This report on Virginia higher education briefly reviews the impact of economic recession, slashed budgets, increased tuition, and increasing politicization upon the state's higher education system, and then looks ahead to issues critical to the higher education's future in the state. The report proposes action in three areas: (1) adequate funding of higher education, noting that the state's standing in funding per student dropped from 27th place in 1985 to 44th in 1995; (2) a need to protect the higher education system from partisan politics and interference observed at all levels--administrative, public support, and intellectual; and (3) seizing the opportunities offered by advanced communications technology. The report envisions a higher education system with new rules--with no protectionist cartels, with strategic investment targeted toward specific opportunities rather than spread about by formula, with an understanding of the practical limits of planning, and the emergence of alternative organizations to advocate on behalf of higher education. (CH)