One proposal approved 21-17 by the Republican-led Senate would aim to save money by changing how health insurance benefits for teachers and government workers are managed.

The measure, now headed to the Democrat-led House, is key to the overall budget deal because it could be a trade-off to get Republicans to vote for tax increases.

The House passed bills to create incentives for Medicaid recipients to lead healthy lifestyles, among other reforms, which now are headed to the Senate.

Democratic Gov. Jennifer Granholm has told about 35,000 of the state's more than 53,000 workers not to report to work on Monday if a shutdown occurs. The remaining workers, mostly related to public health and safety, would stay on the job.

A partial state shutdown would mean most government operations would cease, including liquor deliveries, lottery ticket sales, the issuance of driver's licenses and construction on state roads.

Republicans have pushed Granholm to accept a temporary budget that would extend the one currently in place, giving legislators more time to craft a long term deal.

Granholm has said she won't sign a temporary budget unless she has assurances higher taxes to pay for education, public health and other programs are part of the deal.

Leaders in both the Democrat-led House and Republican-controlled Senate are optimistic a deal will be reached to avoid a shutdown.

While dozens of mortgage companies have closed due to soaring defaults of home loans made to borrowers with weak, or subprime, credit, those problems previously had occurred among non-bank lenders such as New Century Financial Corp. NetBank, in contrast, is federally regulated.

Loose mortgage standards in recent years - especially among lenders catering to subprime borrowers - have resulted in a spike in home loan defaults.

Bert Ely, a banking consultant based in Alexandria, Va., said NetBank was in "deep trouble" before the subprime mortgage market's woes accelerated this year. Regulators, he said, "should have closed it a long time ago."

While some Internet-only banks are successful, he said, operating one without retail branches can be a difficult strategy to maintain.

"Freddie Mac's departure from proper accounting practices was the result of a corporate culture that sought stable earnings growth at any cost," said Linda Thomsen, the SEC's enforcement director, in a statement.

The SEC said it expects to distribute the penalty money to investors.

Freddie Mac has taken a number of steps to bolster its accounting practices. On Thursday, Freddie's chief executive, Richard Syron, said the agreement resolves the last investigation related to its earnings restatement.

"This is another milestone enabling us to focus entirely on those things that are most important -- further advancing our housing mission, effectively serving our customers and building our business for the future," Syron said.

Walters spoke just before Bell, 17, was freed on $45,000 bail after spending 10 months in jail for beating a white classmate.

"He goes home because a lot of people left their home and stood up for him," said the Rev. Al Sharpton, referring to the Sept.20 march. "We do not condone violence of any kind. ... Upon this young man's shoulders is a movement for fairness."

His parents at his side, Bell, who did not speak, walked out of the LaSalle Parish courthouse, flanked also by Martin Luther King 3rd and Sharpton, who recently supplanted less media-savvy local activists to become Bell's spokesman.

An all-white jury convicted Bell after his court-appointed lawyer failed to question any witnesses. The conviction was thrown out this month when an appeals court said he should not have been tried as an adult.

Walters, who is being accused of treating black offenders more harshly than white ones, said he decided not to appeal the ruling.

He said he would retry the case in juvenile court as soon as possible.

"I believe that it is in the best interest of the victim and his family not to delay this matter any further," he said.

Walters charged Bell and five black friends - known as the Jena 6 - with attempted murder last year for punching and stomping white classmate Justin Barker after a series of ugly racial incidents in town.

Walters later reduced the charge to aggravated battery, which could still put the teens in prison for 20 years.

"With the Illinois Act, the state ... is attempting to indirectly regulate the U.S. government by imposing state standards on a federal program that must be satisfied before Illinois employers are permitted to enroll," the 12-page complaint states. "Congress also made it clear its objective and purpose to encourage broad participation in the Basic Pilot Program by instructing DHS to expand the program to all 50 states."

The suit asks for the state law to be declared invalid and seeks an injunction on the ban. Employers using the program submit job applicants' identification information into Social Security Administration and Homeland Security databases on the Internet to confirm their work eligibility. In most cases, the check takes a few seconds, according to Homeland Security. If the program cannot confirm the work eligibility of an applicant, it issues a "tentative nonconfirmation" notice that can take days or weeks to resolve.

Supporters say the program helps employers keep illegal immigrants off employee rolls, but critics note it has an accuracy rate of between 80 percent and 95 percent, which they say marks it as too unreliable and results in some applicants being wrongly dismissed. The Illinois ban was to remain in effect until the program results were 99 percent accurate. The ban also exempts employers who undergo training in the program and receive "anti-discrimination notices" from the U.S. Department of Justice and Illinois Department of Human Rights. About 750 Illinois businesses used E-Verify before the ban took effect, according to the complaint.

The Illinois Coalition of Immigrant and Refugee Rights, a Chicago-based advocacy group, said they thought Homeland Security was wrong in considering the voluntary E-Verify program a federal mandate.

"The verification program is voluntary for nearly all private employers; they are not required to participate in these verification programs to begin with," the statement reads. "The law does not interfere with any federal obligation because for most employers no such obligation exists."

But the department's actions may already have had an effect, as some state lawmakers started backing away from the amendment after learning of the lawsuit.

"We should take a second look at that bill," said Rep. Ruth Munson, R-Elgin, who was one of 76 state House members who voted to pass the amendment in April. "If DHS thinks it's an important tool, the state ought to step back and look at what it does. Maybe the law needs to be repealed or changed."

"The governor would rather do this next week," Brown said. "He's totally focused on the fires."

California intends to sue the EPA in federal court to force a decision on whether California and 11 other states, including Rhode Island, can impose stricter vehicle standards.

The state has waited 22 months for a response from the agency to its petition to be allowed to regulate greenhouse gas emissions from cars, pickup trucks and sports utility vehicles.

California regulators need an answer because they want to implement a 2002 state law requiring vehicles sold in California to emit fewer greenhouse gases starting with model year 2009.

The proposed standard would cut emissions in California by about a quarter by the year 2030, according to the California Air Resources Board. But the law can take effect only if the EPA grants California a waiver under the federal Clean Air Act.

The EPA held hearings in May on the state's request, and administrator Steven Johnson has said he would make a decision by the end of the year. Meanwhile, the agency is also crafting national standards that it plans to propose by the end of the year.

California's lawsuit will allege there has been an "unreasonable delay" by the EPA in deciding on the waiver request, which the state first applied for in December 2005.

Connecticut, New Jersey, Pennsylvania, Rhode Island and Washington also plan to join California's lawsuit against the EPA, officials in those states said.

While the federal government sets national air pollution rules, California has unique status under the Clean Air Act to enact its own regulations -- with permission from the EPA. Other states can then follow either the federal rules or California standards, if they are tougher.

Eleven other states -- Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington -- are ready to implement California's emissions standards. The governors of Arizona, Florida and New Mexico also have said their states will adopt the standard.

The Association of International Automobile Manufacturers, which represents Honda, Nissan, Toyota and 11 other foreign car companies, has sued to block the standards from taking effect.

It argues the standards would raise the cost of cars and could force manufacturers to pull some sports utility vehicles and pickup trucks from showrooms. Their case is pending in federal court in Fresno.

The Alliance of Automobile Manufacturers has asked the EPA to deny the waiver, arguing there should be one federal standard.