Audit finds Idaho State University likely misused state funds for defunct pathology center

A legislative audit found that Idaho State University likely misused funds intended for a never-realized forensic pathology center in Pocatello.

The report found that the university appeared to pay Bannock County funds improperly in order to avoid reverting the unspent money to the state. The issue may go to Idaho Attorney General Raúl Labrador for further investigation.

The Legislative Services Office released the audit report Wednesday, which was too limited in scope to conclude malfeasance, Auditor April Renfro wrote in the audit summary, but facts that “may indicate misappropriation of public funds” were forwarded to the state’s chief litigator for further consideration.

Labrador’s office did not immediately respond to a request for comment on if an investigation will be pursued.

“ISU paid an invoice for $853,700 from Bannock County that was not supported by evidence of allowable expenses and appeared to have been directed and submitted to avoid reverting unspent general funds to the State of Idaho, as required,” the report said.

ISU President Robert Wagner and Chief Financial Officer Jennifer Steele responded in a letter that the university “takes seriously the findings of the audit and its recommendations for use of public funds.”

“We acknowledge the concerns raised in the report and agree to continue to implement measures to ensure appropriate accountability for financial transactions,” the university leaders wrote.

Audit spurred by Idaho senator and a conservative think tank IFF article

The funds originated from a 2022 budget bill to the university for a proposed East Idaho Forensic Pathology Center, which would have been built on ISU’s campus and operated by Bannock County.

The Legislature provided $900,000 for initial costs incurred on the project; ISU spent $46,300 in design consultation and cost estimates, ISU spokesperson Emily Frandsen told the Idaho Capital Sun for a previous story.

The university on April 20, 2023, paid Bannock County the remaining $853,700 for the project but didn’t specify what those costs related to, the report said. The project eventually stalled because of the high costs for construction and to run autopsies, the Sun reported.

In November 2024, the conservative think tank Idaho Freedom Foundation published an article citing public records showing that the funds were never reverted back to the state. Sen. Glenneda Zuiderveld, R-Twin Falls, that same month sent out a press release alleging ISU misappropriated the funds for the defunct project and calling for an investigation, the Sun reported.

The report cited the IFF article and emails showing that the university appeared “concerned about ensuring appropriation was not reverted to the Idaho State General Fund by stating that ‘“we need to expend the $900K state appropriation to ISU by June 30, 2023. We think the cleanest path forward is for the county to invoice us for the $900K.’”

The invoice did not include details on what costs were incurred that it was for, as required by the bill providing the funds, House Bill 776.

“We found no evidence that ISU attempted to obtain additional documentation to support the

expenditure or to recover the funds until after the media and Legislature began asking questions,” the report said.

ISU has taken steps to address findings in report

The report found that ISU employees interpreted the money as “pass-through” funds for the county, which was “problematic” because that is not how they were indicated on the legislation appropriating the money.

Bannock County in late 2024 and early 2025 returned the money through two checks totaling $853,700, to ISU, which then sent the money back to the state treasury, the report said.

The audit provided two recommendations to the university: develop and follow written procedures for proper monitoring and compliance with appropriation laws, and improve internal controls to ensure payments are supported by appropriate documentation and actual expenditures.

In February of this year, the university created an Appropriations Tracking and Oversight Team, meant to ensure state money is expended in full compliance with the legislative intent and law. University leaders cited the new team in its response letter and said they had implemented “new procedures.”