1) People in Colorado are apparently thinking seriously about what would happen if the state simply stopped subsidizing "public" universities. What would they look like? How would they behave? How long would they retain their "serve Colorado first" missions, or their current tuition cost structures? It's almost impossible to predict the outcomes here, although I'll venture out a little onto one limb: if this actually happens, and if the state's universities continue to function reasonably well, expect other states to look seriously at doing the same thing. If the sky doesn't fall, other legislators will discover a great new way to pretend to solve their budget problems.
2) Colorado is already most of the way there already. If you read through the article, you'll find that the state support payment to the flagship University of Colorado is 4.5% (!!) of that institution's budget. That's effectively a private institution by almost any measure; I think the horse-racing industry in Indiana is more heavily subsidized than that. So we're not talking about a massive practical shift, but a symbolic one - although it's a really important symbolic step.
3) The irony here is that the threat to what's left of public higher education spending in Colorado comes because of a lawsuit about inadequate state support for K-12 education. That lawsuit - similar to several others filed around the country, with varying results - turns on a basic promise in the state's constitution to provide a "thorough and uniform" education to all students. It's a promise that, according to at least one state judge, hasn't been met. It's not hard to imagine making that argument, with plenty of evidence to back it up.
4) The really big underlying point: what got us into this mess is the penchant in our politics for allowing politicians to spout promises with their mouths that we lack either the means or the will (mostly the will) to pay for. Nearly every state in the union has a clause in its constitution on education similar to Colorado's; for the most part, these clauses are warm, fuzzy works of fiction. Like the No Child Left Behind Act, we can't bring ourselves to admit that there's a disparity between our rhetorical value on education and our willingness to actually prioritize it over other things in making budgets. As a country, we're like the dad who talks about how important it is for his kids to get a good education, but spends all of his money on cases of beer and cigarettes, leaving a pittance for books.
The problem is clearly bigger than education - primary, higher, or otherwise - but it's most obvious in the fields of education and health care. These are two things that, if you ask people how important they are to their lives and the life of the country, rank consistently at the top.
Yet we have constructed, and continue to maintain, a political system that by its budgetary choices clearly thinks other things are more important. And for the last 30 years, rather than having a grown-up conversation about what we are and aren't willing to afford ("can't" afford is a cop-out; the US economy produces enough surplus wealth to afford all sorts of things, depending on what our priorities are) we have politicians who make grandiose promises about increasing government services and simultaneously cutting taxes.
We get single-issue talking heads who convince us that cutting taxes, or bringing down the deficit, or this or that health care solution, is the only thing we should think about - ignoring the existence of trade-offs. Every dollar spent on one thing is a dollar that can't be spent on something else. But where among our public "leaders" is there someone willing to admit this, and deal with it directly? Better to pander to everyone, I suppose - you're more electable that way.
And we have quietly created a new "third rail" in US politics - the defense budget - which nobody wants to talk about, even though the US leads the rest of the world combined in military expenditures, and nobody can define how much security is "enough". Nary a word has been said on the presidential campaign trail about a budget category that, by itself, is 20-25% of the Federal budget - but already, defense contractors are lining up on Capitol Hill to try to block the "automatic" cuts built into last year's last-minute "budget deal".
What does defense spending have to do with state spending on universities? That's the point - they're all connected. Our penchant for breaking these issues out into separate boxes, and treating each one as if it were isolated and by itself, has led us to a point where our mouths and our wallets no longer align. We talk about how important education is, but we don't fund it. We talk about tax breaks without talking about what we would not be able to fund if we cut taxes. And so the privatization of "public" universities continues.