Over the past decade and a half, the Commonwealth has moved steadily to increase expectations on school districts, schools, teachers, and students to meet the demands of a global economy. It has also added fiscal resources to support reaching these expectations, increasing state aid for education by almost 11 percent per year throughout the 1990s. Recent fiscal challenges at the state level, however, coupled by rising fixed costs and shifting enrollment patterns for districts, have combined to create substantial challenges for districts in sustaining the momentum of education reform. This initial investigation found that: (1) Academic expectations and challenges have risen, but spending on instructional services has not kept pace; (2) On average, districts spend 18 percent more than their foundation budget, and nearly every district in the state is spending over foundation; (3) Chapter 70 aid increases did not keep up with inflation between 2003 and 2006; (4) Despite the Chapter 70 aid cutbacks, many districts were able to maintain their overall spending levels, but only by increasing local funding, and, to a much lesser degree, imposing user fees for transportation and extracurricular activities; (5) A number of districts have experienced enrollment declines, which can have both a positive and negative fiscal impact; and (6) Districts have employed a variety of strategies to maintain services for students despite constraints in their instructional budgets. In summary, at a time when districts need to be moving forward quickly to address their students' growing educational needs, they are hard-pressed to maintain their expenditure levels, let alone increase them to meet higher expectations. And unlike the situation in the late 1980s, when school budget cuts were disproportionately affecting the poorer urban districts, today's fiscal pressures appear to be affecting a much broader range of districts, including many middle-class communities that have traditionally taken great pride in the quality of their school systems. (Contains 9 footnotes, 10 tables, and 4 figures.)