LONG BEACH California State University Chancellor Charles Reed said Tuesday that state budget cuts have left the system little choice but to implement immediate enrollment reductions that will bar 20,000 students from CSU campuses in the fall.

"We do believe that's the only way to maintain quality and manage this size reduction," Reed told CSU's governing board of trustees, which is holding its regular meeting this week in Long Beach.

Gov. Arnold Schwarzenegger, dealing with a monumental state budget deficit, has proposed cutting CSU's state-funded budget by $240 million next fiscal year. The proposed cut if ultimately approved by the Legislature would come on top of $531 million in cuts the system took last year.

Reed told trustees the 23-campus system has already made deep cuts to programs and services, and enrollment reductions are the only remaining option.

"We can admit students, but we won't be able to offer them the classes or sections they need, because if you cut another $240 million out, we won't have the faculty members to teach them," Reed said. "(The students) will be there and they won't be able to get the classes. That's pretty much the worst thing we can do."

Many of the students who don't get into CSU may decide to enter community colleges, Reed said, where they can take general education courses and transfer into the four-year system as upperclassmen.

Schwarzenegger has directed CSU to shuffle 10 percent of its incoming fall freshmen about 4,200 students into community colleges, but Reed and others were unsure how such a proposal would be implemented.

"We don't have a program to ensure they go to community colleges," said Richard West, CSU's executive vice chancellor and chief financial officer. "It would be student choice."

Reed said system administrators will continue to meet with campus presidents, labor groups and other interested parties to formulate a plan for how CSU can manage next year under other cuts proposed by the governor, including a proposed $52 million cut that would wipe out funding for outreach programs that help students get into and succeed in college. Reed will present the plan to trustees in March.

Reed said he intends the ask the Legislature for unallocated cuts to CSU's budget, so campus administrators can best determine which areas to cut.

The governor's plan also calls for a 10 percent increase in undergraduate student fees, which would raise annual tuition to $2,251 per year, up from $2,046, and a 40 percent increase in graduate fees. Graduate fees, currently $2,256 a year, would jump to $3,158 annually.

Reed also cautioned trustees that much of the governor's budget proposal is based on the passage of a $15 billion bond on the March ballot. If the bond doesn't pass, the cuts will likely be much worse, Reed said.

"If the bond fails, I think we then go to Plan B, which is a scorched-earth plan," Reed said. "I don't know what we would do if that happens, to tell you the truth."