Recent data indicate that a large proportion of students entering community colleges are identifying terminal certificate or occupational associate degrees instead of academic majors or transfer as their short-term goal. Despite this, throughout much of the 1980s and 1990s, states established articulation agreements as policy instruments to enhance the transfer of students from public 2-year institutions to 4-year institutions. This conundrum raises an interesting two-part question: In the absence of a significant increase in the demand for transfer by community colleges entrants, why have states enacted these agreements, and what potential impacts may arise from these legislative trends? Applying the state relative autonomy theory, we contend that the rise of articulation agreements constitutes a new state strategy to cope with the stagnation of higher education appropriations, the spiraling costs of tuition, and an excess demand for affordable higher education.