By Erin Allday, SAN FRANCISCO CHRONICLE
October 9, 2019
The state stem cell agency, which is expected to run out of taxpayer money by the end of this year, released a report Wednesday highlighting its contributions to the California economy — including an estimated $1.4 billion in added tax revenue and nearly 57,000 jobs created — since it began doling out grants nearly 15 years ago.
The California Institute for Regenerative Medicine issued the economic impact report on the eve of an expected new ballot measure for 2020, which would ask state voters to re-fund the agency. CIRM was created in 2004 when voters approved a $3 billion bond measure to fund stem cell research.
“We’ve funded tremendous, world-class research of which the voters of California should be very proud, and at the same time we’ve generated great economic impact,” said Jonathan Thomas, chairman of the CIRM governing board. “We are very proud of the numbers in this report.”
The report, which cost $202,250 and was paid for by CIRM, was done by researchers at the Price School of Public Policy at the University of Southern California. The last economic report, which was put together by the Berkeley Research Group, was done in 2012.
The previous report was picked apart by detractors of the agency as overstating CIRM’s impact beyond financing research and helping pay for major infrastructure projects across the state. One major oversight in that report — which is also not addressed in the new publication — was an overall look at return on investment, detractors said. Including interest paid on the bonds, California’s total investment in stem cells comes to about $6 billion.
“There is a line in the report, a caveat, that it did not analyze the question of whether CIRM funding truly added to the state’s baseline economics,” said John M. Simpson, former stem cell project director for Consumer Watchdog who has followed the agency since its founding. “There’s a very good argument that some of this work would have gone on anyway.”
Simpson, who retired this year, said the timing of the report implied to him that its publication was a “political” maneuver designed to help sway voters to approve more funding for CIRM.
“This clearly is a document that has been put out to tout CIRM’s benefits economically, so that when they file for another round of bond financing with another ballot initiative, this will be one of the things they rely on,” Simpson said.
CIRM frequently has promoted its economic impact as an added benefit to its primary function of funding scientific research, which hasn’t yet paid off in tangible outcomes such as cures and treatments. No federally approved therapies have come from CIRM-funded science.
CIRM is down to just a few million dollars to direct toward research. The agency so far has funded 56 clinical trials, but the bulk of its money has gone toward building new laboratories and other facilities and funding basic science or preclinical research, according to a 2018 Chronicle analysis of the agency.
The new economic impact report looked at the agency’s funding through the end of 2018, at which time CIRM had given away about $2.67 billion. The report tallies $641 million in added state and local tax revenue tied to CIRM funding, and $727 million in federal tax revenue. It reports 56,549 jobs created, about half of them in science and medicine.
The report also addresses the national economic impact, including $408 million in state and federal tax revenue outside California and 25,816 jobs.
Among the income sources the report considered were co-funding, in the form of financial contributions from universities and other institutions in conjunction with CIRM grants; partnership funding, which includes private-sector financing seeded by grants; and “follow-on” funding that includes money researchers got to continue work that was initially CIRM-supported.
Co-funding came to about $900 million through 2018, partnership funding was about $1.6 billion, and follow-on funding about $317 million.
“CIRM funding has generated a great deal of collateral economic benefit for the state,” Thomas said. “What we’ve done is really created an economic engine.”
Proponents of the state agency have not yet introduced a measure to re-fund CIRM, but it’s expected to happen before the end of the year. The deadline to get on the November 2020 ballot is next June.
“We hope that this report shows that (voters’) original faith in us and investment that they made in stem cell research through the (2004) initiative was a wise decision, from both an economic and scientific perspective,” Thomas said. As to whether they approve another bond measure: “That’s up to them. We trust that they will view these results in a very favorable light.”
But Simpson said the report, in addition to being “overreaching,” is unnecessary. Unlike 2004, when voters first approved the measure that created CIRM, the agency now has a catalog of scientific research to promote. The more important issue, he said, is whether another round of bond financing is the best way to continue funding that work.
“The economic report is trying to make a case that doesn’t need to be made. We’re starting to see some genuinely significant breakthroughs in stem cell science,” Simpson said. “The question ought to be whether this particular agency is funded in the appropriate way.”