As we move forward with the implementation of our new Strategic Plan, I want to take this opportunity to share some exciting plans for recapitalizing and modernizing our research infrastructure and facilities. This investment is a key strategy within our larger efforts to “rebuild the UCCE footprint” and increase the number of academics throughout the system.
The Strategic Plan proposes a total investment of more than $40 million on UC ANR research facilities, with well over half of that designated for the Research and Extension Center System (RECs). This historic investment will be funded by a combination of debt issuance, judicious deployment of reserves, revisiting recharge rates (cost recovery) and a robust capital campaign. The good news is, in the current financial market, interest rates are still relatively affordable, making it a very good time to borrow money and expedite construction.
The RECs are a unique and critical part of the research capacity of UC ANR, as well as a vital resource for California's agricultural sector. Unfortunately, they have not been adequately supported for a number of years, resulting in 21st century research being conducted in facilities that are 50 to 60 years old. We must look to the future and invest in these facilities now to serve the researchers and scholars that bring their projects to the RECs – both current and future. Going forward, we must also ensure financial stability and plan for ongoing upgrades to keep our facilities up-to-date and in demand.
UC ANR central funds currently cover expenses at the RECs ranging from 70% to 90% of all costs; the RECs, in turn, use those funds to support, on average, over 80% of the costs to conduct research. This significant support has been given to all researchers, regardless of need or priority, and doesn't allow ANR the flexibility to target our research support dollars where they are most needed. Furthermore, much of the work conducted at the RECs for projects awarded to UC campuses, provide no Indirect Cost (IDC) to the RECs to cover utilities, infrastructure and other support costs generally covered by IDC.
Lisa Fischer has been working with the REC directors to develop a vision for the RECs, including prioritizing the improvements to be funded and identifying options to enhance administrative and financial management. Several options are currently under discussion, including liquidating assets and/or pursuing land lease options, increasing crop income, seeking endowment opportunities, and resetting recharge rates either as a system or by individual RECs.
As part of these options, we need to develop recharge rates that more accurately reflect true costs and assist with recovery of the division's outlays. This move will enable those funds to be available to help improve operations and maintenance as well as augment three research funds that we are developing: one to provide extra support for early-career ANR academics, another to be available for emergency needs such as Asian citrus psyllid, and the third to provide matching funds when required for certain grants.
I know you share my enthusiasm about the potential of our REC System to become the elite and productive research infrastructure that California is depending on to provide solutions to the many issues facing the state. We are discussing and evaluating all available options to reduce the RECs' dependence on central funds and develop strategies to improve their administrative and financial management. I anticipate receiving a proposal from REC leadership in late April.
Rising costs, coupled with budget forecasts from our traditional state and federal sources that appear flat for the foreseeable future, mean that all of UC ANR, not just the RECs, must look for ways to manage ongoing programs with less reliance on central funding. Concurrently, we are also greatly enhancing our funds development capacity to assist with program needs and expanding our academic footprint. I will be providing more updates on that, as well as other aspects of the Strategic Plan implementation effort, as plans are finalized and milestones are met.
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