Well, the January budget is out, and the Governor has a clear strategy for closing a $21B deficit: cuts, cuts and cuts. The Governor proposes to implement salary cuts for state employees (in lieu of furloughs) and increased contribution to the pension plan. On the face of it, such measures should require a round of bargaining with the unions, but Schwarzenegger seems to want to implement the cuts by legislative fiat. The Dept. of Corrections budget should see a 10% cut (or $1.2B), to be taken out of inmate medical care (a move that is bound to get the state in trouble with the federal courts), God forbid we actually step on the prison guards union's toes. The Governor is also pulling a trick, replacing a gas tax with an excise fee so that he then raid those revenues for the general fund. Funding for schools will be slashed and programs for the sick, the elderly and the poor reduced. All the while the state is requesting federal aid for about $7B, with further deeper cuts if Washington does not step in, as it seems likely.
When it comes to higher education, Schwarzenegger is increasing the appropriation by about $220M for UC and CSU combined, saying that this should be enough to forestall further fee increases. UC President Yudof had instead requested that the state restore $913M in funding for UC, and a similar request had come from CSU. It's clear that the $220M proposed by the Governor do nothing to address the combined financial woes of UC and CSU.
At UC, the ball is now in Yudof's court: UCOP needs to be clear about the consequences of this budget, whether UC will live up to its commitment that the furloughs will end this year, whether they will seek further fee hikes, or the extent of any cuts they will pass down to the campuses.