Adjustments that state policy-makers and institutions of higher education will need to make as they face cutbacks in public support and declining enrollments are described, based in part on a research project on retrenchment in higher education conducted by the Southern Regional Education Board. Given the long-term contractual obligations of colleges and universities to individuals and the significant size of personnel budgets, institutional administrators often have little choice in the short-term in determining the object of cutbacks. Some of these approaches may include using fund balances; reducing expenditures for such items as equipment, travel, and telephones; cutting energy costs, curtailing library expenditures, and reducing expenditures for secretarial help; deferring maintenance efforts, reducing course offerings, student services and counseling; and hiring freezes. However, these short-term solutions cannot deal adequately with the longer-term problems created by repeated reductions in public support. Alternative approaches to retrenchment are suggested: building of reserves and developing contingency plans, improving institution flexibility, raising revenue from nongovernmental sources, restricting access through enrollment limitations, reducing faculty personnel costs through academic program reduction, reducing administrative and academic support costs, and merging or closing institutions. The case of reorganized statewide governance in Massachusetts and the merging of Boston State College and the University of Massachusetts is briefly described. (SW)