This article examines the consequences of two concurrent policy changes for family literacy programs in Pennsylvania: (1) the transition from federal (Even Start) to state funding and (2) the elimination of adult education as a work activity for welfare recipients over 22 years of age. Using qualitative data from 10 family literacy programs, the article shows how the two policies triggered a cascade of changes in areas such as enrollment, recruitment, student composition, use of staff time, and interagency collaboration; and how professionals adapted to these changes. The study provides a nuanced understanding of how state- and local-level actors' responses to policy shape day-to-day operations in family literacy programs. (Contains 1 figure.)