Viewpoints: Stem Cell Agency Needs To Seize Moment And Repair Its Governance

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The board overseeing California's stem cell agency will elect a new chairman this month to succeed Bob Klein, a moment that offers members an opportunity to correct the agency's dysfunctional management structure.

They must also decide whether to pay Klein's successor nearly a half-million dollars.

Two candidates have been nominated by state constitutional officers: Jonathan Thomas, an investment banker, and Frank Litvack, a cardiologist with a background in medical business development. The board will make its choice at a meeting June 22-23 in San Diego.

As chairman of the board known as the Independent Citizens' Oversight Committee, Bob Klein was the public face of the California Institute for Regenerative Medicine, or CIRM. He drafted Proposition 71, which created the agency and led the campaign that resulted in its overwhelming approval by voters.

As CIRM was in startup mode, Klein was very much a hands-on chairman, intimately involved in the agency's day-to-day management. The problem is that CIRM's president is supposed to be the chief executive.

Klein's propensity to micromanage was understandable – perhaps even helpful – as CIRM got off the ground. But it continued during Klein's six-year tenure.

Every outsider who has looked seriously at CIRM, ranging from the state's Little Hoover Commission to CIRM's own external review panel last fall, has cited the dual executive model as a problem. Fortunately the board has the opportunity to fix this when a new chairman is selected.

A quick review of why the new chairman is being picked in June, six months later than it was supposed to happen, is also important background. In December, Klein tried to pull strings behind the scenes to anoint his successor. Inevitably the closed-door effort blew up in his face, embarrassing him and his choice for the job, and causing collateral damage to the image of the agency's governing board.

Klein had persuaded then-Gov. Arnold Schwarzenegger and Lt. Gov. Abel Maldonado to nominate Alan Bernstein.

When word of the backroom effort became public, scuttling the plan, Bernstein's name was withdrawn and Klein was renominated with the understanding he would serve only six months while the search for a successor began again.

As one board member told me, "Nothing is ever simple at CIRM."

This time around Gov. Jerry Brown, Lt. Gov. Gavin Newsom and Treasurer Bill Lockyer nominated Jonathan Thomas, who apparently sees the chairman's position as requiring a hands-on, day-to-day approach, just like Klein. He is understood to expect a salary in the $400,000 range.

Controller John Chiang, who of the four nominators has most closely followed the agency, takes concerns about the agency's dysfunctional management structure seriously. He and his nominee, Frank Litvack, believe the chair should not be involved on a day-to-day basis. They see the chairman's role as one of oversight, not operational management. Consequently Litvack would expect a salary of $150,000 or less.

It would be tempting to dismiss the selection of the chairman as having little relevance to most Californians, until you remember that CIRM's stem cell research programs will cost taxpayers $6 billion. It's imperative the board fixes a flawed management structure.

Sensitive to the negative public reaction that a $400,000 salary could prompt in a state facing an economic crisis, the board has come up with an interesting fig leaf. It has approved as an option paying the new chairman up to $150,000 from bond funds, and making up the rest from money that has been donated to CIRM.

The fact is that once the money is donated, it is public money. Trying to draw a distinction between bond funds and donations is a ridiculous charade. The board has a fiduciary responsibility to spend all public funds wisely, including donated money.

CIRM already has a world-renowned $500,000-a-year stem cell scientist – its President Alan Trounson. There's no need to spend another half-million on an investment banker so two executives can trip over each other at taxpayer expense.

Litvack understands what the chairman's role should be and has realistic expectations about a salary. He should be elected so the agency can move successfully beyond the Klein era and perhaps to a time when it becomes simpler to get things done at CIRM.


John M. Simpson is director of Consumer Watchdog's Stem Cell Project Director.

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