While Washington, D.C., has been preoccupied with balancing the federal budget, state governments and the nonprofit sector are increasingly taking the initiative in welfare reform.

In Wisconsin, a new plan would restructure the welfare system in part by requiring all able-bodied participants to work in order to receive benefits.

With its reputation as an innovator well established, the Wisconsin legislature has drastically cut its general assistance program, while a new format, Wisconsin Works, is expected to overhaul the entire welfare apparatus next year.

Meanwhile, another major player in the welfare equation has been receiving a boost toward an expanded role in welfare reform. The nonprofit sector, including churches, parachurch organizations, and nonsectarian groups, is increasingly seen as an efficient alternative to the federal bureaucracy for delivery of services to the poor and needy.

Robert Rector, senior policy analyst for welfare issues at the conservative Heritage Foundation in Washington, D.C., stands behind reform provisions allowing more government use of churches and the nonprofit sector. "Government has failed," Rector says. "We need to let government step aside and let a more viable institution like the church come in and pick up the pieces."

One of the key concepts in the welfare-reform movement has been to enable local solutions to local problems and get federal bureaucracy out of the way.

A welfare-reform bill that cleared Congress in December would have set up a "block grant" system, whereby states would administer a large pool of federal money for programs such as Aid to Families with Dependent Children (AFDC), the Job Opportunities and Basic Skills program, and subsidized childcare. However, President ...