The higher education landscape has changed considerably over the past few decades. As government funding for health care has increased in virtually every state in the United States, support for higher education has taken a backseat. The purpose of this white paper is to discuss the relationship between the state of Wisconsin and the University of Wisconsin-Madison. The paper begins by first reviewing economic arguments behind why states have traditionally supported higher education. There are several myths and misconceptions surrounding the economics of higher education and section II attempts to place them in the current context and address them. Section III explores whether UW-Madison is currently subsidized by the State of Wisconsin. Section IV discusses the concept of capital-skill complementarity and how it relates to Wisconsin’s investment in Foxconn. Section V concludes with some policy suggestions – both what UW-Madison can do to better to serve the State of Wisconsin and what the State of Wisconsin can do to ensure that UW-Madison is successful.