@TooOld4School If your interpretation is correct (and it may be), then Michigan uses a “cap” in enrollment – but it is 180 degrees different from the enrollment caps used at other top state universities.
At the Universities of California, Virginia, or North Carolina, for example, there are formal or informal caps on out-of-state students, which are expressed as percentages of the total undergraduate enrollment. Conversely, there are no caps whatsoever on in-state enrollment, which is free to rise in either absolute or percentage terms.
At the University of Michigan, under your interpretation, there is an informal cap on in-state students, which is expressed as a percentage of total high school graduates. If the number of in-state graduates falls (as it has), then the enrollment of in-state students has to fall as well (as it has). Conversely, there appears to be no cap whatsoever on out-of-state enrollment, which is rising in both absolute and percentage terms.
It’s possible that you are right about this. If so, it supports the point I made previously in Post #20 above: UM may have significant advantages, in terms of both tuition revenue and selectivity, over other top state universities. A public university that caps in-state enrollment, without limiting out-of-state enrollment, will have obvious advantages over public universities that do the opposite.