<p>John Chiang announces that his office will suspend $3.7 billion in payments owed to Californians starting Feb. 1, as a result of the state's cash crisis. Student grants are also affected.</p>
<p>By Evan Halper
8:25 PM PST, January 16, 2009</p>
<p>Reporting from Sacramento State Controller John Chiang announced today that his office would suspend tax refunds, welfare checks, student grants and other payments owed to Californians starting Feb. 1, as a result of the state's cash crisis.</p>
<p>Chiang said he had no choice but to stop making some $3.7 billion in payments in the absence of action by the governor and lawmakers to close the state's nearly $42-billion budget deficit. More than half of those payments are tax refunds.</p>
<p>The controller said the suspended payments could be rolled into IOUs if California still lacked sufficient cash to pay its bills come March or April.</p>
<p>"I take this action with great reluctance," Chiang said at a news conference in his office. But he said that without action to close the deficit, "there is no way to make it through February unscathed."</p>
<p>The payments to be frozen include nearly $2 billion in tax refunds; $300 million in cash grants for needy families and the aged, blind and disabled; and $13 million in grants for college students.</p>
<p>What grants are these? I believe CAL grants for spring have already been credited as spring tuition is already due, that usually happens about last week or this week, though I guess the finaid dept could be assuming it will come in and not actually have it??</p>
<p>I think it is around $4300 for a semester, so that will be huge. I wonder if the IOU is accepted by UCs & CSUs for tuition?</p>
<p>edit: I just saw this "and $13 million in grants for college students"
not sure what this refers to, Cal Grants must be more than this??</p>
<p>I can't find what exactly this means in contrast to the title of the article that says the halt includes student grants. perhaps the above statement refers to things like subsidized school lunches. </p>
<p>This is political posturing-- threats designed to get the legislature to come up with a balanced budget. Part of the game they play in California every so often. They'll work it out at the last minute.</p>
<p>I wish I could share in sblake7's optimism. I'm a Californian and as a long-time observer of the shenanigans in Sacramento, IMHO this year is different. There's a cash flow crisis under this year's budget, plus how to balance the 9/10 budget. The current cash flow crisis is estimated at $5 Bil by April 30. A balanced budget for 09/10 cannot be achieved without massive cuts. Thus the urgent need to cut now. In past years they used accounting tricks and some borrowing to bridge the budget gaps, but this year the budget shortfall is absolutely massive. The current budget proposal on the table includes billions of borrowing, which could blow up given the frozen credit markets. What if no investors buy the bonds? You can't just raise taxes and grab the billions in new revenue when stores are closing left and right, people are being laid off in droves, and foreclosures continue to soar. My hunch for the end game (2010) is either Obama bails out California or California defaults like NYC did. I know I sound like a doomsayer but actually I'm a realist. It's bad here, really really bad. It also doesn't help that we have a washed up actor as Governor instead of someone with financial expertise.</p>
<p>SO, UCSC and Cal are both semester, the other UCs are quarter
CSUs are semester, except CPSLO, what about Pomona? And CSULA.</p>
<p>It is scary that this bomb can be dropped on a Friday night, school starts Tuesday at Cal and Monday is a holiday, so how do kids even know if this is a problem or not? No response on the school website yet</p>
<p>Actually the CSUs on quarter system are: Bakersfield, East Bay, LA, Cal Poly Pomona, Cal Poly SLO, and San Bernadino. The rest on are semester except for Stanislaus, which is 4-1-4.</p>
<p>Lets help shed some light on the State Budget and Cal Grants.</p>
<p>Cal Grants are payed out of the general fund by the State Contollers Office (SCO).</p>
<p>The SCO will process general fund dollars to each school as long as they have money to process. If the state is going broke, the Student Aid Commission has
instructed the SCO to pay schools, however the SCO also must prioritize funds to other important state services for every other state department.</p>
<p>Grant funds and other less critical services will be delayed before prisons are closed.</p>
<p>Most schools have been payed 85% of there spring term enrollent.
Where that 85% came up short and schools that havnt been payed yet are going to have to wait. Right now 30 day delays into March and April or more are expected. </p>
<p>Eventually the schools will be payed and hopefully they will work with each student.
Some schools may not because they could also face a cash shortage doing so also, especially if the payment delay from the state is unknown.</p>