Cutting Budgets At Expense Of the Needy

THE light-gray mattresses go "splat" when they hit the bare floor. It is 9 p.m. The crowd of 60 people begins to pull off the neatly piled mattresses and stake out a place to sleep.

By day this is a senior-citizens center. At night, since Thanksgiving, it has served as a homeless shelter.

"We knew that the homeless in Detroit had increased dramatically," explains Carl Thomas, president of Lutheran Social Services of Michigan, which runs the senior center. "The need was more than the traditional places could handle."

Like many states with generous social-welfare programs, Michigan is slashing its assistance to the needy. The cutbacks and recession have boosted the number of homeless and strained social-service agencies. They have also sparked sharp debate over the direction and scope of welfare reform.

The reason for the cuts is simple. Most state budgets are in the soup. Deficits loom. Welfare programs, which make up a large part of budgets in states such as California, Minnesota, and Michigan, are a tempting target. Welfare benefits slashed

The Center on Budget and Policy Priorities in Washington, D.C., reports that states cut more welfare benefits last year than at any other time in the past decade. Forty states froze or reduced Aid to Families with Dependent Children, the center said. Half of the 30 states offering general assistance to the poor cut back those programs.

Michigan took the most dramatic step of all. It eliminated its general-assistance program last October. Nearly 83,000 childless adults lost monthly payments that often covered their rent. The result: more homeless.

For some, the loss of benefits has been a goad. "I did get complacent in a certain lifestyle," says Wendy Jordan, who lost $228 a month in general-assistance payments last fall. "The cutoffs give us an incentive to better ourselves."

The loss of general assistance forced Ms. Jordan to give up her $250-a-month apartment. She decided to check into a drug treatment program. Now drug-free and a resident of a Detroit women's program called Heartline, she is looking for a job.

For other Michiganders, the cuts just made life harder.

Roger Trader of Saginaw used to be a manager at a McDonald's restaurant. He quit that job in the mid 1980s to go back to school and get training for something better. He hasn't worked steadily since then.

When it was available, general assistance was a better deal than working, he says. "You don't get ahead" with a minimum-wage job.

Members of the Mackinac Center for Public Policy, a conservative think tank in Midland, Mich., agree. In a recent report, they noted that a full-time minimum-wage job pays well under $10,000 and may not offer any health benefits. The total value of welfare assistance in Michigan averages around $14,000.

The cuts extend beyond the poor, however.

There have been reports of elderly women in nursing homes taken off solid food because state Medicaid would no longer pay to replace their dentures.

Mary Selden of suburban Detroit still gets meals-on-wheels, but she's worried the service will be cut off. Van service has been pared back. Drivers no longer will carry heavy bags of groceries into the house.

"I want to give as much as I get," Mrs. Selden says. (She saves the portions of the meals she doesn't eat for an elderly neighbor.) But "I would probably live a lot less well if it weren't for this help."

Some voters were outraged when Gov. John Engler began cutting social programs last year. Jackie Shrader, an out-of-work waitress on state aid, launched a petition to oust Governor Engler. She drove 67,500 miles in her 1982 Ford Escort, following the governor around the state to gather names for her recall petition. The effort failed, but Mrs. Shrader, a mother of three, is launching a second recall drive.

Engler, for his part, plans to push ahead.

"We're just starting in terms of programmatic reform," he says in a telephone interview. "It has taken a long time with the bureaucracy in the Department of Social Services. But I think we're making some headway."

This spring he plans to detail a comprehensive set of proposals in a special message on social welfare. Part of the effort will be decentralization of social services.

"We're really trying to drive delivery of social services from the local community - [offering] what the family of the neighborhood needs - rather than just to have it fit a state program," he says. Three Michigan cities are participating in such a program, which Engler has dubbed "Communities First." Reforms called cuts

The governor also plans to detail a social contract in which those receiving state aid take responsibility to give something back.

Many welfare experts say the governor's reforms are merely disguised cuts.

"It's a meat-ax approach to a very complicated problem," says Jeffrey Lehman, a professor of welfare law at the University of Michigan. The governor may talk about giving welfare recipients more incentives to work. But next month, the state will cut the amount of outside income that a welfare mother can get.

Moreover, the poor are not some monolithic group, he says, but a diverse group with different needs and challenges.

Tom Falletich sits in another room of the Detroit shelter, reading Dale Carnegie's "How to Win Friends and Influence People." He is white, nearing middle-age. In the mid-1980s, he owned a small construction firm that employed six people. The company started to falter after the stock-market crash of 1987 and never recovered.

Mr. Falletich moved from his house to the YMCA to another shelter and, eventually, out on the street. He has gone through resume-writing classes and mailed letters to hundreds of prospective employers. No work. Now homeless, he has no address to give even if an employer wanted to reach him.

"I paid taxes in this state for 25 years never thinking that I would need this," he says, indicating the room around him. A shelter volunteer offers him a free pair of underwear, which he turns down. "It's like a long nightmare," he says.

In its report, the Mackinac Center lists 16 recommendations for Michigan welfare reform. The main thrust is to cut benefits and rules that encourage prolonged welfare dependence, such as having more children, truancy from school, and single-parent homes. The plan also calls for expanding education and work requirements of able-bodied adults on Aid to Families with Dependent Children. Money needed for training

Interestingly, many welfare advocates do not defend the status quo that existed before the cuts. But for real reform, they say, the state will have to spend large amounts of money on opportunity.

"States are putting in punitive measures or cuts," says Greg Duncan, program director at the Survey Research Center at the University of Michigan. "I would be willing to go along with some of them provided at the same time there are these carrots.... The key is the willingness of states to put money in programs that work."

That means high-quality training - something that does not come cheap. Mr. Duncan applauds Governor Engler for proposing a high-level job-search and training and education program. "The problem is that there are only 15,000 slots," he says.