Summary: Welfare reform established a block grant program for which federal funds are capped at $16.4 billion annually through 2002. Through these block grants, the new law provides states with broad discretion in designing their welfare programs. However, the Department of Health and Human Services (HHS) is still required to fulfill many important mandates. Among them, HHS must reduce its staffing level by 245 full-time equivalent (FTE) positions for those programs converted to block grants and reduce its FTE levels for management jobs by 60. HHS remains the lead federal agency responsible for overseeing states' welfare programs. HHS is also required to develop a formula to reward "high-performing" states--those that achieve the goals of the law. GAO found that HHS has reduced its FTE levels and is pursuing its research and evaluation mandates. However, the Department is having difficulty developing and issuing the regulations for the Temporary Assistance for Needy Families Program and the high-performance bonus.
