The austerity of California's budget is forcing University of California administrators to delay a proposed merger with the Monterey Institute of International Studies. Having cut staff in order to restore the institute's financial viability, the school's leaders are planning for the merger, but they may have to wait.

UC officials announced last spring that they were interested in taking over the struggling school, but the idea hit a snag.

"We've known since midsummer that the merger would take longer, maybe a couple years," said MIIS President Steven Baker. "The current state budget situation only adds to the uncertainty."

A November letter from UC President Robert Dynes to Baker said incorporation into UC "depends on the willingness of the state to fund the resulting enrollment increase for UC over and above planned enrollment increases on the UC campuses."

Gov. Arnold Schwarzenegger's proposed limit on university enrollment earlier this month puts that willingness in doubt for the near future. But state lawmakers and university administrators say they'll keep moving forward.

"The details of the proposed enrollment cap haven't been worked out yet," said University of California at Santa Cruz spokeswoman Elizabeth Irwin. UCSC administrators continue to study the financial condition of the institute and the physical condition of its facilities, she said.

UCSC would take the lead role in the merger, and both sides have stressed that the unique character of MIIS will be preserved.

Many of the more than 700 students at MIIS study both language and either international business or diplomacy. More than a third come from outside the United States, and the institute requires proficiency in a second language for admission. The school is well-known for its Center for Nonproliferation Studies, preparing students for work on disarmament for the U.S. government and international organizations.

Baker said he continues to meet with UCSC economics and political science professors, trying to build joint academic programs.

Baker said the institute lost $5 million last year and $8 million in 2002 but should record a "modest surplus" this year. The largest part of the savings come from around 25 job cuts, announced at the end of 2002.

Baker's predecessor, Chester Haskell, resigned last summer at a time when alumni criticism questioned his approach to fund-raising and recruitment. Haskell said he resigned for personal reasons.

"The question is, is there a way to go ahead with the merger?" said Assemblyman John Laird, D-Santa Cruz, "while keeping alive the possibility that the enrollment cap could come off in a few years?" He said he and other state legislators met with UC President Dynes last week to discuss university funding and that he had emphasized his support of the UC-MIIS merger.

"UC is facing a situation just like every city and county in the state," Laird said, in that they're forced to make drastic financial cuts based on uncertainty about the state budget.

The UC regents proposed last week that student fees would continue to rise next year, with graduate student fees rising 40 percent, adding around $2,000 for in-state students and around $2,500 more for out-of state students.

In September, Monterey Institute administrators reported that the merger announcement had prompted some prospective in-state students to delay, hoping for lower fees resulting from incorporation into UC. MIIS tuition stands at $22,180 for 2003-04. The recent UC fee increases bring UC costs to out-of-state students close to those of MIIS, but a difference of more than $10,000 per year still looms for in-state students.

The UC Regents will refine their budget proposals in March, ahead of the state budget season this summer.