A common landscape practice is to have the lawn company place mulch around trees and shrubs. Good organic mulch should be effective for 3 years. Consequently, multiple layers of mulch accumulate around the trees and can be responsible for killing a tree.
Mulch is good at 2 to 3 inches depth around the tree but not touching the trunk. Mulch can improve drainage, improve soil health, reduce weeds and competition for nutrients, and prevent string trimmer damage. On the other hand the practice of piling mulch around and up the trunk (forming a mulch volcano) has the opposite effect. It can smother the tree since its respiration occurs around the root ball. The retention of moisture around the trunk can cause a condition for rotting bark which allows diseases, fungus, insects and varmints to attack the tree.
The most heinous crime is circling roots. A tree will begin to grow roots into the mulch instead of into the surrounding soil, called advantageous rooting. Then as the tree grows, the trunk gets larger and eventually the circling roots strangle the tree (see the photo below). The tree does not die immediately but goes through a prolonged period of decline.
If you have one of those geo-illogical structures, reduce the grade so you can see the root flair. Use air pressure or pressure washer to accomplish this. Doing it by hand with sharp tools will cut many of the advantageous fine roots. Repair any girdling roots and position remaining fine roots in a proper growing pattern. Then cover the ball with a fine layer of soil; 2 inches past the trunk, apply the organic mulch and grade it away from the trunk. This tree ring should extend at least 40% of the canopy width: the more the merrier. Do not plant inside this ring which will create competition for scarce nutrients and water. If your tree was planted too low so you have no grade, I recommend using a curbing material to avoid the mulch from building around the tree trunk.
During drought periods the best practice to prevent damage to a tree is to make its growing environment as stress-free as possible. JNJ Pest Control and Grounds Care has program that will help to recover from the drought stress of 2011 and reduce problems from the forecast of continued drought for 2012.