This article focuses on methods of funding allocation and quality assurance as prominent levers of change in higher education reform today. It is their interplay which forms the main components of coordination frameworks. The arguments for more market or new forms of state intervention can only be understood in the context of such a framework. Developments in the higher education system of the Czech Republic, which has seen interesting changes within the last 15 years from an extreme institutional autonomy to a more balanced relationship between state and universities, will be drawn upon to illustrate these arguments.