Having just lifted off into the first week of fiscal year 2004, state officials are already spotting errors in the budget.

Although the state has previously cut funds to match a $1.7 billion budget shortfall reckoned in the last business cycle, officials said Michigan may still come up $350 to $500 million short of projections. In haste, the state treasurer and directors of the House and Senate Fiscal Agencies have agreed to meet Oct. 14 to determine the exact size of the losses. From there, the state may cut certain programs and services - including higher education.

State and University officials said they do not know if higher education will take funding cuts, but they added that a number of other programs will inevitably be affected by the deficits.

"At this point we're just waiting to see just how bad the problem is," said Greg Bird, spokesman for the State Budget Office. "It became clear in our May projections that we had projected in the last three or four months of the fiscal year that the economy would begin to pick up, and that just didn't seem to happen."

To cope with $37 million in cuts to its own budget since the last fiscal year, the University has already begun "tightening the belt" on services, said Cynthia Wilbanks, University vice president for government relations. In addition to raising tuition 6.5 percent last July, the University has increased class sizes, limited course offerings, laid off faculty and reduced department budgets.

Regardless of the state's resolution of the current budget situation, the University will continue to enact cost-reducing measures, Wilbanks said.

"When you see the final decision reached by the individuals involved in the revenue conference, from there the administration will begin thinking about what to propose as possible reductions," she said.

But further reductions may impede the University administration's ability to serve its students.

"Whether higher education is going to be hurt more than anyone else, I don't know," said state Rep. Ruth Ann Jamnick (D-Washtenaw). "But when you start facing budget cuts, when everything's been cut as much as it has, we're facing some really difficult challenges."

University spokeswoman Julie Peterson echoed her remarks.

"We're concerned if we see more cuts (the size of last year's reductions), it's going to dig deeply into our educational offering," she said.

Reflecting on the most recent round of budget reductions, Civil Engineering Prof. Victor Li said downscaled funds have affected his work at the University, mainly by constricting funds available for research projects. He added that future cuts resulting in more tuition increases would deter prospective students from attending the University.

"Generally speaking, I assume these cuts (would) affect some students who may be highly desiring higher education, but cannot afford it."

During the past two weeks, the state has tried to offset its losses by raising fees on services such as new driver license registrations, but Bird said fee hikes will probably be one of many pieces in the state's plan to rebalance the budget.

The fee increases were part of the fiscal year 2004 which started Oct. 1," Bird said. "Those bills have already been passed, so people will see a number of fee increases from everything to pet shop licensing fee increases, to when you go into the secretary of state's office and renew your driver license."