CIRM Reform Legislation Advances in Senate

Despite industry opposition, legislation aimed at improving transparency and accountability at the $3 billion California stem cell agency easily cleared its first legislative hurdle this month.

The bill, also aimed at ensuring affordability of taxpayer-financed stem cell therapies, was sent to the state Senate Appropriations Committee on a 6-0 vote in the Senate Health Committee, which is chaired by the bill's author, Sen. Elaine Kontominas Alquist, D-San Jose.

The California Healthcare Institute opposed the bill, SB1064. The biomedical industry group said the measure's requirements for affordability would create a “disincentive” to commercialization of therapies and give CIRM less flexibility.

The board of the stem cell agency is expected next week to formally ask that the bill be sent to interim study, which would effectively kill the measure for the next year or so. However, the legislation contains a rather large carrot for the stem cell agency, which is struggling with a legal cap that limits it to only 50 employees to monitor the $1 billion in grants CIRM now has out – not to mention another $2 billion that it intends to give away. The legislation would remove the staff limit, which CIRM President Alan Trounson has said is endangering the quality of CIRM work. A spending limit on administrative expenses would remain in place.

CIRM Chairman Robert Klein and a handful of his associates in 2004 wrote the staff cap into the 10,000-word ballot measure, Prop. 71, that created the agency. It was an obvious ploy to defuse potential opposition arguments that CIRM would become another large government bureaucracy. Klein led the political campaign on behalf of Prop. 71.

Earlier this year, Alquist said that she was introducing the legislation because CIRM is essentially accountable to no one. Her action followed a call by a sister organization to CIRM that urged greater accountability and transparency on the part of the agency, whose 29-member board is packed with representatives of institutions that have received the bulk of the $1 billion given by CIRM.

The sister organization is the Citizens Financial Accountability Oversight Committee and is chaired by state Controller John Chiang, the state's top fiscal officer. Chiang endorsed Alquist's legislation as did the Little Hoover Commission, a state good government agency that studied the stem cell agency. Much of the Alquist legislation is based on the findings of the Hoover Commission.

Among other things, Alquist's bill would eliminate overlapping responsibilities between the CIRM chairman and president, which have been the source of turmoil in the past. It would change the selection process for the chairman and require performance audits of CIRM and its directors. Currently, CIRM operates with unprecedented autonomy in state government. Its finances and budget cannot be touched by the governor or the legislature. Cash flows from state bonds directly to CIRM in an unfettered stream, regardless of the state's financial crisis and severe cut backs elsewhere.

According to the Health Committee staff analysis by Lisa Chan-Sawin, Alquist states that

“while stem cell research is an important and laudable goal, concerns about transparency, accountability and oversight raised by the public, the independent Citizen's Financial Accountability Oversight Committee, the Little Hoover Commission, and the State Controller detract from CIRM's ability to provide grants and loans in the most efficient way. These concerns divert resources and attention from CIRM's ability to maximize voter's investment in stem cell sciences.”