Missing Budget Squeezing Schools and Hospitals

The state is no longer paying all of its bills. Newspapers from around the state are now reporting on the impacts of the state's failure to pay what they owe. A hospital struggling with bankruptcy in San Pablo will not get it's Medi-Cal reimbursement payment. A adult day care center in Placer County is talking about shutting down until the budget passes. LADN

Overall, the State Controller's Office is withholding about $1.1billion this month for various state programs, including $170million to K-12 schools for programs including summer school and special education; and $140million to private-sector vendors who provide the state with property, food and other products and services.

The first payment of $327 million will go unpaid today. How schools and hospitals are able to cope, depends on their current fiscal situations.

"A state budget does interrupt the normal distributions of state aid payments to various districts," said Ron Owens, a spokesman for the California Community College system. "Some districts have reserves; others have special fund accounts from which they can borrow to cover the lack of payment in the short run."

In Los Angeles, 21 community colleges will miss payments today totaling about $103million.

The Los Angeles Community College District, which comprises nine of those schools, said it has enough money in reserve to continue campus operations and make payroll without disruption.

"It really won't have any effect on our district," said Jeanette Gordon, chief financial officer of the LACCD. "We have a payday (today). We have enough money to cover that payroll.

"We will probably have enough money to make it through an August payroll also. We are in healthy financial condition with our cash right now."

The longer this budget is stalled, the more and more organizations will run into financial difficulties. It will only get worse until they pass a budget.