The California State Auditor released a report Tuesday that sharply criticized the University of California’s policy on nonresident enrollment for disadvantaging in-state students.

In the report, the auditor’s office alleges that UC policy makes it harder for California residents to gain admission, and that the standard for nonresident admission has dropped as a result of recent changes in UC policy regarding out-of-state applicants. It concludes that the university should have cut costs in other ways before enrolling more nonresidents and recommends legislatively imposed limits on the system’s enrollment.

The report was requested by Assemblymember Mike Gipson, D-Carson, after he felt a “lack of responsiveness and clarity” during the university’s appearance at the Joint Legislative Audit Committee and Assembly Higher Education Committee meeting in February 2015. After the report’s release, Gipson said that he was “thoroughly disgusted and embarrassed by its contents,” alleging the disenfranchisement of in-state students from a university meant to serve them primarily.

The university issued its own report Tuesday, condemning the findings of the auditor’s office. In a March 8 letter accompanying the report, UC President Janet Napolitano wrote that the auditor’s report “makes inferences and draws conclusions that are supported neither by the data nor by sound analysis.”

Nonresident enrollment in the UC system increased by 82 percent, or 18,000 students, from 2010-11 to 2014-15, while in-state numbers fell by 1 percent, or 2,200 students, according to the auditor’s report. The auditor’s office concluded that increases in nonresident enrollment revenue did not have “a significant impact” on the number of residents that the university enrolled, despite the university’s claims that the increased revenue would boost resident numbers.

Between 2007-08 and 2014-15, the auditor report stated, the Berkeley campus generated an increase of $114 million in funding from nonresident tuition revenue.

The increase in nonresident enrollment, the auditor’s office said, impaired the Master Plan for Higher Education’s goal of the UC system admitting the top 12.5 percent of the California graduating class. In 2014-15, the university estimated that it accepted the top 14.9 percent of eligible graduating Californians. The audit stated, however, that this statistic included residents referred to other UC campuses who did not ultimately enroll at their referral campus.

“If we exclude the residents placed in the referral pool and who did not ultimately enroll at the referral campus, the university actually admitted 12.4 percent of the California high school graduating class,” the audit states.

The auditor’s report states that the increase in nonresident enrollment occurred as a result of several policies concerning out-of-state students that the university enacted in the wake of the university’s 2008 state-funding shortfalls.

That year, the university allowed its individual campuses to retain the additional funds generated by nonresidents instead of returning the funds to the UC system and began setting separate systemwide enrollment targets for resident and nonresident students.

Additionally, in 2011, the university modified its admissions policy to mandate that out-of-state admits “compare favorably” to their in-state counterparts, instead of mandating that students’ test scores match the top half of resident students’ scores.

According to the auditor’s report, this change in admission policy, whose implementation was left up to the campuses, led to the admission of less academically qualified students. Notably, the office found that over the past three years, “the university admitted nearly 16,000 nonresidents who were less qualified on every academic score we evaluated than the median scores for admitted residents.”

In addition, campuses sought out-of-state students for the new campus-specific funding nonresident students provided, according to the auditor’s report. The San Diego campus increased its resident freshman enrollment target by 10 percent from fall 2011-14 but its nonresident target by 300 percent.

In its response to the auditor’s report, the university stated that while nonresident enrollment has increased, as of 2014-15, it enrolls 7,000 undergraduate Californian students who are not covered by any state funding.

The university also strongly disputed the notion that decreasing nonresident enrollment would open up spots for more in-state students without an accompanying increase in state funding.

“The immediate impact of reducing the number of nonresidents at the University would be less funding for all UC students,” the UC report states.

Nonresident students provide more than $800 million in funding for the university per year, the UC report said, calling it “unlikely that the state will be positioned to replace” it.

The response also criticized the idea that the “compare favorably” standard reflects a “watering down” of standards, instead calling it an “evolution of UC admissions away from reliance solely on grades and test scores.”

Though the coming resident enrollment boost of 10,000 undergraduate students in the next three years answers legislative calls for increased resident enrollment, the university has maintained that state funding is well below historic levels, and a state Assembly bill that aims to cap nonresident enrollment, AB 1711, is already in committee.