This chapter of "Principles of School Business Management" reviews several concerns that must be addressed by school business administrators in districts facing declining enrollments and the need for reductions in force. The chapter first looks at the business administrator's significant role in planning for retrenchment. The chapter then discusses the difficulties posed for districts by financial exigency. Court litigation affecting job security clauses in negotiated agreements, district claims of fiscal insolvency, and reductions in force resulting from enrollment decline are considered next. The chapter then analyzes the state-granted authority of the local board of education to engage in reductions in force. Several alternatives to reductions in force are noted. The order of dismissal of employees, the impact on employment of district consolidation or desegregation, the acceptability of "bumping" employees with less seniority out of positions, the assignment of formerly full-time employees to part-time positions, the clarification of the status of "qualified" and "certified" personnel, and problems associated with the absence of written policies for reduction are also considered. References and court cases are cited in 74 notes. Appendices offer sample contract clauses and board policies for reduction in force. (PGD)