[Office-of-research] Governor's Executive Order S-09-09

Bruce Morgan bruce.morgan at ucr.edu
Thu Jun 18 23:30:28 PDT 2009

On June 8, the Governor signed Executive Order S-09-09, which is applicable
to all contracts for good and services where funds were encumbered on or
after March 1, 2009.  The Executive Order (EO) requires that the funds
encumbered by the State for the effected contracts be disencumbered and
revert to their original funding source.  In addition, the EO also imposes
on state agencies a minimum 15% reduction in each department's appropriation
for contracts during FY 09/10.


Since the issuance of the EO, the Department of General Services and the
Department of Finance have issued guidance to the state agencies on how to
implement the EO's requirements.  Even with this guidance certain aspects of
the EO remain unclear, which makes it difficult to identify which, if any,
UCR contracts or subcontracts will be effected by the EO.


What we know at this time:


.       Interagency Agreements are exempt from the EO.  While most of UCR's
state contracts supporting research programs are Interagency Agreements,
some of our awards utilize a different contract instrument.  Thus, some UCR
contracts may be adversely effected by the EO.  The Office of Research is
working diligently to identify contracts that may be at risk.


.       The EO and the Department of Finance guidance include a number of
other specific and generic exemptions.  The exemptions are very similar to
those included in the EO issued in August 2008.  Therefore, we believe that
any UCR contract that received an exemption from EO S-09-08 will likely
receive an exemption from EO S-09-09.


.       The Department of Finance has clarified that state agencies are
prohibited from entering into any new contracts or amending existing
contracts.  This will mean that most, if not all, state contracts currently
under negotiation will likely not be funded this fiscal year.  It is unclear
whether this prohibition extends to Interagency Agreements that have not
been executed.


.       Funds for contracts that were encumbered prior to March 1, 2009 are
not subject to the EO.  The Department of Finance has defined "encumbered"
to mean a commitment of all or part of an appropriation for goods and
services not yet received.  This is a fairly broad definition and may work
to UCR's advantage as more is learned about how state agencies will respond
to the EO.  However, because the encumbrance process is not transparent, it
is very difficult to ascertain when funds were encumbered, which complicates
identifying contracts effected by the EO.


.       The EO requires state agencies to develop plans for reducing the
amount of their FY 09/10 appropriations to be encumbered by new contracts or
extended contracts by 15%.  Until the state agencies publish their plans, it
will not be clear how this required reduction will impact research funding.
However, it is reasonable to assume that research funding by state agencies
will decrease, perhaps markedly, as compared to recent years.


The Office of Research and the UCOP Research Administration Office are
working with state agencies to learn more about how the EO will be
implemented and its impact on UC research funding.  In the meantime, the
Office of Research is reviewing UCR's state contracts to identify those that
appear to be at risk given what we currently know about the EO.  As those
contracts are identified, we will contact the PI and the department/unit
administering the contract.  In the meantime, we recommend that PIs and
departments/units proceed cautiously and direct any questions regarding the
EO and its impact on individual contracts and subcontracts to the Contract
and Grant Officer <http://or.ucr.edu/home/Staff.aspx?t=3>  assigned to your


The Office of Research will provide additional notices regarding the EO as
more information is learned.


Bruce Morgan

Assistant Vice Chancellor for Research

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