The trend toward greater state regulation of public higher education is discussed, along with alternative structures or models for state financing of public institutions. The situation in Washington State is briefly described as an illustration. It is proposed that interests of the state, college, and student can be enhanced by allowing colleges more operational independence. At the same time, the state's financial liability can be controlled by refocusing the budgetary decisions to the amount of state tax funds to be provided and eliminating or minimizing the effect of local decisions on the level of investment of public resources. The four alternative models for state financing range from a high degree of state control and little institutional flexibility to one of maximum institutional flexibility and little direct control by the state. Characteristics of the models are illustrated by a checklist consisting of eight major components: budgeting; expenditure oversight; accountability expectations; tuition, fees, and pricing policy; financing options; salary administration; enrollment policy; and program review/approval. The checklist can be used to develop a profile of the financing relationship with a state. (SW)