By Nuria Martinez-Keel and Emma Murphy, Oklahoma Voice
OKLAHOMA CITY — A day after a critical audit of Oklahoma State University was made public, the university refused to answer questions on if it had prompted the sudden February resignation of the university’s president.
The audit found millions of dollars that were intended for specific programs instead went to unrelated funds, and OSU leaders understated the amount of money the university had in its budget.
In response to open records requests, the Oklahoma A&M Board of Regents released the report Wednesday from its internal auditing office two days before their scheduled monthly meeting, shedding light on the financial circumstances during the tenure of OSU President Kayse Shrum. Their Friday meeting agenda does not mention the audit or launching a search for a permanent replacement for Shrum.
The university’s governing board began receiving anonymous employee complaints related to funding and spending at the Innovation Foundation in the spring of 2024, a governance task force was created to review the situation in fall 2024 and an internal audit followed, an OSU spokesperson said Thursday.
Auditors found OSU since 2022 had wrongly transferred $41 million into accounts that didn’t align with the specific purpose the state Legislature had intended the money to support.
The audit recommended the misappropriated funds be returned. An OSU spokesperson said the university will be able to rectify what was discovered through the audit process and is confident that this will not impact students’ tuition or academic programs.
For example, $11.5 million designated for health, polytechnic and aerospace programs instead went to the Innovation Foundation at OSU, rebranded from the Oklahoma State University Research Foundation in 2023. The foundation aims to “maximize the impact of OSU’s excellence in aerospace and advanced mobility, energy and agriculture.”
The foundation received this money without the Regents approving a contractual agreement for it, according to the audit.
“The board and OSU administration are committed to transparency and to taking swift action that protects the university’s commitment to students,” regent Jennifer Callahan said in a statement Wednesday.
OSU officials declined to answer questions Thursday on what role the university’s governing board played in overseeing these transactions, but said a member of the board may be able to shed more light on the situation after Friday’s board meeting.
The audit does not specifically name any specific individuals as being at fault.
Shrum suddenly resigned Feb. 3, but it was not made public by the Regents or the university until Feb. 5. A spokesperson for the university said the news was made public two days after Shrum resigned because that was the “agreed upon timeline” between Shrum and the board.
OSU has not connected Shrum’s resignation with the audit and continued to decline to answer questions on her reasons for departing.
Her nine-sentence long resignation letter, obtained by Oklahoma Voice, provided no reasons for her departure and did not mention the Innovation Foundation. In the letter, Shrum wrote that she plans to return to the tenured faculty at the OSU Center for Health Sciences in July following a sabbatical, per her contract.
Shrum did not respond to messages left seeking comment.
Auditors recommended a review of whether the foundation is financially viable. The report found 96% of the foundation’s funds came from OSU and that it generated only 2% of its own revenue independently while the remainder came from professional services.
OSU officials on Thursday did not say where the funding would come from, but said there is “ongoing strategic review of the foundation’s operations, governance and funding.”
The OSU Regents have halted any further fund transfers to the foundation.
Multiple top OSU administrators, including Shrum, served on the Innovation Foundation’s board, raising conflict of interest concerns, auditors reported. In 2023, Shrum said the foundation was a “crucial pillar” of her strategic plan for OSU.
Innovation Foundation President Elizabeth Pollard resigned following Shrum’s departure.
Pollard could not be reached for comment Thursday. She told the Tulsa World in an email that regents and administrators were kept informed of the foundation’s activities and that she was not aware of any missing funds.
The audit report also raised significant transparency concerns within Shrum’s administration.
OSU leaders underreported to their governing board the amount of money the Legislature had appropriated to the university by $55.5 million. These funds weren’t included in the administration’s budget presentation to the OSU/A&M regents, according to the report.
The $55.5 million funds the Legislature appropriated to the OSU Medical Authority had cooperative agreements in place with the university that outlined how the money was intended to be used.
After Shrum resigned, the regents appointed Jim Hess, an administrator at the OSU Center for Health Sciences, as the university’s interim president Feb. 7.
Hess and the regents are “taking swift action” to address the matters raised in the audit, said Lance Latham, OSU’s chief communications officer. Hess is listed in the audit as the official responsible for overseeing all recommended corrective actions.
“Dr. Hess has underscored that while the financial decisions and transactions which occurred are concerning, they were isolated and do not impact OSU’s overall financial foundation, which remains the strongest among Oklahoma’s institutions of higher education,” Latham said in a statement.
OSU declined to comment on whether or not criminal charges would be pursued as a result of the audit’s findings.
