California's recent investment in teen pregnancy prevention has contributed to the largest decline in teen birth rates and the second largest percentage reduction of all 50 states. California's annual teen birth rate is now similar to the national rate. This occurred while the highest teen birth rate group, Latinas, increased as a proportion of California's total teen population. Nonetheless, California's teen birth rate is unacceptably high. Because of rapidly changing population demographics, California's overall teen birth rate is predicted to begin increasing in 2006, while the number of teen births per year will begin increasing in 2005. Poverty is one of the best predictors of teen birth rates. This report examines trends and activities of the last decade, noting statistical expectations for the future. It offers teen birth rates for year 2000 by California legislative district and a variety of state and local policy options. It concludes that the 40-percent reduction in California's annual teen birth rate over the past decade represents an annual savings to taxpayers of $698 million and a total annual savings to society of $2.2 billion. Four appendices include policy recommendations, a Consensus Statement on Adolescent Sexual Health, notes on birth rate calculation methods and data sources, and assembly district teen births, birth rates, ranks, and estimated costs for year 2000. (Contains 44 references.) (SM)