We Need a Financial Audit of the University of California

Author: Dawn Urbanek info@CUSDWatch.com If you find this research valuable, please consider a donation to The Equity Project.

The University of California may be out of compliance with the University's Master Plan. As a California public institution, the UC should have as its priority a commitment to serve California residents.

"According to the Master Plan for Higher Education in California (Master Plan), which proposed the roles for each of the State’s institutions of higher education, the university should select for admission from the top 12.5 percent of the State’s high school graduating class". [Summary - Results in Brief - 2nd Paragraph]

The University of California may in fact be failing to meet that mandate when it refers California students that are qualified to enter flag ship schools like UC Berkeley and UCLA into a referral pool that only offers them UC Merced.

During the Course of a 2014-15 audit, the audit found that 98% of California students who were denied admission to the UC of their choice and became part of the referral pool declined the offer because the majority of offers were to UC Merced. Students that were qualified to attend flagship schools like UCLA and Berkley went outside the UC System, often to expensive California private schools, or out of state schools with expensive out of state tuition rather than accept UC Merced.

While the UCs' decision to increase nonresident enrollment may result in billions of dollars in increased tuition revenues for the University, the UC fails to consider the cost burden that is placed on the families of displaced California students.

California's best and brightest students are being forced to spend hundreds of thousands of dollars in increased tuition to get a comparable four year education outside the UC System. The estimated cost to 2014-15 California families was hundreds of millions of dollars.

As a result of the Audit, the University committed to enrolling an additional 10,000 California students in fiscal years 2015-16, 2016-17 and 2017-18. Now that the audit period has ended, the UC has changed its policy again. This year on their web site the policy states:

"If you're in the top 9% of California high school graduates and aren't admitted to any of the UC campuses you apply to, you'll be offered a spot at another campus if space is available."

In English... California's best and brightest are no longer guaranteed a seat in the UC system.
Source: University of California Admissions| Freshman| Statewide Path

Audit Summary
Results in Brief

FINANCIAL DAMAGE TO CALIFORNIA TAXPAYERS AND STUDENTS DENIED ADMITTANCE

Report at page 43 & 44

TUITION LET'S DO THE MATH

10,700 California Residents admitted to the UC System; but not to the school of their choice, were placed into a referral pool and offered UC Merced as their only UC option. Only 2% accepted the offer to attend Merced (214 students). 98% (10,486 students) went outside the UC System at much greater cost to their families.

The students that accepted UC Merced paid $12,240.00 per year in Tuition.
The students that went out of the UC System to other comparable flagship schools (for example USC) paid on average $47,562.00 per year in Tuition.

The difference in Tuition displaced families had to pay was $35,322.00 per year.
Over 4 years a California family would have to spend $141,288.00 to get a comparable education to UCLA/UC Berkeley.

In 2014-15 dollars may have cost the 10,486 displaced California families as much as a total of $500,000,000.00.

Every time UC "sells" a seat to an Out Of State or International student at a UC flag ship school like UCLA/UC Berkeley, the University makes an additional $24,760 in tuition per student.
$24,760 per student X 10,486 Displaced California residents referred to Merced = $259,633,360 per year

$259,633,360 X 4 years = $1,0385,533,440 (over $1 billion dollars and that was for the year 2014-15 alone)

In 2014-15, the UC made over $1 billion in additional revenue by "selling" seats at UC flagship schools, unjustly enriching the University at the expense of California families.

Sadly, the California residents that were denied a seat were more qualified than the Out of State and International students that filled them.

The following is the letter that the Auditor sent to the Governor March 29, 2016.

AUDIT FINDINGS - 2015-107
California State Auditor Report Number 2015-107
Fact Sheet (PDF)
Summary
Full Report (HTML) Full Report (PDF)
Recommendations Testimony (PDF) Video

March 29, 2016

The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814

Dear Governor and Legislative Leaders:

As requested by the Joint Legislative Audit Committee, the California State Auditor presents this audit report concerning the University of California’s (university) enrollment, executive compensation, and budget. This report concludes that over the past several years, the university has undermined its commitment to resident students. Specifically, in response to reduced state funding, the university made substantial efforts to enroll nonresident students who pay significantly more tuition than residents. The university’s efforts resulted in an 82 percent increase in nonresident enrollment from academic years 2010–11 through 2014–15, or 18,000 students, but coincided with a drop in resident enrollment by 1 percent, or 2,200 students, over that same time period.

The university’s decision to increase the enrollment of nonresidents has made it more difficult for California residents to gain admission to the university. According to the Master Plan for Higher Education in California, which proposes the roles for each of the State’s institutions of higher education, the university should only admit nonresidents who possess academic qualifications that are equivalent to those of the upper half of residents who are eligible for admission. However, in 2011 the university relaxed this admission standard to state that nonresidents need only to “compare favorably” to residents. Combined with the university’s desire to enroll more nonresidents because of the additional tuition that they pay, the relaxing of this admission standard had dramatic results. During the three-year period after this change, the university 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 that we evaluated. At the same time, the university denied admission to an increasing proportion of qualified residents at the campus to which they applied—nearly 11,000 in academic year 2014–15 alone—and instead referred them to an alternate campus. However, only about 2 percent of residents who the university referred actually enrolled.Moreover, increasing numbers of nonresident students have enrolled in the five most popular majors that the university offers at the same time that resident enrollment has generally declined in those same majors.

The university 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, the university’s spending on employee salaries increased in eight of the last nine fiscal years despite the State’s fiscal crisis. By fiscal year 2014–15, its annual salary costs had risen to $13 billion. In addition, even though the university 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.

Moreover, the university’s funding allocation decisions have 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. After several reports identified inequity in per‑student funding among the campuses and a lack of transparency in how the university distributes that funding, the university embarked on an effort which it refers to as rebenching. However, we identified several problems with rebenching, including the fact that the university does not base the formula it uses to redistribute funds on the amounts it actually costs to educate different types of students. The university also excluded $886 million in state funds from the amount it distributes to campuses through per‑student funding for fiscal year 2014–15 for programs that do not relate directly to educating students. Further, even though the university 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.

Because of the significant harm to residents and their families resulting from the university’s actions, we believe that legislative intervention, as outlined in the report, is necessary to ensure that a university education once again becomes attainable and affordable for all California residents who are qualified and desire to attend. For example, we recommend that the Legislature consider amending state law to limit the percentage of nonresidents the university can enroll each year and consider basing the university’s annual appropriation upon the university following this requirement.

Respectfully submitted,

ELAINE M. HOWLE, CPAState Auditor
CURRENT DATA FOR UCLA

Source: UCLA Undergraduate Admission Profile of Admitted Freshmen

In 2018 30% of incoming freshmen were not residents of California.

There appears to be inconsistencies within the UC web site regarding what the UCs' will do for the top 9% of students that do not get the school of their choice. This leads me to believe that the shift in policy that ONLY guarantees a seat to a student in the top 9% of the state of California is a new policy.

http://admission.universityofcalifornia.edu/counselors/q-and-a/waitlist/index.html

Estimated average costs for nonresidents, 2018–19

2018-19 Out- of -State/International Student: 1,875

In-State Tuition: $13,900

Out- of -State/International Student Tuition: $42,900

Profit when the UC "Sells" a California Residents Seat to a non-resident: $29,000 per student per year

$29,000 X 1,875 = $54,375,000.00 per year

Cost to displaced California Resident: $29,000 per year in tuition alone.

Over 4-years

$116,000 for an already overtaxed California Resident.