Based in part on interviews conducted in 32 municipalities, this paper is intended to provide information to public managers, policy analysts, and others on methods for improving the management of retrenchment. A model summarizes how public organizations recognize and attempt to manage financial crises and prolonged financial stress. Some cutback management options are presented, and an approach for assessing the severity of financial crises and strategies is provided. Among the issues and management apppoaches analyzed are program reduction and termination costs and benefits, planning, evaluation and participation, centralization of decision-making, and improving public-sector marketing. General conclusions drawn are that (1) greater investment in market research and marketing is needed in the public sector, (2) financial crises must be adjusted to and managed cognizant of the rigidities and constraints that characterize bureaucratic organizations, and (3) inability to adapt to environmental change and new social conditions reduces the probability of survival for public agencies. (Author/MLF)