It is easy to perceive Pennsylvania as a state in decline, but that would be a big mistake. While its population total has dropped from fourth largest in 1980 to fifth largest in 1987, Pennsylvania is still one of the 10 states in the nation that contain half of the country's residents. The state's two major metropolitan areas, Pittsburgh and Philadelphia, seem to have "bottomed out" in terms of manufacturing job losses and unemployment rates. Approximately 79 percent of the students in Pittsburgh's schools are thought to be below the poverty line. Pennsylvania's schools, however, do extremely well in retaining youth to high school graduation. Although total enrollments are going down, an increase has turned up in the early grades of school that will work its way up through the system. Higher education in Pennsylvania is marked by richness and diversity, both in public and in private institutions. One problem, though, is the small number of minorities--as well as Caucasians--who go on to higher education. In general, Pennsylvania education is doing a number of things right. Investments in the system have been high, and--except for minorities--the investments seem to pay off. (22 references) (KM)