Another Vote Possible On Stem Cell Funding

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Questions raised about governance of state institute

SACRAMENTO, CA — State voters will probably get a chance to extend taxpayer funding of stem cell research beyond the $3 billion they have already committed, the head of the state stem cell institute told the Little Hoover
Commission yesterday.

If voters like what the stem cell institute has accomplished after its
first 10 years, they could pass a sequel to Proposition 71, the
initiative that created the institute, said Robert Klein, its chairman.

Klein continued to show unflinching confidence in the stem cell initiative,
even though it was subject to yet another inquiry because of questions
about its structure and governance.

The Little Hoover Commission’s inquiry was requested by Sens. Sheila Kuehl,
D-Santa Monica, and George Runner, R-Antelope Valley, who want the
watchdog agency’s guidance on how the institute might be improved.

Klein pointed out in his testimony that the institute has had plenty of
oversight from state officials, both elected and appointed. There have
been reviews by the state Audit Bureau, the state controller and an
audit board created by Proposition 71, he said.

During the five-hour hearing, Klein and Alan Trounson, the institute’s
president, highlighted some of the organization’s accomplishments,
including leveraging about $600 million in state funds to attract more
than $800 million from academia and private philanthropy.

But what was perhaps most revealing were the areas of questioning by the
commission members. They asked about the size of the institute’s
governing board, the transparency of its spending decisions, the
ability of biotechnology companies to benefit from stem cell grants and
the power and job responsibilities of Klein and Trounson.

“I’m concerned that there is an arrogance in how the funding is handled and the institute is structured,” said commission vice chairman Eugene
“Mitch” Mitchell, a vice president of San Diego’s Sempra Energy. “I find it baffling that it is a state agency, but there are so many rules it doesn’t have to adhere to.”

Klein said the institute seeks to abide by the highest ethics and standards,
using the National Academy of Sciences and other organizations as

But the initiative was designed, he said, to shelter it from political arguments and whims. The promise of a steady, long-term funding stream is essential to convincing scientists to dedicate themselves to the field, he said.

Several other people pointed out areas they think are worthy of the commission’s review.

Ken Taymor, a UC Berkeley law professor who has attended many of the
institute’s board meetings, said the public continues to be frustrated
that funding decisions are still made behind closed doors. He also
urged the commission to look at how power is divided between Klein and

The board’s size, at 29 members, makes it inefficient, said several observers. And it is unusual that it has no members whose sole interest is that of the taxpayers, said Michael Klausner, a Stanford Law School expert on
nonprofit governance.

The board’s membership is a long-standing point of debate. Proposition 71 created conflict-of-interest issues by requiring the board to include people
who could actually benefit from the state investment, such as biotech
executives, patient advocates and research institute leaders.

Klein said the institute needs the expertise that each of the groups brings.

John Simpson of Consumer Watchdog, a Santa Monica advocacy group, suggested
trimming the board’s membership to 15 people with no conflicts of

Trounson sought to address concerns that businesses are not benefiting from state funding.

The first grants sought to expand the talent pool by funding new
researchers, he said. As the grants begin funding work that brings
products closer to commercialization, there will be more opportunity
for businesses, he said.

In the next round of funding, which is for the development of tools and
technologies to help stem cell research, companies will probably win
about one-third of the grants, he said.

Consumer Watchdog
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