SACRAMENTO -- Deflecting a potential obstacle to his hopes of winning passage of a budget without general tax increases, Gov. Arnold Schwarzenegger on Tuesday won support from the state's top two university administrators, who agreed to accept $420 million in cuts without complaint next year in exchange for the promise of predictable funding increases in the years ahead.

The agreement comes on the eve of Schwarzenegger's release of his revised budget plan, due out Thursday.

The higher education agreement is part of a strategy by the administration to privately seal deals with interest groups before the broader budget proposal is submitted to the Legislature for review. He is expected to announce today a budget deal with local governments under which they would accept a $1.3 billion cut in each of the next two years in exchange for a constitutional amendment that would protect their property tax revenues from future state raids.

"Everyone knows our budget crisis demands tough choices," Schwarzenegger said. "I'm very happy ... that all those compacts and those deals are being made."

Democrats in the Assembly assailed the higher education compact as a closed-door deal in which University of California President Robert Dynes and California State University Chancellor Charles Reed sold out next year's class of college freshmen for their own administrative convenience.

'All done in the dark of night'

"This was all done in the dark of night in a dark room someplace," said Assemblyman Marco Firebaugh, D-Los Angeles. "We reject them."

As a result of budget cuts proposed by Schwarzenegger in January, the university systems were forced to severely limit enrollment for the fall semester. Combined, the UC and CSU systems rejected applications from 11,400 high school seniors who were qualified for admittance under the state's long-standing higher education master plan.

Assemblywoman Jackie Goldberg, D-Los Angeles, called the deal "a sellout of the students of this state. I believe members of both houses will reject this compact as exactly that."

The master plan says that high school seniors who meet certain academic requirements are guaranteed admission at either a UC or CSU campus. If lawmakers accept Schwarzenegger's higher education compact, said Assemblywoman Wilma Chan, D-Oakland, that deal between the state and its young people will be broken.

"For the first time in nearly 50 years, Gov. Schwarzenegger says we are going to break California's promise to the children and parents of California," she said. "We asked them to play by the rules. They did that. Now they're being turned away."

Said Goldberg: "It's sort of a Fickle Finger of Fate: If your child was born in 1986, tough."

'Right agreement at right time'

CSU Chancellor Reed called the compact "the right agreement at the right time" and said it will allow the university to get back on track beginning in the 2005-06 academic year and then make plans for the future based on predictable levels of funding.

The compact assures both campuses of funding to accommodate enrollment growth of 2.5 percent a year and guarantees 3 percent annual growth in base funding that is used to pay salaries and other ongoing expenses. That annual growth would increase to 4 percent beginning in 2007-08.

Richard Rush, president of California State University, Channel Islands, said the new Ventura County campus might be able to accommodate a higher growth rate if the 2.5 percent annual growth is averaged among the 23 CSU campuses.

"I certainly will make that case to the chancellor," Rush said. "Some of the larger campuses have reached capacity. ... We are definitely in a growth mode."

Schwarzenegger also agreed to scale back his January request for a 40 percent fee increase for graduate students.

Instead, those fees will go up by 20 percent at UC and 25 percent at CSU. Teachers taking graduate-level courses to attain a credential will face a 20 percent increase.

Student fees to jump 14 percent

To compensate for that reduction, fees for undergraduates will rise 14 percent next year, instead of the 10 percent originally requested by Schwarzenegger. CSU trustees are expected to adopt the higher fees at their May 19 meeting. The increase would amount to $288, bringing fees next year to $2,234.

Undergraduate fees at UC for California residents would go up $698, to $5,682.

Under the terms of the compact, the universities will plan for fee increases of 8 percent in each of the following two years.

In a briefing with reporters, Treasurer Phil Angelides -- Schwarzenegger's most vocal critic and a likely Democratic candidate for governor in 2006 -- criticized the governor's deals with interest groups, saying he has failed to identify where the promised increased funding will come from in future years.

"He's creating a whole bunch of new debt that will be borne by future generations of Californians," Angelides said.

To generate sufficient tax revenue to meet the future obligations Schwarzenegger has pledged, Angelides said, "It would take economic growth of the same scale as the unprecedented stock market bubble of the late 1990s on a sustained basis. ... The governor's making promises that I don't know how he's going to fulfill."