Nobody needs to be convinced about the importance of cancer research and prevention. You would be hard pressed to find anybody who does not personally know someone who has struggled with cancer or has even fought it themselves. In fact, the American Cancer Society projects that the year 2013 will see 1.6 million new cancer cases, with over 112,000 of those being in Texas alone. Back in the 2007 Constitutional Amendment Election, Texas voters had their chance to face these looming issues head on by voting on Proposition 15, the creation of the Cancer Prevention and Research Institute of Texas (CPRIT). The establishment of the CPRIT was approved by Texas voters by a count of 61.5% in favor and 38.5% opposed, with over 1 million votes cast. Proposition 15 also authorized the state to issue up to $3 billion in bonds to fund cancer research and prevention programs and services in Texas.
According to the CPRIT website, the institute has funded “498 awards for cancer research, commercialization, and prevention since 2010. The total amount awarded thus far is $835,820,450.” The recipients of CPRIT awards include “72 academic institutions, non-profit organizations, and private companies all located in Texas.”
The Grant Process
Listed on the CPRIT website, there are five steps each organization must take before they can receive funds:
- Request for application
- Apply online
- Grant proposal review
- Governing Board Action
- Funded grant awards
The Oversight Committee
Step number four in the grant process involves the oversight committee, which plays a huge role in what groups receive funding from the CPRIT. They are also the “final check” to make sure that the entire process is “free from conflicts of interest.”
The original CPRIT code called for the oversight committee to have 11 members, including:
- 3 members appointed by the governor
- 3 members appointed by the lieutenant governor
- 3 members appointed by the Speaker of the Texas House of Representatives
- The comptroller or the comptroller’s designee
- The attorney general or the attorney general’s designee
- Also, those making the appointments should attempt to include cancer survivors and family members of cancer patients if possible
- For any group to receive funding, 8 out of the 11 members on the committee must approve
Essentially, the group who has the final authority on who receives these grants is composed of a couple of politicians and people appointed by politicians. A situation such as this could be a breeding ground for conflicts of interest, corruption, and/or cronyism: all charges CPRIT has faced since its inception.
Conflicts of Interest
When dealing with taxpayer funds, conflicts of interest are antithetical to the goals of fiscal conservatism and taxpayer accountability. When those in charge of granting funds dole out money to organizations because they have a personal or financial interest in that group’s success, the aims of merit based rewards are abandoned. This is always a bad deal for taxpayers, but in the case of the CPRIT, it could be even worse for those affected by cancer. Nobody wins when a worthwhile group is passed up on receiving funds in favor of another group simply because not enough money changed hands.
The original CPRIT code attempts to keep appointments to the oversight committee free from conflicts of interest. However, nothing in the code prohibits oversight committee members from donating to the politicians who have the power to appoint to the committee (Gov. Rick Perry, Lt. Gov. David Dewhurst, Speaker Joe Straus) or who are actually on the board (Atty. General Greg Abbott and Comptroller Susan Combs), nor does it prohibit Perry, Dewhurst or Straus from appointing anyone to the oversight committee who has contributed to their campaigns in the past.
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Another potential source of conflicts of interest is between the CPRIT and the organizations that apply for and receive grants. Looking into the state and federal campaign contributions made to the five politicians who have the most influence on the decisions made by the oversight committee (Perry, Dewhurst, Straus, Abbott and Combs), one would find many instances of contributions made by the CEO’s, presidents, owners, board members and other relevant employees of organizations who received CPRIT grants. Members of these groups, whose combined haul was over $688 million in CPRIT funds, donated over $28 million to campaigns of those five politicians who all had a say in which groups received funding.
The two highest donating groups were the Baylor College of Medicine Board of Trustees and the University of Texas Board of Regents, who donated $5.43 million and $4.93 million, respectively. The highest donating individual found is actually a member of the CPRIT oversight committee, Charles Tate, who donated over $1.5 million to the campaigns of the “Big Five.” Tate was appointed to the oversight committee by Lt. Governor David Dewhurst, to whom he has donated over $730,000.
CPRIT Foundation Donations
Under pressure from the media, state legislators and the public, the CPRIT Foundation—which subsidizes the salaries of CPRIT executives—released a list of their donors. Among the big name donors such as Pfizer, Inc. who donated $160,000 to the CPRIT Foundation, are representatives of a number of groups who received CPRIT grants. Peter O’Donnell, whose Peloton Therapeutics received over $11 million from CPRIT grants, donated over $1.5 million to the Foundation. After O’Donnell, the largest donations came from current members of the oversight committee and the Texas Tech System Admin Foundation, who gave sums of $170K and $100K, respectively. Also represented on the donors list are the Methodist Hospital System, the University of Houston Foundation and the University of Texas Chancellor’s Fund, all of whom represent groups who received money from CPRIT grants. However, it was soon discovered that CPRIT employees were being paid large bonuses with money donated to the CPRIT Foundation. Peter O’Donnell, who has ties to The Statewide Clinical Trials Network of Texas (CTNeT), gave over $1.5 million to the CPRIT Foundation. The funds the CPRIT Foundation received subsidized the salaries of CPRIT officials, including ex-CTNeT directors William Gimson and Alfred Gilman. Gimson was being paid a salary of $214,000 as the executive director of CPRIT, and was receiving $86,000 per year from the Foundation to bring his annual salary to $300,000. Throughout the four years Gimson was with CPRIT, he earned $344,000 from the Foundation alone, on top of his state-funded salary. Still, the practice of supplementing salaries with gifts and donations was allowed by the CPRIT code at the time.
Big Problems for CPRIT
Within the last year, the CPRIT has come under fire for a slew of problems. Some of the most documented issues include:
- $56.3 million in grants not being evaluated in accordance with the policies of the CPRIT
- William Gimson resigning from his post as executive director due to the controversies surrounding the institute
- Susan Combs missing too many oversight meetings
- Allegations of cronyism and conflicts of interest between CPRIT donors and grant recipients
The compounded result of these problems was a moratorium on new grants backed by Perry, Dewhurst and Straus.
Texas Senate Bill 149
To attempt to fix the problems found with CPRIT and restore public trust in the agency, in May 2013 the Texas legislature passed Texas Senate Bill 149 (SB 149). The bill is comprised of changes made to the original CPRIT code and should go into effect no later than September 1, 2013. SB 149 was authored by State Senator Jane Nelson (R-Flower Mound) and co-authored by State Senators Kevin Eltife (R-Tyler), Charles Schwertner (R-Georgetown) and Judith Zaffirini (D-Laredo). The plan is for SB 149 to once again allow the CPRIT to be able to issue new grants, but now with far more control and transparency. Before the passing of SB 149, Senator Nelson was quoted as saying that SB 149 “will ensure CPRIT operates in a transparent and accountable way in the future and that these issues will be solved.”
Establishment of CEO, CCO & Compliance Program
One of the key changes in SB 149 to the way the CPRIT operates is to replace the role of executive director via the establishment of a Chief Executive Officer to lead the agency (Section 102.0511). The CEO’s main role will be to hire a chief scientific officer, a chief operating officer, a chief product development officer and a chief prevention officer. SB 149 states that the CEO can only be paid from legislative appropriations, and the CEO’s salary cannot be supplemented by the institute. Though the bill does not mention how much exactly he should be paid, the previous executive director, William Gimson, had a salary of $214,000 (before Foundation subsidizing) when he was with the CPRIT. Regarding employee salaries, SB 149 contains a provision reversing the original CPRIT code’s stance, specifically stating “the institute may not supplement the salary of any institute employee with a gift or grant received by the institute” (Sec. 102.056). This change can likely be attributed to the controversy surrounding former executive director William Gimson and other top officials being paid hundreds of thousands of dollars from donations made to the CPRIT Foundation.
Another important change to the institute is the establishment of a Chief Compliance Officer, whose job is to oversee various committees to ensure that they follow the institute’s rules (Section 102.051). The CCO will be in charge of the newly added compliance program, which was created as a “process to assess and ensure compliance by the institute’s committee members and employees with applicable laws, rules, and policies, including matters of ethics and standards of conduct; financial reporting; internal accounting controls; and auditing” (Sec. 102.263). Compliance seems to be an important component of SB 149, as the word “compliance” was only listed once in the original CPRIT code, but SB 149 contains the word a total of 32 times.
Changes within oversight Committee
SB 149 also modifies the way the oversight committee operates by getting rid of the comptroller and the attorney general’s spots on the oversight committee, leaving the board with just 9 members. SB 149 keeps the section stating that the appointments should include cancer survivors and family members of cancer patients, and goes even further by adding that the governor, lieutenant governor, and speaker of the house of representatives “must each appoint at least one person who is a physician or a scientist with extensive experience in the field of oncology or public health.”
SB 149 attempts to add to the CPRIT code to remedy the charges of cronyism and conflicts of interest that have marred CPRIT’s efforts in recent years. For example, the data shows that current members of the CPRIT oversight committee have donated a combined $1.5 million to Rick Perry, David Dewhurst and Joe Straus – the three men who have the power to appoint people to this board – and another $300,000 to current members of the board Greg Abbott and Susan Combs. Also, members of the oversight committee have donated over $150,000 directly to the CPRIT Foundation.
To address this, SB 149 will require any person appointed to the oversight committee to disclose to the institute each political contribution to a candidate for state or federal office over $1,000 in the five years before the appointment and each year after the appointment until the person’s term expires. To add transparency, the bill says that the institute must annually post a report of these political contributions made by oversight committee members on the institute’s website for the public to be able to view (Section 102.057). On the surface, this looks to be a much needed improvement to the current system. However, this still will allow for cronyism and the rewarding of political supporters. Simply posting the contribution amounts on the CPRIT website likely won’t change a thing, as these contributions are already made available from the Texas Ethics Commission and Federal Election Commission websites.
Conflicts of Interest
As seen in the CPRIT Grants Funded table posted above, with millions of dollars exchanging hands the potential for conflicts of interest with the organizations applying for and receiving funds is rampant. To address this, SB 149 contains provisions stating that the rules not prohibit any oversight committee member, institute employees, or their spouses from “accepting or soliciting any gift, favor, or service that could reasonably influence the member or employee in the discharge of official duties”, or “making personal investments or having a financial interest” that could create a conflict between a committee member or employee’s official duties and private interests (Section 102.109). It is fair to surmise that millions of dollars in campaign contributions qualifies as “having a financial interest” when determining which companies should receive CPRIT grants, however. Also, to address the conflicts of interest these donations bring, the bill states that the “institute may not award a grant to an applicant who has made a gift or grant to the institute or a nonprofit organization established to provide support to the institute” (Section 102.251).
Annual Reports and Taxpayer Accountability
Another issue regarding transparency and accountability is the lack of information made available to the public regarding exactly how taxpayer funds are being spent. For example, in the Texas Emerging Technology Fund (ETF) code, it specifically states that each year an annual report will be placed on the governor’s website, and the report must contain the total number of jobs actually created and a description regarding the intended outcomes of funded projects and the actual outcomes of funded projects, “including any financial impact on the state resulting from a liquidity event involving a company whose project was funded.”
The CPRIT is required by law to submit an annual report as well. Unfortunately, in neither the original CPRIT code nor SB 149 is there any wording stating that they must disclose in a report anything about the actual outcomes of projects funded with taxpayer dollars, except for when the outcome is positive, of course. For the CPRIT to be truly accountable to the taxpayers when using their money, it would be helpful if they were forced to disclose in the annual report which companies were non-compliant, had their awards terminated, filed for bankruptcy, and any financial impact on the state when a company fails.
Speaking of Failed Companies…
One of the CPRIT purposes listed on its site is to “attract, create, or expand research capabilities of public or private institutions.” One example of a company that was created via CPRIT funding is that of the Statewide Clinical Trials Network of Texas (CTNeT), a non-profit clinical trials network established to facilitate collaborative cancer research between many institutions across the state. Carolyn Bacon-Dickson, the executive director of the charitable foundation of Peter O’Donnell (of Peloton Therapeutics) was one of CTNeT’s founding board members. CTNeT was awarded $25.2 million in grants in 2010- the largest amount in CPRIT history. This $25.2 million grant provided by the government was the only funding used to start the company. Less than three years later, CTNeT has already closed its doors after a myriad of corruption and misuse of funds.
For starters, the CPRIT code states that for a company to receive CPRIT funds, the recipient of the grant must dedicate an amount of funds equal to one-half of the funds requested. In all of the data gathered, nowhere has it been mentioned that any private sector funds were used to match half of the amount CPRIT allotted to create the agency. Before CTNeT shut down, it was revealed that they had “spent $1.3 million — or one-sixth of its taxpayer money — on nonallowable costs such as bonuses, moving expenses and honorariums for board members before it ceased operations.” It is hard to believe a company started solely from government funds would have the same motivation to succeed—and use their money appropriately–as if they were a private company who spent their own capital or were held accountable by stockholders.
Should Universities Receive CPRIT Funding?
Not all organizations receiving funds are privately held (or government-created) organizations. Out of all the grant money the CPRIT has given out, an astounding $467 million was given to higher education—either directly to universities or to university-affiliated medical institutions. The question is: Should universities that already receive state funding—such as Texas A&M, Texas Tech and the University of Texas—also receive state funding from the CPRIT? If cancer research is really that important–which it is–why isn’t it put into each school’s budget to begin with? It is a waste of time and financial resources by giving taxpayer money to the CPRIT then requiring public universities spend the time and resources applying for grants, lobbying for funds, being reviewed by the CPRIT to determine the universities’ worthiness, then finally giving them the funds. What the schools end up with is a watered down amount compared to what they could have received had the money been worked into the school’s budget at the beginning. The CPRIT code calls for a University Advisory Committee comprised of at least one member appointed by the president or chancellor of each represented university or system. It is this committee’s job to advise the oversight committee and a research and prevention programs committee regarding the role of institutions of higher education in cancer research. The advisory committee members are unpaid, but are “entitled to reimbursement for actual and necessary expenses” they incur over the course of the job. Ultimately, the CPRIT just acts as a middle-man between the state and the universities, which wastes time and taxpayer dollars.
Is SB 149 the Answer?
As was mentioned previously, cancer research and prevention is a worthwhile endeavor. However, simply throwing large amounts of money at problems seldom fixes them. In order for the CPRIT to most effectively do what they were founded to do – fund groundbreaking cancer research and prevention programs and services in Texas –they need to be held accountable for the ways in which they handle taxpayer dollars.
SB 149 does fix some of the most glaring issues with the CPRIT, such as lessening political influence on the oversight committee, prohibiting employees from being paid with donations made to the Foundation, and the implementation of a compliance program. Nonetheless, there are easily fixable things that the bill does not address.
One that should change is the extent to which the CPRIT allows the potential for conflicts of interest. For example, there is currently no regulation over committee members’ donations to Perry, Dewhurst, et al., and there is nothing stopping big time donors from being appointed to the board–much less stopping them from continuing to donate once they are appointed. Simply posting the donations on the website won’t change much, as those who really care can look through the databases already made available to the public. Another change that could be made is to enhance transparency by requiring that the annual reports include more information of where taxpayer funds actually go, especially when they are lost or misused. Another solution would be to change the process in which state funded universities have to beg the state for more cash instead of allocating cancer research into their budgets, so as to not waste time and tax dollars. Also, the government should not be involved in creating any company from scratch, such as CTNeT, and should enforce the rule that any company receiving funds should be able to match one-half of the requested grant amount to put towards the project themselves.
SB 149 does go a long way in attempting to fix what ails the current CPRIT. However, there is still more that could be done for the Cancer Prevention & Research Institute of Texas to fulfill its mission to bring the best cancer fighting tools to Texas, and ultimately help cancer patients and Texans as a whole.