Gov. Wants to Drop Big Hike in College Fees

Offering an unexpected election-year gift to 650,000 California students and their parents, Gov. Arnold Schwarzenegger will ask the Legislature to cancel a hefty fee increase scheduled for next year at the state’s public colleges and universities, administration officials said Wednesday.

The fee-relief proposal comes as Schwarzenegger puts the final touches on the State of the State speech he will deliver next week and his 2006-07 budget. In the speech, top aides said the Republican governor would take a far less confrontational tone than last year and pick issues of mutual interest to Democrats, who control both houses of the Legislature.

After years of deficits, California is expected to end the fiscal year in June with $5.2 billion in reserves, largely because of economic growth. This has put Schwarzenegger and legislators in the enviable position -- for the first time in his two-year tenure -- of not having to argue about what programs to cut to balance the state budget.

After being informed of the fee-relief proposal by Schwarzenegger’s office Wednesday, Assembly Speaker Fabian Nunez (D-Los Angeles) described it as “a wonderful overture by the governor to reach out to Democrats in a very concrete way by taking on an issue we championed.”

In addition to the fee break for students at University of California and California State University campuses, Schwarzenegger’s State of the State address will call for revamping California’s frayed network of roads, ports and bridges. The infrastructure plan will be the biggest and most complex proposal Schwarzenegger unveils.

The governor would finance the infrastructure overhaul through a bond issue of $25 billion to $27 billion, administration sources said. The huge size of the bond measure, which voters would have to approve along with two-thirds of lawmakers, is expected to be a tough sell to his Republican allies who don’t want more government borrowing. And Democrats would need at least a few GOP votes to win approval.

Schwarzenegger’s Jan. 5 speech to the Legislature and the release of his state budget plan Jan. 10 will frame his relationship with Democrats and Republicans alike for the next year -- at the same time he will be running for a second term.

Administration officials released the college tuition plan Wednesday on the condition that they not be identified because most lawmakers had not been formally briefed. But providing an early glimpse of a governor’s budget is an accepted practice in the Capitol.

The governor is vacationing at his ski cabin in Sun Valley, Idaho, where he regularly holds a New Year’s party, but he is fine-tuning his agenda from there.

Administration officials said the university fee rollback would not shortchange other parts of the state’s education budget. School groups have complained that Schwarzenegger owes them $5.5 billion from a previous budget agreement he broke. Without revealing any figures, Department of Finance spokesman H.D. Palmer said: “There will unquestionably be an increase for” public schools and community colleges as well.

For university students, Schwarzenegger is proposing to “buy out” the approved fee increase for the 2006-07 school year, saving CSU undergraduates $204 and UC students $492. Students in graduate schools, teacher credentialing programs, and law and medical schools also would be spared a planned 10% fee increase for the year.

If approved by the Legislature, the fee break would undoubtedly be welcome news to public university students who have seen four straight years of fee hikes as state lawmakers have struggled to offset large and persistent budget shortfalls.

Currently, UC undergraduates pay $6,141 in mandatory systemwide fees a year and CSU undergraduates pay $3,164, and both were facing an 8% increase next year. Students also pay fees imposed by each campus, as well as room, board and books.

Anu Joshi, president of the UC Student Assn., which represents that system’s more than 200,000 students, said she and other UC and Cal State student leaders met last week with representatives from the governor’s office, and she believes that may have tipped the balance in changing Schwarzenegger’s mind.

“The students were the ones who really pushed for this, and we think that really turned the tide,” Joshi said. “We are incredibly happy about this.”

Despite the news, lawmakers and budget analysts worried that the governor’s plan would alter a 2004 agreement between Schwarzenegger and university officials that guaranteed that if fee increases were necessary in the absence of legislative funding they would occur at a steady and predictable rate through 2011.

Under the new Schwarzenegger plan, taxpayers would provide $129.4 million that the student fee increase would have raised next year. But unless the Legislature approved a similar amount the following year, students could see an even larger fee increase in 2007-08.

That is exactly the kind of budget roller coaster that Schwarzenegger’s compact with the universities was designed to avoid, said Steve D. Boilard, director of the higher education unit of the state legislative analyst’s office. The compact also made the implicit statement that students, not taxpayers, should start paying a larger portion of the fees at California’s relatively inexpensive public universities, he said.

Senate President Pro Tem Don Perata (D-Oakland) said that a one-year promise of aid to UC and Cal State students would not provide families with enough financial certainty.

“Last time I looked, you go to school for four years,” Perata said. “To say ‘For one year we’re not going to charge fees’ hardly is a confidence builder. This probably sounds a lot better than it is, and it continues what we don’t think we want to continue, which is going hand to mouth each year.”

The multiyear compact included money for annual enrollment increases of 2.5%. In exchange, the universities agreed to try to use tax dollars more efficiently and to raise student fees, an average of 8% annually for undergraduates and about 10% for graduate students.

Gerald L. Parsky, chairman of the UC Board of Regents, applauded Schwarzenegger’s move but noted that the regents’ recent approval of the higher fees was provisional. “We really hoped that if there was more revenue coming in, that both the governor and the Legislature would consider rolling this back,” Parsky said.

In addition to the buyout of the public university fee increase, Schwarzenegger also is proposing to increase the amount that new students can receive from the Cal Grant program to attend private colleges. For about 12,300 new students at private colleges, the maximum amount would increase to $9,708 from $8,322 -- for one year only.

Leaders of the state’s two public university systems, who only last month approved student fee increases that would have taken effect next school year, said they were delighted by the news of the proposed buyout. The announcement, several said, also demonstrates that the compact they signed with Schwarzenegger is adaptable to the state’s shifting economy.

“I guess it’s a Christmas or Happy New Year present for all the students,” Cal State Chancellor Charles B. Reed said. “It’s good for the students, good for the governor and once again, he’s just proved that the compact works.”

Reed said the fees buyout, assuming it is approved by legislators, means that Cal State students “won’t have to struggle so much, especially the working students. They’ll have an easier time attending, and we’ll see fewer students have to stop.”

UC President Robert C. Dynes, reached on vacation in Canada, said he was pleased that the governor’s proposal appeared to cover the planned fee increases for graduate and professional students, as well as undergraduates.

“One of our priorities has been to bring back and be much more competitive in helping our graduate students,” Dynes said. “I’m also pleased that the governor has recognized the problem we’ve been facing with middle-class students, who are really feeling the pinch of these fee increases in a very serious way. My hat’s off to him.”

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Times staff writer Jordan Rau contributed to this report. Salladay reported from Sacramento and Trounson from Los Angeles.