Welfare Plan Could Squeeze State Budget

The Bush administration’s plan to bolster work requirements for welfare recipients could cost California hundreds of millions of dollars even as the state faces a huge budget shortfall, welfare advocates say.

President Bush’s plan, floated last month, would require more welfare recipients to hold jobs and work longer hours. In proposing the changes, Bush said he is seeking “to return an ethic of work to an important place in all American lives.”

Critics contend that it would increase the demand for child-care assistance at a time when California can ill afford new expenses.

“We think the effect [of the Bush proposal] on Stage 1 child care could be as much as $400 million annually,” said David Carroll, project director for the California Budget Project, a nonpartisan advocacy group for the poor.

Participants in CalWORKS, the state’s welfare-to-work program, use Stage 1 child care when they enter the program, which provides cash grants and services to needy families.

Welfare Reform Test to Expire

Health and Human Services Secretary Tommy Thompson cited the high cost of the war on terrorism and declining welfare rolls during a hearing last week in Washington as reasons that the president’s proposal does not include additional federal funding for child care.

The Bush proposal comes as the nation’s six-year experiment in welfare reform is set to expire this year and Congress begins a fresh review of the federal government’s welfare policy.

In California, Gov. Gray Davis wants to overhaul the state’s child care programs because he is concerned that CalWORKS has resulted in a flood of new high child-care costs. The costs, he contends, are depriving needy families who have never been on welfare of government help with their child-care bills.

There are 200,000 to 300,000 poor children now on waiting lists for subsidized care through the state’s traditional programs. To serve more children, Davis has proposed increasing co-payments for child care and lowering state reimbursements to child-care providers, among other changes.

Critics fear that the changes will erode care and cause some families to go back on welfare. The Bush proposal, they add, will only make matters worse.

Deeper Cuts Are Feared

Bruce Fuller, a UC Berkeley professor of education and public policy, said that unless Congress demands that Bush bolster federal funding for child care, the state could be forced to make deeper cuts in reimbursement rates or loosen quality standards.

“With no new federal money to serve the additional moms that have to work, that would probably mean a second big hit on quality,” Fuller said.

The state independent legislative analyst’s office is trying to gauge the amount of new costs associated with Bush’s plan. That report is expected next month.

“There could be substantial costs to implementing the Bush proposal in California,” said Todd Bland, social services director for the analyst’s office.

State officials are whittling away at a projected $17.5-billion shortfall in the state budget. So far, they’ve addressed about $4 billion of the problem through spending cuts and budget adjustments, and by refinancing the state’s debt.

California faces the prospect of ongoing operating shortfalls of $7billion in each of the two fiscal years starting in July 2003, according to the analyst’s office.

Under the Bush plan, seven in 10 welfare recipients would be required to hold jobs by 2007, up from the current three in 10. Recipients would also be required to work 40 hours a week, up from 30.

The budget project’s Carroll said that the 40-hour week would require 24 hours of direct work and that the remaining 16 hours could be spent in programs meant to aid a recipient’s long-term job prospects.

Patricia Craig, who lobbies in Washington for the County Welfare Directors Assn. of California, said the Bush plan could force counties to cut employment services designed to help recipients hold jobs, such as transportation assistance and counseling for substance abuse, and plow those funds into child care.

California could face penalties if Bush’s plan is approved and the state fails to meet its provisions, said Shervin Boloorian, a legislative analyst with the California Institute for Federal Policy Research, a think tank that advises the state’s congressional delegation.

“In a year where we’re threatened with a budget crunch, this is probably the last thing that people on assistance want to hear,” Boloorian said.

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Associated Press contributed to this report.