The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 purports to reform welfare policy and encourage parents to achieve self-sufficiency, but the legislation raises many problems for children and their families. This guide is designed to highlight an array of decisions regarding the most important welfare and child care issues resulting from this federal legislation. The issues analyzed are: timing of state decisions for new welfare programs; funding; making work requirements work for families; helping families stabilize work and escape poverty; helping families succeed off welfare; protecting children; child care; and strengthening families. For each of these issues, the guide highlights a promising program model. The guide's five appendices contain data, listed by state, on: TANF (Temporary Assistance for Needy Families) funding for fiscal year 1997; change in welfare caseloads for 5 years; state maintenance of effort levels as required by the federal law; estimated fiscal year 2007 state allocations for the child care and development fund; and time limits on assistance. (JPB)