The Chronicle reports today that SFSU is considering cutting its Engineering Department due to budget problems. The article is a bit alarmist - the school spokesperson says that the department was just the first notified because they are in the process of hiring four professors. So hopefully this is just some standard 'budget cuts are ruining the world!' fearmongering.
Publicly funded college does not give society a good return on investment. What this means is that the money that goes to each student for college expenses does not come back in the form of higher taxes and whatnot (in contrast, K-12 educations does have a positive return on investment for society). This creates an incentive for people to go to college even if it's not really "worth it" to them, because the government is paying for it anyway.
In the United States today, far too many people go to college - many people don't actually need a college education for their likely career options (which will be unchanged by the state or community college degree), and many others learn little or nothing of use at college. College is also a way for those who had the misfortune of attending a low quality public school (which is unfortunately most of them) to make up some of that learning. This last situation should be rectified through improvements to the public schools. The other issues can be addressed by giving people government-backed loans to attend private institutions, which is increasingly the norm. This enables the prospective student to choose whether or not their debt burden will be worth it for the greater career and earning opportunities.
Another reason that public funding for education might be justified would be to enhance our societal 'competitiveness'. This is where the idea of SFSU cutting its Engineering program starts to look almost like a parody of public institution behavior. Because, of course, the Engineering school likely produces students with the most valuable skills of any graduates from the institution. I think it's great that people can major in Apparel Design, Cinema, Human Sexuality Studies, or Interior Design. But I don't think that the taxpayers should be paying for these programs. If we are going to have publicly funded institutions, let's at least require these institutions to support our societal goals and address supposed 'market failures'. Because I can guarrantee we'll have enough apparel and interior designers even if we don't subsidize their university degress.