In this very chaotic and difficult budget year, where funding cuts in the neighborhood of 20 percent are becoming commonplace for higher education, another troubling movement is under way: to use the funding crisis to further dilute the public responsibilities of some of the country’s leading universities.

In the name of deregulation, a number of flagship institutions are seeking to be exempted from complying with state funding and personnel regulations, as well as to be allowed to live outside of the higher education governance systems in their states. They argue that they need this autonomy to compete in the national and international markets, and that their special status is justified because of the reductions in state appropriations.

They’ve got half of this right. Relief from obsolete and ineffective state controls is appropriate for all of higher education, not just a few of the research universities, and not just because of funding reductions. The myriad rules and regulations still operating in many states were developed in another time and place, before the universities grew into multi-billion dollar enterprises with hundreds of thousands of students and tens of thousands of employees.

Yet to this day, many states still require prior approval for purchasing, dictate line-item funding in silos, and maintain fund management requirements that perpetuate bad habits such as year-end spending sprees rather than building prudent contingency reserves. There is no question that these bureaucratic mandates hurt rather than help the institutions to be accountable for efficiency and effectiveness.

But this is no time to weaken the public responsibilities of the flagship institutions, to allow them to opt out of obligations to meet state needs. It’s true that state funds are now the minority of resources in research universities, and in some cases a very small fraction. But the disinvestment of state revenues hasn’t happened to the research universities alone; it has also hurt the regional institutions and the community colleges.

More to the point, the flagship institutions got to where they are through the state investments of billions of dollars over the last century and more, giving them a funding advantage over the other publics, in total revenues, in assets and often in state funding per student, an advantage they certainly aren’t offering to give up as part of the new privatized state they envision.

While system boards work imperfectly, their core purpose is more important now than ever before: to balance institutional aspirations with broader public needs, through planning, differentiation of missions, program review, and attention to student flow across institutions. Weakening the authority of higher education system boards will only serve to advantage the already privileged. The institutions will inevitably gravitate even more away from public needs, and toward institutional self-interest: selective admissions, merit rather than need-based aid, more research, and greater academic specialization. The teaching function and service to poor and working students and to underserved geographic areas lose out in this equation. This will accelerate the declines in educational attainment our country is already experiencing.

We have to increase college access and degree production for all students. To do that the relationship between state government and public institutions needs to be reestablished on a different basis. States need to mend their budgeting systems, to put greater responsibility for fiscal management in the hands of the institutions, and to focus their own attention on how to stabilize state subsidies to meet public priorities. Institutions need to do more to improve efficiency and effectiveness, and to generate savings to build investment pools for things that won’t be coming from "new money" any more.

Both sides need to get away from the year-at-a-time focus that is killing public institutions, toward more of a multi-year investment approach that recognizes that state funds are just one of the many sources of revenue that will be needed to accomplish public purposes. And everyone needs to do more to remove barriers between institutions that keep them from serving students well, not to find ways to drive them apart.

The regulatory and funding model for higher education needs to be mended, not ended.