The state of California will face significant challenges over the next decade as it tries to maintain access to higher education, for all Californians who can benefit, in the face of limited state resources and pressure to allocate those resources to other purposes, such as corrections. Productivity improvement is frequently looked to as a strategy that will enable the state higher education system to continue to meet public needs without increased public spending. The purpose of this report is to present an overview of the literature on productivity in higher education and in the service sector more generally, and to provide a framework for thinking about productivity improvement for state higher education systems. This framework can serve as a useful starting point for public discussion of how to develop productivity improvement programs for the higher education system. The framework suggests that productivity improvement involves four key steps: defining the unit of analysis, articulating the objectives of the higher education system, identifying measures of efficiency and effectiveness that relate to those objectives, and developing strategies for improving and monitoring productivity. The authors link this framework to the California context, illustrating the complexity of the tasks involved by using specific issues state policymakers might face. The examples included are intended not as policy recommendations but as points of departure for policy discussion among members of the California Higher Education Round Table.