Report 2014-121 Recommendation 1 Responses

Report 2014-121: University of California, Davis: It Has Not Identified Future Financing for the Strawberry Breeding Program nor Collected All Available Revenues (Release Date: June 2015)

Recommendation #1 To: University of California, Davis

UC Davis should ensure that the strawberry program is adequately funded. To address the strawberry program's recent loss of funding, the university should consider allocating more of the strawberry program's patent income back to the program itself. In addition, UC Davis should regularly reassess the appropriateness of the strawberry program's royalty rates charged to licensees and adjust the rates as needed to support the program.

1-Year Agency Response

The Strawberry Breeding Program (SBP) has established a budget approved by the CA&ES dean's office and the Plant Sciences department. The $1.2 million annual budget for 2015-16 and 2016-17 is funded entirely with strawberry patent revenue. A copy of the budget is provided. Financial activity is recorded in UC Davis Kuali accounts 3-PATDVS2 and 3-PATSJK2 (summary of financial activity for July 1, 2015-March 31, 2016 provided). As the SBP evolves to full maturity over the next few years, if the net strawberry patent revenue allocated from the campus to the Plant Sciences department and CA&ES dean's office are insufficient to fund the full SBP budget, the campus will partner with the college and department to resolve the difference.

Additionally, a royalty rate assessment has been completed by InnovationAccess. Assessment documentation provided.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

UC Davis provided documentation supporting its statement that it is now using its strawberry breeding program's (strawberry program) patent revenue to fund the strawberry program. In addition, UC Davis provided documentation showing that it has finished assessing the appropriateness of the strawberry program's current royalty rates.

6-Month Agency Response

The strawberry program has recently submitted a budget demonstrating adequate support for the strawberry program to the CA&ES Dean's office for review. The campus budget office will participate in reviewing the strawberry program budget as part of the follow-up to the audit (note: the budget office does not routinely review individual program or department budgets).

Progress to date regarding assessment of the strawberry program's royalty rates is in the form of focused (ongoing) discussion at InnovationAccess in furtherance of the corresponding UC Davis Action (as set forth in our May 22, 2015 letter). We anticipate the process will be completed by December 31, 2015. Over the next several weeks we will continue to take steps toward such completion.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

The department, along with all departments on campus, are in the process of evaluating year-end financial results from 2014-15 along with budgets for 2015-16. The department is working with the dean's office to prepare a multi-year budget to demonstrate adequate support for the strawberry program. The campus budget office will review the budget as part of the follow-up to the audit (note: the budget office does not routinely review individual program or department budgets). It is anticipated that a budget plan will be available for the budget office to review by late October.

With regards to reassessing the appropriateness of royalty rates - Progress to date for this recommendation is in the form of focused (ongoing) discussion at InnovationAccess in furtherance of the corresponding UC Davis Action (as set forth in our May 22, 2015 letter). We anticipate the process will be completed by December 31, 2015. Over the next several months we will continue to take steps toward such completion.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2014-121

Agency responses received are posted verbatim.