The state's proposed 2004-05 state budget makes education cuts in the wrong places and in the wrong way, tying the hands of college administrators who want to avoid steep increases for graduate students.

University of California and California State University graduate students face some of the largest fee increases in the governor's proposal for cutting higher education funds, officials from those campuses said Friday during an Education Town Hall meeting at UC Davis.

Unlike previous budgets, this year's proposal would require the UC and CSU system to increase annual fees for students pursuing professional degrees by $5,000. It would also require a 40 percent tuition increase for all graduate students, said UC Davis Chancellor Larry Vanderhoef.

"The high specificity in the budget is what we're fighting hardest against," he said.

Administrators from local colleges and universities argued against those increases during the meeting, urging the 200 or so students in attendance to contact legislators and demand an alternative.

The proposed cuts, according to Vanderhoef, were based on a misconception that a graduate or professional degree guarantees a higher earning ability.

Although generally that might be true, not all graduate programs lead to high-paying careers, he said, evoking cheers from about 100 students from the university's School of Veterinary Medicine who attended the meeting.

They told administrators that some of them would accumulate a $100,000 debt by the time they graduated. And, based on current salaries for veterinarians, the debt would take some students a lifetime to repay, they said.

"It's important that people in our legislature hear from people like you," Vanderhoef said.

Sen. Mike Machado, D-Linden, who attended the meeting, said long-term economic vitality in the state requires adequate funding for higher education.

In the governor's proposal, the UC system would receive $360 million cuts. The CSU system would receive $299 million in reductions, according to a report from Machado.

"(Higher education has) spawned an economy that has given California the greatness it has today," he said.

Graduate students, who often move into leadership positions, improve the state's economy. While raising their fees may save money in the short run, the long-term effects do not bode well for California, university and college administrators said during the meeting.

The state receives a $5 return for every $1 invested in higher education, Vanderhoef said.

Besides having a detrimental effect on the local economy, the increase would deter many students from attending graduate school. It would also lead other students away from careers that require professional degrees but do not pay well, Vanderhoef said.

Further reductions to the UC and CSU systems in the 2004-05 budget proposal include denying admission to 20,000 qualified, state college applicants; UC freshman enrollment would be reduced by 10 percent, among other cuts.

The meeting, the first of four across the state, was intended to give the community an opportunity to talk about concerns they have with proposed cuts to education.