The State Audit of the UC: The Problem with Non-Resident Admissions

For the past several years, this blog has covered several issues that are the subject of a new state audit of the UC system. Our main concerns have been the unequal funding of the campuses, the crowding out of students from California through nonresident admissions, the lack of UC budget transparency, the failure of the university to estimate the cost of instruction, the limitations of the rebenching process, the increase in spending on administration, and the underfunding of campuses with a high percentage of under-represented students. The new audit backs up all of our past arguments and proposes that the state should increase its funding to the university in order to reduce the system’s reliance on non-resident students.       

The audit begins by arguing that due to state funding cuts and internal decisions, the UC has not been serving the people of California to the best of its ability: “This report concludes that over the past several years, the university has undermined its commitment to resident students. Specifically, in response to reduced state funding, the university made substantial efforts to enroll nonresident students who pay significantly more tuition than residents. The university’s efforts resulted in an 82 percent increase in nonresident enrollment from academic years 2010–11 through 2014–15, or 18,000 students, but coincided with a drop in resident enrollment by 1 percent, or 2,200 students, over that same time period.” As the number of students from California attending the UC system has stayed flat, the number of nonresident students has increased dramatically.  This statistic alone appears to support our fears that students from California have been crowded out of the system because as the population has increased and the number of enrolled students has increased, the number of in-state students has actually gone down. In a response to the audit, the UC flatly rejects the facts by offering several explanations, but the bottom line cannot be denied: as the state reduced its funding, the UC looked for a way to increase support by enrolling nonresident students and this reduced the number of students from California in the system.

One way that the UC started to cater to nonresident students was to lower the admission’s standards for these high-paying students: “According to the Master Plan for Higher Education in California, which proposes the roles for each of the State’s institutions of higher education, the university should only admit nonresidents who possess academic qualifications that are equivalent to those of the upper half of residents who are eligible for admission. However, in 2011 the university

relaxed this admission standard to state that nonresidents need only to “compare favorably” to residents.” The report here points out that in order to attract more high-paying nonresident students, it gave them an advantage that went against the Master Plan.   

UC likes to claim that it has done nothing wrong because it still accepts all eligible students from California, but as the audit points out, this compliance is based on giving students who did not apply to Merced admissions to a campus that 98% of them will reject: “At the same time, the university denied admission to an increasing proportion of qualified residents at the campus to which they applied—nearly 11,000 in academic year 2014–15 alone—and instead referred them to an alternate campus. However, only about 2 percent of residents who the university referred actually enrolled. Moreover, increasing numbers of nonresident students have enrolled in the five most popular majors that the university offers at the same time that resident enrollment has generally declined in those same majors.” Not only are students from California being crowded out of their desired campuses, but they are also being pushed out of their desired majors.

This blog has stressed that as students from California are being excluded from a system built out of state tax dollars, the students who do get in are often funded at unequal rates: “Moreover, the university’s funding allocation decisions have not completely resolved its unequal distribution of per-student state funding across its campuses, resulting in certain campuses continuing to receive less state funds per student than others. After several reports identified inequity in per‑student funding among the campuses and a lack of transparency in how the university distributes that funding, the university embarked on an effort which it refers to as rebenching. However, we identified several problems with rebenching, including the fact that the university does not base the formula it uses to redistribute funds on the amounts it actually costs to educate different types of students. The university also excluded $886 million in state funds from the amount it distributes to campuses through per‑student funding for fiscal year 2014–15 for programs that do not relate directly to educating students. Further, even though the university asserts that the additional revenue from its increased enrollment of nonresidents allows it to improve education quality and enroll more residents, the university does not give campuses spending guidance or track how they use these funds. Lacking such guidance or oversight, we found campuses spend these funds in an inconsistent manner.” Even though rebenching was supposed to even out the funding among the campuses, the result has been an increase in inequity because the unequal distribution of nonresident tuition far exceeds the small money of rebenched state funds. Moreover, the UC has continued to refuse to try to calculate the real cost of educating students, and instead of being transparent, it continues to spend money on producing trumped up reports. 

The UC office of Denial refuses to admit that the reliance on nonresident student tuition has undermined the diversity of the student body, but the audit tells a different story: “Admission decisions have hampered efforts for its student body to reflect the diversity of the State—only 11 percent of the increasing number of nonresident undergraduates were from underrepresented minorities in academic year 2014–15.” In a state that has close to 50% of its population categorized as underrepresented, the use of nonresident students does indeed reduce diversity and opportunity. 

It is important to stress that as the diversity of the system decreases, the money spent on each under-represented student has also decreased: “not including nonresident revenue in a per-student funding calculation contributes to the persistence of per-student funding inequities among the campuses. These funding inequities have continued to disproportionately affect underrepresented minority students. Specifically, the highest‑funded campuses hen we include nonresident revenue—Berkeley, Los Angeles, and San Diego—are among the four campuses with the lowest percentage of underrepresented minority students.”  As we have seen throughout the country, the solution of replacing state funds with nonresident tuition has made college more unaffordable and unequal for everyone. Students from different states are being shut out of their own state universities, and so they are having to pay high tuition to go to out-of-state school, private universities, and for-profit colleges.   

The auditor’s main solution is for the state to increase its funding to the system so that the UC can reduce the number of nonresident students and open spaces for resident students: “Implementing a 5 percent limit on new nonresident enrollment would allow the university to enroll an equivalent number of additional new resident undergraduate students per year—about 7,200—more than the number it enrolled in academic year 2014–15. Requiring the university to enroll these additional residents would necessitate an increased annual financial commitment from both the university and the State to compensate for the increased enrollment of resident undergraduates and the decrease of nonresidents. If the Legislature were to commit additional funds to the university for the purpose of meeting agreed-upon enrollment percentages, it could do so using a phased-in approach.” The UC should welcome this rational approach, but instead, it can only respond through a blanket denial and rejection.

UC’s main response is to say that in the next three years, they plan to bring in 10,000 additional students from California.  However, since they are only getting $5,000 from the state for each student, we have to ask what is going to happen to the underfunded campuses with the highest number of underrepresented students from California? The answer is that they will receive an inferior education with huge classes and little personal attention. This is what separate and unequal educational funding looks like.