Social Service Agency Wary of IOU's

July 2, 2009 12:14:05 AM PDT
The 650 children being taken care of by the I-5 Social Services Corporation, in eight Valley communities are among the possible victims of the budget stalemate.                  |   Watch Video Above for Extended Coverage   |

"95 per cent of our revenue comes from the state."

Chief Financial Officer Leo Aguirre says the agency relies on half a million dollars a month in state education funds to care for the children from low income families. The centers were shut down for a month because the legislature and governor couldn't pass a budget last year. Aguirre is worried about a repeat.

"I hope it doesn't happen. But there's no recourse and we're going to run out of money in July."

The state's solution is to issue IOU's. Jacob Roper A spokesman for the State Controller's office says the IOU's are expected to be sent out on Thursday, to cover a portion of the state's bills.

"About ten point six billion in cash payments will go out in July, but three point three six billion will be paid in IOU's if the governor and the legislature continue to fail to resolve the budget situation."

In addition to social service agencies like I-5, the IOU's would go to companies that do business with the state, local governments and those expecting tax refunds. The IOU's would be redeemable, with interest in October. But Aguirre says unless banks agree to cash them his agency is sunk.

"If they accept them, then we should be okay. And if they don't, then we won't be okay and we may just have to close and 650 kids will have to go elsewhere."

Aguirre says his agency's bank hasn't decided whether to honor the state IOU's. So far, Bank of America, and Golden One Credit Union are among those who have agreed to cash IOU's, for their customers.

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