The Michigan State Board of Education's policy statements on higher education for the 1978-79 fiscal year are presented. Progress in implementation of the policies through the beginning of fiscal year 1977-78 is reviewed, and action needed to more fully implement the policies in the funding process are recommended. State Board policies relate to appropriations for lower division of instruction (freshmen and sophomore), upper division of instruction (junior and senior), graduate instruction, Ph.D. and professional level instruction, collegiate off-campus services, student financial assistance, and capital outlay. A summary of present and projected collegiate enrollment patterns is discussed, followed by an analysis of the State Board's appropriations for fiscal year 1978-79 and a comparison between State Board policies, the 1976-77 actual expenditures, and the 1977-78 appropriations. (SPG)