Thursday, January 27, 2011

CIRM Study Says Stem Cell Spending Will Generate 25,000 jobs by 2014

The California stem cell agency today released a glowing report on its economic impact that was produced by a firm that was charged by CIRM with executing "a vibrant and aggressive strategy to support the goals and initiatives of CIRM.”

The agency's press release on the $300,000, 25-page study said that CIRM's spending will generate 25,000 "job years" and $200 million in new tax revenue by the end of 2014. CIRM has awarded $1.1 billion in grants, although not all of that has yet been distributed. The study projected the future impact of those funds in addition to cash already distributed.

The study was prepared by the LECG group and the Berkeley Research Group under an RFP that said the contract holder must "execute a vibrant and aggressive strategy to support the goals and initiatives of CIRM.”

CIRM Chairman Robert Klein said in a news release,
“This report demonstrates that we’ve delivered on the economic promise today, even as we continue to see strong positive milestones on the research side progressing rapidly toward therapies.”
The agency's news release said more economic studies will be performed. But it said today's report
"...alone makes it clear that CIRM has provided a net gain to the state’s general fund during its early years. For its first five years, through the end of 2009, the agency paid its own debt service costs directly from its bond proceeds so there was no cost to the general fund during those years. From 2010 through 2012, the current estimate for the cost of debt service on CIRM bonds is $160 million. The state’s share of CIRM generated revenue—just from that first $1.1 billion awarded before July—will be an estimated $148 million.

"The report does not, however, take into account grant awards made later in 2010 and those scheduled for 2011 and 2012, which will generate added tax revenue at a similar rate. With those additions, CIRM’s directly generated tax revenue should exceed its debt payments through some point in 2013 even without considering tax revenue from industry growth in the biotech clusters."
No doubt exists that the stem cell spending has had a beneficial economic impact. But whether it has had a "significant" impact on the California economy is in the eye of the beholder. The state's economy runs to something like $1.7 trillion a year. If California were a nation, it would rank among one of the larger economies in the world. The workforce totals around 18 million, making 25,000 jobs statistically less than a hiccup. Keep in mind as well that CIRM, until 2009,  paid the interest on its borrowing with more borrowed funds, all of which adds to the total cost of the borrowing, which is about $3 billion on top of the $3 billion CIRM is handing out.

We have asked CIRM whether it intends to make the economic data underpinning the report available to the public and outside researchers, who can verify the study's conclusions. The agency's response will be carried when we receive it.

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