Welfare reform legislation in the late 1990s lead to rapid declines in state welfare caseloads. In contrast to prevailing accounts that emphasize rapid job creation and those that pin caseload declines on successful work incentives and behavioral sanctions, this article argues that organizational rationing mechanisms explain a large portion of the sharp initial declines in Illinois. The article first highlights how street-level bureaucratic practices oriented toward caseload reduction arose in TANF implementing bodies from a reordered and narrow set of organizational incentives that had little to do with the symbolic goals of welfare reform. Based on an analysis of state-level administrative statistics and formal interviewing and fieldwork in welfare offices and community-based organizations, this article finds that bureaucratic churning, gate-keeping, and other forms of service rationing significantly sped exits from and slowed entrances to welfare in the decisive first three years of TANF implementation.