The budget presented this week for the $3 billion California stem cell agency is a sad disappointment.
One would expect more from an enterprise that is now overseeing $761 million in state-funded grants. The budget lacks important details needed for the agency's board of directors to determine whether the agency is being properly run. CIRM directors served notice on Thursday they want more, including such basic information as how the spending plan for the next fiscal year compares to actual expenditures this year.
It is easy to regard budget preparation as mindless number-crunching. But a budget reflects the agency's thinking, priorities and direction. It is a key tool for directors. A spending plan should open a window on management's effectiveness. It identifies problems that remain unresolved. Failure to produce a realistic and well-documented budget raises questions about management's abilities in other areas.
Here are some of the highlights from the slim information that CIRM has given to directors and made public on its Web site.
The two-page spending plan for 2009-10 totals $12.98 million. CIRM staff compared that to a $13.4 million plan advanced 12 months ago, a budget that was clearly not on target. CIRM did not provide a current estimate for what its spending will total in three weeks, which is the end of the current fiscal year. However, the most recent CIRM documents available showed that as of the end of March, CIRM had spent only 50 percent of its budget for this year. Parsimony can account for part of that savings. But the disparity between the budget and actual spending shows that the original proposal was flawed, to put it mildly.
The major expense, as usual, for the coming year is salaries and benefits. They amount to $7.4 million and reflect a much-needed increase in staff from 44.5 positions to 47 positions. The agency is capped by law at 50 employees.
The No. 2 spending category is outside contracts at $2.1 million, although that figure seems to be vastly understated. It does not include $853,000 for information technology, most of which appears to be linked to Grantium, its troubled grant management program. The $2.1 million also does not include $208,000 for outside help from other state agencies.
CIRM directors were told in October 2007 that the “complete cost” of Grantium program would be $757,000. The proposed budget appears to allocate $610,000 for Grantium issues, including a $275,000 contract with Kutir Corp. for “development” of the grant management program. Some of the $610,000 may include funds that were included in the original $757,000, but the CIRM budget did not include that information.
The latest information on Grantium dates back to a March report, which included figures only as of December 2008. CIRM reported that it had a $702,000 contract with Grantium running from April 2008 to April 2011. Payments of $28,112 were listed. The March document also reported $389,750 in IT contracts for this fiscal year, including $200,000 to Kutir. (The CIRM Web site redesign appears to have dropped the link to the March outside contracts report. If you are interested in a copy, please email djensen@californiastemcellreport.com.)
If all this about Grantium sounds confusing, that's because it is. The proposed budget sheds no light on the matter.
The largest component of the $2.1 million contracts figure is $945,000 for legal services. That figure is based on our calculations, since CIRM did not provide a total in the category. No total was also provided for “communications/media” services, which ran, by our calculations, $455,000. As with other components of outside contracts, CIRM made no comparisons to actual spending this year or even last year's proposed budget.
Another $250,000 was allotted for an economic impact analysis, which could be classified as public relations since that is one of its prime functions. That contract was originally scheduled to be let during this fiscal year.
One category that raised questions last year was travel, which would total $497,000 for the coming year. The category, however, is not defined and may not include travel by board members to CIRM board meetings. John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., analyzed last year's travel plans, pointing out that they would put CIRM Chairman Robert Klein out of the state on CIRM business for 88 days, CIRM President Alan Trounson 68 days and Chief Science Officer Marie Csete 75 days. Simpson has not yet produced a similar analysis for the latest proposed budget.
The proposed CIRM budget will come before the full board of directors at its meetings next week in San Diego.
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