Wednesday, April 17, 2013
During the past couple of years, the California stem cell agency has vastly improved the way it budgets the relatively tiny amount it spends on operational expenses.
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At one point a few years back, its operational budget was often all but incoherent to the public and to at least some members of its governing board. (See here, here and here.) But times have changed. The process for its operational budget, which amounts to about $17 million for the 2013-14 fiscal year, is now more transparent and better organized.
The long overdue improvements can be credited to the hiring of Matt Plunkett in December 2011 as its first chief financial officer in its eight-year history, as well as the efforts of CIRM directors Michael Goldberg and Marcy Feit. Goldberg, a venture capitalist, is chairman of the board's Finance Subcommittee and Feit, CEO of Valley Healthcare in Pleasanton, Ca., is vice chair. Plunkett, however, left the agency suddenly last summer and the agency has no plans to replace him. CIRM Chairman J.T. Thomas says Plunkett put new financial systems in place that can be operated without a CFO.
Interested readers can get a glimpse of what is upcoming for CIRM spending beginning in July in documents prepared for the Monday meeting of the governing board's Finance Subcommittee meeting. The agenda, however, lacks a much-needed explanation and justification for the spending. All that is presented now for the public are raw numbers and a PowerPoint presentation, which is no substitute for a nuanced, written overview.
Nonetheless, here are the basics. The budget proposed for 2013-14 stands at $17.4 million, up 4.6 percent, according to California Stem Cell Report calculations, or $771,000 from forecast expenditures for the current year. The budget represents the cost of overseeing $1.8 billion in grants and loans and preparing new proposals and reviews of applications for hundreds of millions of dollars in additional awards.
The largest budget component is for personnel – $12.1 million, up from $10.7 million. Second largest is outside contracting at $2 million, down from $2.9 million for the current year, continuing a trend away from outside contracts, which once were burgeoning.
One interesting area includes “reviews, meetings and workshops,”- which are expected to cost $1.8 million this year. Next year, they are budgeted for $2 million. Some might look askance at those sorts of expenditures for “meetings.” However, that includes the fees and expenses for scientific reviewers for multi-day meetings in the San Francisco area, which is a high cost area, and other large gatherings. However, the figure does not include travel for reviewers, who come from out of the state and even from overseas.
Examples of the meeting costs include a three-day grant review session last September at the Claremont Hotel in Oakland that cost $44,019. A two-day meeting at the same hotel for the 29-member CIRM governing board cost $34,424. (These figures and others involving outside contracts can be found on the agenda of the board's Governance Subcommittee meeting April 10.)
The agency also dissected the budget from different perspectives on expenditures. The spending plan includes $2.0 million for the office of Chairman Thomas and $1.6 million for the office of President Alan Trounson. Comparable figures for actual spending this fiscal year were not provided, however, by CIRM for the Finance Subcommittee meeting. The size of the chairman's budget reflects the controversial dual executive nature of management at CIRM, which has come under repeated criticism, including from the recent blue-ribbon report by the Institute of Medicine.. However, the arrangement is locked into state law as the result of the ballot measure, Proposition 71, that created the stem cell agency in 2004.
Legal expenses are budgeted at $2.2 million with public relations and communications running slightly more than $1 million. The scientific office, as one might expect, consumes much larger amounts, with basic research, translational research, grants review and grants administration budgeted at $4.7 million. The development side of the scientific office, which focuses on pre–clinical and clinical research, is slated for $3.4 million. The agency did not offer comparable figures for the current year.
Under Proposition 71, the agency can legally spend only 6 percent of its $3 billion in bond funding for operational expenses. At one time the agency had a 50-person staff cap, but that was altered several years ago by the legislature. The most recent figures show it has 54 employees. However, this month's budget documents did not list the number of staff for this year or next.
The stem cell agency also reported that it expects to spend an additional $1 million a year for rent beginning in 2015, when a free rent deal provided through the city of San Francisco expires. The city put together a $18 million package to attract the CIRM headquarters in a bidding war with other California cities. The agency has never produced a public accounting of whether it has received full value on the package.
The proposed budget is likely to be approved by the Finance panel next week without significant changes and then by the full board late in May.
The public can participate in the Finance meeting at two locations in San Francisco one each in Irvine, Pleasanton, La Jolla and Berkeley. Specific locations can be found onthe agenda.