University's should do more than science. Ideally they should be institutions of higher learning. This should include things beyond just STEM. Languages, history, religion, philosophy, literature, and on and on.

In this situation I don't think it's possible to not political.

Aren't they being political by accepting out of state students who pay more money? Are they looking at applicants bank accounts or are they looking for applicants that would be successful and contribute to the diversity of the school?

UC makes the claim that they out-of-state funding creates more spots for in-state applicants, while the audit says otherwise.

Both are plausible explanations, but we need some actual numbers in order to determine whether having a bias toward accepting more out-of-state applicants really does increase in-state applicant admissions.

Education policy is driven by politics. Saying that it's apolitical is just ignoring that aspect of reality.

Going further, government is controlled by politics and we are talking about a government institution.

Right; it's particularly stupid to say that politics (and hence gov't) has no role in an institution that exists as a governmental entity.