The relationship between amounts of state regulation and changes over time in faculty quality, student quality, and external funding success among public Ph.D.-granting universities was examined. Attention was also directed to the possibility that: campus flexibility has the greatest benefit for colleges that are poorly funded; or the possibility that adequately funded colleges are best able to take advantage of flexibility. The analysis was based on 1984, 1985, and 1986 studies by Volkwein of 86 public, doctoral-granting universities in 49 states. States were ranked for the degree of regulation, and three types of regulation were assessed: academic, financial, and personal transactions. Changes in the quality of graduate programs were measured by a 5-year improvement rating, while changes in student quality were measured by comparing 1976 and 1985 Barron's ratings of admissions competitiveness. The results suggest that university effectiveness and quality are relatively unaffected by state regulation. Recent changes in regulatory practices for higher education in Colorado, Connecticut, Idaho, Kentucky, Maryland, Massachusetts, New York, Washington, and Wisconsin are briefly described. (SW)