The Safe Drinking Water Act and its 1986 Amendments are expected to result in increasing costs for water systems. The ability of systems to finance the required improvements is examined. The financial needs of water systems are examined to determine if needs vary by system ownership or system size. Increased water rates are expected as a result of financing system improvements. The increase in rates is predicted, and the effect of increased rates on low-income households is examined. The study concluded that the problem facing Virginia's water systems is not an inability to finance system improvements. The increased rates expected as a result may, however, impose hardships on low-income households. / Master of Science