This document presents information on how the Western states are responding to some of the major policy issues facing U.S. higher education today and on the strategies they have used to implement change. The study, prepared by the Western Policy Exchange Project, defines today's higher education environment as characterized by dynamic global, national, and state economies; increasing demand accompanied by tightening resources; changing demographies; new services and delivery modes; competing market-based models; and changing customer expectations. Other sections in the document include: (1) identify key elements of the systemic change process and list several hypotheses about how state higher education systems change; (2) raise issues of access and changing student demographics; (3) explore the impact of information technology on higher education; (4) note the increasing costs of supporting state colleges and universities and the competing demands on state budgets; (5) review the need for linkages to K-12 education, for outreach programs that reach a wide range of students, and for partnerships with business and industry; and (6) define some of the emerging issues still ahead, including increasing the quality of teacher education; the demographics of a changing student population; problems of affordability and financial aid; the shift toward competency-based education; and the changing role of faculty. (CH)