SAN FRANCISCO -- Gov. Arnold Schwarzenegger's budget could keep as many as 8,000 would-be freshmen out of the University of California next fall and force higher education officials to scale back or eliminate financial aid for middle-income students.

The UC Board of Regents heard those and other grim forecasts Wednesday in their first meeting since Schwarzenegger rolled out his state budget plans for the fiscal year that starts July 1. The governor is pushing to close the state's $14.4 billion shortfall without raising taxes and has asked the University of California and California State University to raise fees, shrink enrollment and rein in financial aid as part of the solution.

"The governor's budget for us could have been a lot worse," said UC President Robert Dynes, who met Tuesday with top Schwarzenegger advisers, including Finance Director Donna Arduin and Chief of Staff Patricia Clarey. "But there are places where I think the budget would have irreversible impacts on the quality of the university."

Regents took no action Wednesday but will vote on fee increases in March. Most regents signaled that they would not sign on to one part of Schwarzenegger's fee proposal: a 40 percent hike for most graduate students, who are an important corps of teachers for undergraduates and university researchers.
"We are already short of graduate students," said Regent David Lee. "If we don't have these people, how will we remain competitive?"

Larry Hershman, UC's vice president for budget, said Schwarzenegger's plans to decrease state financial aid simply won't work unless UC raises undergraduate fees more than the 10 percent the governor has recommended or eliminates financial aid for middle-income students. This year, UC provided students with family income between $60,000 and $90,000 with financial aid that covered half of the 40 percent fee increases.

"All the options are bad," said Hershman, who didn't rule out the possibility of raising undergraduate fees beyond Schwarzenegger's call for 10 percent.

One part of Schwarzenegger's proposal that UC will adopt is a 10 percent reduction in next year's freshman class, or about 3,200 students. Hershman said each of the eight undergraduate campuses would guarantee junior year admission to students who opt to go to community college their freshman and sophomore years. The governor is proposing that those students have their community college fees waived in exchange.

That reduction would come on top of what UC expects could be 5,000 students it won't enroll because there is no money to pay for growth.