State Audit Slams Out of State UC Student Strategy

UC President Napolitano pushes back against Audit Report
UC President Napolitano pushes back against Audit Report

The State Auditor came out with a report highly critical of the UC system – not only critical of the system’s admission policy, which attempted to buttress revenue by admitting nonresident students at the expense of local students, but also shedding light on hot button issues ranging from the student protests of the UC Davis Chancellor, complaints by African American and other students of color, and, of course, local growth pressures.

The auditor, in a letter to the Governor, President Pro Tem of the Senate and Speaker of the Assembly, writes, “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.”

He continues, “The university’s decision to increase the enrollment of nonresidents has made it more difficult for California residents to gain admission to the university.”

The decision to admit more nonresident students might not be a problem except that local students are seeing their enrollment drop.  Moreover, by regulations, “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.”

The report finds, “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.”

The audit was requested a year ago by Assemblymember Mike Gipson.  On Tuesday, Assemblymember Gipson posted on Facebook, “I’m thrilled that I did it. But I’m embarrassed and upset this audit has revealed this tremendous disparity between residents and nonresidents.”

He added, “It’s a form of discrimination against California students that UC would accept a lower standard for nonresidents, but maintain a higher one for Californians.”

“My reaction is utter disgust,” he said. “I’m going to use a harsh word, and the word is discrimination. We are disenfranchising California students.”

The State Auditor writes, “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.”

In order to increase tuition revenue in the face of state funding shortfalls, the audit finds that “the university implemented two key procedural changes that encouraged campuses to maximize nonresident enrollment. In 2008 the university began allowing the campuses to retain the nonresident supplemental tuition revenue (nonresident revenue) they generated rather than remitting these funds to the Office of the President, which resulted in campuses focusing resources on enrolling additional nonresidents. Also in 2008, the Office of the President began establishing separate enrollment targets— systemwide targets for the number of students each campus should strive to enroll each year—for nonresidents and residents, and it allowed each campus to establish its own separate enrollment targets.”

UC Davis was among those who “increased their individual campus enrollment targets for nonresidents at a faster rate than their targets for residents. These two procedural changes satisfied the university’s goal: In fiscal year 2014–15 the university generated $728 million from the supplemental tuition that nonresidents paid—a growth of $403 million, or 124 percent, from fiscal year 2010–11.”

However, the report found that over the past ten years “the university began denying admission to an increasing number of residents to the campuses of their choice. If residents are eligible for admission to the university and are not offered admission to the campuses of their choice, the university offers them spots at an alternative campus through what it calls a referral process. In contrast, nonresidents, if admitted, are always admitted to at least one campus of their choice.”

The auditor notes, “In reaction to state funding reductions, the university has doubled resident mandatory fees—base tuition and the student services fee—over the past 10 years, which has made it difficult for California families to afford and budget for this important investment.”

Writes the auditor, “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 Legislature required the university to enroll an additional 5,000 residents in academic year 2016–17 as a condition of receiving $25 million in state funds. While the university estimates these 5,000 students will cost approximately $50 million to educate, or $10,000 per student, in addition to the tuition they pay, it has not conducted a study to support that estimate. The university plans to use its other funding sources to pay for the remaining $25 million, primarily by not offering financial aid to new nonresidents. These actions suggest that the university has the ability to use funds that it had dedicated for other purposes to enroll additional residents.”

In her response included in the audit’s findings, dated March 8, President Janet Napolitano said that “the draft report that has been shared with us makes inferences and draws conclusions that are supported neither by the data nor by sound analysis.”

She writes, “The audit’s subtitle, for example, presupposes a conclusion that University of California ‘admissions and financial decisions have disadvantaged California resident students.’  An alternative and more objective subtitle would be, ‘faced with unprecedented budget cuts, the University of California made every effort to sustain in-state enrollment, while maintaining academic quality and holding tuition flat.’”

She writes, “[T]o suggest from the outset that UC decisions regarding admissions were designed to ‘disadvantage Californians,’ as opposed to mitigate the impact of a 33 percent budget cut, is a rush to judgment that is both unfair and unwarranted.”

She adds, “We would have preferred a constructive set of recommendations that could help move the University and the state forward. We are deeply disappointed at this lost opportunity.”

UC officials have a counter-argument here, arguing that nonresident students did not displace resident students.  Instead, the additional tuition, up to $23,000, allowed UC to enroll far more resident students than the system could have otherwise have been able to afford.

They argue that, without the extra money from out-of-state students, there would have been another $2400 or 20 percent tuition hike on resident students.

As Ms. Napolitano argued, “The State of California faces a dilemma that the draft report does not fully acknowledge. To maintain the quality of a public university system that virtually all agree is the finest in the world, sufficient funding must be found. Sources for this funding are limited.”

With state funds off the table and student tuition unpopular, nonresident tuition was the answer that they sought, where “the burden of which falls entirely on non-Californians.”

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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  1. Tia Will

    “to suggest from the outset that UC decisions regarding admissions were designed to “disadvantage Californians,”

    nonresident tuition was the answer that they sought where “the burden of which falls entirely on non-Californians.”

    Ms. Napolitano seems to be missing two critical points in her criticism of the audit. Whether the policy was “designed” to “disadvantage Californians” is irrelevant. The fact is that it has done so. Once she became aware of that fact, she had an obligation to change course, not to defend it is “unintended”.

    Her statement that “the burden of which falls entirely on non-Californians” is in error. If you cannot obtain a place on a UC campus because those places have been allotted to non residents, it really does not matter whether or not you could have afforded the increased fees. If there is no place for you, the cost is irrelevant. And this is definitely a burden for those who are qualified but not accepted. There is a secondary impact that Ms. Napolitano does not address. For those residents who do manage to get a slot, it is much harder than it used to be to get all the requisite classes to complete one’s course of study within 4 years. This makes the overall cost of a basic four year education more expensive if you must attend additional terms due to lack of class availability.

    1. Biddlin

      “For those residents who do manage to get a slot, it is much harder than it used to be to get all the requisite classes to complete one’s course of study within 4 years. This makes the overall cost of a basic four year education more expensive if you must attend additional terms due to lack of class availability.”

      My biggest beef with UC at the moment.

      1. South of Davis

        Biddlin wrote:

        > My biggest beef with UC at the moment.

        UC has a problem with this, but it is small compared to the MAJOR problem at the CSU schools.


        1. wdf1


          SoD:  “UC has a problem with this, but it is small compared to the MAJOR problem at the CSU schools.”
          Which is what?  That CSU’s admit a larger percentage of out-of-state students than the UC’s?

        2. South of Davis

          wdf1 wrote:

          > Which is what?

          I was commenting on Biddlin’s “biggest beef” (that hpierce also talks about below) where ALL students (both in state and out of state) are having a hard time graduating without paying extra for summer school or an extra year as UC is starting to do what the CSU schools have been doing making it impossible to get the classes to graduate in four years forcing the kids to pay more for an extra semester (or a lot more for summer school).

  2. South of Davis

    Tia wrote:

    > Her statement that “the burden of which falls entirely on non-Californians”

    > is in error. If you cannot obtain a place on a UC campus because those

    > places have been allotted to non residents

    Don’t forget that when your kid can’t get a ~$12K spot at a UC school many CA parents end up paying the ~$30K  out of state tuition to send their kids to school in another state (and most parents have to spend over $50K per kid for college EACH YEAR when you add in room and board and travel expenses to and from the other state).

    P.S. Does anyone know if UC has some kind of “locals affirmative action”?  Over the years I’ve noticed that kids from Davis (or Riverside or Santa Cruz) seem to get in to the local UC schools with lower grades, lower test scores, and overall less impressive resumes than CA kids from cities that don’t have a UC campus.

  3. hpierce

    It’s not just UC… the other State Universities (inc. CalPoly SLO) have had the higher fees/lack of classes for years… back to 2001-2006 when even a good, driven student took 5 years to get a 4 year degree.  Maybe it’s time to do a “re-boot”.  Start over… dissolve the Regents, dismiss all administrators… might be painful in the short-term, but maybe that’s what’s needed.

  4. Eileen Samitz

    Great article David and thanks for informing everyone about this scandalous practice by UC which I have heard about and read so much about, and now here is the evidence with this audit. I know of two parents and them complain abut others, whose 4.0 GPA kids were denied entry to UCD. Meanwhile, adding so many non-resident students is just exacerbating UCD situation of not even having the teaching facilities, or the faculty and staff to teach this avalanche of students. And then there is the housing needs impacts for all of these students on our community since UCD has been so negligent by not building the promised and needed on-campus student apartments for almost three decades.

    UC says its a budget problem. Well at UCD it has a lot more to do with what some of the projects are that they are spending  $1 BILLION dollars on the campus. Instead of building the needed on-campus apartments needed for the four years the students attend UCD, UCD instead is  currently constructing an art museum, a music recital center and an International Student center. They are adding a mere 500 beds to Tercero to which will not nearly accommodate 9,500 freshman they want to admit this fall. That’s around 3,000 more freshman than last year. I’ll bet the majority are non-residents too.

    Last fall UCD admitted 25% out-of-state students and 35.5% international while denying 11.2% California resident students. At the same time, while their total admission student population was increasing they did nothing to accommodate housing for these students for the 4 years that they would be attending UCD. All UCD did was renovate and expand some freshman dorms to house all of these freshman for one year then force them out of the dorms to find housing elsewhere. That of our being on our community and other cities that they must commute to and from the campus.

    I was not aware of this audit being done but I am glad it was done. It confirms all the complaints I have heard about UC and UCD admissions. Also, the fact that they lowered the admission standards for the non-residents is even more egregious. UC and UCD needs to be called on the carpet for admitting so many students that they can not even accommodate in the classrooms no less with on campus housing. I have heard students complain that they have to sit on classroom floors to get into a class. I have also heard many more students complain that they are force to stay admitted a fifth yer just to get into the classes they need to graduate. This backs up the housing needs as well as increased the costs these students and their parent an enormous amount of money for another few quarters or a year in unnecessary tuition, living expenses including rent.

    All of this is shameful and UCD has got to stop or greatly decrease their accelerated student admissions until they have actually built the promised and needed on-campus housing.

  5. Frankly

    The California state college campuses, like the state public school districts, suck in terms of providing quality service to the people they serve and are the ONLY DAMN REASON THEY EXIST.

    The UC campuses (and to a lesser degree the CSU campuses) focus on fund-raising to build more ego shrines while doing everything they can to protect their bloated and top-heavy administration workforce that is way over-compensated given their crappy customer service performance… and give only minimal attention to raising the value of education service to their paying customers.  Put these folk in a private-sector, for-profit business and they would be lucky to secure a job several steps below their present level of power.  No, take that back… they wouldn’t have the required demonstrated experience to even get the job.

    Instead of paying these people a big fat base salary with hundreds of thousands of dollars of largely unaccounted perks, we should put 50% of their pay at risk as a performance bonus based on a fully-disclosed 5-year performance plan with annual performance targets that is adopted by the governor, the regents, the faculty and the students after a comment period where the general tax-paying public can weigh in.

    Or… make the UC and CSU system completely private.  No State money.  No State tax breaks.  Then let these pampered, over-paid, business-risk-subsidized, elite fools try to run a successful school.

      1. Frankly

        hpierce, if we didn’t have the bloated and competition-protected state school alternative and instead gave vouchers to the college students in this state to pick the best school, then I would expect ALL schools to clean up their act and work to constantly improve the value and quality of service.

        The crappy state schools are subsidized by our tax money and so we end up with bottom-feeders in the private sector having to compete.   I would be fine seeing overall tuition go up if it meant that the qualify of service was also going up.

        By the way, I graduated from a private college, National University, and I have no problem challenging you on the quality of that business degree with what I could have got in the public universities then and now.   I went there specifically because of the crap and crappiness I was dealing with at Sac State… and UCD did not have any undergraduate or graduate business school at the time.  Of course now UCDs working adult MBA program is solid (and expensive) and Sac State has also improved.  But part of the reason that they have improved is the competition with provide schools providing working adult MBA programs.

        1. South of Davis

          Frankly wrote:

          > UCDs working adult MBA program is solid (and expensive)

          I just looked and it is about $60K/year in-state and $73K out of state for a UCD MBA.

          I would not be surprised if the UC schools start putting even more money in to these expensive grad programs since they bring in double the cash they get from out of state undergrads.

          P.S. More money for UC means more people (like Katehi) can hire their husbands and wives to $100K+ jobs

  6. Ron

     “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 growth plans are aimed primarily at profitable, non-resident students.  (The same type of students that can afford Nishi.)  The University is acting more like a private corporation, than a public institution. (No wonder that Katehi also felt justified regarding her recent actions.)

    I heard on the news that UC is (already) vigorously denying the findings of the audit report.  (That reaction does not help.)

    1. Davis Progressive

      I heard on the news that UC is (already) vigorously denying the findings of the audit report.  (That reaction does not help.)

      perhaps you could have just read this article since the second half of it presents napolitano’s reaction extensively

      1. Ron

        DP:  “Perhaps you could have just read this article since the second half of it presents napolitano’s reaction extensively.”

        Guilty as charged.  (I skimmed the article.) The main point (for me) is that the University is pursuing out-of-state students (who pay much more).  And, they are expecting the city to respond to their “growth requirements”, which are no longer focused on California residents.

        The article states that there’s a different (lower) set of standards, for out-of-state/foreign, students.

        I’d like to see another audit, which shows how the University is spending the funds it receives.

  7. talklesslistenmore

    Oh whuddayaknow. Just when we were told it was illegal, it’s a case of old fashioned “affirmative action”!
    If you can pay, you can play.

    That is, if your daddy can name a building, or you can throw a football, or you’re the son of the Chancellor, or you’re an outta state or international cashcow packing in an additional 23K per year in nonresident tuition, well there ain’t no GPA low enough to keep UC from you.

    It’s time for a class-action lawsuit. All UC eligible students denied admission or redirected to other campuses with higher aptitude than out of state admits should file. One caveat, the damages on such a legitimate suit should be paid not from more public taxpayer funds, but by the mofos in the elite UC leadership circles that represent their own selfish interests, protect and move around their buddies at the top, screw over students and families, steal our public funds for private gain, and continue to run our system into the ground. Thus, designate a class-action claimant payout fund that is comprised of every confiscated/reclaimed excess dollar earned by all those fat cat/slob crooked administrators at the top and all the Regent trustees who allowed it to happen for the last 50 years.

    Example: You’ve got Bakke v. UC Regents, a b******t lawsuit, nonetheless one in which we, the taxpayers ended up paying out. And then you’ve got Student Victims of Pepper Spraying v. UC Regents, a legitimate lawsuit, but AGAIN one in which we the taxpayers ended up paying. Both suits were the result of inside leadership breaking the law, then leaning on us the taxpayers to cover the damages.

    No more holding harmless and legal indemnification for public officials who recklessly waste our money, break the laws, run our public school and college and university reputations through the mud, deny students their rights to public educational access, get our fellow taxpayers repeatedly sued, and place our precious and few remaining public education dollars at risk! Let THOSE overpaid slobs at the top pay the damages.

  8. tj

    Do faculty salaries, and admin salaries and benefits especially, seem a bit too high at UCD?

    Also, I notice older buildings not well maintained, not very clean.  It gives the impression that if  buildings gets old, they’re just torn down and replaced, at huge expense, rather than taking care of them and continuing their useful life.

  9. zaqzaq

    If the state wants to limit non-resident students and the extra tuition money brought into the system then they state needs to direct more resources to the UC system to keep tuition costs down.   The audit appears to be a politically motivated hatchet job on the UC system.  Our disgust should be directed at politicians like Gipson who allocate significantly more money to incarcerate people than they do to educate them.  The state’s reduced funding created this monster and politicians like Gipson and Brown will not take responsibility for this new reality.  Back in the Reagan era the state allocated more money to the UC system than the prison system.  Now we spend more on incarceration.  Maybe Sanders has a point on tuition free higher public education.

  10. Tia Will


    Maybe Sanders has a point on tuition free higher public education.”

    In my opinion, this is exactly where we should be heading. College has become, for many, as necessary as high school was for previous generations in order to learn skills to enable people to be self supporting. If we continue to expect everyone to earn enough to live on, then we are going to need to provide our citizens with the necessary knowledge and skills to do so. We should be providing free education so that people can be self supporting rather than burdened with a lifetime of paying off egregious student loans.

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