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Welfare Time Bomb?

Federal reform has states edgy about hiked costs and lost innovation

For two years, Minnesota has been at the forefront of welfare reform, experimenting with a pilot program that has shifted 36% of aid recipients in eight counties into work. But now, officials are rushing back to the drawing board. A new federal law will require every state to place half its welfare population in jobs by 2002--a timetable few officials feel they can meet without huge sacrifices. "This will become more difficult than putting a square peg in a round hole," worries John Petraborg, Minnesota's Acting Commissioner of Human Services.

By mid-August, President Clinton is expected to sign legislation enabling the most radical welfare reform since the system was crafted 60 years ago. When he does, governors will get what they long clamored for--control over entitlement programs serving 12.8 million poor and 1 million legal immigrants. They may soon wish they had kept quiet: The bill will require a wholesale restructuring, even as projected funding is reduced over six years by $56 billion.