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2009-10 Budget Analysis Series: Higher Education

UC and CSU Enrollment and Access

One of the principal factors influencing the state’s higher education costs is the number of students enrolled at the public higher education segments. The 1960 Master Plan of Higher Education expresses the goal that all Californians should be afforded the opportunity to receive a college education. This promise of universal access is achieved by guaranteeing university eligibility to the top one–third of high school graduates and allowing all adults the opportunity to attend a community college. Below we analyze and make recommendations for budgeted enrollment at the public universities and then turn to CCC enrollment funding.

Enrollment Management and the Master Plan

The number of eligible applicants to UC and CSU fluctuates from year to year depending upon a number of factors—including population growth, demographic changes, economic conditions, and student preferences. Each year, the state and the segments take steps to manage the number of students who attend California’s public universities. Such enrollment management is necessary since funding and campuses’ physical capacity in any given year are limited. The state typically provides a fixed amount of funding for a specific level of enrollment in the annual budget. The state expects the universities to manage enrollment through admissions to achieve enrollment close to its targeted level. (See box below for examples of enrollment management techniques the universities use.)

Examples of Enrollment Management

California’s universities employ the following tools to influence the number of eligible applicants who enroll:

  • Redirect students to a lower–choice campus within the system (University of California primarily), or give priority to local–area applicants (California State University).
  • Adjust application deadlines.
  • Restrict lower–division transfers.
  • Establish prerequisites for admission to upper–division status.
  • Limit admission of those seeking second baccalaureate degrees (with some exceptions for high–demand fields).
  • Require incoming students to attend orientation and/or pay enrollment deposits.
  • Make offers of admission provisional on meeting conditions, such as completing courses in process at time of application, maintaining minimum grade point average, and providing supporting documents.
  • Implement standards for academic disqualification (for example, do not permit students without good academic standing to re–enroll).
  • Reduce the number of students admitted by exception (those students who do not meet regular admission requirements).

Such enrollment management techniques are meant to keep enrollment growth from exceeding the state’s resources for higher education or from falling below the state’s enrollment goals. These tools are also meant to uphold the goals of the Master Plan—all eligible students who apply to UC or CSU are guaranteed a spot within the respective system, even though they may not be admitted to their first–choice campus. At UC, students may be redirected to a lower–choice campus. At CSU, students are guaranteed admission only to their local campus. Many applicants to either system reject opportunities to enroll at a lower–choice campus. In this way, both segments can adjust their enrollment levels by increasing or decreasing the number of students they admit to first–choice campuses.

Budgeted Enrollment Levels in Recent Years

As stated above, the Legislature and Governor typically provide General Fund support in the annual budget act to support a specific number of students at each of the three segments. This usually includes an augmentation for enrollment growth, which is added to the previous year’s base funding at a per–student funding rate commonly referred to as the marginal cost of instruction. For example, the Legislature provided annual augmentations for 2.5 percent growth at UC and CSU from 2005–06 through 2007–08. The segments typically serve slightly more or fewer FTE students than budgeted because the number of eligible applicants choosing to enroll is difficult to predict and manage with precision. For example, CSU enrolled fewer students than budgeted in 2004–05, as did UC in 2005–06. As shown in Figure 8, however, in more recent years the segments enrolled more students than budgeted.

Percentage Difference Between Budgeted and Actual Enrollment

Universities Exceeded Enrollment Targets in 2007–08. In 2007–08, UC enrolled approximately 5,400 more students than budgeted and CSU enrolled approximately 11,000 more than budgeted. The enrollment was not even across campuses—some campuses exceeded their enrollment targets while others fell short.

No Enrollment Target Set for UC and CSU in 2008–09. In a departure from past practice, the 2008–09 Budget Act included no explicit augmentation for enrollment growth and did not specify any enrollment targets for UC and CSU. Instead, the segments were given the discretion to set their own enrollment levels for the 2008–09 academic year.

In order to hold the segments accountable for their decisions, the Legislature required the segments to report on any enrollment growth (as well as employee compensation increases) in the current year and how they were funded. These reports, submitted in mid–January, provide some detail on the segments’ enrollment growth in the current year.

UC and CSU Use Various Means to Accommodate Additional Students. According to these preliminary estimates, both segments increased their enrollment in the current year without specific General Fund appropriations for this purpose. The segments did have growth in other revenues. For instance, most of these students paid a portion of their education cost through their fee payments. Moreover, both universities received additional unallocated revenue in 2008–09 from fee increases imposed on all students. The universities report, however, that this increased funding was not enough to cover all their cost increases. In addition to enrollment costs, other cost increases include employee compensation, energy, and the operation of new space. The segments, therefore, report that they have undertaken various cost–saving measures to cover their 2008–09 costs. These include:

Governor’s 2009–10 Enrollment Proposals

No General Enrollment Growth Proposed at UC and CSU for 2009–10. For 2009–10, the Governor proposes no new funding for general enrollment growth at UC and CSU. By not funding the 2.5 percent enrollment growth called for under the 2004 compact, the Governor assumes savings of $56.2 million at UC and $71.6 million at CSU.

Targeted Growth Proposed for UC and CSU Health Sciences Programs. At the same time, the Governor’s proposal does include targeted enrollment growth funding for specific programs in health sciences at UC and CSU. The Governor would add $3.6 million to CSU for an additional 340 undergraduates in nursing and $1.1 million to UC for an additional 50 undergraduate and 42 master’s level nursing students. The Governor’s proposal also includes $1.5 million for UC to enroll an additional 57 students in the Programs in Medical Education (PRIME)—designed to prepare physicians to address the health needs of underserved populations in the state.

The growth funding proposed for the additional nursing and PRIME students is much greater than the marginal cost funding normally provided for enrollment growth, reflecting the higher costs of education in health sciences. The Legislature included growth funding for these programs at the higher marginal cost levels in the budget acts between 2005 and 2007.

UC and CSU Plan to Reduce Enrollment Of New Students in 2009–10

The UC and CSU have already adopted enrollment plans for the budget year. Both segments plan to reduce enrollment levels for new students in 2009–10 based on expectations that they will not receive enrollment funding augmentations due to the state’s budget shortfall.

UC Plans to Reduce Freshman Enrollment From 2008–09 Levels. The UC Regents adopted a plan in January to reduce enrollment of new California resident freshmen by a total of 2,300 FTE students for 2009–10. This would represent a 6 percent reduction from the size of the 2008–09 freshman class. The plan would also increase enrollment of community college transfer students by 500 FTE students (a 3 percent increase) and maintain the same number of graduate students. As shown in Figure 9, UC expects total enrollment would still grow modestly in 2009–10, because the incoming freshmen and transfers would slightly outnumber the graduating class. The estimated total enrollment would still well exceed the budgeted level proposed in the Governor’s budget.

Figure 9

Enrollment at University of California (UC) and
California State University (CSU)

Full-Time Equivalent Students

 

2007‑08

 

2008‑09
Estimate

 

2009‑10

Budgeted

Actual

Governor's Proposala

Segments' Plans

UC

198,455

203,906

 

209,816

 

198,669

210,816

CSU

342,893

353,915

 

355,685b

 

343,233

342,893

 

a  Governor’s budgeted levels reflect 2007‑08 budgeted levels plus a proposed small increase in health sciences enrollment at both segments.

b  Legislative Analyst’s Office estimate.

CSU Plans to Return to 2007–08 Budgeted Enrollment Levels. The CSU Trustees adopted an enrollment plan in November with the goal of reducing enrollment in the budget year to the last budgeted level in 2007–08. Depending upon the results of CSU’s efforts to constrain growth in the winter and spring of the current year, this would reduce the enrollment level by approximately 3 percent to 4 percent compared to 2008–09. The enrollment reductions would mainly affect incoming undergraduate and graduate students through a variety of the enrollment management measures described earlier.

UC and CSU Enrollment Plans Consistent With Master Plan

As described above, UC and CSU intend to reduce enrollments mainly through increased enrollment management efforts. These types of actions do not constitute a departure from previous policy, but rather reflect the expanded use of tools the segments regularly employ to align their enrollment with available resources.

Enrollment Plans Continue to Guarantee Admission for Eligible Students. It is important to note that the proposed enrollment plans are consistent with the Master Plan—all eligible students who meet application deadlines would be guaranteed admission to at least one campus within each university system. As regional institutions, the CSU guarantees that eligible applicants would be admitted to their local campus if they apply by the priority deadline. For 2009–10, the CSU has authorized all campuses to set eligibility criteria such as grade point average and test scores for nonlocal students that exceed the systemwide minimum criteria—referred to as impaction. For example, a high school senior from Pomona who meets the minimum eligibility criteria for admission to CSU would be guaranteed admission to CSU Pomona by applying before the priority deadline. However, this student potentially would not be admitted to some other CSU campuses as those campuses could use higher criteria for reviewing applications from other regions. Many popular campuses are regularly declared impacted to students from outside their region and have set higher eligibility criteria for years. Less popular schools that are unlikely to achieve their enrollment targets would continue to accept all eligible applicants.

The UC similarly guarantees admission to one of its campuses if an applicant meets the system’s minimum eligibility criteria. As the university system charged with responding to statewide needs, UC does not guarantee admission to a local campus, and instead redirects eligible students to campuses with available space. The UC’s policy of redirection has been in place for many years, regardless of state funding levels. The more competitive UC campuses such as UC Berkeley have eligibility criteria that exceed the minimum criteria for admission to the system. If an eligible student applies to UC Berkeley and does not meet that campus’ higher criteria, the student would instead receive an offer of admission to a campus with lower admittance criteria (such as UC Merced). In order to reduce freshman enrollment in 2009–10, UC expects to redirect more applicants than in the past to UC Merced. (There is an expectation that many of these redirected students will pursue other opportunities.) Due to increased redirection, UC expects freshman enrollment to increase at UC Merced in the budget year and decrease or remain flat at the other campuses.

Some Aspects of the Enrollment Plans Could Be Beneficial to Students and the State. Many of the enrollment management strategies that the CSU Trustees directed its campuses to enforce would make sense even without a budget crisis. For example, campuses have been directed to make acceptance offers contingent on satisfactory completion of high school work in progress; accept transfer students only if they meet minimum requirements; and require continuing students to maintain good academic standing. Each of those proposals uphold academic standards the university should promote regardless of the state’s budget situation.

Other enrollment measures under consideration could be beneficial to students. For example, mandatory orientations would introduce more new students to college–level expectations and raise awareness of support networks available on campus. Earlier application deadlines reward motivation and planning by potential students.

Funded Enrollment Level Unclear For 2008–09

The 2008–09 Budget Act did not set enrollment levels for UC and CSU, but instead allowed the segments to decide how to accommodate unallocated reductions in state funding. Specifically, the Governor’s 2008–09 budget proposal started with workload budgets for UC and CSU that included funding for enrollment growth and other cost increases, and then instituted unallocated General Fund reductions to the segments. By making these reductions unallocated, the Governor’s budget proposal deferred to UC and CSU the task of reconciling their workload with reduced General Fund support. (The availability of new revenue from student fee increases aided this task.)

As a result of this approach, the 2008–09 funded enrollment base is not specified in the budget. This has led to conflicting perspectives about what level of enrollment is funded in 2008–09. One interpretation (promoted by the segments) is that UC and CSU did not receive an augmentation for enrollment growth in 2008–09 and, therefore, their budgeted enrollment level for the current year is unchanged from the 2007–08 level. An alternative interpretation is that, by definition, UC and CSU found funding to pay for the students they enrolled in 2008–09. This view is based on the fact that the segments could have accommodated part of their unallocated reduction by reducing their 2008–09 enrollment from the Governor’s workload levels. They also could have absorbed unallocated reductions in other areas, such as reducing research activities, public service, and administration. Other cost saving options included increasing class sizes or faculty course loads, implementing staff furloughs, and reducing travel and other variable expenses. As already described, UC and CSU did make some of these changes in the current year while also enrolling additional students. Under this interpretation, therefore, UC and CSU chose to allocate their General Fund reductions to other areas rather than enrollment growth.

Administration Inconsistent in Treatment of Enrollment. The Governor’s 2009–10 proposal reflects both interpretations. For general enrollment, the Governor sets enrollment targets for both the current year and the budget year that are equal to 2007–08 budgeted levels. In this way, the Governor’s proposal suggests that UC and CSU are not funded for the additional students they have enrolled beyond the 2007–08 level. However, the Governor’s proposed augmentation for UC’s PRIME initiative assumes that the additional PRIME students enrolled in the current year are funded—even though UC has argued they are not. It is not clear why the administration has characterized funded and unfunded enrollment in this way.

The Legislature Should Adopt Specific Enrollment Targets in 2009–10

We believe it is important that the Legislature adopt specific 2009–10 enrollment targets for UC and CSU in order to clarify the state’s goals for enrollment, set expectations for the segments, and provide a clear enrollment base to work from in subsequent years. As illustrated by the Governor’s proposal, leaving specific enrollment targets out of the current–year budget has created confusion about which enrollment actions the state supported. Coupled with the Governor’s abandonment of his compact and other budget turmoil in the current year, this has made it extraordinarily difficult to sort out “funded” and “unfunded” activities. We therefore recommend that the Legislature adopt language identifying specific enrollment levels that are funded for 2009–10. Establishing funded enrollment targets would provide a clear base from which to provide annual enrollment growth funding in the coming years.

Uncertainty about enrollment funding provided in the current year also makes it difficult to determine the amount of funding necessary to support the universities’ enrollment targets in the budget year. Specifically, the lack of budgeted enrollment levels in the 2008–09 budget creates confusion about how much enrollment the state funded in the current year. Moreover, the segments’ reports to the Legislature about how they are funding current year enrollment lack the detail necessary to determine whether current enrollment levels are sustainable at current funding levels. The reports do not, for example, detail the extent to which the segments relied on one–time savings as opposed to ongoing savings to support enrollment growth in 2008–09.

Recommend Enrollment Be Re–Benched

We recommend the Legislature resolve this uncertainty by re–benching UC and CSU’s funded enrollment for 2009–10, taking into consideration actual enrollment in the current year. (See box below for a description of how CSU’s funded enrollment was re–benched earlier in this decade.)

CSU’s Enrollment Re–Benched in 2004–05

The 2003–04 Budget Act included funding for enrollment growth at the two university systems, raising their budgeted enrollment levels. However, the California State University (CSU) chose not to use its enrollment funding to enroll more students, and instead redirected this funding to other purposes (primarily restoring reductions the Legislature had made in other areas). In 2004–05, CSU enrolled still fewer students. Responding to the growing disconnect between budgeted and actual enrollment, the Legislature took two steps to restore transparency and accountability to CSU’s enrollment funding. First, it re–benched CSU’s budgeted enrollment downward to better match CSU’s actual enrollment. Second, it adopted new language in the 2005–06 Budget Act that prevented CSU from redirecting enrollment growth funding to other purposes. This approach was continued until the current year, when no enrollment targets were set.

Adopt UC’s Enrollment Plan. In our opinion, UC has put forward a reasonable enrollment plan for 2009–10. While it would reduce the size of the incoming freshman class, it does so in a way that would not deny access to any eligible applicant. Further, the total number of enrolled students (at all levels) would increase slightly. We therefore recommend that the Legislature adopt budget language establishing UC’s proposed enrollment total of 210,816 resident FTE students. We further recommend that the Legislature augment UC’s budget to fund the enrollment growth this target would require above the estimated current–year level. We estimate this cost at about $11 million.

Increase CSU’s Proposed Target to Recognize Some Growth Funded in Current Year. As discussed above, the Governor’s 2009–10 budget (and CSU’s own plan) would return CSU enrollment to its 2007–08 budgeted level. We estimate this would result in a decline of more than 12,000 FTE students between the current and budget year. We believe this enrollment target is too low for two reasons:

We recommend, therefore, that the Legislature establish CSU’s 2009–10 enrollment target at 350,000 FTE students. While this target is somewhat arbitrary (given the confusion surrounding current–year enrollment), we think it is reasonable and appropriate. It is about 7,000 FTE students more than what the Governor proposes (recognizing that CSU has funded growth in the current year), and about 6,000 FTE students less than our estimate of CSU’s current–year enrollment (recognizing that some of CSU’s current–year enrollment was funded with one–time savings). In our view, this would require no additional funding.

Reject Targeted Enrollment Increases. Our proposed re–benching of budgeted enrollment levels does not include additional students in nursing and PRIME as proposed in the Governor’s budget. We recognize that the Legislature has expanded these programs in recent state budgets, and they may remain a state priority. However, given the state’s budget shortfall, we believe the state’s resources should be focused on higher education’s core responsibilities in fulfilling the Master Plan. Consequently, we recommend the Legislature delay the Governor’s proposed augmentations in UC and CSU’s health sciences programs in order to focus available resources on continuing to provide access—as we have proposed through augmentations to support UC’s enrollment plan and financial aid programs.

Legislature Should Provide Enrollment Guidance for 2010–11 Academic Year

Our forecast of budgetary shortfalls over the coming years suggests that state support for all programs—including higher education—will continue to be constrained in 2010–11. Once again, the segments will need to develop enrollment plans for 2010–11 prior to state budget negotiations for that fiscal year. In order to help promote consistent enrollment and budget planning in this environment, we recommend that the Legislature include language in the 2009–10 budget indicating expected levels of enrollment growth in 2010–11. Based on expected demographic changes, we forecast that enrollment would remain flat at UC and increase modestly at CSU (0.5 percent). These enrollment targets would be appropriate given the state’s fiscal condition. Due to a forecasted decline in the size of the state’s high school graduating class, the effect of the relatively flat enrollment on university participation rates would be lessened compared to a typical year. Alerting the segments to the Legislature’s enrollment growth expectations would allow them to plan for the upcoming year and inform students and parents of their enrollment management plans prior to enrollment deadlines. The segments would likely need to extend their current enrollment management approaches into the 2010–11 admissions cycle in order to achieve these targets.



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