California prepares to send out IOUs

Sacramento, Calif.

-- California employees, including veterinarians employed by the state, already are being forced to take three days of unpaid leave each month, and the University of California-Davis (UC-Davis) is trying to figure out how to absorb a $2.1 million state funding cut. Now, businesses and organizations that receive state funding, including social programs like animal shelters, can expect their state funds to come in the form of IOUs.

The IOUs are coming after months of impasse over the state budget and its $24.3 billion deficit. Gov. Arnold Schwarzenegger declared a fiscal emergency July 1. The mandatory furloughs he ordered months ago will begin July 10. All state offices, including those in the agriculture and veterinary fields, must close the first, second and third Friday of each month until June 2010, according to the governor's office.

The IOUs, last issued by California in 1992, were to begin July 2. They will be used to pay state bills and be sent to counties as funding. Universities are already preparing for students whose grants will not be funded due to the financial crisis. The IOUs will be reimbursed at some point, with interest, but there is no clear time frame as to when that might be.

UC-Davis leaders already have been preparing for a funding decrease and say they are working to maintain services, but already have postponed plans for a new veterinary school building. The veterinary school has not ruled out finding savings from restructuring and/or eliminating positions, programs and services "not directly tied to the school's core teaching mission," according to UC-Davis officials.

Other states and their employees are in similar financial crunches, with many having entered a new fiscal year July 1 with or without new budgets in place. Ohio and Pennsylvania still have not passed budgets, with the University of Pennsylvania School of Veterinary Medicine facing a possible $4 million cut. Numerous other veterinary colleges -- like Tufts, the University of Florida and the University of Tennessee, to name a few -- also are grappling with potential state cuts because of deficits tied to the recession.