First test for stem-cell institute -- money

The authors of last November's successful Proposition 71, the stem- cell research initiative, asked California voters to trust them in two distinct ways.

First, they convinced voters -- in some cases with shamelessly exaggerated promises about the imminence and likelihood of cures -- to invest $3 billion in research that has potential but is still at an early stage.

The second request was written into the initiative in print so fine that few voters had a chance of understanding it. Using obscure legalese, the initiative exempted the state agency it created, the California Institute for Regenerative Medicine, from many of the hard-won legal protections meant to ensure effective and transparent state governance. The result is that the institute, an agency entirely funded by the California public, is being run according to the practices of private enterprise. It best resembles a publicly funded, privately managed venture capital firm.

Now this experiment is facing a major obstacle. Lawsuits are challenging the constitutionality of Prop. 71's exclusion of public and legislative oversight. The state attorney general has determined that the bonds to fund...