BILL ANALYSIS Ó
AB 1711
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Date of Hearing: April 19, 2016
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Jose Medina, Chair
AB 1711
(McCarty and Medina) - As Amended April 18, 2016
SUBJECT: University of California: nonresident student
enrollment
SUMMARY: Revises provisions governing the nonresident tuition
at the University of California (UC). Specifically, this bill:
1)Requires, as a condition of receipt of Budget Act funds, UC to
comply with the following:
a) Prohibits the percentage of undergraduate nonresident
students enrolled at UC systemwide from exceeding 15.5% of
total undergraduate student enrollment;
b) Prohibits any UC campus at which undergraduate
nonresident enrollment exceeds 15.5% from enrolling a
number of new nonresidents in excess of the number of
nonresident undergraduate students enrolled in 2015-16;
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and,
c) Beginning in the 2017-18 academic year, requires not
less than 50% of the revenues in excess of the marginal
cost of instruction from new undergraduate nonresident
enrollment to be directed to fund increased enrollment of
undergraduate resident students at all campuses serving
undergraduates.
2)Requires, as a condition of receipt of Budget Act funds, UC to
annually publish a report that includes, but is not
necessarily limited to, all of the following information:
a) The undergraduate nonresident tuition and fee level
established at each campus;
b) The amount of revenues generated by undergraduate
nonresident enrollment at each campus;
c) The method by which these revenues were distributed
among the various UC campuses; and,
d) For each campus, the purposes for which these revenues
were expended, including, but not limited to, the number of
California resident undergraduate students admitted
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pursuant to the aforementioned requirements.
3)Requires, by July 1, 2017, UC to establish a policy regarding
admission of nonresident undergraduate students to require
each campus to only admit undergraduate nonresidents that
stand in the upper half of those admitted undergraduate
resident students at that campus. Requires related annual
reporting, as specified.
4)Provides that the nonresident enrollment limitations outlined
in (1)(a) and (1)(b) shall be set aside in any year where the
Budget Act provides less funding than was provided to UC in
the prior year.
EXISTING LAW:
1)Requires that a student classified as a nonresident pay
nonresident tuition. Current law authorizes both the UC and
the California State University (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
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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, there
has been a growing trend at UC to enroll more out of state and
international students (nonresidents) at the expense of
California students (residents). The author argues that the
main reason for this shift in enrollment is due to tuition and
fee revenues. As of the 2015-16 academic year, tuition and fees
for nonresidents is $38,108 and for resident students is $13,400
a year. All additional revenue derived from out of state
students stays with the local campus. The author points to
recent enrollment numbers, in the fall of 2015, UC admitted
1,600 fewer resident freshmen compared to fall 2014, and
increased nonresident enrollment by 4,700. According to the
author, without the ratio and budgetary language as proposed in
this bill, the UC will continue to grow its non-resident student
population at the expense of resident Californians.
Background. Historically, the state provided UC (and CSU) with
funding each year to support enrollment growth. Enrollment
targets were generally set by using forecasts for high school
graduation rates and the overall population of 18- to
24-year-olds, and through negotiation with the segments as to an
appropriate per-student amount of funding, referred to as the
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marginal cost. The most recent marginal cost rate for UC is
approximately $10,000 for each additional student. Due to
recession-era budget cuts and current administration preference,
enrollment targets have been eliminated from the budget. No
enrollment targets have been included in the past two Budget
Acts.
The 2015-16 Budget Act provides UC incentive funding of $25
million General Fund if UC increases enrollment by 5,000
California undergraduate students by 2016-17. UC was also
directed to use financial aid previously awarded to nonresident
students ($36.8 million in 2014-15) to support increased
enrollment of California students. While the Fall 2015
enrollment data shows a slight drop in California resident
undergraduate enrollment, UC has indicated it intends to meet
the Budget Act requirement and increase California undergraduate
enrollment by 10,000 students over the next three academic
years.
The state has traditionally considered only resident students
when determining enrollment for UC because the state does not
provide funding for nonresident students. Current law allows UC
to set nonresident enrollment levels and fees, requiring that
nonresident fees, at minimum, cover marginal costs. UC policy
also allows campuses to keep the extra revenue generated by
nonresident tuition. Thus, campuses have a major incentive to
admit and enroll more nonresident students. UC increased
nonresident tuition for 2015-16; undergraduate nonresidents now
pay $24,708 more than California students in tuition.
In Fall 2015, systemwide, California freshman admissions were
reduced by 2.1% (1,319 students) from 2014 while nonresident
admissions increased by 13.2% (3,513) from 2014.
Nonresident students received 34% of offers at UC Berkeley, 41%
at UCLA, 39% at UC San Diego and 35% at UC Davis. Fall 2015
enrollment figures show that UC admitted 1,319 fewer California
freshmen, but increased (new and continuing) nonresident
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enrollments by about 4,700 systemwide (new nonresidents grew
1,182).
While UC has sought to limit nonresident enrollment at the
Berkeley and UCLA, other UC campuses have significantly
increased nonresident student numbers. The Davis, Irvine, San
Diego and Santa Cruz campuses all report significant increases
in nonresident admissions during the past three years.
Nonresidents are currently 15.5% of undergraduate enrollments.
The chart below shows the change in new UC enrollments between
Fall 2008 and 2015.
-----------------------------------------------------------------------------------------------------------
|University | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 |
|Enrollment | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
|-----------+-----------+-----------+-----------+-----------+-----------+-----------+-----------+-----------|
| CA | 34,410 | 32,425 | 31,891 | 32,159 | 33,111 | 33,224 | 34,240 | 32,923 |
| Freshmen | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
|-----------+-----------+-----------+-----------+-----------+-----------+-----------+-----------+-----------|
| CCC | 12,428 | 13,523 | 14,963 | 14,979 | 14,353 | 14,476 | 14,587 | 14,223 |
| Transfers | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
|-----------+-----------+-----------+-----------+-----------+-----------+-----------+-----------+-----------|
|Non-residen| 3,623 | 3,580 | 4,450 | 6,259 | 7,766 | 9,185 | 9,885 | 11,433 |
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| ts | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
|-----------+-----------+-----------+-----------+-----------+-----------+-----------+-----------+-----------|
|% | 7% | 7% | 9% | 12% | 14% | 16% | 17% |20% |
| Non-resident| | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
-----------------------------------------------------------------------------------------------------------
Concerns over nonresident growth. On August, 26, 2015, the
Assembly Higher Education Committee and the Assembly Budget
Subcommittee No. 2 on Education Finance held a joint oversight
hearing to review nonresident student enrollment at UC.
Testimony was presented by Ozan Jacquette, assistant professor
at the University of Arizona, College Of Education, and coauthor
of the working paper "Tuition rich, mission poor: Nonresident
enrollment and the changing proportions of low-income and
underrepresented minority students at public research
universities," (Tuition Rich). According to Jacquette,
increases in nonresident enrollment generate more tuition
revenue and increase academic profiles. However, nonresident
students are more likely to come from high-income families and
less likely to be Black or Latino. Jacquette notes that
increases in nonresident enrollment may exacerbate access
inequalities.
UC nonresident enrollment limitation. 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
released in November 2010, and included recommendations
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regarding resident and nonresident enrollment, including that
the UC President ensure that the proportion of nonresidents
systemwide did not exceed 10%. UC Regents did not adopt the
recommendations.
This bill would prohibit the systemwide undergraduate
nonresident enrollment from exceeding 15.5% of total
undergraduate student enrollment and prohibit any campus at
which nonresident enrollment exceeds 15.5% from enrolling more
new nonresident students that it did in 2015-16. Currently UC
Berkeley, UC Irvine, UC Los Angeles and UC San Diego are above
the 15.5% rate. Under the provisions of this bill, those
campuses would only be authorized to enroll the same number of
new nonresidents as were enrolled in 2015-16. This provision is
intended to allow nonresident enrollment at these campuses but
also ensure that, as systemwide resident enrollment increases,
nonresident growth (and associated revenue) can occur at
campuses with lower nonresident rates.
Funding directed toward California resident access. 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
by nonresident enrollment is used to improve services and access
for California students. Under the current UC nonresident
tuition structure, only those campuses that enroll nonresidents
benefit from the revenue generated by those nonresident
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enrollments. The author aims to ensure all campuses enrolling
additional resident undergraduate students benefit from the
revenue generated from nonresidents. This bill would require,
beginning in 2017-18, of the revenue generated from new
undergraduate nonresident enrollment (about $36,000), in excess
of the cost of instruction (about $22,000), 50% to be used to
support enrollment of resident students at all UC undergraduate
campuses (approximately $7,000 per nonresident).
UC Concerns. UC has issued a letter of deep concern and notes,
"last year, President Napolitano directed that nonresident
enrollment remain flat at UC Berkeley and UC Los Angeles. The
University will again limit nonresidents at UC Berkeley and UCLA
for 2016-17 and will also impose a limit at UC San Diego for the
first time. However, the 15.5 percent limit proposed in this
legislation would require reductions in nonresident enrollment
at those campuses as well as UC Irvine. The University would
have to reduce nonresident enrollment at those four campuses by
a collective 4,591 students at a total tuition revenue loss of
$179 million-a significant sum that would impair our ability to
provide a quality educational experience for California
students."
California State Auditor Report. On March 28, 2016, the
California State Auditor (CSA) released Report 2015-107,
entitled "The University of California: Its Admissions and
Financial Decisions Have Disadvantaged California Resident
Students." According to the CSA report, among other findings:
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1)UCs decision to increase the enrollment of nonresidents has
made it more difficult for California residents to gain
admission to the university.
2)Since 2011, UC has required nonresidents to "compare
favorably" to residents; formerly, it had required
nonresidents to meet the standards of the upper half of
admitted Californians. Since the change, UC admitted nearly
16,000 nonresidents whose scores fell below the median scores
for admitted residents at the same campus on every academic
test score and grade point average evaluated.
3)UC could have taken additional steps to generate savings and
revenue internally to mitigate the impact of its admissions
and financial decisions on residents. For example, spending on
employee salaries increased in eight of the last nine fiscal
years. UC publicly claimed that it redirected $664 million to
its academic and research missions through an initiative it
developed called Working Smarter, it could not substantiate
the asserted savings or revenue amounts or demonstrate how
much of this amount directly benefited students.
4)"Rebenching" has 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.
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5)Even though UC 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.
The CSA recommended, among other items, that UC revise its
admission standard for nonresidents to require campuses to admit
only nonresidents with admissions credentials that place them in
the upper half of the residents it admits, and that the
Legislature amend state law to limit the percentage of
nonresidents that the university can enroll each year.
REGISTERED SUPPORT / OPPOSITION:
Support
California Federation of Teachers
Opposition
AB 1711
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None on File
Analysis Prepared by:Laura Metune / HIGHER ED. / (916) 319-3960