Houston ISD’s inefficient, poorly organized and unwieldy bureaucracy is shortchanging the district’s 209,000 students and city taxpayers, requiring structural changes across virtually all corners of the district, the Texas Legislative Budget Board said in a blistering report issued Friday.

A 325-page performance review of HISD by the LBB, a permanent joint committee of the Texas Legislature, identified extensive operational shortcomings and issued 94 recommendations aimed at improving operations in the state’s largest public school district.

The report took particular aim at the HISD’s prized decentralized power structure, finding the model delivers inconsistent resources to students and poor monitoring of spending, while also piling on the much-maligned school board for eroding public trust and district morale.

The board also proposed several potentially controversial measures, including the formation of a “campus closure and boundary advisory committee” and suggested the district could save $26 million by shuttering as many as 40 underutilized schools. The report also called for various consolidations that could cost hundreds of jobs.

LBB officials said their recommendations could save the district $237 million over the next five years and streamline the delivery of academic services. HISD leaders are not legally required to follow any of the board’s recommendations.

In a statement Friday, the HISD administration said it is evaluating the report.

“We will seek to implement new practices and continue proven methods that maximize student achievement and promote productive and efficient operations,” the statement read.

The report landed in the same week that Texas Education Commissioner Mike Morath announced plans to replace the district’s elected school board and choose its superintendent, the result of chronically low performance at Wheatley High School and substantiated findings of misconduct involving multiple HISD trustees. A revamped governance team could use the LBB report as a roadmap for restructuring the district.

Related: Read the full Houston ISD performance review

HISD trustees requested the budget board review in June 2018, hoping the analysis would offer an independent, unvarnished view of the district to guide budget and policy for years to come. The LBB has conducted more than 200 school district performance reviews in the past 25 years, including an analysis of HISD in 1996. The review cost about $2 million, with the state covering 75 percent and HISD paying the rest.

HISD Trustee Holly Maria Flynn Vilaseca, who supported the performance review, said the findings send “a clear message to administration” that changes are needed. She said board members will discuss in the coming months how to ensure some of the LBB’s recommendations are quickly enacted, possibly as early as the June 2020 deadline to pass the next fiscal year budget.

“This report should be taken seriously and should be a call to urgency,” said Flynn Vilaseca, who serves as chair of the HISD board’s audit committee. “We don’t expect this to be sitting on a shelf somewhere.”

A ‘road map’

The LBB largely dove into the district’s organizational structures to identify financial and structural inefficiencies. The analysis relied on extensive academic and financial data, interviews with district leaders and on-site investigation of operations. The board broke down its recommendations into five categories:

Strengthening spending practices and improving fiscal monitoring

Reorganizing and realigning staff structures

Standardizing programs and services

Improving communication, planning and procedures

Improving school board operations

“The recommendations serve as a road map a school district can use to make improvements,” LBB officials said in a statement. “Once a (school performance review) is released, we are available to provide any further assistance a district may request.”

While the unflinching portrait bodes poorly for the district’s administration and school board, HISD has received back-to-back B-level grades under the state’s academic accountability system. HISD, on average, also outperforms other large, urban public school districts with similar student demographics.

The report also illustrates the challenges of running a $2-billion government enterprise that employs nearly 25,000 adults and educates about 210,000 children. The authors note HISD’s operations suffer from frequent administrative turnover, poor governance practices and a lack of organizational structure — issues that commonly afflict the nation’s biggest school districts.

The LBB issued several politically palatable recommendations that some community leaders, educators and board members long have sought. They include reducing administrative positions, staffing more campuses with counselors and crafting stronger budget practices.

Most recommendations involve anodyne changes to oversight and structure of the district’s many behind-the-scenes departments, including technology, contract management and transportation.

Other recommendations likely would face immediate backlash, including the suggestion that the district consider shuttering underutilized campuses. School closures have proven particularly fraught in Houston, as lower-enrollment campuses typically serve lower-income children of color.

On HoustonChronicle.com: Beyond the headlines, HISD continues to perform ‘better than people think’

Return to centralization

One of the bigger shifts recommended by the LBB involves centralizing more district operations to ensure consistent, uniform practices. Currently, HISD delegates extensive autonomy over campus-level finances, staffing and programming to principals, a rarity among the nation’s largest public school districts.

Supporters of the decentralized system argue campus leaders are best positioned to know their students’ needs and craft innovative plans for raising student achievement. Opponents claim the setup leads to inconsistent student outcomes, particularly for children in the city’s most impoverished neighborhoods. The LBB largely sided with critics of the structure.

“Independent campus decisions result in a student experience that differs across the district, and students may not be served consistently,” the report’s authors wrote.

Jodi Moon, who studied HISD’s decentralized model as a researcher with Rice University’s Houston Education Research Consortium, said the district’s system creates “a greater continuum of successes and failures” between schools. She questioned, though, whether a district as large as HISD would see significantly different results under a centralized setup, noting that principal experience, school choice participation and myriad other factors contribute to campus-level outcomes.

“I just find it hard to believe that you’re going to find any of the larger, urban districts where there’s a lot of uniformity,” Moon said.

LBB officials also emphasized the role of HISD trustees in fostering frustration with the district, writing that the board’s “lack of professionalism” ranked as the primary complaint among community members interviewed for the report. The authors found multiple trustees interfered with hiring decisions, sometimes pushing for candidates based “at least partially on their race or ethnicity,” and overstepped their roles by consulting with principals.

“This practice usurps the leadership and authority of Houston ISD administrators and establishes an atmosphere of distrust and uncertainty about decision-making at the district and campus levels,” the authors wrote.

Amy Maddux, an HISD parent who pushed for the LBB review as part of a grass-roots community coalition, said administrators and board members should take the findings seriously as they structure budgets, staff and programs. She called for returning any savings to campuses through the district’s funding model, which allocates money to schools based on enrollment and student demographics.

“It feels to me like the last time this happened, some 20-odd years ago, nothing came of it,” Maddux said, referring to the 1996 review of HISD. “It also seems like that happens a lot in this district: something is studied and nothing comes of it. I hope there are some real hard looks at things that come out in the report.”

jacob.carpenter@chron.com