The Governor's Commission on Higher Education and the Economy's assessment of the Connecticut system and ways that the educational needs of the economy and the state can be met during a period of declining enrollments and fiscal constraints is presented. Working committees of the commission studied governance and management; business, labor, and education; and academic quality and access. The needs assessment included public hearings. Specific areas of concern include: governance, planning and budgeting, facility/capital plans, operating plans, special plans, skilled labor requirements, education for employment, cooperative programs, apprenticeship programs, academic standards, funding adequacy, tuition and financial assistance, minority access to higher education, access for the handicapped, transfer from two-year to four-year institutions, educational technology, and innovative programs. Among the commission recommendations are the following: replacement of the Board of Higher Education by an 11-member Board of Governors composed exclusively of public members with no ties to state or independent Connecticut colleges; the development of a comprehensive management and budgeting process that includes five-year operating plans; the establishment of a Committee on Technological Change that would help analyze long-term employment trends; and indexing tuition and financial assistance to inflation. Appendices include a summary of studies and actions addressing problems of higher education in Connecticut; information on enrollments, capacity utilization and full-time enrollment for specific colleges, tenure, responsibilities of the Board of Higher Education and the proposed Board of Governors, average faculty salaries, and tuition and fees. (SW)