As he promised State Controller John Chiang is delaying a number of state payments in February including personal, bank and corporate tax refunds, student grants and social services.
These payments, which are being held for 30 days, are typically not made directly to recipients but are sent to the various state and federal government agencies that administer the programs.
The delays come because the state is running out of time to borrow money, and Wall Street is no longer lending, explained a spokesperson for the Controller’s office. In addition, the estimated monthly expenditures in February (estimated at about $10 billion) is projected to outpace income.
All of these problems stem from a budget impasse in Sacramento. Lawmakers are negotiating round the clock to eliminate a $42 billion deficit that includes a $14 billion short fall from the 2008-09 budget.
Among the payments that are being delayed are $188 million of the state’s share of the federal pool for the Supplemental Security Income / State Supplementary Payment (SSI/SSP) programs; $13 million to the Student Aid Commission to fund CalGrants; $114 million to the Department of Social Services for the CalWorks program; and nearly $3 billion in tax refunds.
Those receiving SSI/SSP will continue to receive their full payments, because the federal government has agreed to cover California’s share for February, and possibly for March. The $188 million is the state’s share of the payments, and is sent to the federal government.
The Student Aid Commission would have sent out $13 million in financial aid to students, if the delay had not been imposed. According to a commission representative, 85% of the prior year’s awards have been sent to the colleges and university, and what will be delayed is the additional money that students expected to receive. The commission awarded 72,261 entitlement CalGrants as of Jan. 23.
According to the controller’s office, many colleges and universities as well as all of the California State University Schools and the University of California campuses will cover all of the student fees that would have been paid by the CalGrant.
About 46,000 U.C. students receive CalGrants.
In addition to the state-funded colleges, local schools including USC and Occidental College will also cover any student CalGrant costs not currently paid. This will take place automatically at many campuses. At others, like USC, students must contact the financial aid office.
The CalWorks program, which is California’s version of Temporary Aid to Needy Families, primarily provides parents who have children with assistance to pay food, rent, utilities and other basics. According to a spokesperson for the California Department of Social Services (DSS), the February payments were sent to the dispersing agencies (who actually pay recipients) at the end of January. The delay means that the money that the Controller’s office would normally send to DSS is being delayed for 30 days.
In addition to payment delays, on Friday state employees are expected to begin taking required furlough days imposed by Governor Schwarzenegger.
At the same time, the state Assembly has cut its operating budget by 10%.
On the Senate side, there is hiring and salary increase freeze; and staff members are taking voluntary furloughs.
However, members of both the Assembly and the Senate continue to receive their full salaries, which according to the state constitution appears to have the sole power to adjust legislators’ pay.