TEXT OF PROPOSED LAWS
Proposition 71
This initiative measure is submitted to the people in accordance withthe 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, newprovisions proposed to be added are printed in italic type to indicate thatthey are new.
PROPOSED LAWCALIFORNIA STEM CELL RESEARCH AND CURES INITIATIVESECTION 1. Title
This measure shall be known as the “California Stem Cell Researchand 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, heartdisease, Alzheimer’s, Parkinson’s, spinal cord injuries, blindness, Lou
Gehrig’s disease, HIV/AIDS, mental health disorders, multiple sclerosis, Huntington’s disease, and more than 70 other diseases and injuries.
Recently medical science has discovered a new way to attack chronic diseases and injuries. The cure and treatment of these diseases canpotentially be accomplished through the use of new regenerative medical 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 therapies, and conduct clinical trials.
About half of California’s families have a child or adult who has suffered or will suffer from a serious, often critical or terminal, medical
condition that could potentially be treated or cured with stem cell therapies. 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 needsof patients or control spiraling costs, unless therapy focus switches awayfrom maintenance and toward prevention and cures.
Unfortunately, the federal government is not providing adequate
funding necessary for the urgent research and facilities needed to develop stem cell therapies to treat and cure diseases and serious injuries.
This critical funding gap currently prevents the rapid advancement ofresearch that could benefit millions of Californians.
The California Stem Cell Research and Cures Act will close thisfunding gap by establishing an institute which will issue bonds to support stem cell research, emphasizing pluripotent stem cell and progenitor cell research and other vital medical technologies, for the development 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 forscientists at California’s universities and other advanced medical
research facilities throughout the state.
Maximize the use of research funds by giving priority to stem cellresearch that has the greatest potential for therapies and cures, specifically focused on pluripotent stem cell and progenitor cell researchamong other vital research opportunities that cannot, or are unlikely to,receive timely or sufficient federal funding, unencumbered by limitations that would impede the research. Research shall be subject toaccepted patient disclosure and patient consent standards.
Assure that the research is conducted safely and ethically by including provisions to require compliance with standards based on nationalmodels that protect patient safety, patient rights, and patient privacy.
Prohibit the use of bond proceeds of this initiative for funding forhuman reproductive cloning.
Improve the California health care system and reduce the long-term
health care cost burden on California through the development of therapies 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 campuseswith medical schools; other California universities and California medical research institutions; California disease advocacy groups; andCalifornia experts in the development of medical therapies.

Protect and benefit the California budget: by postponing generalfund payments on the bonds for the first five years; by funding scientific and medical research that will significantly reduce state health carecosts in the future; and by providing an opportunity for the state to benefit from royalties, patents, and licensing fees that result from theresearch.
Benefit the California economy by creating projects, jobs, and therapies that will generate millions of dollars in new tax revenues in ourstate.
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 Institutefor Regenerative Medicine.
SEC. 2. The institute shall have the following purposes:(a) To make grants and loans for stem cell research, for researchfacilities, 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, fromlaboratory research through successful clinical trials.
(c) To establish the appropriate regulatory standards and oversightbodies for research and facilities development.
SEC. 3. No funds authorized for, or made available to, the instituteshall be used for research involving human reproductive cloning.
SEC. 4. Funds authorized for, or made available to, the instituteshall be continuously appropriated without regard to fiscal year, beavailable and used only for the purposes provided in this article, andshall 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 cellresearch 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 broadpotential 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, mayutilize state issued tax-exempt and taxable bonds to fund its operations,medical and scientific research, including therapy development throughclinical 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:
CHAPTER 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 OversightCommittee, hereinafter, the ICOC, which shall govern the institute andis 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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TEXT OF PROPOSED LAWS
Proposition 71 (cont.)(1) The Chancellors of the University of California at San
Francisco, Davis, San Diego, Los Angeles, and Irvine, shall eachappoint an executive officer from his or her campus.
(2) The Governor, the Lieutenant Governor, the Treasurer, and theController 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 demonstrated success and leadership in stem cell research, and that has:(i) A nationally ranked research hospital and medical school; thiscriteria will apply to only two of the four appointments.
(ii) A recent proven history of administering scientific and/or medical research grants and contracts in an average annual range exceeding 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 Academyof Sciences.
(B) A California nonprofit academic and research institution that is
not a part of the University of California, that has demonstrated success 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 researchbudget in the life sciences exceeding twenty million dollars($20,000,000).
(C) A California life science commercial entity that is not actively
engaged in researching or developing therapies with pluripotent or progenitor stem cells, that has a background in implementing successful
experimental medical therapies, and that has not been awarded, orapplied 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, anonprofit research institution or life science commercial entity who isappointed as a member, may from time to time delegate those duties toan executive officer of the entity or to the dean of the medical school, if
applicable.
(3) The Governor, the Lieutenant Governor, the Treasurer, and theController shall appoint members from among California representatives of California regional, state, or national disease advocacy groups,
as follows:(A) The Governor shall appoint two members, one from each of thefollowing disease advocacy groups: spinal cord injury and Alzheimer’s
disease.
(B) The Lieutenant Governor shall appoint two members, one fromeach of the following disease advocacy groups: type II diabetes andmultiple sclerosis or amyotrophic lateral sclerosis.
(C) The Treasurer shall appoint two members, one from each of thefollowing disease groups: type I diabetes and heart disease.
(D) The Controller shall appoint two members, one from each of thefollowing disease groups: cancer and Parkinson’s disease.
(4) The Speaker of the Assembly shall appoint a member fromamong 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 member 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, eachconstitutional officer shall nominate a candidate for chairperson andanother candidate for vice chairperson. The chairperson and vicechairperson shall each be elected for a term of six years. The chairperson and vice chairperson of ICOC shall be full or part time employeesof 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 thatmust include some experience with medical legislative approvals ofstandards and/or funding.

148 | Text of Proposed Laws(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 institutional powers.
(iv) Direct knowledge and experience in bond financing.
The vice chairperson shall satisfy clauses (i), (iii), and (iv) of subparagraph (A). The vice chairperson shall be selected from among individuals who have attributes and experience complementary to those of
the chairperson, preferably covering the criteria not represented by thechairperson’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 completed within the permitted timeframe, the ICOC shall proceed to operate 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 thischapter, the State Controller and the Treasurer, or if only one is available within 45 days, the other shall convene a meeting of the appointed
members of the ICOC to elect a chairperson and vice chairperson fromamong the individuals nominated by the constitutional officers pursuant
to paragraph (6) of subdivision (a).
(c) ICOC Member Terms of Office(1) The members appointed pursuant to paragraphs (1), (3), (4),and (5) of subdivision (a) shall serve eight-year terms, and all othermembers shall serve six-year terms. Members shall serve a maximum of
two terms.
(2) If a vacancy occurs within a term, the appointing authority shallappoint a replacement member within 30 days to serve the remainderof 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 quorum 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 accomplishments, 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 availability of funding for stem cell research from sources other than theinstitute; 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 ofthe 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 shallbe provided to the State Controller, who shall review the audit andannually issue a public report of that review.
(c) Citizen’s Financial Accountability Oversight Committee
There shall be a Citizen’s Financial Accountability OversightCommittee chaired by the State Controller. This committee shall review
the annual financial audit, the State Controller’s report and evaluationof 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 shalleach appoint a public member of the committee. Committee members

TEXT OF PROPOSED LAWS
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 appropriate 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 expensesof 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 theGovernment Code, shall apply to all meetings of the ICOC, except asotherwise 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 theGovernment 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 commercial value and which gives its user an opportunity to obtain a businessadvantage over competitors who do not know it or use it.
(C) Matters involving prepublication, confidential scientificresearch or data.
(D) Matters concerning the appointment, employment, performance, 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 purposes 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 provided in this section.
(2) Nothing in this section shall be construed to require disclosureof 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 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 aservice having commercial value and which gives its user an opportunity to obtain a business advantage over competitors who do not know
it or use it.
(C) Prepublication scientific working papers or research data.
(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 withrespect 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 Codeshall not apply to contracts let by the institute.
(g) Conflicts of Interest(1) The Political Reform Act, Title 9 (commencing with Section 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, orin any way attempt to use his or her official position to influence a decision to approve or award a grant, loan, or contract to his or her employer, 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 approveor 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 immediate family suffers or in which the member has an interest as a representative of a disease advocacy organization.
(C) The adoption of standards is not a decision subject to thissection.
(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 facultyor administration of any system of the University of California and shallnot result in the automatic vacation of either such office. Service as amember of the ICOC by a representative or employee of a disease advocacy organization, a nonprofit academic and research institution, or alife 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, institution, 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 following conditions are met:(A) The grant, loan, or contract directly relates to services to beprovided 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, participating 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 ofCalifornia
The ICOC shall establish standards that require that all grants andloan 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 development, 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 purchasegoods 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 forscientific and medical research, with alternative state programs, theinstitute will develop its own scientific and medical standards to carryout the specific controls and intent of the act, notwithstanding subdivision (b) of Section 125300, Sections 125320, 125118, 125118.5,
125119, 125119.3 and 125119.5, or any other current or future statelaws 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 theestablishment of standards, the award of grants, and the conduct of
grants awarded pursuant to this act.

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TEXT OF PROPOSED LAWS
Proposition 71 (cont.)(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 thestandards 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 effecton January 1, 2003, with modifications to adapt to the mission andobjectives of the institute.
(3) Prohibition on Compensation
Standards prohibiting compensation to research donors or participants, while permitting reimbursement of expenses.
(4) Patient Privacy Laws
Standards to assure compliance with state and federal patient privacy 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, disposal, preservation, quality control, storage, transplantation, or implantation or legal transaction or other administrative costs associatedwith these medical procedures and specifically including any required
payments for medical or scientific technologies, products, or processes 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.
(c) Make final decisions on research standards and grant awards in
California.
(d) Ensure the completion of an annual financial audit of the institute’s operations.
(e) Issue public reports on the activities of the institute.
(f) Establish policies regarding intellectual property rights arisingfrom 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 proceduresof the ICOC. Except as provided in subdivision (k), these rules and regulations 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), andin order to facilitate the immediate commencement of research coveredby this chapter, the ICOC may adopt interim regulations without compliance with the procedures set forth in the APA. The interim regulations shall remain in effect for 270 days unless earlier superseded byregulations 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 optimize the institute’s ability to achieve the objective that its activities berevenue-positive for the State of California during its first five years ofoperation without jeopardizing the progress of its core medical andscientific research program.

150 | Text of Proposed Laws(n) Notwithstanding Section 11005 of the Government Code, accept
additional revenue and real and personal property, including, but notlimited to, gifts, royalties, interest, and appropriations that may be
used to supplement annual research grant funding and the operationsof 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, arising from research conducted by the grantee pursuant to the grant,
and/or, in the alternative, grantees shall name the institute as an additional 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 theGovernment Code, the institute is authorized to retain outside counsel
when the ICOC determines that the institute requires specialized services 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 ofauthorized employees for the institute, up to a maximum of 50 employees, excluding members of the working groups, who shall not be considered institute employees. The ICOC shall select a chairperson, vicechairperson and president who shall exercise all of the powers delegated to them by the ICOC. The following functions apply to the chairperson, vice chairperson, and president:(A) The chairperson’s primary responsibilities are to manage the
ICOC agenda and work flow including all evaluations and approvalsof scientific and medical working group grants, loans, facilities, andstandards 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 financial 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 andMedical Accountability Standards Working Group and the Scientificand 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 chairperson’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 andparticipate 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 andacting 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 programs of the institute; to manage compliance with all rules and regulations on the ICOC, including the performance of all grant recipients;
and to manage and execute all intellectual property agreements andany other contracts pertaining to the institute or research it funds.
(2) Each member of the ICOC except, the chairperson, vice chairperson, and president, shall receive a per diem of one hundred dollars($100) per day (adjusted annually for cost of living) for each day actually spent in the discharge of the member’s duties, plus reasonable andnecessary travel and other expenses incurred in the performance of themember’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, theICOC shall set compensation for the chairperson, vice chairperson,and president and other officers, and for the scientific, medical, technical, and administrative staff of the institute within the range of compensation levels for executive officers and scientific, medical, technical,

TEXT OF PROPOSED LAWS
Proposition 71 (cont.)
and administrative staff of medical schools within the University ofCalifornia 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 shallbe made by a majority vote of a quorum of the ICOC, within 30 days ofthe election and appointment of the initial ICOC members. The working
group members’ terms shall be six years except that, after the firstsix-year terms, the members’ terms will be staggered so that one-thirdof 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.
(c) Working Group Meetings
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 ofeach working group. If 35 percent of the members of any working groupjoin together in a minority position, a minority report may be submitted
to the ICOC. The ICOC shall consider the recommendations of theworking groups in making its decisions on applications for research andfacility grants and loan awards and in adopting regulatory standards.
Each working group shall recommend to ICOC rules, procedures, andpractices for that working group.
(e) Conflict of Interest(1) The ICOC shall adopt conflict of interest rules, based on standards 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 ofthe institute.
(3) Because the working groups are purely advisory and have no
final decisionmaking authority, members of the working groups shallnot be considered public officials, employees, or consultants for purposes 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 working groups shall not be subject to the provisions of Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2of 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 Groupshall have 19 members as follows:(1) Five ICOC members from the 10 groups that focus on diseasespecific areas described in paragraphs (3), (4), and (5) of subdivision(a) of Section 125290.20.
(2) Nine scientists and clinicians nationally recognized in the fieldof pluripotent and progenitor cell research.
(3) Four medical ethicists.
(4) The Chairperson of the ICOC.
(b) Functions
The Scientific and Medical Accountability Standards Working Groupshall have the following functions:(1) To recommend to the ICOC scientific, medical, and ethicalstandards.
(2) To recommend to the ICOC standards for all medical, socioeconomic, and financial aspects of clinical trials and therapy delivery topatients, including, among others, standards for safe and ethical procedures 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 offunded research to ensure compliance with the standards described inparagraphs (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 andregulatory issues.
125290.60. Scientific and Medical Research Funding Working
Group(a) Membership
The Scientific and Medical Research Funding Working Group shallhave 23 members as follows:(1) Seven ICOC members from the 10 disease advocacy groupmembers described in paragraphs (3), (4), and (5) of subdivision (a) of
Section 125290.20.
(2) Fifteen scientists nationally recognized in the field of stem cellresearch.
(3) The Chairperson of the ICOC.
(b) Functions
The Scientific and Medical Research Funding Working Group shallperform the following functions:(1) Recommend to the ICOC interim and final criteria, standards,
and requirements for considering funding applications and for awarding research grants and loans.
(2) Recommend to the ICOC standards for the scientific and medical oversight of awards.
(3) Recommend to the ICOC any modifications of the criteria, standards, 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 recommendations to the ICOC for the award of research, therapy development, and clinical trial grants and loans.
(5) Conduct peer group progress oversight reviews of grantees toensure 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 andshall 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 issuanceof the interim standards.
(c) Recommendations for Awards
Award recommendations shall be based upon a competitive evaluation 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 scientific merit in three separate classifications—research, therapy development, and clinical trials, on criteria including the following:(A) A demonstrated record of achievement in the areas of pluripotent stem cell and progenitor cell biology and medicine, unless theresearch 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 suchsignificant results, the importance of the research objectives, and theinnovativeness of the proposed research.

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Proposition 71 (cont.)(C) In order to ensure that institute funding does not duplicate or
supplant existing funding, a high priority shall be placed on funding
pluripotent stem cell and progenitor cell research that cannot, or isunlikely to, receive timely or sufficient federal funding, unencumberedby limitations that would impede the research. In this regard, otherresearch categories funded by the National Institutes of Health shall not
be funded by the institute.
(D) Notwithstanding subparagraph (C), other scientific and medical research and technologies and/or any stem cell research proposal
not actually funded by the institute under subparagraph (C) may befunded by the institute if at least two-thirds of a quorum of the membersof the Scientific and Medical Research Funding Working Group recommend 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 shallhave 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 fromreceiving compensation from any construction or development entity
providing specialized services for medical research facilities, and shallnot 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 recipientof institute funding grants.
(3) The Chairperson of the ICOC.
(b) Functions
The Scientific and Medical Research Facilities Working Group shallperform the following functions:(1) Make recommendations to the ICOC on interim and final criteria, requirements, and standards for applications for, and the awardingof, grants and loans for buildings, building leases, and capital equipment; 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 beavailable for research no more than two years after the grant award.
(C) The requirement that all funded facilities and equipment belocated solely within California.
(D) The requirement that grantees comply with reimbursable building cost standards, competitive building leasing standards, capital
equipment cost standards, and reimbursement standards and terms recommended by the Scientific and Medical Facilities Funding Working
Group, and adopted by the ICOC.
(E) The requirement that grantees shall pay all workers employedon construction or modification of the facility funded by facilities
grants or loans of the institute, the general prevailing rate of per diemwages for work of a similar character in the locality in which work on
the facility is performed, and not less than the general prevailing rateof 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 ofequivalent merit, as determined by the Scientific and Medical Research
Funding Working Group, considering research opportunities to be conducted in the proposed research facility, shall receive priority to theextent that they provide higher matching fund amounts. The Scientificand Medical Research Facilities Working Group may recommend waiving the matching fund requirement in extraordinary cases of high meritor 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.

152 | Text of Proposed Laws

(2) Make recommendations to the ICOC on oversight procedures toensure 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 Fundshall be allocated as follows:(1) (A) No less than 97 percent of the proceeds of the bonds authorized 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 provided 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 making by the institute, with each year’s commitments to be advanced overa period of one to seven years, except that any such funds that are notcommitted may be carried over to one or more following years. The maximum 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.
(C) Not more than 3 percent of the proceeds of bonds authorized by
Section 125291.30 may be used by the institute for research andresearch facilities implementation costs, including the development,
administration, and oversight of the grant making process and the operations 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 generaladministration 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 thetotal bond authorization under this chapter. This limitation shall beconsidered 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 theinstitute, up to 10 percent of the proceeds of the bonds authorized pursuant to Section 125291.30, net of costs described in paragraphs (2),(4), and (5) of subdivision (a) of Section 125291.20 shall be allocatedfor grants to build scientific and medical research facilities of nonprofit entities which are intended to be constructed in the first five years.
(5) The institute shall limit indirect costs to 25 percent of a researchaward, excluding amounts included in a facilities award, except that theindirect cost limitation may be increased by that amount by which the
grantee provides matching funds in excess of 20 percent of the grantamount.
(b) To enable the institute to commence operating during the firstsix 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 initial administrative and implementation costs. All loans to the institutepursuant to this appropriation shall be repaid to the General Fund
within 12 months of each loan draw from the proceeds of bonds soldpursuant to Section 125291.30.
(c) The institute’s funding schedule is designed to create a positive
tax revenue stream for the State of California during the institute’s first
five calendar years of operations, without drawing funds from theGeneral Fund for principal and interest payments for those first fivecalendar 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 theCalifornia Stem Cell Research and Cures Bond Act of 2004.
125291.15. As used in this article, the following terms have thefollowing 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 forRegenerative Medicine designated in accordance with subdivision (b)of Section 125291.40.

TEXT OF PROPOSED LAWS
Proposition 71 (cont.)(c) “Committee” means the California Stem Cell Research andCures 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, bondanticipation 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 appropriated without regard to fiscal years to the institute for the purpose of(1) making grants or loans to fund research and construct facilities forresearch, all as described in and pursuant to the act, (2) paying general 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 calendar year after this article takes effect, (4) paying the costs of issuinginterim debt, paying the annual administration costs of the interim debt
until and including December 31 of the fifth full calendar year after thisarticle 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 fullcalendar 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 article 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 thefund 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 theinstitute pursuant to this article shall be deposited in the fund and used tomake additional grants and loans for the purposes of this act or for paying continuing costs of the annual administration of outstanding bonds.
125291.25. The proceeds of interim debt and bonds issued andsold 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 proceedsof 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 isnecessary, may be issued and sold to provide a fund to be used for carrying out the purposes expressed in this article and to be used and soldfor carrying out the purposes of Section 125291.20 and to reimburse theGeneral 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 ofCalifornia, and the full faith and credit of the State of California is hereby pledged for the punctual payment of both the principal of, and interest 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), andall 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 issuanceand sale, pursuant to the State General Obligation Bond Law, of thebonds and interim debt authorized by this article, the California Stem
Cell Research and Cures Finance Committee is hereby created. For purposes 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 membersof 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 serveas 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 designatedthe “board.”
125291.45. (a) The committee shall determine whether or not it isnecessary or desirable to issue bonds authorized pursuant to this article 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 soldat any one time. The bonds may bear interest which is includable ingross income for federal income tax purposes if the committee determines 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, shallnot exceed three hundred fifty million dollars ($350,000,000). If lessthan this amount of bonds is issued in any year, the remaining permitted amount may be carried over to one or more subsequent years.
(c) An interest-only floating rate bond structure will be implemented for interim debt and bonds until at least December 31 of the fifth fullcalendar 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 theadvice 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 determination, 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 theinitial five-year period) and to determine that an alternate financing
plan would result in significant lower borrowing costs for the state consistent 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 samemanner and at the same time as other state revenue is collected, in addition 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 thecollection of the revenue to do and perform each and every act that isnecessary 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 intereston, bonds issued and sold pursuant to this article, as the principal andinterest become due and payable.
(b) The sum necessary to carry out Section 125291.60 appropriatedwithout 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 theamount of the unsold bonds that have been authorized by the committee, to be sold for the purpose of carrying out this article. Any amountwithdrawn shall be deposited in the fund. Any money made available
under this section shall be returned to the General Fund, plus anamount equal to the interest that the money would have earned in the
Pooled Money Investment Account, from money received from the saleof 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 inaccordance with Section 16312 of the Government Code for the purposes of carrying out this article. The amount of the request shall not
exceed the amount of the unsold bonds that the committee, by resolution, has authorized to be sold for the purpose of carrying out this article. 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 inaccordance with this article.

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TEXT OF PROPOSED LAWS
Proposition 71 (cont.)
125291.70. All money deposited in the fund that is derived frompremium and accrued interest on bonds sold shall be reserved in thefund and shall be available for transfer to the General Fund as a credit 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 ofDivision 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 forthe issuance of the bonds described in this article includes the approvalof the issuance of any bonds issued to refund any bonds originallyissued under this article or any previously issued refunding bonds.
125291.80. Notwithstanding any provision of this article or theState General Obligation Bond Law, if the Treasurer sells bonds pursuant to this article that include a bond counsel opinion to the effectthat the interest on the bonds is excluded from gross income for federal
tax purposes, subject to designated conditions, the Treasurer may maintain separate accounts for the investment of bond proceeds and theinvestment earnings on those proceeds. The Treasurer may use or direct
the use of those proceeds or earnings to pay any rebate, penalty, orother payment required under federal law or to take any other action
with respect to the investment and use of bond proceeds required ordesirable under federal law to maintain the tax-exempt status of thosebonds and to obtain any other advantage under federal law on behalfof 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 disbursement of these proceeds is not subject to the limitations imposed bythat 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 meanings:(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 differentiated 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.
(c) “Capitalized interest” means interest funded by bond proceeds.
(d) “Committee” means the California Stem Cell Research andCures 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 separate and individual grantee institutions.
(k) “Human reproductive cloning” means the practice of creating
or attempting to create a human being by transferring the nucleus froma human cell into an egg cell from which the nucleus has been removed
for the purpose of implanting the resulting product in a uterus toinitiate a pregnancy.
(l) “Indirect costs” mean the recipient’s costs in the administration, accounting, general overhead, and general support costs for
implementing a grant or loan of the institute. NIH definitions of indirect costs will be utilized as one of the bases by the Scientific andMedical Research Standards Working Group to create a guideline forrecipients on this definition, with modifications to reflect guidance by
the ICOC and this act.
(m) “Institute” means the California Institute for Regenerative
Medicine.

154 | Text of Proposed Laws(n) “Interim standards” means temporary standards that performthe 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 biomedical 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 ethicalissues related to medicine, and (2) administering ethical safeguards
during the clinical trial process, particularly through service on institutional review boards.
(q) “Pluripotent cells” means 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. 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 todifferentiated cells.
(s) “Quorum” means at least 65 percent of the members who are
eligible to vote.
(t) “Research donor” means a human who donates biologicalmaterials for research purposes after full disclosure and consent.
(u) “Research funding” includes interdisciplinary scientific andmedical funding for basic research, therapy development, and thedevelopment of pharmacologies and treatments through clinical trials. 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 ofreimbursement for the facility. In all cases, operating costs of the
facility, including, but not limited to, library and communication services, utilities, maintenance, janitorial, and security, shall be included
as direct research funding costs. Legal costs of the institute incurredin order to negotiate standards with federal and state governments
and research institutions; to implement standards or regulations; toresolve disputes; and/or to carry out all other actions necessary to
defend and/or advance the institute’s mission shall be considereddirect research funding costs.
(v) “Research participant” means a human enrolled with full disclosure 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 theGeneral 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 specialized functions.
(y) “Vital research opportunity” means scientific and medical
research and technologies and/or any stem cell research not actually funded by the institute under subparagraph (C) of paragraph(1) of subdivision (c) of Section 125290.60 which provides a substantially 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 toread:(a) “State service” means service rendered as an employee or officer (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 compensation from that employer therefor, except as provided in Article 4(commencing with Section 20990) of Chapter 11.

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 service 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 theprovisions of this act are severable.

SEC. 8. Amendments
The statutory provisions of this measure, except the bond provisions, may be amended to enhance the ability of the institute to further
the purposes of the grant and loan programs created by the measure, bya 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 formshall be made available by the clerk of each house to the public andnews 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 areferendum in accordance with the provisions of Section 9 of Article IIof the California Constitution.
This proposed law amends and adds sections to various codes; therefore, new provisions proposed to be added are printed in italic type toindicate that they are new.
PROPOSED LAWSECTION 1. The Legislature finds and declares all of thefollowing:(a) The Legislature finds and declares that working Californians andtheir families should have health insurance coverage.
(b) The Legislature further finds and declares that most working
Californians obtain their health insurance coverage through theiremployment.
(c) The Legislature finds and declares that in 2001, more than
6,000,000 Californians lacked health insurance coverage at some timeand 3,600,000 Californians had no health insurance coverage at anytime.
(d) The Legislature finds and declares that more than 80 percent
of Californians without health insurance coverage are working peopleor their families. Most of these working Californians without
health insurance coverage work for employers who do not offer healthbenefits.
(e) The Legislature finds and declares that employment-based healthinsurance coverage provides access for millions of Californians to thelatest advances in medical science, including diagnostic
procedures, surgical interventions, and pharmaceutical therapies.
(f) The Legislature finds and declares that people who are coveredby health insurance have better health outcomes than those who lackcoverage. 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 healthinsurance are at risk of financial ruin and that medical debt is the second most common cause of personal bankruptcy in the United States.
(h) The Legislature further finds and declares that the State ofCalifornia 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 people who are not provided health coverage through employment. The
Legislature further finds and declares that the State of California andlocal governments fund county hospitals and clinics, community clinics, and other safety net providers that provide care to those working
people whose employers fail to provide affordable health coverage toworkers and their families as well as to other uninsured persons.
(i) The Legislature further finds and declares that controlling healthcare 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 andtheir dependents creates a burden on other employers, the State ofCalifornia, 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 apurchasing agent to pool those fees to purchase coverage for all working Californians and their families that is not tied to employment withan individual employer. However, consistent with this act, if the employer 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 workon a seasonal basis, for multiple employers, or who work multiple jobs
for the same employer should be afforded the opportunity to have healthcoverage in the same manner as those who work full-time for a single
employer.
(m) The Legislature recognizes the vital role played by the healthcare 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 important health care resource.
(n) Nothing in this act shall be construed to diminish or otherwisechange existing protections in law for persons eligible for public programs 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 administeredby local education agencies. It is further the intent of the Legislature topreserve benefits available to the recipients of these programs, including dental, vision, and mental health benefits.
SEC. 2. Part 8.7 (commencing with Section 2120) is added toDivision 2 of the Labor Code, to read:
PART 8.7.

EMPLOYEE HEALTH INSURANCE

CHAPTER 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, shallcomply 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 commencing on January 1, 2007, except that those employers with at least
20 employees but no more than 49 employees are not required to comply with the provisions of this part unless a tax credit is enacted that isavailable to those employers with at least 20 employees but no morethan 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 feeor 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 andfederal 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.

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