It appears that the University of California was preferentially admitting out of state students because they wanted the higher out of state tuition:

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.

This is what you get when you chronically underfund public higher education.