By Nick Cahill, Courthouse News Service

SACRAMENTO, Calif. (CN) - California's most prestigious public universities have systematically denied thousands of local applicants to increase revenues by admitting less-qualified nonresidents, according to a state audit (pdf) released Tuesday.

Over the last several years, the University of California's out-of-state and international student enrollment increased by 82 percent while resident enrollment sunk by 1 percent, the audit found. The report claims UC lowered its nonresident admission standards and admitted nearly 16,000 students with academic scores below the average of admitted residents over the last three years.

State auditor Elaine Howle said nonresident students benefitted from relaxed admission standards while qualified Californians were often turned away.

"By admitting nonresidents with lower academic qualifications, the university deprived admittance to highly qualified residents," the blistering 116-page audit states.

The report also found diversity has suffered on the UC's 10 campuses as a result of the boom in nonresident undergraduate students. Just 11 percent of the nonresident students in the 2014-2015 school year identified as what the university considers underrepresented minorities: Latinos, African Americans and American Indians.

"The university will struggle to ensure that its student population reflects the diversity of the state if it continues to increase nonresident enrollment," the audit states.

UC administrators claim they were forced to recruit nonresident students, who pay approximately $23,000 more in tuition annually, because of massive budget cuts brought by the recession. UC President Janet Napolitano has said that the additional tuition revenues generated from nonresidents students have actually helped keep residents' tuition rates from rising even higher.

Napolitano bashed the audit in a response letter, saying the report is a "rush to judgment" that makes conclusions without supporting data and "requires major revision."

"The draft audit understates and undermines the efforts of thousands of UC faculty and staff who have sustained the university's reputation, accessibility and affordability during a period when state funding was cut by about one-third," Napolitano said in her letter.

UC data shows that mandatory tuition and fees for resident undergraduates have doubled since 2008 to more than $11,000 per year, but have remained the same since 2011.

Howle called the UC's response unfortunate and criticized the institution for agreeing to implement only seven out of 21 recommendations.

"Facts led us to our conclusion that the university's admissions and financial decisions have disadvantaged California residents," the audit states.

Tuesday's audit was initiated by state Assemblyman Mike Gipson, D-Carson, who argued that the rise in nonresident students was preventing Californians from being accepted to public universities.

The audit found that despite the budget cuts and tuition hikes, spending on UC staff salaries has increased eight of the last nine years. Annual salary costs reached $13 billion in 2015 and the top UC executives are paid "significantly more" than other high-level state employees, according to the audit.

The audit calls on UC to tighten nonresident admission standards and ensure only the top applicants are accepted before qualified Californians. The institution should also submit cost studies to lawmakers showing that its tuition rates are based on publically available data.

Howle also recommends that the UC set a limit on the amount it spends to recruit nonresidents, and increase recruitment of residents from underrepresented minorities.

Assemblyman Jose Medina, D-Riverside, called the auditor's report "troubling" in a statement Tuesday. Medina chairs the Assembly's higher-education committee.    

"In light of this audit, I question the priorities of UC and their commitment to educating California students. The report underscores the critical need of legislative oversight of the UC. I am committed to working with Assembly member Kevin McCarty on increasing access and equity for California students," Medina said.

To Learn More:

The University of California: Its Admissions and Financial Decisions Have Disadvantaged California Resident Students (California State Auditor) (pdf)

Tougher Than Ever for Californians to Get Into the University of California (by Ken Broder, AllGov California)

University of California Goes for the Gold, Ups Out-of-State Admissions (by Ken Broder, AllGov California)