Save the Goose: California's Stem Cell Story and the 'Army of 900'

Is the stork bringing stem cell billions?

More post-election coverage is trickling out regarding the activities of the $12 billion California stem cell agency, including a lengthy and compelling piece in the Los Angeles Times, the state's largest circulation newspaper. 

The hitch is that the Times piece does not mention the stem cell agency until the 21st paragraph, a fact that carries more weight than the 40 words in the paragraph itself. 

The article in the Times, written by columnist Sandy Banks, was not really about CIRM per se. But it was a story that might not have been told without a $13 million check from CIRM. 

The piece dealt with sickle cell disease. Banks' entry point was a patient named Evie Junior, whose harrowing experiences are certain to resonate with nearly all the paper's readers. 

Banks wrote,

"As a child, (Junior) grew accustomed to frequent hospital stays. But the disease got progressively worse as he moved through his teens; the bone pain was so disabling, he often had to be sedated with heavy-duty opioids."

Banks continued,

"At one point, the bones in both his legs were so damaged by the disease, doctors thought he might not ever walk normally again. Junior battled back."

Banks wrote,

“'I want to be cured of this disease,' he said. 'And I wish the world was more understanding about the people who are struggling with it.'”

Junior is a patient in a UCLA clinical trial led by Donald Kohn, whose research has been supported by a total of $52 million from the stem cell agency -- a figure not noted in the story. 

The stem cell agency comes into the story ever so briefly at paragraph 21. "The trial is funded by the California Institute for Regenerative Medicine (CIRM), the stem cell agency created by voters in 2004 and infused with $5.5 billion in new research money by voters who narrowly approved Proposition 14 this fall," the Times reported.

That is the first and last mention of California's stem cell program in the Times' story. However, that is better treatment of CIRM than is found in most stories in the media over the last few years -- the ones that deal with accomplishments tied to the agency's cash. (See here and also here.) The articles rarely mention where the money comes from. It could be flown in by stork, for all the readers know. 

Why is this important? The answer has to do with CIRM's reliance on tenuous, ballot-box financing and the sustainability of the California stem cell program.  The situation should be of interest to a little known state entity, which is the only state panel that has a legal charge to review the stem cell program.  

The panel is the Citizens Financial Accountability and Oversight Committee (CFAOC). It was created by the same ballot initiative that established the stem cell agency 16 years ago. Last month, at the CFAOC's once-a-year meeting, its members urged the agency to make itself better known. 

Proposition 14 saved the agency from financial extinction. But the measure was a squeaker, and it set the stage for another life-or-death ballot initiative. The money from Proposition 14 runs out in about 11 years. No other source of funding is provided. If CIRM goes to the ballot again in less than a decade or so, it will need a strong base of support from California voters, 8.2 million of whom voted last month to cut off funding for CIRM.

Building a solid base takes years. It also requires something of a change involving the scientific community and science journalism, which is a big ask. The tradition in scientific journals regarding funding is to relegate mention of the sources of money to a tiny footnote as if it were not the lifeblood of research.

Science writers -- the few that now exist in the mainstream media -- follow that ancient and tired public tradition of ignoring what makes research happen. They focus on "exciting" results from the bench and clinic -- not the "filthy lucre" that pays scientists, their institutions, the post-docs who labor behind the microscopes, the equipment suppliers and keeps the lights on.

Recipient institutions write the news releases -- the starting point for most journalists -- without mentioning the many, many billions that taxpayers (state and federal) have provided. Even the stem cell agency itself does not mention dollar amounts in its blog items dealing with significant results from CIRM research. (For an example, see this item from the agency's blog on the UCLA/Kohn sickle cell trial, which CIRM is funding with $13.1 million. That figure is not directly revealed in the blog item.)

Like most state agencies, CIRM is ignored by the media with only occasional exceptions. Its activities are not well known. That is not likely to change over the next decade despite the best efforts of CIRM's tiny staff. The exception would be a major or even minor scandal or development of a major breakthrough that would resonate with the people of California.

The folks in the media have a vast array of topics to cover, all of which CIRM competes with for attention. The news industry is, in fact, overwhelmed by matters that need public scrutiny: schooling for children, jobs for parents, affordability for housing, vaccines for Covid-19, homelessness, climate change, wildfires and much, much more. Meanwhile, the industry is struggling with its own sustainability issues, laying off thousands of reporters, closing outlets and desperately searching for new business models.

Breaking through this wall of issues to generate favorable, regular coverage of the stem cell agency's good works is a herculean task. And so far, the reality is that CIRM's good works are quite minor in terms of how they affect the lives of the vast majority of the people in California. 

The CIRM team, from top to bottom, has provided a prodigious amount of positive information that can resonate with the public. Building positive relationships with voters, however, is a long-term task that requires commitments that go well beyond CIRM's stalwart staffers, who currently weigh in at only 33 for a multibillion dollar program. 

CIRM has major budget and legal limitations, courtesy of Proposition 14. Its outreach team is small, again an outgrowth of ballot initiatives. Nonetheless, CIRM has a potential army of more than 900 available plus more in the future, given the agency's expansive, new responsibilities authorized by Proposition 14. And that doesn't count the patient advocates or their allied organizations.

The army of 900 consists of the researchers and institutions that have received cash from CIRM -- all potential missionaries who can carry the CIRM message from Yreka in the north to Calexico in the south. 

The institutions could highlight CIRM funding in their news releases, instead of burying or omitting it. Researchers could reach out regularly to the various affected communities to help keep the cash flowing. Grantees could pony up $2,000 each and send it off to a new, broad-based nonprofit that might be called something like "Friends of CIRM."

But more immediately, the army of 900 could -- one by one -- resolve to make six new contacts in 2021 with the public or media to tell the CIRM story. Doing so would serve science and CIRM not to mention themselves.

The next statewide election best suited for approval of another bond measure is fast approaching. It is only eight years away. That is much less time than it takes to complete the preclinical work and clinical trials needed for a federally approved stem cell treatment, which is, ultimately, the only thing that voters really want. 

If the army of 900 needs an inspirational motto, it could be something like "Save The Goose."  You know, the one that lays the Golden Eggs. It is better than relying on the stork. 

Praise and Advice Given in Review of California's Stem Cell Research Program

The California stem cell agency today received both kudos and advice from the small state panel that is charged by law with reviewing its financial practices and is the only such state entity with that unique task. 

The panel is the Citizens Financial Accountability and Oversight Committee (CFAOC), which was created in 2004 as part of the ballot initiative that also created the California Institute for Regenerative Medicine (CIRM), as the agency is officially known. 

While it reviews the financial affairs of the agency, the CFAOC has no authority to require changes. CIRM's programs will cost state taxpayers an estimated $11.8 billion dollars before funds run out in 10 to 15 years. 

Betty Yee
Controller photo

State Controller Betty Yee is by law the chair of the CFAOC. It also has four other members, one of whom was sworn in just this morning. Yee and the others were liberal in their praise of the agency's work. In addition to the usual financial information, Maria Millan, CEO of the agency, presented the CIRM programs and their successes. 

Millan's presentation was greeted with praise by all the CFAOC members, including Yee. Towards the end of the meeting, Yee said that she and other members would like to be kept up-to-date regularly on CIRM matters since the CFAOC is required to meet only once a year. 

Yee said, "Numbers have lots of stories behind them. I think really to understand them fully, it is about exactly what we learned today."  She  said she hoped that part of the revision of CIRM's strategic plan next year will involve "how do we tell our story better."  Yee said she thought the agency was doing "great" but there was so much to be told. 

Catherine Sarkisian
UCLA photo

The new member of the CFAOC is Catherine Sarkisian, a UCLA physician who specializes in geriatric medicine, an area that Proposition 14 identified as a new target for CIRM.

Sarkisian raised a question about the need for diversity among recipients of  CIRM grants. CIRM officials pointed to existing training programs for high school and college students. Sarkisian said that those were important "pipelines" but that CIRM should consider creation of "on-ramps" to build up diversity among awardees. 

During the meeting, CIRM officials disclosed that the new strategic plan is expected to be approved next summer by the Independent Citizens Oversight Committee (ICOC), as the CIRM governing board is known. Work on it is already underway. Researchers and other members of the public can weigh in on what they would like to see funded over the next five years by emailing their comments to info@cirm.ca.gov.   

CIRM will be operating under a new, 17,000-word statute -- Proposition 14 -- that significantly expands the agency's scope and increases the ICOC size from 29 to 35. 

The new course of the agency is also likely to come up at a Dec. 21 meeting of the CIRM board. The public can address the board online or email comments. The agenda is legally required to be posted Dec. 11. It will contain instructions for online access to the meeting. 

'Demeaning and Uncalled For:' A CIRM Complaint About the Use of the Word 'Obscure'

The California stem cell agency today sharply criticized an item on the California Stem Cell Report as "demeaning and uncalled for" because it described the four-person Citizens Financial Accountability and Oversight Committee (CFAOC) as "obscure."

The offending word was used in an article yesterday that previewed the first meeting of the committee in nearly 15 months. The CFAOC was created as part of the initiative that created the stem cell agency in 2004, which is known officially as the California Institute for Regenerative Medicine (CIRM). 

The CFAOC reviews CIRM financial documents that have already been reviewed in public by CIRM's 29-member governing board, which is officially known as the Independent Citizen's Oversight Committee (ICOC). The CFAOC has no legal authority over CIRM beyond making possible recommendations.

The article in question began like this:

"One of the more obscure entities in state government is scheduled to meet this Friday to review the financial affairs of California's stem cell agency, a matter that now runs to nearly $12 billion.

"The panel is the Citizen's Financial Accountability Oversight Committee (CFAOC), which was created in 2004 along with the California Institute for Regenerative Medicine (CIRM), as the stem cell agency is formally known. The CFAOC is charged with reviewing the financial practices of the stem cell agency. The CFAOC is the only state panel legally charged with that function. The governor and the legislature have no authority to do so."

Here is the text of the email expressing CIRM's displeasure with the use of the word "obscure." The email was written by Kevin McCormack, senior director of communication at CIRM.

"I think your characterization of the CFAOC in your latest column as 'One of the more obscure government entities' was demeaning and uncalled for. It may not have a high profile but it certainly has an important role. It was created by the voters in 2004 for a very specific purpose, to make sure we are held accountable, every year, for our financial performance. As one of the common, if erroneous, complaints about CIRM is that we are not accountable to the legislature or any other legislative body in Sacramento I would have thought the CFAOC should be praised not dismissed.

 

"This is a group of people who come together with the sole goal of making sure the state’s money is well spent. The members cover a broad range of professions but have one thing in common, they have vast experience in their area. They are appointed by the Controller, the Treasurer, the President pro Tempore of the Senate, and the Speaker of the Assembly (and one by CIRM). These are nobody’s fools, they are diligent in the way they work, meticulous in their analysis of how we work, and forceful in making recommendations. Which we then follow.

 

"At CIRM we are used to people criticizing us, more often than not incorrectly. The CFAOC deserves better."

As the author of the article in question, I have high regard for the CIRM staff and McCormack as well as the persons on the CFAOC. Nonetheless, it is an obscure state entitity, as are many state departments. More than 200 exist and most of them are obscure. Consider the State Allocation Board, for example, or the First 5 California. 

The count of 200 does not include state advisory bodies such as the CFAOC. If it did, the number would likely run into the thousands. Such bodies can do important work, such as was done by the Little Hoover Commission, an obscure state entity whose analysis and recommendations concerning CIRM won significant praise by the Institute of Medicine (IOM), which studied CIRM for months. 

What all these bodies have in common is that they are virtually unknown to the public, even to persons who consider themselves well-informed. 

The California Stem Cell Report writes about the CFAOC because of its connection to CIRM and the fact that both were created by the same 2004 initiative -- a measure criticized as ballot-box budgeting and that sometimes has also created impediments for CIRM. (See the IOM findings and recommendations.)

My bottom line? For a state body to be considered obscure is not a mark of shame. It is just a matter of fact.  

(Editor's note: A very early version of this item incorrectly said that Friday's meeting of the CFAOC will be the first in 19 months. The correct figure is 15 months.)

 

Financial Review of California's Multi-billion Dollar Stem Cell Research Agency Slated for Friday

One of the more obscure entities in state government is scheduled to meet this Friday to review the financial affairs of California's stem cell agency, a matter that now runs to nearly $12 billion.

The panel is the Citizen's Financial Accountability Oversight Committee (CFAOC), which was created in 2004 along with the California Institute for Regenerative Medicine (CIRM), as the stem cell agency is formally known. The CFAOC is charged with reviewing the financial practices of the stem cell agency. The CFAOC is the only state panel legally charged with that function. The governor and the legislature have no authority to do so.

However, the CFAOC does not have authority to require changes by CIRM. It can only make recommendations.

Friday's agenda appears to be routine. However, some members of the committee may have comments on the approval of Proposition 14, which saved CIRM from financial extinction with $5.5 billion in money that the state will have to borrow.

Including Proposition 14, CIRM will cost taxpayers an estimated $11.8 billion by the time its funding runs out again in 10 to 15 years. Of that total, an estimated $3.3 billion will go for interest on the $8.5 billion in state funding for the agency, including the period since 2004. 

CIRM is likely to spend more than the $8.5 billion, however, because Proposition 14 provides for using private funds to hire additional personnel for the agency beyond a nominal cap of 70. CIRM has never had more than 62 employees and currently has about 33, two less than the 35 members of its governing board. 

On the CFAOC agenda are routine audits of the agency that have not identified any particular issues and presentations of previously reported budget plans. However, the meeting may include some discussion of CIRM's future, but don't look for a critical evaluation.

The last meeting of the CFAOC was in August 2019. State law requires an annual meeting. No meeting was held in 2018.

The chair of the panel is Betty Yee, the elected state controller. Other members include:

• Jim Lott, a psychologist and former health care industry executive specializing in health care organizations and strategic thinking. 
• Mark Fischer-Colbrie, CEO of Strateos,  Inc., of Menlo Park, Ca., and for chair of the international board of the Juvenile Diabetes Research Foundation, which is closely linked to Robert Klein, the sponsor of Proposition 14
• Michael Quick, a former provost at USC who left that post in 2019 to return to teaching. The Los Angeles Times wrote, "As the university’s top academic officer, Quick handled many of the complaints against former medical school Dean Carmen Puliafito, who The Times revealed used drugs and partied with criminals during his tenure. Quick reprimanded the dean and ultimately forced him to step down in 2016." 

Puliafito was once a member of the CIRM governing board. USC has received more than $114 million in CIRM awards.

Below is the text of state law concerning the CFAOC and the scope of its authority, which does not include an evaluation of its scientific performance. 

"There shall be a Citizen's Financial Accountability Oversight Committee chaired by the Controller. This committee shall review the annual financial audit, the Controller's report and evaluation of that audit, the financial practices of the institute. The Controller, the Treasurer, the President pro Tempore of the Senate, the Speaker of the Assembly, and the Chairperson of the ICOC shall each appoint a public member of the committee. Committee members shall have medical or patient advocacy backgrounds and knowledge of relevant financial matters. The committee shall provide recommendations on the institute's financial practices and performance. The Controller shall provide staff support. The committee shall hold a public meeting, with appropriate notice, and with a formal public comment
period. The committee shall evaluate public comments and include appropriate summaries in its annual report. The ICOC shall provide funds for all costs associated with the per diem expenses of the committee members and for publication of the annual report."

Financial Examination of California Stem Cell Agency: Fireworks Not Expected

The only state panel that has formal oversight of the $3 billion California stem cell agency meets this Thursday in Los Angeles for what is expected to be a routine meeting.

The body is the Citizens Financial Accountability Oversight Committee, chaired by the state controller, Betty Yee.  The 10 a.m. meeting in Los Angeles City Hall has nothing on the agenda that appears to raise a red flag. However, some past sessions have been lively.

Leaders of the agency are expected to brief the committee, which was created by Proposition 71 in 2004, which also created the research effort itself.

The ballot initiative specifically exempted the agency, known formally as the California Insitute for Regenerative Medicine, from control by the governor and legislature.

Here is a link to names of the members of the committee.

The session will be available on a listen-only basis via the internet or an 800 number. Here are instructions:
Public call-in number (listen only): (877) 260-8900
Confirmation number: 433267

Listen to the meeting online: https://im.csgsystems.com/cgi-bin/confCast
Enter conference ID number 433267, then click “Go.”

Fifteen Clinical Trials: Better Marks for California Stem Cell Agency This Year

California's stem cell agency today received higher marks than nearly two years ago when it was last examined by the only state body charged with oversight of the $3 billion research enterprise.

The occasion was a meeting of the Citizens Financial Accountability and Oversight Committee, chaired by the state controller. One of its members, Jim Lott, in January 2014 had some harsh words for the California Institute for Regenerative Medicine (CIRM), as the agency is formally known.

But after a presentation that showed the agency will be involved in 15 clinical trials by the end of this year, Lott said CIRM had improved its pitch, although most of what he was said was lost in a poor quality audiocast of the meeting.

Jim Lott

The California Stem Cell Report asked him to summarize his views. Lott replied in an email,

"I've always felt that CIRM performs well. They needed to better communicate their achievements to justify the $2 billion the agency has spent thus far.  They needed to make their business case.  They did that today, and it would seem that their new president is the change that occurred to make this and other needed transformational efforts happen."

State Controller Betty Yee, chair of the oversight committee, also seemed satisfied with the agency's progress. Her comments were also largely lost in the audiocast. Her office declined to provide a summary of her views for this item today.

Jonathan Thomas, chairman of CIRM, and other agency executives provided an overview of the agency's progress and changes in its strategic plan, most of which is familiar to readers of the California Stem Cell Report.

Some fresh tidbits from the presentations.

-- The move to the agency's new headquarters in Oakland at the end of November will cost roughly $380,000. The agency is losing its rent-free office space in San Francisco and cannot afford the expensive leases in the city of San Francisco.

-- Randy Mills, president of CIRM since May 2014, has brought a sharp-eyed business approach to the agency, accord to Chairman Thomas. He said the agency "needed a business person" as opposed to an academic as the result of its emphasis on financing clinical trials. Thomas said Mills put "discipline and perspective" of business in place at the agency.

Michael Quick, USC photo

-- Thomas was "delighted" to hear Yee ask what the state could do to help the agency in the future. Thomas said the agency is developing a strategy in which the state could play a "very prominent role." Presumably that would involve more state funding since the agency is expected to run out of funds for new awards in about four years.

The controller's office also announced the addition of a new member to the oversight committee, Michael Quick, provost and senior vice president of academic affairs at USC.

As the school's No. 2 executive, he reports to Carmen Puliafito, president of USC and who also sits on the CIRM governing board. USC, which has held a seat on the board since 2004, has received $107 million from CIRM.

The oversight panel is required by state law to examine the agency on an annual basis. The last such session occurred 21 months ago. Asked to explain the delay, Taryn Kinney, a spokeswoman for Yee, said in an email,

"Since her inauguration earlier this year, (the controller) focused on building her staff and strengthening the many core internal functions of the state controller’s office."

Oversight Panel Concludes Hearing on California Stem Cell Agency

Today's oversight meeting involving the operations of the $3 billion California stem cell meeting concluded at 11:10 a.m.  The agency presented a general update on its operations. No members of the review panel voiced major criticism of the agency. In fact, one who was sharply critical of the agency nearly two years ago appeared to be quite satisfied with its performance. However, much of what he had to say was muddled in the audiocast. We expect to carry an item with more details later today.

Oversight Panel Begins Session Involving California Stem Cell Agency

Today's meeting of the Citizens Financial Accountability and Oversight Committee began about five to 10 minutes ago. Members are hearing presentation of routine audit results already aired publicly by the California stem cell agency.

At 9:18 a.m., the meeting achieved a quorum. That enables it to take official action. A new member was sworn in this morning. However, his name was not audible on the audiocast of the meeting. The California Stem Cell Report has asked for information on the appointee.

California's Stem Cell Oversight Meeting to Begin Shortly; Directions for Listening Online

Today's 9 a.m. meeting of the oversight committee for the California stem cell agency is available online -- listen only -- using the following information.  The slides for the meeting are available here.

Public call-in number (listen only): (800) 260-0718 

Access Code: 369689

 

Listen to the meeting online: https://im.csgsystems.com/cgi-bin/confCast

Conference ID: 369689  

Oversight Panel of California Stem Cell Agency Schedules First Meeting in 21 Months

The only governmental body specifically charged with oversight of the $3 billion California stem cell agency, an enterprise that operates beyond normal state controls, announced yesterday that it would meet in just three days.

The session of the oversight panel comes 21 months after the last meeting of the Citizens Financial and Accountability Oversight Committee(CFOAC). The panel is required by state law to meet annually. Its last meeting in January 2014 saw the agency criticized harshly by one of the members of the oversight panel.

The committee is chaired by the state controller, who currently is Betty Yee. At the time of the last meeting, the controller was John Chiang, who is now state treasurer.

The agenda for this Thursday's meeting contains no items that would seem to be controversial, only a review of a routine audit and a presentation by the agency itself.

In January of 2014, Jim Lott, one of the members of CFAOC, made it clear at some length that he was not pleased with the agency's performance. He said in part:

“What can we say we've done to advance to a cure or to cures? It's fine that we've got all -- we've contributed to all. What can you say that we've actually done? We don't really have any -- I'm going to just say this because it's a bias and I know it's a bias. We don't have any tangible specific and measurable results that I can point to.”

The $3 billion state stem cell agency is exempt from the usual state budgetary controls. It receives its funds directly from bond proceeds without intervention by the governor or the legislature. The agency’s independence was authorized by voters when they created the agency in 2004 through a ballot initiative that altered the state constitution.

Two sites are available for the public to observe and participate. One is in Emeryville in the San Francisco area and the other is in Los Angles. Addresses can be found on the agenda. The public can also listen to an audiocast of the proceedings. Directions are also on the agenda. 

The California Stem Cell Agency and Death by Power Point

One of the readers of the California Stem Cell Report this week sent along the following commentary as a result of Monday's item called “Critiquing the California Stem Cell Story: 'Continuums' vs. Cures.”

The reader is a researcher at a major California institution, who does not want to be otherwise identified. The scientist's comment focused on one of the host of Power Point presentations used by CIRM at last January's meeting of the Citizens Financial Accountability and Oversight Committee, the only state entity charged with overseeing the stem cell agency and its governing board. Here is the full text of the comment.

“You referred to the slide show as mind-numbing.  I might call it weird. 

“The title: 'Advancing Stem Cell Science, CIRM's scientific scope' 

“The first slide 'CIRM's vision and strategy'  No vision or strategy follows.

“The near last slide: 'what does CIRM want?' is the stunner.

“CIRM 'wants:' 

“Stem cell therapies -- Not just any therapy but those 'where the stem cell connection is strong.' And if the connection is weak? Say the disease path was identified in stem cells, and the drug for the path made separately or turns out to be a small molecule? Then what? CIRM won't fund it. A plan for development -- so what have they been doing for 10 years?

“CIRM wants to have a strong, 'major impact' -- Is this a vision, lament, or failure to hire the right publicist?

“CIRM wants diseases that already come with biomarkers and a good understanding of the pathophysiology, diseases that come with their own definitions of efficacy, so that clinical trials are easy to do. Heck, if we knew all that, then treatment development would be rational and easy; both NIH and industry money would and does fund it.

“CIRM wants proof of concept by 2017. Please give us a disease and intervention for which we can do a phase 2a study and show efficacy. 

“Finally, CIRM wants 'a strong, credible team with expertise ...' and executive ability.  Yes, as their regular pronouncements indicate, they lack credibility and expertise in many areas?"

Our take: Clearly the use of Power Point presentations at the CFAOC session did not have the desired effect, either on the audience at the time or on the scientist who sent the above commentary. However, that was only part of the problem at that meeting.

The California Stem Cell Report's comment about mind-numbing Power Point presentations was also aimed beyond last January's meeting to include CIRM's heavy reliance on such presentations, which too often substitute for nuanced, written explorations of the issues at hand. The presentations by their very nature are nothing more than outlines. Almost invariably they are simply read to the audience, as in the governing board of the agency. If the goal of the agency is to convince persons outside the agency of the virtues of its billions of dollars in spending, “death by Power Point” is not the way to do it. Like any tool, such presentations have a use. But they are not always the best tool for everything.

Changing or dropping Power Point presentations, however, will not guarantee that CIRM can make the sale on its programs. If it is going to avert financial death in 2017, when funds for new grants run out, it will have develop a pitch that connects viscerally as well as intellectually.   

Critiquing the California Stem Cell Story: 'Continuums' vs. Cures

It was a genuine “where's the beef” session for California's nearly 10-year-old, $3 billion state stem cell agency.

A member of the only state body legally delegated to oversee the California Instititute of Regenerative Medicine (CIRM) and its governing board wanted an answer to a simple question: What cures has the agency produced as promised during the 2004 ballot campaign that created the state program?

The occasion was a meeting Jan. 22 in downtown Los Angeles of the Citizens Financial Accountability and Oversight Committee, a group headed by state controller John Chiang. It meets once a year to examine the activities of the agency.

Jim Lott
COPE photo

Jim Lott, a long-time member of the panel and an executive vice president of COPE Health Solutions of Los Angeles, was pressing CIRM Chairman Jonathan Thomas and Ellen Feigal, CIRM's senior vice president for research and development.

According to the transcript, Lott, who described himself as a “big supporter” of CIRM, said, 

“I think when many voted for this, they thought there were going to be some cures coming out of this effort. And my bias is I have a 13-year-old daughter who has a spinal cord injury, partial break. I'd like to go home and tell my wife that this did something to advance the medical therapy that will ultimately provide her with the opportunity to walk again. What can you tell me that we've done that's going to get my daughter out of her wheelchair sooner (rather) than later after all this money has been spent?”

Thomas and Feigal struggled at some length to give him satisfying answers to his question. 

It was a tough series of exchanges with Thomas and Feigal talking about “incremental” work and “continuums” along with unrealistic, high expectations raised by the 2004 campaign. Those expectations burden the agency's current efforts to find new funding for awards beyond 2017, when the cash runs out.

At one point, Lott said it would be a “hard sell” to get voters to back more funding. Thomas acknowledged that and said it is “not stuff that readily translates into good sound bites.”

“You don't have a good message,” Lott said, declaring that he raised the issue two years ago.

“You guys are not speaking to people in ways that they understand the value of what you are doing. And that bothers the heck out of me.”  

Here is an exchange from early in the meeting involving Feigal and Lott, who has spent 23 years in the California hospital industry.

Lott:

“What can we say we've done to advance to a cure or to cures? It's fine that we've got all -- we've contributed to all. What can you say that we've actually done? We don't really have any -- I'm going to just say this because it's a bias and I know it's a bias. We don't have any tangible specific and measurable results that I can point to.”

Ellen Feigal

Feigal:

“Actually –”

Lott:

“Tell me if I'm wrong and demonstrate it to me. I want to understand where the results are.”

Feigal:

“So I'm happy to tell you the results, but I guess the issue is the expectations. And when this was funded, it probably was an expectation that (if we) give them money and within a very, very, very short period of time, and frankly ten years is a relatively short period of time, and, as you may not know, the funding didn't start till 2006, but if you try -- we're trying to do things in a very accelerated way. The funding actually for the disease teams and strategic partnerships just started three years ago. Part of it is advancing....”

Feigal continued in that vein for a few more minutes. Lott then asked about CIRM's return on investment(ROI), which amounts to $6 billion that the state will have to pay to support the agency, including the interest on the money that was borrowed for grants.

Jonathan Thomas
CIRM photo

Thomas, a bond financier from Los Angeles, jumped in,

“The results are, do we have any cures? No, we don't have any cures, but the results are many. They're incremental, but they are all moving along a research continuum that any sort of drug therapy would follow.....”

Lott:

“Here's my problem. As you said earlier, and I agree with it completely, I think it's a question of expectations. I know when I voted for this, and I did vote for it, I had some expectations. And my expectations were (that) we were going to see something in terms of cures at the end of the rainbow after we spend $3 billion, whatever it is that we're spending here.

“So when I asked for an ROI -- and I do understand what you are trying to tell us. I do get it, but it's not translatable. It doesn't translate to the expectations that many of us voters had.”

Lott kept coming back to his essential question

“The point is if we did spend all this money, what did we
get for it?”

Thomas and Feigal, aided by their Power Point presentations, continued to talk about CIRM's partnerships, disease teams and funding mechanisms.

Thomas:

“So if we do go back for a subsequent bond measure, I think we will be able to tell a story that will make California proud of being on the cutting edge and having facilitated the acceleration of the research, which, as Ellen said --”

Lott:

“Not if you don't get beyond the marketing problem you got. I'm telling you, pal, I would have a hard time voting for it again."

Thomas:

“That's fair.”

Our take: The California stem cell agency is virtually unknown to most of the people of California, which is not an unusual situation for most state agencies. Since Thomas was elected chairman in 2011, however, it has vastly improved its communications efforts. Nonetheless, it has not fulfilled the campaign promises of cures and won't be able to do so in the next two years. It does have a story to tell, albeit one that does not fit with the mythology of magical stem cells. Telling that story is hindered by mind-numbing Power Point presentations, which are little more than outlines that would be better replaced by nuanced, written documents. The challenge for the agency is to present not only the dry numbers but package the key figures with information that will connect viscerally and persuade people of the virtues of CIRM. Packaging and sizzle are the watchwords, depending on the audience. Each group has different concerns that need to be researched in advance and then addressed in tailored presentations. Whether CIRM's efforts so far have been worth $6 billion remains to be determined, but it is clear that it has not yet made its best case.

Deadline This October: California Stem Cell Agency Seeking Detailed Public-Private Plan for its Future

The $3 billion California stem cell agency, which is currently scheduled to go out of business in a few years, hopes to come up with a detailed plan by this fall for a novel public-private arrangement that would extend its life.

The rough outlines of the proposal assume $50 to $200 million in “public investment,” although it is not clear whether that would be a one-time figure or an annual amount from presumably the state budget or perhaps another state bond measure. The concept includes additional private funding of a yet-to-be-determined nature. (The agency later said that the public investment figures would be a one-time event.)

The broad sketch of the agency's latest thinking about how to regenerate itself was found in an RFP posted four days ago on its website.

CIRM is seeking a consultant who would flesh out the general concepts that it has offered. Work would begin in mid June and be completed in four months, close to the ninth anniversary of the agency, formally known as the California Institute for Regenerative Medicine. The RFP did not contain a figure for the cost of the study, but said that the price would be part of the criteria for evaluating bids.

CIRM was created in November 2004 when California voters approved Proposition 71, a ballot initiative. Since then it has awarded $1.8 billion to 595 recipients. It is funded by money borrowed by the state (bonds), but cash for new grants is scheduled to run out in 2017. Interests costs on the bonds raise the total cost of the agency to roughly $6 billion.

CIRM said in the RFP that the plan for its future should provide

“...an in-depth analysis of various public-private funding models with potential to attract private sector investment to, and facilitate further development of the most promising CIRM-supported research projects; and recommend a single preferred approach for achieving this goal, complete with details relating to the recommended structure and an operational plan.”

The RFP also contained a just-released, $31,750 study by CBT Advisors of Cambridge, Mass, that examined mechanisms for financing translational research, which is the key focus nowadays at the stem cell agency. Such research is aimed at pushing laboratory findings into the marketplace.

Among other things, the CBT report, whose lead author was Steve Dickman, said,

“The nature of CIRM as a state agency is perhaps the biggest weak point (and) has to be addressed politically and cleared up as soon as possible or raising money will be unnecessarily challenging.”

The CBT study did not address how that might be done, which could be a considerable task. Proposition 71 modified the state constitution and state law and can be altered only by a super, super majority vote of the legislature or by another ballot initiative.

California is the first state to provide billions for stem cell research by using borrowed money. It also is unique in California state government in that its funding flows directly to the agency and cannot be altered by the governor or the legislature.

Translating all that into some sort of public-private arrangement would be novel among state government departments and could well require legislative or voter approval.

The California Stem Cell Report has queried the agency concerning the frequency of the assumed “public investment” and CIRM's budget for the RFP. We will report that information when we receive it.  (The agency later declined to disclose what it was prepared to pay for the study.)

California Stem Cell Agency: Comparing the Critiques

State Controller John Chiang has posted a useful, side-by-side comparison of critiques of the $3 billion California stem cell agency, including the Institute of Medicine(IOM) study, along with the responses from the agency.

Chiang, the state's top fiscal officer, has additionally posted the initial remarks Jan. 23 by CIRM Chairman Jonathan Thomas before the stem cell agency governing board on his plan to deal with the sweeping recommendations of the IOM.

Regardless of one's opinion of the board's response to the IOM, Thomas adroitly handled the discussion and vote, not a small accomplishment given the size of the board (29 members) and the legal restrictions involving public meetings. Under state law, Thomas could not lobby significant numbers of the board in advance of the meeting. He was restricted to engineering the approval in a public session, which can easily take on a life of its own given the unwieldy size of the board and the necessity for public comment.

As for the documents posted by Chiang, he is chairman of the Citizens Financial Accountability and Oversight Committee, the only state body specifically charged with oversight of the agency and its board. The web site for the committee is the only location on the Internet where Thomas' prepared remarks and the comparison can be found.

Chiang's comparison chart includes not only the IOM study, but last year's performance audit and the Little Hoover Commission study in 2009. Missing, however, is the state auditor's report in 2007 and its recommendation that the agency seek an attorney general's opinion on whether scientific grant reviewers must file a public financial disclosure form.

Here are links to the various documents: Thomas' prepared comments, Power Point chart used by Thomas, comparison chart of various studies and the transcript of the Jan. 23 meeting during which the governing board approved its response.

California Stem Cell Agency Cited for Improvements in Transparency

IRVINE, Ca. – The $3 billion California stem cell agency was praised this week for making progress in accountability and transparency during the last year.

The comments came from a representative of California state Controlller John Chiang, the state's top fiscal officer and who also chairs the only state entity specifically charged with financial oversight of the stem cell agency and its board.

Ruth Holton-Hodson, deputy state controller, told the blue-ribbon Institute of Medicine panel examining the performance of the stem cell agency that the controller's office "would like to acknowledge the progress the new leadership has made in the last year towards making CIRM a far more transparent and accountable agency than it has been in the past."

CIRM has a new chairman, J.T. Thomas, a Los Angeles financier, who has been in place since the beginning of last July. He succeeded Bob Klein, who was the initial agency chairman and who took office in 2004.

In her testimony at the IOM hearing here on Tuesday, Holton-Hodson discussed previous problems that CIRM had with the transparency of its budget. She said,

"We are very pleased that CIRM’s new leadership recognized this as a problem and quickly adopted a much more transparent budget format which is broken down by function. To make CIRM’s expenditures as transparent as possible, we have also recommended that they post the annual budget on the website. Again, we’re pleased to say that the new leadership has agreed to do this."

She also said,

"At our most recent meeting (of the Citizens Financial Accountability and Oversight Committee), we also recommended that CIRM post all of its private donations and they have agreed to do this."

Holton-Hodson criticized the dual executive arrangement at CIRM that is written into law by Proposition 71. She said,

"It is difficult to uphold the appearance of accountability and objectivity when the board chair has direct line authority over some CIRM staff positions. In essence under the current model, the chair is responsible for evaluating and approving some of the work of the chair.

"While this issue is still outstanding, it is important to acknowledge that the current leadership has made significant progress in more clearly delineating the responsibilities of the chair and the president."

Here is the full text of Holton-Hodson's remarks.Statement from California state controller's office to IOM-CIRM panel April 10, 2012

State Controller to Hold Hearing on Stem Cell Agency Finances

The only state body specifically charged with oversight of the $3 billion California stem cell agency and its board will meet next Friday in Los Angeles for a look at the enterprise's financial affairs.

The group is the Citizens Financial Accountability and Oversight Committee, chaired by the state's top fiscal officer, Controller John Chiang. It was created by Proposition 71, the ballot initiative that established the stem cell research effort.

The agenda is a tad shy of details on what is likely to be brought up although it does mention a briefing by CIRM on "CIRM’s financial performance, current budget,update of grants awarded and grant process."

CIRM Chairman Jonathan Thomas is expected to attend along with the agency's new and first chief financial officer, Matt Plunkett.

Update on Last Week's Hoover and CFAOC Hearings on CIRM

Two California state entities involved with the state's $3 billion stem cell agency examined its progress last week, ranging from its biotech loan program to election of a new chair.

The bodies are the Little Hoover Commission, the state's good government agency, and the Citizens Financial Accountability Oversight Committee(CFAOC), the only state body specifically charged with the overseeing CIRM's finance.

The CFAOC, chaired by state Controller John Chiang, queried CIRM officials, who included co- Vice Chairman Art Torres, President Alan Trounson and outside counsel James Harrison. Topics included the agency's heavy reliance on outside contracts(particularly in connection with legal and communications activities), the biotech loan program and its returns to the state and conflicts of interest, particularly in connection with closer ties to industry, according to Ruth Holton-Hodson, deputy controller.

We expect to have more on the discussion when the CFAOC posts transcript from the meeting.

The Little Hoover Commission was updated on a new law that lifts the 50-person limit on CIRM staff. Originally the legislation would have implemented many of the commission's reform recommendations from 2009. However, CIRM was successful in eliminating most of those provisions from the bill, which was also a topic at the CFAOC meeting. The Hoover meeting included an update on the election of a new chair at CIRM, according to Stuart Drown, executive director of the commission. He said the commissioners asked the staff to continue to follow CIRM activities and report back on the chair election preparations.

Two State Agencies Looking Into CIRM Tomorrow and Friday

This is a busy week for the California stem cell agency, but not all the action is in Burlingame where CIRM board convenes tonight for a preliminary round, followed by the main event tomorrow.

Two other state bodies will be looking at CIRM at meetings in Los Angeles and Sacramento. One of the panels is the only entity specifically charged with oversight of the $3 billion agency's finances. That is the Citizens Financial Accountability Oversight Committee(CFAOC), which convenes in Los Angeles on Friday. The second group is the state's good government agency, the Little Hoover Commission, which recommended in 2009 a number of changes at CIRM to improve its operations and transparency.

On tap for the CFAOC is a look at implementation of the first-ever law passed dealing with the Golden State's unprecedented $3 billion research effort. The measure, SB1064, removes a 50-person cap on the agency's staff, allows for compensation of up to $15,000 a year for some patient advocates serving on the CIRM board and requires the agency to commission the first-ever performance audit of its program.

The CFAOC is chaired by the state's top fiscal officer, Controller John Chiang. An early version of SB1064 contained a provision, supported by Chiang, that would have had the CFAOC commission the performance audit. But CIRM successfully lobbied to take the audit out of the hands of the CFAOC. You can expect questions to be raised during the Friday meeting about the progress of CIRM on setting up its audit.

Also likely to come up is the subject of staffing, particularly in connection with sweeping recommendations by CIRM's external review that would seem to require substantial additional staff.

A new member of the CFAOC, Jim Kovach, former head of the Buck Institute, is expected to be sworn in. Kovach was appointed by CIRM Chairman Robert Klein, whose last appointee to the panel attended one meeting last January and then quit. Kovach is a physician, a lawyer and former professional football player with the San Francisco 49ers and the New Orleans Saints.

You can find a host of budget and other financial documents related to the meeting on the CFAOC website.

The agenda for the Little Hoover Commission says only that a "scoping memo" involving CIRM will be presented to the full commission tomorrow afternoon in Sacramento. The commission staff has not elaborated on just exactly what that means although it comes under the subject of "schedule/project selection."

As for tonight's meeting of the CIRM directors' Governance Subcommittee, you can read about that here. The full board meeting that begins tomorrow morning was subject as well of a number of earlier piecesl on the California Stem Cell Report. (See here, here, here, here and here.) For those of you following those items, the agency still has not posted any information about the cost or scope of its proposal to pay for the attendance of perhaps hundreds of persons at an international stem cell conference in Toronto in June.

Oversight Panel to Review CIRM Finances Later This Month

The only state panel specifically charged with financial oversight of California $3 billion stem cell research effort meets later this month to examine its budget and review last fall's external review of CIRM's operations.

The Citizens Financial Accountability Oversight Committee is scheduled to convene in Los Angeles on Jan. 28, two days after a key panel of CIRM directors is expected to take up part of the committee's 12-month-old request to improve openness and transparency at CIRM.

The financial committee was created as part of Prop. 71, the ballot initiative that also created the stem cell research program. It is chaired by the state's top fiscal office, Controller John Chiang. CIRM is exempt by provisions of Prop. 71 from the normal oversight of the governor and the legislature.

While the committee is a sister to CIRM, the agency has distanced itself from the panel. CIRM successfully lobbied last year to remove from legislation a Chiang-supported provision that would have required the panel to commission a performance audit of the agency. Last February, shortly after the committee unanimously recommended more openness, CIRM President Alan Trounson described the committee's discussion of CIRM as a “strange critique” and “irrational attack.”  (See page 132 of the transcript of the board of directors meeting.)

Among the financial committee's recommendations was a proposal that CIRM post on its web site the statements of economic interests of its directors along with expense claims from directors and top staff. The proposal is to be taken up by the CIRM directors' Governance Subcommittee on Jan. 26 in Burlingame.

Also tap for the Jan. 28 financial committee meeting is discussion of a new law that removed the 50-person cap on CIRM staff. The change was made after Trounson said the quality of its work will suffer without more help. Currently CIRM has more than $1 billion committed to nearly 400 recipients. It has nearly another $2 billion go hand out.

Top California Official Urges Suspension of CIRM Chair Election

The state's top fiscal officer, who has a special role in connection with the California stem cell agency, this afternoon called for cancellation of this week's election of a new CIRM chair, declaring that the current process is fundamentally flawed.

John Chiang, who heads a Prop. 71-created committee that reviews the financial practices and performances of CIRM, said in letter to the agency's governing board,

“It is clear that the current selection process is fundamentally flawed. The taxpayers who provide the funds for CIRM must be assured that the chair and vice chair are selected in an open, transparent process – not through a backroom deal or by default because a deal has fallen apart.”

CIRM directors are scheduled to meet on Wednesday to consider the choice for a chairman to replace Robert Klein, a Palo Alto real estate investment banker, whose term is expiring. The only other candidate besides Klein is Art Torres, one of two vice chairs at CIRM. However, Torres withdrew from the running last week, clearing the way for Klein to continue to serve.

Chiang's letter referred to the ruckus over Klein's attempt to hand pick his own successor. The move failed following reports of closed-door meetings and conflicts of interest. The flap attracted attention in the international stem cell community, attention that CIRM did not welcome.

Chiang, a Democrat, said he was strongly recommending that the CIRM board suspend the selection of the chair and vice chair and ask that the nominations be withdrawn. Chiang said,

“The first step in a new process should be for the (directors')Governance Subcommittee to have a full, public discussion of the necessary criteria for a new Chair. The first question the Board should examine is the role of the Chair of the ICOC and how it differs from the role of the President. While I understand that Proposition 71 provides for a unique, co-leadership model, it is critical from a good governance perspective that there is a clear delineation of duties and decision-making.

“What makes a governing board effective is long-term transparency and accountability. The ICOC's most important role - to provide independent oversight of CIRM management - is compromised when the ICOC chairman is essentially serving as the CIRM CEO.

“It also is important to keep in mind that the Chair is but one member of the ICOC Governing Board. Good governance must rely on the actions of the whole Board, not a single member. While the current structure may have been necessary as CIRM was in start-up mode, as the Institute moves into the next phase, it is important from a good governance perspective that it be driven by a fully participating oversight board rather than a single individual, regardless of how talented that individual may be.

“The ICOC has a responsibility to the taxpayers of California to conduct its business in an open and transparent manner. The most effective way the ICOC can assure the public that the Chair and Vice Chair selection process was fair and resulted in the best candidates is to restart the process in a transparent manner.”

The committee that Chiang heads is the only state entity that is charged legally with regularly examining the operations at CIRM.
State Controller Calls for Suspension of Stem Cell Agency Election