This statement by the associate director of Income Security Issues of the Department of Health, Education and Human Services Division addresses the Congressional welfare reform goal of self-sufficiency for welfare mothers through employment. It analyzes the problems of the current welfare subsidy system by examining the effect of child care subsidy rates on the employment of low-income women. The state notes that Congress has recognized the importance of child care to family self-sufficiency by creating four child care subsidy programs for low-income families since 1988 with the primary goal of economic self-sufficiency through labor force participation made possible by subsidies for low-income mothers' child care costs. But the current system of child care has not necessarily promoted the goal of economic independence and has produced the unintended consequence of gaps in service for the following reasons: (1) categorical eligibility of the existing funding streams; (2) limits on employment-related activities; (3) income eligibility; (4) time limits on subsidized child care; and (5) lack of incentive to serve low-income working families. Closing gaps in federal funding streams, facilitating state flexibility in spending federal dollars, and balancing the incentives for serving various client groups would contribute toward a child care delivery system able to meet the needs of low-income families. (AP)