Gov. Arnold Schwarzenegger is proposing to completely eliminate the state’s welfare program for families, medical insurance for low-income children and Cal Grants cash assistance to college and university students.

The proposals to sharply scale back the assistance that California provides to its neediest  residents came in testimony by the administration this afternoon at a joint legislative budget committee hearing. It followed comments by the governor earlier today that he would be withdrawing a proposal to help balance the budget with billions of dollars of borrowing and replacing it with program reductions.

The proposals would completely reshape the state’s social service network, transforming California from one of the country’s most generous states to one of the most tightfisted. The proposals are intended to help close a budget deficit estimated at $21.3 billion.