Discussions on finance stimulated much debate. Educators complain of "boom and bust" funding cycles. Performance-based funding and tying funding to state priorities may be popular among the public, but they are often viewed as distractions by college faculty. A perceived lack of administrative flexibility and the absence of ways to hold funds in "reserve" for when they are needed were frequent complaints. Others were operating budgets that cannot be planned in fixed terms: the uncertain funding future of libraries; and statutes and regulations that impede institutions’ ability to privatize some of their operations. A general "undercurrent of distrust" has formed between those who fund and those who are funded.

Allusions to the market model were frequent: either fund students so that they can "purchase the product" and create competition between providers, or allow institutions to operate more as competitors in a marketplace. The weakness of the market approach may be in the fact that society calls upon its institutions to do more than teach students; they are expected to conduct research and development, provide health care, and encourage social mobility– functions that do not lend themselves well to this model.

These discussions ended with a number of suggestions. The policy implications are implied in them.

Policy Implications for Finance

Pricing—Let institutions control price—let them charge what is needed and what they can, and let market dynamics apply. Establish and maintain a clear and continuing price relationship among types of institutions.

Funding—Attach a fixed proportion of state expenditures to higher education and link growth to some external index such as the CPI, thereby providing stability and predictability. Tie funding to special programs and the costs of instruction.

Cost—In terms of college costs, the same proportion of the cost of instruction should be paid by the student from generation to generation. Let means play more of a role: require some students to pay more, some less, depending on ability to pay.

Tuition—Make it a rule that when state surpluses are high, tuition will be capped. Do not use tuition as the defense of first resort when times are bad.

Financial Aid—Tighten the gap in tuition between the public and private sectors by allowing students to use state financial aid to attend private schools.

Planning—Above all, be clear about what the public higher education interest is and what institutions are to be expected to do; watch regulatory structures so institutions can be flexible and adapt; carefully guard savings given the "boom and bust" cycle; put some funds aside for state objectives, performance, quality, etc.