BILL ANALYSIS Ó
AB 1370
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Date of Hearing: May 13, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
1370 (Medina) - As Amended April 22, 2015
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill modifies provisions for imposing and allocating
nonresident undergraduate tuition at the University of
California (UC) and the California State University (CSU).
Specifically, this bill:
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1)Requires the governing boards of UC and CSU to establish
nonresident tuition rates for each campus of their respective
segment, considering the nonresident charges imposed by their
comparison institutions and the cost of instruction.
2)Requires that at least 50% of the revenue generated above the
cost of instruction from undergraduate nonresident enrollment
be directed toward enrollment of resident undergraduates.
3)Prohibits the number of undergraduate nonresident students
enrolled at any UC campus from exceeding 10% of total student
enrollment, and until July 1, 2021, any UC campus exceeding
the 10% limit on the operative date of this bill is prohibited
from increasing undergraduate nonresident enrollment above the
amount on that campus as of March 1, 2016.
4)Requires UC to establish a revenue sharing agreement pursuant
to which revenues generated by undergraduate nonresident
student enrollment are distributed equitably to each UC
campus.
5)Requires the UC report annually regarding undergraduate
nonresident tuition by campus, revenues generated from the
tuition by campus, the method by which the revenues were
distributed among the campuses, and, for each campus, the
purposes for which these revenues were expended.
6)Prohibits the UC Regents from allocated state appropriations
for UC to any campus not in compliance with the above.
FISCAL EFFECT:
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1)UC. Based on the current enrollment of 25,000 nonresident
undergraduates, the requirement to reallocate 50% of revenue
generated from these students above the marginal cost of
instruction (assumed as $6,500 per student) would result in a
redirection of $160 million, within UC's core funding of
almost $6.3 billion, to fund resident undergraduate enrollment
growth. Assuming a marginal state cost of $10,000 per student,
this would fund enrollment of an additional 16,000 resident
undergraduates, for an almost 9% increase in undergraduate
enrollment, which UC indicates it could not immediately
absorb. According to UC, this redirection of nonresident
tuition revenue will also impact those areas for which it is
currently expended, such as improving student-faculty ratios,
providing enhanced financial aid for resident students,
improving academic support services, and addressing critical
deferred maintenance issues. The requirement for equitable
distribution of nonresident tuition revenue will also result
in a reallocation of these revenues to the benefit of some
campuses and the detriment of others.
2)CSU. Based on the current enrollment of 13,600 full-time
equivalent nonresident undergraduates, the requirement to
reallocate 50% of revenue generated from these students above
the marginal cost of instruction (assumed as $3,500 per
student) would result in a redirection of almost $50 million
within CSU's core funding of almost $5.4 billion, to fund
resident undergraduate enrollment growth. (CSU indicates that
it currently uses nonresident tuition mainly for one-time
expenses.) Assuming a marginal state cost of $5,500 per
student, this would fund enrollment of an additional 8,600
resident undergraduates.
COMMENTS:
1)Background. Out-of-state and international students
(nonresidents) are recognized in higher education as enhancing
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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).
The author notes that during California's recession and
resulting state budget cuts, UC increasingly relied on tuition
(and from nonresident students, in particular) to meet revenue
needs. From 2007-08 to 2013-14, the number of nonresident
undergraduates grew from 7,103 to 20,073. While 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.
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.
2)Purpose. In an attempt to re-prioritize enrollment of
California residents throughout UC, this bill limits the share
of nonresident undergraduate enrollment at any UC campus to
10%, requires 50% of the revenue generated by nonresident
undergraduates to fund resident undergraduate enrollment, and
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requires the revenue from nonresident undergraduates to be
allocated equitably among the campuses.
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
instituting the cap proposed in this bill could disadvantage
campuses seeking to increase nonresident enrollment in order
to fund resident enrollments and operational needs not met by
the state.
Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081