Gov. Arnold Schwarzenegger this week will propose increasing undergraduate fees at state universities beyond the 10 percent boost he called for in January, but will soften a 40 percent hike he'd envisioned for graduate students.

The change is part of a pact with top university officials, who said they would not fight most of the governor's proposed higher education cuts this year in exchange for a pledge to beef up their budgets starting next year, officials close to the agreement said Monday.

Schwarzenegger is scheduled to announce the proposed deal with University of California President Robert Dynes and California State University Chancellor Charles Reed today, two days before he releases his revised budget.

The accord is subject to legislative approval and is built around a premise similar to those Schwarzenegger is negotiating with other key groups: Accept large cuts this year and receive assurances that he will protect them later. He also is borrowing a strategy from past governors who made sometimes difficult-to-keep promises to invest in higher education for years to come.

Administration and higher education officials were tight-lipped about details Monday, but a chief part of the agreement, sources said, is Schwarzenegger's pledge to boost UC and CSU's base budget 3 percent in the fiscal year that begins July 1, 2005. Essentially, the 3 percent boost would amount to a cost-of-living adjustment to help CSU and UC make up for three straight years of losses in general fund support.

Schwarzenegger also will commit to restore money for enrollment growth that year, a relief to both systems, which have had to reject qualified applicants this year to shrink the size of the freshman class.

In exchange for promises of protection to come, top administrators at UC and CSU won't resist the notion of the roughly $700 million in reductions Schwarzenegger proposed in his January budget. Roughly half of those cuts are to be absorbed through higher student fees.

Sources also said Schwarzenegger has acknowledged that his January proposal to raise graduate student fees by as much as 40 percent was too steep and that undergraduate fees should be increased by more than the 10 percent he called for.

Those involved in the deal declined to say how much the GOP governor will ask to raise undergraduate fees or by how much he will seek to lower his original proposal for graduate fees.

UC, CSU and state leaders have said repeatedly that the governor's proposed boost in graduate student fees - especially for students earning teaching credentials - would be intolerable.

Assembly Budget Committee Chairman Darrell Steinberg, D-Sacramento, said he supports "evening out the fees a little bit, especially when we want to attract people to particular professions like nursing and teaching and social work."

The governor does not set student fees, but merely makes his recommendation in his spending plan. The final word on fees will come next week when the UC Board of Regents and the CSU Board of Trustees vote to set tuition levels for fall.

Students in both systems have already experienced roughly 40 percent increases in fees since late 2002.

Schwarzenegger also is expected to back away from his earlier call to cancel all state funding for outreach programs that help poor and disadvantaged students prepare for college. Sources said the governor will restore some funding for certain programs, but that he is likely to call them something other than "outreach."

Previous governors, including Democratic Gov. Gray Davis and GOP Gov. Pete Wilson, struck similar "compacts" with UC and CSU that were easy to honor during healthy budget times.

Schwarzenegger also is close to striking a deal with cities and counties, in which they would accept deep cuts for two years and he would support a constitutional amendment to protect local government funding in future years. Additionally, he has shored up agreements with K-12 schools representatives and trial courts, and is working on compacts to secure a share of earnings from tribal gambling operations.

Each of these agreements, however, will ultimately require the blessing of the Democratic-controlled Legislature that is supposed to approve a budget plan by a seldom-met June 15 deadline.

H.D. Palmer, a spokesman for the Department of Finance, said Schwarzenegger "wants to be able to get the state's budget back into balance."

However, Steinberg said lawmakers are making no guarantees. He said Democrats might attempt to boost university budgets this year, instead of waiting until next year as Schwarzenegger wishes.