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A state audit found five campuses in the University of California system, including UC Berkeley, had incomplete or misleading information about relationships with online program managers.
Jane Tyska/Digital First Media/East Bay Times via Getty Images
The University of California system needs more oversight and transparency when working with online program management firms, a state auditor’s report found.
The California auditor’s office reviewed 30 of the 51 contracts the university system has with online program managers (OPMs), according to the report released last week. The state audit found each of the campuses with reviewed contracts—UC Berkeley, UC Davis, UCLA, UC San Diego, and UC Santa Barbara—had incomplete or misleading information about OPM relationships, including overstating the value of courses and a lack of transparency about OPMs teaching courses.
In response to the report, the UC system told Inside Higher Ed in a statement that the “university recognizes that providing transparent information on partnerships with OPMs is essential for prospective program participants to assess whether a program aligns with their personal and professional goals.”
“We will continue to diligently review and responsibly implement these recommendations to address any misalignments with state and federal best practices and our own commitments to excellence,” the statement said.
The audit comes after six lawmakers sent a letter last year to the state auditor’s office, flagging a potential misuse of funds involving relationships with online program managers.
The letter cited recent OPM contracts at UC Berkeley’s School of Information and the University of Southern California. The lawmakers alleged a large portion of tuition went toward the OPM, in what is called “tuition sharing revenue.”
OPMs often receive a cut of tuition for the students they recruit, in an effort to help offset upfront costs they assume when launching the online programs. That model is currently under review by the Education Department.
“The allure of OPMs will only continue to increase, given that students are becoming more comfortable with and demanding the flexibility and benefits provided by virtual learning formats,” the lawmakers’ letter stated. “I believe it is incumbent upon the legislature to better understand OPMs and their relationships with California’s public four-year institutions.”
Issues to Resolve in a Year
The new audit pointed to three specific issues.
First, the report called out a potential contract loophole involving a lack of certain guidance from the UC system president. While the president explicitly stated universities should not engage in tuition revenue sharing— in which OPMs are paid a portion of tuition from the students they recruit—the president’s specification only mentions undergraduate students, not graduate or continuing education students.
The auditor’s report said the UC system has until June 2025 to include graduate and continuing education students when discussing tuition sharing bans.
The second issue was that the UC system uses OPMs to teach students in some nondegree programs but is not always transparent about it. While the university system does not use OPM services to offer undergraduate courses, they do use the firms to provide services to continuing education courses. These courses are typically taken by adults versus traditional-aged students.
According to the audit, five contracts of the 30 reviewed did not clearly state the OPM’s involvement in its programming. The report further states at least one program on each of the five campuses also misled students about the industry value of the programming offered.
The report said the UC system has until June 2025 to explicitly disclose the relationship between the OPM and the campus, including the OPM’s role in providing instruction, the credentials of instructors in OPM-supported courses, and any nonrefundable fees or deposits for the programs.
The third issue focused on the finding that UC Berkeley, UCLA and UC San Diego’s continuing education units did not consistently follow every step in course and instructor approval. UC Santa Barbara’s professional and continuing education unit also does not have a process to approve instructors in online courses, “increasing the risk that those instructors may not be adequately qualified.”
UCLA and UC Santa Barbara’s continuing education units also did not conduct consistent student evaluations for the OPM courses, the report found. Both campuses were given until June 2025 to establish and implement policies for student evaluations.
“These campuses may be overlooking information that could help to ensure that their OPM courses and instructors are effective,” the report stated.
The new audit comes amid a year-long back and forth between university administrators and the University of California Academic Senate over the benefits of online courses.
The university in 2023 essentially banned students from earning degrees that would come from taking only online courses. It drew both internal and external criticism that the university was ignoring the potential benefits of virtual learning. In February, that decision was reversed.
In addition, a 20-person task force formed in late 2023 to look into the efficacy of online degree programs and evaluate instructional modalities to potentially offer fully online undergraduate degrees.
While the task force was originally expected to bring its own recommendations to the Academic Senate by the end of the summer, Steven Cheung, the task force’s co-chair, told Inside Higher Ed the report will now come in the early fall.
