

Yes and no. The money given to universities is mostly earmarked for very specific things, as designated by those who donate the money. It’s not like they have a huge tower of gold that they can swim in to their liking. They have a lot of oversight and auditing to make sure money goes where it’s suppose to. And if they want to keep their many accreditations - and they do - then they need that money to jump through whatever hoops their accreditors require.
I work at a university that is also part of a state system with their own rules (also driven by federal regulations).
You’re conflating the government coming on campus and exerting the power of the law with universities having to comply with said laws. And yes, universities will comply because they have no choice.