With its emphasis on reducing dependency and putting people to work, the historic federal welfare reform of 1996 produced spectacular results in New York and across the country.

In the past decade, welfare caseloads across the Empire State have dropped 60 percent, and the child poverty rate in the state has decreased 20 percent.

State-funded welfare payments, which were 5 percent of New York state’s budget when George Pataki took office as governor, have sunk to just 1 percent of state expenditures.

Equally important are the results that can’t be easily measured – such as the positive example set for children by parents who get up every morning and go to work.

As the 10th anniversary of the original reform approaches, welfare policy has arrived at an important crossroads. Five years after the original federal law expired, President Bush has signed a long-overdue extension of the original Temporary Assistance for Needy Families program. The new law has important implications for both state and local officials.

The original TANF law required states to move the heads of 45 percent of single-parent families receiving public assistance into the work force. But there was a loophole: States could get bonus “credit” for reductions in their caseloads below the 1995 level. For New York and most other states, caseloads ended up shrinking so quickly that the 45 percent threshold became moot.

But new TANF provisions move the nationwide work participation goal to 50 percent, and it gives states credit only for caseload reductions since 2005.

Effective Oct. 1, the feds will financially penalize states that don’t meet that goal.

New York has some work to do. The statewide work participation rate among welfare recipients is now hovering around 39 percent (and in Onondaga County, it ‘s slightly lower, according to state officials).

The key problem is that roughly one-quarter of households receiving cash assistance in New York are in “sanction” status, meaning the head of household has simply refused to accept a job or to get involved in some work-related activity. State law now limits the maximum penalty for doing nothing to a 20 percent reduction in the basic family grant. This obviously has proven to be a weak work incentive for too many people.

Gov. Pataki has proposed changing the law to allow the elimination of the family grant for recipients who refuse to work. The 39 other states allowing such a “full family sanction” have found it can dramatically raise work rates.

Assembly Democrats have insisted on removing Pataki’s tougher work sanction proposal from each of the last several state budgets. But their continued refusal to put more teeth in the law will soon have financial consequences.

Failing to meet the work participation rate required could cost New York state (and its localities) $300million next year.

Once a burning issue in New York state politics, welfare seems to have disappeared from the radar of most politicians and opinion leaders.

It’s time to start paying attention again.