Problems confronting higher education are considered from the perspective of state coordinating agencies. Ten obvious problems are as follows: adjusting to new enrollment patterns; attempting to close the cost-income gap; expenditures increasing more rapidly than income; supporting the capacity for research and advanced study; meeting new educational needs of the population; working for more effective use of resources in institutions; encouraging diversity and helping colleges and universities to retain vitality and flexibility; continuing the progress toward social justice both in enrollment and employment; creating conditions that foster self-help and local initiative in institutions; and maintaining the proper balance between the inner direction of institutions and external influences upon them. It is suggested that, except in functions such as resource allocation or setting procedures, the state tends not to be a very good substantive planner. Furthermore, the state is not very good at being an entrepreneur/manager, nor a means for reconciling diverse interests. It is claimed that in the present times of declining enrollment growth and declining growth of finances, the state is being called on to do the things that it does not do very well. Some possible solutions, things that can be done at the state level and that do speak to the obvious problems, are suggested. It is recommended that coordinating agencies can develop a better understanding of the cost pressures in labor/intensive activities, and that they can elicit expertise to assess and act on the impact of inflation. Additionally, there is a need to review state goals in the new context of higher education and to measure state effort in moving toward those goals, to develop new procedural relationships for required planning, and to determine strategies for influencing federal policy. (SW)