Evolve or dissolve. That advice, from a recent report on virtual universities, played out in two news stories last May 2009. The University of Texas' online division is staring down a deep budget hole as it loses a longtime subsidy. In Utah, budget cuts have killed a 10-campus online consortium. Those and other predicaments reflect the growing pains of public online education. As programs mature, their business models have come under more scrutiny. The Texas and Utah cases speak to difficult questions facing states: What role should these programs play? How should states pay for them? Or should they? This article discusses the challenges facing online education in this time of recession.