Murky Money Matters, Disgruntled Directors

The burn rate at the California stem cell agency is about $300,000 a month and likely more. The agency already owes private businesses or other state agencies more than $300,000 after its first five months of life.

The spending is picayune compared to the $100s of millions the agency plans to lavish on stem cell research in California. But how the agency is handling information about its spending is triggering a bit of flap that touches on the credibility of a bureaucracy whose retort to critics is often "trust us."

Even directors of the agency are in the dark about how the agency spends its money, a fact that surfaced at the Oversight Committee earlier this month.

The exchange was not reported by the mainstream media which nearly always focuses on the current highest profile controversy.

According to a transcript of the meeting, the issue came up following discussion of the $5 million Dolby donation. Dr. Claire Pomeroy, executive associate dean of the UC Davis School of Medicine, then raised questions about the agency's budget as well as the $1 million in contracts it has authorized.

"If I was giving a donation of $5 million, I would probably want to see the budget of the organization to which I was donating. and I wonder what was told to them (the Dolbys) about our budget, and I wonder when we might as a board be seeing a budget," said Pomeroy, who has both an MBA and MD.

In response, Chairman Robert Klein referred to a "cash flow" budget that purportedly had given useful financial information. The only significant financial information in that document, however, was that the agency had a $3 million loan from the state that would be gone by November. It contained no breakdown on spending even in major categories.

Pomeroy then brought up the contracting issue. "It was somewhat disconcerting to have to learn from the newspaper(an article by reporter Laura Mecoy of The Sacramento Bee) that we have, in fact, given out over a million dollars in consulting contracts that I personally wasn't aware of and don't feel like I'd been informed about. Hopefully we'll be able to know about those."

Klein replied, "Doctor, we have not given out a million dollars in consulting contracts. The question is if we, as I believe, what the figures are, is if all of the legal fees with litigation were spent and all of the going through the end of the year, they extended out contracts through the end of the year that are not in existence yet, and are going to be brought to this board, for example, on the media public education contract is under review right now, is on a month-to-month basis, and will come to this board actually for review. So I learned from the article that there were some projections that, in fact, assume expenditures that, in fact, are not fully committed expenditures."

"That's good to hear," Pomeroy said. "And then when we get the data, we'll be able to respond when those kind of statements are made. It would be good to have that."

Klein said, "Yes. And I will hope that our governance committee will undertake that as one of their first objectives."

At least one other director indicated some unhappiness with budgetary information. And it is fair to say that they likely reflected unexpressed sentiments of some others on the 29-member board.