When the oversight board for California's stem cell research agency met in late May, South Korean scientists had just described a breakthrough in so-called therapeutic cloning. David A. Kessler, dean of the University of California at San Francisco School of Medicine, pressed fellow board members for clarification. "So we're not cloning human beings?" he asked. "No, we're taking the cells out at a very, very early level of development and cloning cells," answered neuroscientist Zach W. Hall, the state agency's interim president.

With stem cell research under a microscope, the California Institute for Regenerative Medicine (CIRM) takes great pains to make its intentions clear. The institute, dreamed up by real estate investment banker Robert Klein and approved as Proposition 71 by voters last November, funds embryonic stem cell research that the federal government will not.

Klein wrote the bulk of the California Stem Cell Research and Cures Initiative, donated $2.6 million of his own money and served as its biggest promoter. Last December the state's top elected officers named him chair, responsible for setting up the agency and overseeing a $3-billion pot of research money.

Although 59 percent of California voters approved the idea, actually creating the agency has proved contentious. Months after Klein had intended to announce CIRM's first grants, he finds himself struggling to develop an infrastructure and battling legal and legislative challenges. One powerful early supporter, State Senator Deborah Ortiz, has demanded stricter conflict-of-interest rules and policies to ensure that royalties, revenues and therapies benefit state residents. Advocates of open government and biotech skeptics have contested provisions that were originally intended to shield decision making from the bureaucracy of state government and allow the agency to operate like an entrepreneurial start-up.

Klein refers in frustration to the 29 public meetings he has overseen in 22 weeks--and still, he complains, CIRM faces criticism that it does not operate openly enough. "There's some legitimate anxiety about achieving high standards, and we've had to prove ourselves," Klein says. But he insists, "We've delivered on what we said we would."

The 59-year-old Klein is no stranger to the public process. As a real estate developer and banker, he helped to establish a state agency that provides below-market-rate housing loans and has structured bond financing for private and government bodies. His passion for stem cells took root five years ago at a fund-raiser for the Juvenile Diabetes Research Foundation International. Jeffrey Bluestone of U.C.S.F. spoke about islet cell transplantation from donated organs, and Klein was struck by the potential. The downstream delivery system was in place, he realized--what was missing were the embryonic stem cells that might restore insulin production without triggering an immune response. He contributed generously that night, a year before his own son would be diagnosed with the disease.

Soon the foundation recruited Klein to lobby for renewed funding of the National Institutes of Health's juvenile diabetes program, which was slated to end in 2002. He helped to win $300 million for both adult and juvenile forms. But he decided that legislation was a poor way to support research, a view strengthened in 2003 when a bill sponsored by Ortiz to fund embryonic stem cell studies in California foundered.

To Klein, medical research should be viewed as a part of the public infrastructure, like a dam or a bridge. "You've got to stop 'expensing' research," he says. "You've got to put it in the state constitution and authorize state bonds for it as a capital asset." The approach protects controversial areas of study and allows the state to account for costs over decades instead of every year. With this philosophy, Klein proposed a way for citizens to demand long-term funding. For nine months he worked with scientists, patient advocates and a team of prominent lawyers, and they eventually crafted Proposition 71 for the 2004 ballot.