The Question

Should California authorize $8.4 billion in bonds to fund immunology and immunotherapy research at California research institutions?

The Situation

Medical research in the United States is funded by a combination of private industry, the federal government, universities, and nonprofit organizations. Private industry provides most research funding, while federal agencies such as the National Institutes of Health support a large share of basic scientific research. State governments generally play a smaller role in funding medical research.

Immunology is the study of the body’s immune system. Immunotherapy involves treatments that help the immune system prevent, treat, or cure disease. Researchers are studying immunotherapy as a treatment for cancer, Alzheimer’s disease, heart disease, autoimmune disorders, and other conditions.

California voters have previously approved state bonds for stem cell research. Proposition 71 (2004) authorized $3 billion in bonds, and Proposition 14 (2020) authorized an additional $5.5 billion. Those measures funded research through competitive grant programs.

The Proposal

Voters signed petitions to place Proposition 38 on the ballot. Prop 38 would authorize the state to borrow $8.4 billion by issuing general obligation bonds for immunology and immunotherapy research. The bonds would be repaid from the state’s General Fund.

The measure would allocate:

• Approximately $4.2 billion to a single nonprofit medical research institute selected by the California Department of Public Health. The institute must meet specific eligibility requirements, including an affiliation with a University of California campus.
• Approximately $4.2 billion in competitive grants to California public universities, nonprofit universities, and nonprofit research institutions.
• At least half of all funding must support research on cancer, heart disease, and Alzheimer’s disease.
• Universities and institutes that receive grants must buy at least half their goods and services from California suppliers when possible.

The measure would require recipients to return 10% of licensing or revenue generated from funded research to the state. Treatments developed through the program would generally be sold in California at prices at least 20% below the national average.

The measure also creates oversight committees, reporting requirements, independent audits, and limits state administrative costs to 2% of total bond funding.

Fiscal Effects

According to the Legislative Analyst’s Office, the state would pay approximately $500 million to $600 million annually for about 20 years to repay the bonds. Repayment would come from the state’s General Fund.

The state could recover some of these costs if funded research produces discoveries that generate licensing or revenue. The amount and timing of any repayment are uncertain and could take many years.

The measure could also have indirect effects on state health care costs and California’s biotechnology economy, but those impacts are difficult to predict.

Supporters Say

• Research funded by Prop 38 could lead to new treatments or cures for diseases such as cancer, Alzheimer’s disease, heart disease, Parkinson’s disease, and other serious illnesses.
• The measure would provide a stable source of funding for California research institutions at a time when federal research funding is uncertain.
• Any treatments developed with program funding would generally be sold in California at discounted prices.
• The measure includes audits, public reporting, and revenue-sharing requirements intended to protect taxpayers.

Opponents Say

• Research outcomes are uncertain. Opponents say the state should not borrow billions of dollars for projects that may never produce new treatments.
• Medical research priorities should be set by public health needs and scientific review, not through ballot measures.
• Future health needs may change, and opponents say the state should not commit billions of dollars to one area of research for many years.
• Half of the funding would go to one research institute instead of being distributed more broadly among California research organizations.