If we assume that the flagship offers better academic opportunities than the non-flagship presumably-commuter-based universities, then it makes sense to offer the opportunity to attend the flagship based on having sufficient academic merit to be flagship-admissible, which means that group B (assuming that is within the flagship-admissible range) is more important (from a policy standpoint, if the goal is to offer educational opportunities to all academically qualified state residents) to offer discounts to than group A, since group B would otherwise be financially denied the opportunity to make use of the better academic opportunities that it is academically qualified for.