In this report, the executive director of the California State Postsecondary Education Commission summarizes the major demographic and political forces that will likely affect the shape of higher education leadership in California during the 1990s. The report discusses the implications of increased enrollment pressures on educational equity, geographic access, and competition among the segments for new campuses. Next, an analysis is provided of the state's political climate and prospects for state support of growth, with particular emphasis on California's economy, the state budget, and the vulnerability to revenue shortfalls of the University of California and California State University. In addition, four major challenges to the State's postsecondary leaders are identified: (1) insulating institutions from political uncertainty; (2) building a decision-making process to manage the politics of growth; (3) maintaining quality and dynamism within steady-state; and (4) improving productivity. (GLR)