The Little Hoover Commission on Friday released its full recommendations and urged Gov. Arnold Schwarzenegger and the Legislature to make changes to the San Francisco-based California Institute for Regenerative Medicine, which was set up when voters in 2004 approved Proposition 71.

CIRM has been the focus of both optimism and criticism since Prop.
71 authorized the state to sell $3 billion in bonds to support stem
cell research. Despite legal delays by opponents of embryonic stem cell
research and taxpayer advocacy groups, the agency has approved $761.6
million in funding for research and construction.

That includes more than $280 million to Bay Area universities, research institutes and companies.

But CIRM also has been dogged with issues around its management —
particularly oversight board Chairman Bob Klein, who led the Prop. 71
initiative — and its grant review and intellectual property policies.

In its report, the Little Hoover Commission said much of Prop. 71
“now seems overly prescriptive in defining the governance and oversight
structure of CIRM.”

The commission’s suggestions:

• Reduce the size of CIRM’s oversight board to 15 from 29.

• Change the makeup of the board to allow more independent voices
with five patient advocates from unspecified disease groups, two
independent business leaders, two independent scientists with no ties
to CIRM-funded institutions, two University of California officials,
one non-UC university official, two private-sector biotech executives
and one leader of a California research institution.

Eleven of the 15 board members would be appointed by the governor
with Senate confirmation; two of the appointments would be made by the
Legislature; and the remaining two slots would be filled by the UC
system president.

(The current board membership is made up of five executive officers
from UCs with a medical schools, four executive officers from other
California universities, four executive officers from California
research institutes, four executives of commercial life science
companies, 10 patient advocates representing patients with diseases
from cancer to Alzheimer’s, plus the chairman and vice chairman.

• Reduce the terms of all board members to four years.

• Create succession plans for board leadership.

• Provide clear transparent direction for spending funds, with measurable benchmarks, in CIRM’s strategic plan.

• Develop a transition plan for the eventual expiration of bond funding.

• Clarify that CIRM’s president manages all day-to-day operations.

• Elect the board chair and vice chair from within the existing board and set terms for re-election and removal.

• Remove the 50-employee cap on staffing and the 15-person limit on peer reviewers.

• Explore options for greater disclosure of the peer-review process,
polling reviewers about their willingness to participate in the process
if their financial disclosure statements are made public and providing
full grant evaluations to applicants.

• Amend all meeting minutes and then continue to specify individual board members’ votes.

• The Citizen’s Financial Accountability Oversight Committee, led by
the state controller, should conduction performance audits and review
CIRM’s programmatic and strategic performance in addition to overseeing
CIRM’s annual financial audits.

• Adopt removal provisions in the CIRM oversight board’s bylaws to hold members accountable.

“This is a thoughtful and thorough analysis from a bipartisan group
with no ax to grind,” John Simpson, a frequent critic of CIRM’s
policies and stem cell project director for Consumer Watchdog in Santa Monica, said in a prepared statement. “CIRM’s management and board should listen to its advice.”

In a legal memo,
posted by the California Stem Cell Report blog, CIRM said the Little
Hoover Commission’s proposals would stifle its efforts to fund stem
cell research.

“These proposals fly in the face of the voters’ intent,” said the memo from the San Leandro law firm of Remcho, Johansen & Purcell LLP.

The Little Hoover Commission took on its task at the request of former state Sen. Sheila Kuehl and Sen. George Runner.

CIRM’s local grants include $107 million to Stanford University, $83.8 million to the University of California, San Francisco, $34.6 million to UC Berkeley, $22.6 million to the J. David Gladstone Institutes in San Francisco, $25.4 million for the Buck Institute for Age Research in Novato, $1.7 million each to San Francisco State University and San Jose State.

Among the companies to which it has awarded money are BioTime Inc. in Emeryville ($4.7 million), VistaGen Therapeutics Inc. of South San Francisco ($971,558) and Fluidigm Corp. of South San Francisco ($749,520).