The University of California is increasingly rejecting the state’s own residents in favor of foreign and out-of-state applicants who pay higher tuition rates, a newly-published audit of the school’s admission process says.

In the past five yearsa, in-state enrollment within the University of California (UC) system has seen a small 1 percent decline, while domestic out-of-state enrollment has grown a whopping 82 percent and international enrollment has exploded 214 percent. While in the past, these out-of-state students generally needed to be in the top half of the applicant pool to get in, the new audit says that’s no longer the case, with UC actually lowering its standards to accept even more out-of-state applicants. In recent years, 16,000 out-of-state students with substantially below-average credentials were accepted to UC, denying spots to in-state students who were either admitted to lower-tier UC campuses or rejected entirely. Overall, out-of-state students have grown from 5 percent of the student body to 15 percent in the past eight years.

The shift has a clear financial logic to it. Out-of-state students pay over $38,000 in tuition, compared to the $13,400 paid by in-state students. As a result, a surge in out-of-state students provides the UC system a means to offset a loss of state funding in recent years.

But the report is unsympathetic to this goal, saying UC administrators were negating the very purpose of a state-funded public university and were avoiding other means of cutting costs, such as slashing salaries.

“The university’s spending on employee salaries increased in eight of the last nine fiscal years despite the state’s fiscal crisis,” the report says. “By fiscal year 2014–15, its annual salary costs had risen to $13 billion. In addition, even though the university publicly claimed that it redirected $664 million to its academic and research missions through an initiative it developed called Working Smarter, it could not substantiate the asserted savings or revenue amounts or demonstrate how much of this amount directly benefited students.”

The audit recommends that state lawmakers take immediate action to cap the number of out-of-state students UC admits.

[dcquiz] UC appears to have anticipated the ugly audit, as it released its own competing report the same day arguing that UC is doing a fine job of serving California residents first and foremost. The report points out that UC still has a higher acceptance rate for in-state residents compared to out-of-state ones, and that California students who meet a high academic threshold can be guaranteed admission to at least one campus.

UC President Janet Napolitano condemned the report as “unfair” in a letter to the state auditor.

“Nearly every state in the nation has faced this Hobson’s choice, and they have all reached the same decision: open doors to out-of-state students in order to keep the doors open for in-state students,” Napolitano wrote.

Napolitano isn’t wrong. Some schools around the country have seen an even more drastic surge in out-of-state enrollment. At the University of Illinois’s flagship Urbana-Champagne campus, for instance, a staggering 5,000 students are Chinese— more than 10 percent of the student body.

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