The California State University system is considering tying undergraduates' fees to the cost of their education as part of a long-term fee policy.

Cal State officials have for years discussed making such a change. But budget cuts, hefty fee hikes and a call by the governor to develop a predictable schedule of fee increases to help families plan financially have now combined to push CSU to study how to implement a policy as soon as possible.

On Tuesday, the trustees discussed adjusting fees so that students pay a set percentage -- anywhere between 25 and 33 percent -- of the cost of their education. Once fees reach the level the trustees decide on, the university system would thereafter adjust fees annually based on an index such as the Higher Education Price Index or California's per capita income.

Students now pay an average of 21 percent -- or $2,544 -- of what it costs to educate them, a figure CSU officials estimate at $12,400.

The CSU trustees will likely vote on a long-term fee policy for undergraduates in May. But it won't go into effect until fall 2005, said spokeswoman Colleen Bentley-Adler. In the meantime, CSU will likely increase fees by at least 10 percent for this fall.

Fees have risen by roughly 40 percent since December 2002 at both the 23-campus CSU system and the University of California, which has eight undergraduate campuses.

Gov. Arnold Schwarzenegger has proposed reducing CSU's budget by 9 percent or $240 million to $2.4 billion for 2004-05. Fee increases would offset the fiscal impact somewhat -- the net reduction would be 7.2 percent, or $192 million.

"We're in dire straits," said Trustee Murray Galinson at the meeting in Fresno on Tuesday.

Faculty Trustee Kathleen Kaiser questioned whether the state would essentially eliminate the benefits of any fee increases by continuing to cut the university system's budget.

"We say the fee revenues would remain with the CSU, (but) I'd like to know how we're going to guarantee that."

It's not clear the university can. Trustee Fred Pierce asked whether CSU could develop a reserve policy so that in bad economic times, it could tap this fund. But Lt. Gov. Cruz Bustamante, who sits on the board, said legislators in Sacramento wouldn't let a reserve alone during tight economic times unless "you were able to find ways to hide it, tie it up somewhere it's not obvious, where only the chancellor knew where it's at."

"I've been part of that process of taking reserves and moving them into programs that were starving that day," he said.

Bustamante maintains that a 25-cent-per-pack hike in the cigarette tax could resolve the fiscal crisis in higher education.

Student Regent Alex Lopez worries that tying fees to an index will mean they end up exceeding the cost of education.

"The reality is that I don't feel the long-term fee policy addresses our needs," he said. "It opens up a door I don't feel comfortable going through."