An examination of public policy issues and accountability in education focuses on the current situation in California's system of higher education. It looks first at how the consensus about public financing embodied in the state's 1960 master plan for higher education has come apart since about 1990, and reports on two studies, one on recent developments in the community colleges and the other on the funding of higher education over 35 years, that show that the basic principle of public funding is no longer operational in the state. The paper notes that the public appears unconcerned about this situation. Enrollment projections for the next decade suggest that the state and its higher education institutions must choose between maintaining the system at current cost and serving a much smaller proportion of the population, or reducing overall cost per student; there is no scenario under which the status quo model can continue at current cost levels. It is concluded that the re-invention of higher education in California is likely to be a traumatic process, with a substantial need for public policy leadership at the state level, but that the opportunity for major social good to be accomplished is also substantial. (MSE)