The Texas Legislature has voted to give the state's public universities free rein to increase tuition, in a move that lawmakers say will help the state deal with mounting budget shortfalls.

The bill, which Gov. Rick Perry, a Republican, has said he will sign, would end decades of legislative control over tuition rates. Under the new plan, the Board of Regents, rather than the state legislature, will approve tuition increases for public universities.

Although the change would take effect on September 1, no tuition increases are planned for the fall, college officials said. But with a slumping economy and growing enrollment, higher prices might not be far off. Larry R. Faulkner, president of the University of Texas at Austin, has said the campus is in "desperate need" of renovations and must deal with "fallout from the budget." Some legislators and student representatives said they expected a 50-percent increase in tuition over the next two years at many public colleges in Texas.

Mark G. Yudof, chancellor of the University of Texas System, led the push
to decentralize the tuition-setting authority. He said that the system's Board of Regents had not decided how to use its new power. Many regents have mentioned using "economic incentives" to graduate students more quickly, such as offering discounted tuition to those who take classes at unpopular times (like the late afternoon), and charging lower rates for summer courses.

The regents will not adopt those plans "without fair consultation on campuses," Mr. Yudof said. "We'll be meeting with leaders of student government. We're going to have serious, serious consultation." He added: "I would say, particularly to students, that you'll get a fair shake."

Protests by Students

Most students, however, are not convinced. Since Mr. Yudof began pushing in January for colleges to set their own tuition rates, a coalition of student groups at campuses around the state have fought the idea, with protests and student-government resolutions.

David Rushing is chairman of the Young Conservatives of Texas, which opposes the plan. He said that regents are not accountable to the public. "An elected Legislature should be setting the rates rather than an appointed Board of Regents," he said. "There is no incentive for them to keep the rates down."

The Austin campus's student government echoed those concerns in a resolution, passed months ago, that expressed "fervent opposition" to the plan. "And we're still against it," said Brian J. Haley, the student-government president.

"The average student at UT-Austin doesn't know who the regents are," he said. "Regents very seldom come to campus, and when they do it's to make a brief appearance."

The regents may convene panels of students from each campus in the system to advise the board on tuition, Mr. Haley said. But many students fear it would be a token gesture, and that any recommendations would be brushed aside.

'Neiman Marcus' Colleges

The Legislature's heated debates over the tuition proposal -- which lasted until the final afternoon of the session -- focused on affordability. Lawmakers who opposed the bill said wealthy students could afford the increases, and students from low-income families would be eligible for grants, but middle-class families would be hit hard.

"It will set up two tiers of schools," said State Sen. John Whitmire, a Democrat from Houston. "There will be the Neiman Marcus schools, where students can afford to pay the increases. Then there will be the Wal-Mart schools, where the student body can't absorb the increases."

Mr. Whitmire added that Texas had been known for its affordable tuition, but that he expected rates would double in a few years. "It's going to create a situation where the state won't fund higher education because colleges can just raise tuition."

State Sen. Florence Shapiro, a Republican, led efforts in the Senate to enact the new policy. She said critics exaggerated the possibility of tuition increases. Only 13 of the state's 35 public institutions are at the maximum tuition now allowed by the state Legislature, she said. What's more, the proposal stipulates that 20 percent of the revenue from a tuition increase over $46 per credit hour for undergraduates (and 15 percent for graduate students) must go to financial aid. Besides, she said, with the state facing a $10-billion deficit, something had to be done.

Legislators formed an oversight committee made up of 12 lawmakers to keep tabs on how universities perform under the new system. The panel will report to the Legislature, and if public colleges become unaffordable, Ms. Shapiro said, legislators could vote to retake control of tuition. "This group of oversight legislators will be watching the progress of these institutions," said Ms. Shapiro, who heads the Senate Education Committee. "It will be a matter of looking at the numbers and looking for what is just out of bounds."

Free Tuition?

The drive to decentralize the tuition-setting power, or "tuition deregulation" as it's known, is nothing new in Texas. Bills have come and gone since the 1980s, always thwarted by legislators who said that tuition would skyrocket if colleges gained control. The Board of Regents led a push for deregulation in 1991, almost winning it, and Mr. Yudof renewed the debate this year.

He caught the attention of legislators by calling for free tuition for all Texas students from families with annual incomes below the state's median, $40,000. But the plan came with a catch. The proposal, called the Texas Compact, was contingent on a decision by lawmakers to relinquish their power to set tuition. The compact was a gesture, regents said, to show that tuition deregulation would not shut out financially needy students from the system's nine campuses with undergraduate programs.

The regents have won deregulation, but they declined to say if they would make good on that promise. "We will do something innovative," Mr. Yudof said. "But I'm not going to say it will follow the exact contours of that plan."