Under the proposed budget, funding for the Securities and Exchange Commission for the 2006 fiscal year, which starts Oct. 1, would be $888.1 million, up slightly from $888 million this fiscal year.

The SEC has seen sharp increases in its funding since Enron Corp. and other scandals rocked corporate America, with its budget more than doubling since fiscal 2001 and its number of employees increasing by nearly 1,000, to more than 3,900. Staffing levels would be unchanged under the 2006 budget proposal.

But Bush's new budget plan comes amid a backlash against the SEC's corporate governance overhaul. Some in corporate America, for example, have launched high-profile efforts to throw out a new rule requiring independent chairmen of mutual fund boards and to fend off a longstanding proposal to give shareholders limited ability to nominate candidates for boards of directors.

Despite that pushback, Paul Lapides, director of the Corporate Governance Center at Kennesaw State University near Atlanta, said the SEC has done an outstanding job and that he believes the funding level is appropriate.

"If they cut it, it's kind of sending a signal on one hand. ... I look at (the current proposal) as pretty neutral," he said.

"I don't know that increasing it $100 million at this point would do a thing," he said. "I'm not sure the agency can be more effective than it has been in the past few years."

The SEC's budget arithmetic is complex, and its funding levels are smoothed out by funds being carried over from year to year. Counting $856 million in new appropriations and $57 million in carried-over funds, the SEC's budget total reached $913 million this year.

But $25 million won't be spent for various reasons and will be carried over, reducing available spending to $888 million this year and increasing next year's $863.1 million in new spending to $888.1 million.

To some congressional Democrats, that represents a retreat.

"I believe it was unwise for the Bush administration to cut, through the budget, the funds available to the Securities and Exchange Commission at this critical juncture in their efforts to restore investor confidence in our financial markets," said Sen. Paul Sarbanes of Maryland, the ranking Democrat on the Senate Banking Committee and co-author of the Sarbanes-Oxley governance law of 2002, in a statement.

"While much progress has been made in recent years, the SEC is still straining to fulfill an increased mission," he said, including efforts to address mutual fund scandals and its initiative to register hedge funds.

But amid what Bush called a "lean" budget that proposes sharp cuts for many domestic agencies, SEC officials said their proposed levels would give them adequate resources to maintain current staffing and programs.

"As the president said, this is a lean budget. It's lean for the SEC," said SEC Executive Director James McConnell. "We're prepared to deal with this budget effectively."

SEC officials stressed that the current budget includes $38 million in one-time expenses, so the seemingly flat funding levels could be somewhat misleading.

Andrew Gray, a spokesman for Senate Banking Committee Chairman Richard Shelby, R-Ala., said SEC Chairman William Donaldson had indicated in previous testimony that SEC funding was adequate. But Gray said Shelby would discuss that again with Donaldson as the budget is debated on Capitol Hill.

"Sen. Shelby supports giving the SEC all the resources it needs to carry out its mission," Gray said. "If that's what they need to fulfill those responsibilities, then it's appropriate."

The SEC is not funded by taxpayers. It receives fees from securities registrations, proxy solicitations and other transactions, collecting more than it spends. Excess fees go to the federal treasury. But McConnell said it is subject to the same considerations as other federal programs.

"While our budget comes from fees, we are scored just like any other part of the president's budget," he said.

-- Andrew Countryman