A $216 per-student funding increase in the governor's budget proposal sparked cautious optimism Friday among California K-12 public school administrators. But response at the college level was of deep concern over the prospect of higher fees, less financial aid and fewer students.

Under Gov. Arnold Schwarzenegger's budget plan for education, enrollment at California State University and University of California campuses could shrink by up to a total of 23,000 because of budget cuts of about $300 million.

In addition to the proposed UC and CSU cuts, the governor's plan would:

• Increase funding for K-12 schools and community colleges by about $2 billion over this year to $33.2 billion.

• Loosen some restrictions of funding that have maddened administrators in the past.

• Move toward increasing control at the school-site level.

Education takes up about 40 percent of the state budget. K-12 schools were due about $4 billion in additional funding next year, but officials Friday expressed relief at the prospect of getting at least half that amount.

``We think we've done about as well as we could have expected,'' said Linda Murray, superintendent of San Jose Unified School District.

``I think the governor has honored his commitment to protect education to the extent he can.''

San Jose Unified has been projecting a budget deficit of up to $10 million, and -- like most other area districts -- has already started to determine which programs could be cut. Associate Superintendent Jerry Matranga said Friday a preliminary read on Schwarzenegger's budget indicated San Jose Unified's deficit might be halved.

If so, that would mean a controversial proposal to cut one period of electives at district middle schools would be shelved. However, both Murray and board chairman Gary Rummelhoff said a plan to close up to four schools would proceed, in spite of the anticipated easing of the budget crunch.

Of course, the budget blueprint is just a starting point. Ultimately, Schwarzenegger's proposals will have to win the Democrat-controlled Legislature's approval to take effect.

One of the most controversial proposals is sure to be in higher education. Undergraduate fees would increase 10 percent at CSU and UC campuses, bringing the average annual cost to $2,776 at CSU and to $6,028 at UC. Graduate students would take a 40 percent hit, and charges for professional schools, like law, medicine and business, would also increase by about 25 percent.

The availability and size of some state Cal Grants would be reduced and campus-based financial aid also would be cut.

``I already can't afford to attend school,'' said San Jose State University undergraduate Rachael Greathouse, who works about 30 hours a week to help pay for her education. ``For those of us who want to continue on in higher education, we're already in debt and now we'll have to get even more debt.''

In the budget plan, UC would get $2.7 billion and CSU $2.4 billion.

To reduce enrollment, the governor proposes that 10 percent of entering freshmen for both UC and CSU be redirected for their first two years to the community colleges, where their fees would be waived.

But community college officials say they don't know if they can handle the influx.

Several aspects of the budget plan reflect Schwarzenegger's philosophy on education reform. For example, it calls for easing the restrictions on how districts can spend $2 billion in 22 earmarked programs known as ``categoricals.''

``I'm happy to hear that,'' said Cynthia Ranii, superintendent of the Los Gatos-Saratoga district. ``The superintendents in Santa Clara County have long voiced that request -- that we be given flexibility to use categorical funds as we think are best suited to our local needs.''

Schwarzenegger and Education Secretary Richard Riordan also have shown interest in placing more decision-making in the hands of principals and parents.

``People at the local level -- the parents, the teachers and the principal -- know much more about how to teach and train kids than the bureaucrats and politicians in Sacramento,'' Riordan said.

Murray said that's ``a good philosophical direction to go in, but I don't think we can dismantle the district.''

``If I understand this proposal, it's really radical -- and I think something more reasoned should come out of it.''