Jun 18, 2015
State audit suggests changes for UC Davis strawberry program

Following a six-month review of the UC Davis Strawberry Breeding Program, the California state auditor’s office today released recommendations — including suggestions for future funding and revenue collection — for the acclaimed program.

“The audit addressed many of the same issues also covered in an internal UC Davis audit of the Strawberry Breeding Program, issued in April,” said Mary Delany, executive associate dean of the College of Agricultural and Environmental Sciences.

“Campus and college leaders are pleased that the state audit confirmed many of our own findings, indicating that the program is operating well within state regulations and university policies,” she said. “We have responded to the audit’s recommendations and will be incorporating several of its suggestions as the strawberry program moves forward under the direction of our new strawberry breeder.”

The state auditor’s report is available at http://www.bsa.ca.gov and UC Davis’ internal audit report can be downloaded from an online press kit at http://bit.ly/1Mjb3ug.

State auditor’s recommendations

Below are recommendations from the state auditor’s report, with responses from UC Davis:

  • UC Davis should ensure that the breeding program is adequately funded and consider allocating more of the university patent income directly back to the program.

In response, UC Davis confirmed that as it plans for the continued stability of the strawberry breeding program, it is considering all funding options, including use of discretionary patent income allocated to the College of Agricultural and Environmental Sciences to support the program. However, given that the program has not operated in deficit and as of April 30 had approximately $1 million in surplus and reserve funds, there are currently no plans to alter overall campus policies that guide patent revenue distribution.

  • UC Davis should regularly reassess whether the royalty rates charged to strawberry nurseries and growers, licensed to sell patented strawberry varieties, are appropriate, and adjust the rates as needed to support the program.

In response, UC Davis will continue to assess the strawberry program’s royalty rates, informed by input from the California Strawberry Commission, a strawberry advisory committee, licensees and other industry members, and will report those rate analyses annually. Royalty rates may be adjusted if justified by changes in market conditions and other factors. The breeding program has no plans at this time to raise royalty rates charged for licensing its strawberry varieties. The university’s mission is not to maximize revenues from licensees but to work collaboratively with all areas of California agriculture to provide research, education and support as mandated by its land-grant origins.

  • UC Davis’ Department of Plant Sciences, home to the strawberry breeding program, should prepare annual budgets specifically for the breeding program.

In response, UC Davis confirmed that as soon as the new strawberry breeder completes his assessment of the current program and the scope of its future activities, a separate budget will be prepared specifically for the program, rather than rolling the program’s budgetary process into that of the overall department. The budget will ensure that the breeding program continues to operate in a cost-efficient manner.

  • UC Davis should in the 2015-16 fiscal year implement a program to begin accounting for the Strawberry Breeding Program’s financial activities separate from the financial activities of the program’s breeder.

This recommendation also resulted from the UC Davis internal audit, and the campus plans to now establish separate accounting codes for the strawberry program and for the program’s breeder.

  • UC Davis should periodically review the financial records of the companies that hold licenses to grow and sell the program’s patented strawberry varieties, making sure that the university is receiving all of the royalties it is entitled to.

In response, UC Davis will complete a cost-benefit analysis of this recommendation, using the findings to determine whether periodic auditing of its licensees is advisable or if case-by-case auditing would be more appropriate, based on licensee reporting and input from field representatives and others.

Origin of the state audit

The state audit, focusing on the program’s management and operations, was initiated in August 2014 by the Joint Legislative Audit Committee at the request of California State Assemblyman Luis Alejo of the 30th State Assembly District.

It came on the heels of a lawsuit concerning the Strawberry Breeding Program filed against the university in October 2013 by the California Strawberry Commission and a countersuit filed by the university in October 2014. The commission is a state agency charged with supporting the interests of the California strawberry industry.

Legal issues between the university and the strawberry commission were settled out of court in February of this year. The strawberry commission and UC Davis then announced their commitment to work together to ensure a new future for the public strawberry breeding program at UC Davis.

At the same time, UC Davis announced the hiring of plant scientist and breeder Steve Knapp to lead the Strawberry Breeding Program following the retirement of its two former breeders. Knapp, who comes to UC Davis most recently from Monsanto’s Vegetable Research and Development program in Woodland, brings a wealth of research experience to the breeder’s position. He has served on the faculty of Oregon State University and the University of Georgia, and holds a doctoral degree in agronomy and plant breeding.

More information on the history of the UC Davis Strawberry Breeding Program is available at: http://bit.ly/1QGBlrP.

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