Stem Cell Agency Slated for Share of California Bond Sale This Week

The California stem cell agency, which faces a cash crunch next spring, is scheduled to receive additional funding as the result of a $2 billion state bond sale this week.

The exact amount is not yet set. Tom Dresslar, a spokesman for state Treasurer Bill Lockyer, said,

"The amount will not be known until after the sale is completed on Wednesday."

The stem cell funds will come from the taxable bond portion of the sale, which totals $200 million. Individual investors can still participate in the bond sales today(see here).

Earlier this year, the state suspended bond sales, which are the only significant source of CIRM funding, because of the state's financial crisis. California has the lowest credit rating of any state in the nation. CIRM earlier said it had sufficient funds to operate until June of next year.

It is not clear whether the state will continue bond sales after the beginning of the year, when it will face more financial difficulties. Massive, automatic cuts are expected since the state is not meeting its current revenue projections.

As originally conceived by backers, Prop. 71, approved by voters in 2004, was to have ensured steady funding for stem cell research through the use of bonds, which flow directly to the agency – skipping the normal state budget process.

Reliance on bond funding, however, is expensive, effectively doubling the cost of CIRM research because of interest costs on the borrowed money.