Many community mental health centers have bad to operate with less funding in the past several years, especially since the advent of block grant funding. Evidence is now accumulating that some centers have bad to decrease their overall level of services and staffing. Others have attempted to adjust by increasing their clinician caseloads, closing their satellite facilities, and de-emphasizing services that fail to generate adequate fees and third-party reimbursements, such as consultation and education, partial hospitalization, and programs for children and the elderly. in contrast, and partly as a result of the increased authority of the states over the community mental health centers program, services for the severely and chronically mentally ill appear to be receiving higher priority. This development will require that centers improve their access to the general health care sector, maintain and improve their relationships with academic institutions, and increase the number, responsibilities, and rewards of the psychiatrists they employ.