Stanislaus County has enough cash on hand to ride out the state controller's increasingly likely move to begin issuing IOUs this week in place of payments that support education and social services.
Despite that assurance, local government and education officials would prefer to get the money they're owed in their hands.
"I don't even want to go there," county Treasurer Gordon Ford said. "My problem is making sure that we can make payroll, that we can take care of the fundamental requirements that are needed on a day-to-day basis."
He solved that problem by restructuring county investments to free up about $90 million a month for six months.
The county typically receives between $65 million and $100 million each month for schools and state-mandated services, he said.
It's not clear how much of that would be held back if Controller John Chiang follows through on a plan to issue IOUs so the state can hold on to enough cash to pay its own debts.
Lawmakers are at loggerheads over how to close a $24.3 billion deficit, threatening the state's ability to pay its bills.
Money for schools could continue flowing to the county, but Ford said he wanted to prepare for the worst.
"That would be a huge impact to us in the next few weeks" if the state opts to hold on to education money, said Modesto City Schools District budget manager Julie Chapin. She said the district has enough cash to make payroll, but is still waiting for a delayed payment from the state that dates back to February.
The IOUs could delay payments that pass through the county for college financial aid, mental health programs, elderly assistance and certain unemployment benefits.
Unemployment checks and child support payments are expected to continue moving out of Sacramento without delay.
"We're not the bank for the state of California," county Chief Operations Officer Patty Hill Thomas said. "We do have cash, but at some point it could present a tremendous risk to the county."
Bee staff writer Adam Ashton can be reached at firstname.lastname@example.org or 578-2366.