Stem Cell Spending Fight Builds

Two of the leading backers of California’s landmark embryonic stem cell initiative are already at odds over whether state legislators can oversee how the $3 billion in bond money is spent.

The long-simmering disagreement between State Sen. Deborah Ortiz -- a key supporter of Proposition 71 -- and the initiative’s author, Bob Klein, intensified Monday when Ortiz introduced legislation to impose several rules on the agency that will govern stem cell spending.

Ortiz’s proposal includes requirements that the state share in royalties from any discoveries and would place agency board members under the same ethical guidelines as state officials.

The Sacramento Democrat acknowledged that such guidelines could be set by the 27-member governing board still being appointed by politicians and university chancellors. But Ortiz said she felt personally responsible to guarantee high standards are enacted.

Although she campaigned for Proposition 71’s passage, she said from the start that she felt it did not provide adequate specifics on key matters such as guaranteeing that Californians can afford the treatments they paid to develop, providing profit sharing for the state and ensuring transparency in how the billions are spent.

Klein, a Palo Alto real estate developer who headed the multimillion-dollar campaign to pass the initiative, said such interference from politicians was exactly what he intended to prevent when he drew up the legislation.

“One of the vital goals was to provide stability in rule-making,” Klein said Monday at a National Academies of Science seminar on practices for the new agency. Klein cited President Bush’s decision three years ago to restrict funding for embryonic stem cell research because of ethical objections as an example of how politics can “destabilize and discourage” scientists from pursuing a controversial field.

“The Legislature is not needed,” Klein told top researchers, science administrators and others gathered for the meeting at UC Irvine.

“There are very clear prohibitions against legislative intervention in rule-making and funding,” said Klein, who believes such restrictions are necessary to insulate the controversial research from politics and to assure scientists that their funding would be uninterrupted over the next decade.

The board is being appointed by top elected officials in the state, including the governor and lieutenant governor, as well as the chancellors of five UC campuses, who already have chosen their representatives. In all, ten of the 27 board members have been named.

To prevent legislators from raiding funds or changing goals, the initiative makes them wait three years before proposing any changes to the law. The proposition also requires that any change be passed by a 70% vote and that it further the original intent.

Ortiz, who consulted with the legislative counsel, contends that her legislation should be considered supplemental and therefore exempt from the restrictions.

But she acknowledged that the opportunity to act sooner than three years is “a remote one.”

The money, more than ten times the federal funding available each year, is expected to make California the center for embryonic stem cell research in the nation and a leader in the world. Its backers intend the billions as a replacement for federal funding, which is restricted to research on stem cell lines already developed in August 2001 when Bush announced his policy. Those lines, about 22 of which are considered useful, came from embryos donated by couples who had used in vitro fertilization to try to have a child.

Embryonic stem cells are created in the first days of life and can become cells of any type. Many scientists believe they have great promise for treating diseases such as Parkinson’s, Alzheimer’s and insulin-dependent diabetes.

The scuffle about oversight is expected to be the first of many as officials begin to work out details of how the $300 million a year is spent.

The fact that such a fight has come so soon, despite Klein’s efforts to construct an initiative that could not be raided for money or altered in mission, reflects both the massive amount of funding and the high public expectations about what can be achieved.

“If an elected body is behind it and they screw up, you can vote them out,” said Bruce Cain, director of the Institute of Governmental Studies at UC Berkeley. “If you have an un-elected body, you have to build in protections.”

Bob Stern, head of the nonpartisan Los Angeles-based Center for Government Affairs, however, said it should have been clear to voters that Proposition 71, which ran a multimillion-dollar advertising campaign and attracted national attention, excluded the Legislature from an oversight role. The measure passed with 59% of the vote.

“I think [Ortiz] has to go back to the people if she wants to make changes,” Stern said. “I don’t think it was anything that slipped through the people and it wasn’t a close vote.”

Cain said he believed Ortiz’s efforts are appropriate, even if the legislation ends up being challenged in the courts. He said more and more initiatives are specifically designed to keep the Legislature from “monkeying” with the provisions.

“But often, the initiatives are not as thoroughly vetted as they would have been if they came through the Legislature,” he said, noting that he believed the backers had good intentions, but that the attempts to shut out elected officials from the process made him uncomfortable.

“I have complete sympathy for the measure, but I don’t have sympathy for people who appoint themselves legislative kings,” said Cain, who said he voted for Proposition 71. “That kind of arrogance breeds mistakes -- all it takes is one or two people manipulating the system. [Klein’s] not the only one who will be involved in how this plays out.”

Instead of elected officials, the institute will be governed by the independent 27-member board. With a goal of making the first grants in May, the complete board is scheduled to meet for the first time Dec. 17 in San Francisco. They will select a chairperson and vice-chairperson who will be in charge of much of the day-to-day operations.

Klein, who has a background in low-income housing and got involved in the push for embryonic stem cell research because his 14-year-old son has insulin-dependent diabetes and his mother suffers from Alzheimer’s, is considered a front-runner for the chairperson job.

The initiative he wrote includes specific requirements for the position, a list that matches his resume.

He met with Gov. Arnold Schwarzenegger about three weeks ago to discuss the law and its technical provisions, but declined Monday to speculate on the governor’s intentions. He said Schwarzenegger is expected to begin making his five appointments to the board this week.

As he has before, Klein said he wanted the board to select “the very best person for the state based on merit.”

“If that very best person is someone I don’t even know,” he said, “they should select that person.”

But he also said he would “feel responsible to serve” if selected, if only for a short period. “At some point, I need to go back to making a living,” said Klein, who took time away from his firm to run the Proposition 71 campaign.

Both Klein and Ortiz said they believe there is much common ground in their goals. While rejecting Ortiz’s claim that the Legislature has the legal authority to act now, Klein said her call for the highest standards was a “welcome signal.”

For her part, Ortiz said she plans to spend her final two years before term limits ends her career in the Legislature ensuring the $3 billion in grants, which will cost the state about $6 billion over the 30-year life of the bonds, is well spent. She said it is possible that the agency’s soon-to-be-named leaders would sue to prevent enforcement of her legislation -- if it passes -- but said, “Let’s hope we don’t get to that place.”

Ortiz said, in the meantime, she will pursue parallel tracks of public and private oversight.

“This is far too important, and there is far too much money and too great a public trust,” she said, “for all of us not to strive for the highest level of accountability.”