ABC-7 obtains audit warning YISD could become financially insolvent within 2 years

EL PASO, Texas (KVIA) – The Ysleta Independent School District’s general fund could become financially insolvent within one to two fiscal years, according to an audit obtained by ABC-7.

The audit warned there is “a significant rise of financial insolvency and a possibility of needing to declare a financial exigency."

The recently completed audit, conducted by YISD Internal Auditor Amy Sanchez, was obtained by ABC-7 after we filed an open records request with the district under the Texas Public Information Act on June 3. It covers financial transactions for fiscal years 2023–24 through 2025–26, as of February 28, 2026.

The report cites declining state revenues, the likelihood of a multimillion-dollar deficit in the health plan fund, continued enrollment declines, and the rapid depletion of the general fund’s unassigned balance as reasons for the significant risk of financial insolvency.

It is unclear when district and board members were first made aware of the audit, which is dated May 7. However, on May 20, the Board of Trustees received a presentation from Sanchez where she went over the status of various audits conducted by her office.

Although Sanchez did not discuss the audit's findings with the public, titled General Fund Financial Observations, during the meeting, the report prompted questions from Trustees Chris Hernandez and Shane Haggerty.

Hernandez asked whether the district could face insolvency in the next fiscal year, and Sanchez said it could unless expenditures are significantly reduced from current projections. Haggerty said he was frustrated that the board had repeatedly requested budget workshops and insurance updates but had not received them, adding that despite earlier discussions with insurance representatives, he was not aware of any follow-up updates.

ABC-7’s review of the May 20 meeting minutes shows that several audits were completed, though the reports were not included as supporting documents.

The audit stated if YISD continues on its current path, the general fund’s unassigned balance could be depleted by the end of the 2026–27 fiscal year.

The risk of general fund insolvency is rated at the priority level, the highest risk category in the audit’s rating system. According to the audit, this designation means that if the issue is not addressed, it could critically affect the District’s ability to meet its goals.

The district has relied on short-term loans to meet cash-flow needs, including a $49 million loan in June 2025, and an anticipated loan exceeding $50 million in May 2026, according to the audit.

The audit shows the district narrowly avoided receiving an "F" rating in the Texas Education Agency’s School Financial Integrity Rating System (FIRST) because of the short-term loan. Without such loans, the report says the district would not have enough cash on hand to meet rating requirements, further highlighting the severity of its financial situation.

The district’s unassigned fund balance has decreased by 75% over the past five years. According to the audit, the balance fell from $78.9 million in fiscal year 2021 to a projected $18.8 million in fiscal year 2026.

After accounting for losses in the health plan fund, the report shows the available unassigned fund balance could drop to as low as $12.1 million by June 2026.

The audit says that if the 2026–27 budget includes a deficit greater than $12 million, the district would not be able to meet its financial obligations for that year.

According to the audit, the YISD Board may declare financial exigency if one or more of the following conditions exist:

• A decrease of more than 20% in unassigned fund balance per student over two years (actual decrease: 41% in FY24-25, projected 45% in FY25-26).
• A decline in enrollment by more than 10% over the last five years (actual decline: 11% in FY24-25).

Superintendent Xavier De La Torre addressed the budget at Monday's Board of Trustees Workshop.

"The only reason I have not been as open and transparent or as aggressive as has been suggested...I need — I don’t need to create anxiety. I don’t need to create fear. I don’t want our teachers and employees going to work every day worrying about that instead of worrying about the kids. And we have time," Superintendent De La Torre said. “Don’t believe for a minute there isn’t a plan. I just don’t need my plan being forwarded to other people and other places until I’m ready to execute. And that’s the truth."

ABC-7 requested an interview with Superintendent De La Torre about the audit and its findings. District officials said he is not available for comment until Wednesday.

ABC-7 has also reached out to school board members for comment.

The district is expected to present its proposed budget to the board Wednesday, June 17.

Read the full audit below.