BILL ANALYSIS Ó
AB 1370
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Date of Hearing: April 28, 2015
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Jose Medina, Chair
AB 1370
(Medina) - As Amended April 22, 2015
SUBJECT: Public postsecondary education: student residency
SUMMARY: Revises provisions governing the nonresident tuition
at the University of California (UC) and the California State
University (CSU). Specifically, this bill:
1)Requires UC and CSU to establish nonresident tuition rates at
each campus of their respective segment based on the total
nonresident charges imposed by comparison institutions, as
identified by the California Postsecondary Education
Commission or a successor agency, and the cost of instruction.
2)Removes requirements that nonresident tuition increases be
gradual and moderate with a minimum of a 10-month notice, and
instead requires nonresident students have predictable
increases that ensure an appropriate notice of the increase to
students.
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3)Requires, at minimum, 50% of revenues generated, above the
cost of instruction, from undergraduate nonresident enrollment
to be directed to enrollment of resident students.
4)Removes language that sets aside the provisions of the law in
the event that state revenues and expenditures are
substantially imbalanced due to unforeseen factors.
5)Prohibits the number of undergraduate nonresident students
enrolled at any UC campus from exceeding 10% of total student
enrollment. Provides, until July 1, 2021, any campus of UC at
which undergraduate nonresident enrollment exceeds 10% on the
operative date of this bill is prohibited from increasing the
enrollment of undergraduate nonresident students above that
amount.
6)Requires UC to establish a revenue sharing agreement pursuant
to which revenues generated by undergraduate nonresident
student enrollment are distributed equitably to each campus of
the UC.
7)Requires the UC to annually publish an annual report that
includes the undergraduate nonresident tuition and fee level
established at each campus, the amount of revenues generated
by undergraduate nonresident enrollment at each campus, the
method by which the revenues were distributed among the
campuses of the university, and, for each campus, the purposes
for which these revenues were expended.
8)Provides that the Regents of the UC shall not allocate any
state funds appropriated to the UC in the annual Budget Act or
another statute to a campus of the UC unless the campus is in
compliance with this article.
EXISTING LAW:
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1)Requires that a student classified as a nonresident pay
nonresident tuition. Current law authorizes both the UC and
the CSU to establish nonresident student tuition policies and
methodologies to be developed by each institution's governing
body. The annual fee rate is prohibited from falling below the
marginal cost of instruction and the rates at comparison
institutions, as identified by the California Postsecondary
Education Commission, must be considered. (Education Code
Sections 68050-68052)
2)Establishes UC as a public trust and confers the full powers
of the UC upon the UC Regents. The Constitution establishes
that the UC is subject to legislative control only to the
degree necessary to ensure the security of its funds and
compliance with the terms of its endowments. Judicial
decisions have held that there are three additional areas in
which there may be limited legislative intrusion into
university operations: authority over the appropriation of
state moneys; exercise of the general police power to provide
for the public health, safety and welfare; and, legislation on
matters of general statewide concern not involving internal
university affairs. (Constitution of California, Article IX,
Section 9)
FISCAL EFFECT: Unknown
COMMENTS: Purpose of this bill. According to the author, the
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California Constitution establishes UC as a public institution;
annually, over $3 billion in California taxpayer funds are
provided to support UC's teaching, research, and public service
mission. However, evidence suggests that the way in which UC
enrolls and uses funds generated by nonresident students could
be undermining the UC's public mission.
The author notes that during California's recession and
resulting state budget cuts, UC increasingly relied on tuition
(and nonresident students, in particular, who pay an additional
$23,000 in tuition) to meet revenue needs. From 2007-08 to
2013-14 the number of nonresident undergraduates grew from 7,103
to 20,073. In 2000 90% of freshman at UC Berkeley came from
California. By 2012, the proportion dropped to 71%. At UCLA, the
percentage of California residents dropped 23%, to 72% in 2012.
According to the author, UC argues that admitting nonresident
students has allowed the system to enroll about 7,500 California
students for which the state has not provided funding. However,
UC allows tuition revenues generated by nonresident students to
be kept by the campus in which the student enrolls. As the
author points out, according to UC's own records, the majority
of "unfunded students" are attending campuses with very low
nonresident enrollment. In fact, in 2013, UCLA, with 19.2%
nonresidents, was only serving 191 California residents for
which it was not funded. UC Berkeley, with 21.2% nonresidents,
was serving 332 fewer California students than it was funded to
serve. UC Riverside, on the other hand, served 1,871 unfunded
Californians, but enrolled only 448 nonresidents.
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The author points to UC's recent indication that, for the
2015-16 academic year, it will be capping the number of in-state
enrollments at current levels pending the outcome of budget
negotiations. While UC has indicated it will cap nonresidents at
UCLA and Berkeley, it will continue to enroll nonresident
students at other campuses during this time. According to the
author, this means that UC-qualified California students will be
wait-listed and potentially turned away, while nonresident
students are provided access to the system.
Nonresident enrollment. Out-of-state and international students
(nonresidents) are recognized in higher education as enhancing
the college experience by bringing a diversity of backgrounds
and perspectives to campuses. However, the state has
traditionally considered only resident students when determining
enrollment for CSU and UC because the state does not provide
funding for nonresident students. Current law allows each
segment to set nonresident enrollment levels and fees, requiring
that nonresident fees, at minimum, cover marginal costs. At UC,
approximately 13% of all students systemwide are nonresidents,
and undergraduate nonresidents pay about $23,000 more than
California students in tuition. At CSU, about 5% of all
students are nonresidents, and undergraduate nonresidents pay an
additional $11,160. Both UC and CSU indicate that monies
generated from nonresident enrollment are used to support and
enhance educational access and quality for all students
(residents and nonresidents) at that campus.
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Resident enrollment targets. According to the LAO, while it
appears that some campuses, like UC Berkeley, are substituting
nonresidents for residents, it is difficult to hold these
campuses accountable for resident displacement without a clear
indication from the state on what it expects in terms of
resident enrollment systemwide and at each campus. Governor
Brown's budget proposal requires UC and CSU to not increase
student fees and requires UC to not increase nonresident
enrollment above 2014-15 levels in order for each segment to
receive the proposed $119 million augmentation. As noted by the
LAO, if the intent of this proposal is to prioritize access to
UC for California residents, in the absence of enrollment
targets and associated funding, restricting nonresident
enrollment alone might not achieve this objective.
Reestablishing resident enrollment targets in the Budget Act is
an item under discussion by the Assembly Budget Subcommittee No.
2 on Education Finance (subcommittee).
Funding directed toward California resident access. This bill
would require at least 50% of the revenue generated from
undergraduate nonresident enrollment, in excess of the cost of
instruction, to be used to support enrollment of resident
students. According to the Subcommittee, which heard issues
surrounding UC enrollment at a hearing on April 21, 2015, the
data reveal that rising admission and enrollment of nonresident
students has coincided with decreasing admission and enrollment
of Californians at many UC, particularly flagship, campuses.
The Subcommittee analysis notes that, in a paper published in
October 2014 called "Tuition Rich, Mission Poor: Nonresident
enrollment and the changing proportions of low-income and
underrepresented minority students and public research
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universities," professors at the University of Arizona,
University of Missouri, and University of Michigan studied
enrollment trends at public research universities across the
country - including UC - and reported that "nonresident
enrollment growth may have negative consequences for access" to
low-income and underrepresented students.
Campus-based nonresident tuition. Currently nonresident tuition
rates are established on a segment-wide basis. The bill would
allow UC and CSU to establish nonresident tuition rates at each
campus based on nonresident tuition rates of that campus's
comparison institutions. This requirement would potentially
allow UC and CSU to charge different nonresident tuition rates
for each campus, based on the amount the market allows.
Depending on the rates established, this provision could
increase the ability of some campuses to increase nonresident
enrollment and revenue from that enrollment.
UC nonresident enrollment limitations. In 2009, former-UC
President Yudof announced the creation of the UC Commission on
the Future, charged with developing a vision for the future of
the UC that would reaffirm its role in sustaining California's
economy and cultural life while recognizing that limited state
resources required the UC to be creative and strategic in
meeting that mission. The final report of the Commission was
adopted in November 2010.
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Among other things, the Commission recommended that the UC allow
campuses to increase the number and proportion of undergraduate
nonresident students to generate additional resources to sustain
current instructional capacity and quality. The Commission
requested:
a)Campuses establish targets that did not displace funded
California residents eligible for UC admission.
b)The President of the UC monitor enrollments to ensure that
these students were fairly apportioned among campuses.
c)The President to ensure that the proportion of nonresidents
systemwide did not exceed 10% and annually report on the
systemwide proportion to the Regents.
Governor Brown's January budget proposal prohibits UC from
increasing nonresident enrollment above 2014-15 levels in order
for each segment to receive the proposed $119 million
augmentation.
This bill would prohibit the number of nonresident students
enrolled at any campus of the UC from exceeding 10% of total
student enrollment and would, until July 1, 2021, prohibit any
campus at which nonresident enrollment currently exceeds 10% of
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total student enrollment from increasing the enrollment of
nonresident students above current levels. Currently, UC
Berkeley, UC Los Angeles and UC San Diego are above the 10%
threshold. This bill would provide until 2021 for these
campuses to reach the 10% limitation.
In response to concerns over nonresident enrollment, current-UC
President Napolitano recently announced capping nonresident
enrollment at UC Berkeley and UCLA, and limiting growth at UC
San Diego. UC has expressed concern that by instituting the cap
proposed in this bill, this bill could disadvantage campuses
seeking to increase nonresident enrollment to fund resident
enrollments and operational needs not met by the state.
As previously noted, nonresident tuition provides a source of
revenue to UC that is particularly important in budget years
where General Fund support is not provided to the system.
Moving forward, the author may wish to consider whether it would
be appropriate to set aside the nonresident student cap when
necessary to address fiscal imbalance.
Sharing nonresident revenues among UC campuses. Formerly, UC
required supplemental nonresident tuition to be collected
centrally and redistributed back to all campuses based on
systemwide priorities. Since 2007-08, UC has allowed individual
campuses to retain the revenue associated with nonresident
supplemental tuition. UC argues that excess funding generated
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by nonresident enrollment is used to improve services and access
for California students. Nonresident enrollment is managed at
the campus level, and campuses have taken different approaches
in recent years.
As shown by the 2013 undergraduate enrollment numbers outlined
below, UC campuses have taken different approaches to resident
and nonresident enrollment:
----------------------------------------------------------------
| UC |Undergradua|% |Undergradua|Budgeted |"Unfunded|
| | te | Nonresident| te |Residents| " |
| |Nonresident| | Residents | |Residents|
| Campus | s | | | | |
| | | | | | |
| | | | | | |
|----------+-----------+---------+-----------+---------+---------|
|Berkeley | 5,418 | 21.2% | 20,147 | 20,479 |0 (-332) |
| | | | | | |
| | | | | | |
|----------+-----------+---------+-----------+---------+---------|
|Davis | 1,748 | 7.1% | 22,822 | 20,780 | 2,042 |
| | | | | | |
| | | | | | |
|----------+-----------+---------+-----------+---------+---------|
|Irvine | 2,138 | 9.3% | 20,733 | 20,348 | 385 |
| | | | | | |
| | | | | | |
|----------+-----------+---------+-----------+---------+---------|
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|Los | 5,185 | 19.2% | 21,877 | 21,686 | 191 |
|Angeles | | | | | |
| | | | | | |
| | | | | | |
|----------+-----------+---------+-----------+---------+---------|
|Merced | 21 | 0.4% | 5,517 | 3,935 | 1,582 |
| | | | | | |
| | | | | | |
|----------+-----------+---------+-----------+---------+---------|
|Riverside | 448 | 2.7% | 16,180 | 14,309 | 1,871 |
| | | | | | |
| | | | | | |
|----------+-----------+---------+-----------+---------+---------|
|San Diego | 3,375 | 14.7% | 19,625 | 20,315 | 690 |
| | | | | | |
| | | | | | |
|----------+-----------+---------+-----------+---------+---------|
|Santa | 1,362 | 7.6% | 16,662 | 16,365 | 297 |
|Barbara | | | | | |
| | | | | | |
| | | | | | |
|----------+-----------+---------+-----------+---------+---------|
|Santa | 378 | 2.5% | 14,742 | 13,670 | 1,072 |
|Cruz | | | | | |
| | | | | | |
| | | | | | |
----------------------------------------------------------------
Under the current UC nonresident tuition structure, only those
campuses that enroll nonresidents benefit from the revenue
generated by those nonresident enrollments. This bill would
require UC to establish an equitable revenue sharing agreement.
The intent of the author is to ensure that all campuses, and
particularly those enrolling additional California students,
benefit from revenues generated by nonresident enrollment.
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UC has expressed concern that requiring redistribution of
nonresident tuition could take away campuses' incentive to
invest the resources necessary to attract out-of-state students
and thereby generate nonresident tuition revenues. The author
may wish to consider this concern moving forward.
REGISTERED SUPPORT / OPPOSITION:
Support
None on File
Opposition
AB 1370
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None on File
Analysis Prepared by:Laura Metune / HIGHER ED. / (916) 319-3960