CASELOADS PLUMMET IN NEARLY ALL STATES.

Byline: Jason DeParle The New York Times

The steep decline in welfare caseloads that began nearly three years ago has accelerated in recent months, offering states a larger-than-expected windfall and a head start in carrying out the nation's newly restrictive welfare law.

The unprecedented exodus from the rolls follows a period of similarly explosive growth. After reaching a record high in March 1994, caseloads have dropped nearly 18 percent nationwide, and they have dropped in every state but Hawaii.

The declines have reached some of the nation's largest cities, where concentrations of poor and single-parent families have historically made the rolls hard to reduce.

In the past year alone, the number of people on welfare has dropped 19 percent in Milwaukee, 17 percent in Houston, 11 percent in Detroit and 9 percent in New York City.

Much of the decline seems driven by the economic expansion, which has kept the country's unemployment rate below 6 percent for 28 consecutive months. But some of it also seems to stem from the aggressive efforts many states have made in the past few years to place welfare recipients in jobs.

As the nation's governors gather this weekend for their winter meeting, many are crediting their programs for the reduction in welfare caseloads. But researchers are uncertain which force is dominant: good times or tough laws.

It is also unclear whether those leaving the welfare system are mostly moving out of poverty, as many governors have said, or whether some are simply losing benefits and slipping deeper into need.

Whatever the cause, the smaller welfare rolls will make it much easier to implement the law passed last summer, which ends six decades of federal control and offers states broad new latitude in running welfare programs.

Because of the way the law is written, most states will find themselves with both a financial windfall and a bookkeeping advantage in meeting new requirements for putting recipients to work.

``We couldn't have better timing for starting welfare reform,'' said Donna Shalala, the secretary of health and human services.

Welfare rolls have fallen more than 40 percent in three states that have been among the most energetic in urging recipients to work: Oregon, Wisconsin and Indiana. Caseloads have declined by more than 25 percent in 16 other states, stretching from New Hampshire to Utah.

What is more, the rate of decline has accelerated in recent months. From August to October, national caseloads dropped 2.7 percent, as the number of welfare recipients declined by 338,000. By contrast, caseloads dropped 1.5 percent during the same period in 1995, when the rolls fell by 201,000 people.

And there appears to be considerable prospect for continued reductions, since the rolls have only recently peaked in California, where more than a fifth of the nation's recipients live.

``These are phenomenal caseload changes,'' said Wendell Primus, who resigned last year as a senior official at the Department of Health and Human Services to protest the new law.

Almost all of the decline occurred before the law passed last summer. The law imposes a five-year limit on most families' benefits and it is only now being implemented. But Rep. Clay Shaw, R-Fla., who helped write the law, speculated that the prominence of last year's debate had already prompted people to look for work.

``People are seeing that welfare reform is a certainty and that they had darn well better take responsibility for pulling their lives together,'' he said.

``So many people have been throwing rocks at us and saying we're going to starve kids. And quite simply, they're wrong. The law's working. And it's working right from the beginning.''

But Primus cautioned that some states may be dropping people from the rolls whether they have found work or not. ``Offices can do things to make life more difficult for people seeking aid,'' he said, like penalizing them for missed appointments even when they lack child care or transportation.