Fresh Comment

“Anonymous” has filed another comment on the “CIRM calendar” item.

The remarks include the following, which is hard to disagree with:

“This calendar project may be an example of exactly the types of expenditures (multiplied over and over) which create the state's budget shortfall in the first place. State agencies should not spend money just because they can; government at CIRM, and at all other levels, have a responsibility to look at each expenditure with a critical eye toward whether the expense is fundamentally necessary and if so, insure the State's statutes governing the acquisition of goods and services are being complied with. CIRM is not a private enterprise, instead it should always be mindful that it is funded with real taxpayer dollars.”

Fresh Comment

“Anonymous” has filed comment on the “CIRM calendar” item asking about state bidding procedures and public records. We have filed a response.

Fresh Comment

“VoicedUp” has left a comment on the “Obama Chapter 5” item.

Waiting for Obama, Chapter 5 -- Be Careful What You Wish For

Some of the California reaction today to President Obama's action on stem cell research indirectly highlighted potential side effects that might make the state's stem cell agency uneasy – not to mention the biotech industry.

With the feds back in the game, they may not look kindly on wildcat activities out in fringy California and elsewhere. Turf does, in fact, matter. Moreover, with Congress now back in the stem cell legislation business, to borrow from one oldtime political commentator, no one is safe.

Consider the comment from John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca. He issued a call for the feds to act to ensure that taxpayers share in any profit generated by stem cell therapies developed with government funds.

In a letter to President Obama, Consumer Watchdog cited the profit-sharing model at CIRM and said,

“Celebrating the change in policy is not enough, however. It is now necessary, more than ever, to examine the regulations governing the way federal funds are distributed to researchers. A change in those rules is needed and we call on you to work with Congress to implement reform of the Bayh-Dole Act.”

Businesses in California have taken issue with CIRM's profit-sharing rules, but the state agency has now broken the Bayh-Dole ice. The precedent in California will help fuel efforts to make changes in the federal law.

From Oakland, Ca., came another call for federal action that could have an impact on CIRM. Marcy Darnovsky, associate executive director of the Center for Genetics and Society, said the national government should enact enforceable rules for all stem cell research, public and private. Such rules would supersede those in California.

Jesse Reynolds, policy director of the center, said,

"We've seen what happens with inadequate regulation and oversight in the financial sector. The human biotechnology sector also needs effective public policy."

The Dickey-Wicker amendment is already on the table in Congress. It could become the vehicle for a host of challenges to the established order in the biotech business.

More Than You Want to Know about CIRM's Cash Crisis

An overview by yours truly of the financial situation at the California stem cell agency was published today by the FierceBioResearcher newsletter. You can find the piece here.

FierceBioResearcher reports that it has more than 65,000 industry email subscribers and 410,000 monthly page views.

Here are additional links on the subject of CIRM finances, which will come up at Thursday's meeting of the CIRM board.

An overview on the California Stem Cell Report of the situation including Power Point presentations by a top CIRM official.

CIRM´s only statement on its web site concerning its financial status.

An assessment of the January briefing by John M. Simpson, stem cell project director of Consumer Watchdog, a Santa Monica, Ca., nonprofit, and a longtime CIRM observer.

The CIRM transcript from the briefing.

Waiting for Obama Chapter 4 -- Political Thorns and hESC

The No. 2 story this evening on the web site of the New York Times is not one that will necessarily please the most avid advocates of human embryonic stem cell research.

Written by Sheryl Gay Stolberg, the article said,

“President Obama intends to avoid the thorniest question in the debate: whether taxpayer dollars should be used to experiment on embryos themselves, two senior administration officials said Sunday.”

Stolberg wrote about a legal prohibition that is generally subsumed in mainstream media reports on hESC research. She said,

“The ban, known as the Dickey-Wicker amendment, first became law in 1996, and has been renewed by Congress every year since. It specifically bans the use of tax dollars to create human embryos — a practice that is routine in private fertility clinics — or for research in which embryos are destroyed, discarded or knowingly subjected to risk of injury."

Stolberg continued,

“Mr. Obama has not taken a position on the ban and does not intend to, Melody C. Barnes, his chief domestic policy adviser, said Sunday. The president believes stem cell research 'should be done in compliance with federal law,' she said, adding that Mr. Obama recognizes the divisiveness of the issue.

“'We are committed to pursuing stem cell research quite responsibly but we recognize there are a range of beliefs on this,' Ms. Barnes said.”

Stolberg wrote,

“A senior House Democratic leadership aide, who was not authorized to speak publicly about the issue, said overturning the ban 'would be difficult, but not impossible,' adding, 'It’s not something that we would do right away, but it’s something that we would look at.”

Hear CIRM Board Live on its Financial Woes and Politically Charged Election of Vice Chair

This week's meeting of the board of directors of the $3 billion California stem cell agency, which will include an update on its financial woes, will be available live via telephone and the Internet.

The audiocast is the second for the CIRM board and provides a valuable opportunity for public and those affected by the agency's actions to hear first hand its deliberations and actions.

In addition to a briefing by CIRM Chairman Robert Klein on his efforts to peddle state bonds privately, the board is expected to choose a new vice chairman, probably two, in fact. You can find the politically charged details here involving Republican Gov. Arnold Schwarzenegger and Democratic State Treasurer Bill Lockyer.

According to the agenda, part of the vice chairman deal now involves an unspecified reduction in the salary range for the position, which currently is $180,000 to $332,000 annually.

Klein, a millionaire real estate investment banker, receives $150,000 for what the board has defined as a half-time job.

The board will also consider unspecified changes at the top of the CIRM organizational chart in connection with the new vice chairmen or whatever the designation for the posts will be.

None of the details are available on the agenda although the meeting is only three days away. Based on past performance, a strong likelihood exists that the public will be denied access to the proposals in advance of the meeting.

Also scheduled for board action are staff recommendations on research funding priorities that reflect that CIRM will run out of cash by next fall unless bonds are sold. The agency has not released anything beyond a cryptic agenda item on that matter.

Another topic before the board is the actual funding of $58 million in training grants approved in January. The board delayed delivery of the cash in light of CIRM's bleak financial situation.

Expected to be approved are additions to CIRM'S outside legal contracts that will push the total to more than $1 million for this fiscal year. The figure does not include the salaries and benefits of attorneys on staff.

John M. Simpson of Consumer Watchdog attended the directors' Governance Subcommittee meeting last week and reported that it approved a $180,000 hike (40 per cent) in the $450,000 contract with the law firm of Remcho, Johansen & Purcell of San Leandro, Ca.

It also approved a $180,000, 6-month extension on a contract with attorney Nancy Koch, Simpson said. Koch started with a $150,000 contract last April. It jumped to $245,000 sometime after Nov. 30 and now will total $425,000 by the end of September if it is not extended further, based on the Dec. 22 and March 5 outside contract reports.

No written justification for the increases was provided last week, although Simpson reported that Klein said the money was needed for legal work connected with CIRM's financial troubles and the inquiry by state's Little Hoover Commission. Koch is also supposed to help fill the gap until the new counsel to the president comes on board in July, although CIRM also has a $140,431 arrangement with the state Department of Justice.

In an email, Simpson said the additional funds were approved only after CIRM director Claire Pomeroy, dean of UC Davis School of Medicine, insisted on a written justification prior to final board action on Thursday. Klein said the justification would be forthcoming. Last year, Klein pushed through a 66 per cent hike in Remcho fees with no public, written justification.

Thursday's board meeting can be heard by dialing in 866-254-5934 or using this Internet address – http://65.197.1.15/att/confcast. The access code is 991416. The audiocasts do not provide for participation, however.

The public can hear AND participate in the Sacramento meeting at teleconference locations in Southern California, including the City of Hope, the Salk Institute and two in Los Angeles, one at UCLA and one at the office of CIRM director Jonathan Shestack. Specific addresses can be found on the agenda.

New Counsel to President Hired at CIRM

After an eight-month search, the California stem cell agency has hired an attorney from Genentech to become counsel to its president.

The name of the lawyer was not disclosed but she is scheduled to start at the beginning of July.

The job has been vacant since Tamar Pachter resigned in August and returned to the California State Department of Justice. Pachter was with CIRM only 16 months and had a salary of $225,000 with the title of CIRM general counsel.

If we were to hazard a guess, the new hire will not be earning that much. She will hold the title of counsel to the president. It appears that the general counsel position has been effectively eliminated.

CIRM is rich in legal talent and spending nearly $1.2 million this year for outside legal help.

CIRM President Alan Trounson disclosed that the new hire had been made at a meeting last week of the CIRM Governance Subcommittee, according to John M. Simpson of Consumer Watchdog, who attended the session.

Consumer Watchdog on Obama and CIRM

Consumer Watchdog of Santa Monica, Ca., today released the following statement concerning the California state stem cell agency and the lifting of federal restrictions on funding for stem cell research.

John M. Simpson, stem cell project director for the group, said,

"With word that President Obama intends to lift Bush era restrictions on federal funding of embryonic stem cell research, California's stem agency needs to think carefully about where to focus California taxpayers' money.
>>
"Fortunately the agency is in the process of reviewing its strategic plan. Clearly the California Institute for Regenerative Medicine should try to avoid duplicating funding efforts by the National Institutes of Health. CIRM's programs should augment those of the NIH."

Fresh Comment

John M. Simpson of Consumer Watchdog has posted a comment on the "Obama cash source" item, pointing out that the new Podesta lobbying contract slips neatly below the cutoff line for approval by a committee of CIRM directors.

CIRM Calendar Hooha Raises Transparency Issues; Agency Says Calendars Cost $23 Each

The California stem cell agency said today that its 2009 calendar cost $23 apiece and provided figures that indicated the total expense for the calendars was about $35,310.

Based on the numbers provided by CIRM, that seems to mean that 1,535 calendars were printed. Earlier, CIRM said the calendars were sent free to its grant recipients and trainees to remind them "365 days a year where their funding comes from." The agency has 448 recipients and trainees, according to figures on its web site. Calendars were also sent to an unspecified number of "constituents."

In comments on our earlier item on CIRM's 2009 calendar, some readers of this blog said production of expensive, free calendars is a waste of taxpayer money.

Here is the current breakdown on the calendar cost, based on a CIRM report and information supplied by Don Gibbons, chief communications officer for the agency: Printing, $14,000; design, $10,200, and $11,110, which was part of a larger contract.

The $11,110 is a new figure and came today from Gibbons. He said it was part of a $45,000 expenditure with Abbott and Company that CIRM now says was for "image development, office art design and framing." The Abbott contract was initially identified as involving the calendar. After the California Stem Cell Report inquired about the calendar project, the description of Abbott contract was altered on the CIRM web site to remove any mention of a calendar. No footnote was provided on the PDF document to notify the public or directors that a change had been made from an earlier version.

Here is the text of what Gibbons sent earlier today concerning our original item on this subject.

"For the record, you never asked me for the cost per calendar. Instead you chose to make one of your usual worst-case projections. The portion of the Abbott contract that covered the calendar was $11,110, which made the cost per calendar $23. Also, this project began in July, long before the complete budget meltdown."

More than a week ago, we asked Gibbons for the total number printed. He has not provided that number. Following his latest email today, we asked again for that information as well as the number distributed and the cost of postage.

As for our "projections," you can read them here along with our assumptions. They were based on information from CIRM, which was incomplete then and remains incomplete today.

The CIRM calendar is a minor expense in the agency's $13 million operational budget. But outside contracts are not. They now total more than $3 million, up from $2.7 million, as the result of action earlier this week. The outsourcing, which often poses major oversight issues for government agencies, is the second largest category in the budget.

How the agency describes the contracts and other budget items and responds to questions about them is basic to the agency's transparency and openness. The calendar issue is not the only one. A lobbying contract with the Nielsen, Merksamer firm in Sacramento continues to be described as "public education." There may be other fanciful descriptions, but without an examination of contracts and other documents, it is impossible to tell.

Several years ago, CIRM directors initiated the requirement for regular reports on outside contracting because they felt they were not fully informed. While creative budgeting occurs in every organization, without good information it is impossible to make good decisions.

Obviously it is nice to offer gestures of good will to "constituents" and others associated with any enterprise, but CIRM's calendar project came at an impropitious time. The project began shortly after a salary freeze at the CIRM that ran through December. As we remarked then, such freezes affect those on the lower end of the pay scale much more harshly than at the top levels. Perhaps during the holidays, CIRM management could have spread that $35,310 among employees making less than $70,000 a year. That would have been a nice gesture as well.

CIRM Identifies Obama as Cash Source for Its Troubled Lab Projects

California stem cell Chairman Robert Klein says that strapped recipients of CIRM lab construction grants should attempt to tap the nearly $1 trillion Obama stimulus package.

His remarks were contained today in a piece by Ron Leuty of the San Francisco Business Times. Leuty quoted Klein as saying,

"Our grantees are perfectly situated — they’re in construction or about to go. They can clearly demonstrate that they’re going to create jobs."

Leuty wrote that CIRM intends to use its new, $240,000 Washington lobbyist, the Podesta Group, to help snag the cash. Leuty reported,

"The California Institute for Regenerative Medicine — with the help of a well-heeled Washington, D.C., lobbying firm — wants organizations like Novato’s Buck Institute for Age Research to seek some of the $1.5 billion that is earmarked in the $787 billion stimulus package for biomedical research facilities and construction."

Other institutions previously identified as needing to raise more matching funds include the Sanford Stem Cell Consortium (UC San Diego, Scripps, Burnham and Salk) and UC Santa Barbara.

The $240,000 figure is new and comes from a copy of the contract requested from CIRM by the California Stem Cell Report. The total includes expenses plus $20,000 a month from Feb. 11 through Dec. 11, 2009. The contract, which does not need CIRM board approval, can be extended indefinitely by mutual agreement.

If you are interested in a copy of the contract, please send an email to djensen@californiastemcellreport.com.

Obama Watch Chapter 3: Funding Ban to be Lifted on Monday

The Washington Post reported this afternoon that President Obama on Monday will lift the restrictions on federal funding of human embryonic stem cell research.

According to reporter Rob Stein's story, the move will be announced at an event at 8 a.m. PDT. He cited an email sent out on Thursday from the White House concerning a ceremony at that time "on stem cells and restoring scientific integrity to the government process. At the event the president will sign an executive order related to stem cells."

No other significant details were disclosed.

Fresh Comment

"Anonymous" has filed a comment on the "CIRM Calendar" item. Among other things, the comment says the agency "appears uninterested in answering legitimate questions regarding the use of public funds."

Fresh Comment

John M. Simpson, stem cell cell project director of Consumer Watchdog of Santa Monica, Ca., has posted a fresh comment on the "CIRM Calendar" item. Among other things, he notes the size of the CIRM public relations operation and the scanty mainstream media coverage of the agency.

Fresh Comment

John M. Simpson of Consumer Watchdog has posted a comment on the "vice chairmanship" item in which he suggests that it might be a good idea to designate all the board members as vice chairs.

Fresh Comment

"Anonymous" has posted an indignant comment on the "CIRM calendar" item. The remarks say, in part, that the calendar is "a blatant waste of taxpayer money. Just because CIRM defends it, and characterizes this site's inquiry about it as petty, doesn't mean it's so. CIRM's mission is to aid industry in emerging science, not publish high quality photos and calendars. Calendars won't cure any diseases, period."

The Tale of CIRM´s 2009 Calendar

Asking questions of government officials can sometimes generate interesting responses, and the California stem cell agency is no exception.

Last week, as part of the agenda for the meeting Thursday of the directors Governance Subcommittee, the agency posted one of its regular reports on outside contracting. The category is the No. 2 operational expense for the agency at $2.7 million for the 2008-09 fiscal year.

CIRM Chairman Robert Klein and President Alan Trounson take justifiable pride in keeping expenses low -- well under the cap in Proposition 71.

That was one reason I asked questions about what appeared to be $69,200 for a 2009 calendar. How many were printed, why and so forth. But by the time, we were through, it seemed that the cost for each calendar could range from anywhere well under $50 to perhaps $100 or so. And the report on the outside contracts had been altered to remove any mention of the calendar as part of a $45,000 expense, which is now described only as image development, office art design and framing

We will probably never know what the correct cost of the calendar is. Don Gibbons, CIRM´s chief communications officer, has not even responded to my 5-day-old question about how many were printed. However, he did say that they went mainly to CIRM grantees and trainees, which number 448. An unspecified amount went to “constituents.”

Here are the calendar figures that triggered the original inquiry: $14,000 calendar printing to Fong and Fong, $10,200 calendar production to Reineck and Reineck, and then the $45,000 for “calendar” work by Abbott and Company.

On Feb. 25, I asked Gibbons about what was entailed in those contracts as part of other questions dealing with the outsourcing report.

His response:

“Calendar was short hand used by the contract office for a complex series of projects that resulted in high resolution stem cell images fit for printing (quite difficult) that were re-used for several projects, including the FLICKR site, backdrops for media interviews, an exposition banner, to provide to the media, and for framing to dress up the bare walls of our office (framing included in the budget), and yes, the calendar.”

On Feb. 27, I asked him:

“Re the calendars, for what year were they printed? How many were printed? Were they given away or sold? To whom? How many does CIRM still have on hand?”

Gibbons replied on Friday:

“I don’t work for the CSCR (this web site). All of your diving into minutia is a huge waste of tax payer resources. They are paying me to execute much more important and informative projects. The calendars were printed in December for the 2009 calendar year. Almost all were given away already (if you think I am going to the store room to count the actual number left over your are crazy). None were sold. Primary audience was the grantees and trainees to remind them 365 days a year where their funding comes from. All the various constituents who give use their time on working groups etc. received multiple copies. Each image is accompanied by a story about the science it represents. Short versions of those stories are the captions on the Flickr site.”

An earlier version of this item incorrectly gave the total as $65,200 instead of $69,200. The difference was in the Fong printing contract, which is for $14,000 instead of $10,000.

Stem Cell Bifurcation at the Vice Chairmanship Level

Come Friday the 13^th of this month, it is a good bet that the $3 billion California stem cell agency will have two vice chairmen or something akin to that.

No matter that the legal charter for the agency calls for only one, the board of directors is likely to find a way. They have a $1 million crew of artful legal beagles to help them sniff out an appropriate direction for almost any course.

CIRM Chairman Bob Klein signaled the dual vice chairmanship likelihood in his agenda for the March 12 meeting of the agency's board of directors. It was a simple but ambiguous matter of saying something in the plural and not the singular – chair(s) versus chair. The agenda item only says:

“Consideration of election of Vice-Chair(s)”

It was a move that the 17^th century Jesuit Baltasar Gracian (see drawing), a student of the exercise of power and control, would have admired and whose works we became acquainted with as a student 47 years ago.

“Maintain an air of uncertainty,” Gracian said in 1653. “Know the meaning of evasion.”

But in 2009 we need to know more. So here it is: The board has a choice between two men: Art Torres, chairman of the state Democratic Party, and Duane Roth, a current member of the CIRM board of directors and an executive with biomedical industry ties and head of Connect business development organization in La Jolla, Ca.

Torres is a former state legislator and was nominated by Democratic state Treasurer Bill Lockyer, who is the final arbiter on the state bonds that finance CIRM's grants and operations. Lockyer is also a former state lawmaker and friend of Torres, who needs a paying job since he is stepping down as head of the state Democratic party. Roth was nominated by Republican Gov. Arnold Schwarzenegger, who okayed a $150 million state loan to CIRM when it was on the financial ropes a few years ago. The governor has expressed concern about the high salaries at CIRM, and Roth has said he will not need a salary.

Both men bring different skills to the job. Torres is well connected in California politics and Washington. He is endorsed by Sen. Ted Kennedy and House Speaker Nancy Pelosi. Torres would contribute mightily to Klein's lobbying effort for a $10 billion aid package for the California biomedical industry. Roth is connected directly to the industry itself, chairing a CIRM committee that pulled together CIRM's $500 million lending program.

No one at CIRM wants to offend either Lockyer or Schwarzenegger.

While our good Jesuit Gracian would likely have admired Klein's agenda item on the Torres-Roth election, another more contemporary observer and participant in California stem cell issues does not.

In response to a query, John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca. and a man who is reasonably adroit in his own political maneuverings, said,

"Once again Chairman Bob Klein is posting an ICOC (board of directors) agenda that raises more questions than it answers. This serves neither the public nor CIRM. If they are thinking about having more than one vice chair, why not say so?"

One CIRM director, David Serrano Sewell, in response to a query about the result next week, said,

"We'll see what happens at the meeting."

As for CIRM's official views on this, earlier today we told the agency via email that we intended to write that the board is considering electing two vice chairmen. We asked whether CIRM considered that accurate.

CIRM Communications Chief Don Gibbons responded,

"No decisions have been made. The board will decide what motions to consider."

Applying flackery's Rosetta Stone to that comment, it means,

"I am not denying the accuracy of what you are writing. I can't say anything else. This is a delicate issue involving my bosses and issues at a much higher level that they do not want to air in public."

-----------

(Editor's note: I have a copy of Gracian's 1653 work -- “A Truthtelling Manual and the Art of Worldly Wisdom” -- in a net bag next to my bunk on our sailboat here on the west coast of Mexico. The version I have was copyrighted in 1945. More recent versions exist, but they are not as powerful as the 1945 version. And by the way, I am fond of legal beagles that can find ways to make things happen.)

The 'Free Rides' Story: Petty Cash but Major Fallout

One of the most widely read stories on the Los Angeles Times web site during the past few days involves a California state government matter of picayune financial proportions. But it scored extraordinarily high on the public outrage scale.

It is a story that confirmed all the worst suspicions of a cynical public. And it has a lesson in it for state officials, elected and otherwise, including those at the $3 billion state stem cell agency.

The key actors in the Times “free rides” story are top officials on Gov. Arnold Schwarzenegger's staff. Here is the what reporter Michael Rothfeld wrote,

“Over the last two years, as California has slashed services and scrambled to pay bills, top administration officials have made free use of government expense accounts with little oversight and, in some cases, no documentation, The Times has found.

“Together, they have spent tens of thousands of dollars on state-funded trips between Sacramento and the areas where they live, justifying the travel as necessary for state business. Some built weekend trips around one short meeting, and some charged the state to attend events with no apparent connection to their jobs. Often their expense reports were approved by subordinates.

“Many of the costs were incurred after the governor issued an executive order a year ago that state agencies avoid all nonessential travel due to California's fiscal emergency. State law allows employees to charge taxpayers only for activities on behalf of the public, which do not include commuting or events related to their personal lives."

These types of stories are regulars on government beats. But the dollars involved are relatively trivial when compared to such things as the state's $42 billion budget crisis.

I have written my share of them over the years and edited them as well. While reporting for United Press International in Sacramento, I wrote one such story that infuriated then Assemblyman John Burton of San Francisco, chairman of the Legislature's Joint Rules Committee . He wrote a letter, with tongue barely in cheek, ousting the UPI bureau from the Capitol.

I have shied away from such stories on this web site because I am now free of the journalistic demand for them. They have high outrage potential and high readership, but limited impact on what is important in terms of dollars and cents and public policy issues. They do, however, demonstrate an egregious sense of public-be-damned entitlement on the part of the officials. And they do provide fodder for their foes and the enemies of the enterprises involved.

Only a handful of these stories have appeared in the mainstream media involving CIRM. They chronicled the use of limos, expensive meals and so forth. It would be easy to gin up more by examining expense reports at the agency, such as those involving the trip by CIRM Chairman Robert Klein to Australia in 2007. He combined his honeymoon with an appearance at an international stem cell convention. We chose not to write about that at the time because of the relatively minor sums involved.

However, it is easy for an agency isolated in a tiny corner of government, unfettered by the usual oversight by the governor and legislature, to slip into bad habits. Some would argue that CIRM management salary scales, which top out at $508,750 annually, are part of those bad habits.

The salaries do not bother me as much as some. What is worrisome is a sense from the agency that the some of the folks there do not grasp how easy it is for an apparently trivial matter to trigger blowback that could seriously damage not only CIRM, but the entire human embryonic stem cell effort.

The Los Angeles Times story is just one example of how a small issue can trigger public outrage. And the result for the governor's aides is that the report of the petty chiseling not only outweighs, but it overwhelms the good work that those public servants perform.