The requirements of urban sprawl, a highly industrialized and technical economy, and an unpredictable job market apply great pressure to the educational community for diversity of offerings, quality, and accountability. However, despite the extraordinary demands for programs and services, the economic forecast for higher education is pessimistic. The California community college system, consisting of 105 colleges, costing 1.5 billion dollars annually in state and local funds, serves as a model in many ways, especially as the one state system maintaining increasing enrollments and tuition-free education. The California system, following a period of explosive growth, is entering a new development phase requiring a fairly radical redefinition of purposes and goals. The Chancellor's office is currently working on a list of six major political influences which explain the need for finance reform and directly affect public policy decisions for the colleges: (1) the K-12 legacy and the "never-never land" between secondary and higher education; (2) the pervasive yet inconspicuous character of community colleges; (3) the inherent friction of a dual governance systems; (4) constituent diversity relative to the state legislature's makeup; (5) other educational components doing the community college job; and (6) piecemeal and partial solutions to financial problems. (TR)