Proposition 71 authorizes the state of California to sell three billion dollars in general obligation bonds which will provide funding for stem cell research and research facilities. It establishes a new medical research institute. The institute will use the bonds to award grants and loans for stem cell research and research facilities and manage stem cell research activities funded by this measure within California. The major provisions of the measure are as follows: New State Institute Created, General Obligation Bond Funding, How Funding Will Be Spent, Benefits from Royalties and Patents, Right to Conduct Stem Cell Research, and Fiscal Effects.

New State Institute Created
Proposition 71 establishes the California Institute for Regenerative Medicine which will award grants and loans for stem cell research and research facilities. The institute will be responsible for creating regulatory standards for stem cell research and actually managing this research and the research facilities. The institute will consist of a staff of about fifty employees who will be exempt from state civil service requirements. The institute will be governed by the Independent Citizen’s Oversight Committee comprised of about twenty-nine representatives including: specific University of California campuses, other public or private Universities (in California), nonprofit academic and medical research institutions, medical therapy companies, and disease research groups. The appointments to the Independent Citizen’s Oversight Committee will be made by the Governor, Lieutenant Governor, Treasurer, Controller, Speaker of the Assembly, President of the Senate, and certain University of California campus Chancellors.

Below is an orginazational flow chart of the California Institute for Regenerative Medecine created by Proposition 71.

(Source:Center for Genetics & Society)
General Obligation Bond Funding
Proposition 71 authorizes the state of California to sell three billion dollars in general obligation bonds, but limits these sales to three hundred and fifty million dollars annually. The intent of the measure states, but does not require, that these bonds be sold within a ten year period. For at least the first five years, the repayment of the principal would be postponed and the interest on the debt would be repaid using bond proceeds rather than the General Fund. After this five year period, principal and interest payments will be made from the General Fund. The proceeds from the subsequent bond sales will be deposited in the California Stem Cell Research and Cures Fund and used to fund the activities of the California Institute for Regenerative Medicine. These funds will be continuously appropriated without regard to fiscal year. The California Institute for Regenerative Medicine will receive a General Fund loan for up to three million dollars for initial administration and implementation costs, which will be repaid using the proceeds from the sale of general obligation bonds.
How Funding Would Be Spent
Under Proposition 71, any funding needed for various bond-related costs will be deducted before bond proceeds are spent for other purposes. The California Institute for Regenerative Medicine will use up to three percent of the remaining bond proceeds for general administrative costs and an additional three percent of the remaining bond proceeds for administrative costs that are associated with grant-making activities. The remaining funds (about ninety-four percent) will be issued as grants and loans for research and research facilities. Priority for research grant funding will be given to stem cell research based on criteria developed by the California Institute for Regenerative Medicine. Funding can also be provided for other types of research directed at curing or treating major diseases and injuries. The California Institute for Regenerative Medicine will not be allowed to fund research on human reproductive cloning. A portion (about ten percent) can be used to develop research facilities for nonprofit entities within the first five years.
Benefits from Royalties and Patents
The Independent Citizen’s Oversight Committee will establish standards requiring that all grants and loans be subject to agreements that allow the state of California to benefit financially from patents, royalties, and licenses that result from stem cell research.
Right to Conduct Stem Cell Research
Proposition 71 will make conducting stem cell research a state constitutional right.