Pursuant to a congressional request, GAO reviewed the National Aeronautics and Space Administration's (NASA) efforts to reduce space shuttle operating costs, focusing on the: (1) potential for further cost reductions; and (2) impact of cost reductions on shuttle safety. GAO found that: (1) NASA has reduced its cumulative funding for shuttle operations by 22 percent from fiscal years (FY) 1992 to 1995 and its actual operating costs by 8.5 percent between FY 1992 and 1994; (2) additional funding reductions are needed to achieve NASA future budget projections, since program requirements will exceed budget estimates by at least 10 percent in FY 1996 through 2000; (3) it is unclear how NASA will further reduce its funding for shuttle operations; (4) if NASA cannot reduce its shuttle operating costs to match available funds in FY 1996 through 1999, the NASA budget must be increased or other program funding will have to be cut; and (5) although NASA has adequately considered shuttle safety in implementing these cost reductions, it is difficult for NASA to know how much further it can reduce costs without affecting safety.