The 1986 report of the New Mexico Commission on Higher Education first outlines responsibilities of the Commission and developments concerning the Board of Educational Finance and then considers the climate for higher education reform in New Mexico, including economic changes, career changes that require retraining and skill upgrading, and changing student demographics. The Commission is working to improve needs assessment for postsecondary education and data collection to promote planning, and has formed planning and advisory councils. Current academic issues include new graduate programs, an academic preparation for college project, and program reviews. Information is provided on student financial aid, including need-based funding of grants, loans, and work study programs; the Physician Student Loan Program; a Competitive Scholarship Program, tuition reciprocity agreements; waivers for Navajo Reservation residents; and Vietnam Veterans' Scholarship Program. Also covered are the issue of formula funding and developments and budgets for special schools and research and public service projects. Data on enrollments, degrees, faculty characteristics, and revenues and expenditures are appended. (SW)