The critical importance of planning in higher education is addressed. The challenge to planning is seen not just as alleviating the current pressures, but in assuring that the traditions of independence, creativity, and intellectual excellence survive. The planning process at Stanford University is described. For the university, the process of years of decentralization and incremental budgeting was effective in developing teaching and research programs of high quality but also generated "organizational slack." Planning models were developed to deal with financial matters such as tuition, enrollment, payout from endowment, budget size, and deficit or surplus size. The approach used concentrates on the growth rates of the components of income and expense, and a critical concept is that of long-run financial equilibrium. Methods for applying the model are outlined, and reasons for its impact considered. Its implications regarding centralized financial and institutional planning, ecology of the institution, and participation in planning and decision making by the faculty and others are discussed. (LBH)