This article on falling state support for higher education describes my experience fairly well:
At Public Universities, Warnings of Privatization By Sam Dillon, NY Times: Taxpayer support for public universities, measured per student, has plunged more precipitously since 2001 than at any time in two decades, and several university presidents are calling the decline a de facto privatization of the institutions that played a crucial role in the creation of the American middle class. Graham Spanier, president of Pennsylvania State University, said this year that skyrocketing tuition was a result of what he called "public higher education's slow slide toward privatization." ... The share of all public universities' revenues deriving from state and local taxes declined to 64 percent in 2004 from 74 percent in 1991. At many flagship universities, the percentages are far smaller. About 25 percent of the University of Illinois's budget comes from the state. Michigan finances about 18 percent of Ann Arbor's revenues. The taxpayer share of revenues at the University of Virginia is about 8 percent. "At those levels, we have to ask what it means to be a public institution," said Katharine C. Lyall, an economist and president emeritus of the University of Wisconsin. "America is rapidly privatizing its public colleges and universities, whose mission used to be to serve the public good. But if private donors and corporations are providing much of a university's budget, then they will set the agenda, perhaps in ways the public likes and perhaps not. Public control is slipping away."
Around here, you see examples of this everywhere. We are now building much of the infrastructure on campus using donor money rather than state support. Many faculty now come to us as endowed chairs funded from private sources. At the University of Oregon the percentage of state support is 13%, down from 32% in 1990 and the share of that from tuition, i.e. out of student's pockets, has risen substantially during that time. And if you include all the fees that have been shifted onto students that are billed separately from tuition, their share has risen even more:
...the future of hundreds of universities and colleges has become a subject of anxious debate nationwide. At stake are institutions that carry out much of the country's public-interest research and educate nearly 80 percent of all college students, and whose scientific and technological innovation has been crucial to America's economic dominance. ...The average in-state tuition nationwide for students attending four-year public colleges increased 36 percent from 2000-01 through 2004-05, according to the College Board, while consumer prices over all rose about 11 percent. The Morrill Act of 1862 granted federal land to states to finance the creation of public universities, and one of their core missions ever since has been to provide services that promote the well-being of communities and states. Today, educators using the term "privatization" say universities are being forced to abandon this social compact. In the process, many major public universities are looking more like private ones.
Since the state isn't supporting us to any significant degree, we have been trying to get out from under many of the state's restrictions. That part is a lot harder. That 13 cents on the dollar purchases a lot of restrictions on what we are allowed to do as an institution. One thing we asked the state to do was to allow us to set our own tuition rates, or at least set them different from other schools in the state. We were allowed some, but not full flexibility. We are not alone in these types of requests:
For instance, the University of Virginia and other public universities in the state responded to years of dwindling financing by asking Virginia's General Assembly to extend their autonomy and to reaffirm the university governing boards' authority to raise tuition. ... Two years ago, Miami University of Ohio became the first public institution to adopt the tuition model used by private colleges, eliminating the differential between in-state and out-of-state residents. Across the nation, educators said, public anger is rising not only about tuition but about the increasing numbers of faculty members who focus on research rather than on teaching undergraduates, and about the time that university presidents spend hobnobbing with billionaires. University administrators say all three phenomena are related to the transformation of revenues. As private donations and federal grants make up a larger proportion of universities' revenue, more professors are paid mainly to conduct research. And as state financing drops, more building projects depend on private philanthropy. At the University of Wisconsin at Madison, Grainger Hall, which houses the business school, was financed largely by donations from David W. Grainger, chairman of W. W. Grainger Inc., the business-to-business distributor; from his wife; and from the Grainger Foundation. The school of pharmacy is in the new Rennebohm Hall, named after Oscar Rennebohm, whose drugstore chain amassed a fortune. The Rennebohm Foundation financed the building. "Wisconsin people see all the construction on campus and don't understand why the university is complaining about budget cuts," Dr. Lyall said. "We have this apparent incongruity of building growth at a time when resources for teaching in those buildings are shrinking."
And this point is important too:
But flagship universities are less vulnerable to financing declines than are hundreds of state-run four-year colleges that do not offer doctoral programs or conduct significant research, said David Ward, president of the American Council on Education, the nation's largest association of universities and colleges. The flagships can replace some state revenues with federal grants and private donations, but the four-year colleges cannot ...
As we shift more and more costs onto students, as we go out of our way to attract students who provide more net revenue, as we accept more and more money with small seemingly insignificant strings attached, we should look very carefully at the students that are excluded in the process and at how it potentially diverts us from our core mission.