The analysis notes that 1 out of every 14 general fund dollars spent in 2000 was spent on prisons. Although State governments may have believed they could afford this expense during the boom years of the 1990's, State budgets are now feeling the weight of the recent recession and the revenue loss associated with the September 11th terrorist attacks. Data from the National Association of Budget Officer's Fiscal Survey of States projects a $40-billion shortfall for States in fiscal year 2002. After examining the ways in which various States have trimmed corrections costs in the area of prisons, this paper identifies three major categories of reforms that merit consideration when deciding on ways to reduce State prison population pressures and correctional costs. One reform is to repeal mandatory sentencing laws and restore judge's discretion to determine which offenders warrant long prison sentences and which can be safely and effectively supervised and treated in the communities where they reside. A second promising reform is to establish new structures for reviewing and revising State sentencing policies and guiding judges toward the most efficient and effective use of the available correctional options. The third promising reform is the creation of a new system of post-prison responsibilities and supports for offenders after their release from prison, a system that will reduce the rate of recidivism. Suggestions for implementing these three general types of reform are offered. 99 notes