Klein's Fiscal Warning Does Not Match Up with State Treasurer's Account

In his bid to be re-elected, the chairman of the $3 billion California stem cell agency, Robert Klein has issued a financial warning to CIRM directors that is distinctly at odds with what the state treasurer's has told him.

In response to questions from the California Stem Cell Report, Tom Dresslar, spokesman for state Treasurer Bill Lockyer, provided an account that differs in major ways with information that Klein released in an election-eve pitch to CIRM directors. (The state treasurer manages the bond sales that are CIRM's only real source of cash.)

In a statement posted today on the CIRM Web site, Klein said that he was "just informed" by the state treasurer about a looming financial problem that needed "immediate" attention. Klein said it was “essential” for CIRM to quickly provide assurances of “reliability of our funding.”

However, the treasurer's statement did not carry that urgency or compelling weight. It primarily involved hypothetical bond sale timing matters. Dresslar said that CIRM was alerted to the treasurer's view of the state of CIRM bond financing on Dec. 2, the day before Klein gave a rosy financial assessment to the directors' Finance Subcommittee. Klein was also aware of the bond timing questions before last Wednesday's board of directors meeting and did not bring them to the board's attention.

Klein's statement today on CIRM's "financial stability,"  however, said,

“The (state) Treasurer's office has just informed us that the next California Stem Cell Research and Cures Finance Committee (the panel that authorizes CIRM bond sales) meeting must be held in January 2011. Recent applications for clinical trial rounds and the acceleration of our funding commitments on our other programs require an immediate focus on this issue, given there may not be another opportunity until late 2011 to authorize additional bond funding.”

Klein also said that early next year “our collaborative funding partner nations” will require “assurances of our future performance.”

Here is the full text of what the treasurer's office e-mailed to the California Stem Cell Report.

“On the record:

“We don't necessarily agree Klein issued an 'urgent financial alarm' in his statement of candidacy. Regardless, here's what the State Treasurer's Office told CIRM, and didn't tell CIRM:

“We did not say the Finance Committee had to meet in January to authorize additional bond sales. Additionally, we did not tell CIRM there was a possibility the Finance Committee, if it didn't authorize additional bonds in January, would have to wait until late 2011 to do so.

“We told CIRM that, under existing Finance Committee resolutions, the Institute effectively has zero bond authorization remaining. That means, in order for us to sell more stem cell bonds, the Finance Committee has to meet and approve additional authorization. We told
CIRM we could have a bond sale as early as next February. We said if CIRM wanted to get some of the proceeds of any February sale, the Finance Committee would have to meet in December or January.

“This communication with CIRM occurred Dec. 2.

“It's important to stress we have set no firm bond-sale schedule for 2011. Hypothetically, if the State conducted a bond sale in February 2011, and stem cell bonds were not included in the deal, the CIRM Finance Committee could meet in any subsequent month of the year and authorize additional bonds that could be sold in any subsequent 2011 sales.”

Klein's rendition of the bond sales situation is not the first such instance in recent weeks. He earlier announced that his hand-picked candidate to succeed him had to drop out because he was not a U.S. citizen. Klein, who is an attorney, based that assertion on an antiquated state law that the state attorney general has officially declared is unconstitutional.

CIRM directors meet tomorrow afternoon at 4 p.m. PST at Stanford University to deal with the chairmanship question. The public can participate in the meeting there or at teleconference locations in Los Angeles (2), La Jolla(2), Burbank and Duarte. The specific addresses can be found on the agenda. The meeting is also scheduled to be audiocast on the Internet(directions also on the agenda).