The purpose of this paper is to present a model which was developed to forecast Aid to Families with Dependent Children (AFDC) caseloads and payments in Delaware. The model consists of a caseload equation. a payments equation. and three labor market equations. The model. which was fitted statistically using quarterly data for the period 1958-1976, forecasts significantly better than trend type models. In addition , the model, unlike trend type models has the potential for forecasting turning points and can be used to simulate the impact of proposed policy changes.