An ailing economy is threatening the success of welfare reforms that in the past decade moved millions of people off the public dole and into jobs.

Caseloads are shooting up in Sacramento County and across the state as the economy slumps and unemployment rises. At the same time, the welfare system is facing unprecedented budget cuts from the state and a possible financial penalty from the federal government.

The effect is fewer services for people who need them more than ever, administrators told The Bee.

"I have a lot of concern right now," said Bruce Wagstaff, director of the Department of Human Assistance, which administers CalWORKs in Sacramento County. "This is serious business."

Under a bold reform of the welfare system, launched in 1997 by the federal government, many who had depended on public assistance for themselves and their families went to school, learned new skills and found jobs. They became janitors and hotel managers, medical assistants and forklift operators. In California, welfare caseloads plummeted 45 percent.

In Sacramento County, the number of people enrolled in CalWORKs – the program that the state adopted to replace Aid to Families With Dependent Children – has jumped nearly 9 percent during the past year. Other aid programs also are dealing with sharp increases in demand. Nearly 20 percent more people are getting food stamps in Sacramento County. More than 26 percent more people are getting General Assistance.

Things are even more dire in other counties. In Contra Costa, where the mortgage meltdown has hit particularly hard, officials have seen a 67 percent increase in Medi-Cal applications during the past year. Food stamp applications are up 65 percent. During the past two years, 37 percent more people have enrolled in CalWORKs, said Employment and Human Services department spokeswoman Jackie Johnston.

Statewide, enrollment in all forms of public assistance is soaring.

CalWORKs fears federal penalty

CalWORKs no longer is meeting federal standards requiring at least 50 percent of clients to work 30 hours a week, officials said, so the program could be subject to a federal penalty of up to $149 million. At the same time, the state has cut its CalWORKs contribution by $70 million. The losses will mean cuts in staffing and programs that are critical to the program's success, said Wagstaff and others.

"Demand is up. Resources are down," Wagstaff said. "The gap is bigger than we've ever seen it. We are all going to have to redefine what we do, and that is going to have an impact on our clients and our staff."

The County Welfare Directors Association recently polled its members and found that nearly every county in the state is planning cuts in CalWORKs staffing and services in response to budget issues, said Graham Knaus, the association's senior fiscal and policy analyst.

Those cuts almost certainly will translate into delays in processing applications and issuing checks; fewer clients finding jobs; and slashing programs such as housing and education help and domestic violence counseling, officials said.

Despite the current challenges, Wagstaff said, CalWORKs overall has been an unqualified success based on the number of people who have left welfare, the types of jobs they have landed and their wages.

"It's no exaggeration to say that we changed the culture of welfare," moving people who had depended on government aid for years into jobs and independence, said Wagstaff, who helped craft CalWORKs.

"We changed expectations. We trained people and got them good jobs," currently paying an average of more than $11.50 an hour in Sacramento County, he said.

In July 1995, two years before the Legislature enacted reforms, Sacramento County's welfare rolls peaked at 46,362 cases. This past July, that number had shrunk to 30,749, a drop of about 34 percent.

Most entered the program as single parents, 40 percent of them with less than a high school diploma and many with backgrounds that included drug and alcohol abuse, Wagstaff said.

Call The Bee's Cynthia Hubert, (916) 321-1082.