I disagreee w/Jim about the salience of the state angle; the financing and control of AFDC were much the same, and that did little to save it.
The lesson I take from the '90s is that waivers of Federal standards in the name of 'state flexibility' -- even for progressive reasons -- that weaken the entitlement aspect are what can unravel a program. We see waivers in Medicaid, just as we saw in AFDC as the '90s got under way. The safest course for benefits, if not always the most efficient in other respects, is for benefits and eligibility to be stipulated in law and guaranteed as a matter of right, as if they were property.
In the same vein, the road to reconstructing AFDC/TANF, I would say, is to fight for work under TANF auspices to enjoy the same status as jobs in general, with FLSA protection. Minimum wage, EITC, SS benefits, etc.
mbs