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Frequently Asked Questions about Registered Warrants (IOUs) Issued by the State in 2009

Envelope from State Controller's Office Disbursements Bureau

Please note: This page will be updated as new information becomes available.

Update: Are you still holding a registered warrant (IOU) issued by the State in 2009?

State of California registered warrants (IOUs) issued in 2009 continue to be redeemed. If you want to receive interest that has been earned on the IOU, you can present the warrant to the State Treasurer's Office at 915 Capitol Mall, Sacramento, CA. You may also mail it to the Treasurer's Office at Attention: Registered Warrant Desk, State Treasurer's Office, 915 Capitol Mall, Sacramento, CA 95814.

You also can check with your bank or credit union to determine its policy for cashing IOUs and paying interest.

The State issued 450,000 IOUs worth $2.6 billion between July 2, 2009, and Sept. 4, 2009, when the IOUs matured. Please note that IOUs stopped accruing interest after Sept. 4, 2009.

For more information about redeeming an IOU, please call the State Treasurer’s Office at 1-888-864-2762 or visit them online at www.treasurer.ca.gov.

Information on which financial institutions are accepting IOUs can be found on the State Controller's Registered Warrants Web pages and the State Treasurer's Web site.

calculator Please visit our Registered Warrants Interest Calculator Page for a rough estimate of interest to be paid on your IOUs upon redemption


August 31, 2009, Update:

State of California registered warrants (IOUs) issued in 2009 will be payable beginning Friday, September 4, 2009. If you want to receive interest that has been earned on the IOU, you must present the warrant to the State Treasurer's Office at 915 Capitol Mall, Sacramento, CA. You may also mail it to the Treasurer's Office at Attention: Registered Warrant Desk, State Treasurer's Office, 915 Capitol Mall, Sacramento, CA 95814.

For more information about redeeming an IOU, please call the State Treasurer’s Office at 1-888-864-2762 or visit them online at www.treasurer.ca.gov.

August 21, 2009, Update:

Board Approves Controller's Recommendation for Redeeming IOUs

The Pooled Money Investment Board (PMIB) has approved Controller Chiang's recommendation that the State redeem IOUs a month early, beginning September 4, 2009.

August 13, 2009, Update:

Controller Chiang Completes Cash Review, Determines Date to Stop Issuing IOUs

State Controller John Chiang has announced that he has completed “stress testing” the Department of Finance’s cash projections from the State’s newly-revised budget and has determined the new spending plan will provide the State Treasury with enough cash to stop issuing IOUs on September 4, 2009, almost one month earlier than expected.

“The State of California owes a debt of gratitude to the thousands of individuals and businesses that were forced to bear the brunt of the State’s chronic fiscal mismanagement,” Chiang said. “Along with short-term loans that are routinely obtained in the fall, this spending plan should provide sufficient cash to meet all of California’s payment obligations through the fiscal year.”

For more information, please see:

Controller's August 13, 2009, News Release and Cash Outlook Chart


General Information about Registered Warrants (IOUs) Issued by the State in 2009


1. What is a registered warrant?
A registered warrant is a “promise to pay,” or an IOU, that is issued by the State when there are not enough funds to pay all of its General Fund obligations. Registered warrants bear interest and are redeemable by the State Treasury only when the General Fund has sufficient money. If the Legislature and Governor fail to enact budgetary solutions that provide enough cash for the State to pay all of its bills by July 2, 2009, the Controller will begin issuing registered warrants. Assuming there is adequate cash in the Treasury, those warrants may be redeemed on October 2, 2009. Both the issue and the maturity date will be printed on the warrant. If the Pooled Money Investment Board (PMIB) determines there is sufficient cash available for redemption at an earlier date, the warrants may be redeemed earlier than October 2, 2009. (Please see updates at top of page.)

2. How do I know if I have a “registered” warrant, instead of a “regular” warrant?
Registered warrants will be identified with the word “REGISTERED” printed on the face of the warrant. It will also contain a special endorsement stamp on the reverse side.

3. Why is the State issuing registered warrants?
Without action by the Governor and Legislature to stave off a severe cash deficit of almost $3 billion at the end of July 2009, and more than $3.5 billion in August 2009, the Controller will be forced to issue individual registered warrants, also called IOUs, for many payments.

4. What is the difference between a registered warrant and a regular, or “normal” warrant?
A regular warrant is redeemable by the State Treasurer after it is issued. Registered warrants are negotiable instruments, but they will not be redeemed by the State Treasurer until the warrant matures on October 2, 2009, and the State has enough cash to cover the amount of the warrants. If the Pooled Money Investment Board (PMIB) determines there is sufficient cash available for redemption at an earlier date, they may be redeemed earlier than October 2, 2009. (Please see updates at top of page.)


Receiving and Redeeming Registered Warrants Issued by the State in 2009


5. When will I receive my registered warrant?
The registered warrants are issued like regular, or normal, warrants, and you will receive it on the same day you would have received a regular warrant.

6. Will my financial institution honor a registered warrant?
Recipients of registered warrants should contact their financial institution to determine whether they will honor the registered warrant before the redemption date. Additional information on who is accepting registered warrants.

7. What happens if my financial institution will not accept the registered warrant?
You may decide to open an account at another financial institution that will accept registered warrants, or you will have to hold the warrant until it matures on October 2, 2009. (Please see updates at top of page.)

8. Who will continue to receive regular, or “normal,” pay warrants?
The State Constitution mandates that education and debt service have priority status, and the Controller will work to ensure there are sufficient funds to continue to make those payments with regular warrants. The State Constitution, federal law and court order also require that State payroll, CalPERS, CalSTRS, In-Home Supportive Services and providers of most Medi-Cal services continue to be paid with regular warrants.

9. Who will receive registered warrants?
The State in July will issue registered warrants, or IOUs, for all other payments, including those to private businesses, local governments, taxpayers receiving income tax refunds and owners of unclaimed property.

10. When will the State start issuing registered warrants?
If the Legislature and the Governor do not enact budget solutions that provide adequate cash to pay the State’s bills, registered warrants will be issued for payments that are not required to be made with a regular warrant beginning July 2, 2009.

11. How long will I have to hold on to my registered warrant?
Assuming there is sufficient cash in the State Treasury, registered warrants may be redeemed on October 2, 2009, the maturity date printed on the warrant. If the Pooled Money Investment Board (PMIB) determines there is sufficient cash available for redemption at an earlier date, they may be redeemed earlier than October 2, 2009. (Please see updates at top of page.)

12. How can I redeem the warrant?
When registered warrants are eligible for redemption, they can be presented in person or by mail to the State Treasurer’s Office, Attn: Registered Warrant Desk, 915 Capitol Mall, Sacramento, CA 95814.

13. Will the State pay interest on the registered warrants?
The State will pay interest on warrants presented in person or by mail to the State Treasurer’s Office for redemption. Contact your financial institution for information about their policy on paying interest.

14. How much interest will the State pay?
The State will pay an interest rate of 3.75 percent annually until the warrant is redeemed, either on the October 2, 2009, maturity date, or earlier if approved by the Pooled Money Investment Board (PMIB). For example, if you were issued a registered warrant for $1,000 and it was advertised as redeemable three weeks (21 days) after the issue date, you would receive approximately $2.18 in interest. ($1,000 multiplied by .0375, divided by 360 days a year, multiplied by 21 days.)

15. How can I get the interest?
You must hold the warrant until it is redeemable and present it in person or by mail to the State Treasurer’s Office, Attn: Registered Warrant Desk, 915 Capitol Mall, Sacramento, CA 95814. Contact your financial institution for information about their policy on paying interest.

16. Is the interest earned on registered warrants tax free?
Yes, you will not have to pay state and federal income taxes on the interest.

17. Can I use my registered warrant to pay my State taxes?
You can use a registered warrant to pay some of your State tax liabilities, although you will not receive interest unless you hold the warrant until it is redeemable.  For more information, visit the Franchise Tax Board’s website at www.ftb.ca.gov.

18. When will the State stop issuing the registered warrants?
Registered warrants will be issued until the State has sufficient cash to cover all of its bills and redeem outstanding IOUs.

19. What if the State Legislature and Governor act on the State’s budget and cash problem after IOUs have started going out?
Once the Controller determines there is sufficient cash in the State Treasury to meet all of the State's payment obligations, the Controller will ask the Pooled Money Investment Board (PMIB) to call in all IOUs already issued. If the PMIB sets a new maturity date (by calling in the outstanding IOUs prior to the printed October 2, 2009, maturity date), then recipients may begin redeeming their IOUs and collecting interest at that time. The Controller also will stop issuing new IOUs, and will begin issuing regular warrants (checks). (Please see updates at top of page.)

20. Will the State pay for any overdraft or late payment that occurs because I was issued a registered warrant and unable to redeem it for a period of time?
No.


Information on SSI/SSP, Unclaimed Property and Other Issues Relating to Registered Warrants Issued by the State in 2009


21. I receive SSI/SSP payments each month. Will I receive an IOU for the State’s share?
No. The federal Social Security Administration has notified California that it will continue to pay in full both the federal Supplemental Security Income (SSI) and the State Supplementary Payment (SSP) to recipients in July and August. State officials will continue to work with the Social Security Administration to ensure California’s 1.2 million SSI/SSP recipients are not affected by IOUs.

22. Will my unemployment benefits or my disability insurance benefits be paid with an IOU?
No. Individuals receiving unemployment or disability payments will not receive registered warrants from the State. Those payments are made by the Employment Development Department, and are paid out of special funds, not the State’s depleted General Fund. For questions regarding unemployment benefits, please call 1-866-333-4606. For questions about disability insurance, please call 1-800-480-3287.

23. I currently am retired and receive retirement benefits. Will my monthly check be a registered warrant?
No. You will continue to be paid with regular warrants.

24. If I am the owner of property that has been sent to the State as “unclaimed,” will I be paid with a registered warrant?
If the property you are claiming is cash, such as bank accounts, certificates of deposit or money orders, it will be paid with an IOU. If you are the owner of contents in a safe deposit box, you will receive those contents; if the contents have been sold, as required by law, you will receive an IOU for the net proceeds of the sale. If your property is in the form of a security, you will receive the security. If it has been sold, as required by law, you will receive an IOU for the net proceeds of the sale. For specific questions about unclaimed property please call: 1-800-992-4647.

25. If I lose my registered warrant, can I get it replaced?
You should use the normal process for reporting lost warrants, which is contacting the agency that authorized the payment.


Additional Information, Including Telephone Help Lines, Concerning Registered Warrants Issued by the State in 2009


26. Who can I call to complain about this?
Contact the Governor or your local representative in the Senate and Assembly. The Governor’s telephone number is (916) 445-2841. A list of the California Assembly and Senate members and their contact information is available at www.leginfo.ca.gov.

27. Where can I go for more information?
For more information, you can call the State Controller's toll-free registered warrants assistance phone line at 1-866-267-4255. More information about redeeming registered warrants is available on the California State Treasurer’s Web site at www.treasurer.ca.gov, and from the Treasurer’s registered warrants toll-free phone help line at 1-888-864-2762.


Return to the Controller's main registered warrants page