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A state-space model describes the behavioral characteristics of a system as a set of relationships among time functions representing its inputs, outputs, and internal state. The model presented describes the utilization of a university's basic resources of personnel, space, and technological equipment in the production of degree programs, research, and public or technical services. It is intended as an aid in achieving an optimal allocation of resources in higher education and in predicting future needs. The internal state of the system is defined as the distribution of students into levels and fields of study, with associated unit "costs" of education received. The model is developed by interconnecting, with appropriate constraints, independent submodels of major functional segments of university activity. The development of computer programs for estimation of parameters with continual updating and for simulation of the system behavior is described. This description includes a review of machine-addressable data files needed to implement the programs. The state model provides a natural form for approaching problems of system optimization and control. The paper discusses the question of control inputs and the feasibility of developing a formal optimal control policy for a university with essentially "open door" admissions.