Summary: Although almost 10 million children are on welfare today, the existing welfare system requires few of their parents to be in school or training. Welfare reform proposals, however, would require many more welfare recipients to participate in education or training as well as require them to find work after two years. Should such proposals be enacted, many more welfare parents will need child care subsidies. Yet only a small fraction of eligible parents have received child care subsidies. Furthermore, the fragmented nature of the child care funding streams, with entitlements to some client categories, time limits on others, and activity limits on others, produces unintended gaps in services. This limits the ability of low-income families to become self-sufficient. Finally, as states deplete funds for welfare clients, they often turn to funds earmarked for the child care needs of the working poor, putting the working poor at greater risk of welfare dependency. For all of these reasons, GAO believes that welfare reform's goal of economic independence for the poor could be undermined if the problems in the child care subsidy system are not adequately addressed.
