The strategic deployment of state funds is suggested to support changes in higher education to increase faculty productivity and to promote such changes as the adoption of the Carnegie Commission on Higher Education suggestions for less time for degrees (e.g., the three-year bachelor's degree). The use of contracts for services from private higher education institutions in the various states is reviewed as a more feasible procedure than the continuous expansion of public higher education facilities. A correlation is shown between mounting tuition and fees in the private sector and its declining proportion of the total college enrollment. A system for eliminating tuition subsidies and the effects of below cost tuition is examined. The study suggests that an alternative to per student aid is the New York system of aid on the basis of earned degrees produced by the institution. Assisting colleges in forming consortia not only by state leadership but by providing full-time coordinators to promote maximum utilization of resources within each consortium is suggested by the study as another alternative in financing higher education. (Author/LBH)