The frustrated terminator: the State of California and temporary IT employees 2009-27.1

On 31 July 2008, Arnold Schwarzenegger, the Governor of the State of California, signed executive order S-09-08, ordering State departments and agencies to immediately suspend all personal service contracts, effectively terminating about 22,000 temporary, student, and seasonal workers, with the aim of saving $28.5 million per month. The order also cut the pay of about 200,000 State workers to the Federal minimum wage, to save $1.2 billion per month. However State Controller John Chiang refused to follow the Governor’s order. The State of California’s payroll system, still using the COBOL programming language, and Chiang predicted it would take at least six months to reconfigure. COBOL was a programming language first introduced in 1959, no longer widely taught and widely reviled. Chiang had to explain this before a Senate hearing, but the California Legislature and the Governor had to approve a budget that somehow closed the massive gap between revenue and expenses.

This case is set against the background of the growing mortgage foreclosure crisis, which hit California very hard, dramatically increasing the gap between revenue and expenditure. It includes three discussion questions.