Thanks jekees! This looks really close, but the cristatella club formation looks greener than mine and I believe it's native to the East coast and I'm in the Pacific NW. So I looked at other Cladonia and wonder if it isn't Cladonia macilenta (Lipstick Cladonia)? They both have that red tip. I know nothing about lichens so thank you so very much for getting me on to the right genus!

Lichen really are fascinating, I often marvel at their intricate patterns.

or is it dying because of this? =====>>>> the second pic ... shows fungus which indicates that the interior has been dead long enough.. in tree time.. for the interior to rot .. imo ... i should be removed ... and then you will find out if the rot goes into the trunk ... not seeing the whole thing .. when you say there is overall decline ...i would speculate that if there is not much left of the tree .. its probably a goner.. in tree time ... in the mean time.. you can learn a lot about pruning and tree health.. by pruning it over the next few years.. and just observe what happens ... when removing a large branch ... start out at the perimeter.. and work your way to the trunk ... removing hanging weight so that by the time you get to the trunk .. you can make a clean proper cut ... the best thing for that project is a good tree saw ... ken ps: if you like the tree .. perhaps for spring flower ... now would be the time to perfect the ID and plant a new one.. so as this one declines ... the new one will get settled in and growing ... in spring.. get pix of flowers and leaves for the ID ...

Not worth the effort even thinking about it, much less going through the trouble of trying to strip it off. Which may be likely to cause troubles for the host plant anyway. Lichen is completely harmless to whatever host it might be growing on - rocks, fences, cars (yes, I have had lichen growing on my ungaraged car roof) and trees and shrubs. I could show you entire lichen forests in my area but they are really only very visible in winter when the trees are leafless. Rainfall is not a significant factor in their formation. There are lichen that grow in deserts.