California voters approved an $8.4 billion research bond that will direct $4.2 billion to a nonprofit with just three employees, igniting controversy over a billionaire’s influence. The measure also creates a grant pool for other public and nonprofit research institutions.
Proposition 38 Passes, Sending $8.4 Billion to Michelson‑Backed Research Institute
Proposition 38 led with 55.1% to 44.9% opposition, authorizing state borrowing for immunology research aimed at cancer, Alzheimer’s, heart disease and other conditions. Supporters say the funding will keep California at the forefront of medical research as federal dollars shrink.
Half of the money is earmarked for a single unnamed nonprofit whose eligibility criteria match only the California Institute for Immunology and Immunotherapy (CIII), founded and primarily funded by medical‑device inventor Gary K. Michelson. CIII had just three staff members as of September.
Michelson wrote Proposition 38 and contributed $63.2 million of the $71.2 million campaign war chest, while opponents raised roughly $12,000. The disparity highlights the donor’s dominant role.
The bond directs $4.2 billion to the qualifying institute and another $4.2 billion to a grant pool for public and nonprofit research institutions. Proponents argue the investment will sustain California’s leadership in biomedical innovation.
CIII’s five‑year plan projected 51 hires, including six executives and five lead scientists, between summer 2024 and 2025, with 90 more slated for 2025‑2027. UCLA Health CEO John Mazziotta reported in September that only three employees have been hired and the director search remains open.
Construction of the planned headquarters at the former Westside Pavilion site is not expected to finish before late 2028, and the project is short by about $100 million. The delay could postpone the institute’s ability to attract top talent and accelerate its research agenda.
Proposition 38 exempts the institute from California’s public records, meetings and political reform laws, requiring only annual research and financial reports and state audits. UCLA senior officials sit on its board, receiving a 7.5% share of net revenue from any marketable drugs or technologies.
The Legislative Analyst’s Office estimates the $8.4 billion borrowing will cost taxpayers about $12 billion with interest, demanding annual payments of $500‑$600 million for roughly two decades. The cost estimate reflects the long‑term repayment burden on state finances.
The measure mandates that 10% of research revenue return to the state until bonds are repaid. Supporters claim the venture could pay for itself, while critics say full repayment would require over $120 billion in research revenue.
UC Davis biologist Jonathan Eisen warned at an October press conference that generating enough revenue to repay the public is “remarkably hard” and offered no justification for such speculation. His remarks underscored the skepticism among opponents.
The Yes on 38 campaign says bond funds will be released only when the institute is ready to begin work, and the California Department of Public Health will decide eligibility. Campaign spokesperson Robin Swanson emphasized the safeguards.
