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.

Why We Should Stick with Bernie

The most important aspect of the Bernie Sanders campaign for president is that it is taking on the entire political system. Instead of being supported by millionaires and billionaires, Sanders is relying on the support of millions of citizens. By directly taking on the established campaign finance system, he is taking on the meta issue that affects all other issues.  Hillary Clinton may argue that she is not affected by her donors, but history tells a different story.

After the March 15 primaries, some Bernie supporters may think the race is over, but the majority of delegates are still out there, and the next primaries are in the type of states that Sanders has an advantage.  So far, Clinton has 1,132 delegates and Sanders has 818, and a candidate needs 2,383 towin the nomination. Clinton also leads in super delegates, but these votes are not made until the convention, and in 2008, most of them switched from Clinton to Obama at the end of the campaign. 

On June 7^th, 806 delegates will be decided, including 546 in California. If Sanders does will in California, New York, Wisconsin, Washington, Pennsylvania, and Maryland, he could catch up to Clinton by the end of the primaries.  At this point, the super delegates would have to consider that Sanders beats Trump in most national polls by a wider marginthan Clinton. It is also important to remember that Hillary is under investigation by the FBI.

Sanders is not only running against our corrupt campaign finance system, but he is also taking on the political parties. What most people do not know is that Clinton has given the Democratic National Committee over $20 million, and Sanders has not given them anything.  It should be no surprise that super delegates have come out in favor of Clinton since she is helping to fund their campaigns. Through Hillary’s Super Pac, funded by Wall Street, fossil fuel corporations, and  pharmaceutical companies, she has been able to buy the support of the DNC. 

The biggest problem we should all have with Hillary Clinton is we have no way of knowing what policies she would promote as president and who she would choose for her advisors and key administration positions.  She has come down squarely on both sides of many issues (free trade, gay marriage, welfare reform, Wall Street, military intervention) throughout her career, and she appears to be committed to only one specific issue, and that is getting herself elected as president.

Don't let the corporate media tell you how to vote: The best counter to Trump’s fake populism is a real Democrat like Sanders.

Did 638 People Stop Sanders? The Incredible Stupidity of the Media, the Voters, and the System

News media reporters and political officials have declared that Hillary Clinton’s win in the Nevada caucus represented the death of Bernie Sanders’ presidential campaign.  However, looking at the actual vote tallies, we discover that Clinton only beat Sanders by 638 votes.  In a country of over 300 million people, is it possible that so much can be decided by so few?   

It should be clear that our primary system makes a mockery of our democracy as small segments of the population are given the ability to decide the future of the nation.  This unfair and unrepresentative process is then magnified by a news media industry that has little vision, memory, ethics, or rationality.  For the 24-hour corporate news media, every small bit of polling and voting is enlarged and intensified so that it serves as the ruling consensus about the current political order.  Focused on the present with a laser beam of superficiality, these paid actors pretending to be political scientists feed into a social herd mentality. 

Of course, we should not let the public off the hook since ultimately they are responsible for buying into the media stupidity.  In conversation after conversation, I have been shocked to realize how shallow my fellow Americans can be when it comes to understanding our political process and media culture.  The only way that 638 people in Nevada can shape our political future is if we let them. 

Here is a list of very dumb statements from some very “credible” new sources:

“Bernie Sanders’s loss in the Nevada caucuses, 47 percent to 53 percent, reveals a very realweakness of his insurgent challenge to Hillary Clinton.” This is the general establishment narrative that once again is based on an insignificant number of American voters.

“BernieSanders hoped a victory in the Nevada caucuses would change the direction ofthe Democratic race, but the results didn’t turn out as he’d hoped." So the entire direction of the national race has been decided by 638 people?

“Despite collecting millions in small-dollar donations and packing thousands of peopleinto arenas around the country, despite topping Hillary Clinton for the first time in anational poll of likely Democratic voters, the path tovictory has narrowed sharply for Sanders. Some would argue that a window ofopportunity slammed shut Sunday night in Nevada and that the upcoming race inSouth Carolina is the proverbial kitty-bar.” Yes, according to this astute reporter, even though Sanders may lead in national polls, and people are pouring money into his campaign, his loss by 638 votes in Nevada means that everything else no longer matters.  

I could go on and list thousands of articles that come up with the same narrative but fail to look at the actual numbers involved and fail to criticize the dysfunctional nature of the current political-media system.

Let's all take a deep breathe and keep the movement going. 

UC-AFT ENDORSES BERNIE SANDERS

The UC-AFT council voted unanimously to endorse Bernie Sanders for president.  Although our national organization has endorsed Hillary Clinton, we feel that Sanders’ position on free public higher education, Wall Street reform, universal healthcare, unions, campaign finance, and climate change represent a rare chance to push for a truly progressive agenda.

Sanders’ is the only candidate who has tied the rising cost of higher education and student debt to Wall Street.  His plan pushes to increase the number of full-time faculty, reduce administrative costs, and increase spending on instruction.  Many of his ideas on universities coincide with my book Why Public Higher Education Should be Free. 

Some people have asked why we should tax Wall Street transactions to pay for higher education.  The answer is pretty simple, each time that Wall Street crashes, tuition goes up and student debt increases.  Moreover, Wall Street is now engaged in a reckless attempt to cash in on student loans by creating Student Loan Asset-Backed Securities (SLABs).  If this makes you think about betting on subprime loans, it should, since the same people are trying to make money off of indebted students by pooling together risky packages of student loans. 

While Hillary Clinton has also pushed for debt-free college, her program does not go as far as Sanders.  Furthermore, Sanders clearly sees that very little of the progressive agenda will be advanced, if we do not change how political campaigns are funded.  He seeking to create a social movement that will demand a different mode of politics, and therefore instead of asking if he can get his agenda done in the current system, we should ask can he help us create a new system.   

The Global Finance University: The Future of the End?

As a member of the UC Investment Advisory Group for the last several years, I have tried to push for socially responsible investing and have had little luck, but September 9^th marked a new day.  Out of nowhere, the Chief Investment Officer mentioned that the university was no longer invested in coal and guns.  After I pushed him on what this meant, one of the other members seemed quite bothered, and he wanted to be assured that the university is making investment decisions based on economics and not morality.  The CIO assured him that the move away from coal and guns made economic sense, but still the university was now pursuing a sustainable investment strategy.

Some have called Harvard a Hedge Fund with a school attached, because it has over $36 billion in its endowment, but the UC holds over $100 billion in its retirement funds, endowments, and working capital funds.  This large amount of money can be used for good, or it can be used for darker purposes, but one thing for sure, it makes the university an important global finance player.  Of course, we should all ask what it means when a public university enters global finance.

On my pessimistic days, I remember being lectured by fellow members about the need to focus on returns and not trying to make any social statements by our investment choices.  The argument here appears to be that capitalism is essentially amoral, and so we must think and act in an amoral way.  When you extend this logic to the university itself, a public institution with a public mission is driven by an anti-public ideology.  Moreover, as finance has become globalized and its power and valuations exceed the traditional productive and consumer economies, we must realize that we have entered a new stage of capitalism and social organization.  In this era of multinational corporations and central banks circulating trillions of dollars of credit, we have to understand that the old world of democratic institutions and nation-states is being eclipsed. 

A glimmer of hope emerged for me at the last investment meeting because the CIO was making the argument that we can earn a high rate of return and do good at the same time.  Of course, this combination of profit and moral advancement can be a smokescreen to hide naked greed, but it is possible for people to take advantage of this new rhetoric of socially responsible investing.  In other words, as our economies become globalized and integrated into a financialized market, we can steer the circulation of capital in a positive direction. 

In perhaps one of the most surprising conversations I have ever heard at a UC investment meeting, Regent Makarechian started to drill the CIO about the relation between investing and human rights.  I believe the regent even asked if we are investing in companies with good labor conditions. It was clear that the group was pretty uncomfortable with the discussion, but I see this moment as an opportunity. 

Clearly, individual nations cannot deal with global climate change, tax evasion, international labor standards, migration, or terrorism on their own.  Moreover, our democratic institutions are being transcended by multinational corporations, global elites, undemocratic central banks, and the World Trade Organization.  Is it possible that our only hope is a shareholders revolution where huge pension and sovereign wealth funds transform amoral capitalism into socially responsible investing?