Saturday, May 07, 2005

The "Murkier" $100 Million Workaround

Questions are already being raised about the plan to fund the California stem cell agency with $100 million in philanthropic contributions.

Stem cell chairman Robert Klein sketched out the plan on Friday as a way to work around lawsuits that place a cloud over bonds that might be issued on behalf of the California Institute for Regenerative Medicine. (See our May 5 item "Looking for a $100 Million Helping Hand.")

Reporter Laura Mecoy of The Sacramento Bee did the most complete job of reporting on the subject in reports in the major California newspapers. But look for more in the next day or two in other newspapers.

Mecoy said that the most influential California legislator on stem cell matters, Sen. Deborah Ortiz, D-Sacramento, took a dim view of the $100 million plan.

"It would just make a murky issue even murkier," said Ortiz. "It is not the kind of openness you expect in government."

Mecoy said Klein characterized the $100 million as a bridge loan to, in his words, "make certain this momentum to develop new research and medical therapies is not slowed down."

“He refused to name the potential contributors,” Mecoy wrote, “but said they would only be repaid if the bonds sell. If the bonds aren't sold, he said the loans would become contributions.

“Klein said he plans to pursue this proposal on Monday when the stem cell agency's finance committee meets for the first time.

“(Jesse) Reynolds, program director at the Center for Genetics and the Society, called the contribution proposal 'risky,' and said it creates a 'strange relationship between a public agency and private lenders.' He also said Klein opens himself to possible conflict of interests by seeking contributions from foundations that also fund research and could be seeking state stem cell money as part of their future studies.

"'I don't think the head of a state agency responsible for giving out grants should be involved in fundraising,'" Reynolds said.

“Klein said the stem cell board's process for reviewing grants protects against conflicts of interest.

“He also said Proposition 71, the initiative that created the stem cell program, provided for contributions to be used to help fund grants and loans.

“During the election, though, such contributions were presented as matching funds that would be solicited by researchers seeking grants and loans from the state.

"'The problem here is we can't afford to lose eight or 10 months while this process (of litigation) moves forward,' Klein said.”
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