WisBusiness: Former insurance chief pushes for UW to tap $250 million windfall for stem cell research

By Brian E. Clark

MADISON – The University of Wisconsin could do much to maintain its leadership in stem cell research if it would use some of the more than $250 million in funds from the conversion of Blue Cross and Blue Shield United of Wisconsin, the former president of the insurance company said Tuesday.

With the passage of California’s Prop. 71, which will pump $3 billion into embryonic stem cell research efforts over the next decade, the university should move quickly to use its untapped resources, said Tom Hefty, who is also chairman of the governor’s Economic Growth Council.

Hefty, who returned Monday from a trip to California, said the Wisconsin money comes from the 1999 conversion of Blue Cross into a publicly traded company.

But Eileen Smith, director of the Wisconsin Partnership Fund for a Healthy Future, said it’s not that simple. “The impression that this endowment is kind of a big ripe piece of fruit is probably not an accurate one,” she said.

When the Blue Cross conversion to a publicly traded company was approved, the insurance commissioner built in safeguards to make sure the fund wasn’t raided for an “crisis of the day,” said Ken Mount, assistant dean for fiscal affairs at the UW Medical School.

“The idea is that these funds were a return to the citizens of Wisconsin in return for Blue Cross Blue Shield not being not-for-profit,” Mount said. “Especially in light of what happened with tobacco settlement money.”

The UW Medical School and Milwaukee’s Medical College of Wisconsin each have about $290 million in their endowment from Blue Cross, Smith said.

Smith said the insurance commissioner stipulated that 35 percent of the fund must go to public health initiatives, with 65 percent for medical education and research.

Funding decisions are controlled by the oversight committees consisting of four members from the public, four from the school, and one appointee by the insurance commissioner. Each school has its identical committee to oversee funding. A strict five-year plan spells out the uses for the money, Smith said.

Access to the funds is also restricted. While there is $30 million available to each school in startup money to fund grants, other spending is restricted to income from a $100 million endowment, Mount said.

Doyle spokesman Dan Leistikow said the governor is aware of the importance of using the money for diverse applications.

“The governor has said from the very beginning this money should be used for medical research, education and public health, and obviously stem cell research is a piece of that,” said. “But it does have to be spent wisely and over time.”

The governor will make a major announcement early tomorrow afternoon on the UW-Madison campus about stem cell research funding. “He’ll talk about a variety of resources the state as a whole will committing to biotechnology and medical research,” Leistikow said. “He wants to make sure that Wisconsin continues its leadership and our researchers have access to the facilities and equipment they need to continue to lead the world.”

Hefty lauded Gov. Doyle for saying he is committed to keeping Wisconsin’s leadership in stem cell research. Doyle said a new $134 million research center planned for the Madison campus would help do that. The project is part of the state’s 1997 Healthstar initiative. Much of the money for the research center is coming from private gifts, as well as $23 million in taxpayer-supported borrowing.

“I think Wisconsin would make more progress by moving quickly to use those funds, to celebrate that success and build on it to attract other funding and researchers to the Madison campus,” Hefty said.