This statement addresses a critical problem facing California higher education. In the next 10 years, California faces a demand for educational services for between 400,000 and 500,000 new students at the California Community Colleges, the California State University, and the University of California. Most of this surge, which has become known as "Tidal Wave II", will occur after the turn of the century, but if the institutions are to be ready, it is essential that construction is begun now to expand existing campuses, renovate old buildings, build new campuses and off-campus centers, invest in new infrastructure, minimize costs, increase productivity, and purchase new equipment that will give the next generation of students the technological skills that they will need to compete in a radically new kind of economy. California higher education needs billions of new dollars for both current operations and capital outlay. The existing 137 campuses will need about $500 to 600 million annually to renovate and maintain buildings and infrastructure. To grow will require another $400 million per year for 10 years and the total amount needed is $1 billion annually. It has not been determined how these funds will be acquired. (JLS)