This brief was submitted to the Standing Committee on Social Development of the Ontario Legislature in connection with Bill 42, which is intended to limit university deficits. The following concerns are examined: current university funding levels in relation to enrollment and student demand, research responsibilities, tuition fee levels, and capital requirements for teaching and research equipment and for renovations and alterations. The recent history of the funding of universities in Ontario is reviewed, and attention is directed to a fundamental issue of public policy: how to bring the financial resources provided the universities into accord with the educational mandate they have been given. Highlights include the following: Ontario university enrollment is at an all-time high, and an increased participation rate may keep it high through the 1980s; Ontario ranks last among the provinces in its operating grants per student; and Ontario university tuition fees, set by the government, are among the highest in Canada but represent only about 15 percent of university revenues. For each of the findings, policy issues are addressed. (SW)