The UC regents on Nov. 18 adopted a state budget proposal for 2005-06 that would halt the cuts of the last several years and provide modest new funding for enrollment growth, student instructional programs, and faculty and staff compensation.

The board also set student fee levels for 2005-06, recognizing the need for additional funding to help rebuild the university's programs and acting to give maximum notice to students and their families. The fees include increases of 8 percent for resident undergraduates and 10 percent for resident graduate academic students over the full 2005-06 year.

The regents' vote was 13-1.

The budget proposal and student fee levels reflect the "compact" reached by UC and Gov. Arnold Schwarzenegger earlier this year. This agreement sets out expectations for minimum state funding levels and for student fees over a multi-year period, along with accountability measures demonstrating UC's performance to the state. The compact is a planning framework; the Legislature and governor negotiate a final spending plan through the state budget process.

"This is not a budget that accomplishes everything we would like to, all at once," said UC President Robert Dynes. "In this first year of the compact, we will largely be regaining our footing from the cuts of the last several years, not taking huge steps forward. But it is a budget that does take small steps in key areas, with greater investment in future years."

Under the regents' proposal, UC's state-funded budget in 2005-06 would be $2.835 billion, or 4.2 percent more than the $2.720 billion state-funded budget for 2004-05.

Larry Hershman, UC vice president for budget, told the regents that California's increasingly knowledge-based economy requires the contributions of research universities if the state is to remain globally competitive. And California's fastest growing occupational categories are professional and managerial jobs -- the kind that require university training and often an advanced degree.

However, UC's share of the state general fund has fallen from 7 percent in 1970 to 3.5 percent today. Over the last four years alone, UC's state-funded budget has fallen 15 percent while its student enrollments have grown 19 percent. And while the state contributed about $15,000 to the cost of educating each UC general-campus student in 1985, that figure is now approximately $9,000. Beginning in 2005-06, though, the compact offers a halt to the cuts and more stable base of funding.

The governor will issue his state budget proposal for 2005-06 in January; the Legislature will hold hearings and make alternate budget proposals throughout the spring. By summer, the governor and Legislature will take action on a final budget. Below are major elements of the regents' budget plan.

Enrollments: The budget includes funding for growth of 5,000 full-time-equivalent students -- a level expected to allow every UC-eligible freshman applicant to be offered a place at the university. Funding for 2,000 students will be directed to continue phasing in state support for summer instruction at the four campuses (UC Irvine, UC Riverside, UC San Diego and UC Santa Cruz) not already receiving this funding.

Instructional program: Over the last two years, UC has absorbed $70 million in unallocated reductions to instructional budgets. The 2005-06 budget includes $10 million as a first step toward recovering lost ground. The installment would be used to bolster student-faculty ratios, improve instructional support and acquire instructional technology.

Maintenance of new space: For two years state budgets have not provided increases for new building maintenance. The 2005-06 budget includes $16 million for this purpose.

UC Merced: The UC system's 10th campus will open in fall 2005. The campus will receive enrollment funding for 1,000 students the first year. In addition, $10 million in permanent funding for the campus will continue.

Academic preparation: UC's academic preparation programs in the public schools, previously referred to as "outreach" programs, sustained a $4 million reduction in the 2004-05 budget after being threatened with a complete elimination of state funding. UC is requesting that the current level of funding for these programs be sustained.

Faculty/staff compensation: State budgets have not provided for general salary increases the last two years, even as employees have been paying increasing amounts for health care coverage. UC's faculty salaries are now estimated to be 8-10 percent behind those of comparable institutions, and a similar problem affects UC staff. The 2005-06 budget proposes funding for a 3 percent pool for salary increases, including a 1.5 percent general salary increase for all eligible employees, funding for faculty and other academic merit programs, and 1.5 percent for merit-based increases for eligible staff employees. Additional funding is proposed to help cover the cost of increasing employee health benefits and to address market-based and equity issues where newly hired faculty and staff are paid significantly more than current employees with similar experience and skills.

Student fees for California residents: Regents approved fee increases of 8 percent ($457) for undergraduates and 10 percent ($628) for graduate students, beginning in summer 2005. With these increases, fees will be $6,141 per year for undergraduates and $6,897 for graduate students. With campus-based miscellaneous fees, the average totals will be $6,769 for undergraduates and $8,556 for graduate students. The levels are about $1,000 (undergraduates) and $2,300 (graduates) below the average of UC's four public comparison institutions.

Financial aid: UC will reserve 25 percent of new undergraduate fee revenue for financial aid and 50 percent of new graduate student fee revenue.

Nonresident tuition: Nonresident tuition for undergraduates will rise 5 percent ($828) in 2005-06. The total average charge for nonresident undergraduates will be $24,589. However, to remain competitive for the nation's and the world's most talented graduate students no increase in nonresident tuition was adopted for graduate and professional students.

Professional schools: Professional school students will pay the same $628 increase in fees that graduate academic students will. In addition, fees for individual professional schools will be increased 3 percent. It is expected that the regents at their January meeting may be asked by Dynes to act on additional increases for specific professional schools, for the purpose of providing sufficient financial aid and enhancing quality, not to exceed 15 percent of the new combined total of mandatory systemwide fees and professional fees.

Capital improvements budget: Regents are requesting $355 million in state funding from a voter-approved general obligation bond measure in order to expand and upgrade academic facilities to support enrollment growth and to maintain progress on seismic and other life-safety improvements.