The most obvious next step is for the NCAA to state that California schools will be ineligible to compete in the NCAA, but that's a big deal because there are a lot of highly competitive NCAA programs in California (there's a reason Stanford wins the Directors Cup every year), not just in football and basketball. That said, the NCAA could probably carry on without them--but at a great cost to the Pac-12, which would hurt.
To put some data behind this, the top three schools for total Div I team championships are Stanford, UCLA, and USC, with Cal at #10. For team and individual championships, it's Stanford, USC, Texas, UCLA, and Cal is 8th.