This report reviews factors that influence enrollment growth and the current methodology of calculating the "marginal cost" of serving additional students. We identify issues for the Legislature to consider in determining the amount of enrollment growth to fund for a given year. We also recommend revisions to the current marginal cost methodology in order to more accurately budget for these expenses.

UC enrolled roughly 400 more FTE students in 2004-05 than it was budgeted to serve for that year. For the current year, the 2005-06 Budget Act provides $37.9 million to UC to enroll 5,000 additional FTE students above the 2004-05 funded enrollment level, for a total of 205,976 FTE students. As of January 2006, the university estimated that it will meet this current-year enrollment target. The act requires UC to report to the Legislature by March 15, 2006 on whether in fact it met the target.

CSU has not met its budgeted-enrollment targets in the previous two years (2003-04 and 2004-05). In other words, the state provided funding for more students than the university enrolled. Based on recent trends and preliminary data, CSU may not meet its 2005-06 enrollment target as well.

Read the entire report at the Legislative Analyst's Office.