UC schools harm local students by admitting so many from out of state, audit finds

As a student at South Pasadena High School, Katherine Uriarte aced six Advanced Placement classes, got top scores on her ACT, served in student government and nailed a summer internship at Caltech.

It wasn’t enough to get into UCLA or UC Berkeley.

The daughter of a Mexican immigrant, Uriarte still realized her dream of becoming the first in her family to go to college. She is now a freshman at Columbia University in New York City with a full-ride scholarship from the Bill & Melinda Gates Foundation. But she said she felt Californians like herself were losing out to a growing tide of students from other states and countries who want to go to UC schools.

“I think they should prioritize California students,” she said.

A new state audit agrees. The scathing 116-page report released Tuesday accuses the University of California of hurting local students by admitting too many out-of-state applicants to its campuses. It recommended stricter entrance requirements for nonresident students, a cap on their enrollment and more focus on recruiting Californians — particularly African Americans, Latinos and other underrepresented minorities.

University of California President Janet Napolitano denounced the audit’s conclusions as “disappointingly pre-baked” and “unfair and unwarranted.” She said auditors ignored the fact that higher-paying out-of-state students contributed $728 million to UC coffers and allowed the 10-campus system to accept more Californians in the face of massive budget cuts imposed since the 2008 recession.

The audit — and reaction to it — raised the stakes in an intense and long-running political controversy: whether the increase in nonresident students to what is widely viewed as the finest public university system in the nation has helped or hurt Californians.

The audit was requested more than a year ago by Assemblyman Mike Gipson (D-Carson), who has watched with dismay as the enrollment of students from other states and countries has grown to 15.5% of UC’s total undergraduate enrollment, up from about 5% eight years ago.

The audit found that out-of-state applicants benefited from lowered admission standards, while California students increasingly were turned away from their campus of choice.

“The university has undermined its commitment to residents in an effort to increase its revenue by recruiting and enrolling nonresidents,” the audit said.

“Because of the significant harm to residents and their families resulting from the university’s actions, we believe that legislative intervention ... 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,” state auditor Elaine Howle said in a letter released with the audit.

Gipson said he would immediately work with fellow legislators to push for such actions as placing a cap on nonresident students and a public hearing on the audit results.

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

UC officials insist that nonresident students don’t displace Californians. Instead, they say, the nearly $25,000 in additional tuition that nonresidents pay each year has allowed UC to enroll thousands more California students than the system could otherwise afford. Tuition and fees for out-of-state students totaled $38,108 this academic year, compared with $13,400 for in-state students.

Without the extra money from out-of-state students, Californians could have faced an additional $2,500 in tuition — a roughly 20% boost, Napolitano said.

Tuition and fees have doubled since the 2008 recession, but have remained flat — except for one fee increase — for the last five years as part of an agreement between Napolitano and Gov. Jerry Brown that sent more than $3 billion in new dollars to the UC system.

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The University of California has hurt local students by admitting so many out-of-state applicants to its campuses and should be reined in with tough restrictions, according to a sharply critical state audit released Tuesday.

In a separate deal, UC agreed to admit 5,000 additional California students for the fall 2016 term in exchange for $25 million more and a continued lid on tuition increases.

“Providing adequate state funding is the best way to increase the number of California students enrolled at UC,” said a special report on admissions and finances released Tuesday by university officials in anticipation of the audit.

The report made the case that UC policies “overwhelmingly favor” California residents over nonresidents. The system guarantees admission to at least one campus for all eligible California applicants — those in the top 9% of their high school class who maintained at least a 3.0 grade point average while taking a battery of required classes such as English and math. No such guarantee is offered to nonresidents.

Californians are also admitted at higher rates, with 71% accepted to at least one campus of their choice compared with 55% for nonresidents. And, the report said, only Californians enjoy access to three state scholarship and grant programs that have helped more than half of UC’s undergraduates enroll without paying any tuition or fees.

UC data show that California undergraduate enrollment increased from 163,773 in fall 2008 to 167,959 in fall 2015. During the same period, enrollment of out-of-state students grew from 9,000 to 30,907.

Despite that growth, UC officials say their percentage of nonresident students is still significantly lower than the 40% enrolled at comparable public schools such as the universities of Oregon, Iowa and Michigan.

Monica Lozano, chairwoman of the UC Board of Regents, said the audit was filled with erroneous conclusions. California students have always come first, she said, and the regents will continue expanding access for them. “There is no doubt the primary focus and responsibility is for California students,” she said.

Howle, however, said UC officials failed to provide evidence for their key claims. They have not shown, for instance, how they used the $728 million in nonresident tuition for more California students.

“They never called into question any of the facts.... They just don’t like our conclusions,” Howle said. “But our conclusions are based on the facts.”

Hans Johnson, a senior fellow at the nonpartisan Public Policy Institute of California, said UC’s decision to enroll more out-of-state students in the face of dramatic budget cuts was defensible.

But he said he favored reducing their numbers, as they now make up more than 20% of undergraduates at the most popular campuses, UCLA and UC Berkeley.

With fewer nonresident students, he said, more Californians could win admission to their top campus choices. Today, thousands of qualified students who are turned away from their selected campus are offered a seat at UC Merced, even if they did not apply there.

Gipson and others have raised concerns that those referred to UC Merced are disproportionately Latino and African American.

With fewer out-of-state students, UC would need to make up the financial loss with more state dollars or higher tuition and fees, Johnson said. In his view, higher tuition should be considered, as long as financial aid for low-income students increases accordingly.

The state finance department, however, has said that UC also needs to control its costs. The audit recommends a biennial cost study and a review of how to reduce the $13 billion spent on staff salaries in 2014-15. UC officials said they have reduced costs aggressively and will continue to seek new ways to do so.

Gipson also asked that the audit investigate UC’s progress in equalizing funding per student across campuses. An audit from 2011 found that the four undergraduate campuses with more underrepresented minorities received about $3,600 less per student, on average, than the five campuses with fewer minorities.

UC said that campuses with more graduate students and health sciences programs — such as UCLA, UC Berkeley and UC Davis — were more costly to run. But officials have revised their formulas and expect state dollars will be equitably distributed by the 2016-17 school year.

The auditors also found that salaries of campus chancellors were low compared with other research universities. But they said officials could have done more to reduce costs before raising tuition or admitting more nonresidents, such as placing employees on furlough, as they did in 2009.

Napolitano said UC employees should be lauded for their “remarkable feat” in keeping academic quality high despite the intense budget challenges.

“We know that out-of-state enrollment is a sensitive point, and it should be,” she said. “But this report is just wrong. It shouldn’t overlook the fact that the university continued to increase in-state enrollment and continued to provide a world-class education with some of the most highly ranked academic programs in the world and the country.”

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