SACRAMENTO -- The nonpartisan state Legislative Analyst's Office has reversed its position against the University of California at Merced, agreeing instead that lawmakers should support a funding increase to open the campus in fall 2005.

The turnaround brings added credibility to the project as lawmakers begin pulling together the pieces of Gov. Schwarzenegger's budget proposal. A budget hearing about UC Merced is scheduled for Monday before a Senate panel.

The analyst's office now calls the $20 million budget request "justified," a one-word stamp of approval that school officials were celebrating Monday.

"We have known all along that we are being very frugal and approaching a new level of productivity in terms of how we're spending the dollars," said UC Merced Chancellor

Carol Tomlinson-Keasey. "If someone else (like the LAO) can take a look at the books, and say, 'Hey, they're using the money carefully,' that's useful."

In January, Schwarzenegger requested $20 million for the school. But a month later, Legislative Analyst Elizabeth G. Hill suggested limiting the funding to as little as $5 million.

Hill said university officials had not provided enough details about how they planned to spend the money.

With state money tighter than ever, the university's two biggest boosters at the Capitol -- Sen. Jeff Denham, R-Merced, and Assemblywoman Barbara Matthews, D-Tracy -- stepped in to mediate.

"If we end up having a philosophical disagreement, that's one thing," Denham said. "But to have a (negative) recommendation come out because there was a lack of information was frustrating to me. I want to rule out any crutch that somebody may have to oppose this."

The university initially blamed a timing issue for not responding fully to the analyst's requests for information. When Schwarzenegger's budget plan for the school came in lower than requested, UC Merced officials had to retool their budget, then resubmit it to the university system.

Denham and Matthews decided to have UC Merced officials talk directly with the LAO. The two sides met last week.

UC Merced officials explained to analyst office staffers that the $20 million would allow them to increase faculty from 25 to 60, hire staff to process applications and financial aid for 1,000 students, and purchase computer hardware and networking equipment for the library.

"They provided us enough information to make us change our view," said Anthony Simbol, an analyst who crunched the UC Merced numbers.

School officials told lawmakers earlier this month that if the campus does not open next year, buildings worth $280 million and more than 600 dormitory beds would go empty. UC Merced would lose faculty, and $7.6 million in grants and contracts would be at risk, officials said.