Critics Hit Proposed Welfare Rules. SOCIAL ASSISTANCE

LITTLE has been said publicly about welfare reform in the nearly seven months since former President Reagan signed into law the beginnings of a fundamental redirection in America's welfare policy. But beneath the surface much has been going on. Welfare reform is now just beginning to be publicly discussed again, with hearings this week on the way in which the new law is being put into effect.

Over the past seven months officials of the Department of Health and Human Services, which oversees implementation of the new law, have been drawing up regulations the states must meet in order to receive federal funds. The HHS has published the regulations it proposes, and interested organizations may now comment on them. HHS will consider all views before making them final.

This week Sen. Daniel Patrick Moynihan (D) of New York, principal architect of the new law, held a hearing at which representatives of organizations that work with the poor assessed the proposed regulations. What most said publicly was that several flaws exist; the most serious charge was that several elements of the regulations are so stringent that they would limit state flexibility, and in some cases prove counterproductive.

Some, however, who are sharply critical in public, also say in private that the regulations are, on balance, quite good.

Until October the keystone program of the American welfare system had emphasized helping poor children by providing money to them and their mothers.

The thrust of the new law is to redirect the welfare system to emphasize making able-bodied adults financially self-sufficient. The law ``embodies a new consensus that the well-being of children depends not only on meeting their material needs, but also on the parent's ability to become self-sufficient,'' says Constance Horner, undersecretary of the Department of Health and Human Services.

Congress, however, often passes laws that contain ambiguities, frequently because that is the only way to obtain enough votes for passage, says Douglas Besharov, resident scholar at the American Enterprise Institute. Thus, he says, regulations ``are potentially as important as the actual statute,'' because they clarify the ambiguities.

This act of clarification is particularly important in the case of welfare reform: Each of the 50 states makes the rules for its own welfare program, and each must adjust its rules to comply with the federal law. But first each must know as precisely as possibly what it has to do to comply - and that is what the regulations are designed to spell out.

Witnesses at the Moynihan hearing criticized most sharply the so-called participation requirements. One such requirement holds that states would be eligible for additional federal funding only if they could show that a certain percentage of welfare recipients were attending classes or training sessions for 20 hours a week, within 31 days of joining the program. A second requirement is that states keep records on how well each recipient is meeting this standard.

These participation requirements are ``excessively stringent,'' said Dennis J. Boyle, deputy director of California's Department of Social Services. To meet them, states will wind up going against congressional intent and helping only the least needy rather than the most needy, he forecasts.

Opposition to participation requirements was predictable. Congressional sponsors of welfare reform, and organizations that deal with the issue, opposed these requirements last year when Congress was considering the reform law. But they had to accept the concept of participation requirements as a price of support from the Reagan administration.

Most successful state programs would not have met these requirements either, added Judith Gueron, president of Manpower Demonstration Research Corporation. Dr. Gueron's organization has done the most respected assessments to date of state welfare programs.

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