This paper considers implications of the findings of the Texas Performance Review concerning mental retardation services, in light of decreasing numbers of students at state schools and budgetary restraints on major investments in both institutional operations and community service programs. The paper concludes that Texas should consider closing one or more state schools and invest more heavily in community services for this population. Seven questions are addressed: "What are the current trends in Texas and in other states in providing and funding institutional and community services?"; "How many states have closed state institutions (state schools) recently, and how many are planning to do so in the near future?"; "What are today's state school costs per resident in Texas and what will these costs be in 10 years?"; "How do persons with mental retardation and related developmental disabilities adjust to relocation from institutions to a community living environment?"; "How do parents of relocated individuals react to this change?"; "How might cost savings be achieved in Texas if one or more state schools were to be closed?"; and "What are some criteria that might be used to decide which facility or facilities to close?". (10 references.) (DB)