The importance of a state role in assessing and improving undergraduate education and possible initiatives that states can pursue are discussed. Two roles for states are identified: (1) state regulatory and funding mechanisms should create an appropriate climate and concrete incentives for inducing institutional self-improvement; and (2) state governments should monitor the performance of the state's higher education system as a whole by periodically collecting appropriate measures of effectiveness. Because of diversity among colleges and students, multiple means for assessing the effectiveness of both the whole system and individual colleges are needed. Important issues in determining the effectiveness of a state's college instructional system are: changes in student learning and development resulting from instruction; monitoring access to higher education; how student learning and development contribute to behavior at work, the marketplace, and the community; and costs of programs and improvements. Examples of instructional improvement programs at six colleges are described. Broad directions for state policy are addressed that concern issues such as incentives for institutional improvement and the use of quantitative information. (SW)