FOR MONTHS now, we've been waiting nervously for the fallout.

Cutbacks in the National Endowment for the F Arts, increased competition for a fixed amount of foundation dollars, an economy that's supposed to perk up, but so far hasn't -- all this, we've been told time and again by worried actors and beleaguered producers, is bound to take its toll on the theatrical community. The only real suspense is when.

We may have seen the first concrete bit of evidence here earlier this month, when Louis Scheeder, the producer of the Folger Theatre Group since 1973, submitted his resignation. Having built the Folger to its current dimensions, he simply didn't relish the prospect of whittling a $1,360,000 budget back to $1 million as his board of trustees demanded.

"I couldn't see the kind of theater I want for $1 million. It's that simple," he explained. "That doesn't mean someone else can't run the place for $1 million. It means I can't. I think we've given Washington a first-rate classical theater. The city deserves nothing less."

The impulse is to curse the ax-wielders and commiserate with a producer who, apparently, won't compromise his standards. Scheeder is not one to give in to easy martyrdom; if he's quitting, it's because he realizes that the theater, like all living things, must grow from day to day, and growth invariably strains the budget.

Yet his declaration carries a faint scent of hubris. We'd be fooling ourselves to think that the Folger has actually attained the ranks of a "first-rate classical theater."

That's not to deny those strides that have been made, or the fact that they have involved ever larger sums of money. Production values have soared in the past five years. Illyria, Verona, the Forest of Arden -- they've often been breathtaking locales at the Folger. Performances, once limited to weekends, have grown to nine- and 10-week runs. (Last season's "Romeo and Juliet" actually chalked up 107 performances at the Folger and subsequently at the Sylvan Theater). Attendance figures have built steadily from 15,000 in 1973 to more than 100,000.

Shakespeare in the early days at the Folger was gimmick-ridden. Scheeder, to his credit, banished the fanciful productions concepts and tackled the plays straight-on. Clarity, however, was the chief virtue of his productions, and clarity is only a first step. Dramatically, they usually dwelt in the foothills; the summits went unscaled. If such frequent Folger performers as Michael Tolaydo and Marion Lines project an intelligence and grace onstage uncommonly suited to Shakespeare, the company as a whole has frequently substituted mere mannerisms for legitimate characterization. (If you want a quick measuring stick, take a look at Christopher Plummer's Iago at the Warner Theater.) Worse, I think, mannerisms have been allowed to repeat themselves from show to show.

Part of Scheeder's vision for the Folger has always encompassed a year-round company of actors, toiling away at Shakespeare, the Elizabethan mores and language, intrinsically foreign to American actors. Even at the relatively modest $350 weekly scale for its Equity actors, the Folger's payroll has snowballed, especially when you consider that it takes about two dozen bodies just to round out any given Shakespearean cast. The immediate solution to the financial pinch -- a return to the Folger's original game plan which alternated smaller-cast contemporary plays with the Bard's works -- is one that no longer appealed to Scheeder.

"If you're going to do Shakespeare and classical plays, I have come to believe you have to do them continually," he says. "The more you explore, the more you find to explore, and the more rehearsal time you want. When you alternate with modern plays, you disrupt a continuity. In a way you're starting over each time."

Scheeder may be right -- righter than he no doubt wants to be. It may well take a profligacy of time and money to assemble a company that can do full justice to Shakespeare. And the trustees are saying the money isn't there.

Ironically, Scheeder's true sensibility, I think, lay elsewhere, and his tenure at the Folger was distinguished more by the new plays he chose to do, first at the Folger, and then at the Kennedy Center's Terrace Theater. With such works as Tom Cole's "Medal of Honor Rag," David Freeman's "Creeps," Brian Clark's "Whose Life Is It Anyway?" Michael Ondaatje's "The Collected Works of Billy the Kid," Edward Bond's "The Fool," and Amlin Gray's "How I Got That Story," the Folger often seemed to be facing the times more squarely than any other theater in town. Those plays were discordant and aggressive, and they dealt with such nettlesome topics as cerebral palsy, violence, the poisonous heritage of Vietnam, and the right to die. They were also risky endeavors, the kind of unsafe plays that can alienate an audience. No one else dared do them and putting them on was an act of special courage.

Such, it seems to me, is the legacy that Scheeder leaves behind on the eve of the opening of "Julius Caesar," the Folger's 55th production. He has built a solid audience for Shakespeare, even if the enchantments have been more visual than dramatic. Shakespeare, however, is a special case. Merely performing him -- not necessarily performing him well -- is in many minds a praiseworthy act. Scheeder showed his real acumen by counterpointing an easily revered tradition with an abrasive body of new work, which probably lost him as many subscribers as it won him.

The nagging question, of course, is where does the Folger go from here? The prospect for contemporary plays is not good at all. Earlier this summer, the Folger withdrew from its arrangement with the Kennedy Center to produce two new plays each year in the Terrace Theater. Economics was again the bugaboo, although Scheeder claimed at the time that no new plays really excited him. The classical tradition, more or less dictated by the Folger's Elizabethan quarters, will continue. British actor John Neville-Andrews, Scheeder's replacement, has said that he will stick with the previously announced productions of "The Tempest" and "The Comedy of Errors," but may substitute Aphra Behn's Restoration comedy, "The Rover," for Shakespeare's "King John."

Neville-Andrews is clearly taking a conservative approach at the outset. "I'd have to quote Shakespeare and say that the play is going to be the thing," he explains. "I'd hate to walk in there and make some radical changes. But Shakespeare doesn't need all the frills that are sometimes imposed on him. I once worked for a lady named Joan Littlewood, who taught me that you don't need that fancy costume to act, which doesn't mean I'm going to do Shakespeare in jeans and T-shirts. If the productions are not quite so elaborate, however, you don't need quite so elaborate a staff. A million dollars is a lot of money for four plays and by making minor cuts throughout the organization, I think I can pull it off without sacrificing the artistic quality."

Scheeder, whose departure was, as they say, "amicable," has been careful to avoid any inflammatory talk. "I'd be foolish to imply the Folger's in trouble just because I'm leaving," he says. Still, he can't help adding, "But the way I wanted to run it -- on the scale I wanted to run it -- it was definitely an imperiled theater."

All of which indicates that the trick for the coming years is not learning how to do more with more. It will be doing more with less. And the Folger, it appears, will be one of the early testing grounds for the new parsimony.