This discussion of the state/university relationship addresses the ways in which states and universities can achieve relationships that are constructive for both parties. The following chapters are presented: (1) "Choosing Quality" (includes policy, interest in quality, university role, trends in state/university relationships, and resources); (2) "The Nature of Appropriate Policy Versus Inappropriate Intrusion" (includes bureaucratic, ideological and political intrusion and the functioning of the university); (3) "The Causes of Inappropriate Intrusion" (includes growth of state involvement and of higher education, quality mandates, missions, prestige and power, geography, politics, governing boards, and multicampus systems); (4) "Creating a Positive Climate" (includes cutting back bureaucracy, incentive funding, trust and the governance structure); and (5) "What Is It That Matters?" (includes aspiration, tradition, leadership, and university, board, system and state roles and responsibilities). Appendices provide information on the state universities included in the study, recommendations to improve trustee selection, and two views of state university governance. Contains 66 references. (KM)