Two case studies of states that illustrate innovations in higher education budgeting are presented, based on a project of the Education Commission of the States. The two states, Colorado and Minnesota, took different approaches. In Colorado, the impetus for change came from key legislative members interested in providing greater autonomy to the higher education governing boards. Five key conditions provided the impetus for change: legislative leadership, governing board readiness, fiscal austerity, the presence of a mediator, and the success of more modest changes. The governing boards were given greater financial autonomy and responsibility for conducting their own business affairs. In Minnesota, the state coordinating board realized that the incremental approach appropriate in a growth environment was not well suited to an era of fiscal constraint. The board initiated a study of new approaches to budgeting and tapped a reservoir of support in the governor's office, legislature, and among the institutions. The results in both cases were similar: greater decision-making authority for those with more direct responsibility for running the institutions. (SW)