In the 1960s and 1970s, steady economic growth helped the Costa Rican government expand its education system rapidly. The 1979 oil shocks, the U.S. 1981-82 recession, and other factors ended this prosperity and exposed the fragility of Costa Rica's late 1970s debt-financed development. To restore economic growth, new economic policies were implemented, based on International Monetary Fund bridge loans and World Bank Structural Adjustment loans. Structural adjustment imposed certain conditions, including reduced government spending for social programs like education. Secondary education was sacrificed politically to keeping teacher salaries low, parent material contributions high, and university education subsidies high. As morale fell, scapegoating teachers became common. This study examines why the Costa Rican government made such education decisions during structural adjustment (1983-91) and explores how structural adjustment policies are being implemented in Costa Rica's educational setting. Clearly, the government's decision to reduce educational spending was influenced by IMF/World Bank pressures. Policies were less planned than reactive. Teacher organizations' reactions to salary reductions were understandable. The neo-conservative adjustment process negatively affected the shape and quality of Costa Rica's public education. Contains 130 references, 18 tables, and 7 figures. (MLH)