The 1980-86 economic decline in many parts of rural America has had a serious impact on public school financing and programs. While the recession has severely affected farm land values, the effect on property taxes has been delayed for several reasons: (1) assessed values in many states are based on land productivity capacity rather than market prices; (2) assessed values typically lag behind market prices; and (3) mill rates frequently are adjusted to maintain needed revenues. In the long run, however, local governments in the farm-dependent counties will be faced with a downturn in property tax revenues. School districts will be particularly affected since about two-thirds of farm property taxes go to schools. Several of the National Education Association's state associations reported that assessed valuations have already declined, some dramatically. The Advisory Commission on Intergovernmental Relations identified factors indicating the presence of fiscal stress among 10 selected farm state governments. It concluded that North Dakota and Montana are facing the greatest fiscal strain, being doubly vulnerable from their high dependence on farming income and on revenue from severance taxes and royalty fees. Only Georgia and Missouri of the remaining states show little or no signs of fiscal stress. (JHZ)