The General Accounting Office (GAO) examined progress in meeting work-focused goals of the Temporary Assistance for Needy Families (TANF) program. The following issues were considered: (1) states' progress in implementing TANF; (2) the status of families who have left welfare; (3) the characteristics of adults currently receiving TANF; (4) states' strategies for helping hard-to-employ recipients find jobs; and (5) emerging issues as welfare reform evolves. The analysis established that, as states implemented welfare reform amid strong economic growth, welfare caseloads dropped by 50%. Although most adults in former welfare families were employed at some time after leaving welfare, they were often working at low-wage jobs. States were attempting to help hard-to-employ recipients find jobs through strategies such as improving and expanding case management and providing services targeted toward preparing hard-to-employ individuals for work. Most TANF recipients were not engaged in work activities in part because many have characteristics that make it difficult for them to get and keep jobs. The six states visited by GAO staff have modified their "work first" programs to better serve hard-to-employ clients. It was recommended that states emphasize and enhance their work-based welfare-to-work strategies and foster and facilitate improved management and service delivery approaches. (MN)