U.S. Sanctions State Welfare Experiment : Assistance: California plan seeks to encourage young mothers receiving aid to stick with schooling and older ones to get jobs.

The Clinton Administration agreed Tuesday to let California experiment with new welfare rules designed to encourage school-age welfare mothers to stick with their education and older recipients to get jobs.

Called the “work pays demonstration,” the California experiment seeks to promote self-sufficiency for recipients of Aid to Families With Dependent Children.

“A key aspect of the California demonstration is to encourage young AFDC recipients to stay in school or work,” said Health and Human Services Secretary Donna Shalala. “We will continue to work with California and other states to test ways that recipients can achieve self-sufficiency.”

In Sacramento, a Wilson Administration spokeswoman said state officials were “thrilled” that Clinton had approved the rules.

“We hope this signals a willingness on the part of the Clinton Administration to allow us to continue to experiment with these kinds of changes,” said Amy Albright, spokeswoman for the state Department of Social Services.

The new rules will allow AFDC families to accumulate $2,000 in assets and have $4,500 equity in an automobile. Under current law, the asset limit is $1,000, plus $1,500 for a car.

AFDC recipients in the California program also will be allowed to deposit up to $5,000 in savings as long as the money is used to purchase a home, start a business or finance a child’s post-secondary education or training.

Recipients who work but have low AFDC benefits can opt out of the program and remain eligible for health care under Medi-Cal and other services, such as child care, which are available to other AFDC recipients.

Under the school provisions, teen-age parents on AFDC who maintain at least a C grade average or graduate from high school will be eligible to receive cash bonuses of $100 and $500, respectively.

Parents who fail to maintain a D average could have their monthly AFDC benefits reduced by up to $50 for each of two months.

The California rules were part of an overhaul of the welfare program adopted last year by the Legislature and signed by Gov. Pete Wilson. Democrats rejected the Republican governor’s call for harsher sanctions that would have curtailed higher benefits granted to women who have additional children while on welfare.

Wilson and lawmakers who advocated the changes argued that the old rules discouraged savings and punished welfare recipients who got jobs by denying them subsidized health care and child care.