Stem Cell Finance Committee Considers Alternate Funding Options
The California Institute for Regenerative Medicine Finance Committee on Monday authorized the state treasurer to consider issuing up to $200 million in short-term notes to fund the program, the New York Times reports. CIRM is considering several options to temporarily fund the program because two lawsuits have delayed the issuance of the $3 billion in bonds approved under Proposition 71 (Pollack, New York Times, 5/10).
The California Supreme Court in March declined to hear two lawsuits challenging the stem cell institute, but said the lawsuits could be refiled in a lower state court. One of the lawsuits -- brought by the Life Legal Defense Foundation, a group that opposes stem cell research and abortion rights -- has been refiled in Alameda County Superior Court. LLDF is representing People's Advocate and the National Tax Limitation Committee, two taxpayer groups (California Healthline, 5/4).
According to the New York Times, the second lawsuit has not been refilled (New York Times, 5/10).
The finance committee on Monday authorized the state to borrow $3 billion in bonds for CIRM, but the state likely will be unable to sell the long-term bonds because potential lenders could be concerned that the lawsuits could "make their investments worthless," the AP/San Jose Mercury News reports.
Treasurer Phil Angelides (D), who serves as chair of the finance committee, said that borrowing $200 million from short-term lenders is one option, although the lenders could charge higher interest rates than long-term lenders (Elias, AP/San Jose Mercury News, 5/10).
If the lawsuits are not resolved in CIRM's favor, the issued bond anticipation notes would lose their value, thereby putting lenders "in the position of making a grant" to CIRM, the San Francisco Chronicle reports.
Angelides said the finance committee will discuss details of the proposal within the next month, including how much interest would have to be paid in order to secure lenders. A public meeting would be held before any securities are brought to market, Angelides said (Hall, San Francisco Chronicle, 5/10).
Angelides also said that questions remained about the plan's feasibility from a legal and marketing standpoint (New York Times, 5/10).
Independent Citizens' Oversight Committee Chair Robert Klein said officials believed charitable organizations would participate in the short-term bonds program, despite the risk that they might not be repaid. Klein said no organizations had yet committed to the idea (San Francisco Chronicle, 5/10).
Another temporary funding option is a "controversial" proposal from Klein to raise $100 million through charitable donations, the Contra Costa Times reports. Klein said the donations would be repaid when the bonds are sold (Kleffman, Contra Costa Times, 5/10).
The finance committee on Monday did not act on Klein's proposal because it was not on their agenda, Angelides said. He said the committee could consider the idea at a later date (New York Times, 5/10).
Jesse Reynolds of the Center for Genetics and Society said CIRM's temporary financing could "be inappropriate and possibly in fact irresponsible." He added that "reckless behavior" could "endanger the mission of the institute" (San Francisco Chronicle, 5/10).
The finance committee also directed Attorney General Bill Lockyer (D) to "aggressively" fight the lawsuits, including possibly filing a counter-claim to issue the bonds, the Sacramento Bee reports.
Angelides said, "Today's action is a clear signal that we stand ready to do everything possible to provide financing to carry out the will of the voters of California." He added, "We are committed to ... taking all the actions that are necessary to clear away the legal roadblocks that have been put in front of the issuance of bonds."
Angelides said the lawsuit in Alameda County Superior Court was filed by "a narrow set of anti-choice activists who have an idealized zeal to stop stem cell research" (Bluth, Sacramento Bee, 5/10).
LLDF Executive Director Dana Cody said the issues in the lawsuit "have nothing to do with abortion or embryonic stem cell research." She said the lawsuits address concerns about the constitutionality of CIRM's structure (New York Times, 5/10). Cody said Proposition 71 allows CIRM to spend state funds without oversight from elected officials, a governance structure Cody says is not permitted under the California constitution.
Cody added, "Our lawsuit raises a serious issue that they just seem to be dismissing" (Sacramento Bee, 5/10).
Lockyer said, "We're going to do everything possible to remove the litigative obstacle as quickly as we possibly can. It may take several months. We don't really know that. It depends on how many legal obstacles the opponents are willing to keep throwing up" (New York Times, 5/10).
"It's hard to argue with the notion" that CIRM "requires more accountability," a Bee editorial states. Referring to the lawsuits, the editorial states that "persuasive argument and legislation" are best suited for affecting such changes, rather than "stopping this research program in its tracks."
According to the editorial, "Klein needs to provide the public with a full financing plan" before "state officials commit themselves further" to a proposal to seek bridge funding. "Only then can state leaders determine whether this idea protects both taxpayers and the institute's integrity," the editorial concludes (Sacramento Bee, 5/10).