The major problem to be faced in Canada in the next decade is resource allocation. Administrators must make conscious efforts to distinguish between changes in price levels that are the effect of inflationary pressures and increases in costs that are the result of changes in quality or quantity of inputs. A second area extremely important in dealing with declining resources will be the way available resources are distributed. Critical will be an understanding of the difference between average and marginal cost. Average cost measures include cost per student, cost per teacher, and cost per classroom. Marginal cost may be defined at the actual saving or cost that results from adding or subtracting one more unit to the system. When resources are allocated according to a formula based on average cost (such as amount per student) during a period of declining enrollment, fund allocation goes down more than actual marginal savings go up. Although the number of students has declined, the total cost for teacher salaries or plant maintenance remains the same. School boards must be helped to adjust to this situation through a reorganization of allocation systems to reflect true costs more accurately. (Author/JM)