Excerpts from paper: Child care subsidies help low-income families work and leave welfare, but funding shortfalls are forcing states to enact restrictive policies that are hurting poor families and efforts to promote their employment and earnings. The Administration's recently proposed FY 2005 budget would make this situation even worse, causing 447,000 children receiving child care assistance in FY 2003 to lose this assistance by FY 2009. This paper explains that: - Federal and state child care assistance to low-income working families grew substantially between 1996 and 2001 as a result of welfare reform. - Increased child care assistance&emdash;both for welfare recipients and for other low-income working families&emdash;was an essential part of states' strategies to help promote work and reduce the need for welfare. During these years, employment of low-income and single mothers increased significantly. - Child care assistance has played a key role in increasing employment among mothers and helping families leave welfare for work. - Even during this period of progress toward providing child care assistance to a larger share of families who need help, the great majority of eligible children remained unserved as demand outstripped supply. - The growth of child care funding essentially stopped in FY 2001 with Temporary Assistance for Needy Families (TANF) and state dollars becoming rapidly depleted - Limited resources have forced states across the country to cut child care assistance, creating hardship for already struggling low-income families.