Since Congress enacted welfare reform in 1996, states have had more flexibility in designing their own welfare programs. With this flexibility has come an increased interest in accountability at the state level. Although California’s caseload rate fell 43 percent between 1996 and 2000, that decline lags the national average. This report examines the variation in recipiency rates among the five largest states both before and after the welfare reforms of 1996. Its authors find that between 1989 and 1996, economic and demographic factors accounted for most of the variation in welfare recipiency rates; after 1996, however, policy decisions at the state level were the most important factor in explaining caseload variations.