SAN FRANCISCO -- The University of California regents, expecting another grim budget year, began weighing painful coping options Wednesday that included raising fees, shutting qualified students out of UC's nine campuses, and recruiting more out-of-state students who bring in more revenue.

The board members must decide in the coming months whether they will continue to retreat from the state's 43-year-old promise -- known as the Master Plan for Higher Education -- to provide a college education to any high school graduate who wants one. UC and California State University have moved that way already in the wake of more than $700 million in budget cuts by turning away thousands of qualified students who applied for spring admission.

UC President Richard Atkinson -- in his last regents' meeting in the top post -- said the board should consider admitting larger numbers of students from other states and foreign countries. Nonresident students pay dramatically higher fees than California residents -- nearly $20,000 per year compared with nearly $5,000 -- and Atkinson suggested that enrolling more of them at even higher fees would help offset budget cuts without scaling back slots available to California students. Atkinson, who retires Oct. 1 after eight years as president, said the University of Virginia and University of Michigan already rely on large numbers of nonresident students.

"Why don't we have a significant increase in out-of-state and foreign students and jack up the fees on them to meet what other institutions are doing?" Atkinson asked.

Last fall, nonresident students enrolled at UC campuses accounted for just 6 percent of total undergraduate enrollment. Larry Hershman, UC's vice president for budget, said both Virginia and Michigan have nonresident enrollments as high as 40 percent.

At least three regents took interest in Atkinson's impromptu proposal, with John Davies saying it "should be a prime candidate."

Regents took no votes on any of the nearly one dozen budget options presented Wednesday and won't likely act until January, when a proposed budget for 2004-05 is rolled out by the governor. But with the state Department of Finance asking all state agencies -- including UC and CSU -- to cut 20 percent in costs for 2004-05, regents agreed to hash out every scenario for saving and raising money.

The Legislature has already pledged not to pay for any enrollment growth for UC and CSU next year -- a prospect Hershman said must be taken seriously in planning a new budget and when considering whether enrollment caps will be necessary.

"It's very controversial," Hershman said. "We have honored the Master Plan in the good times and the bad."

Regent Richard Blum suggested that tax increases -- most of which Republicans in the Legislature succeeded in blocking this year -- will be the only acceptable solution and called on the board to "draw a line in the sand. We are not going to ruin this institution because people in the state and this Legislature aren't going to pay for it."

Curbing enrollment seemed the most unpalatable to the 26-member board, with some regents criticizing UC's decision earlier this month to return applications from nearly 1,600 first-time freshmen and community college transfer students seeking admission for the winter term. But one option regents heard for saving money next year was to shrink enrollment even more -- by as many as 5,000 students.

Said Dolores Huerta, co-founder of the United Farm Workers union and newly appointed regent: "I'm concerned about those community college transfer students. ... They should be given some priority for consideration next year. Many of them are children of workers."

The Legislature's decision to delay opening a 10th campus in Merced until 2005 also drew fire from regents, saying the university lost critical slots for eligible students next year only to save the state $4 million. Postponing its opening even longer drew no support.

"It would be one of the dumbest decisions I've ever heard in my life," Blum said.

Raising student fees also earned little traction. Regents already have raised fees by 40 percent over what students paid last year and boosting them again, even by a small amount, seemed too unsavory. One scenario on the table, however, would be to raise fees an additional $1,800 per year -- a level that Hershman said would bring UC tuition in line with comparable public schools such as Michigan and State University of New York.

Other options regents will debate in the coming months include: cutting the number of faculty and requiring those who stay to take on heavier course loads; further reducing spending on public service programs, such as UC's Cooperative Extension program for the agriculture industry; and reducing employees' and administrators' salaries.

CSU trustees, meeting in Long Beach on Tuesday and Wednesday, heard similar grim options for coping with a 20 percent budget reduction for next year: cutting enrollment by 111,000 students, raising fees by 98 percent, slashing faculty positions by 6,700 and eliminating 54,000 course sections.

Trustees are expected to vote on CSU's budget choices in October.