The Congress passed PRWORA in 1996, making sweeping changes to national welfare policy. The act replaced the Aid to Families with Dependent Children (AFDC) program with TANF block grants, a fixed federal funding stream that provides states with a total of $16.5 billion per year over 5 years and allows states the flexibility to design their own programs and strategies for promoting work and self-sufficiency. Under TANF there are strong work requirements for recipients and there is a limit on the number of months (60) that families can receive federally funded TANF benefits. The number of families receiving cash assistance has declined dramatically in recent years. More than 5 million families received cash assistance in 1994 but, as the economy improved and TANF work enforcement gathered steam, fewer families received assistance. Caseloads have fallen dramatically since the act went into effect, from 4.4 million families in August 1996 to 2.2 million families in June 2000. Caseload declines slowed toward the end of 1999 and in a few states rose slightly, but the most recent data available from HHS indicate that, nationally, caseloads continue to decline. Although there are no supporting data, many assume that as caseloads have fallen the composition of the caseload has changed. Specifically, some have speculated that those TANF recipients who could easily find and keep jobs have left the rolls, and hard-to-employ recipients—those with characteristics that interfere with employment—comprise an increasing share of the remaining cash assistance recipients. As a result, there is some concern that state programs that may have been effective at moving easier- to-employ recipients into the workforce may not meet the needs of those remaining on the rolls. Under PRWORA, TANF recipients face stronger work requirements than welfare recipients faced in the past. Unless a state opts out, nonexempt adult recipients who are not working must participate in community service employment 2 months after they start receiving benefits. Adults are required to participate in work activities within 2 years after they start receiving assistance under the block grant. If recipients do not comply with the work activity requirement, states must impose sanctions that reduce cash assistance, and may opt to terminate the grant entirely. PRWORA allows states to exempt some TANF recipients from the work activity requirement while still receiving benefits. States may exempt parents with children under age 1 from work requirements, and may disregard them in calculating participation rates. States may not penalize parents with children under 6 for not working if child care is not available. Recipients who are exempted by the state from work requirements are still subject to the federal 60-month limit on receipt of benefits and may be included in a 20-percent hardship exemption from the time limits. All states allow recipients to meet their work activity requirement through paid employment. Many states have an earned income disregard that allows recipients to earn some amount without losing cash assistance, and many states raised the amount of this disregard after implementation of TANF to give TANF recipients additional incentives to work. In states with a higher earnings disregard, more employed persons may still be receiving TANF benefits—and thus remain part of the caseload—than in states with lower earnings disregards, where working recipients with lower earnings levels are removed from the rolls. To avoid financial penalties, states must ensure that at least a specified minimum percentage of adult recipients are participating in work or work- related activities each year that count for federal participation rate purposes. These types of activities are not necessarily identical to the activities the state allows recipients to engage in to maintain eligibility for benefits. As specified in PRWORA, work activities that count for federal participation rate purposes include employment (subsidized or unsubsidized), work experience programs, on-the-job training and community service. Providing child care for TANF recipients engaged in work or work-preparation activities also counts for federal participation rate purposes. Job search is considered a work activity for a recipient for up to 6 weeks (or 12 weeks in high-unemployment areas), as are certain types of education and training that are directly related to employment and attendance at secondary school or in a course of study leading to a certificate of general equivalence in the case of a recipient who has not completed secondary school or received such a certificate. The required number of hours of work participation for TANF recipients and the percentage of a state’s caseload that must participate to meet mandated participation rate requirements were designed to increase over time (see table 1). Under PRWORA, families with an adult TANF recipient cannot receive federally funded assistance for more than 60 months. However, the law allows states to impose a shorter time limit or to provide assistance beyond 60 months using state funds. The law also allows states to exempt families with adult TANF recipients from the 60-month limit on federal assistance based on hardship or if the family includes a victim of domestic violence. If a state determines that a family meets one of these criteria, it can opt to continue the family’s federally funded cash assistance beyond 60 months. However, a state can exempt no more than 20 percent of its TANF caseload at any point in time from the federal 60-month limit. Federal laws and regulations give states flexibility in determining the types of programs they offer to TANF recipients and how TANF block grant and state funds can be used. States also have the flexibility to set a wide range of program rules such as eligibility criteria, earned income disregard amounts, and benefit levels. Most programmatic decisions are also left to states. For example, states can choose to administer the TANF program themselves or devolve responsibility for many of the program management decisions to county or local TANF offices. States can deliver employment- related services to TANF recipients through their workforce development or employment service agencies or through their TANF agencies. With few restrictions, states can also determine the typical pathway for most new applicants. For example, in designing their TANF programs, states have the flexibility to determine whether new applicants initially will be referred to education, training, and work-preparation activities, or whether they first will be encouraged to enter the workforce as quickly as possible. Many states have chosen the latter approach, often referred to as Work First, in part because of the emphasis PRWORA places on work. Under a Work First approach, recipients are encouraged to find jobs as quickly as possible and most recipients are placed in job search—an activity that involves looking for a job—rather than in education or other work preparation activities. Only recipients who fail to find jobs, or who find jobs only to lose them immediately, are referred to education, training, or other types of activities. States also have a great deal of flexibility in determining exactly what types of education, training, or other work-preparation activities as well as what types of support services they provide with their TANF funds. In addition to TANF funds, states can also access U.S. Department of Labor Welfare-to- Work (WtW) grants to operate community service or work experience programs, create jobs through wage subsidies, provide on-the-job training, or provide employment placement and job readiness services. WtW funds may also be used for a wide range of support services, including education and training, child care, short-term housing, and transportation assistance for those placed in work activities. Although PRWORA's emphasis on devolution of program authority to states and other levels of government calls for state and local governments to take responsibility for program results and outcomes, PRWORA gives the federal government some program oversight responsibilities. Under the law, HHS is responsible for administering TANF funding, setting reporting requirements for states, and reviewing state TANF plans. HHS is also responsible for conducting research on the benefits and effects of the TANF program, and receives funding for welfare reform and social services research and evaluation studies. In keeping with this, HHS' stated goals for research supported with these funds are to gain knowledge about, and thereby improve, welfare policy and practice and to ensure that knowledge gained is widely disseminated in formats accessible to policymakers and program administrators at all levels. Section 413 of the Social Security Act specifically directs HHS to develop “. . . innovative methods of disseminating information on any research, evaluations, . . . including the facilitation of the sharing of information and best practices among States and localities through the use of computers and other technologies.” HHS also has created several mechanisms to educate states about the broad latitude granted them by PRWORA and its implementing regulations for assisting TANF recipients. HHS can issue a variety of publications and communiqués and sponsor national and regional conferences that can include discussions of the law and regulations, possible sources and uses of state and federal funds, and creative state strategies. The Welfare Peer Technical Assistance Network, funded by HHS, was created to provide a variety of services and products to states, counties, localities, and community-based organizations that work with TANF recipients. Even though an increasing percentage of TANF recipients nationwide are combining welfare and work, most recipients are not engaged in work or work activities as defined by PRWORA. At least in part, this may be because many current recipients have characteristics that make it difficult for them to work, according to data from national surveys and several studies, as well as from officials in the six states we visited. Characteristics that impede employment are fairly common among TANF recipients, although there are few data available to assess whether recipients with such characteristics represent a greater share of the caseload than previously. To avoid financial penalties, states must ensure each year that at least a specified minimum percentage of adults receiving TANF are participating in work or work-related activities that count for federal participation rate purposes.