BILL ANALYSIS Ó
AB 1711
Page 1
Date of Hearing: May 11, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1711 (McCarty) - As Amended April 18, 2016
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|Policy | Higher Education |Vote:|10 - 3 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill places limits on nonresident undergraduate enrollment
at the University of California (UC). Specifically, this bill:
1)Requires UC to comply with the following, as a condition of
receiving state funds:
a) Prohibits the percentage of undergraduate nonresident
students enrolled at UC systemwide from exceeding 15.5% of
total undergraduate student enrollment.
AB 1711
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b) Prohibits any UC campus where undergraduate nonresident
enrollment exceeds 15.5% from enrolling any more such
students than were enrolled at that campus in 2015-16.
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 newly-enrolled undergraduate
nonresident students to be directed to fund increased
enrollment of undergraduate resident students at all
campuses serving undergraduates.
2)Requires UC to report annually on nonresident undergraduate
tuition levels, tuition revenue, distribution of these
revenues among campuses, and uses of these funds, including
the number of undergraduate resident students admitted per
(1)(c) above.
3)Stipulates that UC is not required to comply with (1)(a) and
(1)(b) when the Budget Act provides less state support to UC
than in the prior fiscal year.
4)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.
FISCAL EFFECT:
To the extent the limits in this bill reduce the number of
nonresident undergraduates that would otherwise attend UC, the
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university will forego about $18,000 per student in net
revenue-the amount paid by these students in excess of the
marginal cost of their instruction. UC notes that, because ever
larger classes of nonresidents have been admitted in recent
years, if all UC campuses maintained the enrollment of new
nonresidents at current levels, total nonresident enrollment at
UC would grow above systemwide 15.5% cap in AB 1711. Therefore,
all campuses would have to reduce new nonresident enrollments
below 2015-16 levels in order to achieve the systemwide cap. For
every 1,000 additional nonresidents that UC would otherwise
enroll absent this cap, the university would forego about $18
million in net revenue.
UC estimates that when compared to a scenario where nonresident
enrollment would otherwise grow at current trends, but not
exceed the current 24.3% of enrollment at UC Berkeley, the
system would have to reduce enrollments by about 5,300 students
in 2017-18-a revenue loss of about $96 million. By 2020-21, UC
estimates the impact would be $226 million, based on assumed
higher nonresident tuition charges at that time.
The requirement in the bill to redirect 50% of the net revenue
from new nonresident undergraduate to fund resident enrollment
growth would result in the reallocation of about $74 million in
2017-18, increasing to $120 million in 20-21. The 2017-18 amount
would provide funding to enroll about 8,200 new students in
2017-18. (UC is already planning to increase resident
undergraduate enrollment by 10,000 over the next three years.)
This requirement would result in a reallocation of these
resources among campuses and also a diversion of these resources
from their current uses.
COMMENTS:
1)Purpose. According to the author, there has been a growing
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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 the additional tuition and fee
revenues paid by nonresidents. For 2015-16, tuition and fees
are $38,105 for nonresidents and $13,400 for resident
students. Formerly, UC required the supplemental nonresident
tuition to be collected centrally and redistributed back to
all campuses based on systemwide priorities. Since 2007-08,
however, UC has allowed individual campuses to retain the
revenue associated with their nonresident supplemental
tuition. The author points out that, in the fall of 2015, UC
admitted 1,600 fewer resident freshmen compared to fall 2014,
while increasing 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.
This bill prohibits the systemwide undergraduate nonresident
enrollment from exceeding the current level of 15.5% of total
undergraduate student enrollment, and prohibits any campus
where nonresident enrollment exceeds 15.5% from enrolling more
new nonresident students than it did in 2015-16. Currently
the Berkeley, Irvine, Los Angeles and San Diego campuses 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.
2)State Auditor Report. On March 28, 2016, the California State
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Auditor (CSA) released Report 2015-107, entitled "The
University of California: Its Admissions and Financial
Decisions Have Disadvantaged California Resident Students."
According to the Auditor's findings, 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.
The auditor recommended, and this bill requires, 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 admitted
residents.
3)UC Concerns. UC asserts that, "AB 1711 is based primarily on
the faulty premise that nonresidents displace California
students and that, therefore, capping nonresident enrollment
will create opportunity for more Californians to attend UC.
This assumption is inaccurate, as nonresidents are admitted
over and above the University's targets for funded
Californians." UC believes that the loss of revenue, as
outlined above, will be a detriment to all students. UC argues
that the proposed change in admissions policy is inconsistent
with its existing admissions policies and will undermine its
comprehensive review process.
4)Related Legislation. AB 1370 (Medina), pending in Senate
Education, prohibits the number of undergraduate nonresident
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students enrolled at any UC campus from exceeding the number
enrolled in 2015-16 and requires that, by the 2018-19 and
each academic year thereafter, not less than 50% of the
revenues in excess of the marginal cost of instruction,
generated from undergraduate nonresident enrollment, be
directed to fund increased enrollment of undergraduate
resident students across all campuses with undergraduate
students.
Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081