Audit shows UC admission standards relaxed for out-of-staters

People walk past The Campanile at University of California, Berkeley campus March 29, 2016 in Berkeley, Calif. People walk past The Campanile at University of California, Berkeley campus March 29, 2016 in Berkeley, Calif. Photo: Leah Millis, The Chronicle Buy photo Photo: Leah Millis, The Chronicle Image 1 of / 38 Caption Close Audit shows UC admission standards relaxed for out-of-staters 1 / 38 Back to Gallery

The University of California has been admitting thousands of students from out of state with lower grades and test scores than state residents as a way to raise cash, a state audit released Tuesday reveals.

In the last three years, nearly 16,000 nonresident undergraduates — about 29 percent of those admitted — have won spots at the coveted public university with grade-point averages and scores below the median of admitted Californians, according to the 116-page audit. The report criticizes university practices it says undermine state residents’ access to UC in favor of nonresidents, who pay about three times the basic tuition and fees of in-state students: $38,108 versus $13,400.

The state’s Master Plan for Higher Education says UC should admit only nonresidents who are at least as qualified as the “upper half of residents who are eligible for admission,” according to the report from State Auditor Elaine Howle.

But in 2011, UC changed that threshold so that nonresidents only had to “compare favorably” with residents, the audit notes.

Financial incentive

“The Master Plan is the commitment that California made to high school students and families that if they work hard, they’ll have the opportunity to an education at UC,” Howle said. “The problem is that UC campuses have an incentive to bring in nonresidents — and that’s hurting California high school graduates who want to go to UC.”

In 2008, the regents began encouraging nonresident enrollment by letting campuses keep the extra tuition money brought in by those students instead of sharing it with other campuses, the audit found. As a result, enrollment of nonresidents more than quadrupled in the last decade, while that of California students rose by 10 percent — despite a 52 percent increase in applications.

Photo: CA State Auditor Report The University of California Admitted Nearly 16,000 Nonresident...

Howle is recommending that the Legislature limit the number of nonresidents UC can enroll — and already received a swift and enthusiastic response.

Legislation coming

Two lawmakers — Assemblywomen Kristin Olsen, R-Modesto (Stanislaus County), and Catharine Baker, R-San Ramon, say they will introduce a bill to do just that, and to require higher admission standards for nonresident students.

But it’s unclear whether UC could be compelled to comply. Unlike the California State University system, UC is autonomous.

In her report, Howle urges UC to restore its prior admissions criteria. Yet, UC is unlikely to agree.

In her lengthy rebuttal to the audit, included as part of the report, UC President Janet Napolitano notes that the university has enrolled more California students than it receives funding for from the state, and calls the claim that UC is undermining resident applicants “unfounded.”

UC also responded with its own report, “Straight Talk on Hot-Button Issues: UC Admissions, Finances, and Transparency 2016,” that says “UC policies overwhelmingly favor California residents” and points out that the admission rate for in-state applicants is higher than that of nonresidents.

In her audit rebuttal, Napolitano writes: “If anything has constrained the enrollment of California students, it has been reductions in state funding. Nonresidents pay the full cost of their education — and more.”

Common argument

It’s an argument made often by UC officials. But the audit says UC’s failure to reduce its costs — not reduced state funding — is at the heart of its troubles. The audit focuses on UC’s generosity with raises and says that between 2005 and 2015, the university decreased spending on salaries just once: when it furloughed employees in the 2009-10 academic year.

It saved $236 million at the time — but lost that advantage a year later by spending another $526 million on salaries, the audit says. It also found that UC executives tend to earn more than other executives in the state, including the governor.

Earns more than Brown

Gov. Jerry Brown earns $169,559, compared with Napolitano’s $570,000, says the report. And while the chief investment officers for the State Teachers’ Retirement System and the State Public Employees’ Retirement System each earn just above $400,000, UC’s investment officer earns $615,000.

“So the explanations from the university don’t ring true,” Howle said.

UC’s rationale for why it needs additional state funding irritated Assemblyman Mike Gipson, D-Carson (Los Angeles County), and prompted him to call for the audit, which took about a year and cost nearly $400,000.

“I’m thrilled that I did it. But I’m embarrassed and upset this audit has revealed this tremendous disparity” between residents and nonresidents, said Gipson, who has a son waiting to hear if he got accepted by UC. “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.”

Another disparity

He pointed to another disparity revealed in the audit. UC guarantees admission to all California public high school seniors who score in the top 12.5 percent of their class, though not to the campus of their choice. Those who are rejected by their favored campus are referred to UC Merced, which most students reject in turn, the audit found.

By contrast, UC grants nonresidents their first choice of campus, the audit found. As a result, it says, nonresidents are also displacing residents in the most popular majors, such as business, engineering and social science.

‘Entirely unfounded’

UC responds that its approach nevertheless guarantees a place at UC for every qualified California applicant. “Even in the leanest of budget years ... UC has continued to offer admission to every California applicant who meets our criteria,” Napolitano told Howle. “To suggest ... that UC has ‘disadvantaged’ California students is entirely unfounded.”

Nanette Asimov is a San Francisco Chronicle staff writer. Email: nasimov@sfchronicle.com Twitter: @NanetteAsimov