[Staff] FW: BREAKING CA NEWS Re: Fw: Pooled Money Investment Board -- Meeting Notice -- Setting of Interest Rate for Registered Warrants

[David Hayhurst]

FYI. David

-----Original Message-----
From: Nancy Marlin [mailto:nmarlin at mail.sdsu.edu] 
Sent: Wednesday, June 24, 2009 4:26 PM
To: Academic Deans Council :; Senate Officers :; Council of Chairs :
Subject: BREAKING CA NEWS Re: Fw: Pooled Money Investment Board -- Meeting
Notice -- Setting of Interest Rate for Registered Warrants


>
>CSU funds will be used to meet our July payroll.
>      Nancy
>
>>>
>>>Press Releases
>>>View as PDF <http://www.sco.ca.gov/PDF-Var/eo_pressrel_5940.pdf>
>>>State Forced to Issue "IOUs" Without Immediate Budget Fix
>>>PR09:021
>>>6/24/2009
>>>Contact: HALLYE JORDAN
>>>916-445-2636
>>>
>>>
>>>SACRAMENTO - Today State Controller John Chiang announced that he 
>>>will be forced to issue registered warrants - also known as IOUs - 
>>>beginning July 2 if immediate budget and cash solutions are not 
>>>quickly adopted by the Governor and Legislature.
>>>
>>>"Next Wednesday we start a fiscal year with a massively unbalanced 
>>>spending plan and a cash shortfall not seen since the Great 
>>>Depression," Chiang said. "The State's $2.8 billion cash shortage 
>>>in July grows to $6.5 billion in September, and after that we see 
>>>a double-digit freefall. Unfortunately, the State's inability to 
>>>balance its checkbook will now mean short-changing taxpayers, 
>>>local governments and small businesses."
>>>
>>>The Controller was forced to delay payments for 30 days in 
>>>February to manage a smaller cash crisis. But the magnitude of 
>>>this shortfall - which is nearly five times larger - cannot be 
>>>temporarily covered by payment delays. The option to pursue 
>>>short-term, high-cost loans from Wall Street to cover the cash 
>>>shortfall was taken off the table by Governor Schwarzenegger 
>>>earlier this month.
>>>
>>>The State Controller met with the Governor and Legislative leaders 
>>>this week to warn them of the consequences of further budget 
>>>delays. In addition to the burden on those who receive the notes, 
>>>resorting to IOUs sends a signal that California has exhausted all 
>>>other options to manage its cash flow.
>>>
>>>Payment categories protected by the State Constitution, federal 
>>>law and court decisions will receive regular payments in July. All 
>>>other general fund payments will be paid with IOUs. These include 
>>>payments to local governments for social services, private 
>>>contractors, state vendors, income and corporate tax refunds, and 
>>>payments for State operations including legislative per diem.
>>>
>>>The warrants will carry an interest rate set by the Pooled Money 
>>>Investment Board. The Controller has requested an emergency 
>>>meeting of the Board on July 2 to set the rate. Any rate adoption 
>>>will become effective immediately. The warrants will have a 
>>>maturity date of October 1, 2009.
>>>
>>>If IOUs are issued next month, the State Controller will launch a 
>>>customer call-center to answer questions. The Controller's Web 
>>>site, www.sco.ca.gov <http://www.sco.ca.gov/> , will be updated 
>>>regularly with the latest information on the State's cash position 
>>>and related developments. The Controller's Web site also has 
>>>several new Web pages 
>>><http://www.sco.ca.gov/eo_news_registeredwarrants.html>  with 
>>>information about registered warrants.
>>>
>>>###