The survey showed that many police departments are grappling with serious resources and cutback problems, including reduced manpower and budgets, termination of programs that depended on Federal funds, and prioritization of calls for service. Most have responded by making small, short-term adjustments in their operating arrangements that yield some cost savings without a loss of visible operating effectiveness. But over time these tactics produce long-run costs that may result in the need for additional expenditures or seriously eroded services. The contrasting approach of strategic management requires a multiyear timeframe, a significant reallocation and reconfiguration of resources, substantial changes in organizational structure, and comprehensive rather than ad hoc reexamination of the organization's problems and goals. A strategic approach depends on four key assumptions. First, the effectiveness of a management plan depends on the contingency relationships between the strategy and the situation, as illustrated by a matrix showing types of fiscal situations -- short and long term, high and low severity -- and tactics for coping. Second, a department must have an appropriate strategic capacity, such as financial forecasting and cost accounting systems. Third, strategic choices require an examination of a full array of alternative service delivery options. Finally, while fiscal stress will close some windows of opportunity, it will open others. In this context, proposals that are likely to save money or generate revenue are probably more feasible than ones that improve services but cost more. As episodes of fiscal stress deepen, strategies must shift from the traditional to the nontraditional and from operating tactics to realignment of the organization's relationship to its environment. Examples, charts, and 17 footnotes are included.