The identification of David V. Mastran and Gilbert Fernandez, executives of Maximus Inc., was reversed in a photo caption on Page A3 in some editions yesterday. (Published 10/18/89)

LOS ANGELES -- Marco Amaya's troubles as a Los Angeles County welfare worker were far from unique. He always had more clients than he could serve adequately. Supervisors changed the rules from day to day. His best efforts brought neither reward nor praise, just taller stacks of case files and more stress. So Amaya did something most unusual. He went private last month, taking his skills to the nation's only known free-enterprise welfare office, joining an experiment that has enraged government-employee unions and some politicians here and left other officials and businessmen hopeful and intrigued. Inside a barren, windowless building suitable for this warehouse district south of downtown, Maximus Inc. has brought its philosophy of sweetness, light and modern business management to the heart of the American underclass. With the blessing of a Los Angeles County board of supervisors dominated by conservative Republicans, Maximus is attempting to coax welfare mothers, often overwhelmed by the hopelessness of their lives, into paying jobs, saving money for taxpayers and earning itself profits. For the often disgruntled and frustrated women who enter the company's softly lit, carpeted waiting room, there are cookies and coffee, plants and attractive wall posters, polite receptionists and case managers who appear promptly to escort "participants," as the welfare clients are called, to private offices upstairs. "I enjoyed the interview," said Yvonne Wallace, a recipient of Aid to Families with Dependent Children (AFDC) who has been placed in a remedial-education program at a local high school. "You don't have to wait in line. You just go up and talk to him and see some videos." Welfare workers such as Amaya now have smaller caseloads, computers to accelerate paperwork and bonuses for moving participants into jobs. Critics note that the nonunion Maximus employees have less generous benefits and can be fired more easily than county workers. If a client remains in a job for six months or finds enough work to reduce an AFDC grant at least 50 percent in that period, the individual case manager receives $100 of a $150 bonus paid to Maximus under its contract with the county. "In my personal opinion," said Amaya, 43, a native of El Salvador, "they do everything better than the county." Some of the initial warm response to Maximus's unusual role in the county welfare system stems from the limits and opportunities of its contract. The company is based in Falls Church, Va., and was started by a former welfare official from the Nixon administration. It has been hired, with a $7.9 million appropriation that its enemies in Sacramento tried to kill, to run Los Angeles' portion of the state's new Greater Avenues for Independence (GAIN) program, a massive child-care, job-training, education and placement program for welfare recipients. Welfare clients have praised government-run GAIN programs in other counties for steering them into remedial education or job-training programs while paying child-care bills. But Maximus executives, running five GAIN offices here with about 9,000 clients, are attempting to prove that they can do the job better and more cheaply. David V. Mastran, Maximus's founder and chief executive officer, is a West Point graduate and former Defense Department systems analyst who became fascinated with the possibilities of welfare reform while director of the office of research and demonstrations in the Department of Health, Education and Welfare at the end of the Nixon administration. Maximus includes other veterans of federal welfare policy such as former Carter administration official Bill B. Benton, executive vice president, and former Reagan administration official John A. Svahn, board vice chairman. The company's GAIN contract manager here is Fred Gustafson, who worked 22 years for the county welfare system and extols the flexibility in a private company. "Welfare reform needs injections of innovation, entrepreneurial energy, the profit motive to make the welfare system work," Mastran said. "It needs a marketing focus, satisfying customer {welfare recipient} wants." He said for-profit administrators can be more flexible and give welfare recipients a clearer, first-hand sense of the demands of private employment. County officials supervising Maximus's work seem happy with the results. Except for some refugee programs, no private company has directly managed welfare cases, so comparison is difficult. But John Martinelli, the county's chief of GAIN operations, said Maximus, for less cost, "has done as good a job as we would have done, and in some respects better." Martinelli said he was particularly impressed by the computer systems. Other welfare experts remain skeptical, and often hostile, toward Maximus. Efforts by the Service Employees International Union (SEIU) to void the company's three-year contract in court have failed. The union contended that only civil-service employees could legally perform "discretionary" duties such as deciding whether someone is eligible for welfare. The county said Maximus employees are following instructions in manuals written by government officials. "I think it's ethically and morally wrong for a profit-making company to be given a large contract to help welfare recipients . . . one that projects a $1 million profit," said Howard Boyle, a senior employment representative with the Los Angeles Roman Catholic Archdiocese. A company thinking only of profit "might choose to work more with the most placeable applicants," he said. Gilbert Fernandez, Maximus regional director in charge of the downtown GAIN office, echoed other company officials' praise for the flexibility of a private enterprise. "We're not tied down in the bureaucracy," he said. "If I see today there is a window broken, I can get it fixed today." Rose Patterson, a welfare client for 19 years, looked around the Maximus waiting room at the flowers and pastel walls and said she was beginning to entertain hope. "They're nice to you, and they don't make you wait for days and days," she said. "We'll see."