The Journal Sentinel has an article complaining about how UW Madison is letting in fewer students, and that the requirements for academic excellence of prospective students is climbing as well:

The university guaranteed admission to all high school graduates in the top half of their class. It accepted more than 80% of applicants.

"I walked upright," Dan Conley, a 1981 graduate, said with a chuckle. "That's how I got in."

How times have changed.

Now students are discouraged from applying without a grade-point average from 3.5 to 3.9, an ACT score of at least 26 and a class rank in the 85th to 96th percentiles. The acceptance rate for Wisconsin residents is 65%. No student is guaranteed a spot in the freshman class, no matter how good his or her grades are.

"I had a student who was denied admission last year with a 3.7 GPA, six Advanced Placement courses and a 27 on the ACT," said Curt Cattanach, college adviser at Whitefish Bay High School. "We're frank with our students: UW-Madison has become very selective."

I can't help thinking... maybe the people in charge of student applications needs to transfer over to the department in charge of hiring professors.  They seem to need some help there.  In general I don't see the problem here at all.  When you have fewer slots available at your flagship university, your entry requirements should get more strict.  How else would you suggest assigning limited slots?