Wednesday, November 24, 2010

CIRM Management Stumbling at Routine Tasks

Only four business days remain before a key California stem cell agency meeting that will deal with its financial future and the future of its departing chairman, Robert Klein, but the $3 billion state enterprise still is not providing any information to the public on those matters beyond cryptic hints.

The failure to provide the information represents a continuing and inexplicable problem with CIRM, which operates outside the normal oversight for nearly all state agencies. Its standard practice for a year and more has been to delay posting for the public background material on issues to be considered by directors, effectively denying interested parties and the public the ability to comment intelligently on major matters.

The issues coming before the Governance Subcommittee of the CIRM board of directors next Wednesday are not trivial. They could well deal with spending priorities for the next $2 billion that CIRM will hand out and whether it will be able to fulfill the promises of the campaign that created it six years ago. However, the only information that CIRM deigns to give the public describes the matters only as “budget allocations and structural priorities.”

Also up for consideration is the future role for Klein, who has said he will leave as chairman next month at the end of his term. The subcommittee agenda only mentions  “future assignments to and volunteer support by Chair Emeritus.” One likely role for Klein is work on the beginning stages of a campaign for a multibillion dollar bond measure to continue funding CIRM's effort. Unclear is whether CIRM directors intend to pay Klein for work after he leaves the board. Klein has considerable expertise and knowledge that should not be lost to the agency. However, building support for a bond election campaign should not be financed with CIRM's public funds.

The Governance group might also consider his role in the context of the other departing members of its board. They too have history and knowledge that should not be lost. Again, the question of compensation does arise.

Just why the agency does not provide timely information to the public on its meeting agendas is unclear. But at least two possible reasons exist. The agency may not be capable producing of the documents in a timely fashion for a variety of reasons. One likely possibility is that they are stalled on the desk of one of CIRM's top officials, but there are obviously more possibilities. Given that the failure to provide the public with important information is CIRM's standard mode of operation, it could reflect a management breakdown. The inability of an enterprise to perform routine tasks in a routine fashion is also one sign of serious, embedded management problems that are likely to extend well beyond the routine matters.

Another reason for not providing the information to the public is an overt decision by the agency itself to withhold the material, which is a matter of public record by law. Government agencies, both federal and state, sometimes stall in the release of documents for a variety of reasons, which can include a desire to restrict public input in the decision-making process. Another reason could involve an unwillingness to release to the public information that could be embarrassing or involve sensitive – but legally public – information having to do with salaries or compensation.

We cannot say exactly why CIRM does not make the information available in a timely fashion, but for whatever reasons it reflects poorly on the enterprise. The track record the agency is compiling on its lack of transparency will certainly come back to haunt CIRM come bond election time. It would be relatively easy to solve the situation, but CIRM does not seem to have the will to do so.

As for the specific issues coming up next week, the agency just posted a notice that another important meeting will occur one week from Friday that involves the future of the agency. The meeting of the directors' Finance Subcommittee will consider significant changes in its fledgling biotech loan program, once billed as a $500 million effort. Also on the table is an examination of the current, rocky state of the government bond market and the implications for CIRM, which has no other source of funds than state bonds.

All the information that CIRM has provided to the public, which includes the many biotech firms throughout California and hundreds of scientists, is the following:

“Consideration of risk premium options for loan programs, including amendments to warrant coverage requirements in Loan Administration Policy and adoption of interim regulations to offer payback of multiple of loan amount as alternative to warrant coverage. “

“Discussion regarding bond market and future implications for CIRM.”

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