The Wisconsin Works (W-2) program revolutionized expectations about public assistance recipients by requiring them to work. A new study notes that W-2 has also radically overhauled the administrative structure of public assistance by partially privatizing its administration and introducing performance measures.

• Under the old federal Aid to Families with Dependent Children (AFDC) program, private entities were prohibited from determining eligibility or performing case management functions.

• In Wisconsin, county workers had a monopoly on the delivery of program benefits, and the state reimbursed them for whatever costs were incurred -- which gave them no incentives to reduce costs.

• The federal Temporary Assistance for Needy Families (TANF) program which replaced AFDC last year allows states to contract with "charitable, religious, or private organizations" for benefits administration.

Wisconsin took advantage of this option, and initially the W-2 plan proposed competitive bidding for welfare management throughout the state, and therefore its potential privatization.

• But due to objections from public employees, counties were given the chance to earn the "right of first selection"-- that is, to administer W-2 without facing competition if they met caseload reduction, job placement and expenditure targets.

• Of the state's 72 counties, 67 ultimately earned the right of first selection; but six counties chose not to exercise their rights, leaving 11 counties open for competitive bidding.

• Private vendors ended up winning the bidding process in nine of the 11 counties, and roughly 70 percent of the state's W-2 caseload is handled by private entities, both for-profit and not-for-profit.

Over the first two years of W-2, the state is saving at least $10.25 million -- the difference between what the state is paying private vendors and what it would have had to pay all the counties to administer the program.