I agree with your principle ('publicly funded work shouldn't be patented'), but that's not the legal framework we have, and it hasn't been that way since Bayh-Dole was passed in 1980 [1].
Until that act is reversed, it's foolish for UC to not behave more like Stanford.
It seems like it would be a good idea to have some kind of sub-patent, time-limited exclusivity granularity. For purposes of saying "I recognize that you are providing value to me as the patent holder by doing something with the patent that may not merit its own patent, but should nonetheless be encouraged (for my own gain and yours)".
Like a sub-piggyback patent that automatically includes licensing of the parent.
Until that act is reversed, it's foolish for UC to not behave more like Stanford.
1. https://en.wikipedia.org/wiki/Bayh–Dole_Act