California State Controller , John Chiang says he expects to issue $3.36 Billion in IOUs and  $10.9 Billion in regular payments this month.  The Controller, The State Treasurer, and the Governor's Finance Director met as the Pooled Money Investment Board this morning.  Controller spokesman, Jacob Roper, told KNCO they set the interest rate for the I-O-U's shortly before noon today. "The staff recommendation to the board, based on a commercial review of corporate bonds out right now, recommended a rate of 3.75 percent,  that is the rate being closest to similar commercial paper being issued on Wall Street right now.  That came at a recommendation of 3.75 percent and a maturity date of October 2nd. and that's what the Board recommended on a 2 to 1 vote." The state will now begin issuing IOUs to those who are not mandated by law to receive cash.

Golden State lawmakers failed to pass a budget package before the new fiscal year began yesterday.  In response, Governor Arnold Schwarzenegger declared a fiscal emergency and has ordered state employees to take another day off without pay.  That brought the total number of monthly furlough days to three for state workers.  State officials say issuing the IOUS won't affect most low-income people, the elderly and the disabled, who should still receive their regular checks on schedule.  In addition, schools, state workers, Medi-Cal providers, pension funds and In-Home Supportive Services are all prohibited by law from getting an IOU instead of a real check.