The Governor’s budget proposes to delete the June 2008 and 2009 state statutory COLAs and pass-through the federal COLAs. The Governor estimates that the deletion of these COLAs will result in savings of $23.3 million in 2007-08, and $300.3 million in 2008-09. Based on more recent data, we estimate savings in 2008-09 will increase by $5.3 million to a total of $305.6 million in the budget year. As part of the LAO budget alternative, we recommend reducing grants for couples to 125 percent of the federal poverty level.