Focuses on the efforts of 7 states -- California, Connecticut, Louisiana, Maryland, Oregon, Texas, and Wisconsin -- to modify their child care subsidy programs under the new welfare reform law. Identifies the amounts of federal and state funds that states are spending on child care subsidy programs and how they are allocating these resources among welfare families, families making the transition from welfare to work, and working poor families. Examines how states are trying to increase the supply of child care to meet the projected demand under welfare reform, and the extent to which states are changing standards for child care providers. Tables.