Correction: A previous version of this article incorrectly reported that Paul Tudor Jones was a graduate of the University of Virginia’s Darden School of Business. In fact, he provided a donation that endowed a professorship in his name shared by Darden and the McIntire School of Commerce. This version has been updated.

Public universities around the country are facing many of the same issues that the University of Virginia is grappling with. (Norm Shafer/FOR THE WASHINGTON POST)

In 1819, after heavy lobbying by Thomas Jefferson, Virginia’s General Assembly established the state university in Charlottesville, agreeing to spend public dollars because giving young men knowledge and skills would improve the economy for all Virginians.

But not too many dollars. Legislators, suspicious that the university might be anti-religion or overly extravagant, allocated a paltry $15,000 a year to the University of Virginia. The former president was appalled. “With the short funds proposed . . . we shall fall miserably short,” Jefferson wrote in a letter, accusing legislators of “higgling” and failing to recognize “that knowledge is power.”

Nearly two centuries later, as this month’s surprise ouster of U-Va. President Teresa A. Sullivan demonstrated, the tension between major public universities and the state authorities that fund and direct them has grown deeper than ever.

Inspired by the accountability movement that has swept through the nation’s primary and secondary schools, and driven by financial woes that show no sign of abating, the leaders of U-Va.’s governing board went after Sullivan, portraying her as clinging to fusty old ways, impeding progress and productivity. But Sullivan’s supporters did not fold and may yet win this battle in a culture war that has its roots in Jefferson’s day.

When the U-Va. Board of Visitors convenes Tuesday to decide whether to reverse the sacking of Sullivan, the argument will probably focus on whether the board’s rector, Helen E. Dragas, was right to see the president as an incrementalist in a time that calls for swift change. But the university and state government inevitably must tackle a bigger question: What should the nation’s premier public universities be?

Should they focus on preparing young people for careers in specific high-growth fields, or remain full-service liberal arts institutions, like the private universities they were modeled after?

Public universities have long found themselves caught between politicians, who demand results they can present to constituents as a return on their tax dollars, and academics, who want the resources and freedom to let scholars explore as they choose.

But now, with states facing their toughest financial crisis since the Great Depression, top public universities are struggling to meet urgent new missions with diminishing resources.

At the center of the conflict are governing board members, many of them successful business people, appointed by Republicans and Democrats alike, who want schools to behave more like corporations — measuring student outcomes, boosting faculty productivity and trimming programs that don’t add to the bottom line.

“They’ve got to run more efficiently,” said Virginia House Majority Leader M. Kirkland Cox (R-Colonial Heights), a 12th-grade government teacher. “We do want more return for the money — distance learning, using facilities year-round, putting more resources into science, math and technology because that’s where the jobs are.”

Such an approach risks losing sight of a university’s purpose, said Harold T. Shapiro, an economist who was president of the University of Michigan in the 1980s and Princeton University in the 1990s. “It’s very easy to focus on what’s popular or profitable,” he said. “But corporations and universities have different social functions. State universities like Virginia need to ask the people of their state: Do they really want a university of great quality?”

The rising pressure to run universities like businesses has changed academic leadership, but no new model has solidified.

“The days of university leaders sitting back and thinking great thoughts are gone,” said Alan G. Merten, who will step down as president of George Mason University this week after a 16-year run. “Every year, the state contribution to our budget goes down, and I have to raise tuition or have larger and larger classes, which I can’t do. It’s a failure of leadership in both directions. The politicians don’t respect what we do, and we are sometimes our own worst enemy.”

Despite a consensus that a college education is more essential than ever, with college graduates earning twice what high school graduates make, states are disinvesting. The state share of U-Va.’s budget has plummeted over 23 years from 26 percent to 6 percent.

Virginia spends $8,600 per in-state student at U-Va. — far less than North Carolina, which spends $26,000 per in-state student at its flagship in Chapel Hill, or Maryland, which supports such students at College Park to the tune of $18,000 a year.

“These budget cuts have just played havoc with higher education,” said Virginia Senate Democratic leader Richard L. Saslaw (Fairfax). “It’s hypocritical as hell: Politicians promise to keep tuition down and open up more seats for in-state students, and then we cut the budget, so the universities have to bring in more out-of-state students and cut courses. So kids end up taking five years to graduate instead of four, and parents foot the bill.

“People in both parties have bought into this idea that universities can be run like corporations, but you can’t cut professors’ pay, or they’ll leave. Nobody wants to pay for anything in this country anymore, and you’re beginning to see the results.”

Swift condemnation

The message spray-painted across the six columns of the Rotunda at U-Va. on Monday morning, “G-R-E-E-E-D,” was graffiti in the classic sense, a cry of protest from the citizens of Jefferson’s Academical Village in defiance of an unpopular regime.

When Sullivan was ousted, the nation’s higher-education elite reacted swiftly: Here was the board of a top school sacking a well-regarded leader without evidence of wrongdoing, unpopularity or political missteps.

“I haven’t seen anything like this,” said Hunter Rawlings, a former Cornell president who leads the Association of American Universities, representing 61 top research institutions.

As details of the clandestine operation leaked out, it appeared that a small clutch of board members and alumni had initiated and embraced Sullivan’s removal, and many had ties to a single U-Va. address: the Darden School of Business.

Dragas, the ringleader and a Darden grad, spoke of “hard decisions on resource allocation.” Peter Kiernan, a New York investor and Darden trustee whom Dragas consulted about the presidential change, wrote to fellow Darden supporters with repeated references to “strategic dynamism,” a B-school term that denotes management-by-shake-up. Paul Tudor Jones, an ally of Dragas who endowed a professorship shared by Darden and U-Va.’s McIntire School of Commerce, wrote a column in the Charlottesville Daily Progress arguing that “it is time for a revolution.”

Dragas “is going to be remembered as the person who brought the end of the era of the University of Thomas Jefferson and the beginning of the era of the University of Darden,” said Michiko N. Wilson, a professor of Japanese language and literature.

Sullivan arrived at U-Va. in 2010 and set about reshaping it, shifting power to academic departments, exploring online education and reenergizing the admission office, yielding the freshman class with the highest scores in history.

But to Dragas and her backers, Sullivan was moving too slowly. They faulted her for lacking what in the corporate world is an essential text: a strategic plan.

To Sullivan, what the impatient board members wanted was “disruptive change” and “deep top-down cuts,” she said in her first public statement Monday. She warned that Dragas’s approach would drive star faculty members to other elite universities and shred U-Va.’s reputation.

E-mails between Dragas and Vice Rector Mark Kington show them trading op-ed pieces from the Wall Street Journal and the higher-education press, building a case for toppling a president. To academics accustomed to basing change on methodical study, their exchanges sounded flip, their reasoning flimsy.

“It’s a very small group of people talking to a very small group of people who are reinforcing their opinions,” said a former U-Va. board member.

Under pressure to explain her rationale, Dragas released a statement Thursday saying that U-Va. is adrift and has failed to hold faculty members accountable or measure “how well any particular curriculum or program actually prepares U-Va. graduates for the increasingly complex, international world.”

To Sullivan’s supporters, that sounds like an argument for focusing on programs that bring in revenue — and trimming those that purportedly don’t, such as classics.

But university leaders say it’s pound-foolish to focus on profitable programs when you never know what needs will pop up. For example, when government and the private sector suddenly needed workers versed in Middle East politics, language and culture a decade ago, employers were glad to find university programs that had not yet been cut.

Dragas and her allies think U-Va. must shore up its competitive position against wealthier private schools that pay professors more and offer smaller classes. In stark business terms, that means spending less or earning more.

Some public university leaders see a solution in tripling tuition — with a sliding scale for those less able to pay. U-Va. charges market rates for out-of-state students, who pay about $37,000 a year.

“There’s a deeply felt belief here that we’re leaving all kinds of money on the table,” said David Breneman, an education professor. “We’re radically underpricing our product.”

Virginia political leaders flatly reject a sliding tuition scale, but the university’s law and business schools already charge market rates. Dragas and Kington singled out the Darden school for praise. In an e-mail, Kington called Darden “a near and visible template for much of what we seek.”

Erosion of status and trust

Across the continent at Stanford University, Patricia Gumport tries to persuade bright students to consider careers in academia — as professors and, perhaps someday, as college leaders.

Her job is getting harder. “I’m enormously worried about whether we’ll be able to attract really talented people,” said Gumport, director of Stanford’s Institute for Higher Education Research. “There’s been this erosion of status and trust. We’re not giving up, but it’s become more of a challenge to demonstrate that there are ideals that shouldn’t be sacrificed to short-term thinking.”

Presidents of public schools have always had to tend to politics. Sullivan told students in a sociology course she taught this year that when she interviewed to become provost at Michigan, the university president flew down to meet her in Texas, where she worked.

“She checked out my car,” Sullivan said, because “if you are an executive at the University of Michigan, you do not drive a foreign car.” There, Sullivan and her husband drove Buicks and learned to make small talk about the auto industry with lawmakers.

But the current fiscal crunch has forced university leaders into much tougher political conflict. Presidents at state universities in Oregon, Wisconsin and Illinois have made abrupt, premature exits in the past two years. Some were criticized for moving too fast; others for going too slowly.

More confrontations over efficiency and accountability are coming. College leaders agree that some of that is necessary. “A university ought to be able to plow its roads just as efficiently as any business,” Shapiro said. “But too often, this idea that a university should be run like a corporation is just an excuse, kind of a cop-out to cover the state’s failure to commit the resources necessary to maintain quality.”

Cox agrees that there is “natural tension between universities and government. Everybody talks past each other. STEM [science, technology, engineering and mathematics] is where the jobs are, and you have to recognize that. But by the same token, ripping out liberal arts programs isn’t the answer, either.”

But too often, presidents say, politicians excuse cost-cutting by accusing universities of elitism.

“I always heard, ‘You guys at Michigan are elitist,’ or ‘You guys at Princeton are elitist,’ ” Shapiro said. “I often said to legislators in Michigan, ‘Why is being good in higher education associated with elitism?’ Why is it that we don’t talk about quality in cars or refrigerators as elitism?”

De Vise reported from Charlottesville. Staff writer Jenna Johnson contributed to this report.