updated 6/19/2007 5:50:43 PM ET 2007-06-19T21:50:43

Wisconsin's landmark welfare reform program was dealt a setback Tuesday by a state appeals court that said the state must continue giving assistance to participants who are ready to enter the work force but cannot find jobs.

In a 2-1 decision, the District 1 Court of Appeals ruled in favor of two women who qualified for the Wisconsin Works program but were immediately deemed "job ready" and ineligible for aid even though they didn't have jobs.

The program, started 10 years ago under then-Gov. Tommy Thompson, requires mothers to work or get job training in exchange for a check and child care. It replaced a conventional welfare program, that provided money for poor women based on income and how many children they had.

Thompson, who is seeking the GOP presidential nomination, touts the program on the campaign trail as one of his signature accomplishments. He says the program, which helped lay the groundwork for federal welfare reform in 1996 and was copied by other states, reduced the welfare rolls and encouraged people to find jobs.

Dissenting justice: Ruling will ‘open the ... floodgates’
A dissenting judge said the decision guts the program's goal of restricting welfare-like payments to those unable to work and said it would "open the welfare floodgates."

The women agreed they were capable of working but said their lack of jobs meant they had no income to support their families. They sued to challenge the Department of Workforce Development's placement of them in unsubsidized employment, a classification meaning they were no longer eligible for a state-subsidized job or job training.

The majority opinion, by Judge Patricia Curley, said state law only allows participants in the program who have jobs to be moved into unsubsidized employment, so the plaintiffs and all others without jobs should be placed in state-subsidized jobs or training.

"This placement policy defeats the purpose of W-2 which includes assisting needy families ... and is not consistent with controlling state law requiring that unsubsidized employment placements involve actual employment," the court said.

In his dissent, Judge Ralph Fine accused his colleagues of rewriting state law to expand the number of people eligible for taxpayer-subsidized work.

"The real-world result of what the Majority does here will open the welfare floodgates to others in Wisconsin with employment skills but no job," he wrote.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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