The University of Michigan and the University of Virginia have pioneered a sort of public-private hybrid model that other public universities may begin to look at. Both schools faced drastic state budget cuts much earlier than most state flagships, and as a consequence needed to make up for lost state appropriations with other sources of funding. I believe both schools now get something like 5% of their annual operating budgets from their respective states, far lower than most publics. That required them to raise tuition, for one thing, and both were institutionally positioned to make those decisions without legislative interference. It also meant increasing OOS and international representation in the undergraduate student body and setting OOS tuition very near but slightly below the tuition at comparable private institutions. It meant becoming more heavily reliant on outside research grants, which Michigan in particular has been spectacularly successful at, with an annual research budget now well in excess of $1 billion, compared to state appropriations of around $200 million. And it meant building their endowments; Michigan’s now stands at around $10 billion, 9th largest among all colleges and universities, public or private, and UVA’s is at about $6 billion, good for 18th place in the latest NACUBO survey, ahead of, e.g., Cornell, Rice, Vanderbilt, and USC. Michigan and Virginia are still public institutions insofar as they still make a majority of their seats available to in-state students and offer substantial tuition discounts to state residents, as well as meeting 100% of need for in-state students; but they’re quasi-private insofar as they enroll large numbers of OOS students, set their tuition rates without legislative interference, and depend heavily, indeed primarily, on non-state revenue sources to keep the institution moving forward.
Wisconsin-Madison is well positioned on research grant funding; it’s one of the nation’s heaviest hitters in this area with around $1 billion in annual research expenditures. But its in-state tuition is still lower than Michigan’s or Virginia’s, and although it has a substantial OOS undergraduate population, about 1/3 of its OOS students are Minnesotans who enjoy tuition reciprocity, and its standard OOS tuition is lower than Michigan’s or Virginia’s. And Wisconsin’s endowment, while substantial at around $2.3 billion, is only about 1/4 of Michigan’s and well under half of UVA’s, the latter being a substantially smaller school.
There are probably people at UW-Madison who would like to move it closer to a Michigan/Virginia model, but it won’t happen overnight. It’s taken Michigan 30-40 years to build the endowment war chest it now has, and that’s in a state with a larger population base (72% larger) and more aggregate wealth (Michigan has about 50% more "ultra-high net worth individuals"worth $30+ million than Wisconsin). The concern at Wisconsin in the meantime would be that ongoing budget cuts, coupled with Gov. Walker’s apparent goal of bludgeoning the university into mediocrity, will drive away some of the academic talent that drives the research engine, while at the same time making the school less attractive to OOS applicants and also less attractive to big donors who are less likely to invest in a sinking ship than in an up-and-coming enterprise.
A lot of this, however, depends on governance arrangements. Michigan, and I believe Virginia, are blessed with independent governance structures that make those universities less subject to the whims of state legislative politics than most state universities.