Recognition of the link between child care and the success of welfare reform has given rise to questions about how states are spending child care funds provided through Temporary Assistance to Needy Families (TANF) and the Child Care and Development Fund (CCDF). At the request of members of Congress, this report from the General Accounting Office details: (1) child care expenditures by states under the CCDF and TANF block grants; (2) the type of care selected by families who receive subsidies with these funds and the mechanisms by which states provide child care subsidies to eligible families; and (3) states' priorities in providing child care subsidies to low-income families and their views about the adequacy of the current levels of funding for child care. The report shows that states are committing increasing amounts of money for child care; that nationwide, more than half of the children whose child care was subsidized with CCDF funds were cared for in centers (this varied by state, however), and subsidies for all types of care were primarily provided through vouchers; and that over half of states gave TANF and former TANF families making the transition to work first or second priority for receiving child care subsidies, whereas other low-income families were assigned lower priorities. (EV)