Topeka ? Kansas University officials Monday said Gov. Kathleen Sebelius’ budget proposal was a “good-faith effort” but would still result in funding cuts.

“The budget proposal is a significant improvement over the past two, and a solid starting point for legislative action,” KU Chancellor Robert Hemenway said in testimony to a Senate subcommittee on higher education.

Under Sebelius’ proposal for the fiscal year that starts July 1, KU would receive a $2.2 million increase in its operating grant, a 3 percent pay raise for classified employees and an additional $1.4 million for faculty pay raises.

But Hemenway said that on the negative side, regents universities, including KU, would not receive any funding to cover increases in health insurance costs and other fringe benefits. The amount of the shortfall is $6.4 million at KU’s Lawrence campus and Medical Center, he said.

“Failure to fund the increase in fixed employer costs is a de facto budget cut for the universities,” he said.

Still, Hemenway sounded upbeat, saying the budget proposal represented progress from $19 million in cuts over the past two years when the economy and state revenue plunged.

“The economy of the state has stabilized. I feel like the spirit of the people of Kansas is more optimistic than it has been in quite some time,” he said.

In addition to the underfunded costs of health care, Hemenway said Sebelius’ budget made no special effort to help KU Medical Center’s attempts to become a national cancer institute.

KU is close to meeting the criteria to get the designation, which officials said would attract more scientists and researchers to Kansas.

“It’s important for us to get it for status, funding and elevation” of health care, said Don Hagen, executive vice chancellor of the Medical Center.

Committee Chairman Steve Morris, R-Hugoton, said lawmakers sympathized with the funding plight of higher education. “The Legislature is aware of the problems,” but he added, “There is not money there to do anything more. I wish that there was.”