Budget Cuts Siphon Welfare Funding for Energy Purchases

With California’s coffers strained by $6 billion in electricity purchases, the governor’s proposed budget for next year cuts funding in other areas. Among them are programs considered to be the pillars of welfare reform, some welfare experts say.

Orange County’s welfare director and others around the state say they may have to abandon programs that took months, if not years, to develop and were considered innovative because they attacked the core causes of poverty: lack of child care, transportation and job skills. The idea was to prevent people from going on welfare in the first place.

The money for these programs, which totals $1.9 billion, was amassed by counties as a reward from the state for reducing welfare rolls. The counties expected that more such “incentive funds” would follow.

But just two years after counties statewide began exhaustive planning to use this new source of funding, Gov. Gray Davis eliminated it from his proposed budget for the coming fiscal year.

Los Angeles County officials also lament the situation but say they were very cautious about long-term budgeting based on incentive money. Programs they established will remain intact until the fiscal year 2004-05, said Phil Ansell, chief of intergovernmental relations for the county Department of Public Social Services.

Ansell said the county Board of Supervisors planned for only the money it received, stretching those funds out over several years instead of spending it in one and hoping more would follow.

Officials in several other counties said they initiated programs that could be shut down as early as next summer if alternative funding isn’t found. Some of the programs have already started, others have been put out to bid and more are still in the planning stages.

“It makes us looks insincere. . . . We got assurance from the state that these funds would continue to accrue as long as we would put people [on welfare] to work,” said Angelo Doti, Orange County’s welfare director. “Then you are calling people saying we may not see this money. You feel a little dumb, but we are trying to understand the crisis that the state faces.”

Orange County, for example, allocated $7.5 million for two years of the summer Youth Employment Program, which teaches teens job skills. The program, which serves 2,212 each year, will close next summer unless other funding is found, Doti said.

A similar program in San Diego, funded with $500,000 in incentive money, will also be forced to close just one year after it opened unless other funding develops, said Joan Zinser, deputy director of San Diego’s health and human services agency.

Smaller programs would also be closed, such as a computer laboratory for teens on welfare, she added.

Although state officials say the cuts were made because of decreased revenue, most local officials attribute the problem to the energy crisis.

Frank Mecca, executive director of the County Welfare Directors Assn., said the working poor are paying twofold for the state’s energy crisis.

“It sends a signal to counties to retrench . . . your programs. We are doing that precisely at the time when we should be making sure that the people we helped get off the [welfare] rolls stay off, particularly in a time of economic downturn,” he said.

Although counties have actually spent only $80.7 million of the incentive money, Mecca and others say much such funding has been “obligated”--or committed in contracts--with organizations and companies that were asked to provide services.

Kevin Gaines, assistant to the director of the Riverside County Department of Public Social Services, said his county recently asked for bids to operate a program designed to keep people off welfare with home budget assistance and counseling. But that program will stay afloat only if the county finds alternating funding.

Davis’ proposed budget is “affecting us in a significant way. One of the things we counted on was for our partners at the state level to keep their commitment to funding these services,” Gaines said.

Funding for child care for the working poor has been put on hold, as have programs to help at-risk teens, he said.

Bruce Wagstaffe, deputy director of the state Department of Social Services’ welfare-to-work division, said California is not legally required to provide incentive money. Incentives were not included in the budget because the governor wanted to ensure that basic services in the state’s welfare-to-work program--known as CalWORKS--were funded, he said.

“The governor was very concerned that we maintain a program, that we provide services in CalWORKS. What the governor had to do is to make sure there was enough for the base program,” Wagstaffe said.

Counties began accruing incentives in 1998; the state stopped paying them in July 2000. The state still owes the counties $97 million.

“Counties aren’t very pleased. [But] you can’t say that is automatically saying that all of their work will go by the wayside. Each county will have to look at its own situation and determine what it can do,” Wagstaffe said.