Federal welfare funding through the Temporary Assistance for Needy Families (TANF) block grant gives states flexibility to help low income parents move into employment. However, the law discourages states from allowing welfare recipients to participate in education and training programs. These restrictions are at odds with recent research findings. This paper addresses: "Welfare Recipients, Skills, and Employment"; "Which Welfare-To-Work Strategies Work Best?"; "When Does Education and Training Pay Off?"; and "Implications for Federal, State, and Local TANF Policies." As Congress considers legislation in 2003 to reauthorize TANF, decisions it makes regarding access to education and training may profoundly impact the long-term success of welfare reform. Steps the federal government can take to help increase access to and successful participation in high quality education and training include easing the current restrictions on counting education and training participation toward federal work requirements; allowing sufficient time for welfare recipients to move through adult basic education and job training to obtain occupational certificates; and offering incentives to states to provide support services and work-study positions to low income parents who are students. Steps that state and local governments can take include establishing clear links between basic education, English as a Second Language, and job training; providing intensive services and closely monitoring progress; and establishing training options for those with low skills. (Contains 83 endnotes.) (SM)