts (ISDs) and the opaque education foundations (EFs) that support them. The cozy relationship and monetary exchanges between these two groups has many people asking questions.
Education Foundations
In theory, an education foundation is supposed to raise money — through private donations, corporate and business contributions, events and fundraisers, and grants from other foundations — and, in some measure, gift those proceeds back to the ISD for which it is quasi-connected. In actuality, EFs take in money from a variety of sources, including from the very government it is intended to serve.
And this type of setup exists on an industrial scale.
There are more than 2,660 EFs across the state, according to CauseIQ — 700 of which serve a single school district. Generally, EFs are legally separate from the ISDs. Each EF is governed by a volunteer board of directors but is “aligned with the vision and mission of the school system and serve as a partner to develop public and private support,” the Texas Education Foundation Network (TEFN) explains.
“Typical programs funded by education foundations include innovative approaches in a classroom, educator/student learning projects, pilot or incubator programs, professional development, and other areas of support as determined,” TEFN adds. “Education foundations work as a partner to increase student achievement and academic success.”
Operating as a nonprofit, tax-exempt 501c(3), EFs may occasionally highlight major sponsors and partners, but these are discretionary decisions as they are not required by law to publicly disclose donor identities. In principle, such discretion is entirely consistent with law (see NAACP v. Alabama) and tradition; but the extent to which EFs soak up public monies and resources complicates this ideal.
Current estimates suggest that EFs across Texas boast an estimated $9 billion in assets, employ 1,841 people and generate more than $1 billion in revenue each year.
The relationship between EFs and their respective ISDs has brought to the surface questions concerning personnel, the use of grant money, and the tangled web of characters with a foot in both camps.
And while a Texas school district is a public agency, governed by a locally elected board of trustees, accountable to the Texas Education Agency, and ultimately subject to the Texas Legislature’s authority over policy and finance, EFs fall under a different part of state code.
As nonprofit corporations under the Texas Business Organizations Code (TBOC), EFs are not seen as educational entities under a standalone Education Code framework. The TBOC regulates formation, governance, fiduciary duties, conflicts of interest, and the holding and use of charitable assets, while broader state and federal nonprofit law governs charitable solicitation, reporting, and 501(c)(3) compliance.
The Texas Education Code comes into play only indirectly, chiefly through how school districts may accept, account for, and spend donated funds once a foundation’s grant is conveyed to the district and approved by the locally elected board of trustees.
The oversight splits as foundations are controlled internally by nonprofit law and fiduciary obligations, while ISDs remain bound by Education Code provisions, local board policy adopted under Chapter 11, and constitutional limits on gifts of public funds under the Texas Constitution. Whether EFs are subject to Ch. 552 of the Texas Government Code, which establishes the framework and use(s) of the Texas Public Information Act, is an open question that, to some degree, depends upon circumstance, controversy, and court interpretation.
This framework leaves EFs in a legal gray area.
They are formally private yet functionally intertwined with public school districts. Their proximity to ISDs allows private fundraising decisions to influence public priorities without the transparency, accountability, or statutory constraints that bind governmental bodies.
And while not inherently improper, this arrangement blurs the line between public authority and private discretion.
How It Works
A perfect example of this “grey area” is the Barbers Hill ISD’s EF.
According to the 2024 Barbers Hill ISD audit, the foundation’s financials are contained within Barbers Hill ISD’s annual audit. The foundation is classified as a “Discretely Presented Component Unit” within the district. Component units are legally separate entities from the governmental entity in which they are a component of, yet they benefit greatly from the government it’s tied to. The financials for a component unit appear separately in their own columns on the government entity’s finances.
Regarding Barbers Hill ISD and its EF, these two entities, and how intimately their financials are intertwined, evidence the matter at hand. Obvious questions arise after perusing the audit, including: Where is the line between public and private partnerships in education? What guardrails exist to protect taxpayer funds from flowing out of the school system and into the pockets of interested parties? And who is to be held accountable for malfeasance and misspending?
To start, the Barbers Hill ISD foundation is big — the largest not just in Texas, but the entire nation, in assets per pupil. At the end of 2024, the Barbers Hill ISD EF had $175 million in its fund.
Beginning back in 2010, the foundation has distributed $2.2 million in grants to teachers and students.
“Through the tax-deductible donations of these individuals and businesses,” the website states, “the Education Foundation can provide grants directly to educators who have fresh, new ideas for programs that help students not only learn, but remember.”
In their most recent 990 filing, despite the exorbitant amount of money in its fund, the EF reported just $106,240 in contributions and grants for the year. That represents just cash donations from donors, while the foundation’s website does list several corporate scholarships partners, such as Sonic, Whataburger, Chick-fil-a, ExxonMobil, and others.
But it is this gap between the dollars in the foundation’s account and the fractions of it being directed to actual grant-making purposes that brings up questions about where priorities are being placed.
For example, in addition to having an enormous sum of money in the foundation’s fund, it also quite appears to be quite a prolific investor.
The Barbers Hill Education Foundation has more than $26.7million in “alternative investments,” accounting for 20 percent of its total investments. The foundation has also invested 64 percent of its total, or over $85.3 million, in equity and mutual funds. Moreover, through June 30, 2024, the foundation generated substantial investment earnings — looking more like an asset manager than a grant-making charity.
This level of financial strength places the foundation in an unusual position relative to the ISD. Although the foundation does not own or control any ISD capital assets, it commands a giant pool of private capital large enough to influence priorities, supplement public expenditures, and shape how and where school district resources are ultimately directed.
At some point in the past, the foundation received very large initial capital (maybe land, securities, or other appreciated assets), and those assets were placed into long-term investments, leaving many people to wonder: Who originally endowed the foundation? Did the assets originate from land transactions, private benefactors, or other interests? Were any assets ever transferred in-kind rather than as cash? To the extent that public resources are involved, is this an appropriate use?
For now, there are more questions than answers. But, perhaps soon, a time will come when the public will finally learn the truth.
The Texas Public Policy Foundation contacted Barbers Hill ISD for clarification and did not receive a response by the time of publication.
The cozy relationship between Barbers Hill ISD and the Foundation is also clear in its previous financial disclosures. According to information collected by Open The Books, a database of public spending, a total of $41.4 million was transferred from Barber Hills ISD to the Education Foundation across 2019, 2020, and 2021.
While formally legal, yet structurally strange, the accounting separation obscures the circular reality of money flowing back-and-forth between the two. But the overlap in governance and administration, and the assets tied to the ISD and the Foundation, is another unsettling benefit of their relationship.
The Barbers Hill Education Foundation, in April 2023, entered into a joint venture with Americus Brickyard GP, LLC and Americus Brickyard Investors, LLC, forming Americus Brickyard Partners, LTD for the purpose of acquiring, developing, and managing real property. Holding a 50 percent equity interest (totaling $5,329,025), the Foundation is the principal owner in that venture. This is recorded as an asset of the Foundation — not of the school district.
Yet, as earlier records show, the district transferring large sums of money to the Foundation, and once transferred, those funds become Foundation assets, legally distinct from the ISD, and are then deployed by the Foundation into private real-estate investments that the district itself could not directly hold on its governmental balance sheet.
Another unusual aspect of this joint venture is Americus itself. One of the holdings company’s vice presidents is also a volunteer member of the Barbers Hill Education Foundation board. Americus Holdings lists the Barbers Hill ISD Education Foundation as a partner in the “Brickyard project” which includes a sprawling 365,000 square foot “Luxury” apartment complex.
The concern is regarding how the ISD and the Foundation are financially entangled.
All of this in addition to the Barbers Hill ISD Education Foundation purchasing a parcel of land from Americus Holdings in June 2024 — which the Chambers County Central Appraisal District valued the property at $6,417,500.
There is ample evidence that the Foundation is extraordinarily wealthy — it admits as much on its website. And as its financial records show, it also has been incredibly successful in the market, allowing the Foundation to make millions of dollars’ worth of investments in the real estate sector. But with the Foundation receiving exorbitant amounts of money from the ISD itself and then making purchases and investments that benefit its own board members, it all resembles a revolving door of tax-payer funds being handed over to individual interests.
The Barbers Hill ISD superintendent also comes under scrutiny when examining his contract. He is paid a $489,144 base salary, while being “reimbursed” by the Foundation for “administrative services provided to the Foundation by the Superintendent based upon time spent.” This superintendent also sits on the board, as an executive director, of the Barbers Hill ISD Education Foundation.
This double-dipping into taxpayer money is concerning. Again, Barbers Hill ISD is allocated funds by the state (along with other federal dollars and grant programs) and then is making transfers in the tens of millions to the Barbers Hill ISD Education Foundation. That money is then being used by the Foundation to make large real estate purchases (with companies that are directly connected to its board members) while, also, reimbursing the ISD superintendent (who is also on the Foundation’s board) for unspecified services.
Taken together, the structure relationship between ISD’s and Education Foundations is opaque. The close, but formally separate, relationship between Barbers Hill ISD and its Education Foundation is just one example of how public funds move between public and private entities. Within a gray zone of transparency, double-dipping into taxpayer funds becomes obscured.
Meanwhile, residents face rising property taxes, justified by ever-growing district expenditures. This all raises fundamental questions about whose interests the system now serves.
