ARNOLD TO BOOST COLLEGE FUNDING FEE HIKES FROZEN FOR UC, CSU.

Byline: Harrison Sheppard Sacramento Bureau

SACRAMENTO - In one of the first glimpses of next year's state budget, Gov. Arnold Schwarzenegger plans to add more than $140 million to higher education, postponing fee increases that were expected next fall, administration officials said Wednesday.

Schwarzenegger, who is expected to submit his 2006-07 budget Jan. 10, will propose adding about $75 million to University of California funding and $54.4 million to the California State University budget - above other increases already anticipated, according to officials.

He also plans to add almost $12 million to the Cal Grant scholarship program for California students attending private universities, raising the current ceiling of $8,322 to $9,078.

Officials declined to discuss funding plans for kindergarten through 12th grade or for community college districts. Nor would they release figures about overall funding for higher education or the overall budget.

But the state has collected higher revenues than expected this year, meaning the governor might have room to increase funding in some areas despite earlier deficit projections of $6 billion.

``Given the state's improved revenue picture, the governor believes it's an appropriate time to ease the financial burden on students and their families,'' said a high-ranking administration official who requested anonymity.

State Legislative Analyst Elizabeth Hill reported recently that revenues in the first four months of this fiscal year are $1.5 billion above projections.

She estimated that the state's overall budget would grow from $90.2 billion in 2005-06 to $95.1 billion in 2006-07, an increase of 5.5 percent.

She also expects the state to end the year with $5.2 billion in reserve, or about $4 billion more than estimated, helping to cover the previously anticipated deficit.

Education advocates - including many still angry at the governor over what they say is his broken promise to fully fund K-12 education this year - reacted with cautious optimism to the news.

``I've been around this town long enough to know that until it's in writing and you see the whole package, nothing is certain,'' State Superintendent of Public Instruction Jack O'Connell said in a written statement. ``But, based on what I'm hearing, additional funding in the budget for higher education is good news.''

O'Connell also said he would like to see more money added to the K-12 budget.

Schwarzenegger struck compacts with UC and CSU officials in the spring of 2004, when he committed to future funding increases in exchange for concessions in that year's budget.

Those compacts would add about $35 million to the projected increases in the higher-education budget in fiscal 2006-07, according to Hill. The governor's new proposal comes on top of the $35 million.

Earlier this fall, UC regents approved plans for fee increases of 8 percent for undergraduates, 10 percent for graduates and 5 percent for students in law schools, medical schools and other professional schools.

The CSU board of governors similarly planned an increase of 8 percent for undergraduates, 8 percent for teaching-credential candidates and 10 percent for other graduate students.

Assembly Speaker Fabian Nuez, D-Los Angeles, a member of the UC Board of Regents, opposed the fee increases, and he praised the governor's

decision.

``I am heartened that the governor is stepping up to the plate to make sure that UC and CSU students don't get hit with an unfair and unwarranted boost in their tuition,'' Nuez said in a printed statement.

``Returning CalGrant to where they were two years ago also sends a strong message that California is serious about investing in our future.''

The governor needs legislative approval for his proposed budget, with a nominal deadline of July 1.

CSU Chancellor Charles B. Reed said the news was a ``terrific Christmas or New Year's present for CSU students.''

``We have had a compact with the governor for the past three years, but the governor always said it was a floor, not a ceiling, and if the budget had the resources to buy back the fee increases, he would,'' Reed said.

Reed predicted that the additional funds would generate a slight increase in enrollment, and that fewer students would have to drop out because of costs.

Murray J. Haberman, executive director of the California Post Secondary Education Commission, said the commission's position is that tuition should be affordable, and any fee increases should be ``gradual, predictable and moderate.''

Too often in the past, the state has reduced fees or held them steady when economic times were good, then walloped students with 30 percent and 40 percent increases when the state's coffers ran dry, Haberman said.

The state hasn't had a consistent fee policy for higher education since 1996, and fees have fluctuated, depending on the state's economy, analysts said.

Fees remained stable or even declined in the middle to late 1990s. But in the budget crunches that started in 2002, fees began rising again. ``It's hard for families to prepare when they don't know what the costs are going to be a year or two out,'' Haberman said.

Sen. Jack Scott, D-Pasadena, chairman of the Senate's Education Committee, recalled that the education community had to fight hard against the governor's proposal two years ago to cut freshman enrollment at CSU and UC by 10 percent, and said his decision Wednesday was good news for students.

``I think it's a decided relief to hard-pressed students who often end up having to bear the burden of increased educational costs,'' Scott said.

Staff Writer Lisa M. Sodders contributed to this report.

Harrison Sheppard, [phone]

harrison.sheppard(at)dailynews.com