Sunday, June 28, 2009

California Insolvency!

2009-06-30: Federal Judge Blocks Bankrupt California from Reducing Wages of State Workers
U.S. District Judge Claudia Wilken halted the wage cuts on June 25 in response to a lawsuit by the Service Employee International Union (SEIU) on behalf of 250,000--out of a total of 440,000--home care workers that it represents in California.

The judge ordered the state to keep paying the workers, referred to as In-Home Supportive Services Workers (IHSS), up to $12.10 in wages and benefits.
The union argued that the IHSS program actually saves the state money because it keeps its users from going into nursing facilities that tend to be more expensive.

However, according to a California Senate Office of Oversight and Outcomes report this year, the IHHS program “lacks sufficient oversight and suffers from fraud and abuse.”
[How shocking!!]
Ok, let's do the math... (assume 1000 work hours/year; half-time)

440,000 workers x $12.10/hour x 1000 hours/year = $5.3BILLION

2009-06-30: California poised to issue IOUs to vendors
So far, no banks have committed to honoring the IOUs, said Hallye Jordan, spokeswoman for state Controller John Chiang.

She said banks are probably waiting to see how much interest the state will pay on the IOUs – a figure that won't be decided until Thursday, the same day Chiang is scheduled to issue IOUs. The notes will total $3.36 billion, with about $500 million targeted for the private sector.

2009-06-24: California set to issue IOUs
"Next Wednesday we start a fiscal year with a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression," Controller John Chiang said in a statement announcing that he would be forced to use IOUs to pay the state's bills beginning on July 2.


Rob Dawg said...

States cannot bankrupt. California declares insolvency witihin a month. a different animal altogether.

Tyrone said...

C'mon, man, lemme take some liberty with the terminology. :)

Tyrone said...

Avoiding the legal context of banruptcy, I think it works either way. Cheers!

1. a. Unable to meet debts or discharge liabilities; bankrupt.
1. b. Insufficient to meet all debts, as an estate or fund.
2. Of or relating to bankrupt persons or entities.

A bankrupt.

1. Law A debtor that, upon voluntary petition or one invoked by the debtor's creditors, is judged legally insolvent. The debtor's remaining property is then administered for the creditors or is distributed among them.
2. A person who is totally lacking in a specified resource or quality: an intellectual bankrupt.

1. Having been legally declared financially insolvent.
2. Financially ruined; impoverished.

Rob Dawg said...

Gallows humor Tyrone.