The problem: Should the state stem cell institute keep approving research grants, even though it will run out of money about the end of September because of the state budget impasse?
The answer: a resounding yes.
After lengthy discussion Thursday night and yesterday, the institute’s board decided to forge ahead with its grants while simultaneously looking for outside money sources.
The California Institute for Regenerative Medicine board has approved awarding $635 million in grants to support stem cell research. Yesterday, the board approved $58 million more in grants to train scientists and laboratory technicians, under the condition that it can raise the money.
"What really happened here is that it came home for the first time just how absolutely dire the state’s financial situation is," John Simpson of the nonprofit Consumer Watchdog organization said after the board meeting in Burlingame.
"People are just beginning to wake up to how totally irresponsible it is of the governor and Legislature to not work out a solution to this horrible financial mess," Simpson said.
The board’s action also sends a message of hope to scientists around the state, he said. And they need it.
Currently, the National Institutes of Health, which supports a large percentage of scientific research in the United States, funds less than 10 percent of its grant applications.
California scientists saw the stem cell institute as a way to diversify, and perhaps increase, their funding sources. Its promise prompted dozens of scientists, and even businesses, to move to California.
"We hired people in anticipation of those grants," said Jeanne Loring, who runs the stem cell program at Scripps Research Institute in Torrey Pines.
"You don’t want to be hiring people for a couple months and then laying them off, especially since these are highly trained people we’ve already invested millions of dollars in," said Loring, who has been promised about $7 million in three state grants.
"I think the trouble is short-term, but I have to worry about the short and long term," she said.
Because taxpayers voted to allow the institute to spend $3 billion to support stem cell research, the state is obligated to pay the grants it issues, said Robert Klein, the institute’s chairman.
However, Klein said the institute’s board is mindful that the funding source for the state’s programs – the sale of bonds – has been turned off because Gov. Arnold Schwarzenegger and the Legislature have been unable to agree on a budget that deals with the state’s projected $40 billion deficit.
Rather than wait for the state to issue bonds again – at which time there will be a multibillion-dollar backlog of bonds to be sold – the institute will seek private investors to lend it the money, Klein said.
The institute plans to sell general-obligation bonds to deep-pocketed investors who have similar goals of curing disease, such as major foundations with a patient-advocacy bent.
It needs to raise a minimum of $138 million just to fund the programs it has approved through the end of 2010, when it hopes the state budget mess is resolved, Klein said.
"We’re not talking about something that is wildly out there," said board member Duane Roth, who runs Connect, a San Diego organization for startup technology companies. "We may not get it in one fell swoop, but $50 million to $100 million is very doable."
