Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

California's Furlough Fridays are back

NEW YORK (CNNMoney.com) -- Closed signs went up at California agencies Friday as a second slew of mandatory furloughs went into effect for government employees in an effort to resolve California's $19 billion budget deficit.

Gov. Arnold Schwarzenegger, according to the governor's office, ordered state workers to take three unpaid days off per month until a new budget is in place and the Department of Finance certifies that California has enough cash to meet its financial obligations through the end of the fiscal year.

The furloughs were to have started Aug. 1 but were temporarily blocked by a lower court decision. On Wednesday, the state supreme court allowed the furloughs to resume.

The Professional Engineers in California Government union, which had previously sued on the grounds that the governor did not have the authority to furlough employees, said it will urge the supreme court to rule that the furloughs are illegal. Employees are entitled to full paychecks, the union said in a statement.

The furloughs affect about 150,000 state employees and will save $150 million a month, the governor's office said.

Cash-strapped California first implemented furloughs in February 2009, demanding employees take two unpaid days off per month.

As revenues continued to plummet six months later, officials bumped the number of monthly furlough days to three. That mandate expired with the end of the fiscal year on June 30.

In addition to furloughs, California may also have to issue IOUs in two to four weeks to keep the state solvent, according to State Controller John Chiang.

He estimates there are $2.2 billion in expenses -- mainly to social service agencies, vendors and schools -- that will go unpaid in August. Last year, a budget crunch forced California to issue 450,000 IOUs worth $2.6 billion between July 2 and Sept. 4

Schwarzenegger is also trying to impose the minimum wage on state workers until a budget is passed, but that effort remains tied up in the courts.

--The CNN Wire and CNNMoney senior writer Tami Luhby and staff reporter Hibah Yousuf contributed to this article.  To top of page

Index Last Change % Change
Dow 17,050.75 138.46 0.82%
Nasdaq 4,810.79 19.64 0.41%
S&P 500 2,013.43 17.60 0.88%
Treasuries 2.11 0.05 2.23%
Data as of 8:13am ET
Company Price Change % Change
Bank of America Corp... 15.75 0.00 0.00%
EMC Corp 27.18 1.22 4.70%
Apple Inc 109.50 -1.28 -1.16%
Freeport-McMoRan Inc... 13.46 0.45 3.46%
General Electric Co 28.03 0.26 0.94%
Data as of Oct 8


IMF's Christine Lagarde avoided blaming China for lackluster global economic growth on Thursday, framing the country's deep slowdown as the "healthy" result of needed reforms. More

The National Domestic Workers Alliance introduced a new initiative, Good Work Code, to set standards and protections for on-demand workers. More

Karim Abouelnaga turned down a job on Wall Street to address a problem that set him back as a low-income student: the summer slide. More

Danny Miller is a self-taught investor from Mobile, Alabama. He's better at figuring out stock prices and company earnings than most Walll Street pros. More