In 1980, Tonnelly Central School District became the first school district in New York State to be dissolved pursuant to Section 1505 of Education Law, marking the first use of dissolution and annexation as a means by which to address the programmatic and management problems encountered in the operation of a central school district. Problems faced by the school board (declining enrollment, the longstanding small local tax base, and increased high school graduation requirements) had become increasingly unmanageable and ultimately lacked any solution short of reorganization. The resignation of the board after the decision to excise certain programs from the school's curriculum signaled the desperate situation of the district and, finally, the need for radical structural change. The choice of dissolution and its justification were heavily influenced by a "sense of community" and "community pride." The dissolution alternative offered strong financial incentive, lowering property taxes and resulting in the distribution of revenues generated by the sale of school equipment and state aid to the district. A legal and political analysis of the dissolution and future uses are included. Data collected for this study were obtained primarily through interviews, as well as from the State Education Department and the 1980 Census. (JMM)