The legal objections to structural reforms at the
agency were initially advanced in 2009 when the stem cell agency was
fighting an unwelcome analysis of its activities by the state's good
government agency, the Little Hoover Commission. The objections were
voiced again at a meeting earlier this month by some governing board
members, particularly Sherry Lansing, who is also chairwoman of the
University of California regents. Her comments came within minutes of
the start of the Institute of Medicine's (IOM) presentation to the
board.

She said directors' hands “are tied”
because of requirements in Proposition 71, the ballot initiative that
created the stem cell agency, which is formally known as the
California Institute for Regenerative Medicine(CIRM). While Lansing
did not elaborate, some of the initiative is written into the state
constitution, which can only be amended by a vote of the people.
However, Proposition 71 can also be amended by a 70 percent vote of
each house of the Legislature and the signature of the governor,
which is no small task to achieve.

The 2009 legal memo (see the full text
below) dealt with the recommendations of the Little Hoover
Commission, some of which were cited and echoed by the IOM. The legal
memo contended that the legislature was barred from making major
changes in the structure of the stem cell agency governing board
because the changes supposedly would not “enhance the ability of
the (agency) to further the purposes of the grant and loan programs.”
The argument was that only the people could make “non-enhancing”
changes. The vague “enhancement” requirement was written into
Proposition 71 by its authors, one of whom is James Harrison, the
outside counsel to the board, who was also the lead author on the
2009 memo. Harrison is revisiting the supposed constitutional issues in the wake of the IOM study.

However, the objections cited in his earlier memo are dubious and easily overcome. The meaning of “enhance” is
so vague as to permit wide interpretations. Certainly, removing
public suspicion about conflicts of interest would seem to help move
the agency forward. Straightening out the muddled management
structure of the agency, with its overlapping responsibilities for
the chairman and president, would certainly seem to enhance the
functioning of the agency. Assuring that the governing board has the
full ability to exercise strong oversight over the conduct of the
agency would certainly seem to be an enhancement and long overdue.

At least that is what the most
prestigious body of its sort says. The Institute of Medicine studied
the agency for 17 months under a $700,000 contract with CIRM. The
IOM's charge was to evaluate the performance of the agency and make
recommendations for improvements. The IOM recommendations echoed
findings not only of the Little Hoover Commission, but some in two
earlier studies also funded by the agency.

For CIRM directors now to reject the
IOM findings and turn away would be to indicate that their earlier
admiration and respect for the IOM was something of a sham or, more
likely, now inconvenient.

As for removing ambiguity about what
does or does not enhance the agency's mission, the 29-member board
could simply adopt a resolution declaring that all the IOM
recommendations would enhance the CIRM mission.

One of major obstacles to acting on the
earlier recommendations for changes was Robert Klein, the first
chairman of the agency board. Klein, an attorney and real estate investment
banker, also directed the writing of Proposition 71 and wrote
portions of it himself. He would often make numerical code citations
to the initiative during agency board meetings.

Klein is now gone from the board,
leaving in 2011 at the end of his term. He was replaced by Jonathan
Thomas, a Los Angeles bond financier, who has ushered in a new and
different era at the stem cell agency. Some might say a more
reasonable era. He says he and governing board
take the IOM study seriously. 

The report is scheduled for discussion
Jan. 23 at a public workshop at the Claremont Hotel in Berkeley, Ca.,
the day before the regular board meeting. .

The IOM's recommendations have won theeditorial endorsement of all the California newspapers that have so
far written about them. The newspapers believe that the proposals
would indeed enhance the agency's mission and are, in fact, necessary
if the agency is to survive beyond 2017, when the money for new
grants runs out.

Directors of the stem cell agency are
currently mulling the future of their efforts. If they are to be
successful in raising additional hundreds of millions of dollars –
be they private or public – the directors must confront the
findings of the IOM in a forthright manner. And they must move to
dispel the cloud that now hangs over the stem cell agency.

(Editor's note: The full text of the
2009 legal memo can be found below. Also below is another related
legal memo from Americans for Cures, a stem cell lobbying group
sponsored by Robert Klein at the same time he was chairman of the
stem cell agency. Despite the language on the Americans for Cures
memo, it is a public record. It became a public document when Klein
submitted it to the Little Hoover Commission.) 

Legal memo from Americans for Cures regarding the Little Hoover Commission Report 2009