What Obama’s Support for Stem Cell Research Means for California

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The president has lifted the Bush restrictions on embryonic stem cell on federal funding for embryonic stem cell research mean for the funding. What does that mean for an oft-criticized state agency with $3 billion in grants to give out?

BURLINGAME, CA — California provides more funding for stem cell research than the other 49 states combined. So what does President Obama’s executive order lifting the restrictions financing and structure of the California Institute for Regenerative Medicine (CIRM), the state’s cash-strapped stem cell agency?

Not much.

At recent meetings, the members of CIRM’s governing board have made clear that they see changes in federal policy as good news, but not as something that should slow down their funding or change their plans. "This is what the voters of California wish their dollars to go for," said Sherry Lansing, a former studio executive who is a leading voice on the board, during a meeting here earlier this year. "That has been something they have made quite clear, and we have a mission that we have to complete no matter what happens at the federal level." During the same discussion, Phil Pizzo, dean of the Stanford University School of Medicine, warned that whatever the National Institutes of Health ultimately funds in stem cell research, "it’s not going to be with this intense focus on stem cell biology…. It won’t be the depth that we are able to do."

The truth is that there is no easy way to make major changes at CIRM, or its governing board, the Independent Citizens Oversight Committee (ICOC). Nothing—not legal challenges, not the state government’s insolvency, and certainly not any newly available federal funding—can stop this state from funding stem cell research. In recent weeks, CIRM officials have said that proposed draft NIH guidelines on stem cell research are largely consistent with CIRM standards and would require only a minor revision of state regulations on what couples are told before donating their excess embryos to research. The guidelines’ specific prohibitions on some research funded by CIRM demonstrates the continuing need for the independent state agency, officials say.

That independence is by design. The institute and board were created in November 2004 by a ballot initiative—a method of democratic lawmaking that often produces inflexible legislation. Most crucially, California voters, in approving the initiative known as Proposition 71, authorized $3 billion in general obligation bonds to fund research. To siphon that money for other purposes, or to change the agency or board in any significant way would require either another vote of the people, approval of 70 percent of the state legislature—or both. As a practical matter, those hurdles are impossibly high.

Robert Klein, the Palo Alto developer who wrote the initiative and now chairs the ICOC board, has argued that this inflexibility serves as an essential bulwark against interference by politicians and interest groups who oppose the controversial research or would rather divert state funds to other priorities.

And as a defense against such meddling, Klein’s strategy has worked. Despite legal challenges that slowed the beginning of funding, some $500 million in bonds have been sold and CIRM has approved $761 million in grants to facilities, training and research.

The question being asked in California is if Klein’s methods have worked too well. To critics, the stem cell agency and board are rogues. Whereas they are nominally part of state government, they are not part of any other department or agency. The stem cell institute has the power to sell state bonds but is not part of the budget process. Board members are public officials but it is not entirely clear how or if they may be removed from office. The board is a public entity but has exemptions from: civil service requirements (so it can pay staffers higher salaries commensurate with posts at research institutions); some conflict-of-interest rules (so the board includes representatives of research institutions that receive funding from the agency); and some state open meetings and open records laws (to protect proprietary scientific data).

The initiative established a board made up of people who would be invested in the success of stem cell research: four representatives of "California research institutes," four from state universities, five from University of California campuses with medical schools, four from "commercial life science entities" and 10 advocates for patients with diseases for which stem cell research holds some promise of improved treatment. This board is large—29 people—and Klein’s initiative established a high quorum for any official vote (65 percent, or 19 of the 29 members) to make an outside takeover of the board difficult.

Among the fiercest critics are strong supporters of stem cell research in the legislature and among progressive public policy groups that have come to see the board as unaccountable. Newspaper editorials and bloggers have suggested making the board smaller and bringing it under some other state departments. Gov. Arnold Schwarzenegger, a strong supporter of the agency, has chided the board for a recent decision to begin paying salaries to its chairman, Klein, and a new vice chairman. (The ballot initiative authorized salaries for those two board positions, but Klein and a previous vice chairman had declined to accept them). And the Little Hoover Commission, a state-appointed panel that focuses on government efficiency, has launched an investigation of the board.

"What you got is a government-funded agency and board that doesn’t have the same kind of accountability that government agencies have. And there’s very little we can do about it," says State Sen. George Runner, a Republican who has been a critic of the agency. Because of the governing board’s rules, even the simple act of holding board meetings and casting votes is an adventure. With a big board comprising—per the initiative’s requirements—"executive officers" of various research, university and corporate entities, getting enough members without conflicts of interest to show up and maintain a quorum during meetings has been a particular challenge. At one meeting, things got so dire that the agency’s executive director tried to prevent one board member, the chairman of obstetrics and gynecology at Los Angeles’s Cedars–Sinai Medical Center, from going to the bathroom in order to maintain a quorum.

"I think the board is large and unwieldy," says the agency’s first president, Zach Hall, who left after he tangled with Klein, the board chair, over how the agency should be structured. "It is surprising to me that the proposition did not call for any members of the board who represent the public interest."

Klein, perhaps unsurprisingly, does not think the board structure is a significant stumbling block. But there is a major issue on the horizon: The only real threat to the agency is the state’s persistent budget troubles, which have made it difficult for California’s treasurer to sell general obligation bonds—including those that fund the stem cell agency. Earlier this spring, financial documents indicated that the agency only had enough cash on hand to fund its commitments through the fall, but a recent state bond sale appears to have loosened the pressure for now. As an insurance policy, the board has made plans to sell some notes privately to raise cash.

With other state programs in trouble, the economic security of stem cell funding rankles: "There’s a very valid, sensitive question to be asked," says John M. Simpson, who tracks the board for Consumer Watchdog, a progressive organization that is well-known in California but does not disclose its donors. "Given California’s economic situation, does it make sense for us to continue to sell bonds to finance stem cell research?"

But Klein adds that, although the agency and board are remaking their strategic plan to focus more on funding scientists that can turn research into cures and treatments, the mission  and structure won’t change. In fact, in testimony late last year before the state’s Little Hoover panel investigating the board, Klein suggested that California’s stem cell research program might add to its $3 billion in funding—by sponsoring another ballot initiative.

Consumer Watchdog
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