The proposed budget for higher education released this week by the state House would end state financing for a project run by N.C. Central University that is currently under investigation by state auditors.

About $527,000 for the Historically Minority Colleges and Universities Consortium, administered by NCCU, would be shifted to a dropout prevention initiative within the state's Department of Public Instruction.

That shift would remove all state funding for the NCCU project, which is the subject of a current state audit after officials on the NCCU campus found evidence that a former employee may have embezzled funds from it.

The program also receives state and federal funds. An NCCU official said Thursday the loss of state funding wouldn't necessarily be the program's death knell because it does receive other funding as well.

N.C. Central University has turned an ongoing internal audit over to state regulators after discovering evidence that a former university employee embezzled funds from a project funded in part by federal and state grants.

NCCU has found that the former director of the Historically Minority Colleges and Universities Consortium, for which NCCU was a member and fiscal agent, funneled some of its funds into a personal bank account, according to a March 29 letter to state officials from NCCU Chancellor Charlie Nelms.

“It now appears that substantial funds may have been diverted into this Bank of America account,” Nelms wrote. “The account may also have been maintained covertly by the former employee for improper purposes.”

The amount of money in question isn’t specified in the letter, and NCCU officials have declined further comment.

But over the last decade, the program has received more than $13 million in funding from state appropriations, federal and state grants and private foundations.

Read more in Friday's News & Observer.