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Top Tennessee Republicans say they are concerned about potential financial records mismanagement in Memphis-Shelby County Schools after they received a confidential briefing this week on the ongoing financial audit into the state’s biggest school district.
Republican lawmakers on Thursday did not provide details of what they learned from auditors on Wednesday, citing confidentiality concerns until the audit, which so far has cost $6 million, is complete. But some legislators said the audit reiterated the need to pass aggressive Memphis district takeover legislation the House Republicans are pushing.
“I won’t speak to the details of what they reported, because their report is not complete, but there are certainly indications there that there’s really poor records management, at a minimum, and the potential for waste, fraud and abuse is extensive,” said Sen. Bo Watson, a Hixson Republican who chairs the Senate Finance Committee.
In an emailed statement, MSCS leaders said they meet with the audit firm weekly and have not been informed of any “potential or suspected findings related to fraud, waste or abuse.”
“We understand the gravity of these concerns, and we take them seriously,” the statement says. “MSCS has strong internal controls in place and will continue working closely with the audit team to address any findings promptly and responsibly.”
Watson said Thursday more money is needed to get the audit across the finish line, though neither he nor House leadership would speak to how much additional funding is needed. Watson said the audit firm told lawmakers the search will take longer than it anticipated due to “the level of disorganization” and “extensive” lack of information from the district.
“Much of the record is in a paper format with poor cross references, lack of invoices, a computer system that is designed to allow for certain records to disappear after a certain time period,” Watson said. “There’s a lot of forensic investigation that’s having to occur.”
Lawmakers didn’t reference any allegations of fraud. And district leaders said they are aware their systems are outdated, but they are in line with state and federal regulations.
“Importantly, instead of directing additional taxpayer dollars toward expanded audits alone, we would welcome targeted financial support from the State to help modernize outdated systems,” MSCS said in its emailed statement.
Lawmakers funded the audit after the controversial 2025 firing of then-Superintendent Marie Feagins, which also prompted Republicans to float legislation last year to seize some control of MSCS functions.
Memphis Republican Sen. Brent Taylor and Rep. Mark White, who are sponsoring Memphis takeover bills, both declined to get into specifics about what they learned at the audit update. But White said he heard some “very concerning” details, and Taylor said the update reiterated his goal to pass the more aggressive House takeover bill.
House Speaker Cameron Sexton, a Crossville Republican, said the concerns raised by the ongoing audit support the need for state-led oversight of the Memphis district.
“It further tells us that the House version is correct, which is a total takeover of the Memphis-Shelby County school system. I can’t go in more detail than that, but we’re having those conversations. I’m hopeful that we’ll be able to take them over, because it’s a nightmare,” Sexton said.
The Tennessee Comptroller held the closed-door meeting on Wednesday with auditors and lawmakers. It’s not clear who was invited to the meeting or if the district was informed lawmakers would be briefed.
MSCS board member Michelle McKissack said she thinks auditors should share what it’s found publicly before the state invests more money.
“We have not heard or received anything at all from the state, and so it’s starting to feel like a fishing expedition,” McKissack said. “I don’t know what exactly they are looking for and how far back they’re going.”
McKissack said she initially supported the audit as a way to collaborate with the state to improve district functions.
“I believe that with a school district of this size, how large it is, that there could be some discrepancies,” she added. “But all the audits that we’ve had previously have been conducted with an outside party and came back clean.”
The Comptroller’s office declined to provide details on the meeting to Chalkbeat Tennessee. A spokesperson said the update was not based on any final findings but confidential working papers, which are shielded from Tennessee public records law.
Last year, Tennessee lawmakers approved $6 million for the financial audit, and accounting firm CliftonLarsonAllen, LLP signed a contract with the Tennessee Comptroller in July. The contract is set to expire in January 2027.
Per state law, the district already submits annual financial and compliance audits performed by an external firm, which have on occasion revealed things such as payroll lapses and contract overpayment.
Though takeover legislation stalled last year over disagreements between the two chambers, it could move forward quickly if leadership can strike a compromise this spring.
House Republicans favor a more aggressive approach that would install an oversight board, handpicked by the governor and legislative leaders, to assume control of all major district decisions. The more muted Senate approach would install a similar oversight board that had less power and more input from local elected officials.
Taylor, the Senate sponsor, is now on board with the House plan. He said Wednesday the audit update only solidified his decision to pursue a more aggressive takeover.
Democrats have opposed takeover efforts, though they have little legislative power to stop it if Senate and House Republicans can agree on a path forward.
In the emailed statement Thursday, MSCS leaders said they always welcome opportunities for improvement, including the state audit.
“The discussion should reflect not only challenges but also the significant progress the district has made in recent years to strengthen financial management,” the statement said. “We look forward to continuing our partnership with the State, addressing any findings that emerge, and working collaboratively to strengthen the fiscal operations that support our students, families, and community.”
Melissa Brown is the bureau chief for Chalkbeat Tennessee. Contact Melissa at mbrown@chalkbeat.org.
Bri Hatch covers Memphis-Shelby County Schools for Chalkbeat Tennessee. Reach Bri at bhatch@chalkbeat.org.
