In 1988, the Congress enacted sweeping changes to the nation’s welfare system by passing the Family Support Act (FSA). A central purpose of FSA was to transform Aid to Families With Dependent Children (AFDC) into a transitional program by strengthening existing work requirements and guaranteeing child care subsidies to welfare recipients while they participate in education and training activities. To accomplish this, FSA created the JOBS program, which was designed to help AFDC families to obtain the education, training, and work experience to become independent from welfare. Under the JOBS program, states may make available to participants a broad range of services and activities. States are required to provide certain components, including high school or equivalent education, basic and remedial education, education for those with limited English proficiency, job skills training, job readiness training, and job development and placement. States must also offer two of the following four optional components: job search, on-the-job training, community work experience, and work supplementation. FSA also required states to guarantee child care for JOBS participants and employed AFDC recipients. Under FSA, states are accorded substantial flexibility in the design and implementation of their JOBS programs. Although about $1 billion in federal funds has been made available for JOBS each year, states must commit their own resources by providing matching funds to acquire the federal dollars allocated to them. Recognizing the state financial role in JOBS, FSA generally allows states to operate their programs to the extent that “State resources . . . permit.” Moreover, although FSA mandates participation in JOBS for AFDC recipients between 16 and 59 years of age, it allows exemptions for certain individuals, such as those caring for children under age 3. FSA also allows states to limit participation by those with child care needs by deferring participation, granting “good cause,” creating waiting lists, reassigning priorities, and taking other measures. Finally, FSA defines minimum participation standards for states to meet. To meet these requirements, states only have to serve a portion of their nonexempt AFDC recipients. As welfare recipients move into the workforce, they often must pay for the child care that enables them to work, and the cost of child care remains an employment barrier to many of them. Recognizing the importance of child care to helping welfare recipients obtain training and employment, leave welfare, and stay employed, the Congress has created four child care programs since 1988: Guaranteed child care for employed recipients of AFDC, JOBS participants (discussed above), and recipients in other approved education activities; Guaranteed child care for 1 year after leaving the welfare rolls for employment (known as Transitional Child Care); Child care subsidies for working poor families who are not currently receiving AFDC but who would be at risk of becoming eligible for AFDC without such subsidies (known as at-risk child care); and Monetary support, provided under the Child Care and Development Block Grant, to working, low-income families with incomes up to 75 percent of a state’s median income. The first three of these programs require states to commit their own resources to obtain the federal dollars allocated to them; the fourth requires no state matching funds. In fiscal year 1994, federal and state governments spent over $2.5 billion on these four programs. Taken together, these subsidy programs have made an important contribution to states’ efforts to move some mothers off welfare to have them begin work, as well as to keep some working poor families off welfare. Most state JOBS programs in our nationwide survey reported providing child care subsidies or help arranging child care to all or almost all participants who needed assistance (see table 1). However, to a great degree, their ability to do so stemmed from two key FSA provisions that serve to limit participation in JOBS by AFDC recipients who might need child care. One provision exempts large numbers of AFDC recipients, many of whom would potentially need child care assistance if they took part in JOBS. These FSA exemptions provide one way of managing the influx of clients who may need child care to participate. The most recent Department of Health and Human Services (HHS) data show, for example, that nationally in 1993 75 percent of the female AFDC recipients exempted from participation in JOBS were exempt because they were caring for children under the age of 3. A state may also limit JOBS participation on a case-by-case basis if child care is not available. Our analysis of HHS data showed that 50 percent of nonparticipants have a child under age 3, while only 20 percent of participants have a child under age 3. To determine what portion of adult AFDC recipients JOBS is serving, we obtained the most recent HHS average monthly data available. These data showed that the seven states we visited were serving 169,891 welfare recipients in their JOBS programs, only 15 percent of their total adult AFDC caseload. Table 2 shows JOBS participants as a percentage of the total AFDC population for each of these states. Nationwide, HHS data showed that 541,995 welfare recipients were participating in JOBS programs, about 13 percent of total adult AFDC recipients in any given month. The number of AFDC recipients who participate in JOBS is also constrained by state funding. Although spending for child care assistance has been growing and states must guarantee child care for participants, FSA allows states to operate the JOBS program as state resources permit. The amount of funding that states provide for child care to match federal funding competes with other state budget requirements, such as providing funds for building highways and prisons. Providing fewer state matching dollars limits the total dollars available for child care services, which in turn, limits the number of JOBS participants who can be given child care subsidies. Five of the seven states we visited reported insufficient funds for child care. Some officials explained that because of the level of matching funds, they must limit those who can participate in their JOBS programs to women with minimal child care needs or those who have made child care arrangements that are free. In Florida, JOBS participants have third priority for child care funds, after children at risk of abuse or neglect and children of parents who have left the welfare rolls for employment or who still receive AFDC because of low earnings. Florida, therefore, simply exempts AFDC recipients with child care needs from participating in JOBS when funding is not available. Texas officials stated they have very meager funds for child care and therefore attempt to enroll participants who can find free child care or who have school-aged children and can participate during school hours. Five of the seven states we visited were able to provide information on the number of JOBS participants’ children currently receiving child care. For fiscal year 1994, these five states reported providing child care to 207,104 children of JOBS participants. These children, however, represent only a small portion of the states’ total number of children on AFDC. For example, during April, May, and June of fiscal year 1994, Michigan provided child care to an average of 13,999 children of JOBS participants each month.During this same quarter, Michigan had an average of 323,823 children under age 13 on its AFDC rolls. (See app. III for additional data on the number of children served and the associated cost.) Although FSA guarantees child care to welfare recipients while they are participating in JOBS, and our survey showed that most JOBS programs are providing some child care assistance to current participants, a number of barriers hinder finding child care for participants. Some of these barriers are common to the general population of individuals searching for appropriate child care, while others are related to how the JOBS program may be structured in a state. These barriers can delay AFDC recipients’ participation in the JOBS program. Nationally, we found in our survey that, irrespective of funding issues, a general lack of child care in the community—as well as a lack of child care that is affordable for participants—contributes to some JOBS programs’ inability to provide child care assistance. Like the general population, JOBS participants seek child care from a variety of sources, such as centers, family child care homes, and relatives, and encounter similar problems in finding appropriate child care. In our visits, we found that some JOBS participants have difficulty finding care for infants, special-needs children, children before and after school, and sick children. In addition, some JOBS participants have difficulty finding child care that is accessible, given a lack of reliable public or private transportation, and available during nonstandard hours of work. (See app. IV for additional information on barriers.) Officials in every state we visited reported a shortage of care for infants, six states reported a shortage of care for special-needs children, and three states reported a shortage of before- and after-school care. In Texas, where a shortage of infant care already exists, officials believe recent quality improvements to state licensing regulations will cause some providers to discontinue their infant programs rather than comply with the new regulations. Michigan officials said the state has a shortage of infant and special needs-related child care in the inner cities and a shortage of all types of child care in rural areas. Moreover, a suburban county child care specialist in Michigan said the current supply of child care providers cannot handle the expected influx of the 3,000 new clients in that county required to participate in the state’s welfare reform program begun in October 1994. The specialist stated the supply shortage may push participants to use care not regulated by the state. In addition, caseworkers told us that an urban school district in Michigan has only one location that offers before- and after-school care. Even when before- and after-school care is available, county officials told us that children may not have transportation between their homes and the care facility during these nonschool hours. Washington State officials noted that some children of JOBS participants have multiple special needs, which increase providers’ reluctance to care for them.