This working paper, published by the Irvine Foundation and AEA Consulting, identifies the major challenges facing the arts and cultural sector in California. Based on interviews with arts leaders and a review of the relevant literature, the paper describes five key themes that, if not addressed, may threaten the health and well-being of the sector going forward. The themes are: Access, Cultural Policy, Arts Education, Nonprofit Business Model, and Preparing the Next Generation of Artists and Arts Managers. This working paper is the first phase of a project to engage arts leaders and others in a discussion on how to ensure a more sustainable future for the arts in California.