State’s Welfare Growth Rate Shows Dramatic Slowdown : Aid: Officials say it is too early to spot the reasons for the downturn but suggest the drop may be tied to a decline in population growth.

After posting some of the biggest increases in history, California’s welfare rolls have stopped growing at such a rapid rate--and state officials don’t know why.

Although the number of people on welfare and the public costs are still rising, they are going up much more slowly than Gov. Pete Wilson had warned when he argued for cutting welfare benefits in December, 1991.

Wilson predicted then that government aid rolls would expand in the double digits well into 1994 and taper off only marginally during the rest of the decade.

But new state figures show that the growth rate of the main welfare program, Aid to Families With Dependent Children, reached its peak at 13.5% in October, 1991, and then fell steadily each month thereafter. By October, 1992, the Department of Social Services placed the growth at 7.1% over the previous year, bringing the number of parents and children on welfare in California to 2.4 million.

The slowdown was even more dramatic among single-parent families, who make up 84% of the AFDC program. In November, 1992, the number of single-parent families receiving AFDC was up 4.8% over the previous November--less than half the 11.2% growth rate recorded in November, 1991.

The slower growth rates mean welfare spending will be less than projected this year. In a five-month period from May to November, the slowing rates produced savings of $18 million--a figure officials say is encouraging but only a drop in the bucket when compared to the $2.8 billion the state annually spends on AFDC.

The figures undercut predictions by Wilson, based on a Department of Finance long-range forecast, that the welfare caseload would soar 91% during the decade.

State officials concede that the finance department did not foresee the sudden slowdown in welfare growth and had assumed that the high growth rates of the early ‘90s would continue throughout the decade.

Officials say it is still too early to spot population, birth rate and other trends that would explain what has caused the drop. “It’s a puzzlement,” said Michael Genest, deputy director of the Department of Social Services’ welfare program division.

But Genest and other officials suggest several possible explanations.

* The drop may be tied to an overall decline in population growth in California and a change in migration patterns. Preliminary estimates from the Finance Department’s Demographic Research Unit suggest that more people may have moved out of California in the past year than moved into the state.

* Department of Social Service Director Eloise Anderson believes that the sharp decline in the growth rate of single-parent families on welfare could be a signal that divorces and unwed births will show a drop when the most recent data become available. Both are major causes of women and children going on welfare.

“Is something happening with single women saying, ‘I’m not going to have a baby by myself anymore?’ ” she asked. “Are we having more people staying married than being divorced? We don’t know.”

Anderson suggests that there may also have been subtle factors that discouraged some families from applying for welfare. As the state’s plummeting tax revenues have made the high costs of the AFDC program a subject of political debate, she said it may have further enforced the negative image of welfare recipients.

“I would suspect that the welfare atmosphere in this state was such that people who might have wanted to go on welfare decided to do something else,” she said. “If you know it’s not cool to go on, you try to find other things.”

Pointing to huge budget shortfalls, Wilson has long argued for cutting the size of welfare benefits, which have declined 10% since he came into office.

* Some say that double-digit welfare growth was unlikely to continue and that it was clear all along that it would slacken off.

The Commission on State Finance, a bipartisan panel that monitors the state’s fiscal condition and issues its own projections on welfare growth, has maintained for the past year that there would be a decline in the welfare growth rate.

Brad Williams, the commission’s executive director, said the panel believed that growth would follow roughly the same pattern it has in most recessions: high increases at first, followed by a gradual drop as the recession matured.

“The number of people finding themselves in need of public assistance grows rapidly in the early stage of a recession,” he said, adding that the growth rate then begins to decline as the recession hits a plateau.

“As bad as economic conditions are, they haven’t continued to deteriorate at a fast rate,” he said. “We haven’t started recovering, but growth in the number of people who are unemployed has stabilized.”

Even so, “I’ll have to say (welfare growth) has slowed down much earlier than we had anticipated,” he said.

Influenced by economic conditions and changes in the rules that determined who was eligible for aid, California’s welfare population has always fluctuated from year to year. There has been some growth in most years, although it was rarely more than 4% until the ‘90s.

In the last two decades, there were only three years--1973, 1974 and 1979--when the number of families on welfare declined. The highest growth rate in those two decades--9.1%--was recorded in 1981, a year of economic decline.

Although welfare officials deny it, critics of Wilson’s welfare proposals say the Administration had a motive for making recent predictions as pessimistic as possible.

“I remember I heard these numbers and I immediately thought of Mark Twain, who said: ‘There are lies, there are damn lies and there are statistics,’ ” said state Sen. Mike Thompson (D--St. Helena), author of a rival welfare plan. “I was concerned that the numbers were being manipulated in order to advance the governor’s agenda.”

Wilson had released the projections when he announced an initiative that, like his current budget plan, called for major changes in the welfare system and a 25% cut in benefits. Wilson won approval from the Legislature for a smaller cut in cash grants, but his initiative, known as Proposition 165, was defeated at the polls last November.

Rich Mekata, former chief of the Department of Social Service’s estimates bureau, said there was ample justification for the Administration’s projections because welfare growth has been more prolonged during this recession than in others. When Wilson unveiled his initiative in December, 1991, he said caseload growth had been rising steadily since September, 1989. “There was no indication that it was going to change dramatically,” Mekata said.

His position is supported by Michael Wiseman, a University of Wisconsin professor who has studied California’s welfare system and believes that the state had reason to be alarmed by recent trends.

“I think that it’s probably true that the governor’s darkest forecasts were unwarranted by historical experience, but at the same time I believe that the governor was correct in claiming that the recent growth in caseload exceeded what would have been expected given the nature of the recession,” Wiseman said.

Even with the unexpected slowdown in growth, Genest said the Administration still believes that substantial cuts in AFDC benefits are needed.

“Whether the rate of growth is dropping or not, we have a welfare system that our revenue base will no longer support,” he said. “We cannot afford AFDC as it is. We have to make it cheaper.”

Slowdown in Welfare Growth

The annual growth rate of California’s welfare program is slowing, a surprising trend to state officials. The slowing is especially apparent in aid to single-parent families, which make up 84% of recipients in the Aid to Families With Dependent Children program. The rate listed for each month is annualized .

% SINGLE-PARENT % TWO-PARENT DATE % TOTAL FAMILIES FAMILIES *October, 1991 13.5 11.5 28.2 *November, 1991 13.4 11.2 28.1 *December, 1991 13.1 10.9 27.6 *January, 1992 12.7 10.6 26.1 *February, 1992 11.7 9.7 24.2 *March, 1992 11.0 9.1 22.7 *April, 1992 10.2 8.5 20.8 *May, 1992 9.2 7.6 18.9 *June, 1992 8.8 7.4 17.7 *July, 1992 8.4 6.9 17.5 *August, 1992 7.9 6.1 18.7 *September, 1992 7.6 5.8 18.6 *October, 1992 7.1 5.4 17.8 *November, 1992 6.4 4.8 N.A.

Source: California Department of Social Services