How Does $5.5 Billion Turn Into $5.00 a Person? It's a Stem Cell Mystery So Far

Backers of this fall's $5.5 billion ballot measure to support the state stem cell research agency say that it will cost each resident of California only $5 a year. 

The calculation may be correct. It also could be campaign hype of the sort that arose in 2004 involving the initiative that created the California Institute for Regenerative Medicine (CIRM), as the state stem cell agency is officially known.  

But it is impossible to tell as the date of this writing. The campaign has not responded to requests from the California Stem Cell Report for information on how it came up with the $5.00 figure. 

Whether it is $5.5 billion or only $5.00 a person, it involves money borrowed by the state. Proposition 14, the ballot measure in question, directs the state to borrow the cash over a 10-year period. Paying interest to investors would cost an additional estimated $2.3 billion over several decades, bringing the total estimated cost to $7.8 billion, according to the state legislative analyst. 

Calculating the annual cost per person over decades involves a number of assumptions including population predictions, future interest rates, timing of bond sales and so forth.  

The only language that could be found on the campaign website concerning the figure says, 

"When you consider that chronic disease is the leading cause of death and the leading driver of annual health care spending, this initiative is a small price to pay to potentially save millions of lives and billions of dollars in health care costs in the coming decades – less than $5 per person per year." 

It should be noted that the campaign web site does not seem to include a search engine, although that is common practice on most web sites. 

As for CIRM's cost today, it began with $3 billion in 2004. Estimates then of the interest costs were about $3 billion, making a total estimated cost of $6 billion. The actual cost as of this summer was $4 billion, largely because of the low interest rates since the Recession of 2008. 

CIRM is now running out of money and will begin closing its doors this winter unless Proposition 14 passes. 

If the campaign supplies information on the $5.00 figure, the California Stem Cell Report will carry it when it comes in.