North Carolina’s state auditor released its annual financial audit of North Carolina A&T State University in July, and the headline result was clear: the books of the nation’s largest historically Black university are accurate and reliable. The report carried a single finding, an internal control weakness in how one pool of student financial assistance was awarded. But the detail that says the most about where A&T stands today is not in the finding itself. It is who found the problem first. Not state investigators. The university.
During the fall 2025 semester, members of Chancellor James R. Martin II’s team raised concerns with him about improper disbursements of financial assistance that predated his arrival in 2024. Martin authorized a full investigative audit through the university’s Office of Internal Auditing, and that internal investigation uncovered the problem and referred it to the North Carolina Office of the State Auditor. By the time the state’s report was published, the university had already investigated itself, discontinued the practice, taken personnel actions, and referred the matter for external review.
The finding lands at a moment of considerable strength. A&T is posting record enrollment, growing its balance sheet, and remaining above the University of North Carolina System’s financial health threshold.
What the Investigation Found
The money at issue came from a pool called Administrative Recovery Funds, cost-recovery dollars generated from fees students pay for housing, dining and parking. These were not federal or state-allocated funds. According to Martin’s April message to campus, the university’s internal investigation found $5.1 million in improper disbursements over an eight-year period, awarded through the Division of Business and Finance during the tenure of the former vice chancellor for that division rather than through the Office of Financial Aid and Scholarships.
The state auditor’s April special report covered that full eight-year period. The annual financial audit released in July examined only the 2024-25 fiscal year, and found the university awarded about $747,649 from these funds to 196 students without documented eligibility criteria. Senior officials selected the students and set award amounts without independent review, and the duties of authorizing, approving, and disbursing the aid were not separated. In a sample of 60 recipients, auditors found 23 students received $175,669 with no documented basis for eligibility or amount.
A Response That Preceded the Report
The university’s corrective actions were largely in motion before the July report was published. The practice of Business and Finance awarding financial assistance has been permanently discontinued, with aid administered exclusively through the Office of Financial Aid and Scholarships. The senior officials directly involved are no longer employed by the university, and the university is evaluating options for recovering the funds. In coordination with the state auditor, the matter has been referred to the Guilford County District Attorney’s Office and the State Bureau of Investigation, a referral the university says it initiated as part of its commitment to full transparency.
In its formal audit response, A&T agreed with the finding in full and committed to two further steps: contracting an external audit firm to independently review the entire financial aid awarding process and building a comprehensive policy covering all internally funded scholarships, with defined eligibility criteria and separate duties. The university expects to complete the corrective actions by Dec. 31, 2026, and the state auditor’s office has said it will monitor implementation.
“We hold ourselves to the same standard we ask of our students, faculty, and staff,” Martin wrote in his campus message, adding that the improper disbursements “are from a prior period” and “do not reflect the institution we are today.”
Behind the Finding, a Clean Audit and a Growing University
Beyond that single control weakness, auditors found A&T’s financial statements accurate and reliable, a clean opinion that is the strongest result an audit can produce. And the numbers those statements report describe a university expanding on nearly every front.
Total revenues reached $521.6 million, while expenses totaled $491.4 million, increasing the university’s net position by $30.2 million to $716.8 million. Fall 2025 enrollment climbed 6.7% to 15,275 students, making A&T the first historically Black university to surpass 15,000 and extending its run as the nation’s largest at a time when much of higher education is fighting decline. And the run is not over: the university expects a second consecutive record this fall, with enrollment projected to surpass 16,000 students. The endowment reached $247 million, faculty researchers secured $96.4 million in contracts and grants, and the university holds strong credit ratings from both Moody’s (Aa3, stable) and Fitch (AA, stable).
What the Financial Health Score Shows
The university also stands on the right side of the UNC System’s key financial health measure. Each spring, the system calculates a Composite Financial Index for each campus based on the prior year’s audited financial statements. The score blends four questions: does the university have enough in reserve, can it cover its debts, is its financial position improving, and is it living within its means. The industry standard for financial health is a score above 3.0. A&T remains above that line, though its score declined in 2024-25, a distinction it shares with East Carolina and Winston-Salem State. N.C. Central was the only public university in the state to fall below the overall threshold.
The component detail shows exactly where A&T’s dip came from. The university cleared the two balance-sheet components, reserves and debt coverage, consistent with its strong credit ratings. It fell short on the two operating components: return on net position, which asks whether financial strength is improving, and net operating revenues, which asks whether revenues are keeping pace with expenses. On that second measure, A&T is in notable company. N.C. State and UNC-Chapel Hill missed the same threshold.
The audit explains why. The university’s surplus before capital gifts and endowment additions narrowed from $70.5 million to $6.2 million in a single year, as pandemic-era federal support ended, one-time foundation gifts rolled off, and spending on people, scholarships and facilities accelerated. The balance sheet is strong; the operating margin tightened. University leadership is treating that dip as a call to action rather than a footnote.
Where Athletics Fits In
For readers who follow Aggie athletics, the audit carries a structural point worth understanding: A&T’s athletics budget lives inside Campus Enterprises, the university’s family of self-supporting operations that also includes housing, dining, parking and the bookstore. In the university’s “colors of money” framework, athletics sits with housing and dining among the fee-funded trust funds. These dollars carry more flexibility than state appropriations, but they must ultimately answer to their own bottom lines, because state money does not backfill them.
In 2024-25, Campus Enterprises operations generated $57.5 million in gross revenues, including $4.7 million from athletics sales such as tickets and events, against $83.7 million in operating expenses. The audit does not break out athletics’ share of that spending, and the gap is not a clean profit-and-loss figure since these operations also serve internal campus functions. But it is the backdrop for the university’s work with Campus Enterprises units to proactively address structural gaps between what those units bring in and what they spend. Athletics also maintains its own reserve, held separately from the university’s central reserve, as do dining, housing and student fee accounts.
The enrollment surge is the other half of the athletics story. Because Campus Enterprises units are funded substantially by student fees, each enrollment record broadens the base supporting Aggie athletics. A campus with over 16,000 students is, among other things, a growing revenue base for the athletics program.
Managing the Reserve Opportunity
Behind the headline numbers, university leadership is openly confronting the cost side of rapid growth. Operating expenses rose 18.8% in 2024-25, driven by a 10% increase in headcount, a doubling of scholarship spending, and major capital work. The university’s central reserve, its main flexible cushion, declined from $29.0 million to $16.1 million during the year and is projected to end 2025-26 at $12.4 million. For perspective, that reserve stood at $35.7 million as recently as the start of the 2021-22 fiscal year, and it is the central fund only; dining, housing, athletics and student fee reserves are held separately.
Presentation materials from A&T’s recent Board of Trustees annual retreat trace the drawdown to three causes: the $20 million steam plant, an annual merit aid commitment that had reached $12 million, and delays in reimbursements from contracts and grants. Each has a corresponding fix in leadership’s plan.
The largest lever is merit aid. The university has cut new merit aid commitments from $12 million to $1 million per year, a change that will take about four years to reach full effect as existing student commitments run off, but one that ultimately redirects roughly $11 million a year back toward the reserve. Leadership is also working with the contracts and grants operation to improve infrastructure, so reimbursements for sponsored research arrive faster, tightening spending around events, and being intentional about using general funds where possible so flexible dollars are not spent on costs the state can cover.
The plan also protects the reserves that sit outside the central fund. Dining holds a healthy reserve, and rather than drawing it down, the university will use its new dining partner’s capital investment to renovate Williams Dining Hall. The same discipline extends across Campus Enterprises, athletics included, where leadership says it is proactively addressing structural gaps rather than letting them quietly erode reserves.
That combination of a self-initiated investigation, personnel accountability, a clean audit, record enrollment and a public plan to rebuild reserves positions A&T to keep growing on a firmer foundation. The December 2026 deadline for corrective actions gives supporters a clear marker to watch.
