Non-Resident Enrollment Growth in the University of California: Issues and Answers

1. Non-Resident Enrollment Growth in the University of California: Issues and Answers Robert Cox University of California, Los Angeles California Association for Institutional Research San Francisco November 4, 2015

2. A Big Story – Still Unfolding • Openness to ideas and talent from around the nation and the world is not only a core value for the (public) research university – it is a fundamental condition for doing business effectively • In graduate degree programs high levels of non-resident enrollment are required and expected at UC campuses • But the new big story for UC is about non-resident enrollment growth at the undergraduate level • It is a story about rapid growth of historic magnitude and significance – and whether this growth can be sustained

3. Issues and Answers • Revenue from undergraduate non-residents offsets some of the massive withdrawal of state funding from the UC over the past two decades • But this is an answer that raises plenty of new issues and questions – for which there are no easy answers • It raises fundamental questions about the nature of the compact or relationship between the UC and the State of California • Degree of alignment with the mission and goals of the UC? • Degree of alignment with the needs of the public and the people of California? • Degree of alignment with the expressed (political) will of the people of California? • It raises questions about enrollment growth at the margin that is testing the limits of the capacity of the UC to provide a high quality educational product and experience for all students • What is the optimum or most-appropriate balance between resident and non-resident undergraduate enrollment? • Is the differential between resident and non-resident costs justifiable? Is it ‘healthy’ for the university community? Is it sustainable?

6. Issues and Answers UC is addressing mounting financial pressures on higher education in a variety of ways Cost cutting and restructuring (e.g. UCOP, UCB) Balance sheet initiatives (e.g. STIP/TRIP) Financial upgrades (e.g. returns on investments) AND… Expanding other revenue sources, especially: • Philanthropy; private donations (e.g. the UCLA Campaign) • Raising the base tuition that everyone pays (formerly ‘FEES’) • AND… Increasing NRST – Non-Resident Supplemental Tuition A historic crossing-point in 2011-12 between revenues received from State support and student tuition revenue

8. Issues and Answers Transition from an ‘If You Build It…’ to an ‘Enrollment Management’ mindset and organizational regime New skills required to identify and recruit qualified and competitive non-residents who can and will accept UC offers, persist, and succeed Campus planning efforts and system-wide ‘comparability’ standards Opening freshman access to the global community at this moment in history – in particular the history of modern China – is making the most of an historic opportunity But we must balance risks of enrolling more international and domestic non-residents And maintain high CCC transfer access (also a pathway to UC for many internationals)

9. The Problem of Balanced Growth • Rapid growth disrupts established patterns and ratios Adding non-residents while striving to maintain levels of California Resident enrollment • This leads to rapid growth in total UG enrollment • And troubles with State Government as the proportions change Adding undergraduates but not graduate students • This leads to troubles in staffing discussion sections Adding new freshmen but not new transfers • This leads to disproportionate growth in LD instruction The shifting preferences of undergraduates in general and the new non-residents in particular • Disparate rates of growth in teaching workload by academic unit LAST NOT LEAST: Adding students but not permanent faculty

10. Tuition Wedge and Turbulent Times • Circumstances driving a widening wedge between the costs of attendance for California Residents and Non-Residents A challenge to the distinctive ‘UC Model’ – premised on providing opportunity for students and families at all income levels And a sudden, staggering reliance on NRST to pay the bills • Turbulent relations with the Governor and the Legislature The revenue answer becomes the issue Calls for correctionand a probing audit of UC enrollment practices A settlement with the Governor… and an offer from the Legislature • First hold strictly to Cal Resident targets as negotiations proceed • Now add ten thousand California Residents in a hurry • New rules – and contingencies – are built-in to prospective growth funding • Campus incentives contrasted with UC System funding corrections Tuition-driven ‘Funding Streams’ and State-support-driven ‘Rebenching’

11. Trends in Graduate and UndergraduateNon-Resident Enrollment over 30+ Years Moderate graduate growth in recent yearsextends a smooth long-term trajectory A much smaller undergraduate non-resident component until just a few years ago – but now a sudden surge An exhibit borrowed from UCOP Budget and Planning shows how this surge fits-in with the relative stability in California Resident enrollment that it has allowed the UC to maintain But there has been a massive shift in the undergraduate / graduate student ratio – an important change that impacts the capacity to deliver high quality undergraduate education

16. The ‘UC Model’ and the Challenge Kudos on UC contributions to civic responsibility and broad access from publications like the Washington Monthly Kudos on social mobility from ‘The Upshot’ (New York Times) The Pell Grant Metric Memorialized by IRAP, widely cited by the President and CFO Note: Annual UC Accountability Reports and Budgets for Current Operations (available online) are bursting with information on these topics; the Budgets contain valuable extended discussions of UC funding and fee history Need-based aid for UC undergraduates is extensive About 30% of all base tuition revenue is returned to students in aid Blue & Gold Plan sets ZERO tuition for over 70,000 UC undergraduates Middle-Class Scholarship and other Programs

19. The ‘UC Model’ and the Challenge • Non-Residents pay much higher total tuition • In 2015-16 all undergraduates are charged $11,220 for base tuition – the same charge every year since 2011-12 • But Non-Residents will be charged an additional $24,708 – up 8% from 2014-15 – and pay a total of $35,928 for exactly the same set of educational services that UC provides to California Residents • Yet many strong students are eager to accept our offer at that price • This is a testament to the perceived quality of a UC education • At the same time, however, it places negative selective pressure on potential non-resident students from families without ample means • A striking contrast to and departure from the ‘UC Model’ and … • A challenge to enrollment management efforts in working against cleavage between rich and poor by forming contingents of talented non-residents from families all along the income spectrum

20. Why Do The Applications Keep Coming? • The time-tested strength of the ‘CALIFORNIA’ brand surely has something to do with it • It may be hot and dry here now, and we are not without other problems, but for college applications it seems that the brand is heat-resistant • Favorable misperceptions or overestimations of UC might play a part • …Or misunderstandings of what student life in the UC is all about

25. Why Do The Applications Keep Coming? All joking aside, however, I believe it ultimately comes down to sober assessment of the quality and value of a UC undergraduate education on the part of well-informed parents and students all across the nation and the world The rise to prominence of national ranking schemes and global league tables for higher education institutions has its down sides, of course, but it has also put much more information at the fingertips of decision-makers everywhere Then too, there is lack of capacity in elite institutions to absorb growing populations of highly qualified students -- and an evident lack of superior educational alternatives in one or another state or national context – be it Texas, New York, or nations overseas But can these new high levels of non-resident enrollment and high rates of growth in non-resident demand be sustained? In the face of rising non-resident tuition and other costs of attendance? In the face of reduced access to financial aid for non-resident families of modest means? Given political stress and pressures on capacity and program quality in the UC iteslf?

28. Charting How Much Growth and Where • Non-resident enrollment growth drives total enrollment growth at the undergraduate level -- Changes 2010-11 to estimated 2015-16 • UCB, UCLA and UCSD have taken the lead, with each campus adding 3,700 to 3,900 non-residents in just the past four years • UCI and UCD are rising rapidly now • UCB and UCSD have shed some California Residents along the way • Material from the UC ‘Statistical Summary’ shows that patterns of domestic and international non-resident enrollment growth over more than three decades (from Fall 1980) are very different – the international participation surge is quite recent • Similar differences appear in patterns of domestic and international non-resident applications for freshman admission over the past two decades (from Fall 1995)

37. Tracking Cohorts and Impacts on Academic Program Commitments at UCLA • A strategic pivot at UCLA from 2012 forward toward development of demand from domestic non-residents -- and toward a more balanced distribution of internationals by country of origin • Population and teaching workload pressures are increasing rapidly overall, but unevenly across academic departments -- Examples • Disproportionate growth of majors and course enrollments in the sciences, mathematics, and economics are driven to a considerable extent by increased international participation • Also: A quick comparison of academic outcomes for California Residents, domestic non-residents, and international non-residents

43. Entering a New ‘Post-Non-Resident’ StageWith Pictures … and with Tongue in Cheek! • A brief history of the Committee of Two • And an added word from the excluded middle: The Legislature Speaks • $25 million offer for plus 5,000 Cal Residents • But not on trust – pre-verification required • Some security in funding over the next four years – but an uncertain pathway beyond • And then finally – wrapping up on a cautionary note – an illustration of the current extent of dependence on non-resident revenue throughout the UC system

47. The Non-Resident Revenue Stream • UC stands to collect about $2.150 billion in base tuition this year, up from $1.632 billion in 2010-11 • Non-Residents will make up 15% of the population and pay about 15% of base tuition, or $325 million • But they will also pay $716 million in NRST – up from $209 million in 2010-11 – for a total contribution of $1.042 billion in 2015-16

48. The Non-Resident Revenue Stream • All told, UC stands to collect $2.866 billion in GROSS base tuition + NRST in 2015-16, of which the $1.042 billion contributed by Non-Residents constitutes 36% • Taking into account the 30% of base tuition revenue that is returned to students in financial aid, overall NET base tuition + NRST will be $2.221 billion – of which Non-Residents will contribute $994 million, or 43% • At campuses where Non-Residents account for more than 20% of the population, they contribute more than 40% of GROSS and 50% of NET combined tuition revenue