State governments need to be more innovative in providing various public services. Greatly increased state investment in public universities has strengthened university capabilities in many disciplines and research programs related to problems facing governments. But the real problems are involved in a university's efforts to provide more effective service to state governments. These problems include inappropriate organizational structures within universities, unfavorable past experiences in providing services, and widely varying perceptions of the university's total range of functions. While there is considerable consensus about the nature of state government university problems, there is much diversity in the manner of solution. Mississippi has established a single research and development center; Georgia, North Carolina, Tennessee, and Texas have established special centers or institutes; and Kentucky has often relied on faculty participation in task force efforts by state governments. After a comprehensive picture of the ways in which state government and university spokesmen view the public service responsibilities of higher education, it is concluded that a close and effective cooperation between a state agency and the universities can be a productive and continuing force. (Author/KE)