The circumstances under which certificated employees, including instructors, counselors, librarians, school nurses, and administrators, may be laid off are governed by Section 87743 of the California Education Code of 1976. The statute provides that when a school district is faced with financial exigency, layoffs may be made if they conform to the requirements of the Code, i.e., if there is an enrollment decline or a reduction or discontinuance of specific services or programs. The Code also specifies the conditions which must be complied with to reduce staff: (1) layoffs must occur at the end of the school year; (2) notice of termination must be given on or before May 15; (3) the right to a hearing must be provided, and these hearings, if requested, must be conducted in accordance with the Code; and (4) at a time of reductions in force, administrators may be transferred to teaching positions in those disciplines in which they are certificated, competent, and senior to other instructors in the discipline. After explaining the Code's provisions, this report presents two case studies involving layoffs. The first concerns the passage of the "Jarvis-Gann" Tax Limitation Initiative of 1978. It discusses the legal process which ensued after 52 employees were terminated and the legal and policy implications of the reduction in force. The second deals with Hopper vs. Yosemite Community College District, a recent decision involving the termination of an Assistant Dean. (HB)