Higher Education For California Residents At Risk

By Connie Kwong

In this file photo from Wednesday, Jan. 22, 2014, California Gov. Jerry Brown, left, and University of California president Janet Napolitano listen to speakers during a UC Board of Regents meeting in San Francisco. Legislative analysts in Sacramento are releasing their review of Brown's proposed higher education budget. The recommendations may figure into the ongoing negotiations over the University of California's finances, which so far have had lawmakers and the governor taking a dim view of UC President Janet Napolitano's plan to expand undergraduate enrollment by raising tuition. (AP Photo/Jeff Chiu)

California Gov. Jerry Brown, left, and University of California president Janet Napolitano listen to speakers during a UC Board of Regents meeting in San Francisco. (AP Photo/Jeff Chiu)

In a previous piece, I suggested that concerns over the growing share of non-Californian students at University of California campuses, while valid, were overblown. I dismissed state Assemblymen Kevin McCarty and Jose Medina’s proposed bill to cap the amount of out-of-state and international students as being founded largely on an unnecessarily politicized notion of “us” (Californians) versus “them” (non-Californians). And I emphasized that out-of-state students are a positive force on campus because they boost diversity and the university’s global reach.

I still stand by that last point. But in light of new information, I can’t say the same about the other two. Last year, the California Joint Legislative Audit Committee requested the audit of the UC amidst growing concerns over the fact that out-of-state enrollment across campuses had more than tripled from 5 percent to 15.5 percent within the last decade. The audit was published last week, and finds that the state’s flagship public university system has increasingly accepted out-of-state applicants with lower median grade point averages and test scores than resident applicants within the last decade. While residents pay $12,240 in tuition, nonresidents pay that plus an additional $24,708 in Nonresident Supplemental Tuition. In other words, nonresidents are an attractive revenue source for the university. It’s hardly enough to say that an understanding of the factors behind campus diversity should be nuanced. Rather, this audit further evidences a greater problem we’ve long known: the world’s best public university system is rampantly mismanaged and its administration is out of touch with students’ needs and concerns.

According to the audit, between the 2010–11 and 2014–15 academic years, the number of resident applications to the UC increased by nearly 22 percent as more California high school seniors became eligible for college. During this time, the UC admitted 2,600 more residents in the 2014–15 academic year than it did in 2010–11, a four percent increase. However, it also increased the nonresident student share by 17,200 students — 182 percent. The audit finds that between the academic years  2012–13 and 2014–15, the UC admitted nearly 16,000 nonresidents who were less academically qualified on every academic indicator the auditors evaluated—grade point averages, SAT, and ACT scores—than the upper half of residents admitted at the same UC campus (Figure 6). The university’s practice of admitting domestic nonresidents with lower GPA scores became widespread beginning in the 2010–11 academic year. And in the 2014–15 year alone, the university admitted more than 9,400 nonresidents whose SAT reading and math scores and more than 11,200 nonresidents whose SAT writing scores fell below the upper half of residents’ scores.GraphTable

In response to these findings, the UC released its own report declaring that it remains committed to prioritizing residents in its admissions process. While it’s worth pointing out that the UC’s report is considerably shorter, less populated with graphs and tables comparing residents’ and non-residents’ academic qualifications, and doesn’t address the share of nonresident admits with lower grades and test scores, what’s especially noteworthy about the administration’s overall response is its failure to seriously consider the ramifications of its actions on resident students.

It’s true that nonresident students help subsidize education for resident students. It’s also true that compared to 30 percent across other public universities in the American Association of Universities, nonresidents only make up 15.5 percent of student populations in the UC. However, trends across other states are not necessarily applicable to California. California is the nation’s most populous state, and also one of the most expensive to live in. When factoring the state’s ethnically and socioeconomically diverse makeup, it’s even harder to justify substantially raising the UC’s nonresident population under the reason that it’s necessary to keep university doors open to resident students.

This isn’t to say that the UC’s dilemma isn’t reflective of the greater national problem of making higher education affordable and accessible. As one report by the New America think tank finds, public universities nationwide are compromising their integrity to in-state students by attracting out-of-state students. For instance, seven out of 10 public institutions examined provide non-need-based aid – otherwise known as merit aid – to at least five percent of freshmen each year. According to the UC’s 2015 Accountability Report, one in six UC undergraduates receives merit aid and the average award amounts to $4,860 — over one-third of resident tuition. The New America report also finds that public universities that provide substantial amounts of merit aid tend to enroll more nonresident students but fewer students with Pell grants. They also tend to charge low-income students a higher net price than those offering less merit aid. Students who qualify for merit aid tend to be from wealthier backgrounds. Feeling the sting of state budget cuts to education, public universities often use merit aid to attract the brightest students who are also wealthy enough to pay more and can help boost the university’s rankings and marketability. So from a purely financial perspective, a university is more willing to pay a $5000 merit scholarship to someone who can pay the rest in full or requires less aid rather than shell out more money to subsidize a lower-income student.

These techniques undermine the idea that public higher education exists for the sake of the public good, not just the wealthy elite. Naturally, public universities must figure out new financial plans in the face of budget constraints and declining state funding. But the UC’s conduct doesn’t suggest that it’s fully committed to creating a well-educated Californian population. The audit notes that in 2008, the UC Office of the President established separate system-wide enrollment targets for nonresidents and residents, and allowed each allowed campus to establish its own specific targets. In the following years, the Davis, Los Angeles, San Diego, and Santa Barbara campuses all increased their individual campus enrollment targets for nonresidents than residents at a faster rate than their targets for residents. The audit notes that resident underrepresented minorities (Latinos, African-Americans, and American Indians) make up less than 30 percent of the UC undergraduate population. When including nonresident student revenue, the highest-funded campuses are also the ones with the lowest percentage of underrepresented minority students (Figure 11).  Screen Shot 2016-04-03 at 3.31.36 PM

Considering that the UC’s 2015-2016 budget summary projects Nonresident Supplemental Tuition as the biggest share of the UC General Fund at an estimated $620.7 million, we’re right to suspect that future resident applicants’ admission prospects remain at risk.

In a letter to California State Auditor Elaine Howle, University of California President Janet Napolitano claims that the audit’s findings were erroneous and that it was “unfair and unwarranted.” Yet, it’s simply ridiculous to assert that a public university funded by taxpayer money is a victim of “unfairness” because it’s being audited. It’s uncommon for a state to so sharply criticize its own university system, much less when the university system is the best public system in the world. So it’s preposterous to think that the audit was unwarranted because lawmakers play major roles in shaping education policy, and they need relevant statistics and information to inform their decisions.

And following the release of the UC’s counterclaiming report, the California State Auditor updated the audit with its own response. It notes that throughout its research process, the UC declined repeated offers to meet and discuss audit results and concerns. At no point during the audit did the UC provide a publicly-available report contained detailed information comparing the academic qualifications of resident and nonresident admits. The audit also points out:

“According to the university’s associate vice president of budget analysis and planning (budget associate vice president), the university does not base tuition on the cost of instruction. Instead, it uses a model to estimate its future budget needs and expected revenue, then increases tuition to fill any estimated revenue gap…The university’s cost study is problematic because the source of the data it uses is not apparent, and it does not tie the costs and funding it reported to readily available and public financial data, such as its audited annual financial report.”

The UC’s administration needs to be held accountable for the fact that thousands of qualified resident applicants have been effectively disenfranchised from a high-caliber public education. While the system’s financial troubles can hardly be solved in a day, the UC’s first step should be an honest review and acknowledgement of the audit’s findings. It should also conduct a usable cost study following methodologies used by other prominent public flagship universities, and preferably, in collaboration with the California State Auditor and state legislature. For instance, the Texas state legislature uses annual financial statements and enrollment data to calculate the relative educational costs per student academic level and discipline. And following the advice of the auditors and other education policy experts, it should enforce an enrollment cap on out-of-state students. Most importantly, it needs to remember that the University of California system became the world’s premier public university system because it was founded first and foremost to educate and empower the people of the Golden State.


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