This document examines strategies for preventing working families and disadvantaged youth from needing cash assistance and becoming dependent on welfare. The document begins with a brief discussion of the tenuous nature of the boundary between families who need public assistance and families who don't and factors contributing to welfare dependency. The next section answers policy questions pertaining to the following issues: (1) the feasibility of various strategies for supplementing income to assist low-wage workers in avoiding welfare dependency; (2) types of supports needed to help assist low-income families in securing and retaining employment; (3) services needed to help youth and children become self-sufficient adults (workforce development, child care, transportation, health care, mental health services, substance abuse services, and disability-related services, housing assistance, and domestic violence services); (4) actions states can take to help families find alternatives to welfare; and (5) federal funds available to support states' efforts to prevent welfare dependency. Pertinent research findings are presented along with profiles of two innovative national programs and innovative programs in California, Maryland, New York, and Ohio. Concluding the document are the addresses (including World Wide Web addresses, when available) of 7 resource contacts and sources for 38 pertinent publications. (MN)