Dick Startz, over at Crosscut has posted an article proposing a strange sort of state capitalism as a solution to funding the schools. I have excerpted relevant parts of his text below (in blue) but suggest you read the entire text at Crosscut. 
With all due respect to a faculty colleague, this proposal seems superficial and quite likely illegal.
Public higher education is an engine of prosperity for the nation, the state of Washington, and most importantly for the individual young people of the state. Too bad we have the wrong model for funding it. ….
Here are the components of the proposal:
1. The four-year college and university portion of the higher education budget of the state should be eliminated completely, and the funds released would be used in their entirety to provide scholarships to Washington students, to be used at any four-year Washington public college or university of their choice. …. ……. Later he describes the scholarship plan: Pot 1 provides a basic scholarship to every Washington state high school grad who attends a public, four-year, Washington school. Pot 2 is given out on the basis of financial need. The third pot offers merit scholarships to the best performing Washington students. We will, of course, have to have a merry argument on just how large each pot should be. (Note that this proposal does not affect community colleges.) My emphasis.
2. The four four-year colleges and two research universities would continue to be public institutions with governing boards appointed by the governor and with graduate program approval remaining with the Higher Education Coordinating (HEC) Board, but most other supervision would be eliminated. Specifically, tuition and scholarship policies would be entirely in the hands of each institution.
……If this proposal seems radical, unprecedented, and unworkable, remember that it’s long been tested by private institutions. What’s added to the mix is the public subsidy for students.
Another welcome change that this model would prompt concerns the relationship of the institutions to the state. No longer would institutions individually lobby the Legislature for what they view as their fair share of the state’s operating budget. Instead, their lobbying would be focused on growing the whole pie for higher education: they would lobbying with one another rather than against one another.
A few points:
1. Presumably, the endowments and property of the schools would now belong to them? If the State no longer provides funds, why would the State still control the schools via the board of Regents? and the Higher Education Board?
2. If a major national school, say UW or Evergreen, chooses to attract the best paying students from outside of WASTATE, will the State be able to prevent this? Will the State match the tuition offered by students from Beijing or Dubai?
3. Presumably costs at these new private universities would be expected to rise quickly to the national norms for similar private schools. Say, something like $30,000 to $49,999 for a premier research campus like UW. Is the State realy going to privide THAT kind of scholarships?
I wonder if Dick is aware that a number of VERY expensive “pribvate” colleges, inlcuding Harvard, Virginia, and Cornell were once public schools?
4. Could the State justify NOT allowing these scholarship funds to go to private schools, including bible colleges, for profit Diploma mills, paramilitary academies, or ????
5. Dick wants to guarantee ” a basic scholarship to every Washington state high school grad who attends a public, four-year, Washington school.” Unless the scholarship is an ENTITLEMENT, why does Dick believe the state legislature would come up with the funds for a discretionary scholarship program?
6. Is Dick not aware of how many WASTATE students now use Community Colleges as a way to cut there costs?
7. Out tenure tenure system is based by a commitment by the State to fund a certain number of state salary lines. I she proposing to end tenure?
Comments welcome.