El Paso Independent School District has made what auditors call significant progress tightening its financial practices since reporting a projected $52.79 million deficiency for fiscal year 2025-26, but a fresh review completed in October found that five of nine required corrective actions still have not been put in place. The follow-up audit also found that significant financial risks known inside the district's own financial management department were never communicated or addressed before the crisis became public.
According to KFOX14/CBS4, auditors reviewed budget development, financial reporting and expenditures through May and interviewed 25 employees, all five current trustees, and the district's former chief financial officer as part of the review. The audit concluded that former CFO Martha Aguirre, who also served as interim superintendent for several months, failed to adequately fulfill her responsibilities as the district's principal financial advisor.
The district's financial troubles trace back to a budget crisis that followed the nearly $53 million deficit, which prompted the school board to vote to declare financial exigency. An earlier audit had found the deficit stemmed from underestimated expenses, unrealistic budget assumptions, poor financial oversight and weak budget controls, and auditors said corrective action plans were needed in response.
What's Fixed and What Isn't
Of the nine corrective actions ordered, four are now in place, per the station's report. EPISD has set deadlines for reporting financial risks, added funding checks and required approvals for additional budget requests and staffing changes, and now provides monthly financial reports to the superintendent and school board. The remaining five actions carry deadlines stretching through summer 2027.
One of the pending fixes would phase out the district's reliance on salary savings from unfilled jobs to help balance its budget — a practice auditors flagged as a structural weakness. Auditors are planning additional reviews to test whether the changes already made are actually working, the same account notes.
Tracing the Overrun
Much of the scrutiny traces back to the 33-page Budget Overrun Review, ordered by the Board of Trustees and completed on July 10. Reporting on the size of the unbudgeted spending behind the crisis has varied: El Paso Matters reported that $11.1 million in additional expenditures were made outside the board-approved 2025-26 budget, while KVIA reported outside auditors found $11.2 million in spending not accounted for in the budget.
EPISD has since taken steps to stabilize its finances. The district says it adopted a 2026-27 budget that reduced its projected deficit from $37 million to $4.3 million, according to a statement posted on episd.org. The district later said additional savings were expected to fully offset that remaining $4.3 million gap, and projected more than $60 million in fund balance reserves — roughly 46 days of operating expenditures — per a separate statement on the district's website.
A Shrinking Piggy Bank
The numbers still tell a story of a district whose financial cushion has thinned considerably. EPISD's unassigned fund balance stood at $125.2 million when Superintendent Diana Sayavedra arrived in February 2022 and was estimated at $60.3 million after the later financial findings, a 52% decline, as reported by El Paso Matters. The district's unrestricted fund balance, sometimes described as its piggy bank, fell to the equivalent of about 38 days of operating expenses.
El Paso ISD is not alone among local districts in watching its reserves erode. El Paso Matters noted that Socorro ISD's unassigned fund balance declined 61% between fiscal years 2022 and 2025, while Ysleta ISD's declined 45% over the same period — a regional pattern that frames EPISD's struggles as part of a broader financial squeeze facing El Paso-area school systems.
El Paso ISD continues to operate under the corrective action plan while auditors monitor whether the district's remaining fixes take hold before the summer 2027 deadlines arrive.
