"CEU is not bleeding. We are financially sound . . . but we do have some unique circumstances," Thomas said.

His assurances, however, failed to quell a growing concern that for CEU to be a viable public junior college, it must recruit 65 percent of its students from outside Price.

With that in mind, the regents authorized Higher Education Commissioner Richard Kendell to explore the possibility of merging CEU and the Southeast Applied Technology College (SATC). The commissioner may explore other options for CEU as well, and has been directed to present his recommendations to the board by June 30. Administrators have made significant gains in reducing the school's $2.3 million deficit to $149,000, but persistent enrollment declines pose added budget difficulties, Kendell said.

The school's woes were intensified by the 2002 Legislature's decision to split the then-Applied Technology Training Center from CEU. The ATC program is not sufficiently funded to be truly independent and relies on CEU for most of its essential administrative services. In addition, Utah State University also offers extension services in Price.

SATC Campus President Miles Nelson asked the board to put off any merger decision for at least a year.

"I am reluctant to take a year to get it done. If we need a merger, let's get it done" Kendell said. "If it's done by the Legislature, it wouldn't happen until 2008."

Also Friday, regents:

l Adopted an across-the-board first-tier tuition rate that will be the same percentage legislators set for public employees' raises. Each school also may add another 4 percent to 10 percent as a second-tier tuition rate.

l Authorized the University of Utah to proceed with a $35 million student recreation center. Student fees, currently estimated at $60 per semester, will fund debt repayment.