Regent says employee tip led to internal OSU audit that showed alleged misspending

STILLWATER – A subordinate of the OSU/A&M Board of Regents said Friday the kernels that led to an Oklahoma State University interior audit – which appears to person led to erstwhile President Kayse Shrum’s surprise resignation – were planted successful June with a whistleblower’s extremity from an OSU employee.

Regent Jennifer Callahan, who led a regents’ task unit investigating governance issues astatine OSU, spoke with reporters pursuing a regularly scheduled committee meeting, 2 days aft the audit, which OSU said showed misspending by the OSU Innovation Foundation of wealth that was legislatively appropriated for different purposes.

Callahan said the audit “speaks for itself” arsenic acold arsenic who bore work for what happened and that the Innovation Foundation “is moving connected it close now” to reimburse the entities to which the wealth primitively had been appropriated.

What to cognize astir the OSU audit findings

Among the findings of the audit were that the assemblage did not decently relationship for $41 cardinal successful legislatively appropriated funds betwixt July 1, 2022, done Jan. 15, 2025, a clip during which Shrum was serving arsenic president.

The scope of the audit was constricted to an magnitude of astir $55.5 cardinal for fiscal years 2023 to 2025, and sought to effort and recognize the circumstantial restrictions and intended uses of the appropriated funds. It did not see each legislative appropriations during that time.

In investigating the alleged misspending, Callahan said, “The strategy worked – committee oversight, autarkic interior audit functions, autarkic outer audit functions, arsenic good arsenic authorities laws that were successful spot to negociate this, each showed that the strategy worked.”

According to the audit’s enforcement summary, the $41 cardinal successful funds “were not decently restricted and successful immoderate instances were co-mingled with different funds, starring to expenditures that were not aligned with the restricted purposes.” The improper handling of funds, the audit said, included unauthorized transfers to the OSU Innovation Foundation, 1 of Shrum’s favored projects, which was rebranded successful 2023 from its erstwhile name, the Oklahoma State University Research Foundation.

“Such actions successful immoderate cases violated authorities laws and policies, thereby posing fiscal and reputational risks to the institution,” the audit said.

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Callahan said the assemblage is consenting to enactment with different authorities agencies, including the authorities auditor’s office, if it’s determined that volition fulfill the regents’ extremity of transparency.

“The study speaks specifically to the authorities laws that were violated,” Callahan said. “There are circumstantial relations arsenic it relates to, if you privation to telephone them auxiliary oregon affiliated entities. There is simply a heightened level of scrutiny, and I deliberation for bully reason, that erstwhile payer dollars are transferred to an entity, that adjacent if it’s a 501(c)3 (nonprofit), it’s a backstage entity.”

Kayse Shrum disputes findings of OSU audits

Shrum hasn’t responded to aggregate messages near by The Oklahoman since her resignation, but successful a connection issued to the Tulsa World, she disputed the findings of the audit, saying regents and attorneys were alert of the transfers of wealth betwixt entities and did not rise immoderate concerns.

“I bash not person immoderate cognition that immoderate laws were broken," Shrum told the newspaper. "To my knowledge, perfectly thing was done that was incorrect oregon inappropriate. My grooming is arsenic a physician, I americium not a lawyer, and I relied upon the aforesaid ineligible proposal that the Board of Regents were given. There is perfectly nary wealth missing. No authorities wealth has been taken. All of the wealth is inactive successful OSU accounts and was spent connected delivering acquisition and probe per the ngo of the university."

Asked for a response, Callahan said, “You’d astir apt person to spot what was really communicated to the regents earlier you determine responsibility.”

Callahan seemingly spearheaded the probe aft the Oklahoma Senate confirmed her to a spot connected the OSU/A&M committee successful July. She joined the committee astir a period aft the archetypal whistleblower complaint, she said, and was briefed successful August astir the issue. At the aforesaid time, she said, she was asked to regenerate a erstwhile regent connected the committee of the Innovation Foundation.

Callahan, an attorney, said she observed an August gathering of the Innovation Foundation committee “and became acrophobic astir its governance operation and its nonaccomplishment to comply with the Open Meeting Act.” She said that owed to her concerns, she ne'er formally attended a gathering arsenic a committee member.

In November, she received a briefing concerning the issues with spending of authorities funds and soon formed a Governance Task Force with 2 different regents, Joe Hall and Chris Franklin. That task unit recovered “serious issues” and yet presented the findings during an enforcement league during a January meeting, aft which Callahan made a question to frost funds associated with the Innovation Foundation, which passed unanimously.

Shrum officially resigned from OSU connected Feb. 2, but OSU officials kept the concern so secret the regents didn’t officially denote Shrum’s resignation until two days later, neglecting to springiness a heads-up to cardinal authorities higher acquisition officials, including Chancellor Sean Burrage and Dennis Casey, the seat of the Oklahoma State Regents for Higher Education.

Less than a week aft Shrum resigned, regents named Jim Hess arsenic OSU’s interim president. Board Chair Jimmy Harrel opened the OSU information of Friday’s gathering by expressing the board’s assurance successful Hess. Later successful the meeting, the committee approved an yearly wage for Hess of $650,000. Harrel said the committee would find the timeline for the OSU statesmanlike hunt “at a aboriginal date.”

What the audit recovered astir the Innovation Foundation

According to its website, the Innovation Foundation's ngo “is to maximize the interaction of OSU’s excellence successful aerospace and precocious mobility, energy, agriculture, and One Health by translating innovative applied probe into products and services, facilitating beardown partnerships with aligned manufacture and determination partners, and investing successful the improvement of emerging companies — each for the payment of society.”

A cardinal uncovering successful the audit was the Innovation Foundation lacked “independent funding” and “is not operating with fiscal independency and has inappropriately utilized legislative appropriations intended for OSU.” The audit recovered the Foundation “relied connected inappropriately transferred legislatively appropriated funds intended for OSU peculiar projects to enactment 96% of (its) operating costs.” Callahan confirmed that fig Friday.

More: What is OSU's Innovation Foundation? Funding successful spotlight arsenic Kayse Shrum, different resigns

The Innovation Foundation’s enforcement director, Elizabeth Pollard, resigned soon aft Shrum. Pollard told the Tulsa World, “The Innovation Foundation followed University argumentation and procedures, including fiscal reporting into University systems.”

Asked however overmuch work Pollard had successful the situation, Callahan paused a infinitesimal earlier responding, “We cognize what her rubric was, right? I think, again, the audit study speaks for itself.”

The audit besides recovered that betwixt 2023 and 2025, $55.5 cardinal successful legislatively appropriated funds from the OSU Medical Authority were not afloat presented to the OSU/A&M regents’ committee for budgetary approval, thing required by some the committee and the Oklahoma State Regents for Higher Education.

The audit said $41 cardinal of that magnitude had been transferred from the Medical Authority to OSU. It besides said OSU transferred $11.5 cardinal successful legislatively appropriated funds to the Innovation Foundation – wealth provided done OSUMA and intended for the University.

This nonfiction primitively appeared connected Oklahoman: Regent: OSU audit connected alleged misspending sparked by worker complaint