The recent overhaul of the federal welfare system gives states new flexibility to set child care policies, develop child care programs, and fund new initiatives. The Child Care Action Campaign (CCAC) conducted an audioconference on July 31, 1997, to examine key elements of new state plans and to take a close look at how one state, Illinois, made decisions on interrelated issues such as eligibility, parent co-payments, and state reimbursement rates for child care. Featured presenters were Joan Lombardi, Associate Commissioner of the U.S. Child Care Bureau, and Michele Piel, manager of the Office of Child Care and Development, Illinois Department of Human Services. This issue brief summarizes information from the audioconference. The brief covers the following topics: (1) how states will administer the new programs; (2) determining eligibility and prioritizing service; (3) income-based eligibility and Illinois; (4) parent co-payments and state rates; (5) quality; and (6) increasing funding. (EV)