Gov. Gray Davis' recent revisions to his state budget proposal brought both welcome and unwelcome news for UCLA and its sister UC campuses.

Davis unveiled his revised 2001-02 budget plan on May 14 amid a darkening state fiscal picture, largely due to a decline in stock option and capital gains incomes. Revenues for 2001-02 were estimated to be $4.59 billion lower than the initial projection - producing a net $3.45-billion revenue reduction.

There was some good news for UCLA. Funding for enrollment growth and summer sessions, as well as capital funding for the California NanoSystems Institute, has been left intact, said Vice Chancellor of Finance and Budget Steve Olsen.

"The proposal also contains a $100-million augmentation to assist the campuses systemwide with their energy bills," Olsen said. While it's not yet known how the funds will be allocated, it should help UCLA defray the additional $23 million the campus has had to spend on the higher cost of natural gas to run the cogeneration plant, he said. "We've also requested funding for $17 million in capital projects that will help ensure that the campus can reduce its demand for power in peak load hours."

The downside of the revisions is the loss of $90 million to UC's core budget increase. UC's partnership with the governor calls for an annual 4% increase to cover inflationary price hikes, employee salary increases, increased benefit costs and other similar expenses. The revision reduces that to 2% and eliminates an additional 1% for instructional equipment and technology, deferred maintenance and libraries.

"What causes me most concern," Olsen said, "is that the university has been receiving funding to improve the quality of undergraduate education and had been anticipating getting an increase. Now that's likely to hit the cutting-room floor. It may slow our efforts to support such projects and affect our efforts to improve the student/faculty ratio."

Although disappointing, Olsen said, "the governor's proposal raises broader questions about the future of the partnership."

Legislators will consider Davis' revised proposal before working on their own.

Assistant Vice Chancellor Keith Parker of Government and Community Relations and his staff are closely reviewing the revised proposal in light of UCLA's highest priorities.

"We know what the outstanding issues are," Parker said. "Now we need to see where our advocacy efforts might be best placed. When the State Assembly begins its budget hearings, we'll get a better sense of where we may need to mobilize our advocates and push for our priorities."