This report is one of several efforts designed to monitor outcomes in Washington's higher education system, and fulfills the biennial requirement that the Higher Education Coordinating Board (HECB) inform the higher education and fiscal committees of the legislature of progress toward goals. The portrait that emerges from this review of achievements at the baccalaureate institutions is one of strong performance. Degree production is rising and efficiency improvements are occurring. High demand degree production is expected to increase in the next few years after enrollments funded in 2003, 2006, and 2007-09 have been in place long enough for students to complete degrees. In addition, progress is being made with the focus in the statewide Strategic Master Plan on demand for degrees in science, technology, engineering and mathematics (STEM) fields and health care. Particularly noteworthy are the strong gains in the graduation rates for first-time full-time freshmen within six years. Sustaining the levels of progress described would be difficult under the best circumstances, and the report concludes that the current recession poses a serious challenge to the Legislature and the state's higher education institutions. Particularly problematic is that progress made in the last two biennia may be eroded by reductions in 2009--11. Three appendices are included: (1) Baccalaureate Performance Review; (2) Performance Expectations; and (3) Community and Technical College System Performance Review. (Contains 7 endnotes and 6 figures.)