The Houston ISD Board of Managers received updates Oct. 9 from the district audit committee and the finance team showing progress on internal-audit recommendations and an improved first-quarter financial outlook.

The audit committee chair summarized the committee’s review of internal-audit items, saying auditors identified 41 observations from 2024–25 work, 11 of which are closed and 30 remaining open; 12 items are ready for follow-up testing. The committee also reported planned internal-audit projects for the coming fiscal year including IT cybersecurity governance and contract administration.

CFO Jim Terry presented the district’s financial position through Sept. 30, the first quarter of fiscal 2026. Terry cited a projected end-of-year fund balance of about $779 million and said a budget amendment column reflected $799 million previously expected; he attributed the roughly $20 million difference in part to recapture and in part to timing of property sales. He told trustees the projected net use of fund balance had improved from a previously reported negative $267 million to a projected negative $14.7 million in the current projected column. “We think that that 14,000,000 of use of the fund balance by the end of this current fiscal year is certainly doable,” he said.

Terry also discussed district debt-service work, saying the district had completed refinancings that reduce long-term costs. In his remarks he said the district “was able to save the taxpayers, approximately half a billion dollars in in debt,” and added the immediate tax-effect estimate, saying “the overall effect saves the taxpayers, probably $50,000,000 in taxes.”

Board members asked for clarifications of specific line items and the staff noted the annual comprehensive financial report would be before the board in November after the audit is finalized.

Ending: Trustees accepted the audit committee report and the budget update in separate motions later in the meeting. Staff said they will continue to monitor audit follow-ups and present the audited annual financial report next month.