The ten-campus University of California (UC) system — a national star of US public universities — has begun haemorrhaging top researchers as its financial crisis escalates.

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On 16 July, the UC board of regents voted to give its president Mark Yudof the power to force university staff to take unpaid leave through a furlough plan. The cuts are meant to help the system offset about a quarter of its US$813-million drop in state funding this year. The measures would affect 108,000 full-time UC employees and would follow a sliding scale according to salary, with the lowest-paid faculty members drawing 11 unpaid days off — equivalent to a 4% pay cut — and the highest-paid staff drawing 26 unpaid days, or a 10% cut.

"The alternative is massive lay-offs," Yudof told the regents in San Francisco. "We have frankly just run out of money."

Those exempt from salary cuts include student employees, such as graduate students, as well as staff whose salaries are paid wholly from research grants and contracts. Most campuses have dramatically curtailed recruiting, including withdrawing job offers already made to candidates.

Marye Ann Fox, chancellor of the University of California, San Diego (UCSD), said at the regents' meeting that several top researchers had already left the system. In written comments naming some of them, she mentioned Edward Yu, a professor of electrical and computer engineering who is moving to the University of Texas at Austin, and biologist Charles Zuker, said to be moving to Columbia University in New York.

The separate, 23-campus California State University (CSU) system is also struggling — its budget from the state for the new fiscal year is $584 million less than it was expecting. CSU executives are asking employee unions to agree to a two-day-a-month furlough, which represents a 9.5% pay cut, for 46,000 employees. The California Faculty Association, a key group that represents 23,000 faculty members from the CSU system, is voting on the proposed cut this week, with results likely to be tabulated on 22 July (after Nature went to press). If the faculty do not approve, CSU officials say that lay-offs are likely.

At the UC regents' meeting, meanwhile, some scientists argued that young faculty members will be hit particularly hard by the cuts, and that it is already becoming difficult to recruit and retain them.

Astronomer Mark Krumholz of the University of California, Santa Cruz, says that if the cuts continue for longer than a year, he would consider leaving. "In one year, I have brought in nine times my salary in grants," he says. "If I go elsewhere, that money follows me."

Krumholz spearheaded the writing of a letter sent this month to California governor Arnold Schwarzenegger and members of the state legislature to protest against the cuts. It has been signed by more than 300 UC faculty members who are members of the US National Academies of Science or Engineering or of the Institute of Medicine.

Another signatory at the Santa Cruz campus, astronomer Sandra Faber, warned the regents that continued cuts would lead to serious harm. "The university is the most powerful economic engine in the state," she said. "Disinvesting in the University of California at this time is like eating our seed corn."

But the state continues to face a $26-billion budget deficit; it must balance its books for each fiscal year, which began on 1 July. "I don't really see a light at the end of the tunnel," Yudof said last week. With Russell Gould, chairman of the UC board of regents, he has announced plans to form a Commission on the Future of UC to examine the university's continued existence, its services and its funding model.

The cuts have even triggered fighting within the UC system itself, with some at the biggest campuses suggesting turning on the smaller ones. In a 15 June letter that made headlines last week, the chairman of UCSD's sociology department, Andrew Scull, and 22 other department chairs called on the regents to make the UC campuses at San Diego, Berkeley, Los Angeles and San Francisco into elite research institutions; other campuses would be downgraded to teaching institutions, with presumably smaller budgets.

As Nature went to press, the state legislature and the governor had agreed a plan to close the budget gap, involving some $15 billion in proposed cuts.