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Proposition 71

This initiative measure is submitted to the people in accordance with

the provisions of Section 8 of Article II of the California Constitution.

This initiative measure expressly amends the California Constitution

by adding an article thereto; and amends a section of the Government

Code, and adds sections to the Health and Safety Code; therefore, new

provisions proposed to be added are printed in italic type to indicate that

they are new.

PROPOSED LAW

CALIFORNIA STEM CELL RESEARCH AND CURES INITIATIVE

SECTION 1. Title

This measure shall be known as the “California Stem Cell Research

and Cures Act.”

SEC. 2. Findings and Declarations

The people of California ﬁnd and declare the following:

Millions of children and adults suffer from devastating diseases or

injuries that are currently incurable, including cancer, diabetes, heart

disease, Alzheimer’s, Parkinson’s, spinal cord injuries, blindness, Lou

Gehrig’s disease, HIV/AIDS, mental health disorders, multiple sclero-

sis, Huntington’s disease, and more than 70 other diseases and injuries.

Recently medical science has discovered a new way to attack chron-

ic diseases and injuries. The cure and treatment of these diseases can

potentially be accomplished through the use of new regenerative med-

ical therapies including a special type of human cells, called stem cells.

These life-saving medical breakthroughs can only happen if adequate

funding is made available to advance stem cell research, develop thera-

pies, and conduct clinical trials.

About half of California’s families have a child or adult who has suf-

fered or will suffer from a serious, often critical or terminal, medical

condition that could potentially be treated or cured with stem cell ther-

apies. In these cases of chronic illness or when patients face a medical

crisis, the health care system may simply not be able to meet the needs

of patients or control spiraling costs, unless therapy focus switches away

from maintenance and toward prevention and cures.

Unfortunately, the federal government is not providing adequate

funding necessary for the urgent research and facilities needed to devel-

op stem cell therapies to treat and cure diseases and serious injuries.

This critical funding gap currently prevents the rapid advancement of

research that could beneﬁt millions of Californians.

The California Stem Cell Research and Cures Act will close this

funding gap by establishing an institute which will issue bonds to sup-

port stem cell research, emphasizing pluripotent stem cell and progeni-

tor cell research and other vital medical technologies, for the develop-

ment of life-saving regenerative medical treatments and cures.

SEC. 3. Purpose and Intent

It is the intent of the people of California in enacting this measure to:

Authorize an average of $295 million per year in bonds over a

10-year period to fund stem cell research and dedicated facilities for

scientists at California’s universities and other advanced medical

research facilities throughout the state.

Maximize the use of research funds by giving priority to stem cell

research that has the greatest potential for therapies and cures, speciﬁ-

cally focused on pluripotent stem cell and progenitor cell research

among other vital research opportunities that cannot, or are unlikely to,

receive timely or sufﬁcient federal funding, unencumbered by limita-

tions that would impede the research. Research shall be subject to

accepted patient disclosure and patient consent standards.

Assure that the research is conducted safely and ethically by includ-

ing provisions to require compliance with standards based on national

models that protect patient safety, patient rights, and patient privacy.

Prohibit the use of bond proceeds of this initiative for funding for

human reproductive cloning.

Improve the California health care system and reduce the long-term

health care cost burden on California through the development of ther-

apies that treat diseases and injuries with the ultimate goal to cure them.

Require strict ﬁscal and public accountability through mandatory

independent audits, open meetings, public hearings, and annual reports

to the public. Create an Independent Citizen’s Oversight Committee

composed of representatives of the University of California campuses

with medical schools; other California universities and California med-

ical research institutions; California disease advocacy groups; and

California experts in the development of medical therapies.

Protect and beneﬁt the California budget: by postponing general

fund payments on the bonds for the ﬁrst ﬁve years; by funding scientif-

ic and medical research that will signiﬁcantly reduce state health care

costs in the future; and by providing an opportunity for the state to ben-

eﬁt from royalties, patents, and licensing fees that result from the

research.

Beneﬁt the California economy by creating projects, jobs, and ther-

apies that will generate millions of dollars in new tax revenues in our

state.

Advance the biotech industry in California to world leadership, as an

economic engine for California’s future.

SEC. 4. Article XXXV is added to the California Constitution, to

read:

Article XXXV. Medical Research

SECTION 1. There is hereby established the California Institute

for Regenerative Medicine.

SEC. 2. The institute shall have the following purposes:

(a) To make grants and loans for stem cell research, for research

facilities, and for other vital research opportunities to realize therapies,

protocols, and/or medical procedures that will result in, as speedily as

possible, the cure for, and/or substantial mitigation of, major diseases,

injuries, and orphan diseases.

(b) To support all stages of the process of developing cures, from

laboratory research through successful clinical trials.

bodies for research and facilities development.

SEC. 3. No funds authorized for, or made available to, the institute

shall be used for research involving human reproductive cloning.

SEC. 4. Funds authorized for, or made available to, the institute

shall be continuously appropriated without regard to ﬁscal year, be

available and used only for the purposes provided in this article, and

shall not be subject to appropriation or transfer by the Legislature or

the Governor for any other purpose.

SEC. 5. There is hereby established a right to conduct stem cell

research which includes research involving adult stem cells, cord blood

stem cells, pluripotent stem cells, and/or progenitor cells. Pluripotent

stem cells are cells that are capable of self-renewal, and have broad

potential to differentiate into multiple adult cell types. Pluripotent stem

cells may be derived from somatic cell nuclear transfer or from surplus

products of in vitro fertilization treatments when such products are

donated under appropriate informed consent procedures. Progenitor

cells are multipotent or precursor cells that are partially differentiated,

but retain the ability to divide and give rise to differentiated cells.

SEC. 6. Notwithstanding any other provision of this Constitution

or any law, the institute, which is established in state government, may

utilize state issued tax-exempt and taxable bonds to fund its operations,

medical and scientiﬁc research, including therapy development through

clinical trials, and facilities.

SEC. 7. Notwithstanding any other provision of this Constitution,

including Article VII, or any law, the institute and its employees are

exempt from civil service.

SEC. 5. Chapter 3 (commencing with Section 125290.10) is

added to Part 5 of Division 106 of the Health and Safety Code, to read:

HAPTER 3. CALIFORNIA STEM CELL RESEARCH AND CURES

BOND ACT

Article 1. California Stem Cell Research and Cures Act

125290.10. General—Independent Citizen’s Oversight Committee

(ICOC)

This chapter implements Article XXXV of the California

Constitution, which established the California Institute for Regenerative

Medicine (institute).

125290.15. Creation of the ICOC

There is hereby created the Independent Citizen’s Oversight

Committee, hereinafter, the ICOC, which shall govern the institute and

is hereby vested with full power, authority, and jurisdiction over the

institute.

125290.20. ICOC Membership; Appointments; Terms of Ofﬁce

(a) ICOC Membership

The ICOC shall have 29 members, appointed as follows:

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(1) The Chancellors of the University of California at San

Francisco, Davis, San Diego, Los Angeles, and Irvine, shall each

appoint an executive ofﬁcer from his or her campus.

(2) The Governor, the Lieutenant Governor, the Treasurer, and the

Controller shall each appoint an executive ofﬁcer from the following

three categories:

(A) A California university, excluding the ﬁve campuses of the

University of California described in paragraph (1), that has demon-

strated success and leadership in stem cell research, and that has:

(i) A nationally ranked research hospital and medical school; this

criteria will apply to only two of the four appointments.

(ii) A recent proven history of administering scientiﬁc and/or med-

ical research grants and contracts in an average annual range exceed-

ing one hundred million dollars ($100,000,000).

(iii) A ranking, within the past ﬁve years, in the top 10 United States

universities with the highest number of life science patents or that has

research or clinical faculty who are members of the National Academy

of Sciences.

(B) A California nonproﬁt academic and research institution that is

not a part of the University of California, that has demonstrated suc-

cess and leadership in stem cell research, and that has:

(i) A nationally ranked research hospital or that has research or

clinical faculty who are members of the National Academy of Sciences.

(ii) A proven history in the last ﬁve years of managing a research

budget in the life sciences exceeding twenty million dollars

($20,000,000).

engaged in researching or developing therapies with pluripotent or pro-

genitor stem cells, that has a background in implementing successful

experimental medical therapies, and that has not been awarded, or

applied for, funding by the institute at the time of appointment. A board

member of that entity with a successful history of developing innovative

medical therapies may be appointed in lieu of an executive ofﬁcer.

(D) Only one member shall be appointed from a single university,

institution, or entity. The executive ofﬁcer of a California university, a

nonproﬁt research institution or life science commercial entity who is

appointed as a member, may from time to time delegate those duties to

an executive ofﬁcer of the entity or to the dean of the medical school, if

applicable.

(3) The Governor, the Lieutenant Governor, the Treasurer, and the

Controller shall appoint members from among California representa-

tives of California regional, state, or national disease advocacy groups,

as follows:

(A) The Governor shall appoint two members, one from each of the

following disease advocacy groups: spinal cord injury and Alzheimer’s

disease.

(B) The Lieutenant Governor shall appoint two members, one from

each of the following disease advocacy groups: type II diabetes and

multiple sclerosis or amyotrophic lateral sclerosis.

following disease groups: type I diabetes and heart disease.

(D) The Controller shall appoint two members, one from each of the

following disease groups: cancer and Parkinson’s disease.

(4) The Speaker of the Assembly shall appoint a member from

among California representatives of a California regional, state, or

national mental health disease advocacy group.

(5) The President pro Tempore of the Senate shall appoint a mem-

ber from among California representatives of a California regional,

state, or national HIV/AIDS disease advocacy group.

(6) A chairperson and vice chairperson who shall be elected by the

ICOC members. Within 40 days of the effective date of this act, each

constitutional ofﬁcer shall nominate a candidate for chairperson and

another candidate for vice chairperson. The chairperson and vice

chairperson shall each be elected for a term of six years. The chairper-

son and vice chairperson of ICOC shall be full or part time employees

of the institute and shall meet the following criteria:

(A) Mandatory Chairperson Criteria

(i) Documented history in successful stem cell research advocacy.

(ii) Experience with state and federal legislative processes that

must include some experience with medical legislative approvals of

standards and/or funding.

(iii) Qualiﬁed for appointment pursuant to paragraph (3), (4), or (5)

of subdivision (a).

(iv) Cannot be concurrently employed by or on leave from any

prospective grant or loan recipient institutions in California.

(B) Additional Criteria for Consideration:

(i) Experience with governmental agencies or institutions (either

executive or board position).

(ii) Experience with the process of establishing government standards

and procedures.

(iii) Legal experience with the legal review of proper governmental

authority for the exercise of government agency or government institu-

tional powers.

(iv) Direct knowledge and experience in bond ﬁnancing.

The vice chairperson shall satisfy clauses (i), (iii), and (iv) of sub-

paragraph (A). The vice chairperson shall be selected from among indi-

viduals who have attributes and experience complementary to those of

the chairperson, preferably covering the criteria not represented by the

chairperson’s credentials and experience.

(b) Appointment of ICOC Members

(1) All appointments shall be made within 40 days of the effective

date of this act. In the event that any of the appointments are not com-

pleted within the permitted timeframe, the ICOC shall proceed to oper-

ate with the appointments that are in place, provided that at least 60

percent of the appointments have been made.

(2) Forty-ﬁve days after the effective date of the measure adding this

chapter, the State Controller and the Treasurer, or if only one is avail-

able within 45 days, the other shall convene a meeting of the appointed

members of the ICOC to elect a chairperson and vice chairperson from

among the individuals nominated by the constitutional ofﬁcers pursuant

to paragraph (6) of subdivision (a).

(1) The members appointed pursuant to paragraphs (1), (3), (4),

and (5) of subdivision (a) shall serve eight-year terms, and all other

members shall serve six-year terms. Members shall serve a maximum of

two terms.

(2) If a vacancy occurs within a term, the appointing authority shall

appoint a replacement member within 30 days to serve the remainder

of the term.

(3) When a term expires, the appointing authority shall appoint a

member within 30 days. ICOC members shall continue to serve until

their replacements are appointed.

125290.25. Majority Vote of Quorum

Actions of the ICOC may be taken only by a majority vote of a quo-

rum of the ICOC.

125290.30. Public and Financial Accountability Standards

(a) Annual Public Report

The institute shall issue an annual report to the public which sets

forth its activities, grants awarded, grants in progress, research accom-

plishments, and future program directions. Each annual report shall

include, but not be limited to, the following: the number and dollar

amounts of research and facilities grants; the grantees for the prior

year; the institute’s administrative expenses; an assessment of the avail-

ability of funding for stem cell research from sources other than the

institute; a summary of research ﬁndings, including promising new

research areas; an assessment of the relationship between the institute’s

grants and the overall strategy of its research program; and a report of

the institute’s strategic research and ﬁnancial plans.

(b) Independent Financial Audit for Review by State Controller

The institute shall annually commission an independent ﬁnancial

audit of its activities from a certiﬁed public accounting ﬁrm, which shall

be provided to the State Controller, who shall review the audit and

annually issue a public report of that review.

There shall be a Citizen’s Financial Accountability Oversight

Committee chaired by the State Controller. This committee shall review

the annual ﬁnancial audit, the State Controller’s report and evaluation

of that audit, and the ﬁnancial practices of the institute. The State

Controller, the State Treasurer, the President pro Tempore of the Senate,

the Speaker of the Assembly, and the Chairperson of the ICOC shall

each appoint a public member of the committee. Committee members

Proposition 71 (cont.)

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Proposition 71 (cont.)

shall have medical backgrounds and knowledge of relevant ﬁnancial

matters. The committee shall provide recommendations on the institute’s

ﬁnancial practices and performance. The State Controller shall provide

staff support. The committee shall hold a public meeting, with appropri-

ate notice, and with a formal public comment period. The committee

shall evaluate public comments and include appropriate summaries in its

annual report. The ICOC shall provide funds for the per diem expenses

of the committee members and for publication of the annual report.

(d) Public Meeting Laws

(1) The ICOC shall hold at least two public meetings per year,

one of which will be designated as the institute’s annual meeting. The

ICOC may hold additional meetings as it determines are necessary or

appropriate.

(2) The Bagley-Keene Open Meeting Act, Article 9 (commencing

with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the

Government Code, shall apply to all meetings of the ICOC, except as

otherwise provided in this section. The ICOC shall award all grants,

loans, and contracts in public meetings and shall adopt all governance,

scientiﬁc, medical, and regulatory standards in public meetings.

(3) The ICOC may conduct closed sessions as permitted by the

Bagley-Keene Open Meeting Act, under Section 11126 of the

Government Code. In addition, the ICOC may conduct closed sessions

when it meets to consider or discuss:

(A) Matters involving information relating to patients or medical

subjects, the disclosure of which would constitute an unwarranted

invasion of personal privacy.

(B) Matters involving conﬁdential intellectual property or work

product, whether patentable or not, including, but not limited to, any

formula, plan, pattern, process, tool, mechanism, compound, procedure,

production data, or compilation of information, which is not patented,

which is known only to certain individuals who are using it to fabricate,

produce, or compound an article of trade or a service having commer-

cial value and which gives its user an opportunity to obtain a business

advantage over competitors who do not know it or use it.

research or data.

(D) Matters concerning the appointment, employment, perform-

ance, compensation, or dismissal of institute ofﬁcers and employees.

Action on compensation of the institute’s ofﬁcers and employees shall

only be taken in open session.

(4) The meeting required by paragraph (2) of subdivision (b) of

Section 125290.20 shall be deemed to be a special meeting for the pur-

poses of Section 11125.4 of the Government Code.

(e) Public Records

(1) The California Public Records Act, Article 1 (commencing with

Section 6250) of Chapter 3.5 of Division 7 of Title 1 of the Government

Code, shall apply to all records of the institute, except as otherwise pro-

vided in this section.

(2) Nothing in this section shall be construed to require disclosure

of any records that are any of the following:

(A) Personnel, medical, or similar ﬁles, the disclosure of which

would constitute an unwarranted invasion of personal privacy.

(B) Records containing or reﬂecting conﬁdential intellectual prop-

erty or work product, whether patentable or not, including, but not lim-

ited to, any formula, plan, pattern, process, tool, mechanism, com-

pound, procedure, production data, or compilation of information,

which is not patented, which is known only to certain individuals who

are using it to fabricate, produce, or compound an article of trade or a

service having commercial value and which gives its user an opportu-

nity to obtain a business advantage over competitors who do not know

it or use it.

(f) Competitive Bidding

(1) The institute shall, except as otherwise provided in this section,

be governed by the competitive bidding requirements applicable to the

University of California, as set forth in Article 1 (commencing with

Section 10500) of Chapter 2.1 of Part 2 of Division 2 of the Public

Contract Code.

(2) For all institute contracts, the ICOC shall follow the procedures

required of the Regents by Article 1 (commencing with Section 10500)

of Chapter 2.1 of Part 2 of Division 2 of the Public Contract Code with

respect to contracts let by the University of California.

(3) The requirements of this section shall not be applicable to grants

or loans approved by the ICOC.

(4) Except as provided in this section, the Public Contract Code

shall not apply to contracts let by the institute.

(g) Conﬂicts of Interest

(1) The Political Reform Act, Title 9 (commencing with Sec-

tion 81000) of the Government Code, shall apply to the institute and to

the ICOC, except as provided in this section and in subdivision (e) of

Section 125290.50.

(A) No member of the ICOC shall make, participate in making, or

in any way attempt to use his or her ofﬁcial position to inﬂuence a deci-

sion to approve or award a grant, loan, or contract to his or her employ-

er, but a member may participate in a decision to approve or award a

grant, loan, or contract to a nonproﬁt entity in the same ﬁeld as his or

her employer.

(B) A member of the ICOC may participate in a decision to approve

or award a grant, loan, or contract to an entity for the purpose of

research involving a disease from which a member or his or her imme-

diate family suffers or in which the member has an interest as a repre-

sentative of a disease advocacy organization.

section.

(2) Service as a member of the ICOC by a member of the faculty or

administration of any system of the University of California shall not,

by itself, be deemed to be inconsistent, incompatible, in conﬂict with, or

inimical to the duties of the ICOC member as a member of the faculty

or administration of any system of the University of California and shall

not result in the automatic vacation of either such ofﬁce. Service as a

member of the ICOC by a representative or employee of a disease advo-

cacy organization, a nonproﬁt academic and research institution, or a

life science commercial entity shall not be deemed to be inconsistent,

incompatible, in conﬂict with, or inimical to the duties of the ICOC

member as a representative or employee of that organization, institu-

tion, or entity.

(3) Section 1090 of the Government Code shall not apply to any

grant, loan, or contract made by the ICOC except where both of the fol-

lowing conditions are met:

(A) The grant, loan, or contract directly relates to services to be

provided by any member of the ICOC or the entity the member

represents or ﬁnancially beneﬁts the member or the entity he or she

represents.

(B) The member fails to recuse himself or herself from making, par-

ticipating in making, or in any way attempting to use his or her ofﬁcial

position to inﬂuence a decision on the grant loan or contract.

(h) Patent Royalties and License Revenues Paid to the State of

California

The ICOC shall establish standards that require that all grants and

loan awards be subject to intellectual property agreements that balance

the opportunity of the State of California to beneﬁt from the patents,

royalties, and licenses that result from basic research, therapy develop-

ment, and clinical trials with the need to assure that essential medical

research is not unreasonably hindered by the intellectual property

agreements.

(i) Preference for California Suppliers

The ICOC shall establish standards to ensure that grantees purchase

goods and services from California suppliers to the extent reasonably

possible, in a good faith effort to achieve a goal of more than 50 percent

of such purchases from California suppliers.

125290.35. Medical and Scientiﬁc Accountability Standards

(a) Medical Standards

In order to avoid duplication or conﬂicts in technical standards for

scientiﬁc and medical research, with alternative state programs, the

institute will develop its own scientiﬁc and medical standards to carry

out the speciﬁc controls and intent of the act, notwithstanding subdivi-

sion (b) of Section 125300, Sections 125320, 125118, 125118.5,

125119, 125119.3 and 125119.5, or any other current or future state

laws or regulations dealing with the study and research of pluripotent

stem cells and/or progenitor cells, or other vital research opportunities,

except Section 125315. The ICOC, its working committees, and its

grantees shall be governed solely by the provisions of this act in the

establishment of standards, the award of grants, and the conduct of

grants awarded pursuant to this act.

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(b) The ICOC shall establish standards as follows:

(1) Informed Consent

Standards for obtaining the informed consent of research donors,

patients, or participants, which initially shall be generally based on the

standards in place on January 1, 2003, for all research funded by the

National Institutes of Health, with modiﬁcations to adapt to the mission

and objectives of the institute.

(2) Controls on Research Involving Humans

Standards for the review of research involving human subjects which

initially shall be generally based on the Institutional Review Board

standards promulgated by the National Institutes of Health and in effect

on January 1, 2003, with modiﬁcations to adapt to the mission and

objectives of the institute.

(3) Prohibition on Compensation

Standards prohibiting compensation to research donors or partici-

pants, while permitting reimbursement of expenses.

(4) Patient Privacy Laws

Standards to assure compliance with state and federal patient priva-

cy laws.

(5) Limitations on Payments for Cells

Standards limiting payments for the purchase of stem cells or stem

cell lines to reasonable payment for the removal, processing, dispos-

al, preservation, quality control, storage, transplantation, or implan-

tation or legal transaction or other administrative costs associated

with these medical procedures and specifically including any required

payments for medical or scientiﬁc technologies, products, or process-

es for royalties, patent, or licensing fees or other costs for intellectual

property.

(6) Time Limits for Obtaining Cells

Standards setting a limit on the time during which cells may be

extracted from blastocysts, which shall initially be 8 to 12 days after cell

division begins, not counting any time during which the blastocysts

and/or cells have been stored frozen.

125290.40. ICOC Functions

The ICOC shall perform the following functions:

(a) Oversee the operations of the institute.

(b) Develop annual and long-term strategic research and ﬁnancial

plans for the institute.

California.

(d) Ensure the completion of an annual ﬁnancial audit of the insti-

tute’s operations.

(e) Issue public reports on the activities of the institute.

(f) Establish policies regarding intellectual property rights arising

from research funded by the institute.

(g) Establish rules and guidelines for the operation of the ICOC and

its working groups.

(h) Perform all other acts necessary or appropriate in the exercise

of its power, authority, and jurisdiction over the institute.

(i) Select members of the working groups.

(j) Adopt, amend, and rescind rules and regulations to carry out the

purposes and provisions of this chapter, and to govern the procedures

of the ICOC. Except as provided in subdivision (k), these rules and reg-

ulations shall be adopted in accordance with the Administrative

Procedure Act (Government Code, Title 2, Division 3, Part 1, Chapter

4.5, Sections 11371 et seq.).

(k) Notwithstanding the Administrative Procedure Act (APA), and

in order to facilitate the immediate commencement of research covered

by this chapter, the ICOC may adopt interim regulations without com-

pliance with the procedures set forth in the APA. The interim regula-

tions shall remain in effect for 270 days unless earlier superseded by

regulations adopted pursuant to the APA.

(l) Request the issuance of bonds from the California Stem Cell

Research and Cures Finance Committee and loans from the Pooled

Money Investment Board.

(m) May annually modify its funding and ﬁnance programs to opti-

mize the institute’s ability to achieve the objective that its activities be

revenue-positive for the State of California during its ﬁrst ﬁve years of

operation without jeopardizing the progress of its core medical and

scientiﬁc research program.

(n) Notwithstanding Section 11005 of the Government Code, accept

additional revenue and real and personal property, including, but not

limited to, gifts, royalties, interest, and appropriations that may be

used to supplement annual research grant funding and the operations

of the institute.

125290.45. ICOC Operations

(a) Legal Actions and Liability

(1) The institute may sue and be sued.

(2) Based upon ICOC standards, institute grantees shall indemnify

or insure and hold the institute harmless against any and all losses,

claims, damages, expenses, or liabilities, including attorneys’fees, aris-

ing from research conducted by the grantee pursuant to the grant,

and/or, in the alternative, grantees shall name the institute as an addi-

tional insured and submit proof of such insurance.

(3) Given the scientiﬁc, medical, and technical nature of the issues

facing the ICOC, and notwithstanding Section 11042 of the

Government Code, the institute is authorized to retain outside counsel

when the ICOC determines that the institute requires specialized serv-

ices not provided by the Attorney General’s ofﬁce.

(4) The institute may enter into any contracts or obligations which

are authorized or permitted by law.

(b) Personnel

(1) The ICOC shall from time to time determine the total number of

authorized employees for the institute, up to a maximum of 50 employ-

ees, excluding members of the working groups, who shall not be consid-

ered institute employees. The ICOC shall select a chairperson, vice

chairperson and president who shall exercise all of the powers delegat-

ed to them by the ICOC. The following functions apply to the chairper-

son, vice chairperson, and president:

(A) The chairperson’s primary responsibilities are to manage the

ICOC agenda and work flow including all evaluations and approvals

of scientific and medical working group grants, loans, facilities, and

standards evaluations, and to supervise all annual reports and public

accountability requirements; to manage and optimize the institute’s

bond financing plans and funding cash flow plan; to interface with

the California Legislature, the United States Congress, the California

health care system, and the California public; to optimize all finan-

cial leverage opportunities for the institute; and to lead negotiations

for intellectual property agreements, policies, and contract terms. The

chairperson shall also serve as a member of the Scientific and

Medical Accountability Standards Working Group and the Scientific

and Medical Research Facilities Working Group and as an ex-officio

member of the Scientific and Medical Research Funding Working

Group. The vice chairperson’s primary responsibilities are to support

the chairperson in all duties and to carry out those duties in the chair-

person’s absence.

(B) The president’s primary responsibilities are to serve as the chief

executive of the institute; to recruit the highest scientiﬁc and medical

talent in the United States to serve the institute on its working groups;

to serve the institute on its working groups; to direct ICOC staff and

participate in the process of supporting all working group requirements

to develop recommendations on grants, loans, facilities, and standards

as well as to direct and support the ICOC process of evaluating and

acting on those recommendations, the implementation of all decisions

on these and general matters of the ICOC; to hire, direct, and manage

the staff of the institute; to develop the budgets and cost control pro-

grams of the institute; to manage compliance with all rules and regula-

tions on the ICOC, including the performance of all grant recipients;

and to manage and execute all intellectual property agreements and

any other contracts pertaining to the institute or research it funds.

(2) Each member of the ICOC except, the chairperson, vice chair-

person, and president, shall receive a per diem of one hundred dollars

($100) per day (adjusted annually for cost of living) for each day actu-

ally spent in the discharge of the member’s duties, plus reasonable and

necessary travel and other expenses incurred in the performance of the

member’s duties.

(3) The ICOC shall establish daily consulting rates and expense

reimbursement standards for the non-ICOC members of all of its

working groups.

(4) Notwithstanding Section 19825 of the Government Code, the

ICOC shall set compensation for the chairperson, vice chairperson,

and president and other ofﬁcers, and for the scientiﬁc, medical, techni-

cal, and administrative staff of the institute within the range of compen-

sation levels for executive ofﬁcers and scientiﬁc, medical, technical,

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Proposition 71 (cont.)

and administrative staff of medical schools within the University of

California system and the nonproﬁt academic and research institutions

described in paragraph (2) of subdivision (a) of Section 125290.20.

125290.50. Scientiﬁc and Medical Working Groups-General

(a) The institute shall have, and there is hereby established, three

separate scientiﬁc and medical working groups as follows:

(1) Scientiﬁc and Medical Research Funding Working Group.

(2) Scientiﬁc and Medical Accountability Standards Working Group.

(3) Scientiﬁc and Medical Research Facilities Working Group.

(b) Working Group Members

Appointments of scientiﬁc and medical working group members shall

be made by a majority vote of a quorum of the ICOC, within 30 days of

the election and appointment of the initial ICOC members. The working

group members’ terms shall be six years except that, after the ﬁrst

six-year terms, the members’ terms will be staggered so that one-third

of the members shall be elected for a term that expires two years later,

one-third of the members shall be elected for a term that expires four

years later, and one-third of the members shall be elected for a term that

expires six years later. Subsequent terms are for six years. Working

group members may serve a maximum of two consecutive terms.

Each scientiﬁc and medical working group shall hold at least four

meetings per year, one of which shall be designated as its annual meeting.

(d) Working Group Recommendations to the ICOC

Recommendations of each of the working groups may be forwarded

to the ICOC only by a vote of a majority of a quorum of the members of

each working group. If 35 percent of the members of any working group

join together in a minority position, a minority report may be submitted

to the ICOC. The ICOC shall consider the recommendations of the

working groups in making its decisions on applications for research and

facility grants and loan awards and in adopting regulatory standards.

Each working group shall recommend to ICOC rules, procedures, and

practices for that working group.

(e) Conﬂict of Interest

(1) The ICOC shall adopt conﬂict of interest rules, based on stan-

dards applicable to members of scientiﬁc review committees of the

National Institutes of Health, to govern the participation of non-ICOC

working group members.

(2) The ICOC shall appoint an ethics ofﬁcer from among the staff of

the institute.

(3) Because the working groups are purely advisory and have no

ﬁnal decisionmaking authority, members of the working groups shall

not be considered public ofﬁcials, employees, or consultants for purpos-

es of the Political Reform Act (Title 9 (commencing with Section 81000)

of the Government Code), Sections 1090 and 19990 of the Government

Code, and Sections 10516 and 10517 of the Public Contract Code.

(f) Working Group Records

All records of the working groups submitted as part of the working

groups’ recommendations to the ICOC for approval shall be subject to

the Public Records Act. Except as provided in this subdivision, the work-

ing groups shall not be subject to the provisions of Article 9 (commenc-

ing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2

of the Government Code, or Article 1 (commencing with Section 6250)

of Chapter 3.5 of Division 7 of Title 1 of the Government Code.

125290.55. Scientific and Medical Accountability Standards

Working Group

(a) Membership

The Scientiﬁc and Medical Accountability Standards Working Group

shall have 19 members as follows:

(1) Five ICOC members from the 10 groups that focus on disease-

speciﬁc areas described in paragraphs (3), (4), and (5) of subdivision

(a) of Section 125290.20.

(2) Nine scientists and clinicians nationally recognized in the ﬁeld

of pluripotent and progenitor cell research.

(3) Four medical ethicists.

(4) The Chairperson of the ICOC.

(b) Functions

The Scientiﬁc and Medical Accountability Standards Working Group

shall have the following functions:

(1) To recommend to the ICOC scientiﬁc, medical, and ethical

standards.

(2) To recommend to the ICOC standards for all medical, socioeco-

nomic, and ﬁnancial aspects of clinical trials and therapy delivery to

patients, including, among others, standards for safe and ethical proce-

dures for obtaining materials and cells for research and clinical efforts

for the appropriate treatment of human subjects in medical research

consistent with paragraph (2) of subdivision (b) of Section 125290.35,

and to ensure compliance with patient privacy laws.

(3) To recommend to the ICOC modiﬁcation of the standards

described in paragraphs (1) and (2) as needed.

(4) To make recommendations to the ICOC on the oversight of

funded research to ensure compliance with the standards described in

paragraphs (1) and (2).

(5) To advise the ICOC, the Scientiﬁc and Medical Research

Funding Working Group, and the Scientiﬁc and Medical Research

Facilities Working Group, on an ongoing basis, on relevant ethical and

regulatory issues.

125290.60. Scientiﬁc and Medical Research Funding Working

Group

(a) Membership

The Scientiﬁc and Medical Research Funding Working Group shall

have 23 members as follows:

(1) Seven ICOC members from the 10 disease advocacy group

members described in paragraphs (3), (4), and (5) of subdivision (a) of

Section 125290.20.

(2) Fifteen scientists nationally recognized in the ﬁeld of stem cell

research.

(3) The Chairperson of the ICOC.

(b) Functions

The Scientiﬁc and Medical Research Funding Working Group shall

perform the following functions:

(1) Recommend to the ICOC interim and ﬁnal criteria, standards,

and requirements for considering funding applications and for award-

ing research grants and loans.

(2) Recommend to the ICOC standards for the scientiﬁc and med-

ical oversight of awards.

(3) Recommend to the ICOC any modiﬁcations of the criteria, stan-

dards, and requirements described in paragraphs (1) and (2) above as

needed.

(4) Review grant and loan applications based on the criteria,

requirements, and standards adopted by the ICOC and make recom-

mendations to the ICOC for the award of research, therapy develop-

ment, and clinical trial grants and loans.

(5) Conduct peer group progress oversight reviews of grantees to

ensure compliance with the terms of the award, and report to the ICOC

any recommendations for subsequent action.

(6) Recommend to the ICOC standards for the evaluation of

grantees to ensure that they comply with all applicable requirements.

Such standards shall mandate periodic reporting by grantees and

shall authorize the Scientific and Medical Research Funding Working

Group to audit a grantee and forward any recommendations for action

to the ICOC.

(7) Recommend its ﬁrst grant awards within 60 days of the issuance

of the interim standards.

Award recommendations shall be based upon a competitive evalua-

tion as follows:

(1) Only the 15 scientist members of the Scientiﬁc and Medical

Research Funding Working Group shall score grant and loan award

applications for scientiﬁc merit. Such scoring shall be based on scien-

tiﬁc merit in three separate classiﬁcations—research, therapy develop-

ment, and clinical trials, on criteria including the following:

(A) A demonstrated record of achievement in the areas of pluripo-

tent stem cell and progenitor cell biology and medicine, unless the

research is determined to be a vital research opportunity.

(B) The quality of the research proposal, the potential for achieving

signiﬁcant research, or clinical results, the timetable for realizing such

signiﬁcant results, the importance of the research objectives, and the

innovativeness of the proposed research.

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supplant existing funding, a high priority shall be placed on funding

pluripotent stem cell and progenitor cell research that cannot, or is

unlikely to, receive timely or sufﬁcient federal funding, unencumbered

by limitations that would impede the research. In this regard, other

research categories funded by the National Institutes of Health shall not

be funded by the institute.

(D) Notwithstanding subparagraph (C), other scientiﬁc and med-

ical research and technologies and/or any stem cell research proposal

not actually funded by the institute under subparagraph (C) may be

funded by the institute if at least two-thirds of a quorum of the members

of the Scientiﬁc and Medical Research Funding Working Group recom-

mend to the ICOC that such a research proposal is a vital research

opportunity.

125290.65. Scientiﬁc and Medical Facilities Working Group

(a) Membership

The Scientiﬁc and Medical Research Facilities Working Group shall

have 11 members as follows:

(1) Six members of the Scientiﬁc and Medical Research Funding

Working Group.

(2) Four real estate specialists. To be eligible to serve on the

Scientiﬁc and Medical Research Facilities Working Group, a real estate

specialist shall be a resident of California, shall be prohibited from

receiving compensation from any construction or development entity

providing specialized services for medical research facilities, and shall

not provide real estate facilities brokerage services for any applicant

for, or any funding by the Scientiﬁc and Medical Research Facilities

Working Group and shall not receive compensation from any recipient

of institute funding grants.

(3) The Chairperson of the ICOC.

(b) Functions

The Scientiﬁc and Medical Research Facilities Working Group shall

perform the following functions:

(1) Make recommendations to the ICOC on interim and ﬁnal crite-

ria, requirements, and standards for applications for, and the awarding

of, grants and loans for buildings, building leases, and capital equip-

ment; those standards and requirements shall include, among others:

(A) Facility milestones and timetables for achieving such milestones.

(B) Priority for applications that provide for facilities that will be

available for research no more than two years after the grant award.

located solely within California.

(D) The requirement that grantees comply with reimbursable build-

ing cost standards, competitive building leasing standards, capital

equipment cost standards, and reimbursement standards and terms rec-

ommended by the Scientiﬁc and Medical Facilities Funding Working

Group, and adopted by the ICOC.

(E) The requirement that grantees shall pay all workers employed

on construction or modiﬁcation of the facility funded by facilities

grants or loans of the institute, the general prevailing rate of per diem

wages for work of a similar character in the locality in which work on

the facility is performed, and not less than the general prevailing rate

of per diem wages for holiday and overtime work ﬁxed as provided in

Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of

the Labor Code.

(F) The requirement that grantees be not-for-proﬁt entities.

(G) The requirement that awards be made on a competitive basis,

with the following minimum requirements:

(i) That the grantee secure matching funds from sources other than

the institute equal to at least 20 percent of the award. Applications of

equivalent merit, as determined by the Scientiﬁc and Medical Research

Funding Working Group, considering research opportunities to be con-

ducted in the proposed research facility, shall receive priority to the

extent that they provide higher matching fund amounts. The Scientiﬁc

and Medical Research Facilities Working Group may recommend waiv-

ing the matching fund requirement in extraordinary cases of high merit

or urgency.

(ii) That capital equipment costs and capital equipment loans be

allocated when equipment costs can be recovered in part by the grantee

from other users of the equipment.

(2) Make recommendations to the ICOC on oversight procedures to

ensure grantees’ compliance with the terms of an award.

125290.70. Appropriation and Allocation of Funding

(a) Moneys in the California Stem Cell Research and Cures Fund

shall be allocated as follows:

(1) (A) No less than 97 percent of the proceeds of the bonds author-

ized pursuant to Section 125291.30, after allocation of bond proceeds

to purposes described in paragraphs (4) and (5) of subdivision (a) of

Section 125291.20, shall be used for grants and grant oversight as pro-

vided in this chapter.

(B) Not less than 90 percent of the amount used for grants shall be

used for research grants, with no more than the following amounts as

stipulated below to be committed during the ﬁrst 10 years of grant mak-

ing by the institute, with each year’s commitments to be advanced over

a period of one to seven years, except that any such funds that are not

committed may be carried over to one or more following years. The max-

imum amount of research funding to be allocated annually as follows:

Year 1, 5.6 percent; Year 2, 9.4 percent; Year 3, 9.4 percent; Year 4,

11.3 percent; Year 5, 11.3 percent; Year 6, 11.3 percent; Year 7, 11.3 percent;

Year 8, 11.3 percent; Year 9, 11.3 percent; and Year 10, 7.5 percent.

Section 125291.30 may be used by the institute for research and

research facilities implementation costs, including the development,

administration, and oversight of the grant making process and the oper-

ations of the working groups.

(2) Not more than 3 percent of the proceeds of the bonds authorized

pursuant to Section 125291.30 shall be used for the costs of general

administration of the institute.

(3) In any single year any new research funding to any single

grantee for any program year is limited to no more than 2 percent of the

total bond authorization under this chapter. This limitation shall be

considered separately for each new proposal without aggregating any

prior year approvals that may fund research activities. This requirement

shall be determinative, unless 65 percent of a quorum of the ICOC

approves a higher limit for that grantee.

(4) Recognizing the priority of immediately building facilities that

ensure the independence of the scientiﬁc and medical research of the

institute, up to 10 percent of the proceeds of the bonds authorized pur-

suant to Section 125291.30, net of costs described in paragraphs (2),

(4), and (5) of subdivision (a) of Section 125291.20 shall be allocated

for grants to build scientiﬁc and medical research facilities of nonprof-

it entities which are intended to be constructed in the ﬁrst ﬁve years.

(5) The institute shall limit indirect costs to 25 percent of a research

award, excluding amounts included in a facilities award, except that the

indirect cost limitation may be increased by that amount by which the

grantee provides matching funds in excess of 20 percent of the grant

amount.

(b) To enable the institute to commence operating during the ﬁrst

six months following the adoption of the measure adding this chapter,

there is hereby appropriated from the General Fund as a temporary

start-up loan to the institute three million dollars ($3,000,000) for ini-

tial administrative and implementation costs. All loans to the institute

pursuant to this appropriation shall be repaid to the General Fund

within 12 months of each loan draw from the proceeds of bonds sold

pursuant to Section 125291.30.

tax revenue stream for the State of California during the institute’s ﬁrst

ﬁve calendar years of operations, without drawing funds from the

General Fund for principal and interest payments for those ﬁrst ﬁve

calendar years.

Article 2. California Stem Cell Research and Cures

Bond Act of 2004

125291.10. This article shall be known, and may be cited, as the

California Stem Cell Research and Cures Bond Act of 2004.

125291.15. As used in this article, the following terms have the

following meaning:

(a) “Act” means the California Stem Cell Research and Cures Bond

Act constituting Chapter 3 (commencing with Section 125290.10) of

Part 5 of Division 106.

(b) “Board” or “institute” means the California Institute for

Regenerative Medicine designated in accordance with subdivision (b)

of Section 125291.40.

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Cures Finance Committee created pursuant to subdivision (a) of

Section 125291.40.

(d) “Fund” means the California Stem Cell Research and Cures

Fund created pursuant to Section 125291.25.

(e) “Interim debt” means any interim loans pursuant to subdivision

(b) of Section 125290.70, and Sections 125291.60 and 125291.65, bond

anticipation notes or commercial paper notes issued to make deposits

into the fund and which will be paid from the proceeds of bonds issued

pursuant to this article.

125291.20. (a) Notwithstanding Section 13340 of the Government

Code or any other provision of law, moneys in the fund are appropriat-

ed without regard to ﬁscal years to the institute for the purpose of

(1) making grants or loans to fund research and construct facilities for

research, all as described in and pursuant to the act, (2) paying gener-

al administrative costs of the institute (not to exceed 3 percent of the net

proceeds of each sale of bonds), (3) paying the annual administration

costs of the interim debt or bonds after December 31 of the ﬁfth full cal-

endar year after this article takes effect, (4) paying the costs of issuing

interim debt, paying the annual administration costs of the interim debt

until and including December 31 of the ﬁfth full calendar year after this

article takes effect, and paying interest on interim debt, if such interim

debt is incurred or issued on or prior to December 31 of the ﬁfth full

calendar year after this article takes effect, and (5) paying the costs of

issuing bonds, paying the annual administration costs of the bonds until

and including December 31 of the ﬁfth full calendar year after this arti-

cle takes effect, and paying interest on bonds that accrues on or prior to

December 31 of the ﬁfth full calendar year after this article takes effect

(except that such limitation does not apply to premium and accrued

interest as provided in Section 125291.70). In addition, moneys in the

fund or other proceeds of the sale of bonds authorized by this article

may be used to pay principal of or redemption premium on any interim

debt issued prior to the issuance of bonds authorized by this article.

Moneys deposited in the fund from the proceeds of interim debt may be

used to pay general administrative costs of the institute without regard

to the 3 percent limit set forth in (2) above, so long as such 3 percent

limit is satisﬁed for each issue of bonds.

(b) Repayment of principal and interest on any loans made by the

institute pursuant to this article shall be deposited in the fund and used to

make additional grants and loans for the purposes of this act or for pay-

ing continuing costs of the annual administration of outstanding bonds.

125291.25. The proceeds of interim debt and bonds issued and

sold pursuant to this article shall be deposited in the State Treasury to

the credit of the California Stem Cell Research and Cures Fund, which

is hereby created in the State Treasury, except to the extent that proceeds

of the issuance of bonds are used directly to repay interim debt.

125291.30. Bonds in the total amount of three billion dollars

($3,000,000,000), not including the amount of any refunding bonds

issued in accordance with Section 125291.75, or as much thereof as is

necessary, may be issued and sold to provide a fund to be used for car-

rying out the purposes expressed in this article and to be used and sold

for carrying out the purposes of Section 125291.20 and to reimburse the

General Obligation Bond Expense Revolving Fund pursuant to

Section 16724.5 of the Government Code. The bonds, when sold, shall be

and shall constitute a valid and binding obligation of the State of

California, and the full faith and credit of the State of California is here-

by pledged for the punctual payment of both the principal of, and inter-

est on, the bonds as the principal and interest become due and payable.

125291.35. The bonds authorized by this article shall be prepared,

executed, issued, sold, paid, and redeemed as provided in the State

General Obligation Bond Law (Chapter 4 (commencing with Section

16720) of Part 3 of Division 4 of Title 2 of the Government Code), and

all of the provisions of that law except Section 16727 apply to the bonds

and to this article and are hereby incorporated in this article as though

set forth in full in this article.

125291.40. (a) Solely for the purpose of authorizing the issuance

and sale, pursuant to the State General Obligation Bond Law, of the

bonds and interim debt authorized by this article, the California Stem

Cell Research and Cures Finance Committee is hereby created. For pur-

poses of this article, the California Stem Cell Research and Cures

Finance Committee is “the committee” as that term is used in the State

General Obligation Bond Law. The committee consists of the Treasurer,

the Controller, the Director of Finance, the Chairperson of the

California Institute for Regenerative Medicine, and two other members

of the Independent Citizens Oversight Committee (as created by the act)

chosen by the Chairperson of the California Institute for Regenerative

Medicine, or their designated representatives. The Treasurer shall serve

as chairperson of the committee. A majority of the committee may act

for the committee.

(b) For purposes of the State General Obligation Bond Law,

the California Institute for Regenerative Medicine is designated

the “board.”

125291.45. (a) The committee shall determine whether or not it is

necessary or desirable to issue bonds authorized pursuant to this arti-

cle in order to carry out the actions speciﬁed in this article and, if so,

the amount of bonds to be issued and sold. Successive issues of bonds

may be authorized and sold to carry out those actions progressively, and

it is not necessary that all of the bonds authorized to be issued be sold

at any one time. The bonds may bear interest which is includable in

gross income for federal income tax purposes if the committee deter-

mines that such treatment is necessary in order to provide funds for the

purposes of the act.

(b) The total amount of the bonds authorized by Section 125291.30

which may be issued in any calendar year, commencing in 2005, shall

not exceed three hundred ﬁfty million dollars ($350,000,000). If less

than this amount of bonds is issued in any year, the remaining permit-

ted amount may be carried over to one or more subsequent years.

ed for interim debt and bonds until at least December 31 of the ﬁfth full

calendar year after this article takes effect, with all interest to be paid

from proceeds from the sale of interim debt or bonds, to minimize debt

service payable from the General Fund during the initial period of basic

research and therapy development, if the committee determines, with the

advice of the Treasurer, that this structure will result in the lowest

achievable borrowing costs for the state during that ﬁve-year period

considering the objective of avoiding any bond debt service payments,

by the General Fund, during that period. Upon such initial determina-

tion, the committee may delegate, by resolution, to the Treasurer such

authority in connection with issuance of bonds as it may determine,

including, but not limited to, the authority to implement and continue

this bond ﬁnancing structure (including during any time following the

initial ﬁve-year period) and to determine that an alternate ﬁnancing

plan would result in signiﬁcant lower borrowing costs for the state con-

sistent with the objectives related to the General Fund and to implement

such alternate ﬁnancing plan.

125291.50. There shall be collected each year and in the same

manner and at the same time as other state revenue is collected, in addi-

tion to the ordinary revenues of the state, a sum in an amount required

to pay the principal of, and interest on, the bonds maturing each year.

It is the duty of all ofﬁcers charged by law with any duty in regard to the

collection of the revenue to do and perform each and every act that is

necessary to collect that additional sum.

125291.55. Notwithstanding Section 13340 of the Government

Code, there is hereby appropriated from the General Fund in the State

Treasury, for the purposes of this article, an amount that will equal the

total of the following:

(a) The sum annually necessary to pay the principal of, and interest

on, bonds issued and sold pursuant to this article, as the principal and

interest become due and payable.

(b) The sum necessary to carry out Section 125291.60 appropriated

without regard to ﬁscal years.

125291.60. The Director of Finance may authorize the withdrawal

from the General Fund of an amount or amounts, not to exceed the

amount of the unsold bonds that have been authorized by the commit-

tee, to be sold for the purpose of carrying out this article. Any amount

withdrawn shall be deposited in the fund. Any money made available

under this section shall be returned to the General Fund, plus an

amount equal to the interest that the money would have earned in the

Pooled Money Investment Account, from money received from the sale

of bonds for the purpose of carrying out this article.

125291.65. The institute may request the Pooled Money Investment

Board to make a loan from the Pooled Money Investment Account in

accordance with Section 16312 of the Government Code for the purpos-

es of carrying out this article. The amount of the request shall not

exceed the amount of the unsold bonds that the committee, by resolu-

tion, has authorized to be sold for the purpose of carrying out this arti-

cle. The institute shall execute any documents required by the Pooled

Money Investment Board to obtain and repay the loan. Any amounts

loaned shall be deposited in the fund to be allocated by the institute in

accordance with this article.

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125291.70. All money deposited in the fund that is derived from

premium and accrued interest on bonds sold shall be reserved in the

fund and shall be available for transfer to the General Fund as a cred-

it to expenditures for bond interest.

125291.75. The bonds may be refunded in accordance with

Article 6 (commencing with Section 16780) of Chapter 4 of Part 3 of

Division 4 of Title 2 of the Government Code, which is a part of the State

General Obligation Bond Law. Approval by the voters of the state for

the issuance of the bonds described in this article includes the approval

of the issuance of any bonds issued to refund any bonds originally

issued under this article or any previously issued refunding bonds.

125291.80. Notwithstanding any provision of this article or the

State General Obligation Bond Law, if the Treasurer sells bonds pur-

suant to this article that include a bond counsel opinion to the effect

that the interest on the bonds is excluded from gross income for federal

tax purposes, subject to designated conditions, the Treasurer may main-

tain separate accounts for the investment of bond proceeds and the

investment earnings on those proceeds. The Treasurer may use or direct

the use of those proceeds or earnings to pay any rebate, penalty, or

other payment required under federal law or to take any other action

with respect to the investment and use of bond proceeds required or

desirable under federal law to maintain the tax-exempt status of those

bonds and to obtain any other advantage under federal law on behalf

of the funds of this state.

125291.85. Inasmuch as the proceeds from the sale of bonds

authorized by this article are not “proceeds of taxes” as that term

is used in Article XIII B of the California Constitution, the disburse-

ment of these proceeds is not subject to the limitations imposed by

that article.

Article 3. Deﬁnitions

125292.10. As used in this chapter and in Article XXXV of the

California Constitution, the following terms have the following mean-

ings:

(a) “Act” means the California Stem Cell Research and Cures Bond

Act constituting Chapter 3 (commencing with Section 125290.10) of

Part 5 of Division 106 of the Health and Safety Code.

(b) “Adult stem cell” means an undifferentiated cell found in a dif-

ferentiated tissue in an adult organism that can renew itself and may,

with certain limitations, differentiate to yield all the specialized cell

types of the tissue from which it originated.

(d) “Committee” means the California Stem Cell Research and

Cures Finance Committee created pursuant to subdivision (a) of

Section 125291.40.

(e) “Constitutional officers” means the Governor, Lieutenant

Governor, Treasurer, and Controller of California.

(f) “Facilities” means buildings, building leases, or capital

equipment.

(g) “Floating-rate bonds” means bonds which do not bear a ﬁxed

rate of interest until their ﬁnal maturity date, including commercial

paper notes.

(h) “Fund” means the California Stem Cell Research and Disease

Cures Fund created pursuant to Section 125291.25.

(i) “Grant” means a grant, loan, or guarantee.

(j) “Grantee” means a recipient of a grant from the institute. All

University of California grantee institutions shall be considered as sep-

arate and individual grantee institutions.

(k) “Human reproductive cloning” means the practice of creating

or attempting to create a human being by transferring the nucleus from

a human cell into an egg cell from which the nucleus has been removed

for the purpose of implanting the resulting product in a uterus to

initiate a pregnancy.

(l) “Indirect costs” mean the recipient’s costs in the administra-

tion, accounting, general overhead, and general support costs for

implementing a grant or loan of the institute. NIH deﬁnitions of indi-

rect costs will be utilized as one of the bases by the Scientiﬁc and

Medical Research Standards Working Group to create a guideline for

recipients on this deﬁnition, with modiﬁcations to reﬂect guidance by

the ICOC and this act.

(m) “Institute” means the California Institute for Regenerative

Medicine.

(n) “Interim standards” means temporary standards that perform

the same function as “emergency regulations” under the Administrative

Procedure Act (Government Code, Title 2, Division 3, Part 1, Chapter

4.5, Sections 11371 et seq.) except that in order to provide greater

opportunity for public comment on the permanent regulations, remain

in force for 270 days rather than 180 days.

(o) “Life science commercial entity” means a ﬁrm or organization,

headquartered in California, whose business model includes biomed-

ical or biotechnology product development and commercialization.

(p) “Medical ethicist” means an individual with advanced training

in ethics who holds a Ph.D., MA, or equivalent training and who spends

or has spent substantial time (1) researching and writing on ethical

issues related to medicine, and (2) administering ethical safeguards

during the clinical trial process, particularly through service on institu-

tional review boards.

(q) “Pluripotent cells” means cells that are capable of self-renew-

al, and have broad potential to differentiate into multiple adult cell

types. Pluripotent stem cells may be derived from somatic cell nuclear

transfer or from surplus products of in vitro fertilization treatments

when such products are donated under appropriate informed consent

procedures. These excess cells from in vitro fertilization treatments

would otherwise be intended to be discarded if not utilized for medical

research.

(r) “Progenitor cells” means multipotent or precursor cells that are

partially differentiated but retain the ability to divide and give rise to

differentiated cells.

(s) “Quorum” means at least 65 percent of the members who are

eligible to vote.

(t) “Research donor” means a human who donates biological

materials for research purposes after full disclosure and consent.

(u) “Research funding” includes interdisciplinary scientific and

medical funding for basic research, therapy development, and the

development of pharmacologies and treatments through clinical tri-

als. When a facility’s grant or loan has not been provided to house all

elements of the research, therapy development, and/or clinical trials,

research funding shall include an allowance for a market lease rate of

reimbursement for the facility. In all cases, operating costs of the

facility, including, but not limited to, library and communication serv-

ices, utilities, maintenance, janitorial, and security, shall be included

as direct research funding costs. Legal costs of the institute incurred

in order to negotiate standards with federal and state governments

and research institutions; to implement standards or regulations; to

resolve disputes; and/or to carry out all other actions necessary to

defend and/or advance the institute’s mission shall be considered

direct research funding costs.

(v) “Research participant” means a human enrolled with full dis-

closure and consent, and participating in clinical trials.

(w) “Revenue positive” means all state tax revenues generated

directly and indirectly by the research and facilities of the institute are

greater than the debt service on the state bonds actually paid by the

General Fund in the same year.

(x) “Stem cells” mean nonspecialized cells that have the capacity to

divide in culture and to differentiate into more mature cells with spe-

cialized functions.

(y) “Vital research opportunity” means scientific and medical

research and technologies and/or any stem cell research not actual-

ly funded by the institute under subparagraph (C) of paragraph

(1) of subdivision (c) of Section 125290.60 which provides a sub-

stantially superior research opportunity vital to advance medical

science as determined by at least a two-thirds vote of a quorum of

the members of the Scientific and Medical Research Funding

Working Group and recommended as such by that working group to

the ICOC. Human reproductive cloning shall not be a vital research

opportunity.

SEC. 6. Section 20069 of the Government Code is amended to

read:

(a) “State service” means service rendered as an employee or ofﬁ-

cer (employed, appointed or elected) of the state, the California

Institute for Regenerative Medicine and the ofﬁcers and employees of

its governing body, the university, a school employer, or a contracting

agency, for compensation, and only while he or she is receiving com-

pensation from that employer therefor, except as provided in Article 4

(commencing with Section 20990) of Chapter 11.

Proposition 71 (cont.)

Text of Proposed Laws | 155

TEXT OF PROPOSED LAWS

Proposition 71 (cont.)

(b) “State service,” solely for purposes of qualiﬁcation for beneﬁts

and retirement allowances under this system, shall also include service

rendered as an ofﬁcer or employee of a county if the salary for the serv-

ice constitutes compensation earnable by a member of this system

under Section 20638.

SEC. 7. Severability

If any provision of this act, or part thereof, is for any reason held

to be invalid or unconstitutional, the remaining provisions shall not

be affected, but shall remain in full force and effect, and to this end the

provisions of this act are severable.

SEC. 8. Amendments

The statutory provisions of this measure, except the bond provi-

sions, may be amended to enhance the ability of the institute to further

the purposes of the grant and loan programs created by the measure, by

a bill introduced and passed no earlier than the third full calendar year

following adoption, by 70 percent of the membership of both houses of

the Legislature and signed by the Governor, provided that at least

14 days prior to passage in each house, copies of the bill in ﬁnal form

shall be made available by the clerk of each house to the public and

news media.

Proposition 72

This law proposed by Senate Bill 2 of the 2003–2004 Regular

Session (Chapter 673, Statutes of 2003) is submitted to the people as a

referendum in accordance with the provisions of Section 9 of Article II

of the California Constitution.

This proposed law amends and adds sections to various codes; there-

fore, new provisions proposed to be added are printed in italic type to

indicate that they are new.

PROPOSED LAW

SECTION 1. The Legislature finds and declares all of the

following:

(a) The Legislature ﬁnds and declares that working Californians and

their families should have health insurance coverage.

(b) The Legislature further ﬁnds and declares that most working

Californians obtain their health insurance coverage through their

employment.

6,000,000 Californians lacked health insurance coverage at some time

and 3,600,000 Californians had no health insurance coverage at any

time.

(d) The Legislature finds and declares that more than 80 percent

of Californians without health insurance coverage are working people

or their families. Most of these working Californians without

health insurance coverage work for employers who do not offer health

benefits.

(e) The Legislature ﬁnds and declares that employment-based health

insurance coverage provides access for millions of Californians to the

latest advances in medical science, including diagnostic

procedures, surgical interventions, and pharmaceutical therapies.

(f) The Legislature ﬁnds and declares that people who are covered

by health insurance have better health outcomes than those who lack

coverage. Persons without health insurance are more likely to be in poor

health, more likely to have missed needed medications and treatment,

and more likely to have chronic conditions that are not properly

managed.

(g) The Legislature ﬁnds and declares that persons without health

insurance are at risk of ﬁnancial ruin and that medical debt is the sec-

ond most common cause of personal bankruptcy in the United States.

(h) The Legislature further ﬁnds and declares that the State of

California provides health insurance to low- and moderate-income

working parents and their children through the Medi-Cal and Healthy

Families programs and pays the cost of coverage for those working peo-

ple who are not provided health coverage through employment. The

Legislature further ﬁnds and declares that the State of California and

local governments fund county hospitals and clinics, community clin-

ics, and other safety net providers that provide care to those working

people whose employers fail to provide affordable health coverage to

workers and their families as well as to other uninsured persons.

(i) The Legislature further ﬁnds and declares that controlling health

care costs can be more readily achieved if a greater share of working

people and their families have health beneﬁts so that cost shifting is

minimized.

(j) The Legislature ﬁnds and declares that the social and economic

burden created by the lack of health coverage for some workers and

their dependents creates a burden on other employers, the State of

California, affected workers, and the families of affected workers who

suffer ill health and risk ﬁnancial ruin.

(k) It is therefore the intent of the Legislature to assure that working

Californians and their families have health beneﬁts and that employers

pay a user fee to the State of California so that the state may serve as a

purchasing agent to pool those fees to purchase coverage for all work-

ing Californians and their families that is not tied to employment with

an individual employer. However, consistent with this act, if the employ-

er voluntarily provides proof of health care coverage, that employer is to

be exempted from payment of the fee.

(l) It is further the intent of the Legislature that workers who work

on a seasonal basis, for multiple employers, or who work multiple jobs

for the same employer should be afforded the opportunity to have health

coverage in the same manner as those who work full-time for a single

employer.

(m) The Legislature recognizes the vital role played by the health

care safety net and the potential impact this act may have on the

resources available to county hospital systems and clinics, including

physicians or networks of physicians that refer patients to such hospitals

and clinics, as well as community clinics and other safety net providers.

It is the intent of the Legislature to preserve the viability of this impor-

tant health care resource.

(n) Nothing in this act shall be construed to diminish or otherwise

change existing protections in law for persons eligible for public pro-

grams including, but not limited to, Medi-Cal, Healthy Families,

California Children’s Services, Genetically Handicapped Persons

Program, county mental health programs, programs administered by the

Department of Alcohol and Drug Programs, or programs administered

by local education agencies. It is further the intent of the Legislature to

preserve beneﬁts available to the recipients of these programs, includ-

ing dental, vision, and mental health beneﬁts.

SEC. 2. Part 8.7 (commencing with Section 2120) is added to

Division 2 of the Labor Code, to read:

PART 8.7. EMPLOYEE HEALTH INSURANCE

HAPTER 1. TITLE AND PURPOSE

2120. This part shall be known and may be cited as the Health

Insurance Act of 2003.

2120.1. (a) Large employers, as deﬁned in Section 2122.3, shall

comply with the provisions of this part applicable to large employers

commencing on January 1, 2006.

(b) Medium employers, as deﬁned in Section 2122.4, shall comply

with the provisions of this part applicable to medium employers com-

mencing on January 1, 2007, except that those employers with at least

20 employees but no more than 49 employees are not required to com-

ply with the provisions of this part unless a tax credit is enacted that is

available to those employers with at least 20 employees but no more

than 49 employees. The tax credit shall be 20 percent of net cost to

the employer of the fee owed under Chapter 4 (commencing with

Section 2140). “Net cost” means the dollar amount of the employer fee

or the credit consistent with Section 2160.1 reduced by the employee

share of that fee or credit and further reduced by the value of state and

federal tax deductions.

2120.2. It is the purpose of this part to ensure that working

Californians and their families are provided health care coverage.

2120.3. This part shall not be construed to diminish any protection

already provided pursuant to collective bargaining agreements or

employer-sponsored plans that are more favorable to the employees

than the health care coverage required by this part.