EDITORIAL : A NEW ERA BEGINS WILSON'S EXECUTIVE ORDER USHERS IN WELFARE REFORM.

BY signing an executive order ending some state services for illegal immigrants, Gov. Pete Wilson became a lightning rod for welfare activists, including some who vowed to go to court to reverse cutbacks.

The governor also became a convenient target for liberals who aren't anxious to remind their allies that President Clinton, after all, signed the complex legislation that radically changes the way welfare and other social programs are funded and administered.

Nonetheless, the executive order signed by the governor Tuesday appears to be consistent with the new law. Likewise, it probably has the approval of most Californians, especially those who supported Proposition 187 in the 1994 election.

(Proposition 187 sought to cut off many benefits for illegal immigrants, but most of its provisions have been blocked by the courts on the grounds that they conflicted with federal law. The new Personal Responsibility and Work Opportunity Reconciliation Act of 1996 undercuts some of the legal grounds upon which the rulings on Proposition 187 were based.)

However, the executive order deals with only a few of the ramifications of the welfare-reform act. Much work remains for the governor and the Legislature.

These challenges are outlined in an Aug. 20 report by the nonpartisan state Legislative Analyst's Office to the Joint Legislative Budget Committee.

The analyst's office estimated that the new law will result in a net loss of $51 million in federal funds during the 1996-97 fiscal year and $6.8 billion over six years. Most of the reductions result from federal restrictions on assistance to noncitizens, including food stamps, Medi-Cal benefits and supplementary security income.

The law also eliminated most welfare benefits as entitlements. However, it also imposes new mandates on states, including work requirements for some welfare recipients.

At the same time, the law gives the states more flexibility. For example, California could exempt up to 20 percent of its recipients from the five-year limit on Temporary Assistance to Needy Families, which replaces Aid to Families with Dependent Children. To what extent, if any, should the state do this?

Another question is whether the state should initiate some state-funded programs, such as aid for noncitizens or teen-age parents who are not in school.

Last but far from least, the Legislature needs to come to grips with the issue of whether certain state and county aid programs will remain entitlements. If there are to be county entitlements, the state should assume financial responsibility for them. If it doesn't, counties - which have little authority to raise revenues or determine eligibility on their own - might be overwhelmed for demands for aid by people who have been cut off other programs.

The new law clearly ends welfare as we know it - one of the goals of Clinton and a majority in Congress. How well it will work in practice will depend to a large extent upon on how effectively state and local officials, who have long complained about federal mandates and bureaucratic straitjackets, face up to their new opportunities - and responsibilities.