Labeled a "citizen assessment," this study evaluates the effects of Massachusetts 2-1/2 during the first year after its enactment. The law limited taxes and changed laws relating to school budgets. The study focused on two areas: (1) the effect of loss of fiscal autonomy on school budgeting procedures, and (2) the changes in school spending resulting from the law. The study found major changes in spending, which affected the majority of Massachusetts school districts as school budgets were cut more deeply than other budgets. The total first-year local revenue loss amounted to 9.3 percent with the larger cities and towns sustaining the largest budget cutbacks. Shifts of power profoundly altered school budget processes. Budget-making at all levels became less political and more hierarchical, while participation of citizens in local budget processes declined. School constituents were found to have less power over school budgets, while the indirect power of state government increased. Close to 12 percent of teaching positions statewide were cut. The study found that the allocation of budget reductions among school districts was educationally arbitrary; the schools in older, poorer areas with the greatest needs were hardest hit. The proposition had a traumatic effect on teacher morale. The study concludes that the impact of the law on Massachusetts schools is just beginning. (MD)