The University of California and California State University won't have to take the drastic measure of turning away eligible students to cope with the state budget crisis if they change who they're considering for admissions, according to a state report released Friday.

Both systems are probably accepting students they shouldn't be, the legislative analyst's office reported. For example, under the 1960 Master Plan for Higher Education, UC should be choosing its students from the top 12.5 percent of high school graduates. The legislative analyst's office says it actually may be picking from among the top 20.5 percent.

Considering so many extra students means that if UC turns away students, which seems likely this year, it runs the risk of turning away some of the best qualified applicants. At the same time, it could end up admitting people the master plan didn't originally intend UC to admit.

Gov. Arnold Schwarzenegger's budget proposal called on UC to cut freshman enrollment by 3,200 students this fall and CSU to trim by 4,200.

If UC shores up its criteria for determining who is eligible, it may not need to turn away eligible students, the report suggests.

But such a change would come too late for this year: In just a few weeks, the university will mail out acceptances and rejections for fall 2004.

The budget crisis has pushed the issue of eligibility criteria to the fore.

"As long as people aren't (being) excluded, no one minds if you're more generous in letting people into the university," said Steve Boilard, director of higher education with the Legislative Analyst's Office. "But as soon as resources become more constrained, as they have in the last couple of years, you have to make hard choices. We cannot accommodate as many people as we have in the past."

The question is particularly pressing for UC: A number of UC regents and educators have asked if recent admissions changes have caused UC's GPA and SAT indexes to capture too many people.

The California Postsecondary Education Commission will soon determine if that is the case. The CPEC's study of UC and CSU's eligibility pools is due out in May. UC officials said they're waiting on that data.

"Even if we are above the 12.5 percent, we believe that should be viewed as a positive indicator of what's happening in California's schools," said spokeswoman Lavonne Luquis. "We set high standards, and an increasing number of students are working hard to meet those standards. We think that's good for everyone."

The legislative analyst's office released its report Friday to bring attention to an issue that is complicated and esoteric, but extremely important to the makeup of the state's university systems.

At loggerheads are those who want a racially and socioeconomically diverse student body and those who say efforts to achieve that have hurt the system.

The report suggested that one way in which UC may be unnecessarily expanding its eligibility pool is by admitting students through special exception. Generally speaking, students become eligible to attend UC by taking the required high school courses and earning the proper grades and SAT scores.

The 1960 master plan allowed for UC and CSU to admit up to 2 percent of its freshmen class through special exceptions. Those students don't have to have the right grades or take the right courses or even take the SAT. In contrast, UC has permitted its campuses to admit up to 6 percent of students by special exception, though in 2002 it adhered to the 2 percent rule. Friday's report suggested it should stay there.

CSU admits up to 8 percent of its freshmen by special exception and now is admitting 6 percent.

Other issues are: How should UC define the top 12.5 percent? What is "top"?

The legislative analyst's report suggests that UC scrap the SAT as an eligibility requirement but not necessarily for admissions. It shouldn't be used to determine who is in the top 12.5 percent, Boilard said. One reason is that the test costs money and not all students take it. A brilliant student with a stellar GPA may not have taken the SAT because he thinks he's not going to college, Boilard said. Shouldn't that student still be considered as one of the top 12.5 percent?

The report suggested that the Legislature should play more of a role in how UC and CSU determine eligibility criteria. That notion makes UC bristle.

"Stepping back, it seems the LAO is suggesting the Legislature get more involved in UC's admissions criteria," said Luquis. "That is a major concern for us."