updated 4/10/2006 7:10:11 PM ET 2006-04-10T23:10:11

The California stem cell agency — armed with money borrowed from wealthy philanthropists — handed out its first research grants Monday, 17 months after voters approved borrowing $3 billion to fund the controversial science.

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The California Institute for Regenerative Medicine awarded $12.1 million to 16 universities and nonprofit research outfits throughout the state. The grants will be used to train 169 scientists and students in the stem cell science basics, including ethics courses.

"This was the intent of the people of California when they voted for passage of Proposition 71," which created the agency said Brian Henderson, the University of Southern California medical school dean and a member of the committee that manages the stem cell agency. USC received a $601,379 grant, but Henderson didn't participate in considering the school's grant application.

Eight University of California campuses received grants of between $374,730 and $1.2 million each. The California Institute of Technology, Stanford University, four nonprofit research institutes and the Children's Hospital of Los Angeles were the others awarded grants.

Several other members of the agency's oversight board are also high-ranking officials at most of the institutions that received grants Monday. All the members declined to participate when their institutions' grant applications were considered.

Their membership on the committee that hands out grants has drawn criticism and is part of two lawsuits being considered by a judge. Attorneys with connections to anti-abortion groups allege the agency is unconstitutional because it lacks proper government and public oversight.

Many social conservatives oppose stem cell research because days-old embryos are destroyed during research. Stem cells are the building blocks of life and researchers believe they can someday use the cells to replace and repair diseases and damaged body parts.

Proposition 71 was placed on the California ballot as a protest against President Bush's stem cell research policy, which severely restricts the amount of federal funding that can be used on such work.

The lawsuits have prevented the agency from borrowing any money from traditional Wall Street lenders.

Six philanthropic organizations loaned the agency $14 million with the stipulation they be paid back once the lawsuits are resolved. A judge is expected to rule soon, but even with a favorable ruling the agency will be unable to sell its bonds until the expected appeals are exhausted some time next year.

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