This is the second in an annual series of reports that summarize financing trends affecting higher education. The report notes that state appropriations to higher education reached $56.7 billion in fiscal year (FY) 2000, an increase of 7 percent over FY 1999, and the largest ever appropriated by states for higher education. The 1999 legislative sessions were marked by limitations on tuition increases and increases in the use of performance measures and other accountability requirements. Average levels of student indebtedness continued to increase, with loans comprising almost 60 percent of all student financial aid. Affordability, workforce preparation and accountability, performance-based funding, and reform of teacher preparation programs were the most important issues on state legislative agendas for 2000. The report details state appropriations trends at both the state and national levels, examines some regional changes, notes trends in pricing and student financial aid, and examines some other issues, including changes in governance structures, performance-based budgeting, technology and distance education, and projected funding for FY 2001. (Contains 43 references.) (CH)