Agencies with 50 or fewer sworn personnel have been strongly affected by budget cutbacks and retrenchment forms of management since the passage of Propositions 13 and 3, both of which have limited governmental spending. Law enforcement agencies are finding it increasingly difficult to attract quality candidates, and lawsuits against the police have also had major impacts. Small communities that previously benefitted from Federal revenue sharing must now look to other forms of aid. Contracting for law enforcement services or the unification of resources is the only solution for some agencies, although issues of loss of control, loss of identity, and quality of service will need to be addressed. Other approaches include partial consolidation of services, privatization of some services, the expansion of the use of volunteers, and city entrepreneurship to generate revenue. Figures, glossary, and 15 references.