Use of money from endowments' principal among the problems cited
A state audit released Wednesday criticizes the beleaguered Texas Southern University for mismanaging endowment funds, putting its financial future in jeopardy and keeping inaccurate records.
The audit, conducted as a routine measure by the State Auditor's Office, deals another blow to the nation's second-largest historically black university, which has had to cut jobs and raise tuition this year amid a spending scandal involving the former president.
Two weeks ago a Harris County grand jury indicted Priscilla Slade, who served as president of TSU for about seven years before being fired in June, and three aides on allegations they misused school dollars.
The audit focused solely on the university's $23 million in endowment funds — donations slated primarily for offering scholarships to students and creating professorships.
"I think the report speaks for itself. It's pretty clear that Texas Southern University hasn't managed its endowments adequately," State Auditor John Keel said Wednesday.
The written audit does not place blame on any individuals, but Keel said the university's Board of Regents has the "ultimate responsibility" of overseeing the endowments.
Specifically, the audit found that the university spent money from the principal of several endowments — an atypical and generally undesirable move, according to Keel. Foundations usually leave the principal alone and spend the interest earned.
Auditors could not determine exactly how much TSU spent from the principal because of "poor recordkeeping," but they found at least $285,934.
"There's certainly nothing illegal or improper about contributing part of the principal to the cause, but it's probably a better practice" to avoid it, said Bill King, a TSU regent and an attorney.
The audit also found that TSU lacks a "well diversified portfolio" — a risky measure — and it fails to scrutinize "the long-term performance of its endowment investments."
If continued, the university's practices could "negatively affect the long-term growth of the endowment funds," the audit said.
Official looks at bright side
J. Paul Johnson, the chairman of TSU Board of Regents, and King characterized the audit's findings as problems that can and will be fixed.
"I think it's important to point out that the thrust of the audit report is a lack of internal controls. There's not any finding that any money's missing," King said.
"But clearly it shows there's work to be done on the internal controls," he continued. "I don't think that's too surprising to anybody based on what we found earlier this year," with the alleged presidential misspending.
Slade, who has a doctorate in accounting, has denied any wrongdoing.
The university released a three-sentence statement to the Chronicle in response to the audit.
"Texas Southern University has issued a formal response to the State Auditor and is taking corrective measures to ensure the University's total compliance," the statement said. "TSU agrees with the auditor's recommendations and has determined that these issues will be resolved within the next six months. The institution is strongly committed to upholding high professional and ethical standards."
Effect on donations
Johnson had not read the audit Wednesday evening but said he did not think the findings would thwart donations to the university.
"Again, we're working to correct any of the problems that were specified in the audit," he said. "We would hope that donors would continue to donate to our endowment. It's my understanding that this wasn't a massive problem. I don't think there were any illegalities per se."
Bertrand Simmons, president of TSU's Metropolitan Houston alumni chapter, also said he hoped alumni wouldn't abandon their support.
"As far as donations are concerned, I would certainly hope that donations don't go down, and I really wish that people would look at some of the good things that are happening at Texas Southern University," said Simmons, who graduated from TSU in 1979 with a bachelor's in economics.
"Unfortunately, you have to take the good with the bad sometimes," he added. "Hopefully we can get the leadership in place and move forward."
In Slade's absence, Bobby Wilson, the university's provost, is serving as acting president, and the university is seeking a new chief financial officer to replace Quintin Wiggins, who also was indicted in the spending scandal.