Progress in integration of state-level welfare and work force development systems in the Midwest was examined through case studies of 10 communities in 7 states. The case studies focused on local-level coordination and/or integration between the welfare and work force development systems. Despite legislative mechanisms to encourage collaboration, separate funding streams were still keeping the two systems apart in six of the seven states. Despite recent shifts in agencies' work and goals, the welfare and work force development systems were continuing to operate independently of one another. The following were among the identified challenges to collaboration: changing organizational missions; organizational staffing issues; lack of coordinated service delivery; disconnected funds; and lack of shared outcomes. The following are among the eight strategies recommended for achieving integration: (1) increase the flexibility of federal and state program regulations; (2) develop common reporting and performance measures for welfare-to-work programs to encourage joint planning and coordinated service delivery; (3) identify collaborative strategies that have proved effective in different settings; and (4) gather unified local employer relations teams to develop partnerships with employers. (The bibliography contains 19 references. The following items are appended: a state matrix; local site descriptions; and a list of project participants.) (MN)