A state audit reveals the University of California system’s questionable lessons in fairness

The University of California system is scrambling to defend itself against a March report from the state auditor alleging that the system has pushed aside qualified resident student applicants to cash in on out-of-state applicants, who pay a tuition rate triple that of Californians.

The audit claimed that the University of California, faced with state funding cuts, has failed to responsibly manage its own expenses, such as a booming employee payroll. Instead, according to the report, the system has sharply increased nonresident enrollment—in part by lowering its academic performance standards—to put more cash in its coffers.

The problem, say critics, is that these enrollment policies are making it harder for California residents to attend a UC. They also tend to disproportionately favor white and Asian students, according to the audit.

According to the state auditor, Elaine Howle, nonresident enrollment increased by 82 percent, or about 18,000 students, from 2010 to 2015 while resident enrollment dipped by one percent, or about 2,200 students. The auditor’s report also contends that UC has rejected thousands of California residents whose academic performance scores were equal to or better than those of nonresidents who were accepted.

UC president Janet Napolitano has defended the practices. In a March 8 letter to the auditor, Napolitano wrote, “Unfortunately, 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.”

UC also produced its own report to counter the auditor’s. Both reports were released on March 29.

Even before, lawmakers were demanding an overhaul of UC’s admission policies. Assemblyman Kevin McCarty, D-Sacramento, coauthored legislation that would require UC to keep nonresident enrollment below 15.5 percent in order to receive funding from the state.

“[UC’s] policies are rationing access for Californians, for taxpayers,” said McCarty, whose Assembly Bill 1711 was introduced on January 26.

But Dianne Klein, a UC spokeswoman, says the audit is misleading and woven together partly with “cherry-picked” data.

“The report focused on undergraduates and UC’s educational core budget,” Klein explained. “But when they wanted to show unprecedented staff growth and expenses, they included the whole $27 billion enterprise, including the medical centers, rather than just the $6 billion core budget.”

The medical centers, Klein says, account for 72 percent of the growth in UC’s staff over the cited time period. That growth comes entirely from nonstate funds, she says.

When it comes to the system’s minority enrollment, UC’s breakdown of ethnicity fails to represent the diversity of California, the audit argues. Of new students enrolled at UC Berkeley in fall of 2015, 43 percent were Asian, 24 percent were white, 13 percent were of Latin American descent and just 2.8 percent were black and African American. UC Davis is 37 percent Asian, 28 percent white, 19 percent Hispanic and 3 percent black.

Bringing balance to such racial disparity will be difficult if the UC continues to favor nonresidents, the audit says. That’s because most out-of-state Americans who apply are white, and most out-of-state non-U.S. citizens who apply are Asian.

Klein argues this conclusion was created through more selective data.

“They excluded UC Merced, which is a majority minority,” she explained

UC Merced, as well as UCSF, was indeed excluded from this portion of the audit because, as the report explains, these campuses had not yet been included in a process called “rebenching,” a scheme aimed at distributing state funding equally across all campuses.

But Ralph Washington Jr. says excluding Merced from a percentage-based analysis of ethnic representation is legit. Washington, a UC Davis grad student and chair of the campus’s Graduate Student Association, says the large proportion of Hispanics at UC Merced—48 percent of the population—creates an illusion of diversity. This is because the school’s total student population—grads and undergrads alike—is less than 7,000. The Berkeley and Davis schools are home to about 37,000 and 35,000 students, respectively. In fact, Davis’ undergraduate Hispanic population is almost twice the size of Merced’s.

When racial diversity is represented in raw numbers, Washington says, UC Merced trails behind the other campuses. There are about 300 undergrad African-American studentts there and black grad students add almost nothing to the bar graphs.

“You can count the number of black graduate students at UC Merced on two hands,” Washington said. For these students, “that can be an incredibly isolating experience,” he added.

Klein says UC’s nonresident student population has recently jumped from 15.5 percent to about 17 percent. But nonresident students, she says, generated about $800 million in tuition fees 2015—a significant pile of cash for a university system.

“If you took away the funds generated by out-of-state students, it would actually be worse for these California students because you wouldn’t have that $800 million for support services and the education and the faculty,” Klein said.

Kevin Sabo, president of the UC Student Association, contests this claim.

“We haven’t seen how the massive revenue that comes from nonresident enrollment actually gets turned around and reinvested in student support services,” he said.

State funding for UC was cut by almost $1.4 billion from 2008 to 2011. This prompted increased enrollment of nonresidents, and from 2008 through 2015 revenue from nonresident tuition nearly tripled. At UC Davis, for example, nonresident enrollment has increased by 233 percent in the past five years, while resident enrollment increased by just 4 percent. Currently, Davis’s undergraduate population is about 13 percent nonresidents.

Nonresidents pay $37,338 per year to attend. Residents pay $14,460. The increase in out-of-state students has allowed UC to bridge the budget gap, Klein says.

But Sabo, a fourth-year undergraduate at UC Berkeley, says increasing the nonresident population has a direct impact on California-grown students, since campus resources are limited.

McCarty acknowledges that “out-of-state students kept the lights on for two or three years.

“But the problem was resolved for the most part, but they’ve become addicted to the extra funding,” he said.

For a university system that claims to be strapped for cash, its executives and chancellors are paid exorbitantly well. According to the state auditor, payroll expenses boomed from $8 billion to $13 billion in the last decade. In the past 18 months, UC’s most highly paid employees have received generous raises. New salaries range from $231,750 for Anne Shaw, chief of staff for the UC regents, to $991,942 for UC San Francisco’s chief executive Mark Laret. Napolitano receives $570,000 a year.

In a March 29 press release issued in response to the report, the university claimed it “is an effective, responsible steward of its financial resources.”

Sabo doesn’t think so. He said high salaries may not add up to a significant cost but that it’s just one of many examples of inappropriate spending.

“It’s kind of absurd, since we have students sleeping in forests on campus, or sleeping in their cars or students who are dumpster diving for food, and meanwhile the chief investment officer is making one-and-a-half million dollars,” Sabo said.