Earlier today, the State Auditor's Office (SAO) released an audit of the Texas Education Agency (Summary | Full Report). This report was required by a rider added to the budget bill passed last session. 

Three main findings stand out from the auditor's report:

TEA's management-to-staff ratio

According to the SAO, TEA has one manager per 3.5 employees — a heavier management structure than the statutory standard of one manager per 11 employees and the state agency average of one per 9.7. TEA had not obtained approval from the Legislative Budget Board to operate outside the statutory ratio, though it filed a waiver request in December 2025 after auditors raised the issue. Auditors noted that management salary costs rose 64% since FY2021, to $44.7 million, while management headcount grew 38% compared to 12% for non-management staff.

Pre-K partnership oversight

The auditors found TEA has no process to verify that schools expanding pre-K through public-private partnerships confirmed their private providers meet state requirements — childcare licensing, required accreditations, TEC § 29.171 class-size limits, and contract terms. The agency agreed with the recommendations but said that, ultimately, verification on those items is the school system's responsibility.

What this means for you: This could prompt legislative changes next session. Districts with these partnerships should confirm their agreements cover licensing status, class size, and required contract terms. TEA also said that the new pre-K partnership intermediaries created by HB 2 (TEC § 29.153(g-1)) rolling out through 2027 could remedy this problem as well.

Grant monitoring

TEA disbursed $1.9 billion in state grants during the audit period, all within required timelines. But the auditors found that the agency had not established a minimum monitoring standard, leaving each program department to set its own, resulting in inconsistent oversight.

What this means for you: We may see more consistent — and more rigorous — grant oversight ahead from the agency as a result. TEA is developing minimum monitoring standards by November 2026, training program offices through December, and adding a high-risk grantee designation in January 2027 to escalate noncompliance. 

The rest, briefly: no unallowable expenses were found in the transactions tested. Minor contracting gaps on nepotism disclosures and website postings. Charter school oversight was deemed to be sufficient. TEA agreed with all recommendations, with corrective actions due between November 2026 and August 2027.