Education spending cuts are upon us. After years of non-stop increases--national k-12 per-pupil spending is up by one-third in inflation-adjusted dollars since 1995--schools now face the near certainty of repeated annual budget cuts for the first time since the Great Depression. In some states and districts, reductions will be dramatic--well into the double digits. And these new revenue-trend levels are likely to be semi-permanent, what with increased pressure on the public purse from the retirement of Baby Boomers, Medicaid and Medicare costs, debt payments, and other demands. The challenge for education policymakers is not only to cut carefully so as not to harm student learning, but, better yet, to transform these fiscal woes into reform opportunities: to cut smartly and thereby help schools and students emerge stronger than ever. This paper offers some ideas on how to do that.