Since 1977, school budgetary problems have been created by a decline in state and federal tax revenues combined with a greater demand for services and declining student enrollment. The serious erosion in the fiscal health of the 50 states over the last few years means that competition for tax dollars will increase, leaving government with the choice to pass new taxes, institute cuts in state costs/services, or increase users' fees for such things as parks and roads. If federal funds continue to drop, school programs will be modified or discontinued, staff positions reduced, and materials and supplies cut. Monitoring such problems as advancing teacher age and increasing per pupil expenditures, local school boards should resist new state standards not fully funded and identify areas for cutting back services. Local funding is likely to experience a property tax backlash in the immediate and near future. Tactics for responding to the current period of budget cuts and program and fiscal accountability include (1) instituting effective community public relations, (2) hiring younger teachers to cut costs, (3) moving to school based management, and (4) undertaking critical internal evaluation of existing programs. (JBM)