The ultimate reputation of a university is formed both by its professors and its students. This decisions means that fewer of the nation's brightest students end up at the UC systems.
I think this provides an opening for the University of Michigan to compete for and get a greater share of these students. It already pays more for professors (after adjusting for cost of living) than Berkeley does, and Michigan's large endowment means it can spend money strategically in a way that the UC system cannot. It would not surprise me to see that Michigan is the #1 public university in 20 years or so.
