A search into the relationship between organizational decline and effectiveness was designed to confirm that two-year colleges are experiencing conditions of decline as perceived by faculty holding positions with two-year colleges. Attempts were made to examine the effects of decline on perceived academic effectiveness and faculty morale. The issue of whether faculty union status is a factor in determining perceived effectiveness was studied. Data for the study were extracted from the 1984 Carnegie Foundation for the Advancement of Teaching national survey, in which faculty were asked to respond to various items regarding feelings about the institution within which they served. Study findings support the contention that the relationship between decline and effectiveness and morale is not consistent across types of colleges and universities. It is suggested that two-year colleges may be added to the list of affected schools. Significant effects were found to occur in both academic effectiveness and morale. Results suggest that college managers must recognize (1) that decline conditions do affect perceived academic effectiveness and faculty morale and (2) that unique strategies need to be employed to blunt the effects of decline conditions in many community colleges. More research needs to focus upon the two-year institutions as unique from their higher education partners. Contains 19 references. (SM)