A report prepared as background material for the 1971 workshop for new chairmen of graduate departments of psychology focuses on financial concerns. It is suggested that with disappearing grant support, universities will have to pick up the salaries of faculty members. Programs such as minority group studies will generate fiscal demands that will be difficult to meet. Department heads must deal with the prospect of operating on a decreasing budget on a long-term basis and will have to fight to maintain present budgets. Important to the department head's work will be the reassessment of priorities regarding graduate versus undergraduate education and research versus teaching. It is suggested that in many universities, graduate instruction and research are the losers and that the department head is likely to have to seek outside support. Federal support for research and graduate training is still available but more difficult to obtain. The squeeze on personnel funds has led to drastic changes in the pattern of funding graduate students, including admitting more students without stipends and dividing teaching assistantships for two or more students. Changes have also occurred in respect to academic values, and there has been a new emphasis on teaching as opposed to research, a notion that graduate programs should be reduced and modified in order to meet societal demands, and an anti-intellectual atmosphere that would substitute feeling for reason and action for research. Ways that the department head can economize include allocating funds to subdivisions within the departments and distinguishing between personal and departmental business. (SW)