I imagine budget reasons in part. To add more students, they have to hire more faculty and staff at a time when the state budget doesn’t seem to be keeping up with increased costs. They used to make up for the shortfall by accepting more out of state and international students who are full pay, but the state has put a cap on the number of non-state students the UC campuses can accept.
For UCB there is also the housing issue - they university can’t house the students it already has. They have freshman being assigned to lounges because there aren’t enough dorm rooms for everyone and after freshman year you are generally on your own and at the mercy of the local housing market, which is tough for students on a tight budget. So that makes it tough.
There also isn’t really anyway to enlarge the campus significantly in order to accommodate more students. They are currently building a new undergrad academic building, but almost every square inch of campus is occupied already. There isn’t much room for expansion.
Maybe these problems could be solved, but they cost money. Of course, the issue of university budgets is a whole 'nother can of worms.