The Question

Should California sell $5.5 billion in new bonds to continue funding grants for research and development of stem cell treatments?

The Situation

In 2004 voters approved Proposition 71 which added a provision to the California Constitution allowing stem cell research. The measure also created the California Institute for Regenerative Medicine (“CIRM”) and allowed the State to sell $3 billion in bonds to fund CIRM grants and operations. To date, the CIRM has awarded approximately $2.7 billion in grants. Funded projects have included stem cell research, developing potential treatments for many diseases using stem cells and undertaking clinical trials for new potential treatments. Grant funds also have supported construction of new research facilities and research internships. Grant recipients who license or sell their inventions are required to share a portion of the income from these inventions with the State.

As of June 2020, almost all the funds from the sale of the bonds authorized by Prop 71 have been spent. Only approximately $30 million remains available for grants and the CIRM needs additional funds to continue its operations and support for stem cell research.

The Proposal

Prop 14 would allow the State to sell $5.5 billion in new bonds to continue the CIRM’s funding of stem cell and other medical research and training, stem cell therapy and delivery of treatments to patients, research facility construction and administrative expenses. Prop 14 also sets limits on the bond funds that can be used for administrative purposes and targets funding for research and treatment of certain diseases. $1.5 billion is set aside to research and develop treatments for diseases affecting the brain and central nervous system, including Alzheimer’s and Parkinson’s disease, among others. It limits administrative costs to 7.5% of bond funds. Prop 14 also provides for the phased sale of bonds over 11 years, or about $540 million per year.

Prop 14 also would make several changes to the CIRM and its governing board. The changes are intended to expand patient access to stem cell treatment.

Fiscal Effect

Total costs are estimated at $7.8 billion over a 30-year period, including $5.5 billion in principal and $2.3 billion in interest to repay bondholders. This would average about $260 million per year. The State also is entitled to revenue from new inventions resulting from research or treatments funded by the CIRM. The future revenue source is uncertain. There could be indirect fiscal effects for some health care programs, such as Medi-Cal, but the net fiscal impact is unknown.

A YES Vote Means

A YES vote on this measure means: Criminal offenders who commit certain non-serious and nonviolent drug and property crimes would be sentenced to reduced penalties (such as shorter terms in jail). State savings resulting from the measure would be used to support school truancy and dropout prevention, victim services, mental health, and drug abuse treatment, and other programs designed to keep offenders out of prison and jail.

A NO Vote Means

A NO vote on this measure means: Penalties for offenders who commit certain non-serious and nonviolent drug and property crimes would not be reduced.

Supporters Say

• California’s stem cell funding has led to significant advances in treatments and cures for many diseases, including over 2,900 medical discoveries.
• Prop 14 is supported by over 70 patient advocate organizations. It will increase patient access and affordable treatments and provide patients, their families and caregivers with financial assistance.
• Prop 14 will contribute to the rebound of California’s economy. Funding to date has generated about $10.7 billion in economic stimulus.

Opponents Say

• California cannot afford the $7.3 billion for Prop 14 bonds particularly in the middle of an economic crisis and repayment of the bonds will increase taxes.
• Previous funding has not yielded the promised results for treatments or economic benefits. Private investors and companies have made great strides in stem cell research and cures.
• Independent analysts and news outlets have questioned the management, integrity and transparency of the CIRM.

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