UC Enrolls Too Many Non-Residents in Efforts to Increase Revenue, Audit Claims

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The University of California has been granting admission to thousands of out-of-state applicants — some with markedly lower grades and test scores than in-state applicants who were granted admissions — to generate more revenue, according to the California state auditor’s report released last Tuesday.

Elaine Howle, the California state auditor, described in a report that UC has made “substantial efforts to enroll nonresident students who pay significantly more tuition than state residents.” The average in-state yearly tuition cost is $12,240, while the average out-of-state yearly tuition cost is $37,000.

The report referenced the Master Plan for Higher Education in California which calls for admission of the top 12.5 percent of California high school graduates to UC, though not necessarily to the campus of choice. Until 2011, the Master Plan stated that nonresidents should have higher qualifications than the median for residents who are admitted, but in 2011 this was changed so that out-of-state students needed only to “compare favorably” to in-state students.

According to the report, this change resulted in UC schools admitting 16,000 nonresidents whose academic scores were less than the median in terms of each GPA and admission test score evaluated.

The audit holds that this was done solely to increase tuition revenue, especially in light of changes to policy. In 2008, UC began allowing campuses to retain nonresident tuition revenue rather than sending this revenue to the Office of the President, and allowed each campus to create its own enrollment targets for the number of in-state and out-of-state students admitted.

These changes allowed UC to generate $728 million from nonresident supplemental tuition during the 2014-15 year. In contrast, the UC generated $325 million from nonresident supplemental tuition in 2010-11.

The audit also described that the “referral process,” which offers students not admitted to campus of choice spots at an alternative campus, often was in place for in-state students. In contrast, nonresident students were always admitted to at least one campus of choice. Admission to a campus of choice is significant because it often determines whether a student subsequently enrolls in the UC system.

Howle believes that this admission system also prevents UC from achieving campus state diversity that reflects the diversity of the State. In 2014-15, only 11 percent of undergraduate nonresidents were from underrepresented minorities and took the seats of potential state applicants.

The audit criticizes the lack of transparency in UC’s allocation of funds, and describes that by reducing employee salaries which rose $13 billion in the last fiscal year and by engaging in cost-saving initiatives, UC could make more funds available to enroll residents. Thus, these funds did not need to come from enrolling more nonresidents.

The report recommends addressing the problem by revising the admission standard to only admit nonresidents who have higher qualifications than the median of resident students. The audit also suggests revising the referral process to increase the likelihood of resident enrollment.

The UC issued its own report responding to a draft audit report shown in early March, believing that the draft report “makes inferences and draws conclusions that are supported neither by the data nor by sound analysis.” UC President Janet Napolitano also addressed a letter to Howle on behalf of the UC Regents illustrating the flaws in the state audit’s findings.

Napolitano described that each resident student who met the enrollment criteria was admitted to the UC system, even “in the leanest of budget years.”

Moreover, Napolitano held that the state auditor does not acknowledge the dilemma faced by the UC system. In light of limited funding, UC has the option of either increasing student tuition or enrolling nonresidents who pay greater tuition costs, with the former option being very unpopular.

According to Napolitano, UC has devoted millions of dollars to fund residents in need of aid, and has controlled costs to remain affordable to residents. Napolitano also says that the UC is committed to research and public service, and these costs also benefit California students and the State overall.

UC is committed to the people of California, the UC report describes, “from educating and training more than 50 percent of the doctors and medical residents in California, to undertaking agricultural cooperative extension in every California county, to sending UC staff members into California high schools for college advising and preparation.”

While Napolitano asks for a major revision of the audit, the California state auditor believes that the UC “did not provide evidence that refuted our conclusion nor identify factual errors with [the] draft report.”

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