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FLAGSTAFF — To thrive in the future, Arizona's public universities must shift from acting as educational agencies of the state to a more self-reliant enterprise model, according to an Arizona Board of Regents discussion Friday.

Under the enterprise model, the universities would take a greater role in generating their own revenue, with those resources treated as investments. The universities would also focus on increasing expectations along with revenue, taking greater responsibilities for their own fate.

The shift to enterprise models is the next step in the evolution of the state university system, said University of Arizona President Peter Likins, as regents and other presidents brainstormed at the board's annual retreat on the Northern Arizona University campus.

In the last several years, the regents have brought large-scale changes to the university system with the changing directions initiative and system redesign. Now, each university is free to pursue its own distinct mission, working with the others as a system.

The overall goal must be to deliver the best education to the citizens of Arizona, said Robert Bulla, the board's incoming president.

The universities will never fit a pure business model, but their continued success depends on strategic changes to move away from their historical roles as agencies of the state, Bulla said.

State funding as a portion of the universities' revenue has been shrinking, down to roughly one third across the system now. That financial reality has forced the universities to seek other sources of funding, including a greater emphasis on research to bring in outside grants, higher tuition and an unprecedented push for private fund-raising.

The change in fund-raising has been dramatic, from an Arizona State University centennial capital campaign with a $100 million goal in 1985 to the University of Arizona's $1.2 billion campaign that wrapped up a year ago.

"If you don't have money, you don't have a mission," Bulla said.

Shifting to enterprise models is a long-term movement rather than a one-year fix, he said.

Universities have a fundamentally unique role in society as "organizations that have taken on the task of adapting society as it moves forward, through learning and discovery," said ASU President Michael Crow.

"We create knowledge, we store knowledge, we synthesize knowledge and we transfer knowledge," Crow said.

Universities deliver educational services, but their principal mission reaches far beyond that. Great universities are measured as a function of the ability to create, Crow said.

"To build universities that are excellent, neither the market or government offers us the construct to be able to do that," Crow said.

The move toward an enterprise model is inevitable, but must examine the role of faculty, where there is a healthy and natural division between those who primarily teach and those who primarily research, said Regent Gary Stuart. The role of students and their families must also be considered, he said.

Crow and NAU President John Haeger gave their universities' perspectives on the enterprise model. Incoming UA President Robert Shelton will make a presentation at the August regents meeting.

"The public agenda today is we have to have a more educated work force, at a higher level," Haeger said. "It will require a fundamental cultural shift inside the universities than we've seen in some years."

The regents, university presidents and various other administrators and officials brainstormed ways to effectively bring positive changes to the university system in several areas, including financial management and resource acquisition, capital infrastructure, human capital, information technology, knowledge production and customers.