California Meets U.S. Welfare Reform Rules : Aid: State succeeds in putting enough recipients to work for the first time since 1996, averting federal penalties.

For the first time since the 1996 passage of welfare reform, California has met stiff federal work requirements, even for hard-to-employ two-parent families, many of whom are recent immigrants.

In a startling turnabout from a year ago, the state’s booming economy, coupled with a precipitous drop in welfare rolls, has allowed California to comply with the central demand of reform--putting families on aid to work.

With more than a third of the adults engaged in work or “work activity,” the state’s independent legislative analyst reported Tuesday, California will avoid millions of dollars in federal penalties and eventually be able to reduce its welfare spending by up to $176 million a year.

“We weren’t predicting this,” said Bruce Wagstaff, the Social Services Department’s deputy director for welfare-to-work. “We didn’t expect that we would meet the federal rates this soon, but we’re very pleased that we did.”

Most of the working aid recipients, he said, are employed in low-wage, entry-level jobs with the state providing child care, medical benefits and some continued assistance. Most recipients who combine welfare and work are better off financially, state officials say, than those who subsist entirely on welfare.

To force states to comply with the dictates of welfare reform, Congress set a sliding scale of work requirements to be met each year. Failure to meet the thresholds results in millions of dollars in federal penalties. Welfare is jointly financed by federal, state and local governments.

In 1997, states had to have 25% of their overall caseload and 75% of their two-parent welfare families engaged in work. By 1998, the year that has just been measured, the requirements for the overall caseload rose to 30% and remained at 75% for two-parent families. In 1999, the state will have to meet goals of 35% and 90%.

States can reduce those percentages if they can show that their total caseloads have dropped. Thus in 1997, when California was able to lower its caseload by 5.5%, the overall work requirement was cut from 25% to 19.5%.

Still, for California, which has not only the nation’s highest welfare rolls but also the biggest population of two-parent families on assistance, the goals were especially daunting. Two-parent families make up about a fifth of California’s welfare rolls; in many states they make up less than 1%. Some states have no two-parent families on assistance.

Last year California met the overall work requirement but failed to make the two-parent goal, and the federal government levied a fine of $7 million.

State officials argued that the numbers didn’t tell the whole story. California was terribly disadvantaged, they said, because it had a disproportionately high number of legal immigrants who had significant barriers to employment, including poor language skills, lack of work experience and a lack of education.

This year, state officials attributed the much rosier picture to two factors: a change in the way the federal government calculates caseload reductions and the strong emphasis counties have put on employing two-parent--especially immigrant--families. At the same time, they said, an improving economy made more jobs available, especially low-wage positions.

The new federal calculations permitted the state to report that its two-parent caseload had dropped 42.3% in 1998 and its overall load 12.3%. With 36% of welfare families engaged in work, that meant the state easily met the requirements.

Frank Mecca, executive director of the County Welfare Directors Assn. of California, said many counties have concentrated their welfare-to-work efforts in the past year on two-parent families.

“Clearly, the threat of sanctions sent a pretty strong message to county administrators that this is a group you need to focus on and fast,” he said. “But I think we also may not have understood how resilient this [two-parent] group is. There are a lot of immigrant families who worked pretty hard to integrate into the working community.”

In some counties, he said, welfare agencies were able to get jobs for immigrant families in the non-English-speaking “pockets of the economy where even folks with language and cultural barriers could do some work.”

Even so, Todd Bland, author of the analyst report, said the state is not going to risk the possibility of penalties in the future. Beginning in October, it will reorganize its welfare system so that the aid paid to two-parent families will come entirely from state--and not federal--funds.

As long as no federal funds are involved, he said, the state will not have to meet the work requirements for two-parent families. Two other states, Florida and New Jersey, have already followed that course.

“But,” Wagstaff said, “that does not in any way relieve our interest in a strong work focus program or in our efforts to do things for our two-parent caseload.”