At a time when college degrees are increasingly a prerequisite for middle-class wages, less than 40 percent of college students are able to demonstrate proficiency on literacy tests, barely half of college students graduate on time, and many do not graduate at all. At the same time. the price of college continues to increase quickly and significantly. The authors of this report believe that colleges and universities need to pay more attention to the core task of educating their students well. Acknowledging that economic, geographic and demographic diversity across states demand different higher education systems and corresponding accountability systems, the authors advocate that certain elements should be incorporated into all state systems, including: (1) Measuring student outcomes; (2) Measuring institutional practices; (3) Measuring scholarship, external impact and service; (4) Connecting accountability to governance and strategic planning; (5) Tying funding to performance; and (6) Promoting transparency. This report thus describes the current state of the art in state higher education accountability and concludes with a set of guidelines for designing a model state higher education accountability system. (Contains 15 figures and 25 endnotes.)