University Senate

Proposed: Dec. 14, 2001

Adopted: Dec. 14, 2001

RESOLUTION SEEKING GREATER BUDGET TRANSPARENCY

WHEREAS the mandate of the Senate Budget Review Committee is to “review the annual budget of the University after its adoption to assure its general conformity with short-range and long-range priorities of the University and expressions of policy by the Senate,” and

WHEREAS the uses of royalties and license income from Columbia inventions are not itemized in the operating budget of the University, and

WHEREAS the Budget Review Committee recognizes a need for a clearer presentation of major uses of the University’s share of this income, which the Bayh-Dole Act requires to be spent to support scientific research and education;

THEREFORE BE IT RESOLVED that the Senate ask the administration to enhance the transparency of the University’s operating budget by capturing major uses of royalty and license income in appropriate line items and supporting schedules, or in other suitable ways.

Proponent: Budget Review Committee

RATIONALE FOR THE RESOLUTION SEEKING GREATER BUDGET TRANSPARENCY

As the university faces tightening fiscal constraints and a declining revenue stream from patents and royalties, it is imperative to reassess our priorities. Unfortunately, strategic planning is hampered by accounting procedures and practices that do not clearly show how income from patents and royalties has been spent. Therefore, decisions about how to spend these revenues have not benefited from faculty, student, and alumni guidance through oversight by the Senate Budget Review Committee.

If these monies were inconsequential, then discretionary spending would fall outside of the normal budgetary review process. However, this is not the case, as seen in examples from the Operating Plan and Capital Budget 2001-2002 [June 2001]. One of the graphs on p. 85 shows a cumulative income from royalties for the years 1987-2000 of slightly over half a billion dollars.

In FY00, total patent income was $142.6M (p. 85). After deducting 20% of the gross income for expenses and allocating 25% of the net income to the inventors, in accordance with the Columbia patent policy, the remainder available for scientific research and education is at least $84M. The only uses of this income that can be found in the current Operating Plan are in the budget of the School of Medicine (p. 32), which identifies two income items, Patent Income and Strategic Initiative Funds, for a total of $30.5M in FY00, and in Other Income (p. 96, Table 8) where $6.7M are listed under Royalties and License Fees, for general budget support.

The Budget Review Committee has been unable to track the uses of the remainder, at least $47M, through the published Columbia budget. These monies are used as Strategic Initiative Funds, Development Funds, etc. and ought to appear either as income in school budgets or as expenses in Central Support Service, or in other supporting schedules, in order for the committee to be able to fulfill its mandate and report to the Senate.