Clark Kerr's Master Plan of 1960 : the University of California, with its flagship at Berkeley, would have the exclusive right to grant doctorates and admit the state's top eighth of high school graduates. The California State University campuses could award only master's degrees, and could admit the top one-third of high school grads, plus transfer students. Community colleges, awarding only 2-year degrees, served everybody else.
in 1970, with Kerr as chair of the Carnegie Commission came up with its famous classification system, that, for the first time, graded all of the nation's colleges by a single rubric: (1) doctoral-granting institutions, separated into five grades depending on how heavily they invested in research (2) comprehensive colleges(Those that grant master's degrees); (3) liberal-arts colleges(more or less selective); (4) two-years institutions; (5) freestanding professional schools.
Strictly separating colleges by functions and type seems like a fine, organized thing to do. But it triggers a natural tendency among college leaders to try to move up the ranks and be eligible for more cash for federal and state governments...
from book "DIY U: Edupunks, Edupreneurs, and the Coming Transformation of Higher Education"