A staff report to the California Postsecondary Education Commission analyzes the California governor's 1989-90 budget and describes provisions for postsecondary education. Topics of the report are: factors constraining the budget; proposed educational expenditures (for public school expenditures, University of California, California State University, California Community Colleges, Hastings College of the Law and the California Maritime Academy, and California Student Aid Commission); higher education capital outlay; and faculty salaries. It is concluded that: the budget proposes an increase in general fund support of 4.0%, 8.6%, 8.3%, and 0.8% for the University of California, California State University, California Community Colleges, and the Student Aid Commission respectively; there appear to be basic structural flaws in the way the state generates funds to pay for the programs and services it provides; and because the state has only one short-term option, cutting programs for balancing the budget, the debate over funding priorities are particularly intense this year. An appendix presents legislative testimony by Kenneth B. O'Brien, "The 1989-90 California State Budget and Postsecondary Education." Displays are included. (SM)