New York City's public school system was challenged during the 1990s by fiscal pressures that coincided with a surge in student enrollment. The focus of this report is how the City's schools performed under these combined pressures. There were four major conclusions relating to disappointing school performance: school buildings grew more crowded; class sizes increased; the condition of school buildings deteriorated; academic achievement remained poor. Findings show that crowding increased in school buildings, with almost half of the city's 1,006 public school buildings being utilized at or above 100 percent of capacity. The average class sizes in 1990 were 30 for high school, 28 for grades four through nine, and 25 for kindergarten through grade three. By 1996 the size for these classes grew to 32, 26, and 29, respectively. Furthermore, buildings that were already in poor shape deteriorated. Unfortunately, the School Board was only able to allocate 20 percent of the necessary investment to bring the school buildings up to date. New York City students performed poorly on reading and mathematics competency tests. In 1990, 66 percent of third-graders and 71 percent of sixth-graders read at the State Reference Point (SRP) which is approximately one grade level below the students tested; for mathematics, the shares meeting or exceeding the SRP were 87 and 80 percent, respectively. The disappointing performance of the schools can be linked to six policies pursued by the Board of Education and the City of New York: cuts in spending per student (10 percent from 1990 to 1996); compensation increases rather than hiring more teachers; stagnant teacher productivity; cuts in maintenance spending (11 percent from 1990 to 1996); misguided capital investment; and underutilized buildings. Overall, the performance of New York City's public schools in the 1990s has been poor and the general outlook for the future is bleak. (Contains three figures and nine tables.) (RJM)