BURLINGAME -- Here's a sliver of good news in the California fiscal mess: Although the treasurer's office has said the state is not selling any new bonds given the cash crunch and $42 billion deficit, some state agencies and other government entities may be able to sell bonds anyway.

How?

Privately.

Call it do-it-yourself bond sales. I got the 411 on this Thursday night at the meeting of the Independent Citizens' Oversight Committee, the board that oversees the California Institute for Regenerative Medicine, the state's stem cell research agency.

CIRM would seem to be secure. Voters, via Prop 71, approved $3 billion of general obligation bonding authority to fund the agency and its programs in 2004. CIRM has used only a fraction of that bonding authority so far, but as it grows, it needs the state to exercise that authority and sell bonds. And the state isn't selling bonds. If that doesn't change at some point, CIRM won't be able to fund what it wants to do. So what to do?

Douglas Montague, of Montague Derose and Associates LLC, a Westlake Village financial advisory firm that specializes in public finance, laid out a strategy. Instead of using underwriters and the usual process, CIRM could sell its general obligation bonds in "private placement" - that is, the agency, with help from the treasurer's office (and presumably its own financial advisors), would go out and find buyers for its bonds. That's the do-it-yourself piece.

Montague told the board that other government entities are considering the same thing. The board of the Bay Area Toll Authority voted this week to try the same thing. But the approach appears to be novel. Montague also said that he was unaware of any previous efforts to sell general obligation bonds privately.

What are the drawbacks? Well, it may be hard to find buyers if the credit markets stay frozen. And who will buy the bonds? It's possible that interested buyers would be institutions that have an interest in the mission of the government agency that's trying to sell the bonds. That could pose problems of conflicts of interest.

But the state's cash and budget problems leave agencies with few options. Those that are able to do this privately should look at it.