HOUSTON ENDOWMENT INC. A PHILANTHROPY ENDOWED BY JESSE H.

AND MARy GIBBS JONES

ANN B. STERN
President

July 22,2013 Dr. Terry Grier Superintendent of Schools Houston Independent School District 4400 West 18th Street Houston, TX 77092-8501 Ms. Anna Eastman President, HISD Board of Education c/o HISD Board Services th 4400 West 18 Street Houston, TX 77092-8501 Dear Dr. Grier and Ms. Eastman: In May 2011, the Board of Directors of Houston Endowment Inc. ("HEI") authorized a grant in the amount of$6 million to the Houston lndependent School District Foundation toward implementation of the Apollo 20 program. HEI subsequently made two annual payments totaling $3 million toward this obligation. HEI' s grant contract contemplates a final payment in the amount of$3 million on or before July 31, 2013. The grant contract requires that the HISD Foundation submit an annual progress report to HEI one month prior to the scheduled payment date. Further, the contract provides that HEI can either withhold or cancel its grant if any of the following conditions occur: a. The Apollo 20 program is not being executed in a manner as described in the HISD Foundation' s proposal dated April 4, 2011. b. There have been material modifications to the Apollo 20 program that have not been accepted in writing by HE!. c. The Apollo 20 schools do not demonstrate year over year progress based on standardized test scores. While the HISD Foundation submitted an annual progress report to HEI earlier this month, the report does not provide us with sufficient information to determine whether any of the stated conditions have been met. Most significantly, the report lacks meaningful data with respect to academic performance results and there is no evidence of any external validation. As a result of the report's deficiencies, HEI has elected to put a hold on the remaining $3 million payment. In light of the seriousness ofHEI's concerns, we would like to meet with you and if possible, Dr. Fryer, as soon as practicable. To ensure the best use of everyone's time, prior to that meeting we will provide a more specific description of the information that HEr would need to see before

600 TRAVIS. SUITE 6400

HOUSTON,TEXAS 770023000 (713) 2388100 FAX (713) 238 8101

proceeding with the [mal payment. We request that attendance at the meeting be limited to those who have direct leadership and/or operational oversight of Apollo 20 as well as a representative of the HISD Board of Education, preferably the President. There is no need for representatives from the mSD Foundation or community oversight board to attend. To coordinate a mutually convenient meeting time, please contact my assistant, Amanda KuIm, at 713-238-8112. Sincerely,

AnnB. Stem

cc:

HISD Foundation, board chair HISD Foundation, executive director