Cap administrative costs
Operate year-round, five days a week
More teaching, less (mediocre) research
Cheaper, better general education
In most fields there is not a shortage of PHD's and little of the Universities' prestige comes from its professors. So if they quit you replace them, if they go to other Universities you could get the experienced professors that they replace.
I think that the state schools being subsidized already should ignore loss of prestige to some fairly low level and educate more students at lower cost. To be concrete target 20% increase in enrolment and 50% of the current per student cost. I think if you forgo prestige it could be done.