The impact of recent changes in the welfare and work force development systems on adult basic education programs and their students was examined at a literacy education provider in Somerville, Massachusetts. The study found that the Student Coalition for Action in Literacy Education (SCALE) program had previously had no difficulty in attracting and retaining students and in helping students achieve the desired results. Now, however, the new Career Center Initiative and the system of "Individual Referrals" has had the following effects: the number of students in education programs at the agency has plummeted; the agency is having a difficult time recruiting students; programs have been consolidated and are at risk of ending altogether; staff have been laid off; and the stability of a large, long-running community agency has been severely shaken. Income has dropped from $228,000 to $84,500. The situation seems to stem from changes in the welfare and work force development systems, such as the following: (1) the implementation of the 20-hour work requirement for most recipients of public assistance, along with significant restrictions on funding for education; (2) cuts in non-Department of Education funding for basic and prevocational education from sources such as the Job Training Partnership Act; and (3) implementation of the One-Stop Career Center Initiative and the replacement of funding contracts with the Individual Referral process, posing many problems for adult basic education programs and the agencies that operate them. These developments have put a strain, probably unintended, on the agencies. They are now forced to spend large amounts of staff time in marketing and follow-up, and staff are already overextended. In addition, the Career Center design and Individual Referral process more easily serves a middle-class, English-speaking clientele that can more easily visit a number of programs. Finally, communication between the Service Delivery Area and the programs is not always adequate, especially now when it is needed during the implementation of reforms. (KC)