Of course they do. On the other hand, UCSC is not exactly overrun with OOS and international students. For Fall 2016, UCSC undergraduates were 92.4% California residents, with only 7.6% OOS or international.
https://edsource.org/2017/uc-regents-debate-20-percent-cap-on-undergraduates-from-outside-california/578854
7.6% non-residents doesn’t seem like an unreasonably high number for a nationally-ranked state university. Furthermore, it is way below the 20% systemwide cap that UC has proposed, based on the current level of state funding.
The fundamental problem here is that even if we drove the number of non-resident students down to 0.0% (an obviously extreme measure), it wouldn’t alleviate the current crunch for CA residents. At UCSC, for example, non-resident students will take up a few hundred slots in the 3,900-student freshman class. So if we eliminated non-residents completely, we could make a few hundred more CA residents happy.
But UCSC currently rejects tens of thousands of CA residents annually. The total number of rejected UCSC applications this year was 27,503, most of which were from residents. Even the extreme move of eliminating all non-resident enrollment would make only a few hundred slots available, which is not much when tens of thousands of rejections are involved.
https://admissions.ucsc.edu/apply/first-year-not-admitted.html