SACRAMENTO — Nearly 90,000 IOUs worth a total of $50 million issued by the state to businesses and individuals during the height of the summer budget crisis have not been cashed.
The IOUs, also known as registered warrants, stopped earning interest Sept. 3, and state officials are at a loss to explain why so many businesses and individuals have not collected their money.
In San Francisco, 2,315 IOUs worth $1.4 million remain uncashed; in Los Angeles, a staggering $9.8 million in IOUs are outstanding, according to the controller's office.
The state lists Stanislaus County with 708 uncashed warrants worth $235,373.92, San Joaquin with 935 valued at $794,397.02 and Merced with 324 IOUs worth $51,064.10.
"Ultimately, we don't know why" IOUs have not been cashed, said Jacob Roper, a spokesman for state Controller John Chiang.
Today, Chiang and Treasurer Bill Lockyer will begin mailing 89,000 letters to those who have failed to cash IOUs.
The letters tell IOU holders how to redeem them and include an addressed envelope. In the letter, the state "apologizes for any hardship you have suffered because it was temporarily unable to meet its obligations."
One IOU holder said he wasn't sure why he hadn't redeemed his. Dr. Michael LeNoir, an Oakland allergist and pediatrician who accepts Medi-Cal, said he needs the money but isn't sure how much the IOU is worth.
"I haven't even looked at it, but I am going to look at it now," he said. "I never thought of it as that much money — it wasn't a priority. And I think we made a couple attempts, but it looked prohibitive."
Roper said it's a wide- ranging group of people hanging on to IOUs. They include vendors who provide goods and services to the state, state employees reimbursed for travel, and people whose tax returns were sent during the period IOUs were issued.
They were among 450,000 creditors who received IOUs from the state in the summer, as the state faced a cash-flow crisis. In a unusual move, the state issued $2.6 billion in IOUs from July to September to get through the crisis.
Some banks honored IOUs immediately after they were issued to help their customers. The state advises IOU holders to ask their banks if they will cash IOUs and if so, whether they charge fees. To avoid fees, IOU holders can redeem them with the state.
One vendor listed by the state as having at least one uncashed IOU is Oakland Pharmacy Inc., which owns eight pharmacies. Vice President Kam Tam said the company cashed its IOUs in September through its bank, East West Bank.
"My pharmacy does tens of thousands of dollars of business with the state — we can't afford to hold on to them," he said. "But that was way back. ... Maybe there's a delay in the reporting system."
A spokeswoman for East West Bank said it redeemed millions of dollars worth of IOUs for its small-business customers last year and believes the bank has cashed all of them.
For more information about cashing IOUs, go to www.treasurer.ca.gov/warrants or call 1-888-864-2762.