BILL ANALYSIS Ó
AB 1711
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ASSEMBLY THIRD READING
AB
1711 (McCarty and Medina)
As Amended May 27, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Higher |10-3 |Medina, Baker, |Bloom, Levine, |
|Education | |Chávez, Irwin, |Williams |
| | |Jones-Sawyer, Linder, | |
| | |Low, Olsen, Santiago, | |
| | |Weber | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |19-0 |Gonzalez, Bigelow, |Bloom, Levine, |
| | |Bloom, Bonilla, |Williams |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | | | |
| | | | |
| | |Roger Hernández, | |
| | |Holden, Jones, | |
| | |Obernolte, Quirk, | |
| | |Santiago, Wagner, | |
AB 1711
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| | |Weber, Wood | |
| | | | |
| | | | |
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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 10% of
total undergraduate student enrollment by the 2022-23
academic year;
b) Provides that in each year between 2017-18 and 2022-23,
the UC shall increase resident undergraduate student
enrollments by 5,000 and decrease nonresident student
enrollment by 1,700.
c) 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.
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
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among the various UC campuses; and,
d) For each campus, the purposes for which these revenues
were expended.
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 UC will not be required to comply with the
nonresident/resident enrollment requirements in any year where
the Budget Act provides less funding than was provided to UC
in the prior year.
5)Provides Legislative intent that the enrollment changes will
be funded by a combination of state funding, savings from
operational efficiencies implemented by the UC, and increases
in nonresident undergraduate student tuition and fees.
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)
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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. (California Constitution, Article IX,
Section 9)
FISCAL EFFECT: According to the Assembly Appropriations
Committee, General Fund costs for increased enrollment growth
are about $20 million in 2019-20, and $200 million in 2022-23.
The enrollment growth is also projected to be funded with $50
million worth of operating efficiencies and $250 million in
revenue for increased nonresident tuition increases.
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 reduction proposed in this bill, the UC will
continue to grow its non-resident student population at the
expense of resident Californians.
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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
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.
In Fall 2015, systemwide, California freshman admissions were
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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
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.
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:
1)UC's 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
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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.
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.
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Analysis Prepared by:
Laura Metune / HIGHER ED. / (916) 319-3960 FN:
0003093