Educators reacted with cautious optimism Thursday to the governor's revised budget, which revealed a slight increase for K-12 schools -- amounting to about $62 per pupil.

``We're obviously happy it's more money than we expected from the January budget,'' said Kevin Gordon of the California Association of School Business Officials. But the bigger picture, he added, is that school districts across the state are undergoing ``one of the most difficult years we've seen in terms of budget cuts.''

UC and CSU

In higher education, the budget relies on undergraduates at University of California and California State University campuses to shoulder a 14 percent fee increase next year -- slightly higher than they expected -- so graduate student fee increases can be limited to 20 to 25 percent. Undergraduate fees, which already have increased about 40 percent over the past two years, would increase 8 percent annually over the subsequent two years.

K-12 schools

The increase for K-12 schools comes on top of Gov. Arnold Schwarzenegger's move in January to provide them an additional $2 billion in funding. Under state law, schools had been due an increase of $4 billion. But with the state budget crisis looming, the education community seemed happy to compromise with Schwarzenegger for half that amount.

Gary Rummelhoff, president of the Santa Clara County School Boards Association, said Thursday that any increase is better than nothing. ``But I would reserve judgment about any excitement,'' he said, until it's clear how much of the increase actually will go to students.

Education officials complained that a huge chunk of the $2 billion was allocated to non-classroom education costs, such as debt service from previous borrowing. Rummelhoff, who also is president of the board of the San Jose Unified School District, said that's the reason he is ``a little bit head-shy'' about the extra $62 per pupil announced Thursday.

``It could easily be committed to obligations we don't have any control of,'' he said.

Community colleges would receive a funding increase, including money for 3 percent enrollment growth, including freshmen deferred from the UC and CSU systems.

Cal Grants

The good news for students is the governor's proposal to allow Cal Grants, the state-funded scholarship program for needy students, to cover fee increases at UC and CSU, reversing his January stand. But he also has called for cutting the number of grants that primarily benefit older students from 22,500 to 16,875 a year and has stuck with his proposal to raise the income level needed to qualify for Cal Grants and to nearly halve Cal Grants for California's private universities.

The UC and CSU systems agreed to a third year of deep funding reductions -- about $217 million for UC and $220 million for CSU -- in exchange for a commitment of future funding increases through 2011.

Students, faculty and legislators criticized the plan. ``There will be no alternative but to cancel thousands of classes'' if the governor's 2004-05 budget goes through, said John Travis of the California Faculty Association.

The new ``compact'' with the governor lays out a six-year plan that calls for:

• Escalating increases of 3 to 5 percent annually through 2011 for basic costs such as instruction, salaries and inflation, plus an extra 1 percent starting in 2008 for technology, libraries and instructional equipment.

• Funding to allow enrollment growth of 2.5 percent a year, the equivalent of about 5,000 full-time students for UC and 8,000 for CSU.

• Continuing outreach and preparation programs for economically and educationally disadvantaged students.