Texas State Auditor Uncovers Major Financial misappropriation totaling $282 million at Texas Southern University
Texas State Auditor Lisa R. Collier issued an interim update on Monday revealing significant financial and operational deficiencies at Texas Southern University (TSU), one of the state’s largest historically Black universities. The findings, part of a larger audit of financial processes included in the Fiscal Year 2025 Audit Plan, featured interconnected issues stemming from staffing shortages in critical areas, leading to lapses in asset management, procurement, contracting, and financial reporting.
Collier notified the Legislative Audit Committee in May 2025 that the audit had commenced. Fieldwork is now complete, and the auditor plans to meet with TSU officials on Thursday, November 13, to discuss preliminary results. Any new information provided by the university that alters the findings will prompt an immediate update to lawmakers.
Asset Management Failures
The audit found that TSU has not conducted annual physical inventories of assets, a standard practice for ensuring accountability. Compounding this, the university’s official system for tracking assets is incomplete, outdated, and inconsistently maintained. These gaps contribute to poor oversight and increase the risk of loss or misuse of state resources.
Procurement and Contracting Irregularities Totaling Hundreds of Millions
Data analysis uncovered alarming discrepancies in TSU’s procurement and contracting processes:
• 743 invoices totaling approximately $282.2 million were paid to vendors whose contracts were listed as expired in the university’s database.
• 8,144 invoices amounting to roughly $158 million had invoice dates prior to their corresponding requisition dates, suggesting payments were processed without proper upfront authorization.
Auditors sampled transactions and discovered that TSU lacked valid contracts for some purchases. In certain cases, contracts were expired, unsigned, or did not explicitly cover the goods or services acquired. The university also failed to adhere to its own procurement procedures, which mandate the creation and approval of requisitions before invoice payment—a step skipped in the sampled cases.
Delayed and Inaccurate Financial Reporting
TSU’s financial reporting to the Texas Comptroller’s Office has been neither timely nor accurate. Audited financial statements for fiscal years 2023 and 2024 were submitted 10 months and 4 months late, respectively. The university also inconsistently followed internal processes, such as completing reconciliations, to verify data accuracy.
Collier emphasized that the identified deficiencies are “interrelated,” with staffing gaps in key financial functions exacerbating each problem area.
Next Steps and Legislative Oversight
The State Auditor’s Office is drafting its full report. The interim letter was addressed to key legislative leaders, including:
• Lt. Gov. Dan Patrick (Joint Chair, Legislative Audit Committee)
• House Speaker Dustin Burrows (Joint Chair)
• Sen. Joan Huffman (Senate Finance Committee)
• Rep. Greg Bonnen (House Appropriations Committee)
• Sen. Robert Nichols
• Rep. Morgan Meyer (House Ways and Means Committee)
Copies were sent to chief of staff members and policy directors in relevant offices.
TSU, located in Houston, serves over 8,000 students and receives substantial state funding. These findings raise questions about fiscal stewardship at the institution and could influence future appropriations.
Collier invited questions from committee members and pledged transparency as the audit concludes.
Lieutenant Governor Dan Patrick gave a statement about the findings: Over the last few months, the Texas State Auditor has been auditing Texas Southern University. They have been reviewing TSU’s financial processes, procurement operations, and inventory records.
Over the weekend, I was informed of disturbing information suggesting the misuse of state funds. We reached out to the State Auditor on Saturday for an update on the audit.
The information I had been given appeared to be accurate.
This morning, the auditor confirmed that thousands of unauthorized invoices totaling hundreds of millions of dollars have been identified.
The details are provided in the attached letter below.
Sadly, TSU has come under scrutiny in the past over how finances and contracts have been handled, as well as shoddy work done by contractors.
There has been a revolving door of presidents, board members, and school officials. Graduation rates have not met expectations.
The legislature has continued year-after-year to try to help the school. It appears the legislature has been misled over this time period on promised improvements in accounting practices and contracting.
Based on today’s audit update, I am calling for a Texas Ranger investigation of TSU. I am asking the Rangers to work in concert with the State Auditor to determine if there are violations of state law.
Everyone involved must be held accountable, from school employees to contractors, going back as many years as there are questionable records and practices. Let the facts lead where they may.
I will contact the Governor and Speaker to agree on budget execution language to put a freeze on TSU’s current appropriation. I don’t want one more taxpayer dollar spent until this issue is resolved.
The losers are not only Texas taxpayers, but the students of TSU, having no idea that funding meant for their quality education was either fraudulently spent or thrown away by sloppy, unprofessional accounting processes.
The full interim update is available on the State Auditor’s Office website at www.sao.texas.gov.