Public higher education in Massachusetts has fallen on hard times, but a budget proposed by Gov. Michael S. Dukakis for fiscal 1990 could prevent the situation from worsening, education officials said this week.

In a hearing of the legislative Committee on Education last week on Dukakis' budget proposal, officials called the governor's plan a "subsistence" budget that would prolong but stabilize the fiscal problems of the last two years.

With $791 million slated for public higher education, Dukakis' proposed fiscal 1990 budget will only return the system to fiscal 1987 levels, they say.

"This certainly isn't the ideal situation," said Salvatore Albano (D-Somerville), the Senate chair of the Committee on Education. "But we're faced with serious fiscal problems. We have to understand that these are tough times, and everybody has to share in it."

The funds allocated to state higher education have been cut by $42 million since 1987 to compensate for general budget shortfalls. This year, the governor proposes to return the system to its 1987 levels, and many education officials are calling the proposal a victory--if a Pyrrhic one.

"With the proposed outlay, tuition retention, and some new fees here and there, the system will be okay," Albano said. He said he predicts that the Dukakis proposal will allow colleges and universities to stop turning away qualified students.

But Mt. Holyoke Community College President David Bartley said the current proposal would not lead to full enrollment.

"This simply will not enable us to serve our students," Bartley said, adding that the proposal will also mean tuition increases. "The bottom line is that students had to pay 15 percent more last year and will be paying another 15 percent more this year."

The 29 campuses that make up the state's public institutions of higher learning are intended to serve the needs of all Massachusetts students, but this semester, 2000 qualified students were turned away. Some campuses imposed fee hikes to keep within their budgets and the Board of Regents of Higher Education is now considering additional tuition increases.

The higher education outlay currently under debate is part of Dukakis' record $13.4 billion budget proposal for fiscal 1990, a $1 billion increase over last year's budget. While many legislators say the governor's plan will not make it through the legislature, they add that education funds could survive.

"Virtually every senator and representative realizes full well the importance of these funds," Albano said, calling the executive and legislative branches "committed" to a stable education budget. And, he said, the costs may not be prohibitive.

"The fact that we would only be bringing the system back to 1987 levels makes me think that we can afford this," said Albano.

In the past, the education budgets approved by the legislature were slightly reduced forms of a governor's proposal, Bartley said. But this year, the budget will probably not be cut.

"We're hopeful that we'll be less affected by the budget squeeze than other agencies," said Soterios C. Zoulas, director of public affairs for the state Board of Regents of Higher Education--which oversees the operations of public universities and colleges.

And if the budget is not left intact, Bartley says the state could be heading for disaster.

But many education experts see the recent appointment of former Sen. Paul Tsongas to the chair of the Board of Regents as hopeful sign.

"With Paul Tsongas as chair, the case for higher education will be much stronger," Zoulas said.

Tsongas has already suggested a program that will increase the level of partnership between public higher education and the business community.

Tsongas' plan would bring more executives to state college boards of trustees and more college officials to business boards. The plan would also include a more aggressive effort to solicit community and private sector financial support for education. The program would also tie additional funding for state campuses to their individual performances.

But Tsongas said his program may not have an immediate impact on the current fiscal woes of the higher education system because partnerships need time to develop. The partnerships will, however, provide a long-term solution, he said.

"Right now when it comes to getting funding, we are like a lone ranger out there," Tsongas said. "The momentum that will be provided by local and business support will be a big help at funding time."