This study focuses on how school districts in Michigan are reacting to budgetary stress brought on by the downturn in the economic climate. It addresses the key factors school districts can implement to increase revenues or decrease expenditures and identifies which of these factors districts choose and the reasons why. This study also analyzes the effectiveness of the various measures implemented in restoring or maintaining the financial health of the district. The research seeks to generate useful lessons about strategies for improving district financial conditions. The research also pays particularly close attention to districts that are either in deficit or are close to a deficit status. A number of these districts have been successful in making budgetary adjustments that have permitted them to strengthen their financial condition and avoid falling into a deficit. Accordingly, a comparison will be made of the finances of Deficit Districts, Near-Deficit Districts, and all other districts in the state. To determine more about the financial status of school districts in the State of Michigan, two main questions are posed. First, how have levels of fiscal stress--measured by district fund equity--changed over the past five years for all districts in the State of Michigan? Second, what factors have contributed to strong or weak fiscal positions of Michigan's school districts? The empirical work will be based on an analysis of the finances of all the districts in the State of Michigan, plus a detailed study of the budgets and decision-making in a sample of six districts. The six districts are located in a highly populated suburban area located in a major metropolitan center (Detroit), with a great degree of racial, ethnic and socio-economic diversity. Findings show that in the research setting studied, there is not a "one-size-fits-all" pattern of revenue enhancement or expenditure reductions present in the behavior of school districts. School districts had to consider a variety of internal and external influences before decisions to implement certain measures were made. Thus, what measures can be implemented to improve the financial health in one district, may not be feasible to be implemented in another district. Furthermore, certain revenue enhancement and expenditure reduction measures appear to have a negative affect on fiscal health. [The dissertation citations contained here are published with the permission of ProQuest LLC. Further reproduction is prohibited without permission. Copies of dissertations may be obtained by Telephone (800) 1-800-521-0600. Web page: http://www.proquest.com/en-US/products/dissertations/individuals.shtml.]