SACRAMENTO -- Two days before he's to release his revised budget plan, Gov. Arnold Schwarzenegger on Tuesday announced a spending deal with state university officials that trades spending cuts and fee increases now for future financial support.

It's the third such deal Schwarzenegger has reached with key interest groups before the release of his revised budget plan and is part of what the administration hopes will be a wave of support that will help pass this year's budget on time.

While the agreement with universities saves the state only about $660 million next year out of an estimated budget shortfall of $17 billion it may help Schwarzenegger pass the first budget on time since 2000.

Some Democrats denounced the deal, saying it limits university enrollments and breaks a 40-year promise of a state-supported higher education to qualified students.

The deal with the universities would impose a 14 percent increase on undergraduate student fees next year amounting to $288 for CSU students and another 8 percent increase each of the next two years.

CSU graduate students would see a 25 percent fee increase amounting to $564.

The higher fees would begin in the fall.

The governor promised to begin restoring university funding beginning with a 3 percent increase in 2005-2006.

If lawmakers approve the deal as part of the budget, it will mean the lifting of the cap on enrollments in CSU schools next year, said CSU Chancellor Charles Reed. The agreement will give badly needed predictability when the CSU works on new budgets in years to come, said Allen Mori, provost and vice president of academic affairs at Cal State Dominguez Hills.

"It's difficult for us to make good, reasoned decisions when there's so much uncertainty,' Mori said.

Cal State Long Beach officials also praised the deal.

"What's important for the CSU is that this compact is going to bring state resources rather than cuts,' said Robyn Mack, associate vice president for budget and human resources.

CSULB this year took a cut of about $14 million, after increasing its student fees, and cut enrollment in 2004-2005 by 5 percent, or just under 1,400 full-time equivalent students, she said.

The new deal would allow the university to boost enrollment by 650 students next year, Mack said.

Today the governor is expected to announce an agreement that locks in $2.6 billion in cuts over the next two years.

The Associated Press and staff writer Kevin Butler contributed to this report.