Good pictures or a lot more detailed descriptions needed for anyone here to be able to make accurate determinations.

Here's some pics. Showing the lichen (fungus?) growth, and how the trees lose their internal needles and don't grow much. Some of the trees have grown 3 feet in 10 years, whereas the healthy ones have grown up to 3 feet a year.

That group of four trees was healthy and full at one time. Now they're candidates for a good fire.

Spruce aphid and other common problems can make spruces go bald on the inside

I can't say what is causing the decline but I can say that the lichen appearing is the result of the loss of needles......it is not the cause of the loss of needles. Lichen themselves are harmless but they will often colonize trees that are in decline.