This report is the product of nearly 2 years' work by the California State Postsecondary Education Commission on how the State of California should prepare for enrollment increases in higher education through the year 2005. The six sections of the report cover trends that will influence enrollment demand; the current growth plans of the state's higher education systems for expansion; the capital outlay and operating budget consequences of this planned growth; the state's ability to support this growth; and alternatives to growth. Based on the five fundamental assumptions of the recently concluded Master Plan review process, the Commission recommended that: (1) the state should prepare for 70,000 new students by the year 2005; (2) no commitments on expansion plans should be made until voters allow the state a greater spending limit; (3) the process for growth should be orderly, coordinated, and gradual rather than competitive among the systems; and (4) the state should ensure that this planning be directed not just toward expansion but toward increased diversity of student enrollment. With respect to the individual systems of education, the Commission found that: (1) enrollment increases for the California State University should be between 31% and 41%; and (2) the California Community Colleges can expect enrollment to increase approximately 40%. The Commission requested more information about regional priorities before specifying how these enrollments should be accommodated in existing or new facilities. An appendix provides the Senate Concurrent Resolution 66 (1989). Contains 13 references. (GLR)