Tuesday, December 14, 2010

Klein's Fiscal Warnings at Odds With His Rosy View 11 Days Ago

Less than two weeks ago, CIRM Chairman Robert Klein told directors of the California stem cell agency that its financial situation was rosy and no problems existed with its bond financing, its only source of cash.

His statements on Dec. 3 stand in sharp contrast to his election eve warning today that the agency must act swiftly to stave off a looming funding problem.

Klein made his comments at a meeting of the directors Finance Subcommittee, chaired by Michael Goldberg. Only a handful of the 29 CIRM directors attended the meeting. Here is the text of what Klein said, according to the transcript.
“Chairman Goldberg: Okay. Thank you. I'd like to in the time that remains briefly address the climate for california bond issuance since we're going as an agency dependent on their bond authority. And there's been articles in the press in the last two weeks in connection with the last large series of bond financings the state has done about some of the challenges and difficulties. And without getting into any of the specifics of those issues, I'd like to ask Chairman Klein, who's maintained contact with the issuing authorities, what the general perspective or view is over the course of the next 12 to 24 months and whether or not there's any cause for action on the part of the ICOC (CIRM's board of directors) with respect to anything we can or should be doing being mindful of that.
“Chairman Klein: Thank you, Chairman Goldberg. So given that over the last three years we've tried to always look forward at least a couple of years and foreseeing the difficult environment particularly with some of the initiatives that passed in this last session, this last electoral cycle, we've been fortunate, by doing advanced planning, to make sure we could cover our strategic plan advances we would need to make over the running 24-month period going forward. At this point we've achieved that objective, and we have a little less than 24 months, but approximately that level of cash funding that's available to us. So our programs are very stable during this period. It's hopeful that in that time period California will return to a much stronger bond position.
"Nevertheless, for our scientific partners and our international partners and our individual scientists within the state, it's important to again remind everyone that under the state institution, the top 40 percent of the revenue of the state goes to education, and then bond debt service is the next priority ahead of harbors, ahead of major new highway construction, and other projects to the extent they come out of state funds versus federal funds. So California will retain the ability, even if this difficult period is a full two years or longer, to fund this agency on a timely basis. And institutions and the scientists will be covered in the time period of our commitment. So we're very thankful for the support of the state treasurer's office and for the support of the governor and the director of finance, for the work of (CIRM staffer) Lynn Harwell, who has been instrumental in executing on this plan, for (CIRM directors) Ted Love and Marcy Feit, who have been on the bond finance credit committee of the state with me. And we are thankful and very appreciative of the fact that we'll be able to honor our strategic plan and have the flexibility during that time to use reserves that are set up specifically to respond to new scientific developments that are certainly expected to arise at various times during that cycle.
“Chairman Goldberg: Thank you, Chairman Klein.”
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