We examine an important problem facing managers in state and local departments of public health-how to convert changes in public health policies to operational strategic issues. Research in strategic issue identification has consistently suggested that decision makers tend to display a 'threat bias' when evaluating strategic challenges. That is, issues are more likely to be defined as threats than as opportunities. The findings of this study reinforce this observed tendency. In addition to the confirmation of a threat bias on the part of decision makers in public health settings, this paper used a multi-state methodology in developing a technique to assist strategic decision makers in detecting and interpreting changes in public health policy and in setting priorities in order to formulate appropriate responses. This technique employs a three-dimensional portfolio matrix to classify strategic issues facing state departments of public health in terms of the issue's impact, likelihood of occurrence, and the department's perceived ability to deal effectively with the challenges presented by the opportunity or threat. It is argued that this approach can be effectively used as one means of differentiating between high and low priority strategic issues. The paper concludes with a series of implications for management decision makers. © 1993 European Journal of Public Health.