In the state of SaxonyAnhalt, a new Public Health Service law came into force in 1998. Our study investigated whether this new legislation has led to an extension of duties performed by regional health departments and to a subsequent increase in expenditure. Methods: Guided interviews at all administrative levels of the public health system were conducted. The catalogue of duties was systematized and a questionnaire was developed and distributed to all regional health departments (response rate: 17 out of 24). Data concerning revenues and expenditures of the regional health departments were analysed on the basis of the administrative districts' budget data. Results: Regional health departments stated that there had been practically no change in their activities over the last few years. When questioned about the coverage of 58 specific duties, a considerable disparity was evident between departments. A core group of classical duties comprising environmental health and hygiene, child health protection, individual health appraisal, and public health supervision are carried out on an established basis. Some duties were handled by external institutions, others, mostly community health duties, were not performed on an extensive scale. When asked about the desired model for their health department, most departments preferred the model of being an executor of sovereign duties, however a corporate model was deemed to be almost as acceptable. The following fields will gain increasing significance in the future: environmental medicine, health reporting, preventive medicine, co-ordination of regional health care, and health promotion. Since 1995, staff has been reduced in all regional health departments (-10.4%; 1999: 2.92 employees per 10,000 inhabitants). In 1999, expenditures amounted to an average of 24.64 German Marks per capita (range 14.20-44.58 DM). The number of inhabitants and the revenue of the regional districts were determinants of their health budgets. Conclusion: Our results showed that no uncompensated additional expenditure by regional authorities resulted from this law. So far, most districts have not perceived regional health as a community affair offering possible competitive advantages. The federal state lost considerable influence at the regional level. Recommended are regional health priorities, conjoint staff development, and state guidance by a head agency providing leadership and support, while leaving responsibility with the districts.