California's fiscal woes are in sharp focus again today, as state offices close on the first of three "Furlough Fridays" this month, idling tens of thousands of state workers; major banks stop redeeming state-issued IOUs at the close of business; and state leaders appear no closer to resolving the $26.3 billion hole in the state spending plan.

IOUs

What do IOUs cost?

Assuming a 3.75 percent interest rate, an Oct. 2 redemption date and a need for $4.85 billion in IOUs through July and August, about $45.5 million in interest, according to the Department of Finance.

How are they redeemed?

IOU holders can hang on to them until the state redeems them on Oct. 2, with 3.75 percent annualized interest. The interest is exempt from state and federal taxes.

Might someone else buy them?

It's legal to resell IOUs, so there could be a secondary market. The SEC said Thursday the IOUs are investment securities and anyone who wants to buy or sell their notes should go through registered dealers. This could make it safer.

BANKS CHALLENGE IOUs

• Chase, Bank of America, Wells Fargo, Citigroup and some regional banks in the state agreed to redeem the warrants, but have said they will stop after today. Some credit unions have said they'll continue honoring the IOUs through October.

• The state controller's office began printing IOUs on July 2 and had processed 91,213 with a value of about $354 million through Wednesday. The office expects to process $2.87 billion in IOUs through July if the budget is not resolved.

Who gets IOUs?

People and companies that do business with the state, cities and counties, and those awaiting tax refunds are the main recipients. Thanks to a 1993 federal court ruling, state employees won't get them. Nor will the state pension funds or recipients of health and social service programs.

FURLOUGH FRIDAYS RETURN

• Gov. Arnold Schwarzenegger ordered most state employees to take two furlough days a month starting in February. He has since ordered a third furlough day per month, which starts today. The three days amount to a 14.2 percent pay cut for state workers.

• The third day comes with plans to reinstitute "Furlough Fridays," which will close most state offices, including the DMV, on the first three Fridays every month through June 2010.

• The governor also has proposed a 5 percent pay cut on top of the furloughs. Legislative Democrats are unlikely to go along with the cut, but the governor could conceivably achieve the same savings by ordering a fourth furlough day.

Will some services be available by phone?

Unemployment Insurance offices will be taking phone inquiries. And some Department of Public Health services will be available by phone.

How many state workers are actually being furloughed?

Of the 235,000 under the governor's control, about 210,000 are being furloughed.

Who is exempt?

Employees with the Public Utilities Commission, Department of Forestry and Fire Protection, and a couple of other departments are exempt by executive order. Sworn CHP officers haven't been furloughed either. Their union is the only one with a current contract.

What about employees working for statewide constitutional officers, like the attorney general?

Those employees aren't being furloughed, but Schwarzenegger says they should be. The two sides are fighting it out in court.

Are legislative and university employees being furloughed?

The Legislature just started furloughing higher-paid staff one day per week. The state universities are still hammering out furloughs for their employees. The governor has no control over either.

How much are these furloughs saving the state?

According to the Department of Personnel Administration, the three furlough days will save the state almost $1.3 billion in general fund wages during the current fiscal year.

What about this month? The first Friday was a holiday.

As a practical matter, those offices will be closed the second, third and fourth Fridays in July, starting today and continuing on July 17 and July 24.

Why are administration officials bringing back Furlough Fridays?

Here's their reasoning: Managing self-directed furloughs three days a month would be logistically difficult, and closing offices entirely would save on building operation costs.

Will some operations be open?

Yes. State prisons, state parks, hospitals, developmental centers and other 24-hour operations will maintain normal hours of operation. So will the California Highway Patrol and Cal Fire stations.

Source: Bee research; state Department of Personnel