By Pat Ciarrocchi

PHILADELPHIA (CBS) — Governor Tom Corbett’s proposed $27.3 billion state budget has no tax hikes, but makes substantial cuts to the Department of Public Welfare and Education.

Today, the $470 million dollars in cuts and the efforts to reform welfare are creating real worry among the agencies that help the state’s most vulnerable citizens — those with mental disabilities, the homeless and others dealing with things like drug and alcohol rehabilitation.

This year, they will be fighting over a funding pie that is 20 percent smaller than before.

For Michelle Manigo, a client at ARC of Philadelphia – an agency that trains adults with intellectual disabilities — cuts could put her job at risk.

Michelle works in a sheltered workshop at ARC. On Wednesday, she was making sure that every plastic bag has been filled with all five items, ordered by the company that contracted with ARC for its services.

“It means a lot to me to be here. I like working here, and it’s fun,” Michelle says. “It feels nice to get a paycheck.”

If the governor’s budget, with its steep cuts, is passed by the legislature, Michelle’s paycheck could be at risk.

In his budget address from Harrisburg yesterday, Corbett proposed reforms. He said he wants to transform the public welfare system.

“Not to eliminate it…but to right-size it,” Corbett explained.

But the part of his plan that those affected said was very short on details involved merging seven budget lines that provide and administer funding to social service agencies. Corbett’s intention is to put the money into block grants, which would be administered by the counties. The counties would have more flexibility in prioritizing who needs the help and getting it to them.

“The devil is in the details,” says Jill Michal, the CEO of the United Way of Southeastern Pennsylvania. “Actually, how some of that gets operationalized and rolled out, I think there is some work to do in both crafting and understanding it.”

And having less money to work with concerns Michal, because people need these services more than ever.

“We all are going to have to do more for more, with less…and that’s the stark reality, right now. But what it means is that a lot of really vulnerable people are going to get a lot closer to the edge.”

At ARC of Philadelphia, 150 people trained there are now working for agencies and companies such as the Department of Motor Vehicles and Tastykake. Last year, ARC had to manage its services with a six-percent cut.

Bruce Hulick of ARC believes this year could be worse.

“The alternative for people coming here to receive job training is sitting at home, and that’s probably the worst thing that could happen.”

As for Michelle, she says cuts “would make me feel unhappy, mad and upset.”