The new federal welfare reform law shifts more responsibility for welfare programs to the states; but many aren't equipped to help people find the jobs they are required to get under the new law. Seeking more efficient management, states are contracting with private firms to provide services for the $20 billion welfare system, from job training to cash disbursements.

Cities have successfully privatized such services as fire protection and trash hauling over the past few years. Over the objections of some unions representing government workers, they are moving to privatize welfare services as well. For example:

• Curtis & Associates provides counseling services and motivational training for chronic welfare recipients, and is paid based on the number of recipients who find jobs and keep them.

• Kelly Services placed a recruitment center in a Detroit welfare office, offered free computer software training and placed 288 welfare recipients in temporary jobs in one year -- more than a third of whom worked 90 days or more.

• New York and other states have already privatized food distribution, housing coordination and medical care.

• Citicorp already has contracts with 27 states to provide debit cards that replace food stamps, welfare checks and rent subsidies -- and the rest must set up such systems by 2002.

Unlike traditional welfare bureaucracies, private contractors can innovate because they aren't bound by union work rules and civil service procedures, and they are paid based on performance.