Welfare Payment Reductions a Step Nearer

State officials cleared the way Wednesday for cutting welfare payments to 2.7 million recipients of Aid to Families With Dependent Children starting Jan. 1.

Payments will be cut by 4.9% for recipients in urban areas and 9.8% in 41 rural counties, implementing reductions approved by the Legislature as part of the budget.

The action was made possible by California’s application on Wednesday for the federal government’s new welfare block grant. The Legislature included the AFDC cuts in the current state budget but they were never implemented because, previously, they required federal waivers.

State finance officials said Wednesday’s action also will generate about $260 million more in federal funds than the state anticipated in its current budget. It will be up to the Legislature to decide how to spend the additional welfare money.

“This is a beginning,” said Eloise Anderson, director of the state Department of Social Services.

The director also nodded to the confusion and highly charged atmosphere surrounding the welfare reform process when she cautioned that “this step should be viewed solely as an administrative action to generate maximum revenue for California.”

Still to come, officials said, is the major overhaul of California’s welfare system that was provided for in the landmark welfare reform legislation President Clinton signed in August.

Officials said Gov. Pete Wilson is expected to announce his proposal to redesign the welfare system early next year, followed by a legislative approval process that should be completed by July 1.

The block grant plan submitted Wednesday, however, offered a general overview of many welfare goals Wilson has promoted in the past and that he expects to be included in California’s redesigned system.

The document said California will operate a program:

* “To provide temporary assistance to needy families so that the children may be cared for in their own homes or in the homes of relatives;

* “To end dependence of needy parents on government benefits by promoting job preparation, work and marriage;

* “To prevent and reduce the incidence of out-of-wedlock pregnancies . . . and encourage the formation and maintenance of two-parent families.”

The block grant application triggers a federally required 45-day public hearing process. State officials said the times and places for the hearings have not been decided.

Wilson also said Wednesday that he will recommend early next year that the Legislature allocate about $60 million of the increased federal funding to the state’s work training program for welfare recipients.

State officials said the heightened attention to training programs will be necessary for the state to comply with a strict timetable that requires welfare recipients to move into the work force. States that fail to meet the schedule can be penalized by a reduction in funds.

California’s much-heralded work training program, called Greater Avenues for Independence, or GAIN, now has only enough funding to support 25% of those who qualify for the program, said Bruce Wegstaff, deputy director of the state social services department.

Wegstaff said officials hope to double that reach with the new federal money even though it will only add about $60 million to a current budget of about $245 million.

Officials said about $75 million of the new federal block grant will also be required to offset a hole in the state budget left by the delay in implementing the state’s latest cut in welfare grant payments.

The 4.9% cut in welfare grants for urban recipients means that the monthly check for a family of three will drop about $29, to $565. In rural areas, the 9.8% cut will reduce the check for a family of three to $538.

The Legislature passed the two-tiered payment system in recognition of the higher cost of living for recipients in California’s urban areas.

Federal officials said Wednesday that about 25 states have already submitted their block grant applications even though the plans were not required until next July.

If California had waited, it would not have received about seven months’ worth of increased federal funding levels. At the same time, however, the application triggers other requirements that the state has yet to address.

For example, the federal welfare reform legislation requires assistance for all able-bodied recipients to end after two consecutive years. There is also a lifetime limit of five years for welfare aid.

California’s decision to apply for its block grant funds Wednesday is expected to start that clock ticking late next month. But state officials acknowledged that they have not yet developed a system capable of tracking welfare recipients in order to know how long they have received aid.

State welfare officials said the Legislature and governor will determine next spring when California will begin dropping able-bodied recipients from the rolls. After two years, however, the state can no longer use federal funds for current welfare recipients who remain on assistance in November 1998.

“People can throw problems up in our face,” said state Finance Director Craig Brown. “But the price of not doing this now is leaving a ton of federal money behind.”