Regents of the University of California (PERB 1689H)

'
STATE OF CALIFORNIA
DECISION OF THE
PUBLIC EMPLOYMENT RELATIONS BOARD
UNIVERSITY COUNCIL AMERICAN
FEDERATION OF TEACHERS,
Charging Party, 	Case No. SF-CE-611-H
v . 	PERB Decision No. 1689-H
September 17, 2004
REGENTS OF THE UNIVERSITY OF
CALIFORNIA,
Respondent.
Appearances: Leonard Carder by Arthur Krantz, Attorney, for University Council American
Federation of Teachers; Hanson, Bridgett, Marcus, Vlahos & Rudy, by Allison Woodall,
Attorney, for Regents of the University of California.
Before Duncan, Chairman; Whitehead and Neima, Members.
DECISION
DUNCAN, Chairman: This case is before the Public Employment Relations Board
(Board) on exceptions filed by the Regents of the University of California (University) to a
proposed decision (attached) of an administrative law judge (ALJ). The ALJ held that the
University violated the Higher Education Employer-Employee Relations Act (HEERA) by
unilaterally adjusting health benefits without giving the University Council American
Federation of Teachers (UC-AFT) notice and opportunity to bargain.
The Board has reviewed the entire record in this matter, including the proposed
decision, the University's exceptions and UC-AFT's response." The Board finds the ALJ's
HEERA is codified at Government Code section 3560, et seq. Unless otherwise
indicated, all statutory references herein are to the Government Code.
2 The request for oral argument was denied September 2, 2004.
STATE OF CALIFORNIA
DECISION OF THE
PUBLIC EMPLOYMENT RELATIONS BOARD
UNIVERSITY COUNCIL AMERICAN
FEDERATION OF TEACHERS,
Charging Party,
V.
REGENTS OF THE UNIVERSITY OF
CALIFORNIA,
Respondent.
Case No. SF-CE-611-H
PERB Decision No. 	1689-H
September 	17, 	2004
Appearances: Leonard Carder by Arthur Krantz, Attorney, for University Council American
Federation of Teachers; Hanson, Bridgett, Marcus, Vlahos & Rudy, by Allison Woodall,
Attorney, for Regents of the University of California.
Before Duncan, Chairman; Whitehead and Neima, Members.
DECISION
DUNCAN, Chairman: This case is before the Public Employment Relations Board
(Board) on exceptions filed by the Regents of the University of California (University) to a
proposed decision (attached) of an administrative law judge (ALJ). The ALJ held that the
University violated the Higher Education Employer-Employee Relations Act (HEERA)1 by
unilaterally adjusting health benefits without giving the University Council American
Federation of Teachers (UC-AFT) notice and opportunity to bargain.
The Board has reviewed the entire record in this matter, including the proposed
decision, the University's exceptions and UC-AFT's response.2 The Board finds the ALJ's
1HEERA is codified at Government Code section 3560, et seq. Unless otherwise
indicated, all statutory references herein are to the Government Code.
2 The request for oral argument was denied September 2, 2004.

22
proposed decision to be free of prejudicial error and adopts it as the decision of the Board
itself.
ORDER
Based on the foregoing findings of fact and conclusions of law and the entire record in
this matter, it has been found that the Regents of the University of California (University)
violated the Higher Education Employer-Employee Relations Act (HEERA), Government
Code section 3571(a), (b) and (c), by unilaterally changing health benefits for calendar years
2002 and 2003 without affording the University Council American Federation of Teachers
(UC-AFT) notice and an opportunity to bargain. By this conduct, the University has breached
its duty to bargain in violation of HEERA section 3571(c), interfered with the right of Unit 18
employees to be represented by UC-AFT in violation of section 3571(a), and denied UC-AFT
the right to represent its members in violation of section 3571(b).
Pursuant to HEERA section 3563.3, it is hereby ordered that the University and its
representatives shall:
A. 	CEASE AND DESIST FROM:
1 . 	Failing and refusing to negotiate with the UC-AFT about the decision to
change health benefits;
2. 	Denying UC-AFT the right to represent Unit 18 employees in their
employment relations with the University; and
3. Interfering with the right of Unit 18 members to be represented by their
chosen representative.
proposed decision to be free of prejudicial error and adopts it as the decision of the Board
itself.
ORDER
Based on the foregoing findings of fact and conclusions of law and the entire record in
this matter, it has been found that the Regents of the University of California (University)
violated the Higher Education Employer-Employee Relations Act (HEERA), Government
Code section 3571(a), (b) and (c), by unilaterally changing health benefits for calendar years
2002 and 2003 without affording the University Council American Federation of Teachers
(UC-AFT) notice and an opportunity to bargain. By this conduct, the University has breached
its duty to bargain in violation ofHEERA section 3571(c), interfered with the right of Unit 18
employees to be represented by UC-AFT in violation of section 3571(a), and denied UC-AFT
the right to represent its members in violation of section 3571(b).
Pursuant to HEERA section 3563.3, it is hereby ordered that the University and its
representatives shall:
A. 	CEASE AND DESIST FROM:
1. 	Failing and refusing to negotiate with the UC-AFT about the decision to
change health benefits;
2. 	Denying UC-AFT the right to represent Unit 18 employees in their
employment relations with the University; and
3. 	Interfering with the right of Unit 18 members to be represented by their
chosen representative.

3
B. 	TAKE THE FOLLOWING AFFIRMATIVE ACTIONS DESIGNED TO
EFFECUTATE THE POLICIES OF THE HEERA:
1 . 	Unless otherwise agreed to by the parties, make employees whole for
losses suffered as a result of the unilateral change in health benefits for calendar years
2002 and 2003. The make whole remedy shall include, but shall not be limited to:
(a) reimbursement for the difference between premiums they have paid since January 2003 and
the premiums they would have paid had the University followed its benchmark methodology of
setting its contribution based upon the lowest cost health maintenance organization after risk
adjustment, and (b) reimbursement for the difference between copayments they have paid since
January 2002, when the University made the discretionary decision to negotiate higher
copayments not in conformance with any past practice, and the copayments they would have
paid had the University not made the decision. The period covering the make whole remedy
shall begin with the date the changes were implemented and end with the effective date of a
successor agreement covering health benefits. All monetary losses will include interest at the
rate of 7 percent per annum.
2. 	Within ten (10) workdays following the date this decision is no longer
subject to appeal, post at all work locations where notices to employees customarily are posted,
copies of the Notice attached hereto as an Appendix. The Notice must be signed by an
authorized agent of the University, indicating that the University will comply with the terms of
this Order. Such posting shall be maintained for a period of thirty (30) consecutive workdays.
Reasonable steps shall be taken to ensure that the Notice is not reduced in size, altered, defaced
or covered with any other material.
3. 	Written notice of the actions taken to comply with this Order shall be
made to the San Francisco Regional Director of the Public Employment Relations Board in
3
B. 	TAKE THE FOLLOWING AFFIRMATIVE ACTIONS DESIGNED TO
EFFECUTATE THE POLICIES OF THE HEERA:
1. 	Unless otherwise agreed to by the parties, make employees whole for
losses suffered as a result of the unilateral change in health benefits for calendar years
2002 and 2003. The make whole remedy shall include, but shall not be limited to:
(a) reimbursement for the difference between premiums they have paid since January 2003 and
the premiums they would have paid had the University followed its benchmark methodology of
setting its contribution based upon the lowest cost health maintenance organization after risk
adjustment, and (b) reimbursement for the difference between copayments they have paid since
January 2002, when the University made the discretionary decision to negotiate higher
copayments not in conformance with any past practice, and the copayments they would have
paid had the University not made the decision. The period covering the make whole remedy
shall begin with the date the changes were implemented and end with the effective date of a
successor agreement covering health benefits. All monetary losses will include interest at the
rate of 7 percent per annum.
2. 	Within ten (10) workdays following the date this decision is no longer
subject to appeal, post at all work locations where notices to employees customarily are posted,
copies of the Notice attached hereto as an Appendix. The Notice must be signed by an
authorized agent of the University, indicating that the University will comply with the terms of
this Order. Such posting shall be maintained for a period of thirty (30) consecutive workdays.
Reasonable steps shall be taken to ensure that the Notice is not reduced in size, altered, defaced
or covered with any other material.
3. 	Written notice of the actions taken to comply with this Order shall be
made to the San Francisco Regional Director of the Public Employment Relations Board in

A
accord with the director's instructions. Continue to report to the regional director as directed.
All reports to the regional director shall be concurrently served on UC-AFT.
Members Whitehead and Neima joined in this Decision.
4
accord with the director's instructions. Continue to report to the regional director as directed.
All reports to the regional director shall be concurrently served on UC-AFT.
Members Whitehead and Neima joined in this Decision.

APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
PUBLIC EMPLOYMENT RELATIONS BOARD
An Agency of the State of California
After a hearing in Unfair Practice Case No. SF-CE-611-H, University Council
American Federation of Teachers v. Regents of the University of California, in which all
parties had the right to participate, it has been found that the Regents of the University of
California (University) violated the Higher Education Employer-Employee Relations Act
HEERA), Government Code section 3571(a), (b) and (c). The University violated HEERA
when it implemented significant changes in health benefits for calendar years 2002 and 2003
without affording the University Council American Federation of Teachers (UC-AFT), the
exclusive representative of an appropriate unit of lecturers (Unit 18), notice and an opportunity
to negotiate.
As a result of this conduct, we have been ordered to post this Notice and we will:
A. 	CEASE AND DESIST FROM:
1 . 	Failing and refusing to negotiate with UC-AFT about the decision to
change health benefits;
2. 	Denying UC-AFT the right to represent Unit 18 employees in their
employment relations with the University; and
3. Interfering with the right of Unit 18 members to be represented by their
chosen representative.
B. 	TAKE THE FOLLOWING AFFIRMATIVE ACTIONS DESIGNED TO
EFFECTUATE THE POLICIES OF THE HEERA:
Unless otherwise agreed to by the University and UC-AFT, make employees whole
for losses suffered as a result of the unilateral change in health benefits for calendar years
2002 and 2003. The make whole remedy shall include, but shall not be limited to:
a) reimbursement for the difference between premiums they have paid since January 2003 and
the premiums they would have paid had the University followed its benchmark methodology of
setting its contribution based upon the lowest cost health maintenance organization after risk
adjustment; and (b) reimbursement for the difference between copayments they have paid since
January 2002, when the University made the discretionary decision to negotiate higher
copayments not in conformance with any past practice, and the copayments they would have
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
PUBLIC EMPLOYMENT RELATIONS BOARD
An Agency of the State of California
After a hearing in Unfair Practice Case No. SF-CE-611-H, University Council
American Federation of Teachers v. Regents of the University of California, in which all
parties had the right to participate, it has been found that the Regents of the University of
California (University) violated the Higher Education Employer-Employee Relations Act
(HEERA), Government Code section 3571(a), (b) and (c). The University violated HEERA
when it implemented significant changes in health benefits for calendar years 2002 and 2003
without affording the University Council American Federation of Teachers (UC-AFT), the
exclusive representative of an appropriate unit of lecturers (Unit 18), notice and an opportunity
to negotiate.
As a result of this conduct, we have been ordered to post this Notice and we will:
A. 	CEASE AND DESIST FROM:
1. 	Failing and refusing to negotiate with UC-AFT about the decision to
change health benefits;
2. 	Denying UC-AFT the right to represent Unit 18 employees in their
employment relations with the University; and
3. 	Interfering with the right of Unit 18 members to be represented by their
chosen representative.
B. 	TAKE THE FOLLOWING AFFIRMATIVE ACTIONS DESIGNED TO
EFFECTUATE THE POLICIES OF THE HEERA:
Unless otherwise agreed to by the University and UC-AFT, make employees whole
for losses suffered as a result of the unilateral change in health benefits for calendar years
2002 and 2003. The make whole remedy shall include, but shall not be limited to:
(a) reimbursement for the difference between premiums they have paid since January 2003 and
the premiums they would have paid had the University followed its benchmark methodology of
setting its contribution based upon the lowest cost health maintenance organization after risk
adjustment; and (b) reimbursement for the difference between copayments they have paid since
January 2002, when the University made the discretionary decision to negotiate higher
copayments not in conformance with any past practice, and the copayments they would have

paid had the University not made the decision. The period covering the make whole remedy
shall begin with the date the changes were implemented and end with the effective date of a
successor agreement covering health benefits. All monetary losses will include interest at the
rate of 7 percent per annum.
Dated: 	REGENTS OF THE UNIVERSITY OF
CALIFORNIA
By:
Authorized Agent
THIS IS AN OFFICIAL NOTICE. IT MUST REMAIN POSTED FOR AT LEAST THIRTY
(30) CONSECUTIVE WORKDAYS FROM THE DATE OF POSTING AND MUST NOT BE
REDUCED IN SIZE, DEFACED, ALTERED OR COVERED WITH ANY OTHER
MATERIAL.
2
paid had the University not made the decision. The period covering the make whole remedy
shall begin with the date the changes were implemented and end with the effective date of a
successor agreement covering health benefits. All monetary losses will include interest at the
rate of 7 percent per annum.
Dated: --------- REGENTS OF THE UNIVERSITY OF
CALIFORNIA
B Authorized Agent
y:------------
THIS IS AN OFFICIAL NOTICE. IT MUST REMAIN POSTED FOR AT LEAST THIRTY
(30) CONSECUTIVE WORK.DAYS FROM THE DATE OF POSTING AND MUST NOT BE
REDUCED IN SIZE, DEF ACED, ALTERED OR COVERED WITH ANY OTHER
MATERIAL.
2

STATE OF CALIFORNIA
PUBLIC EMPLOYMENT RELATIONS BOARD
UNIVERSITY COUNCIL AMERICAN
FEDERATION OF TEACHERS,
UNFAIR PRACTICE
Charging Party, 	CASE NO. SF-CE-611-H
V . 	PROPOSED DECISION
(3/17/04)
REGENTS OF THE UNIVERSITY OF
CALIFORNIA,
Respondent.
Appearances: Leonard Carder, by Arthur Krantz, Attorney, for University Council American
Federation of Teachers; Hanson, Bridgett, Marcus, Vlahos and Rudy, by Douglas Barton and
Allison Woodall, Attorneys, for Regents of the University of California.
Before Fred D'Orazio, Administrative Law Judge.
PROCEDURAL HISTORY
The University Council American Federation of Teachers (UC-AFT) initiated this
action on March 5, 2002, by filing an unfair practice charge against the Regents of the
University of California (University). The Office of the General Counsel of the Public
Employment Relations Board (PERB or Board) issued a complaint on August 22, 2002. The
complaint, as amended, alleges that the University changed health benefits for calendar years
2002 and 2003 without affording UC-AFT notice and an opportunity to negotiate about the
decision or the effects thereof. It is alleged that the University, by this action, violated the
Higher Education Employer-Employee Relations Act (HEERA) section 3571(a), (b) and (c).'
HEERA is codified at Government Code section 3560 et seq. Unless otherwise
indicated, all statutory references herein are to the Government Code. In relevant part,
section 3571 states:
It shall be unlawful for the higher education employer to do any
of the following:
STATE OF CALIFORNIA
PUBLIC EMPLOYMENT RELATIONS BOARD
UNIVERSITY COUNCIL AMERICAN
FEDERATION OF TEACHERS,
Charging Party,
V.
REGENTS OF THE UNIVERSITY OF
CALIFORNIA,
Respondent.
UNFAIR PRACTICE
CASE NO. SF-CE-611-H
PROPOSED DECISION
(3/17 /04)
Appearances: 	Leonard Carder, by Arthur Krantz, Attorney, for University Council American
Federation of Teachers; Hanson, Bridgett, Marcus, Vlahos and Rudy, by Douglas Barton and
Allison Woodall, Attorneys, for Regents of the University of California.
Before Fred D'Orazio, Administrative Law Judge.
PROCEDURAL HISTORY
The University Council American Federation of Teachers (UC-AFT) initiated this
action on March 5, 2002, by filing an unfair practice charge against the Regents of the
University of California (University). 	The Office of the General Counsel of the Public
Employment Relations Board (PERB or Board) issued a complaint on August 22, 2002. 	The
complaint, as amended, alleges that the University changed health benefits for calendar years
2002 and 2003 without affording UC-AFT notice and an opportunity to negotiate about the
decision or the effects thereof. It is alleged that the University, by this action, violated the
Higher Education Employer-Employee Relations Act (HEERA) section 357l(a), (b) and (c). 1
1 HEERA is codified at Government Code section 3560 et seq. Unless otherwise
indicated, all statutory references herein are to the Government Code. In relevant part,
section 3571 states:
It shall be unlawful for the higher education employer to do any
of the following:

The University answered the complaint on September 16, 2002, generally denying the
allegations and setting forth a number of affirmative defenses. Denials and defenses will be
addressed below, as necessary.
A settlement conference was conducted by a PERB agent, but the matter was not
resolved. The undersigned conducted six days of formal hearing in Oakland between
January 15 and February 28, 2003. With the receipt of the final brief on June 17, 2003, the
matter was submitted for decision.
FINDINGS OF FACT
Jurisdiction
UC-AFT is an employee organization within the meaning of section 3562(1)(1) and the
exclusive representative of an appropriate unit of the University's non-senate instructional
employees (Unit 18) within the meaning of section 3562(i). The University is a higher
education employer within the meaning of section 3562(g). At all relevant times the collective
bargaining agreement between the parties had expired and the parties were negotiating for a
successor agreement.
(a) Impose or threaten to impose reprisals on employees, to
discriminate or threaten to discriminate against employees, or
otherwise to interfere with, restrain, or coerce employees because
of their exercise of rights guaranteed by this chapter. For
purposes of this subdivision, "employee" includes an applicant
for employment or reemployment.
(b) Deny to employee organizations rights guaranteed to them by
this chapter.
(c) Refuse or fail to engage in meeting and conferring with an
exclusive representative.
2	2
The University answered the complaint on September 16, 2002, generally denying the
allegations and setting forth a number of affirmative defenses. 	Denials and defenses will be
addressed below, as necessary.
A settlement conference was conducted by a PERB agent, but the matter was not
resolved. The undersigned conducted six days of formal hearing in Oakland between
January 15 and February 28, 2003. 	With the receipt of the final brief on June 17, 2003, the
matter was submitted for decision.
FINDINGS OF FACT
Jurisdiction
UC-AFT is an employee organization within the meaning of section 3562(f)(l) and the
exclusive representative of an appropriate unit of the University's non-senate instructional
employees (Unit 18) within the meaning of section 3562(i). The University is a higher
education employer within the meaning of section 3562(g). At all relevant times the collective
bargaining agreement between the parties had expired and the parties were negotiating for a
successor agreement.
(a) Impose or threaten to impose reprisals on employees, to
discriminate or threaten to discriminate against employees, or
otherwise to interfere with, restrain, or coerce employees because
of their exercise of rights guaranteed by this chapter. For
purposes of this subdivision, "employee" includes an applicant
for employment or reemployment.
(b) Deny to employee organizations rights guaranteed to them by
this chapter.
(c) Refuse or fail to engage in meeting and conferring with an
exclusive representative.

Background
The University encompasses ten campuses, as well as several medical centers and three
national laboratories. It offers a comprehensive health benefits package to eligible employees
and retirees, regardless of their location within the system or their representation by an
exclusive representative. Employees in all bargaining units participate in the health benefits
system and have the same benefit options and costs as all other participants. The University's
Human Resource and Benefits Policy Division, headed by Executive Director Michele French,
manages policy and administration for all non-pension benefits.
The health benefits system covers approximately 145,000 active employees and
retirees. With covered dependents, the system provides benefits for over 300,000 individuals.
The number of benefit-eligible UC-AFT members is less than one percent of the total number
of employees in the University system. By virtue of their participation in the system, members
may choose coverage from a number of different health plans, including several health
maintenance organizations (HMO), a preferred provider organization (PPO), a point of service
plan, and two fee for service plans." The University's ability to offer a variety of plan choices
arises from the large number of participants in the system.
All participants in the system have the opportunity to change their health care coverage
once per year during an open enrollment process. Open enrollment occurs every November,
with changes becoming effective January 1 for the following calendar year. During the open
enrollment, participants may switch to a new plan, change the dependents enrolled in a plan, or
An HMO offers a closed access program with a defined network of physicians and a
primary physician who acts as a gatekeeper or manager of the patient's health care. A PPO
provides greater flexibility than an HMO by providing a defined network of physicians without
the primary physician gatekeeper. A point of service plan provides different levels of benefits
by melding an HMO component with a PPO component or a fee for service component. A fee
for service plan has no gatekeeper component and no defined network.
33
Background
The University encompasses ten campuses, as well as several medical centers and three
national laboratories. It offers a comprehensive health benefits package to eligible employees
and retirees, regardless of their location within the system or their representation by an
exclusive representative. Employees in all bargaining units participate in the health benefits
system and have the same benefit options and costs as all other participants. 	The University's
Human Resource and Benefits Policy Division, headed by Executive Director Michele French,
manages policy and administration for all non-pension benefits.
The health benefits system covers approximately 145,000 active employees and
retirees. 	With covered dependents, the system provides benefits for over 300,000 individuals.
The number of benefit-eligible UC-AFT members is less than one percent of the total number
of employees in the University system. 	By virtue of their participation in the system, members
may choose coverage from a number of different health plans, including several health
maintenance organizations (HMO), a preferred provider organization (PPO), a point of service
plan, and two fee for service plans. 2 The University's ability to offer a variety of plan choices
arises from the large number of participants in the system.
All participants in the system have the opportunity to change their health care coverage
once per year during an open enrollment process. Open enrollment occurs every November,
with changes becoming effective January I for the following calendar year. During the open
enrollment, participants may switch to a new plan, change the dependents enrolled in a plan, or
2 An HMO offers a closed access program with a defined network of physicians and a
primary physician who acts as a gatekeeper or manager of the patient's health care. 	A PPO
provides greater flexibility than an HMO by providing a defined network of physicians without
the primary physician gatekeeper. 	A point of service plan provides different levels of benefits
by melding an HMO component with a PPO component or a fee for service component. 	A fee
for service plan has no gatekeeper component and no defined network.

make no change to prior selections. The ability of employees to make annual changes through
open enrollment is important because the benefits and costs of the plans change every year for
a variety of reasons, including cyclical swings both in the health care market and in the
University's budgetary resources.
The Process for Setting Health Benefits
The process leading to the open enrollment period in November is a lengthy one
involving University committees in areas such as planning, administration, communications
and systems. It generally begins soon after the open enrollment period in November with a
goal of completion the following August. According to French, preliminary steps in dealing
with health plans are taken in the calendar year prior to an enrollment period. She said "you'd
probably begin thinking about it the year before, but you'd begin to actually sit down and
hammer them out in the first quarter of the year at least an initial take on where you think . . .
you want to go or what you need to know in order to determine where you go."
The University sends a request for renewal to each health plan in approximately mid-
April. The request concerning benefits for the 2002 calendar year, for example, was issued on
April 13, 2001, and required a written response by May 1, 2001. Among other things,
response typically includes proposals for premium rates, plan designs and related matters. At
about this time, negotiations between numerous University teams and the various health plan
vendors commence on a number of issues. The University typically schedules a meeting for
July with representatives from the various plans who have final decision-making authority.
French testified that all non-financial decisions (anything that is not limited to the final
rate negotiations with the vendor) must be made by about August 31. Other decisions are
made shortly thereafter. For example, she said the final date for setting the 2002 benefits,
including the vendor's rate and the University's rate, was September 25, 2001. A total
4
make no change to prior selections. The ability of employees to make annual changes through
open enrollment is important because the benefits and costs of the plans change every year for
a variety of reasons, including cyclical swings both in the health care market and in the
University's budgetary resources.
The Process for Setting Health Benefits
The process leading to the open enrollment period in November is a lengthy one
involving University committees in areas such as planning, administration, communications
and systems. 	It generally begins soon after the open enrollment period in November with a
goal of completion the following August. According to French, preliminary steps in dealing
with health plans are taken in the calendar year prior to an enrollment period. 	She said "you'd
probably begin thinking about it the year before, but you'd begin to actually sit down and
hammer them out in the first quarter of the year at least an initial take on where you think ...
you want to go or what you need to know in order to determine where you go."
The University sends a request for renewal to each health plan in approximately mid-
Apri 1. The request concerning benefits for the 2002 calendar year, for example, was issued on
April 13, 2001, and required a written response by May 1, 2001. Among other things,
response typically includes proposals for premium rates, plan designs and related matters. At
about this time, negotiations between numerous University teams and the various health plan
vendors commence on a number of issues. The University typically schedules a meeting for
July with representatives from the various plans who have final decision-making authority.
French testified that all non-financial decisions (anything that is not limited to the final
rate negotiations with the vendor) must be made by about August 31. Other decisions are
made shortly thereafter. 	For example, she said the final date for setting the 2002 benefits,
including the vendor's rate and the University's rate, was September 25, 2001. A total

premium ordinarily is established at about that time, and rates are sent to the payroll
department so they can be programmed for deductions. That function typically is completed
by October 15, and the process moves to the open enrollment stage. Notification of changes in
health benefits typically is forwarded to employee organizations in late October or early
November. Changes in health benefits become effective January 1.
In the negotiations leading to adoption of a final benefit package, the University and the
various health plans have several options in dealing with rising health care costs. One option
is to increase copayments, which is what the University did in the 2001 negotiations leading up
to the 2002 changes. The plans had proposed a double digit increase in premiums, and the
University was able to keep the increase lower by proposing plan design changes that included
copayment increases. The proposal was accepted by the plans. Other options include
increasing the University's contribution if funding is available and adopting salary-related
contributions, otherwise known as transitional allowances." Establishing a multiple tier system
is yet another option. Under this approach, contributions are made in increasing amounts in
accordance with the following order: single employee, employee with one or more children,
employee with one adult, and an employee with an adult and one or more children. Under this
option, the University's aggregate cost does not change, it merely is allocated differently
across the tiers.
Still another option available to the University is to take money from other areas, such
as salaries and cost of living increases, and use it to fund health care increases. In fact, the
University uses a "total compensation approach." According to French, this term means that
The transitional allowance concept permits the University to vary its contribution for
different groups of employees based on salary. As more fully discussed below, the
contribution for calendar year 2003 was higher for employees whose annualized salaries were
less than $40,000, while the contributions were lower for employees whose annualized salaries
were higher than $40,000. 5	5
premium ordinarily is established at about that time, and rates are sent to the payroll
department so they can be programmed for deductions. That function typically is completed
by October 15, and the process moves to the open enrollment stage. Notification of changes in
health benefits typically is forwarded to employee organizations in late October or early
November. 	Changes in health benefits become effective January 1.
In the negotiations leading to adoption of a final benefit package, the University and the
various health plans have several options in dealing with rising health care costs. One option
is to increase copayments, which is what the University did in the 2001 negotiations leading up
to the 2002 changes. The plans had proposed a double digit increase in premiums, and the
University was able to keep the increase lower by proposing plan design changes that included
copayment increases. The proposal was accepted by the plans. Other options include
increasing the University's contribution if funding is available and adopting salary-related
contributions, otherwise known as transitional allowances. 3 Establishing a multiple tier system
is yet another option. Under this approach, contributions are made in increasing amounts in
accordance with the following order: single employee, employee with one or more children,
employee with one adult, and an employee with an adult and one or more children. Under this
option, the University's aggregate cost does not change, it merely is allocated differently
across the tiers.
Still another option available to the University is to take money from other areas, such
as salaries and cost of living increases, and use it to fund health care increases. 	In fact, the
University uses a "total compensation approach." According to French, this term means that
3 The transitional allowance concept permits the University to vary its contribution for
different groups of employees based on salary. 	As more fully discussed below, the
contribution for calendar year 2003 was higher for employees whose annualized salaries were
less than $40,000, while the contributions were lower for employees whose annualized salaries
were higher than $40,000.

·
the University looks at "the entire compensation to an individual, that includes salary, health
and welfare benefits, pension, can include fringe benefits, depending on how broad a definition
you want to wrap that up, it's anything that can be looked at as compensation, things like
[ that]."
According to French, the University decides which options it plans to use in an
"interactive process" that takes into account the marketplace, resources and the overall
competitive position of the benefit program. French said she meets with several groups in the
process and seeks input. These include the faculty welfare committee (an arm of the faculty
senate that has a constitutional right to shared governance), various administrative groups, and
employee organizations to the extent that University's labor relations representatives want to
involve the unions in informational meetings."
The process for setting the University's contribution rate for health benefits has
changed over the years. Prior to 1982, the University did not set its own rate. It established an
annual contribution based on the rate paid by the Public Employee Retirement System or PERS
for State of California (State) employees. From 1982 to 1993, the University continued to
follow the State's formula, which was to develop a contribution based on the weighted average
of the four largest plans; that is, the average was weighted based on how many members those
plans had.
In 1993, the University adopted a benchmark methodology, which is designed to
provide a contribution equal to the cost of lowest priced HMO at all nine University campuses.
As the University stated in its open enrollment announcement for 1994, it "adopted the
"In 2002, for example, French said she met with the faculty welfare committee
sometime during the first six months of 2002 to consult about the transitional allowance. The
committee has medical experts who offered input regarding "risk rating" and point of service
plans. 6
the University looks at "the entire compensation to an individual, that includes salary, health
and welfare benefits, pension, can include fringe benefits, depending on how broad a definition
you want to wrap that up, it's anything that can be looked at as compensation, things like
[that]."
According to French, the University decides which options it plans to use in an
"interactive process" that takes into account the marketplace, resources and the overall
competitive position of the benefit program. French said she meets with several groups in the
process and seeks input. These include the faculty welfare committee (an arm of the faculty
senate that has a constitutional right to shared governance), various administrative groups, and
employee organizations to the extent that University's labor relations representatives want to
involve the unions in informational meetings.4
The process for setting the University's contribution rate for health benefits has
changed overthe years. Prior to I 982, the University did not set its own rate. 	It established an
annual contribution based on the rate paid by the Public Employee Retirement System or PERS
for State of California (State) employees. From 1982 to 1993, the University continued to
follow the State's formula, which was to develop a contribution based on the weighted average
of the four largest plans; that is, the average was weighted based on how many members those
plans had.
In 1993, the University adopted a benchmark methodology, which is designed to
provide a contribution equal to the cost of lowest priced HMO at all nine University campuses.
As the University stated in its open enrollment announcement for 1994, it "adopted the
4 In 2002, for example, French said she met with the faculty welfare committee
sometime during the first six months of 2002 to consult about the transitional allowance. 	The
committee has medical experts who offered input regarding "risk rating" and point of service
plans.

7
principle of setting the employer contribution close to the level of the most cost-efficient plan."
Under this methodology, the University offered at least one fully paid HMO, assuming the
resources were available to fund it. This methodology continued until 2002. Even when the
University commenced using the so-called "risk adjustment" concept in 2000, the benchmark
methodology was followed, with the University setting its contribution equal to the price of the
lowest risk-adjusted HMO.
The State Budget Process
At about the time the health benefit process between the University and the various
health plans is unfolding, the University proceeds on a separate track to adopt an overall
budget. In November, the University submits its budget for the following fiscal year to the
Regents. After the Regents approve the budget, the University submits its proposed budget to
the Legislature and the Governor. The Governor proposes a State budget in January and
announces revisions in May. Ideally, the State budget is to be completed by July 1, but in
reality the budget frequently is finalized later. After the Governor signs it, the University's
budget is sent to the Regents for approval of any changes from its original proposal.
Budgeting for health benefit costs is difficult because the budget process involving the
University and the State operates on a fiscal year basis, while the benefit-setting process
between the University and health plans operates on a calendar year. The calendar year
premium increases for health benefits must by matched up with the University's budget year.
Consequently, the premium increases fall into two separate budget cycles.
French described risk adjustment as an attempt to prevent any given plan and any
employee that chooses that plan from being either advantaged or disadvantaged based on
health risk. She said the University's means of accomplishing that goal is to increase its
contribution for those employees who are part of a plan that has more unhealthy people in it.
The University ends up making higher contributions for groups of employees that have more
health problems as compared to groups of employees who have fewer health problems.
principle of setting the employer contribution close to the level of the most cost-efficient plan."
Under this methodology, the University offered at least one fully paid HMO, assuming the
resources were available to fund it. This methodology continued until 2002. 	Even when the
University commenced using the so-called "risk adjustment" concept in 2000, the benchmark
methodology was followed, with the University setting its contribution equal to the price of the
lowest risk-adjusted HM0. 5
The State Budget Process
At about the time the health benefit process between the University and the various
health plans is unfolding, the University proceeds on a separate track to adopt an overall
budget. In November, the University submits its budget for the following fiscal year to the
Regents. 	After the Regents approve the budget, the University submits its proposed budget to
the Legislature and the Governor. The Governor proposes a State budget in January and
announces revisions in May. Ideally, the State budget is to be completed by July I, but in
reality the budget frequently is finalized later. 	After the Governor signs it, the University's
budget is sent to the Regents for approval of any changes from its original proposal.
Budgeting for health benefit costs is difficult because the budget process involving the
University and the State operates on a fiscal year basis, while the benefit-setting process
between the University and health plans operates on a calendar year. 	The calendar year
premium increases for health benefits must by matched up with the University's budget year.
Consequently, the premium increases fall into two separate budget cycles.
5 French described risk adjustment as an attempt to prevent any given plan and any
employee that chooses that plan from being either advantaged or disadvantaged based on
health risk. 	She said the University's means of accomplishing that goal is to increase its
contribution for those employees who are part of a plan that has more unhealthy people in it.
The University ends up making higher contributions for groups of employees that have more
health problems as compared to groups of employees who have fewer health problems.

For several years the University and the State have operated under a Partnership
Agreement where the State provides the University with a 4 percent annual increase in funds
for salaries, benefits and other expenditures. In brief, the Partnership Agreement money is
envisioned as a 4 percent increase each year on a base budget from the Legislature; it is
appropriated in a lump sum, but it is justified in certain categories. Funds from the Partnership
Agreement are pooled and must be allocated by the University to cover various costs.
However, the University identifies in its budget how it expects to spend the money.
Under the established budget process, the University has the discretion to determine its
contribution to health benefits because it determines how much it will pay for the benefits as
compared with payments for other items, such as salaries. University Vice President for
Budget Larry Hershman, testified that the amount projected for health benefit increases is
based on two factors: "One is staying within this total pot of 4 percent and what the priorities
are for salaries, what we estimate costs for other inflation, and an estimate of the cost increase
for health benefits, yes. So we look at all those and figure out an allocation of that 4 percent
and that would be included in the plan, absolutely."
Within the framework of the Partnership Agreement, the University tells the Legislature
and the Governor how much it plans to spend for health benefits. Hershman testified "since
the partnership hasn't been fully funded, we're behind on salaries. So we're behind on a lot of
things, given what's happened recently. And so we have to make a judgment within the
amount of money that we would hope to get how to distribute that." Hershman said, for
example, the University may decide to include in its budget request a line item of 10 percent
for health benefits, but anticipated health benefit increases are 20 percent. In view of the
University's other priorities employees would have to pay for the increase or benefits would
have to be changed.
8	8
For several years the University and the State have operated under a Partnership
Agreement where the State provides the University with a 4 percent annual increase in funds
for salaries, benefits and other expenditures. In brief, the Partnership Agreement money is
envisioned as a 4 percent increase each year on a base budget from the Legislature; it is
appropriated in a lump sum, but it is justified in certain categories. Funds from the Partnership
Agreement are pooled and must be allocated by the University to cover various costs.
However, the University identifies in its budget how it expects to spend the money.
Under the established budget process, the University has the discretion to determine its
contribution to health benefits because it determines how much it will pay for the benefits as
compared with payments for other items, such as salaries. 	University Vice President for
Budget Larry Hershman, testified that the amount projected for health benefit increases is
based on two factors: "One is staying within this total pot of 4 percent and what the priorities
are for salaries, what we estimate costs for other inflation, and an estimate of the cost increase
for health benefits, yes. 	So we look at all those and figure out an allocation of that 4 percent
and that would be included in the plan, absolutely."
Within the framework of the Partnership Agreement, the University tells the Legislature
and the Governor how much it plans to spend for health benefits. Hershman testified "since
the partnership hasn't been fully funded, we're behind on salaries. So we're behind on a lot of
things, given what's happened recently. And so we have to make a judgment within the
amount of money that we would hope to get how to distribute that." Hershman said, for
example, the University may decide to include in its budget request a line item of 10 percent
for health benefits, but anticipated health benefit increases are 20 percent. 	In view of the
University's other priorities employees would have to pay for the increase or benefits would
have to be changed.

Although the University attempts to spend the money in its budget request in accord
with the terms of the request, this does not mean that the University lacks discretion in the
manner that it eventually allocates the money. In addition to the discretion the University has
in presenting its request in the first place, once the University receives its money from the
Legislature, it is legally free to spend the money as it wishes. However, the University
ordinarily chooses not to deviate from the original request, in order to maintain credibility with
the Governor and the Legislature. Hershman summarized the process as follows: "[IIn terms
of how we get money from the Governor and the partnership, we got a lump sum, if you
would, a percentage increase. But we always presented a plan for how we were going to spend
that money."
An example of the University's discretion in the budget process lies in its action during
fiscal year 2002-2003. The University's original budget request indicated that it planned to
allocate part of the 4 percent Partnership Agreement funding to a 10 percent increase in its
health benefits contribution. When the State provided the University with only 1.5 percent
funding under the Partnership Agreement, rather than 4 percent, the University decided to
reduce its increase in health benefits contributions to 6.7 percent. The University's discretion
is further evident in that the decrease was not in proportion to the State's reduction; that is, the
State's 1.5 percent funding represented almost a two-thirds cut from the full 4 percent funding,
but the University responded by planning to cut its increase in health benefits contributions by
only one-third.
When the University decided that a 6.7 percent increase in its health benefits would not
be enough to fund salary increases for faculty and staff, it implemented another plan to raise
additional revenue by increasing non-resident tuition and using the increased revenues to
supplement health benefit programs. Thus, in 2003, the University chose to increase its non-
9	9
Although the University attempts to spend the money in its budget request in accord
with the terms of the request, this does not mean that the University lacks discretion in the
manner that it eventually allocates the money. 	In addition to the discretion the University has
in presenting its request in the first place, once the University receives its money from the
Legislature, it is legally free to spend the money as it wishes. However, the University
ordinarily chooses not to deviate from the original request, in order to maintain credibility with
the Governor and the Legislature. Hershman summarized the process as follows: 	"[I]n terms
of how we get money from the Governor and the partnership, we got a lump sum, if you
would, a percentage increase. But we always presented a plan for how we were going to spend
that money."
An example of the University's discretion in the budget process lies in its action during
fiscal year 2002-2003. The University's original budget request indicated that it planned to
allocate part of the 4 percent Partnership Agreement funding to a IO percent increase in its
health benefits contribution. When the State provided the University with only 1.5 percent
funding under the Partnership Agreement, rather than 4 percent, the University decided to
reduce its increase in health benefits contributions to 6. 7 percent. The University's discretion
is further evident in that the decrease was not in proportion to the State's reduction; that is, the
State's 1.5 percent funding represented almost a two-thirds cut from the full 4 percent funding,
but the University responded by planning to cut its increase in health benefits contributions by
only one-third.
When the University decided that a 6. 7 percent increase in its health benefits would not
be enough to fund salary increases for faculty and staff, it implemented another plan to raise
additional revenue by increasing non-resident tuition and using the increased revenues to
supplement health benefit programs. Thus, in 2003, the University chose to increase its non-

resident tuition by 16 percent and to put 6 percent of that money toward health benefit
contributions.
The Negotiations for a Successor Agreement
UC-AFT and the University have been parties to a series of collective bargaining
agreements beginning in 1986. Each contract contained a waiver clause providing that, during
the term of the agreement, the University had the right to make changes to health benefits for
Unit 18 employees, provided that the changes were identical to those made for senate faculty.
(The relevant contract provision is set out in its entirety below.) Prior to 2000, there was only
one hiatus between contracts, in 1993, and the University made no health benefit changes
during that time. The most recent contract expired in June 2000. As of the conclusion of the
hearing in this matter, the parties had not reached agreement on a successor agreement.
The parties began negotiations for a successor agreement early in 2000 against a
background of what the University describes as a "growing volatility in the health care
marker." Proposals were exchanged, but it does not appear that detailed discussions about
health benefits occurred in the early negotiations. In October 2000, the University announced
changes to health benefits, effective January 1, 2001. The changes were implemented without
affording UC-AFT notice and an opportunity to bargain. However, UC-AFT declined to file
an unfair practice charge because the changes were minimal, consistent with the University's
benchmark methodology and generally acceptable to employees. The 2001 changes are not at
issue here.
In December 2000, as the negotiations continued, the University proposed a benefits
article that was similar to the prior agreements. UC-AFT followed with proposals in January
and April 2001 which abandoned an initial proposal in favor of language that is similar to the
prior agreements. Thus, proposals covering health benefits were on the table at this time.
1010
resident tuition by 16 percent and to put 6 percent of that money toward health benefit
contributions.
The Negotiations for a Successor Agreement
UC-AFT and the University have been parties to a series of collective bargaining
agreements beginning in 1986. Each contract contained a waiver clause providing that, during
the term of the agreement, the University had the right to make changes to health benefits for
Unit 18 employees, provided that the changes were identical to those made for senate faculty.
(The relevant contract provision is set out in its entirety below.) Prior to 2000, there was only
one hiatus between contracts, in 1993, and the University made no health benefit changes
during that time. The most recent contract expired in June 2000. As of the conclusion of the
hearing in this matter, the parties had not reached agreement on a successor agreement.
The parties began negotiations for a successor agreement early in 2000 against a
background of what the University describes as a "growing volatility in the health care
marker." Proposals were exchanged, but it does not appear that detailed discussions about
health benefits occurred in the early negotiations. 	In October 2000, the University announced
changes to health benefits, effective January 1, 2001. The changes were implemented without
affording UC-AFT notice and an opportunity to bargain. 	However, UC-AFT declined to file
an unfair practice charge because the changes were minimal, consistent with the University's
benchmark methodology and generally acceptable to employees. The 2001 changes are not at
issue here.
In December 2000, as the negotiations continued, the University proposed a benefits
article that was similar to the prior agreements. UC-AFT followed with proposals in January
and April 2001 which abandoned an initial proposal in favor of language that is similar to the
prior agreements. Thus, proposals covering health benefits were on the table at this time.

Nonetheless, it appears there was little detailed discussion about the benefits article and the
initial proposals during negotiations in early 2001 with one exception, a proposal by UC-AFT
to expand benefits eligibility for part-time lecturers.
During the summer, the University published articles in its HR/Benefits Review
newsletter that described a managed care crises facing the health care industry and the
University. It advised employees that they could expect changes which included premium and
copayment increases.
Notably, plan design changes that revise the copayment structure
of UC's medical plans are being examined in an effort to keep the
net monthly costs closer to what employees and retirees are used
to paying. Ideally, the result for 2002 will be a modest increase
in net monthly costs and slightly higher copayments for medical
services.
The fall 2001 HR/Benefits Review similarly advised employees that the University had
maintained a balance between holding down premium costs and modestly increasing
copayments. UC-AFT president and negotiator Jeremy Elkins testified that he did not recall
reading these articles.
In October 2001, University Labor Relations Manager Peter Chester took over as chief
negotiator. The negotiations had been stalled for some time and Chester wanted to get them
moving. In an informal meeting, the parties discussed several outstanding substantive issues,
as well as the idea of resuming full team negotiations. During one of those meetings, Chester
suggested extending the contract through at least June 2002. He testified that he proposed the
extension because, among other things, the no-strike clause, management rights clause and
various contractual waivers were no longer in effect, and the University wished to reinstate
them. "In terms of doing business," Chester testified, "we needed to make changes in the
11
Nonetheless, it appears there was little detailed discussion about the benefits article and the
initial proposals during negotiations in early 2001 with one exception, a proposal by UC-AFT
to expand benefits eligibility for part-time lecturers.
During the summer, the University published articles in its HR/Benefits Review
newsletter that described a managed care crises facing the health care industry and the
University. 	It advised employees that they could expect changes which included premium and
copayment increases.
Notably, plan design changes that revise the copayment structure
of UC's medical plans are being examined in an effort to keep the
net monthly costs closer to what employees and retirees are used
to paying. 	Ideally, the result for 2002 will be a modest increase
in net monthly costs and slightly higher copayments for medical
services.
The fall 2001 HR/Benefits Review similarly advised employees that the University had
maintained a balance between holding down premium costs and modestly increasing
copayments. UC-AFT president and negotiator Jeremy Elkins testified that he did not recall
reading these articles.
In October 2001, University Labor Relations Manager Peter Chester took over as chief
negotiator. 	The negotiations had been stalled for some time and Chester wanted to get them
moving. 	In an informal meeting, the parties discussed several outstanding substantive issues,
as well as the idea of resuming full team negotiations. 	During one of those meetings, Chester
suggested extending the contract through at least June 2002. He testified that he proposed the
extension because, among other things, the no-strike clause, management rights clause and
various contractual waivers were no longer in effect, and the University wished to reinstate
them. "In terms of doing business," Chester testified, "we needed to make changes in the

terms and conditions of employment." One of the clauses that the University wanted to
reinstate was the waiver permitting changes to health benefits.
Elkins responded that UC-AFT was not interested in a full contract extension, but the
union would be willing to discuss extending certain articles. Chester responded that a contract
extension would benefit the union, because it would permit the University to pass through an
across-the-board cost of living salary increase that had been provided to other employees in
2000. The parties then discussed extending the contract in return for the salary increases.
In an October 25, 2001, letter to Elkins, the University announced the health benefits
for calendar year 2002, including a number of specific changes in the benefits provided the
previous year. The letter stated that materials were being sent to employees regarding the open
enrollment, and employees who want detailed information can access the information through
the University's open enrollment website. The letter was the first notice to UC-AFT of the
specific changes in benefits offered by the University for calendar year 2002. (The details of
the changes are more fully addressed below.)
Elkins responded in a letter dated November 7, 2001, requesting to meet and confer
over the changes. He also requested five categories of information to prepare for the
bargaining. "We thought that we should be part of the process of bargaining over these kinds
of changes," Elkins testified. No written proposals were offered by the union at this time.
On November 26, 2001, Chester responded to Elkins' November 7 letter regarding
health benefits.
As a matter of law, the University has no obligation to bargain
these annual modifications to health care coverage through the
open enrollment process, as these adjustments do not constitute a
unilateral change in the terms and conditions of employment. On
the contrary, the University's open enrollment process is an
established past practice under the dynamic status quo principle.
Indeed, the University has implemented health benefit plan
12	12
terms and conditions of employment." One of the clauses that the University wanted to
reinstate was the waiver permitting changes to health benefits.
Elkins responded that UC-AFT was not interested in a full contract extension, but the
union would be willing to discuss extending certain articles. 	Chester responded that a contract
extension would benefit the union, because it would permit the University to pass through an
across-the-board cost of living salary increase that had been provided to other employees in
2000. The parties then discussed extending the contract in return for the salary increases.
In an October 25, 2001, letter to Elkins, the University announced the health benefits
for calendar year 2002, including a number of specific changes in the benefits provided the
previous year. The letter stated that materials were being sent to employees regarding the open
enrollment, and employees who want detailed information can access the information through
the University's open enrollment website. 	The letter was the first notice to UC-AFT of the
specific changes in benefits offered by the University for calendar year 2002. (The details of
the changes are more fully addressed below.)
Elkins responded in a letter dated November 7, 2001, requesting to meet and confer
over the changes. He also requested five categories of information to prepare for the
bargaining. 	"We thought that we should be part of the process of bargaining over these kinds
of changes," Elkins testified. No written proposals were offered by the union at this time.
On November 26, 2001, Chester responded to Elkins' November 7 letter regarding
health benefits.
As a matter of law, the University has no obligation to bargain
these annual modifications to health care coverage through the
open enrollment process, as these adjustments do not constitute a
unilateral change in the terms and conditions of employment. On
the contrary, the University's open enrollment process is an
established past practice under the dynamic status quo principle.
Indeed, the University has implemented health benefit plan

modifications (including adjustments in health benefits and
employee monthly contributions to reflect the health plan changes
and costs assessed by the health carriers), through the open
enrollment process for over thirteen years. By allowing AFT
represented employees to participate in the November, 2001 open
enrollment process, which is open to all UC employees, the
University is simply maintaining the status quo.
Chester testified that UC-AFT's request to negotiate was untimely. He said that the University
was not going to negotiate over the changes because they were "essentially finalized." He said
further that "if we got a demand to bargain and that demand to bargain was a timely one, we
would bargain over the benefits. That is my understanding of what our position is."
At the next bargaining session, November 30, 2001, Chester responded with a written
proposal agreeing to pass through the cost of living increase if UC-AFT agreed to extend the
contract to June 30, 2002, and withdraw its earlier salary proposal for 2000-2001. Elkins was
reluctant to accept the proposal, but the UC-AFT caucused and prepared a counterproposal.
The counterproposal was presented orally at the bargaining session and later in e-mail and hard
copy. Among other things, UC-AFT agreed to accept the University's 2002 health benefit
changes and not strike until at least March 2002 in return for the same salary increase provided
other non-senate employees and an agreement that the University participate in at least eight
bargaining sessions and eight informal sessions prior to March 1, 2002.
Elkins and Chester continued to discuss a possible interim agreement. Proposals were
exchanged, but no agreement was reached. UC-AFT had presented no specific proposals
regarding health benefits, other than expanding benefit eligibility to include part-time lecturers.
Meanwhile, as the discussions continued, the changes in health benefits were
implemented on January 1, 2002, without agreement by UC-AFT. In brief, the changes
included the following: (1) 100 percent increases in copayments for office visits, home visits,
eye examinations, hearing examinations, allergy testing and treatment, abortion, podiatry,
13	13
modifications (including adjustments in health benefits and
employee monthly contributions to reflect the health plan changes
and costs assessed by the health carriers), through the open
enrollment process for over thirteen years. 	By allowing AFT
represented employees to participate in the November, 2001 open
enrollment process, which is open to all UC employees, the
University is simply maintaining the status quo.
Chester testified that UC-AFT's request to negotiate was untimely. He said that the University
was not going to negotiate over the changes because they were "essentially finalized." He said
further that "if we got a demand to bargain and that demand to bargain was a timely one, we
would bargain over the benefits. That is my understanding of what our position is."
At the next bargaining session, November 30, 2001, Chester responded with a written
proposal agreeing to pass through the cost of living increase if UC-AFT agreed to extend the
contract to June 30, 2002, and withdraw its earlier salary proposal for 2000-2001. Elkins was
reluctant to accept the proposal, but the UC-AFT caucused and prepared a counterproposal.
The counterproposal was presented orally at the bargaining session and later in e-mail and hard
copy. 	Among other things, UC-AFT agreed to accept the University's 2002 health benefit
changes and not strike until at least March 2002 in return for the same salary increase provided
other non-senate employees and an agreement that the University participate in at least eight
bargaining sessions and eight informal sessions prior to March 1, 2002.
Elkins and Chester continued to discuss a possible interim agreement. Proposals were
exchanged, but no agreement was reached. 	UC-AFT had presented no specific proposals
regarding health benefits, other than expanding benefit eligibility to include part-time lecturers.
Meanwhile, as the discussions continued, the changes in health benefits were
implemented on January 1, 2002, without agreement by UC-AFT. 	In brief, the changes
included the following: 	(1) I 00 percent increases in copayments for office visits, home visits,
eye examinations, hearing examinations, allergy testing and treatment, abortion, podiatry,

outpatient mental health and substance abuse visits, inoculations, and other outpatient services;
(2) 43 percent increase in emergency room copayments; (3) establishment of a new $250.00
per occurrence hospitalization copayment for all inpatient services, maternity services and
mental health/substance abuse inpatient care; and (4) approximately 100 percent increase in
prescription drug copayments.
It is not disputed that the University made changes in copayments during several years
prior to the 2002 changes. Prior to the 2002 changes, however, the University had never
implemented changes in health benefits during a contract hiatus, except for the changes in
2001. As noted above, UC-AFT did not challenge the 2001 changes because the union
concluded they were beneficial to its members.
In early 2002, Labor Relations Director Gayle Cieszkiewicz joined the negotiations. At
about this time, she proposed to pass through the 2000-2001 and 2001-2002 across-the-board
salary increases if UC-AFT would agree to the already-implemented 2002 health benefit
changes and the 2003 health benefit changes that would become effective January 1, 2003.
The proposal also sought UC-AFT agreement that it would not litigate the 2002 benefit
changes, and would also agree to the benefit proposal whether or not the parties agreed on a
complete contract.
In an e-mail to Cieszkiewicz, Elkins conveyed his concern about waiving future
bargaining rights without a comprehensive contract. However, he wrote that he "could sell the
team on agreeing to the health care changes for 2001-2002 in return to [sic] the pass through
on the outstanding COLAs." In another e-mail to Cieszkiewicz, Elkins wrote on February 20,
2002, that
As I indicated in the email I sent you last week, UC-AFT is
uncomfortable agreeing to waive any rights to meet and confer in
the future, unless that waiver is part of a comprehensive contract.
14	14
outpatient mental health and substance abuse visits, inoculations, and other outpatient services;
(2) 43 percent increase in emergency room copayments; (3) establishment of a new $250.00
per occurrence hospitalization copayment for all inpatient services, maternity services and
mental health/substance abuse inpatient care; and ( 4) approximately I 00 percent increase in
prescription drug copayments.
It is not disputed that the University made changes in copayments during several years
prior to the 2002 changes. 	Prior to the 2002 changes, however, the University had never
implemented changes in health benefits during a contract hiatus, except for the changes in
2001. 	As noted above, UC-AFT did not challenge the 2001 changes because the union
concluded they were beneficial to its members.
In early 2002, Labor Relations Director Gayle Cieszkiewicz joined the negotiations. At
about this time, she proposed to pass through the 2000-200 I and 2001-2002 across-the-hoard
salary increases if UC-AFT would agree to the already-implemented 2002 health benefit
changes and the 2003 health benefit changes that would become effective January 1, 2003.
The proposal also sought UC-AFT agreement that it would not litigate the 2002 benefit
changes, and would also agree to the benefit proposal whether or not the parties agreed on a
complete contract.
In an e-mail to Cieszkiewicz, Elkins conveyed his concern about waiving future
bargaining rights without a comprehensive contract. However, he wrote that he "could sell the
team on agreeing to the health care changes for 2001-2002 in return to [sic] the pass through
on the outstanding COLAs." In another e-mail to Cieszkiewicz, Elkins wrote on February 20,
2002, that
As I indicated in the email I sent you last week, UC-AFT is
uncomfortable agreeing to waive any rights to meet and confer in
the future, unless that waiver is part of a comprehensive contract.

However, we continue to be willing to discuss a side letter that
would provide our consent to the 2001-2002 health care cost
increases in exchange for "pass through" of past COLAs. I think
that we would also be very willing to consider a side letter on
health care increases for the future as part of an agreement on
implementation of an overall salary scale.
By letter of February 24, 2002, Elkins reiterated the union's proposal to withdraw its earlier
salary proposal and to accept the health benefits changes for the 2002 calendar year in return
for a pass-through of the 2000-2001 cost of living increase of 3-4 percent. UC-AFT received
no response, and it appears that the negotiations slowed down for several months.
On June 26, 2002, the parties participated in an informational meeting with French to
discuss some of the possibilities under consideration by the University with respect to health
benefit changes for the next calendar year, 2003. At the time of the meeting, the University's
negotiations with health plan vendors were underway and French was not certain of the
outcome, although she had a general notion that health care costs were rising and the
University might not be able to deliver a free HMO plan. French explained that the Governor
had cut the University's request for health benefits money from 10 percent to 6.7 percent.
Elkins responded that the cut should not determine the cost to employees. He argued that the
University's maximum contribution was the equivalent to what it had been ten years earlier,
the University had saved the money in the interim and it should now restore it.
French did not agree with the way Elkin's characterized the history of contributions.
She believed Elkins' statement regarding University contributions in past years represented a
narrow view and was made out of context. Elkins testified: "And so there was a bit of a heated
argument about that. But we were certainly very concerned that they not try to paint this as if
their hands were tied and they had to pass along these increases to employees."
15	15
However, we continue to be willing to discuss a side letter that
would provide our consent to the 2001-2002 health care cost
increases in exchange for "pass through" of past COLAs. 	I think
that we would also be very willing to consider a side letter on
health care increases for the future as part of an agreement on
implementation of an overall salary scale.
By letter of February 24, 2002, Elkins reiterated the union's proposal to withdraw its earlier
salary proposal and to accept the health benefits changes for the 2002 calendar year in return
for a pass-through of the 2000-2001 cost of living increase of 3-4 percent. 	UC-AFT received
no response, and it appears that the negotiations slowed down for several months.
On June 26, 2002, the parties participated in an informational meeting with French to
discuss some of the possibilities under consideration by the University with respect to health
benefit changes for the next calendar year, 2003. At the time of the meeting, the University's
negotiations with health plan vendors were underway and French was not certain of the
outcome, although she had a general notion that health care costs were rising and the
University might not be able to deliver a free HMO plan. French explained that the Governor
had cut the University's request for health benefits money from 10 percent to 6.7 percent.
Elkins responded that the cut should not determine the cost to employees. 	He argued that the
University's maximum contribution was the equivalent to what it had been ten years earlier,
the University had saved the money in the interim and it should now restore it.
French did not agree with the way Elkin's characterized the history of contributions.
She believed Elkins' statement regarding University contributions in past years represented a
narrow view and was made out of context. Elkins testified: "And so there was a bit of a heated
argument about that. But we were certainly very concerned that they not try to paint this as if
their hands were tied and they had to pass along these increases to employees."

No specific proposals were presented at the meeting, but French mentioned the
possibility that the free health plan would be eliminated. Chester testified that French said
elimination of the free plan was "very likely." Elkins testified that the parties discussed
elimination of a free plan, but he said the discussion of this topic was marked by phrases such
as "it wasn't definite" and "there was no precise plan." Elkins testified "there was no
indication of the details." Even French testified that she was not sure what the cost of benefits
would be as of the date of the meeting; while she had a "directional sense" or a "pretty good
sense" that the University would not be able to offer a free plan, she "wasn't sure yet." Asked
specifically by UC-AFT counsel if she was sure the University would not be able to offer a
free plan, she testified "no."
Chester's notes of the meeting indicate that French was asked about actual monthly
payments by employees and responded "we are still looking at what the costs are per plan.
Then we break out for the individual contributions. So, the answer is we don't know yet."
When French was asked whether there would be a free plan, the notes indicate, she responded
"We have asked each HMO to provide a no frill plan that would involve no cost to the
employee. The plans refused. We asked again what their no frills looked like. We have also
asked a PPO provided for a higher front end." Asked about the coverage of a no frills plan,
French responded "we don't want to whittle away at benefits. There won't be a total UC paid
plan. We are still wrestling with the numbers but I can't throw any out. The managed care
market is unraveling."
I credit the testimony of French and Elkins over Chester's notes to the extent that
French told UC-AFT on June 26 that she wasn't sure if the University would provide a no-cost
HMO. Chester's notes are not the most reliable account of the meeting. They are incomplete,
internally inconsistent and not a verbatim account of the discussion. In contrast, French
16	16
No specific proposals were presented at the meeting, but French mentioned the
possibility that the free health plan would be eliminated. Chester testified that French said
elimination of the free plan was "very likely." Elkins testified that the parties discussed
elimination of a free plan, but he said the discussion of this topic was marked by phrases such
as "it wasn't definite" and "there was no precise plan." Elkins testified "there was no
indication of the details." Even French testified that she was not sure what the cost of benefits
would be as of the date of the meeting; while she had a "directional sense" or a "pretty good
sense" that the University would not be able to offer a free plan, she "wasn't sure yet." Asked
specifically by UC-AFT counsel° if she was sure the University would not be able to offer a
free plan, she testified "no."
Chester's notes of the meeting indicate that French was asked about actual monthly
payments by employees and responded "we are still looking at what the costs are per plan.
Then we break out for the individual contributions. 	So, the answer is we don't know yet."
When French was asked whether there would be a free plan, the notes indicate, she responded
"We have asked each HMO to provide a no frill plan that would involve no cost to the
employee. The plans refused. 	We asked again what their no frills looked like. We have also
asked a PPO provided for a higher front end." Asked about the coverage of a no frills plan,
French responded "we don't want to whittle away at benefits. There won't be a total UC paid
plan. 	We are still wrestling with the numbers but I can't throw any out. The managed care
market is unraveling."
I credit the testimony of French and Elkins over Chester's notes to the extent that
French told UC-AFT on June 26 that she wasn't sure if the University would provide a no-cost
HMO. 	Chester's notes are not the most reliable account of the meeting. 	They are incomplete,
internally inconsistent and not a verbatim account of the discussion. In contrast, French

forthrightly testified at hearing that, in fact, there was merely a possibility that the free HMO
would not be offered, but she wasn't sure at the time. Elkins' testimony is in accord with that
given by French. Hence, I conclude that French told UC-AFT representatives on June 26 that
she had a directional sense that the no-cost HMO might be eliminated, but she wasn't sure
about it.
Also on June 26, the University presented to UC-AFT a two-part proposal regarding
benefits. The first part was the same as the language in the expired contract, stating that the
University would have the right to make changes to health benefits, provided the changes were
the same as the changes for senate faculty. The second part stated "This language is submitted
as the language that UC proposes if we reach impasse." The second part of the proposal was
essentially the same as the expired contract and included specific dollar maximums the
University was willing to contribute toward benefit premiums beginning in 2003.
Cieszkiewicz testified that the first offer was the University's proposal if the parties agreed on
a contract, while the second offer contained the terms the University would implement at
impasse. She testified that the University preferred the offer that did not include specific rates.
There was no agreement on these proposals.
As discussed below, neither offer was ever implemented. No other University proposal
contained specific contribution amounts or other specifics regarding coverage. The dollar
amounts that were included in the University's two-part proposal are not the same as those
eventually implemented on January 1, 2003.
In addition, during the discussions in June 2002, Elkins reiterated to Cieszkiewicz that
any changes the University wanted to make must be negotiated. According to Elkins, she
responded that the University's position was that it would not negotiate annual changes within
its systemwide plan, but rather would engage in negotiations only if UC-AFT was willing to
17	17
forthrightly testified at hearing that, in fact, there was merely a possibility that the free HMO
would not be offered, but she wasn't sure at the time. Elkins' testimony is in accord with that
given by French. 	Hence, I conclude that French told UC-AFT representatives on June 26 that
she had a directional sense that the no-cost HMO might be eliminated, but she wasn't sure
about it.
Also on June 26, the University presented to UC-AFT a two-part proposal regarding
benefits. The first part was the same as the language in the expired contract, stating that the
University would have the right to make changes to health benefits, provided the changes were
the same as the changes for senate faculty. 	The second part stated "This language is submitted
as the language that UC proposes if we reach impasse." The second part of the proposal was
essentially the same as the expired contract and included specific dollar maximums the
University was willing to contribute toward benefit premiums beginning in 2003.
Cieszkiewicz testified that the first offer was the University's proposal if the parties agreed on
a contract, while the second offer contained the terms the University would implement at
impasse. 	She testified that the University preferred the offer that did not include specific rates.
There was no agreement on these proposals.
As discussed below, neither offer was ever implemented. No other University proposal
contained specific contribution amounts or other specifics regarding coverage. The dollar
amounts that were included in the University's two-part proposal are not the same as those
eventually implemented on January 1, 2003.
In addition, during the discussions in June 2002, Elkins reiterated to Cieszkiewicz that
any changes the University wanted to make must be negotiated. According to Elkins, she
responded that the University's position was that it would not negotiate annual changes within
its system wide plan, but rather would engage in negotiations only if UC-AFT was willing to

take its members out of the University's systemwide plan. However, she conceded in her
testimony that taking a group of employees out of the University system was not the only way
to negotiate about benefits.
After the University's June 26 two-part proposal brought no agreement, the parties
resumed discussing a possible interim agreement by trading a pass-through of salary increases
in return for UC-AFT's agreement to the 2002 and upcoming 2003 health benefit changes.
Elkins reiterated that UC-AFT could not agree to any forthcoming changes sight unseen, and
Cieszkiewicz promised the University would provide more specific information as soon as it
had it. However, the University never complied with this promise. Elkins left the negotiations
in August 2002.
The parties continued discussions through July and October, 2002, and proposals were
discussed that relate to health benefits. However, no agreement was reached. By letter dated
October 25, 2002, the University announced to UC-AFT the specific aspects of the changes
that would become effective January 1, 2003. Prior to receiving the letter, the University had
provided no specifics regarding the changes.
The health benefit changes for 2003 contained a different approach to establishing the
University's contribution. For the first time, the University established its contribution based
on budgetary constraints rather than premiums charged by a specific plan. Previously, the
University had followed its benchmark methodology, under which its annual contribution
toward employee health benefits was equal to or near the full cost of the lowest priced HMO
available at every major University location. French testified that the University now
determines its bench mark contribution based on what it feels it can pay, rather than on a
specific plan's premium. As noted earlier, under this methodology, the University historically
had provided at least one cost-free plan to employees. Under the 2003 changes, there was no
18	18
take its members out of the University's system wide plan. However, she conceded in her
testimony that taking a group of employees out of the University system was not the only way
to negotiate about benefits.
After the University's June 26 two-part proposal brought no agreement, the parties
resumed discussing a possible interim agreement by trading a pass-through of salary increases
in return for UC-AFT's agreement to the 2002 and upcoming 2003 health benefit changes.
Elkins reiterated that UC-AFT could not agree to any forthcoming changes sight unseen, and
Cieszkiewicz promised the University would provide more specific information as soon as it
had it. However, the University never complied with this promise. Elkins left the negotiations
in August 2002.
The parties continued discussions through July and October, 2002, and proposals were
discussed that relate to health benefits. However, no agreement was reached. By letter dated
October 25, 2002, the University announced to UC-AFT the specific aspects of the changes
that would become effective January 1, 2003. Prior to receiving the letter, the University had
provided no specifics regarding the changes.
The health benefit changes for 2003 contained a different approach to establishing the
University's contribution. For the first time, the University established its contribution based
on budgetary constraints rather than premiums charged by a specific plan. 	Previously, the
University had followed its benchmark methodology, under which its annual contribution
toward employee health benefits was equal to or near the full cost of the lowest priced HMO
available at every major University location. French testified that the University now
determines its bench mark contribution based on what it feels it can pay, rather than on a
specific plan's premium. As noted earlier, under this methodology, the University historically
had provided at least one cost-free plan to employees. 	Under the 2003 changes, there was no

cost-free plan. A chronology of major health and welfare program changes prepared by the
University states for January 1, 2003: "Employer contributions targeted to budget requirements
rather than to a specific plan's premium."
The 2003 changes also established a transitional allowance, under which the
University's contribution toward health benefits was based on employee earnings. The
contribution was higher for employees whose annualized salary is less than $40,000. The 2003
changes also included a new health care reimbursement account and a four-tier rate structure
rather that three-tier rate structure. Under the health care reimbursement account, employees
are permitted to pay out-of-pocket health care expenses, excluding premiums, with pre-tax
dollars. Under the four-tier rate structure, medical coverage for an employee with children
would be less expensive than coverage for two adults or a family.
In February 2003, as the bargaining continued, UC-AFT negotiator Rebecca Rhine
requested to negotiate changes in health benefits for 2004. In a letter to Cieszkiewicz, Rhine
wrote:
In any event, in order to put to rest your supposed confusion on
this point [UC-AFT's desire to negotiate about benefits], the
Union hereby demands that it be afforded an opportunity to meet
and confer over any and all material changes in health benefits
that the University may contemplate making in the future. Since
the University begins making its plans for the next year quite
early, we wish to begin immediate meeting and conferring.
Cieszkiewicz responded by letter a few days later . Her letter states in relevant part:
If you are now asking again to bargain about annual plan changes
that will be negotiated with the carriers this year before they are
implemented for the next open enrollment, we do continue to
decline to do that. If, on the other hand, AFT is now asking to
bargain about a separate set of arrangements for AFT members
with respect to medical plan design, options offered, or the way
in which the resulting costs are to be allocated, that is a surprising
departure from the AFT's position on such issues up to now.
19	19
cost-free plan. A chronology of major health and welfare program changes prepared by the
University states for January 1, 2003: "Employer contributions targeted to budget requirements
rather than to a specific plan's premium."
The 2003 changes also established a transitional allowance, under which the
University's contribution toward health benefits was based on employee earnings. The
contribution was higher for employees whose annualized salary is less than $40,000. The 2003
changes also included a new health care reimbursement account and a four-tier rate structure
rather that three-tier rate structure. 	Under the health care reimbursement account, employees
are permitted to pay out-of-pocket health care expenses, excluding premiums, with pre-tax
dollars. 	Under the four-tier rate structure, medical coverage for an employee with children
would be less expensive than coverage for two adults or a family.
In February 2003, as the bargaining continued, UC-AFT negotiator Rebecca Rhine
requested to negotiate changes in health benefits for 2004. In a letter to Cieszkiewicz, Rhine
wrote:
In any event, in order to put to rest your supposed confusion on
this point [UC-AFT' s desire to negotiate about benefits], the
Union hereby demands that it be afforded an opportunity to meet
and confer over any and all material changes in health benefits
that the University may contemplate making in the future. 	Since
the University begins making its plans for the next year quite
early, we wish to begin immediate meeting and conferring.
Cieszkiewicz responded by letter a few days later . Her letter states in relevant part:
If you are now asking again to bargain about annual plan changes
that will be negotiated with the carriers this year before they are
implemented for the next open enrollment, we do continue to
decline to do that. If, on the other hand, AFT is now asking to
bargain about a separate set of arrangements for AFT members
with respect to medical plan design, options offered, or the way
in which the resulting costs are to be allocated, that is a surprising
departure from the AFT's position on such issues up to now.

At the hearing in this matter, UC-AFT counsel questioned Cieszkiewicz about her letter to
Rhine.
Q 	In this case, the request to bargain for changes that would
become effective January 1, 2004, was in fact made with quite a
bit of lead time, yes?
. . . . . . .
A 	Yes.
O 	Okay. But nevertheless, you are refusing to bargain.
A 	Well, no. If you read the next sentence, I clarify and say
if, on the other hand, the AFT is asking to bargain about a
separate set of arrangements for AFT members with respect to
medical plan design, the options offered or the way the resulting
costs are to be allocated, it would be a surprising departure, but it
might be something I'm willing to do. The bargain about the
annual plan changes that are negotiated with the carriers, that is a
different process, I think. We negotiate with carriers over broad-
based plans for University of California employees. I am
offering an alternative to that, as I have to the unions before.
Q 	Let me see if I understand. I don't want to put words in
your mouth, so correct me if I'm wrong, please. You're saying
that if AFT is interested in taking the lecturers out of the pool of
other employees who are covered under UC benefits, then you
would be able to start negotiating that?
A 	We would look at that.
Q 	But if UCAFT is proposing to keep its members that it
represents in the pool with all the other University employees and
to actually negotiate concerning the annual changes that will take
effect next January, then you're not willing to bargain?
A 	Yes. And the reason I say that is it was a surprising
departure is because we've already received counterproposals
from the AFT agreeing to the coverage that the University
provides for the AFT, being the same that we provide for
everybody else. The same plan, the same carrier, same terms and
conditions.
20	20
At the hearing in this matter, UC-AFT counsel questioned Cieszkiewicz about her letter to
Rhine.
Q 	In this case, the request to bargain for changes that would
become effective January 1, 2004, was in fact made with quite a
bit of lead time, yes?
A 	Yes.
Q 	Okay. But nevertheless, you are refusing to bargain.
A 	Well, no. If you read the next sentence, I clarify and say
if, on the other hand, the AFT is asking to bargain about a
separate set of arrangements for AFT members with respect to
medical plan design, the options offered or the way the resulting
costs are to be allocated, it would be a surprising departure, but it
might be something I'm willing to do. The bargain about the
annual plan changes that are negotiated with the carriers, that is a
different process, I think. 	We negotiate with carriers over broad-
based plans for University of California employees. I am
offering an alternative to that, as I have to the unions before.
Q 	Let me see if I understand. 	I don't want to put words in
your mouth, so correct me if I'm wrong, please. You're saying
that if AFT is interested in taking the lecturers out of the pool of
other employees who are covered under UC benefits, then you
would be able to start negotiating that?
A 	We would look at that.
Q 	But if UC AFT is proposing to keep its members that it
represents in the pool with all the other University employees and
to actually negotiate concerning the annual changes that will take
effect next January, then you're not willing to bargain?
A 	Yes. And the reason I say that is it was a surprising
departure is because we've already received counterproposals
from the AFT agreeing to the coverage that the University
provides for the AFT, being the same that we provide for
everybody else. The same plan, the same carrier, same terms and
conditions.

As more fully discussed below, I find that Cieszkiewicz took the position with UC-AFT that
the University would not negotiate about annual changes in health benefits if the union
proposed to keep its members in the pool with other University employees.
The CUE/UPTE Negotiations
The Coalition of University Employees (CUE) is the exclusive representative of a unit
of approximately 18,000 clerical employees in the University system. In 2002, CUE was
engaged in negotiations with the University for a new collective bargaining agreement. CUE's
expired contract, like the contract between the University and UC-AFT, contained a provision
permitting the University to make health benefit changes during the life of the agreement. The
waiver in the CUE contract, in fact, was almost identical to the waiver in the UC-AFT contract.
Pursuant to the waiver, the University has traditionally made changes to health benefits for
CUE members, just as it has done with respect to UC-AFT members.
On June 5, 2002, University chief negotiator Sharon Hayden proposed a side letter to
CUE, under which the contract waiver giving the University the right to make changes to
health benefits would continue until the effective date of a successor agreement. Hayden
testified that she made the proposal because "we were looking at some changes coming down
in the area of benefits. We'd already been through some changes for the winter and I was
proposing to the Union that we have their agreement as to the benefits for the rest of the year
since it was looking like it was going to take us a long time to finish this contract." Hayden
testified further that in proposing the side letter she explained to CUE representatives that, in
her view, the parties were operating under a dynamic status quo. Yet Hayden testified that she
wanted to tell French, who was dealing with the various health plan vendors at the time, that
CUE was "on board" with respect to health benefits. Hayden said she never told CUE that the
21	21
As more fully discussed below, I find that Cieszkiewicz took the position with UC-AFT that
the University would not negotiate about annual changes in health benefits if the union
proposed to keep its members in the pool with other University employees.
The CUE/UPTE Negotiations
The Coalition of University Employees (CUE) is the exclusive representative of a unit
of approximately 18,000 clerical employees in the University system. In 2002, CUE was
engaged in negotiations with the University for a new collective bargaining agreement. 	CUE's
expired contract, like the contract between the University and UC-AFT, contained a provision
permitting the University to make health benefit changes during the life of the agreement. The
waiver in the CUE contract, in fact, was almost identical to the waiver in the UC-AFT contract.
Pursuant to the waiver, the University has traditionally made changes to health benefits for
CUE members, just as it has done with respect to UC-AFT members.
On June 5, 2002, University chief negotiator Sharon Hayden proposed a side letter to
CUE, under which the contract waiver giving the University the right to make changes to
health benefits would continue until the effective date of a successor agreement. Hayden
testified that she made the proposal because "we were looking at some changes coming down
in the area of benefits. 	We'd already been through some changes for the winter and I was
proposing to the Union that we have their agreement as to the benefits for the rest of the year
since it was looking like it was going to take us a long time to finish this contract." Hayden
testified further that in proposing the side letter she explained to CUE representatives that, in
her view, the parties were operating under a dynamic status quo. Yet Hayden testified that she
wanted to tell French, who was dealing with the various health plan vendors at the time, that
CUE was "on board" with respect to health benefits. Hayden said she never told CUE that the

University believed it needed CUE's agreement to go forward with the open enrollment period,
and CUE demanded no concessions to agree to the side letter.
CUE's chief negotiator, Margy Wilkinson, testified about her exchange with Hayden.
She said Hayden told her that "the University was about to enter into negotiations with benefit
plan providers, and that in order to, you know, I'm not quoting her, but the general gist of what
she said was that in order to go into those negotiations in the strongest possible position, the
University needed the buy-in of our bargaining unit." At 18,000 employees, the bargaining
unit represented by CUE is the largest in the University system.
Wilkinson also testified that the University's proposal carried a sense of urgency. She
testified that Hayden said the agreement was "extremely urgent" and she needed agreement by
the end of the bargaining session (which was June 7) because negotiations with the health
providers was imminent. Wilkinson testified further that CUE agreed to the proposal after
gaining concessions in the hours of work article which the union had been seeking and the
University had rejected.
The parties reached agreement on a side letter on June 7. The agreement permitted the
University to make changes in health benefits and included an alternative work schedule
provision CUE had "wanted for a long time," according to Hayden.
As noted, Hayden testified that CUE demanded no concessions in exchange for signing
the side letter, but the record undercuts that claim for several reasons. Hayden's testimony was
based in part on research performed by her assistant on bargaining history notes, but Hayden
conceded that she never told the assistant to research whether concessions were made.
Wilkinson was a credible witness who testified that CUE agreed to the side letter in return for
the agreement on hours, and the record evidence supports her testimony, not that given by
Hayden. The record shows that the parties signed a side letter that contains the agreement on
22	22
University believed it needed CUE's agreement to go forward with the open enrollment period,
and CUE demanded no concessions to agree to the side letter.
CUE's chief negotiator, Margy Wilkinson, testified about her exchange with Hayden.
She said Hayden told her that "the University was about to enter into negotiations with benefit
plan providers, and that in order to, you know, I'm not quoting her, but the general gist of what
she said was that in order to go into those negotiations in the strongest possible position, the
University needed the buy-in of our bargaining unit." At 18,000 employees, the bargaining
unit represented by CUE is the largest in the University system.
Wilkinson also testified that the University's proposal carried a sense of urgency. 	She
testified that Hayden said the agreement was "extremely urgent" and she needed agreement by
the end of the bargaining session (which was June 7) because negotiations with the health
providers was imminent. 	Wilkinson testified further that CUE agreed to the proposal after
gaining concessions in the hours of work article which the union had been seeking and the
University had rejected.
The parties reached agreement on a side letter on June 7. The agreement permitted the
University to make changes in health benefits and included an alternative work schedule
provision CUE had "wanted for a long time," according to Hayden.
As noted, Hayden testified that CUE demanded no concessions in exchange for signing
the side letter, but the record undercuts that claim for several reasons. Hayden's testimony was
based in part on research performed by her assistant on bargaining history notes, but Hayden
conceded that she never told the assistant to research whether concessions were made.
Wilkinson was a credible witness who testified that CUE agreed to the side letter in return for
the agreement on hours, and the record evidence supports her testimony, not that given by
Hayden. The record shows that the parties signed a side letter that contains the agreement on

June 7, the end of the session, just as Wilkinson testified. And the parties on June 7 agreed to
a provision in the hours article that CUE had sought earlier, just as Wilkinson testified.
Although Hayden testified that she could not recall if she told CUE that agreement was urgent,
she conceded that she told the union "I really wanted it." There is no apparent reason for CUE
to have agreed to a side letter regarding benefits if it received nothing in return. Accordingly, I
find the timing of the agreement between CUE and the University does not represent mere
coincidence. In this context, the most logical inference to be drawn from Hayden's
explanation for proposing the side letter ("I was proposing to the Union that we have their
agreement as to the benefits for the rest of the year since it was looking like it was going to
take us a long time to finish this contract.") is that she believed she needed to bring CUE "on
board" before the changes were implemented
In addition, Hayden testified that she served as the University's chief negotiator during
negotiations with the University Professional and Technical Employees (UPTE) in 2002.
UPTE is the exclusive representative of an appropriate unit of University professional and
technical employees. On October 16, 2002, UPTE proposed specific changes to the
University's contributions to various health plans. The proposal envisioned UPTE remaining
in the University's systemwide benefits program. In response, the University on December 12
presented a counterproposal. The multi-faceted proposal included, among other things, a
specific contribution for all benefit plans and did not include the standard waiver language that
was in the prior agreement. (The prior UPTE contract included language similar to that in the
UC-AFT agreement.) Instead, the University proposed retaining the right to increase
contribution rates "by an amount determined by the University based on the identified
allocation in the State Budget for the University of California, as additional funds are
identified in the State Budget to contribute toward the cost of benefits." Hayden testified that
23	23
June 7, the end ofthe session, just as Wilkinson testified. And the parties on June 7 agreed to
a provision in the hours article that CUE had sought earlier, just as Wilkinson testified.
Although Hayden testified that she could not recall if she told CUE that agreement was urgent,
she conceded that she told the union "I really wanted it." There is no apparent reason for CUE
to have agreed to a side letter regarding benefits if it received nothing in return. Accordingly, I
find the timing of the agreement between CUE and the University does not represent mere
coincidence. In this context, the most logical inference to be drawn from Hayden's
explanation for proposing the side letter ("I was proposing to the Union that we have their
agreement as to the benefits for the rest of the year since it was looking like it was going to
take us a long time to finish this contract.") is that she believed she needed to bring CUE "on
board" before the changes were implemented
In addition, Hayden testified that she served as the University's chief negotiator during
negotiations with the University Professional and Technical Employees (UPTE) in 2002.
UPTE is the exclusive representative of an appropriate unit of University professional and
technical employees. On October 16, 2002, UPTE proposed specific changes to the
University's contributions to various health plans. The proposal envisioned UPTE remaining
in the University's systemwide benefits program. 	In response, the University on December 12
presented a counterproposal. The multi-faceted proposal included, among other things, a
specific contribution for all benefit plans and did not include the standard waiver language that
was in the prior agreement. (The prior UPTE contract included language similar to that in the
UC-AFT agreement.) Instead, the University proposed retaining the right to increase
contribution rates "by an amount determined by the University based on the identified
allocation in the State Budget for the University of California, as additional funds are
identified in the State Budget to contribute toward the cost of benefits." Hayden testified that

if UPTE had accepted the proposal its members would have remained in the systemwide
benefits program.
ISSUE
Did the University implement changes in health benefits for 2002 and/or 2003 without
affording UC-AFT notice and an opportunity to negotiate, in violation of its duty to bargain in
good faith under HEERA?
CONCLUSIONS OF LAW
The Contract Clause
The parties' expired collective bargaining agreement contains a provision that gave the
University the right to alter health benefits "during the term of this agreement." UC-AFT
argues that under the explicit terms of the agreement, the University's right to make changes to
health benefits expired with the contract. As a matter of law, UC-AFT argues, contract
waivers do not continue beyond the expiration of the agreement, unless the parties agree
otherwise. And there was no such agreement here.
The University does not contend that the mere existence of the benefits article in the
agreement permitted implementation of the changes at issue here. Rather, it argues that the
actual practice of annual change under both the benefits article and the years preceding the first
contract with UC-AFT allowed the University to treat members of UC-AFT the same as all
other participants in the health benefits system.
Article 11, section A, of the expired contract provides:
Faculty/instructors in the unit who are eligible to participate in
University-sponsored benefit programs listed in Appendix B.1
participate to the same extent as other eligible faculty, including
Senate faculty, of the University. Costs in excess of the
University's contributions are to be paid by the faculty/instructor
in the unit, normally through payroll deduction. The coverage(s)
24	24
if UPTE had accepted the proposal its members would have remained in the system wide
benefits program.
ISSUE
Did the University implement changes in health benefits for 2002 and/or 2003 without
affording UC-AFT notice and an opportunity to negotiate, in violation of its duty to bargain in
good faith under HEERA?
CONCLUSIONS OF LAW
The Contract Clause
The parties' expired collective bargaining agreement contains a provision that gave the
University the right to alter health benefits "during the term of this agreement." UC-AFT
argues that under the explicit terms of the agreement, the University's right to make changes to
health benefits expired with the contract. As a matter of law, UC-AFT argues, contract
waivers do not continue beyond the expiration of the agreement, unless the parties agree
otherwise. 	And there was no such agreement here.
The University does not contend that the mere existence of the benefits, article in the
agreement permitted implementation of the changes at issue here. 	Rather, it argues that the
actual practice of annual change under both the benefits article and the years ·preceding the first
contract with UC-AFT allowed the University to treat members of UC-AFT the same as all
other participants in the health benefits system.
Article 11, section A, of the expired contract provides:
Faculty/instructors in the unit who are eligible to participate in
University-sponsored benefit programs listed in Appendix B. l
participate to the same extent as other eligible faculty, including
Senate faculty, of the University. Costs in excess of the
University's contributions are to be paid by the faculty/instructor
in the unit, normally through payroll deduction. The coverage(s)

and the carrier(s) of the benefit plans listed in Appendix B. I shall
be the same as for other faculty at the same location.
During the term of this agreement the University may alter in any
way, at its sole discretion, any aspect of these plans, including but
not limited to coverages, benefit schedules, carriers, contribution
rates, and/or eligibility criteria during the term of this Agreement
and if the University does so, such changes will apply to
faculty/instructors in the unit eligible for benefits to the same
extent as they apply to other eligible faculty, including Senate
faculty, at the same campus. Benefits identified in Appendix B. 1,
including coverages, schedules, carriers, contribution rates and/or
eligibility criteria shall not be differentiated among eligible
faculty titles.
Similar language has been included in the parties' contracts for the past 20 years.
According to the plain language of the agreement, the University had the right to make
changes in health benefits during the term of the agreement. The National Labor Relations
Board (NLRB) has held that managerial authority over matters in a contract does not authorize
unilateral action upon expiration of the contract, concluding that "a contractual reservation of
managerial discretion does not extend beyond the expiration of the contract unless the contract
provides for it to outlive the contract." (Blue Circle Cement Company (1995) 319 NLRB 954
[151 LRRM 1356].) It is the practice that develops under the agreement that sets the status
quo and defines the post-expiration actions the employer is permitted to take unilaterally.
(California State Employees Association v. PERB (1996) 51 Cal.App.4 923 [59 Cal.Rptr.2d
488] (CSEA v. PERB). In that case, the collective bargaining agreement provided that the
California State University (CSU) would grant merit salary adjustments (MSA) "for the
duration of this agreement." A longstanding practice existed under which MSAs were granted
or denied based on fixed criteria such as merit and effective performance. During post-
expiration negotiations and prior to impasse, CSU unilaterally stopped paying MSAs. In
response to the allegation of bad faith bargaining, CSU asserted that the union had
25	25
and the carrier(s) of the benefit plans listed in Appendix B.1 shall
be the same as for other faculty at the same location.
During the term of this agreement the University may alter in any
way, at its sole discretion, any aspect of these plans, including but
not limited to coverages, benefit schedules, carriers, contribution
rates, and/or eligibility criteria during the term of this Agreement
and if the University does so, such changes will apply to
faculty/instructors in the unit eligible for benefits to the same
extent as they apply to other eligible faculty, including Senate
faculty, at the same campus. Benefits identified in Appendix B.1,
including coverages, schedules, carriers, contribution rates and/or
eligibility criteria shall not be differentiated among eligible
faculty titles.
Similar language has been included in the parties' contracts for the past 20 years.
According to the plain language of the agreement, the University had the right to make
changes in health benefits during the term of the agreement. 	The National Labor Relations
Board (NLRB) has held that managerial authority over matters in a contract does not authorize
unilateral action upon expiration of the contract, concluding that "a contractual reservation of
managerial discretion does not extend beyond the expiration of the contract unless th_e contract
provides for it to outlive the contract." (Blue Circle Cement Company (1995) 319 NLRB 954
[151 LRRM 1356].) It is the practice that develops under the agreement that sets the status
quo and defines the post-expiration actions the employer is permitted to take unilaterally.
(California State Employees Association v. PERB (1996) 51 Cal.App.4 th 923 [59 Cal.Rptr.2d
488] (CSEA v. PERB). In that case, the collective bargaining agreement provided that the
California State University (CSU) would grant merit salary adjustments (MSA) "for the
duration of this agreement." A longstanding practice existed under which MS As were granted
or denied based on fixed criteria such as merit and effective performance. 	During post-
expiration negotiations and prior to impasse, CSU unilaterally stopped paying MSAs. 	In
response to the allegation of bad faith bargaining, CSU asserted that the union had

contractually waived its right to payment of MSAs after expiration of the agreement. The
court concluded that the "duration of this agreement" language did not constitute a clear and
unmistakable waiver of the right to negotiate about any post-expiration changes in the practice
under which MSAs were granted.
Nor is the general phrase - "duration of this Agreement" - the
equivalent of stating in clear and unmistakable terms the parties
were expressly waiving the right to have the provisions for
MSA's continue at expiration of the agreement while all other
terms could continue during negotiations. Moreover, to interpret
agreement on mere "duration" language as a waiver of the
statutory right to bargain would severely undermine the principles
of collective bargaining by allowing widespread unilateral
changes after expiration of collective bargaining agreements
containing such general and innocuous language while bargaining
over a successor agreement. To give this term a significance not
clearly intended or expressed by the parties could wreak havoc,
rather than promote harmony, in employer-employee labor
relations contrary to the purposes of HEERA. [CSEA v. PERB at
p. 939; fn. omitted.]
The court noted that "[a] collective bargaining agreement is not an ordinary contract.
Employers may not change terms or conditions of employment after expiration of such an
agreement until it affords the union an opportunity to bargain over those changes." (Ibid.; see
also State of California (Department of Personnel Administration) (1998) PERB Decision
No. 1296-S, p. 3, adopting proposed decision of administrative law judge at pp. 23-26 ["for the
duration of this agreement" language insufficient to constitute waiver of right to negotiate
about post-expiration changes]; State of California (Department of Mental Health) (1990)
PERB Decision No. 840-S, p. 2, adopting proposed decision of administrative law judge at
p. 15.)
In this case, the plain terms of the contract provide that the waiver to negotiate about
health benefits existed during the life of the agreement. The cases cited above establish that a
contract-based management right ends with the expiration of the agreement, and an employer
26	26
contractually waived its right to payment of MS As after expiration of the agreement. 	The
court concluded that the "duration of this agreement" language did not constitute a clear and
unmistakable waiver of the right to negotiate about any post-expiration changes in the practice
under which MSAs were granted.
Nor is the general phrase - "duration of this Agreement" - the
equivalent of stating in clear and unmistakable terms the parties
were expressly waiving the right to have the provisions for
MSA's continue at expiration of the agreement while all other
terms could continue during negotiations. Moreover, to interpret
agreement on mere "duration" language as a waiver of the
statutory right to bargain would severely undermine the principles
of collective bargaining by allowing widespread unilateral
changes after expiration of collective bargaining agreements
containing such general and innocuous language while bargaining
over a successor agreement. To give this term a significance not
clearly intended or expressed by the parties could wreak havoc,
rather than promote harmony, in employer-employee labor
relations contrary to the purposes of HEERA. 	[CSEA v. PERB at
p. 939; fn. omitted.]
The court noted that "[a] collective bargaining agreement is not an ordinary contract.
Employers may not change terms or conditions of employment after expiration of such an
agreement until it affords the union an opportunity to bargain over those changes." (Ibid.; see
also State of California (Department of Personnel Administration) ( 1998) PERB Decision
No. 1296-S, p. 3, adopting proposed decision of administrative law judge at pp. 23-26 ["for the
duration of this agreement" language insufficient to constitute waiver of right to negotiate
about post-expiration changes); State of California (Department of Mental Health) (1990)
PERB Decision No. 840-S, p. 2, adopting proposed decision of administrative law judge at
p. 15.)
In this case, the plain terms of the contract provide that the waiver to negotiate about
health benefits existed during the life of the agreement. The cases cited above establish that a
contract-based management right ends with the expiration of the agreement, and an employer

may not unilaterally alter the status quo established by the expired contract or a past practice
under that contract. Therefore, the question to be addressed here is not whether Article 1 1
permitted the University to implement the changes at issue here. The question is whether the
University breached its duty to bargain during the post-contract period by implementing
changes in health benefits that went beyond the parameters of the dynamic status quo that
developed during the life of the agreement.
The Unilateral Changes
UC-AFT argues that the University has unilaterally implemented changes in health
benefits for calendar years 2002 and 2003 that were inconsistent with the dynamic status quo.
Relying on PERB and NLRB case law, the union contends the University unlawfully departed
from the dynamic status quo when it exercised its discretion to implement the changes at issue
here. According to UC-AFT, a practice under the dynamic status quo concept is not created
merely because the University has changed health benefits each year. To fit within the
dynamic status quo, the union asserts, changes must conform to a fixed formula or criteria, and
the employer's subsequent changes must follow the same pattern for the employer to lawfully
make the changes without bargaining.
In this case, UC-AFT continues, the evidence shows that the University has
implemented a radical shift in the methodology used to provide health benefits, and has acted
in areas where it enjoyed vast discretion. These include, for example, setting contribution
rates, determining the amount of money for health benefits, and allocating cost increases
between copayments and premiums. It is the union's position that the University, by
unilaterally exercising its discretion in these and other areas, breached its duty to bargain.
The University responds that the factors to determine if an employer has departed from
the dynamic status quo include expectations of the parties, the longevity of the practice and the
27	27
may not unilaterally alter the status quo established by the expired contract or a past practice
under that contract. Therefore, the question to be addressed here is not whether Article 11
permitted the University to implement the changes at issue here. 	The question is whether the
University breached its duty to bargain during the post-contract period by implementing
changes in health benefits that went beyond the parameters of the dynamic status quo that
developed during the life of the agreement.
The Unilateral Changes
UC-AFT argues that the University has unilaterally implemented changes in health
benefits for calendar years 2002 and 2003 that were inconsistent with the dynamic status quo.
Relying on PERB and NLRB case law, the union contends the University unlawfully departed
from the dynamic status quo when it exercised its discretion to implement the changes at issue
here. 	According to UC-AFT, a practice under the dynamic status quo concept is not created
merely because the University has changed health benefits each year. 	To fit within the
dynamic status quo, the union asserts, changes must conform to a fixed formula or criteria, and
the employer's subsequent changes must follow the same pattern for the employer to lawfully
make the changes without bargaining.
In this case, UC-AFT continues, the evidence shows that the University has
implemented a radical shift in the methodology used to provide health benefits, and has acted
in areas where it enjoyed vast discretion. These include, for example, setting contribution
rates, determining the amount of money for health benefits, and allocating cost increases
between copayments and premiums. It is the union's position that the University, by
unilaterally exercising its discretion in these and other areas, breached its duty to bargain.
The University responds that the factors to determine if an employer has departed from
the dynamic status quo include expectations of the parties, the longevity of the practice and the

employer's discretion to implement the change in question. Applying these factors in the
context of this record, the University contends that there has been no unlawful change. It
asserts that it has provided health benefits for employees since 1962 under a complex system
that permits it to make changes on an annual basis, and the type and nature of the changes have
varied from year to year. Moreover, the University contends there is a reasonable expectation
among employees not only that they will be permitted to participate in the system, but also that
they will be treated the same as other employees. According to the University, even UC-AFT
has developed the expectation of participation in the system. As evidence of the union's
expectation, the University points to UC-AFT's acceptance of the 2001 changes in health
benefits without protest, admission that it did not expect the enrollment process to stop pending
negotiations in late 2001, and its failure to follow through on its demand to bargain in
November 2001. The University further asserts that UC-AFT made no specific proposals after
its meeting with French in June 2002, and any proposals made by the union were mere tactics
designed to obtain leverage and a favorable agreement.
In addition, the University contends UC-AFT's claim that it has unfettered discretion in
setting health benefits ignores the actual constraints under which the University operates,
including the cyclical swings in the health care market and resource limits. In this regard, the
University argues that even if it has some discretion in providing health benefits, the mere fact
that it can make choices among certain options does not defeat its dynamic status quo defense.
If an employer's ability to exercise discretion, standing alone, could defeat the dynamic status
quo defense, then the very concept of the dynamic status quo would be rendered meaningless,
the University argues. The key question, according to the University, is whether there exists a
"recognizable pattern of change" in benefits and costs, and such a pattern exists here.
28	28
employer's discretion to implement the change in question. Applying these factors in the
context of this record, the University contends that there has been no unlawful change. 	It
asserts that it has provided health benefits for employees since 1962 under a complex system
that permits it to make changes on an annual basis, and the type and nature of the changes have
varied from year to year. Moreover, the University contends there is a reasonable expectation
among employees not only that they will be permitted to participate in the system, but also that
they will be treated the same as other employees. According to the University, even UC-AFT
has developed the expectation of participation in the system. As evidence of the union's
expectation, the University points to UC-AFT's acceptance of the 2001 changes in health
benefits without protest, admission that it did not expect the enrollment process to stop pending
negotiations in late 2001, and its failure to follow through on its demand to bargain in
November 2001. The University further asserts that UC-AFT made no specific proposals after
its meeting with French in June 2002, and any proposals made by the union were mere tactics
designed to obtain leverage and a favorable agreement.
In addition, the University contends UC-AFT's claim that it has unfettered discretion in
setting health benefits ignores the actual constraints under which the University operates,
including the cyclical swings in the health care market and resource limits. In this regard, the
University argues that even if it has some discretion in providing health benefits, the mere fact
that it can make choices among certain options does not defeat its dynamic status quo defense.
If an employer's ability to exercise discretion, standing alone, could defeat the dynamic status
quo defense, then the very concept of the dynamic status quo would be rendered meaningless,
the University argues. The key question, according to the University, is whether there exists a
"recognizable pattern of change" in benefits and costs, and such a pattern exists here.

Unilateral changes are considered per se violations of the duty to bargain if certain
criteria are met. Those criteria are: (1) the employer implemented a change in policy
concerning a matter within the scope of representation, (2) the change had a generalized impact
on employees and (3) the change was implemented before the employer notified the exclusive
representative and gave it an opportunity to request negotiations. (Walnut Valley Unified
School District (1981) PERB Decision No. 160; Grant Joint Union High School District (1982)
PERB Decision No. 196.)
At the center of this case is whether the University has implemented a change in the
practice under which it has provided health benefits in the past. The status quo against which
an employer's conduct is evaluated must take into account the regular and consistent past
patterns of changes in the conditions of employment, and changes consistent with such a
pattern are not violations of the status quo. (Pajaro Valley Unified School District (1978)
PERB Decision No. 51, p. 6 (Pajaro).) In Pajaro, for example, the employer's practice was to
pay a set dollar amount toward the total health insurance premium. When the carrier increased
its premium, the employer's practice was to pass along the entire amount of such increase to
employees. There was no exercise of discretion by the district. PERB held that because the
employer had historically passed along increases in premiums to employees pending
negotiations, it was privileged to act in accordance with that practice, and such conduct did not
amount to a change in a term of employment. Thus, PERB found that a dynamic status quo
existed which permitted the employer's action. (Pajaro at pp. 9-10; see also Yuba Community
College District (1990) PERB Decision No. 855; Regents of the University of California
(1996) PERB Decision No. 1169-H (UPTE).)
In contrast, the Board has declined to recognize a dynamic status quo defense where the
employer retains discretion in adopting the changes. In the leading case of Regents of the
29	29
Unilateral changes are considered per se violations of the duty to bargain if certain
criteria are met. Those criteria are: ( 1) the employer implemented a change in policy
concerning a matter within the scope of representation, (2) the change had a generalized impact
on employees and (3) the change was implemented before the employer notified the exclusive
representative and gave it an opportunity to request negotiations. (Walnut Valley Unified
School District (1981) PERB Decision No. 160; Grant Joint Union High School District (1982)
PERB Decision No. 196.)
At the center of this case is whether the University has implemented a change in the
practice under which it has provided health benefits in the past. The status quo against which
an employer's conduct is evaluated must take into account the regular and consistent past
patterns of changes in the conditions of employment, and changes consistent with such a
pattern are not violations of the status quo. 	(Pajaro Valley Unified School District (1978)
PERB Decision No. 51, p. 6 (Pajaro).) In Pajaro, for example, the employer's practice was to
pay a set dollar amount toward the total health insurance premium. 	When the carrier increased
its premium, the employer's practice was to pass along the entire amount of such increase to
employees. There was no exercise of discretion by the district. PERB held that because the
employer had historically passed along increases in premiums to employees pending
negotiations, it was privileged to act in accordance with that practice, and such conduct did not
amount to a change in a term of employment. Thus, PERB found that a dynamic status quo
existed which permitted the employer's action. 	(Paiaro at pp. 9-1 O; see also Yuba Community
College District (1990) PERB Decision No. 855; Regents of the University of California
(1996) PERB Decision No. 1169-H (UPTE).)
In contrast, the Board has declined to recognize a dynamic status quo defense where the
employer retains discretion in adopting the changes. 	In the leading case of Regents of the

University of California (1983) PERB Decision No. 356-H (Regents), the Board found that the
University unilaterally implemented parking fee increases without negotiating with the union.
The University argued that it did not change the dynamic status quo regarding parking
increases, but rather continued the practice of imposing annual increases across the board.
Relying on Pajaro, the University argued that it had an established formula under which it
contributed a set amount from its budget and charged consumers of parking services for any
increased costs.
The Board concluded that the University's reliance on Pajaro and similar cases was
misplaced.
. . . In the instant case, the amount of increase in parking system
costs was not set by a clear formula. It was not keyed to some
standard method computation such as a cost-of-living increase or
a regular percentage step increase. Nor was the amount of the
increased cost established by a third party (such as the health care
insurer in Pajaro Valley, supra). Further, the increase was not
passed along on a uniform percentage basis or by a set amount.
Different sorts of parking fees exist in the system (metered,
quarterly, hourly, daily, etc.), and different sorts of consumers
utilize them (staff, students, the public). . . . It is clear that UC
exercises a vast amount of discretion in computing an annual
operating budget for its parking system. Further, UC clearly
exercises virtually unfettered discretion in determining how it
will extract increased costs. It determines the extent to which
each type of parking facility and each group of consumers will
bear the increased burden. . . . [Regents at pp. 15-16.]
The Board concluded that
. . . Where the employer has traditionally exercised a large
measure of discretion in making such changes, it is impossible for
the exclusive representative to know whether or not there has
been a substantial departure from past practice, and therefore the
exclusive representative may properly insist that the employer
negotiate regarding such changes. [Regents at pp. 16-17; fn.
omitted.]
30	30
University of California (1983) PERB Decision No. 356-H (Regents), the Board found that the
University unilaterally implemented parking fee increases without negotiating with the union.
The University argued that it did not change the dynamic status quo regarding parking
increases, but rather continued the practice of imposing annual increases across the board.
Relying on Paiaro, the University argued that it had an established formula under which it
contributed a set amount from its budget and charged consumers of parking services for any
increased costs.
The Board concluded that the University's reliance on Paiaro and similar cases was
misplaced.
. .. In the instant case, the amount of increase in parking system
costs was not set by a clear formula. 	It was not keyed to some
standard method computation such as a cost-of-living increase or
a regular percentage step increase. Nor was the amount of the
increased cost established by a third party (such as the health care
insurer in Pajaro Vallev, supra). Further, the increase was not
passed along on a uniform percentage basis or by a set amount.
Different sorts of parking fees exist in the system (metered,
quarterly, hourly, daily, etc.), and different sorts of consumers
utilize them (staff, students, the public) .... It is clear that UC
exercises a vast amount of discretion in computing an annual
operating budget for its parking system. Further, UC clearly
exercises virtually unfettered discretion in determining how it
will extract increased costs. It determines the extent to which
each type of parking facility and each group of consumers will
bear the increased burden. . . . [Regents at pp. 15-16.]
The Board concluded that
... Where the employer has traditionally exercised a large
measure of discretion in making such changes, it is impossible for
the exclusive representative to know whether or not there has
been a substantial departure from past practice, and therefore the
exclusive representative may properly insist that the employer
negotiate regarding such changes. 	[Regents at pp. 16-1 7; fn.
omitted.]

Thus, in distinguishing cases such as Pajaro, the Board has determined that employer
discretion is the key factor in determining whether the dynamic status quo has been changed.
In cases dealing with unilateral changes in health benefits, NLRB decisions are in accord. (See
e.g., Dynatron/Bondo Corp. (1997) 323 NLRB 1263 [155 LRRM 1225] (Dynatron); Maple
Grove Health Care Center (2000) 330 NLRB 775, 780 [164 LRRM 1020]; Garrett Flexible
Products (1985) 276 NLRB 704, 706 [120 LRRM 1 124].)
Prior to 1982, the University established its annual contribution based on the PERS
contribution for State employees. From 1982 to 1993, the University continued to follow the
State's formula, which was to develop a contribution based on the weighted average of the four
largest plans.
In 1993, the University adopted a benchmark methodology, under which its annual
contribution was equal to the cost of the lowest priced HMO at the nine University campuses.
Under the benchmark methodology, the University always offered at least one fully paid HMO,
assuming the resources were available to fund it. This methodology continued until 2002.
Even when the University commenced using risk adjustment in 2000, the benchmark
methodology was used, with the University setting its contribution equal to the price of the
lowest risk-adjusted HMO.
Beginning with calendar year 2003, however, the University adopted a significantly
different approach to establishing its contribution. For the first time, the University did not
establish its contribution based on the cost of the lowest priced HMO or a specific plan's
premium. Rather, it based its contribution on budgetary considerations. A chronology of
major health and welfare program changes prepared by the University states for January 1,
2003: "Employer contributions targeted to budget requirements rather than to a specific plan's
31	31
Thus, in distinguishing cases such as Pajaro, the Board has determined that employer
discretion is the key factor in determining whether the dynamic status quo has been changed.
In cases dealing with unilateral changes in health benefits, NLRB decisions are in accord. 	(See
e.g., Dynatron/Bondo Corp. ( 1997) 323 NLRB 1263 [ 155 LRRM 1225] (Dynatron); Maple
Grove Health Care Center (2000) 330 NLRB 775, 780 [ 164 LRRM 1020]; Garrett Flexible
Products (1985) 276 NLRB 704, 706 [120 LRRM 1124].)
Prior to 1982, the University established its annual contribution based on the PERS
contribution for State employees. From 1982 to 1993, the University continued to follow the
State's formula, which was to develop a contribution based on the weighted average of the four
largest plans.
In 1993, the University adopted a benchmark methodology, under which its annual
contribution was equal to the cost of the lowest priced HMO at the nine University campuses.
Under the benchmark methodology, the University always offered at least one fully paid HMO,
assuming the resources were available to fund it. This methodology continued until 2002.
Even when the University commenced using risk adjustment in 2000, the benchmark
methodology was used, with the University setting its contribution equal to the price of the
lowest risk-adjusted HMO.
Beginning with calendar year 2003, however, the University adopted a significantly
different approach to establishing its contribution. For the first time, the University did not
establish its contribution based on the cost of the lowest priced HMO or a specific plan's
premium. Rather, it based its contribution on budgetary considerations. A chronology of
major health and welfare program changes prepared by the University states for January 1,
2003: "Employer contributions targeted to budget requirements rather than to a speci fie plan's

premium." The change involved an exercise of discretion that rendered it negotiable under the
rationale set forth in Regents.
Under the established budget process, the University has significant discretion to
determine its contribution to health benefits because it determines how much it will pay for the
benefits as compared with payments for other items, such as salaries. And the University does
not have to negotiate the amount of its contribution with health plan vendors. While every
example of University discretion need not be set forth here, a few are noteworthy.
The Legislature provides a particular amount of money to the University for health
benefits, but the amount devoted to employee health benefits is not set in concrete. Under the
Partnership Agreement with the State, the University may allocate the 4 percent allotment
among various types of cost increases. As Hershman testified, the amount projected for health
benefit increases is based on two factors: "One is staying within this total pot of 4 percent and
what the priorities are for salaries, what we estimate costs for other inflation, and an estimate
of the cost increase for health benefits, yes. So we look at all those and figure out an allocation
of that 4 percent and that would be included in the plan, absolutely." Hershman also said
"since the partnership hasn't been fully funded, we're behind on salaries. So we're behind on
a lot of things, given what's happened recently. And so we have to make a judgment within
the amount of money that we would hope to get how to distribute that."
Granted, under the Partnership Agreement, the University initially tells the Legislature
and the Governor how much it plans to spend for health benefits. However, in addition to the
discretion the University has in presenting its request in the first place, after the University
receives its money from the Legislature, it is legally free to exercise discretion in the way it
spends the money. While the University ordinarily does not deviate from the original request,
it tries to stick to the spending plan to maintain credibility with the Governor and the
32	32
premium." The change involved an exercise of discretion that rendered it negotiable under the
rationale set f 01ih in Regents.
Under the established budget process, the University has significant discretion to
determine its contribution to health benefits because it determines how much it will pay for the
benefits as compared with payments for other items, such as salaries. And the University does
not have to negotiate the amount of its contribution with health plan vendors. 	While every
example of University discretion need not be set forth here, a few are noteworthy.
The Legislature provides a particular amount of money to the University for health
benefits, but the amount devoted to employee health benefits is not set in concrete. Under the
Partnership Agreement with the State, the University may allocate the 4 percent allotment
among various types of cost increases. As Hershman testified, the amount projected for health
benefit increases is based on two factors: 	"One is staying within this total pot of 4 percent and
what the priorities are for salaries, what we estimate costs for other inflation, and an estimate
of the cost increase for health benefits, yes. 	So we look at all those and figure out an allocation
of that 4 percent and that would be included in the plan, absolutely." Hershman also said
"since the partnership hasn't been fully funded, we're behind on salaries. 	So we're behind on
a lot of things, given what's happened recently. And so we have to make a judgment within
the amount of money that we would hope to get how to distribute that."
Granted, under the Partnership Agreement, the University initially tells the Legislature
and the Governor how much it plans to spend for health benefits. However, in addition to the
discretion the University has in presenting its request in the first place, after the University
receives its money from the Legislature, it is legally free to exercise discretion in the way it
spends the money. 	While the University ordinarily does not deviate from the original request,
it tries to stick to the spending plan to maintain credibility with the Governor and the

Legislature. Hershman described the process as follows: "if we present a plan, we try to stick
to that plan. If we deviate from that plan, we will get severely criticized when we go back the
next year. I mean, we'd be very hard-pressed to do that."
In addition, the University uses a "total compensation" approach under which it
evaluates the entire employee compensation package, including salary, health benefits, and
retirement. The package may include anything that can be considered compensation, such as
vacation. Under this approach, the cost of different forms of compensation are pooled so that
an increase in health benefits can be funded by decreasing another form of compensation, such
as salaries. And, as French testified, the University sets its actual contribution toward
employee health benefits without negotiation with the health benefit providers. Hershman
similarly testified that although the University presents a spending plan to the Legislature, it
legally has options such as giving different salary increases to different employee groups or
treating employees differently with respect to benefits based on the amount of money they
earn. Salaries, health benefits and retirement benefits clearly are matters within the scope of
representation. It follows that the discretion to allocate resources within an overall
compensation package that includes such benefits is similarly negotiable and is further
evidence of the University's discretion in areas within the scope of representation.
Evidence of the University's discretion is found in its conduct during fiscal year 2002-
2003. The University's original budget request indicated that it planned to allocate part of the
4 percent Partnership Agreement funding to a 10 percent increase in its health benefit
contribution. When the State provided the University with only 1.5 percent funding under the
Partnership Agreement, rather than 4 percent, the University decided to reduce its increase in
health benefits contributions to 6.7 percent. As Hershman testified, "[that was our estimate
and that's based on a priority decision that we made that we had to fund merit increases at least
33	33
Legislature. Hershman described the process as follows: "if we present a plan, we try to stick
to that plan. 	If we deviate from that plan, we will get severely criticized when we go back the
next year. I mean, we'd be very hard-pressed to do that."
In addition, the University uses a "total compensation" approach under which it
evaluates the entire employee compensation package, including salary, health benefits, and
retirement. The package may include anything that can be considered compensation, such as
vacation. Under this approach, the cost of different forms of compensation are pooled so that
an increase in health benefits can be funded by decreasing another form of compensation, such
as salaries. And, as French testified, the University sets its actual contribution toward
employee health benefits without negotiation with the health benefit providers. Hershman
similarly testified that although the University presents a spending plan to the Legislature, it
legally has options such as giving different salary increases to different employee groups or
treating employees differently with respect to benefits based on the amount of money they
earn. 	Salaries, health benefits and retirement benefits clearly are matters within the scope of
representation. It follows that the discretion to allocate resources within an overall
compensation package that includes such benefits is similarly negotiable and is further
evidence of the University's discretion in areas within the scope of representation.
Evidence of the University's discretion is found in its conduct during fiscal year 2002-
2003. The University's original budget request indicated that it planned to allocate part of the
4 percent Partnership Agreement funding to a 10 percent increase in its health benefit
contribution. 	When the State provided the University with only 1.5 percent funding under the
Partnership Agreement, rather than 4 percent, the University decided to reduce its increase in
health benefits contributions to 6.7 percent. As Hershman testified, "[t]hat was our estimate
and that's based on a priority decision that we made that we had to fund merit increases at least

at the minimum level for faculty and do equivalent for the staff, and that we cut way back on
what we were going to do for other inflationary increases and put together a package and try to
do the best we could for health benefits at that time and that was 6.7 percent." It is noteworthy
as further evidence of discretion that the decrease adopted by the University was not in
proportion to the State's reduction. The State's 1.5 percent funding represented almost a two-
thirds cut from the full 4 percent funding, but the University responded by planning to cut its
increase in health benefits contributions by only one-third.
When the University decided that a 6.7 percent increase in its health benefits would not
be enough to fund an adequate salary increase for faculty and staff, the University
implemented another plan to raise additional revenue by increasing non-resident tuition and
using the increased revenues to supplement health benefit programs. While the University
discussed this increase with the Governor and the Legislature, it did so primarily for political
reasons to maintain credibility in Sacramento, not because it did not have the legal authority to
make the decision itself. In fact, Hershman testified that the Regents had the legal authority to
take the action. No one in Sacramento objected and the University went ahead with its plan.
Thus, in 2003, the University chose to increase its non-resident tuition by 16 percent and to put
6 percent of that money toward health benefit contributions.
Another example of the University's discretion lies in its authority to vary its health
benefit contribution for different employees groups. As French testified, for calendar year
2003, the University departed from past practice when for the first time it established a
transitional allowance, under which the University's health benefit contribution was higher for
employees whose annualized salaries are less than $40,000. As Hershman testified, the
University made a decision that we would "deviate from history here and do even extra for
lower-paid people because of this fear of reduction in take-home pay." French said the
34	34
at the minimum level for faculty and do equivalent for the staff, and that we cut way back on
what we were going to do for other inflationary increases and put together a package and try to
do the best we could for health benefits at that time and that was 6. 7 percent." It is noteworthy
as further evidence of discretion that the decrease adopted by the University was not in
proportion to the State's reduction. 	The State's 1.5 percent funding represented almost a two-
thirds cut from the full 4 percent funding, but the University responded by planning to cut its
increase in health benefits contributions by only one-third.
When the University decided that a 6. 7 percent increase in its health benefits would not
be enough to fund an adequate salary increase for faculty and staff, the University
implemented another plan to raise additional revenue by increasing non-resident tuition and
using the increased revenues to supplement health benefit programs. 	While the University
discussed this increase with the Governor and the Legislature, it did so primarily for political
reasons to maintain credibility in Sacramento, not because it did not have the legal authority to
make the decision itself. In fact, Hershman testified that the Regents had the legal authority to
take the action. No one in Sacramento objected and the University went ahead with its plan.
Thus, in 2003, the University chose to increase its non-resident tuition by 16 percent and to put
6 percent of that money toward health benefit contributions.
Another example of the University's discretion lies in its authority to vary its health
benefit contribution for different employees groups. As French testified, for calendar year
2003, the University departed from past practice when for the first time it established a
transitional allowance, under which the University's health benefit contribution was higher for
employees whose annualized salaries are less than $40,000. As Hershman testified, the
University made a decision that we would "deviate from history here and do even extra for
lower-paid people because of this fear of reduction in take-home pay." French said the

University arrived at these figures after an "interactive process" with the budget office. "[Ijt
was a combination of assessing what we can fund, what's competitive and what do we want to
look at in terms of the relativity from year to year," French said. The decision to set the
amount of contribution and the cut-off point was somewhat subjective and discretionary, and
based on "equity considerations," French said, underscoring the University's discretion.
Although the changes in health benefits for calendar year 2002 were not as great as
those for 2003, they were nevertheless significant, conformed to no fixed formula or criteria
and involved the exercise of discretion by the University. The allocation of cost increases
between copayments and premiums in the 2002 changes to health benefits was not in
conformance with the dynamic status quo. As French testified, in dealing with increased
health care costs the University has the discretion to raise premiums, increase copayments or
modify the plan design. In fact, during the dealing with vendors for the 2002 changes the
University agreed to increased copayments in return for smaller premium increases. During
that year, the health plans proposed a double digit increase in premiums. The University's idea
of copayment increases in order to decrease premiums in 2002 was accepted by the plans.
While there had been increases in copayments in the past, the evidence does not support the
conclusion that they were implemented in accord with an established methodology that
restricted the University's discretion. Thus, even for calendar year 2002, when the University
had not abandoned its benchmark approach, it had discretion in making decisions that
determine employee copayments.
Granted, negotiations with health plan vendors is complex and must be accomplished
within a fixed time frame in tandem with State budget negotiations. However, the record
supports the conclusion that the procedure does not preclude meaningful bargaining over
health benefits. French testified that, while it may not be possible to change the open
35	35
University arrived at these figures after an "interactive process" with the budget office. "[I]t
was a combination of assessing what we can fund, what's competitive and what do we want to
look at in terms of the relativity from year to year," French said. The decision to set the
amount of contribution and the cut-off point was somewhat subjective and discretionary, and
based on "equity considerations," French said, underscoring the University's discretion.
Although the changes in health benefits for calendar year 2002 were not as great as
those for 2003, they were nevertheless significant, conformed to no fixed formula or criteria
and involved the exercise of discretion by the University. The allocation of cost increases
between copayments and premiums in the 2002 changes to health benefits was not in
conformance with the dynamic status quo. As French testified, in dealing with increased
health care costs the University has the discretion to raise premiums, increase copayments or
modify the plan design. 	In fact, during the dealing with vendors for the 2002 changes the
University agreed to increased copayments in return for smaller premium increases. During
that year, the health plans proposed a double digit increase in premiums. The University's idea
of copayment increases in order to decrease premiums in 2002 was accepted by the plans.
While there had been increases in copayments in the past, the evidence does not support the
conclusion that they were implemented in accord with an established methodology that
restricted the University's discretion. Thus, even for calendar year 2002, when the University
had not abandoned its benchmark approach, it had discretion in making decisions that
determine employee copayments.
Granted, negotiations with health plan vendors is complex and must be accomplished
within a fixed time frame in tandem with State budget negotiations. However, the record
supports the conclusion that the procedure does not preclude meaningful bargaining over
health benefits. French testified that, while it may not be possible to change the open

enrollment as late as October or November, with enough lead time it would be impossible to
negotiate about changes in the health benefits plan. With respect to the timing of Rhine's
February 2003 request to negotiate about health benefits for 2002, French testified that such an
early request gives the parties "the option," but "[ijt really depends on what the parties agree to
and how soon they agree to it, as to whether or not it can be implemented for 2004."
UC-AFT does not argue that the open enrollment period should have been stopped.
However, the union has set out in its brief several examples of issues that could have been
negotiated prior to the open enrollment period. While all of these need not be set forth here, a
few are noteworthy. Because the University may set its contribution rate without negotiating
with health plan vendors, establishment of the contribution amount is outside the lengthy and
complex process involving the vendors and thus falls within the University's discretion and is
subject to negotiations. Further, it is possible for the University to make benefit changes that
apply only to lecturers, as the UPTE negotiations indicate. For example, as UC-AFT points
out in its brief, the union may have wanted to trade a decrease in salaries in exchange for
increased health benefit contributions. It is also possible to negotiate about various aspects of
the transitional allowance concept. For instance, Elkins testified that many part-time lecturers
earn less that $40,000 per year, but because their annualized salary would be more than
$40,000 per year it appears that they are not eligible for the transitional allowance.
Accordingly, I find that there are several areas that lend themselves to resolution within
the collective bargaining process. The Board has held that in order to establish a business
necessity defense to an allegation of unilateral action an employer must show a crises offering
"no real alternative and no opportunity for meaningful negotiations." (Compton Community
College District (1989) PERB Decision No. 720, p. 23 (Compton).) The University has not
met its burden here.
36	36
enrollment as late as October or November, with enough lead time it would be impossible to
negotiate about changes in the health benefits plan. 	With respect to the timing of Rhine's
February 2003 request to negotiate about health benefits for 2002, French testified that such an
early request gives the parties "the option," but "[i]t really depends on what the parties agree to
and how soon they agree to it, as to whether or not it can be implemented for 2004."
UC-AFT does not argue that the open enrollment period should have been stopped.
However, the union has set out in its brief several examples of issues that could have been
negotiated prior to the open enrollment period. While all of these need not be set forth here, a
few are noteworthy. 	Because the University may set its contribution rate without negotiating
with health plan vendors, establishment of the contribution amount is outside the lengthy and
complex process involving the vendors and thus falls within the University's discretion and is
subject to negotiations. Further, it is possible for the University to make benefit changes that
apply only to lecturers, as the UPTE negotiations indicate. For example, as UC-AFT points
out in its brief, the union may have wanted to trade a decrease in salaries in exchange for
increased health benefit contributions. 	It is also possible to negotiate about various aspects of
the transitional allowance concept. 	For instance, Elkins testified that many part-time lecturers
earn less that $40,000 per year, but because their annualized salary would be more than
$40,000 per year it appears that they are not eligible for the transitional allowance.
Accordingly, I find that there are several areas that lend themselves to resolution within
the collective bargaining process. The Board has held that in order to establish a business
necessity defense to an allegation of unilateral action an employer must show a crises offering
"no real alternative and no opportunity for meaningful negotiations." (Compton Community
College District (1989) PERB Decision No. 720, p. 23 (Compton).) The University has not
met its burden here.

The University argues that its actions in 2002 and 2003 were consistent with past
practice and thus were permitted under the reasoning of UPTE, a case the University contends
is controlling here. In UPTE, during negotiations for an initial collective bargaining
agreement, the University notified the union of upcoming changes in health benefits. The
union demanded to bargain. The University declined to negotiate on the ground that the
changes were consistent with past practice. The union filed an unfair practice charge, the
regional attorney dismissed the charge and the Board upheld the regional attorney on appeal.
The Board held that the alleged unlawful changes were consistent with a longstanding practice
of reevaluating health care costs and benefits on a yearly basis.
The University contends UPTE cannot be distinguished from the instant case,
emphasizing that this dispute and the UPTE case have many factors in common. Both cases
involve the same health benefit system, with the same overriding goals of choice, quality,
access and affordability. Both cases concern the identical process for plan renewal and open
enrollment. In 1995, just as in 2001 and 2002, the University sent requests for renewal to the
plans, received their renewal proposals and engaged in complex negotiations to achieve the
best array of plans available. Following completion of the renewal negotiations, the University
held open enrollment in November to allow employees an opportunity to change their coverage
and cost options. Moreover, both cases involve changes in benefits offered through various
plans, as well as changes in the University's and the employees' contribution to the plans.
The University would reject the UC-AFT claim that the Board in UPTE considered
only a formulaic change to the benchmark methodology, noting that the underlying unfair
practice charge alleges a unilateral change in "benefit plan modifications," "benefit changes"
and costs, as well as a change in the methodology. The University thus would construe UPTE
as upholding its broad right to make the changes at issue here.
37	37
The University argues that its actions in 2002 and 2003 were consistent with past
practice and thus were permitted under the reasoning of UPTE, a case the University contends
is controlling here. 	In UPTE, during negotiations for an initial collective bargaining
agreement, the University notified the union of upcoming changes in health benefits. The
union demanded to bargain. The University declined to negotiate on the ground that the
changes were consistent with past practice. The union filed an unfair practice charge, the
regional attorney dismissed the charge and the Board upheld the regional attorney on appeal.
The Board held that the alleged unlawful changes were consistent with a longstanding practice
of reevaluating health care costs and benefits on a yearly basis.
The University contends UPTE cannot be distinguished from the instant case,
emphasizing that this dispute and the UPTE case have many factors in common. Both cases
involve the same health benefit system, with the same overriding goals of choice, quality,
access and affordability. 	Both cases concern the identical process for plan renewal and open
enrollment. In 1995, just as in 200 I and 2002, the University sent requests for renewal to the
plans, received their renewal proposals and engaged in complex negotiations to achieve the
best array of plans available. Following completion of the renewal negotiations, the University
held open enrollment in November to allow employees an opportunity to change their coverage
and cost options. Moreover, both cases involve changes in benefits offered through various
plans, as well as changes in the University's and the employees' contribution to the plans.
The University would reject the UC-AFT claim that the Board in UPTE considered
only a formulaic change to the benchmark methodology, noting that the underlying unfair
practice charge alleges a unilateral change in "benefit plan modifications," "benefit changes"
and costs, as well as a change in the methodology. The University thus would construe UPTE
as upholding its broad right to make the changes at issue here.

The University argues further that PERB, in UPTE, recognized its longstanding
practice of annually changing health benefits and costs and determined that those changes
constituted the status quo. In short, the University concludes, the UPTE decision encompassed
the regular and consistent pattern of changes both in benefits and costs implemented each year
for all participants in the health benefits system.
In response, UC-AFT argues that not only is UPTE not controlling in this matter, the
University presented arguments in that case that undercut its position here. In that case, UC-
AFT asserts, the University relied on its "established formula" to convince the Board that
dynamic status quo principles permitted it to continue following the formula in making
changes, even after UPTE was certified as the exclusive representative. UC-AFT contends that
the regional attorney and the Board relied on the University's representations in dismissing the
unfair practice charge. Thus, UC-AFT concludes, according to both the University's
arguments in UPTE and PERB's decision, the dynamic status quo principle prevented the
University from unilaterally changing health benefits as alleged in the amended complaint in
this case.
For the following reasons, I find that the University has advanced an overly broad
interpretation of UPTE. While there are some similarities between this case and UPTE, I
conclude that UC-AFT's argument is more persuasive and thus UPTE may be distinguished
from the instant case.
It is important to note initially that the decision in UPTE was based on a dismissal of
the unfair practice charge by the regional attorney. There was no hearing and thus no
evidentiary record that is comparable to the record in this matter. UPTE's claim rested on
bare-boned allegations in the underlying unfair practice charge. The regional attorney gave
UPTE the opportunity to amend the charge, but UPTE did not do so. The regional attorney
38	38
The University argues further that PERB, in UPTE, recognized its longstanding
practice of annually changing health benefits and costs and determined that those changes
constituted the status quo. 	In short, the University concludes, the UPTE decision encompassed
the regular and consistent pattern of changes both in benefits and costs implemented each year
for all participants in the health benefits system.
In response, UC-AFT argues that not only is UPTE not controlling in this matter, the
University presented arguments in that case that undercut its position here. 	In that case, UC-
AFT asserts, the University relied on its "established formula" to convince the Board that
dynamic status quo principles permitted it to continue following the formula in making
changes, even after UPTE was certified as the exclusive representative. 	UC-AFT contends that
the regional attorney and the Board relied on the University's representations in dismissing the
unfair practice charge. Thus, UC-AFT concludes, according to both the University's
arguments in UPTE and PERB' s decision, the dynamic status quo principle prevented the
University from unilaterally changing health benefits as alleged in the amended complaint in
this case.
For the following reasons, I find that the University has advanced an overly broad
interpretation of UPTE. While there are some similarities between this case and UPTE, I
co~clude that UC-AFT's argument is more persuasive and thus UPTE may be distinguished
from the instant case.
It is important to note initially that the decision in UPTE was based on a dismissal of
the unfair practice charge by the regional attorney. There was no hearing and thus no
evidentiary record that is comparable to the record in this matter. 	UPTE's claim rested on
bare-boned allegations in the underlying unfair practice charge. The regional attorney gave
UPTE the opportunity to amend the charge, but UPTE did not do so. The regional attorney

and the Board concluded that UPTE failed to state even a prima facie case. Moreover, as
discussed below, the centerpiece of UPTE is that the University had not changed its
methodology of setting its contribution at or near the lowest-cost HMO. The present dispute is
set in a wholly different context and thus presents different legal and factual questions that
were not present in UPTE and thus were not considered by the Board.
The decision of the Board and the warning letters of the regional attorney, read
together, suggest that the Board addressed a narrow issue in UPTE. The regional attorney's
warning letter of May 14, 1996, indicates that the informational packet provided by the
University to UPTE outlines the policy on contributions to health care premiums. The letter
describes the University's explanation of its contribution as follows:
The maximum UC contributions are set close to the price of the
lowest cost HMO plan, which varies from year to year. Your
monthly cost is based on the difference between the cost of your
plan and UCs maximum contributions. Your medical plan cost
will go up, down, or remain the same as a result of these two
changing factors. . . . Generally, UC contributions are set so that
there is at least one HMO plan at each major UC location with no
cost to employees. If you want one of the more expensive plans
you will need to pay the difference in premium. The amount UC
contributes is also subject to state appropriate, which may change
or be discontinued in future years.
Later in the dismissal letter, the regional attorney noted that "the University clearly states that
its contribution will be near or equal to, the premiums of the lowest-costing HMO. No
evidence has been provided by UPTE to demonstrate that this is a new policy or the revision of
a prior policy. Nor has evidence been provided that the University is failing to adhere to its
stated policy. Without such evidence, UPTE cannot establish that the University has changed a
policy within the scope of representation." (Regional attorney warning letter of May 14,
1996.)
3939
and the Board concluded that UPTE failed to state even a prima facie case. Moreover, as
discussed below, the centerpiece of UPTE is that the University had not changed its
methodology of setting its contribution at or near the lowest-cost HMO. The present dispute is
set in a wholly different context and thus presents different legal and factual questions that
were not present in UPTE and thu.s were not considered by the Board.
The decision of the Board and the warning letters of the regional attorney, read
together, suggest that the Board addressed a narrow issue in UPTE. The regional attorney's
warning letter of May 14, 1996, indicates that the informational packet provided by the
University to UPTE outlines the policy on contributions to health care premiums. The letter
describes the University's explanation of its contribution as follows:
The maximum UC contributions are set close to the price of the
lowest cost HMO plan, which varies from year to year. 	Your
monthly cost is based on the difference between the cost of your
plan and UCs maximum contributions. 	Your medical plan cost
will go up, down, or remain the same as a result of these two
changing factors .... Generally, UC contributions are set so that
there is at least one HMO plan at each major UC location with no
cost to employees. If you want one of the more expensive plans
you will need to pay the difference in premium. The amount UC
contributes is also subject to state appropriate, which may change
or be discontinued in future years.
Later in the dismissal letter, the regional attorney noted that "the University clearly states that
its contribution will be near or equal to, the premiums of the lowest-costing HMO. No
evidence has been provided by UPTE to demonstrate that this is a new policy or the revision of
a prior policy. Nor has evidence been provided that the University is failing to adhere to its
stated policy. Without such evidence, UPTE cannot establish that the University has changed a
policy within the scope of representation." (Regional attorney warning letter of May 14,
1996.)

Clearly, the warning letter addressed a narrow aspect of the alleged unilateral change in
health benefits; that is, whether there had been a change in the methodology of setting
contributions equal to or near the cost of the lowest-cost plan. It is this letter that the Board
affirmed, for UPTE declined to present additional evidence when requested to do so.
The regional attorney, in the dismissal letter that followed, reiterated the above-quoted
language from the warning letter, concluding that "any changes made in the health benefits
provided to University employees and any modifications in costs, are consistent with the
University's past practice of reevaluating health care costs and benefits on a yearly basis."
(Regional attorney letter of May 28, 1996, p. 2.)
The Board adopted the conclusions reached by the regional attorney as the decision of
the Board itself.
. . While the University must continue to negotiate with UPTE
over the mandatory subject of health benefits, it may act in
accordance with its past practice of adjusting health benefits until
the parties have completed negotiations for their first contract or
they have completed impasse procedures. UPTE has failed to
allege facts which demonstrate that the University's actions in
adjusting health care benefits and the University's contribution
rate were contrary to the established past practice. Accordingly,
this argument is without merit. [UPTE, at pp. 5-6.]
While the underlying unfair practice charge in UPTE may have included various
allegations that the University made "benefit changes" or changes in "health care benefits," the
allegations were of a general nature with no supporting evidence. The only specific allegation
addressed in the regional attorney's letters, which were affirmed by the Board, concerned the
methodology under which the University set its contribution rate. The regional attorney
dismissed that charge because the methodology was not changed in 1996. The regional
attorney and the Board found the allegation did not state a prima facie case, noting that UPTE
was invited but failed to amend the charge to include sufficient facts to support its claim.
40	40
Clearly, the warning letter addressed a narrow aspect of the alleged unilateral change in
health benefits; that is, whether there had been a change in the methodology of setting
contributions equal to or near the cost of the lowest-cost plan. 	It is this letter that the Board
affirmed, for UPTE declined to present additional evidence when requested to do so.
The regional attorney, in the dismissal letter that followed, reiterated the above-quoted
language from the warning letter, concluding that "any changes made in the health benefits
provided to University employees and any modifications in costs, are consistent with the
University's past practice ofreevaluating health care costs and benefits on a yearly basis."
(Regional attorney letter of May 28, 1996, p. 2.)
The Board adopted the conclusions reached by the regional attorney as the decision of
the Board itself.
... While the University must continue to negotiate with UPTE
over the mandatory subject of health benefits, it may act in
accordance with its past practice of adjusting health benefits until
the parties have completed negotiations for their first contract or
they have completed impasse procedures. UPTE has failed to
allege facts which demonstrate that the University's actions in
adjusting health care benefits and the University's contribution
rate were contrary to the established past practice. Accordingly,
this argument is without merit. 	[UPTE, al pp. 5-6.]
While the underlying unfair practice charge in UPTE may have included various
allegations that the University made "benefit changes" or changes in "health care benefits,'' the
allegations were of a general nature with no supporting evidence. The only specific allegation
addressed in the regional attorney's letters, which were affirmed by the Board, concerned the
methodology under which the University set its contribution rate. 	The regional attorney
dismissed that charge because the methodology was not changed in 1996. The regional
attorney and the Board found the allegation did not state a prima facie case, noting that UPTE
was invited but failed to amend the charge to include sufficient facts to support its claim.

Simply put, UPTE failed to state a prima facie case, and I decline to read UPTE as broadly as
the University construes the decision.
The instant case is significantly different in critical respects. As discussed elsewhere in
this proposed decision, the University changed its methodology in 2003. UC-AFT has
presented evidence establishing the University's discretion in making specific changes in
benefits in 2002 and 2003, along with legal argument in support of its claim that the changes
fall outside the dynamic status quo. None of these issues were before the Board in UPTE. For
these reasons, it would be inappropriate to conclude that UPTE is controlling here.
In addition, it is worth noting that University's arguments presented to the Board in its
opposition to the appeal of the dismissal in UPTE undercut its position here and tend to
support the interpretation of UPTE set forth above. Specifically, in arguments submitted to
PERB the University argued that its
. . . maximum monthly contribution is based upon the lowest
cost HMO available to members at all major University locations,
which may vary from year to year. A member's monthly cost for
his or her health plan depends upon the difference between the
cost of the member's chosen plan and the University's maximum
contribution. Thus, each year, a member's monthly health plan
cost may increase, decrease, or remain the same, depending upon
the employee's choice of coverage and the price of the lowest
cost HMO available at all major University locations.
Under the University's established practice, which began in
1993, maximum contributions are set so that one HMO, known as
the "benchmark plan," is available to members at no cost. . . . The
University followed its established past practice of setting the
benchmark plan and the University's maximum contribution by
the lowest cost HMO plan available at all major University
locations. [Italics added.]
Later in its submission to PERB, the University argued:
The determination of the University's maximum monthly
contribution per member and the identity of the benchmark plan
has been established since 1993 by a clearly defined, set formula
41	41
Simply put, UPTE failed to state a prima facie case, and I decline to read UPTE as broadly as
the University construes the decision.
The instant case is significantly different in critical respects. As discussed elsewhere in
this proposed decision, the University changed its methodology in 2003. 	UC-AFT has
presented evidence establishing the University's discretion in making specific changes in
benefits in 2002 and 2003, along with legal argument in support of its claim that the changes
fall outside the dynamic status quo. None of these issues were before the Board in UPTE. 	For
these reasons, it would be inappropriate to conclude that UPTE is controlling here.
In addition, it is worth noting that University's arguments presented to the Board in its
opposition to the appeal of the dismissal in UPTE undercut its position here and tend to
support the interpretation of UPTE set forth above. Specifically, in arguments submitted to
PERB the University argued that its
.... maximum monthly contribution is based upon the lowest
cost HMO available to members at all major University locations,
which may vary from year to year. 	A member's monthly cost for
his or her health plan depends upon the difference between the
cost of the member's chosen plan and the University's maximum
contribution. Thus, each year, a member's monthly health plan
cost may increase, decrease, or remain the same, depending upon
the employee's choice of coverage and the price of the lowest
cost HMO available at all major University locations.
Under the University's established practice, which began in
1993, maximum contributions are set so that one HMO, known as
the "benchmark plan," is available to members at no cost. ... The
University followed its established past practice of setting the
benchmark plan and the University's maximum contribution by
the lowest cost HMO plan available at all major University
locations. 	[Italics added.]
Later in its submission to PERB, the University argued:
The determination of the University's maximum monthly
contribution per member and the identity of the benchmark plan
has been established since 1993 by a clearly defined, set formula

- the price of the lowest cost HMO plan available at all major
University locations. Moreover, the price of the benchmark plan
is determined essentially by the insurance carrier, as the carriers
have the ultimate authority to set their prices at a given level.
(Italics added.)
The University further asserted that
under the dynamic status quo as established by the University's
past practice, the University must provide an unspecified
benchmark plan at no cost to employees and offer other health
plan options at some cost to employees. UPTE did not, and
cannot, provide any evidence that the University acted contrary to
a written policy or past practice. . . . [Italics added.]
PERB relied on these arguments in rendering its decision in UPTE.
Therefore, according to the University's own arguments, the established practice
included the benchmark plan and a clearly defined methodology. Under dynamic status quo
principles, the University was required to continue setting its maximum contributions based
upon the benchmark methodology it relied on in UPTE. The University did not do so in the
changes at issue here.
Based on the foregoing, I find the University has substantial discretion in the health
benefits area, and thus the changes at issue here were not in accord with the dynamic status
quo. Yet the University did not negotiate about the changes with UC-AFT. I conclude,
therefore, that the University has unilaterally implemented changes in matters within the scope
of representation in violation of its duty to bargain under HEERA. (Regents at p. 16; Dynatron
at p. 1265.)
though evidence about the CUE negotiations is not dispositive of the issues
presented here, it tends to undermine the University's argument that it had the right to make
changes in health benefits. Hayden clearly felt it was important to bring CUE "on board"
before French negotiated changes with health plan vendors. If she truly believed the
University had the right to make changes in health benefits, there would have been no reason
to agree to the side letter with such urgency. 42	42
- the price of the lowest cost HMO plan available at all major
University locations. Moreover, the price of the benchmark plan
is determined essentially by the insurance carrier, as the carriers
have the ultimate authority to set their prices at a given level.
(Italics added.)
The University further asserted that
under the dynamic status quo as established by the University's
past practice, the University must provide an unspecified
benchmark plan at no cost to employees and offer other health
plan options at some cost to employees. 	UPTE did not, and
cannot, provide any evidence that the University acted contrary to
a written policy or past practice .... [Italics added.]
PERB relied on these arguments in rendering its decision in UPTE.
Therefore, according to the University's own arguments, the established practice
included the benchmark plan and a clearly defined methodology. 	Under dynamic status quo
principles, the University was required to continue setting its maximum contributions based
upon the benchmark methodology it relied on in UPTE. 	The University did not do so in the
changes at issue here. 6
Based on the foregoing, I find the University has substantial discretion in the health
benefits area, and thus the changes at issue here were not in accord with the dynamic status
quo. 	Yet the University did not negotiate about the changes with UC-AFT. I conclude,
therefore, that the University has unilaterally implemented changes in matters within the scope
of representation in violation of its duty to bargain under HEERA. (Regents at p. 16; Dynatron
at p. 1265.)
AlAlthough evidence about the CUE negotiations is not dispositive of the issues
presented here, it tends to undermine the University's argument that it had the right to make
changes in health benefits. 	Hayden clearly felt it was important to bring CUE "on board"
before French negotiated changes with health plan vendors. If she truly believed the
University had the right to make changes in health benefits, there would have been no reason
to agree to the side letter with such urgency.

The Waiver Issue
The University contends UC-AFT had a reasonable expectation that its members would
continue to participate in its benefits system and changes would continue to occur unless the
parties negotiated something different. Consequently, the University claims in effect that UC-
AFT did not truly attempt to negotiate about health benefits because of its expectation.
Although the University does not expressly cast this claim as a waiver defense, I construe its
contentions in this regard as akin to an argument that the union has waived its right to bargain
by its conduct.
Specifically, the University asserts that UC-AFT never complained about the changes
in health benefits for calendar year 2001, even though it had pending at that time a proposal to
eliminate the University's ability to unilaterally change any aspect of health benefits. And,
shortly after the 2001 changes, UC-AFT modified its benefits proposal to indicate its desire to
maintain the status quo under the agreement. Even after the UC-AFT submitted its demand to
bargain in November 2001, the University continues, the union presented no proposals
regarding specific health benefits. Likewise, after the UC-AFT received information from
French in June 2002, the union presented no proposal regarding specific health benefits. On
the contrary, UC-AFT pursued only its proposal to include more members (part-time lecturers)
in the University's systemwide program.
According to the University, the evidence shows that UC-AFT's demands to bargain
were mere tactical maneuvers designed to gain an advantage at the bargaining table. In the
University's view, UC-AFT had "no real expectation" that the University was required to
bargain with it regarding open enrollment changes, and it acted accordingly.
UC-AFT contends that it received no notice of the specific changes that were
announced in October 2001 to become effective in calendar year 2002. Any attempt to
43	43
The Waiver Issue
The University contends UC-AFT had a reasonable expectation that its members would
continue to participate in its benefits system and changes would continue to occur unless the
parties negotiated something different. 	Consequently, the University claims in effect that UC-
AFT did not truly attempt to negotiate about health benefits because of its expectation.
Although the University does not expressly cast this claim as a waiver defense, I construe its
contentions in this regard as akin to an argument that the union has waived its right to hargain
by its conduct.
Specifically, the University asserts that UC-AFT never complained about the changes
in health benefits for calendar year 2001, even though it had pending at that time a proposal to
eliminate the University's ability to unilaterally change any aspect of health benefits. And,
shortly after the 2001 changes, UC-AFT modified its benefits proposal to indicate its desire to
maintain the status quo under the agreement. Even after the UC-AFT submitted its demand to
bargain in November 2001, the University continues, the union presented no proposals
regarding specific health benefits. Likewise, after the UC-AFT received information from
French in June 2002, the union presented no proposal regarding specific health benefits. 	On
the contrary, UC-AFT pursued only its proposal to include more members (part-time lecturers)
in the University's systemwide program.
According to the University, the evidence shows that UC-AFT's demands to bargain
were mere tactical maneuvers designed to gain an advantage at the bargaining table. In the
University's view, UC-AFT had "no real expectation" that the University was required to
bargain with it regarding open enrollment changes, and it acted accordingly.
UC-AFT contends that it received no notice of the specific changes that were
announced in October 2001 to become effective in calendar year 2002. Any attempt to

negotiate at that stage of the health benefit process would have been futile due to the timing of
the announcement. With respect to the 2003 changes, UC-AFT advances a similar argument;
that is, it did not receive adequate notice of the specific changes and the University adhered to
the position that it would not negotiate about health benefits while the union's members
remained in the systemwide program. Even if notice had been provided, UC-AFT asserts, the
changes at issue here were implemented prior to impasse and on that basis alone are unlawful.
In addition, UC-AFT argues that its decision not to challenge the changes in health
benefits for calendar year 2001 is not evidence of waiver. Like the changes in 2002 and 2003,
the changes in 2001 were announced without affording the union notice and an opportunity to
negotiate. UC-AFT did not contest them because they were acceptable, and, in any event, the
failure to contest a single unilateral change does not constitute a waiver of the right to
negotiate similar changes for all time. Nor does UC-AFT's proposals or lack thereof support a
finding that the union has waived its right to bargain, UC-AFT continues, for a bargaining
proposal is not a waiver of the right to negotiate where it is conditioned on agreement to a
complete contract. Lastly, UC-AFT argues that it had no duty to present proposals. Because
the University wanted to change the status quo, it had the duty to present proposals and
negotiate to impasse before implementation.
PERB has long held that waiver of the right to bargain must be "clear and
unmistakable." (Amador Valley Joint Union High School District (1978) PERB Decision
No. 74, pp. 8-9; Long Beach Community College District (2003) PERB Decision No. 1568,
p. 14.) To establish waiver, a party must show that the matter was "fully discussed" and
"consciously explored" and that the union "consciously yielded" its interest in the matter.
(Los Angeles Community College District (1982) PERB Decision No. 252, p. 15 (Los Angeles
CCD).) Moreover, "any doubts must be resolved against the party asserting waiver," and the
44	44
negotiate at that stage of the health benefit process would have been futile due to the timing of
the announcement. With respect to the 2003 changes, UC-AFT advances a similar argument;
that is, it did not receive adequate notice of the specific changes and the University adhered to
the position that it would not negotiate about health benefits while the union's members
remained in the system wide program. 	Even if notice had been provided, UC-AFT asserts, the
changes at issue here were implemented prior to impasse and on that basis alone are unlawful.
In addition, UC-AFT argues that its decision not to challenge the changes in health
benefits for calendar year 2001 is not evidence of waiver. Like the changes in 2002 and 2003,
the changes in 200 l were announced without affording the union notice and an opportunity to
negotiate. UC-AFT did not contest them because they were acceptable, and, in any event, the
failure to contest a single unilateral change does not constitute a waiver of the right to
negotiate similar changes for all time. Nor does UC-AFT's proposals or lack thereof support a
finding that the union has waived its right to bargain, UC-AFT continues, for a bargaining
proposal is not a waiver of the right to negotiate where it is conditioned on agreement to a
complete contract. Lastly, UC-AFT argues that it had no duty to present proposals. Because
the University wanted to change the status quo, it had the duty to present proposals and
negotiate to impasse before implementation.
PERB has long held that waiver of the right to bargain must be "clear and
unmistakable." (Amador Valley Joint Union High School District (1978) PERB Decision
No. 74, pp. 8-9; Long Beach Community College District (2003) PERB Decision No. 1568,
p. 14.) 	To establish waiver, a party must show that the matter was "fully discussed" and
"consciously explored" and that the union "consciously yielded" its interest in the matter.
(Los Angeles Community College District (1982) PERB Decision No. 252, p. 15 (Los Angeles
CCD).) Moreover, "any doubts must be resolved against the party asserting waiver," and the

"clear and unmistakable' standard requires that the evidence of waiver be conclusive."
Compton Community College District (1989) PERB Decision No. 720, p. 18.) In the final
analysis, the party asserting waiver bears the burden of proving it as an affirmative defense,
and any doubts must be resolved against that party. (Placentia Unified School District (1986)
PERB Decision No. 595, p. 7.)
On October 25, 2001, the University announced the 2002 health benefit changes in the
midst of negotiations without affording UC-AFT notice of the specific changes and an
opportunity to bargain. The HR Benefits Review newsletters distributed during the summer
and fall of 2001 did not provide valid legal notice to UC-AFT. In addition to the fact that
Elkins had no recollection of seeing the relevant portions of the letters, such communications
do not provide the kind of notice that is necessary to inform the union of proposed changes in
negotiable subjects. Actual or constructive notice must be communicated to a union official
with authority to act on behalf of the organization, and it must be "reasonably calculated" to
draw attention to a specific change in a negotiable matter. (See e.g., Victor Valley Union High
School District (1986) PERB Decision No. 565, pp. 5-6 [school board agenda not adequate
notice unless it is delivered to a proper official and presented in a manner that is reasonably
calculated to draw attention to a proposed changed].) Under this standard, proper notice places
an affirmative obligation on the part of the employer to tell the union of specific proposed
changes in negotiable subjects, so that the union may make an informed decision about its
bargaining strategy. The University has not satisfied its obligation here.
Elkins responded to the University's announcement on November 7, 2001, asking for
five categories of information and requesting to negotiate. And in a counterproposal on
November 30, UC-AFT agreed to accept the University's 2002 health benefit changes and not
strike until at least March 2003 in return for wage increases and an agreement that the
45	45
'"clear and unmistakable' standard requires that the evidence of waiver be conclusive."
(Compton Community College District (1989) PERB Decision No. 720, p. 18.) In the final
analysis, the party asserting waiver bears the burden of proving it as an affirmative defense,
and any doubts must be resolved against that party. (Placentia Unified School District (1986)
PERB Decision No. 595, p. 7.)
On October 25, 2001, the University announced the 2002 health benefit changes in the
midst of negotiations without affording UC-AFT notice of the specific changes and an
opportunity to bargain. The HR Benefits Review newsletters distributed during the summer
and fall of 2001 did not provide valid legal notice to UC-AFT. 	In addition to the fact that
Elkins had no recollection of seeing the relevant portions of the letters, such communications
do not provide the kind of notice that is necessary to inform the union of proposed changes in
negotiable subjects. Actual or constructive notice must be communicated to a union official
with authority to act on behalf of the organization, and it must be "reasonably calculated" to
draw attention to a specific change in a negotiable matter. 	(See e.g., Victor Valley Union High
School District (1986) PERB Decision No. 565, pp. 5-6 [school board agenda not adequate
notice unless it is delivered to a proper official and presented in a manner that is reasonably
calculated to draw attention to a proposed changed].) Under this standard, proper notice places
an affirmative obligation on the part of the employer to tell the union of specific proposed
changes in negotiable subjects, so that the union may make an informed decision about its
bargaining strategy. The University has not satisfied its obligation here.
Elkins responded to the University's announcement on November 7, 2001, asking for
five categories of information and requesting to negotiate. And in a counterproposal on
November 30, UC-AFT agreed to accept the University's 2002 health benefit changes and not
strike until at least March 2003 in return for wage increases and an agreement that the

University meet in at least eight bargaining sessions and informal sessions. Chester declined to
negotiate, claiming that the University's action was consistent with the dynamic status quo and
no duty to bargain existed. Thus, the October 25, 2001, announcement was presented as a fait
accompli which by that time rendered meaningful negotiations impossible. (See San Francisco
Community College District (1979) PERB Decision No. 105, p. 17; Vernon Fire Fighters v.
City of Vernon (1980) (107 Cal.App.3d 802, 823 [165 Cal.Rptr. 908].)
Chester's testimony with respect to whether the University would negotiate about the
health benefit changes for 2002 does not support its claim that UC-AFT waived its right to
bargain. As noted, in November 2001, Chester made it clear that the University believed it had
no duty to negotiate about health benefit changes for calendar year 2002 because the changes
were consistent with the dynamic status quo. In his testimony, however, Chester said the
University would have negotiated with UC-AFT in response to a timely demand. But I have
found that the University unlawfully changed health benefits for 2002. Accordingly, the duty
to present timely proposals was on the University, not the union, for it was the University that
wanted to make the changes at issue here. Instead of presenting proposals, the University
unlawfully implemented changes in health benefits prior to impasse. (Moreno Valley Unified
School District v. PERB (1983) 142 Cal.App.3d 191, 199 [191 Cal.Rptr. 60] (Moreno Valley).)
Nor did UC-AFT waive its right to bargain with regard to the 2003 changes in health
benefits. The meeting with French on June 26, 2002, did not constitute a valid notice of the
specific changes that would eventually occur. At the time of the meeting, the University's
negotiations with health plans was just beginning and French was not certain of the outcome.
She knew that costs were rising. But she had only a general notion or a directional sense that
the University would not be able to provide a free HMO plan, although the possibility of such
a plan was not ruled out. This was the only meeting UC-AFT had with French. Thus, it cannot
46	46
University meet in at least eight bargaining sessions and informal sessions. Chester declined to
negotiate, claiming that the University's action was consistent with the dynamic status quo and
no duty to bargain existed. Thus, the October 25, 2001, announcement was presented as a fait
accompli which by that time rendered meaningful negotiations impossible. (See San Francisco
Community College District (1979) PERB Decision No. 105, p. 17; Vernon Fire Fighters v.
Citv of Vernon (1980) (107 Cal.App.3d 802,823 [165 Cal.Rptr. 908].)
Chester's testimony with respect to whether the University would negotiate about the
health benefit changes for 2002 does not support its claim that UC-AFT waived its right to
bargain. As noted, in November 2001, Chester made it clear that the University believed it had
no duty to negotiate about health benefit changes for calendar year 2002 because the changes
were consistent with the dynamic status quo. 	In his testimony, however, Chester said the
University would have negotiated with UC-AFT in response to a timely demand. 	But I have
found that the University unlawfully changed health benefits for 2002. 	Accordingly, the duty
to present timely proposals was on the University, not the union, for it was the University that
wanted to make the changes at issue here. 	Instead of presenting proposals, the University
unlawfully implemented changes in health benefits prior to impasse. (Moreno Valley Unified
School District v. PERB (1983) 142 Cal.App.3d 191, 199 [191 Cal.Rptr. 60] (Moreno Valley).)
Nor did UC-AFT waive its right to bargain with regard to the 2003 changes in health
benefits. The meeting with French on June 26, 2002, did not constitute a valid notice of the
specific changes that would eventually occur. At the time of the meeting, the University's
negotiations with health plans was just beginning and French was not certain of the outcome.
She knew that costs were rising. But she had only a general notion or a directional sense that
the University would not be able to provide a free HMO plan, although the possibility of such
a plan was not ruled out. This was the only meeting UC-AFT had with French. Thus, it cannot

be concluded on this record that the meeting with French constituted the kind of notice
required to alert UC-AFT to the changes that would occur. (San Diego Community College
District (1988) PERB Decision No. 662, pp. 17-18, affirmed San Diego Adult Educators v.
Public Employment Relations Board (1990) 223 Cal.App.3d 1124, 1136 [273 Cal.Rptr. 53]
(inconclusive discussion at meeting attended by union president not effective notice of
change).)
In addition, UC-AFT's reaction to the University's two-part proposal of June 26, 2002,
does not suggest a waiver of the right to bargain. The first part was the same as the expired
contract and provided the University would have the right to make changes to health benefits,
if the changes were the same as changes for senate faculty. The second part contained a
proposal that stated "This language is submitted as the language that UC proposes if we reach
impasse." The terms of the proposal were essentially the same as the expired contract and
included specific dollar maximums the University was willing to contribute toward benefit
premiums beginning in 2003. However, rather than waiting for impasse and implementing
either part of the proposal, the University announced a different set of changes in October
2002, to become effective January 1, 2003, without ever proposing the changes to UC-AFT in
advance. Not only were the 2003 changes a fait accompli by the time they were announced,
they were implemented prior to impasse. A unilateral change prior to impasse is unlawful,
even if it is contemplated within an existing offer. (Moreno Valley at p. 199.)
Meanwhile, after the meeting with French, the negotiations continued and the parties
discussed a possible interim agreement. Elkins reiterated that UC-AFT could not agree to
future changes sight unseen. And he credibly testified that Cieszkiewicz promised to provide
more specific information as soon as possible. However, the University never complied with
the promise. In addition, I credit Elkins' testimony that, at about the time of the meeting with
47	47
be concluded on this record that the meeting with French constituted the kind of notice
required to alert UC-AFT to the changes that would occur. (San Diego Community College
District (1988) PERB Decision No. 662, pp. 17-18, affirmed San Diego Adult Educators v.
Public Employment Relations Board (1990) 223 Cal.App.3d 1124, 1136 [273 Cal.Rptr. 53]
(inconclusive discussion at meeting attended by union president not effective notice of
change).)
In addition, UC-AFT's reaction to the University's two-part proposal of June 26, 2002,
does not suggest a waiver of the right to bargain. The first part was the same as the expired
contract and provided the University would have the right to make changes to health benefits,
if the changes were the same as changes for senate faculty. 	The second part contained a
proposal that stated "This language is submitted as the language that UC proposes if we reach
impasse." The terms of the proposal were essentially the same as the expired contract and
included specific dollar maximums the University was willing to contribute toward benefit
premiums beginning in 2003. However, rather than waiting for impasse and implementing
either part of the proposal, the University announced a different set of changes in October
2002, to become effective January 1, 2003, without ever proposing the changes to UC-AFT in
advance. 	Not only were the 2003 changes a fait accompli by the time they were announced,
they were implemented prior to impasse. A unilateral change prior to impasse is unlawful,
even if it is contemplated within an existing offer. 	(Moreno Valley at p. 199.)
Meanwhile, after the meeting with French, the negotiations continued and the parties
discussed a possible interim agreement. Elkins reiterated that UC-AFT could not agree to
future changes sight unseen. And he credibly testified that Cieszkiewicz promised to provide
more specific information as soon as possible. However, the University never complied with
the promise. In addition, I credit Elkins' testimony that, at about the time of the meeting with

French and the University's two-part proposal, Cieszkiewicz took the position that the
University would not negotiate about the changes unless UC-AFT agreed to remove its
members from the systemwide plan, a predictably unacceptable proposal. ' Elkins was a
credible witness and his testimony on this point is consistent with other record evidence,
including Cieszkiewicz's own testimony and her letter to Rhine. Cieszkiewicz indicated in her
February 2003 letter to Rhine that the University would not negotiate about "annual plan
changes" for the following calendar year and UC-AFT insistence on a "separate set of
arrangements" would be a "surprising departure" from the union's prior position. At hearing,
she was questioned about the position set out in the letter. Asked by UC-AFT counsel if the
University would refuse to negotiate if the union proposed to keep its members in the pool
with other University employees, Cieszkiewicz said "yes."
Nor did the UC-AFT's lack of proposals to change specific health benefits constitute a
waiver of the right to negotiate. It is true that UC-AFT made few proposals to change specific
health benefits, other than the proposal to include coverage of part-time lecturers. However, it
is important to note that the proposals advanced by UC-AFT evidence an attempt at substantive
bargaining. In October 2001, Chester proposed extending the contract through June 2002.
Elkins rejected the offer, but said UC-AFT would be willing to extend certain articles. The
parties discussed the extension in return for a pass through of the salary increase. In November
he University is able to offer a wide range of choices because of the large number of
participants in the system. Given the relatively small role the UC-AFT membership occupies
within the large University health benefits system, it is an understatement to say that
bargaining outside the system would not be beneficial to the union. Thus, the condition
Cieszkiewicz placed on the agreement to negotiate seems more likely to prevent the
meaningful give and take of good faith bargaining rather than foster it. Plainly, it is a
condition that UC-AFT could not possibly have accepted.
Although not dispositive of the issues presented here, the University's conduct in its
negotiations with other unions is noteworthy. As the UPTE negotiations indicate, it is possible
to negotiate about health benefits without removing the union from the systemwide program.
48	48
French and the University's two-part proposal, Cieszkiewicz took the position that the
University would not negotiate about the changes unless UC-AFT agreed to remove its
members from the systemwide plan, a predictably unacceptable proposal. 7 Elkins was a
credible witness and his testimony on this point is consistent with other record evidence,
including Cieszkiewicz's own testimony and her letter to Rhine. Cieszkiewicz indicated in her
February 2003 letter to Rhine that the University would not negotiate about "annual plan
changes" for the following calendar year and UC-AFT insistence on a "separate set of
arrangements" would be a "surprising departure" from the union's prior position. 	At hearing,
she was questioned about the position set out in the letter. Asked by UC-AFT counsel if the
University would refuse to negotiate if the union proposed to keep its members in the pool
with other University employees, Cieszkiewicz said "yes."8
Nor did the UC-AFT's lack of proposals to change specific health benefits constitute a
waiver of the right to negotiate. 	It is true that UC-AFT made few proposals to change specific
health benefits, other than the proposal to include coverage of part-time lecturers. However, it
is important to note that the proposals advanced by UC-AFT evidence an attempt at substantive
bargaining. In October 2001, Chester proposed extending the contract through June 2002.
Elkins rejected the offer, but said UC-AFT would be willing to extend certain articles. 	The
parties discussed the extension in return for a pass through of the salary increase. 	In November
TThe University is able to offer a wide range of choices because of the large number of
participants in the system. Given the relatively small role the UC-AFT membership occupies
within the large University health benefits system, it is an understatement to say that
bargaining outside the system would not be beneficial to the union. 	Thus, the condition
Cieszkiewicz placed on the agreement to negotiate seems more likely to prevent the
meaningful give and take of good faith bargaining rather than foster it. Plainly, it is a
condition that UC-AFT could not possibly have accepted.
8 Although not dispositive of the issues presented here, the University's conduct in its
negotiations with other unions is noteworthy. As the UPTE negotiations indicate, it is possible
to negotiate about health benefits without removing the union from the systemwide program.

2001, Elkins requested information and asked to negotiate, but Chester refused under the
dynamic status quo defense. In late November 2001, Chester proposed a pass through of the
salary increase in return for a contract extension and withdrawal of the union's earlier salary
proposal. Elkins responded with a counterproposal under which UC-AFT would agree to
accept the 2002 health benefit changes and not strike until March 2002 in return for a salary
increase and agreement to participate in at least eight bargaining sessions prior to March 2002.
Similar exchanges occurred in 2002. In early 2002, Cieszkiewicz presented a proposal
that would pass through the salary increase in return for UC-AFT accepting the 2002 health
benefit changes without litigation and the 2003 benefit changes that would become effective in
2003. Elkins responded that he could not accept future changes, but he "could sell" an
agreement on the 2002 health benefit changes in return for the salary increase. This proposal
was reiterated a few days later by UC-AFT. Even after the University's June 2002 two-part
proposal brought no agreement, the parties continued to discuss a possible interim agreement
that contemplated a pass through of the salary increase in return for UC-AFT accepting the
2002 and 2003 health benefit changes. These discussions continued until October 2002, when
the University announced the changes in health benefits for 2003.
It may be true that the proposals made by UC-AFT did not encompass specific changes
in health benefits and in large part were contingent on the University's agreement on salaries.
Nevertheless, I conclude that UC-AFT made significant proposals throughout 2001 and 2002
and its conduct does not constitute a clear and unmistakable waiver of the right to negotiate
health benefits. Further, absent agreement, the proposals by UC-AFT did not entitle the
University to change the dynamic status quo in regard to existing health benefits prior to
impasse. The Board has held that there can be no waiver where a union's acquiescence to an
employer's position occurs in the context of negotiations for total agreement and negotiations
49	49
2001, Elkins requested information and asked to negotiate, but Chester refused under the
dynamic status quo defense. 	In late November 2001, Chester proposed a pass through of the
salary increase in return for a contract extension and withdrawal of the union's earlier salary
proposal. Elkins responded with a counterproposal under which UC-AFT would agree to
accept the 2002 health benefit changes and not strike until March 2002 in return for a salary
increase and agreement to participate in at least eight bargaining sessions prior to March 2002.
Similar exchanges occurred in 2002. In early 2002, Cieszkiewicz presented a proposal
that would pass through the salary increase in return for UC-AFT accepting the 2002 health
benefit changes without litigation and the 2003 benefit changes that would become effective in
2003. 	Elkins responded that he could not accept future changes, but he "could sell" an
agreement on the 2002 health benefit changes in return for the salary increase. This proposal
was reiterated a few days later by UC-AFT. Even after the University's June 2002 two-part
proposal brought no agreement, the parties continued to discuss a possible interim agreement
that contemplated a pass through of the salary increase in return for UC-AFT accepting the
2002 and 2003 health benefit changes. These discussions continued until October 2002, when
the University announced the changes in health benefits for 2003.
It may be true that the proposals made by UC-AFT did not encompass specific changes
in health benefits and in large part were contingent on the University's agreement on salaries.
Nevertheless, I conclude that UC-AFT made significant proposals throughout 2001 and 2002
and its conduct does not constitute a clear and unmistakable waiver of the right to negotiate
health benefits. Further, absent agreement, the proposals by UC-AFT did not entitle the
University to change the dynamic status quo in regard to existing health benefits prior to
impasse. The Board has held that there can be no waiver where a union's acquiescence to an
employer's position occurs in the context of negotiations for total agreement and negotiations

are not concluded prior to the unilateral change. (Palo Verde Unified School District (1983)
PERB Decision No. 321, p. 14.)
UC-AFT's conduct in failing to protest the 2001 health benefit changes does not lead to
the conclusion that the union had no intention of negotiating about the changes, expected that
the changes would take place, or acquiesced to the changes in subsequent years. The 2001
changes were the only changes made during a contract hiatus in several years, other changes
having been made during the life of the agreement when the waiver clause was in effect. UC-
AFT declined to challenge the 2001 changes because they were positive or otherwise
unobjectionable. For instance, the University did not deviate from its benchmark
methodology, and the union did not find any increased copayments objectionable in the context
of the negotiations then underway. A union's acquiescence in a previous unilateral change
does not operate as a waiver of the right to bargain for all times. (San Jacinto Unified School
District (1994) PERB Decision No. 1078, adopting proposed decision of administrative law
judge at p. 23.) Moreover, the failure of UC-AFT to request negotiations about the 2001
changes does not itself establish a new status quo for the purpose of determining whether a
unilateral change is unlawful. (See CSEA v. PERB at p. 944.)
Based on the foregoing, I find that UC-AFT attempted to negotiate about the changes in
health benefits for 2002 and 2003, yet no agreement was reached and specific notice of the
changes was not provided until they were finalized and announced to employees. Therefore, I
conclude that UC-AFT at no time consciously yielded its interest in negotiating about health
benefits. (Los Angeles CCD at p. 13.)
Impact of Changes
It is settled that changes in health benefits must have a material and significant effect to
require negotiations. (See e.g., Oakland Unified School District v. PERB (1981) 120
50	50
are not concluded prior to the unilateral change. (Palo Verde Unified School District (1983)
PERB Decision No. 321, p. 14.)
UC-AFT's conduct in failing to protest the 2001 health benefit changes does not lead to
the conclusion that the union had no intention of negotiating about the changes, expected that
the changes would take place, or acquiesced to the changes in subsequent years. 	The 2001
changes were the only changes made during a contract hiatus in several years, other changes
having been made during the life of the agreement when the waiver clause was in effect. UC-
AFT declined to challenge the 2001 changes because they were positive or otherwise
unobjectionable. For instance, the University did not deviate from its benchmark
methodology, and the union did not find any increased copayments objectionable in the context
of the negotiations then underway. A union's acquiescence in a previous unilateral change
does not operate as a waiver of the right to bargain for all times. (San Jacinto Unified School
District ( 1994) PERB Decision No. 1078, adopting proposed decision of administrative law
judge at p. 23.) Moreover, the failure of UC-AFT to request negotiations about the 2001
changes does not itself establish a new status quo for the purpose of determining whether a
unilateral change is unlawful. 	(See CSEA v. PERB at p. 944.)
Based on the foregoing, I find that UC-AFT attempted to negotiate about the changes in
health benefits for 2002 and 2003, yet no agreement was reached and specific notice of the
changes was not provided until they were finalized and announced to employees. Therefore, I
conclude that UC-AFT at no time consciously yielded its interest in negotiating about health
benefits. (Los Angeles CCD at p. 13.)
Impact of Changes
It is settled that changes in health benefits must have a material and significant effect to
require negotiations. (See e.g., Oakland Unified School District v. PERB (1981) 120

Cal.App.3d 1007, 1012 [175 Cal.Rptr. 105]; State of California (Department of Forestry and
Fire Protection) (1998) PERB Decision No. 1260-S, p. 12.) PERB has found for instance that
a health plan provided by an employer at no cost to employees is a materially different benefit
than the identical plan requiring employee contributions. Increases in the cost of prescription
drugs from one dollar to between five and seven dollars, the cost of emergency room visit
copayment from zero to $35, and increased copayments for general services constitute
significant changes, as well. (Oakland Unified School District (1994) PERB Decision
No. 1045, pp. 4-5 (Oakland); see also Savanna School District (1988) PERB Decision No. 671,
pp. 3-4 (actual increases in employee contributions for health care benefits is material);
Oakland Unified School District v. PERB, supra, 120 Cal.App.3d 1007, 1012-1013 [change in
a benefit plan administrator from Blue Cross to Western Administration Company must be
negotiated, even where the only impact is that terminated employee would no longer have the
right to continuing coverage under the Blue Cross Group Conversion program and employee
would not have access to Blue Cross affiliated hospitals outside the employee's geographic
area].)
In other cases, the Board has found that changes were not significant enough to trigger
a duty to bargain. For example, the Board found that the charging party failed to establish that
changes in a vision care plan including, among other things, modification in "accessibility of
benefits," reduction in the number of providers, cost of eyeglasses and "cosmetic extras" were
not significant. The Board wrote: "To prevail in this case, [ the charging party] must present
evidence of the impact on actual vision care benefits, or their cost to employees, which resulted
from the State's action. The evidence [charging party] presents is either speculative,
insufficiently explained or unhelpful in demonstrating this impact." (State of California
(Department of Forestry and Fire Protection), supra, PERB Decision No. 1260, pp. 15-22; see
51	51
Cal.App.3d 1007, 1012 [175 Cal.Rptr. 105]; State of California (Department of Forestry and
Fire Protection) (1998) PERB Decision No. 1260-S, p. 12.) 	PERB has found for instance that
a health plan provided by an employer at no cost to employees is a materially different benefit
than the identical plan requiring employee contributions. Increases in the cost of prescription
drugs from one dollar to between five and seven dollars, the cost of emergency room visit
copayment from zero to $35, and increased copayments for general services constitute
significant changes, as well. (Oakland Unified School District (1994) PERB Decision
No. 1045, pp. 4-5 (Oakland); see also Savanna School District (1988) PERB Decision No. 671,
pp. 3-4 (actual increases in employee contributions for health care benefits is material);
Oakland Unified School District v. PERB, supra, 120 Cal.App.3d 1007, 1012-1013 [change in
a benefit plan administrator from Blue Cross to Western Administration Company must be
negotiated, even where the only impact is that terminated employee would no longer have the
right to continuing coverage under the Blue Cross Group Conversion program and employee
would not have access to Blue Cross affiliated hospitals outside the employee's geographic
area].)
In other cases, the Board has found that changes were not significant enough to trigger
a duty to bargain. 	For example, the Board found that the charging party failed to establish that
changes in a vision care plan including, among other things, modification in "accessibility of
benefits," reduction in the number of providers, cost of eyeglasses and "cosmetic extras" were
not significant. The Board wrote: "To prevail in this case, [the charging party] must present
evidence of the impact on actual vision care benefits, or their cost to employees, which resulted
from the State's action. The evidence [charging party] presents is either speculative,
insufficiently explained or unhelpful in demonstrating this impact." (State of California
(Department of Forestry and Fire Protection), supra, PERB Decision No. 1260, pp. 15-22; see

also State of California (Department of Personnel Administration) (1998) PERB Decision
No. 1244-S, pp. 16-17 [record evidence fails to establish significant change in vision care
benefits, such as retail pricing of eyeglasses].) Therefore, the Board declined to find the
changes at issue significantly impacted actual benefits or the cost of those benefits.
I find the record evidence supports the conclusion that changes at issue in this case
constitute a material and significant impact on benefits. While every aspect of the changes in
health benefits need not be set forth here, a few are noteworthy. For instance, the change in the
benchmark methodology was significant. In 2002, the Pacificare single, two-party or family
plan was free on a three-tier structure. If the University had continued its benchmark
methodology, the Pacificare plan would have remained free. Instead, for Pacificare in 2003,
rates increased so that an employee earning over $40,000 paid $18.12 per month for himself,
$32.62 per month for himself and children, $38.06 per month for himself and an adult, and
$52.55 per month for himself and family. Due to the implementation of the transitional
allowance concept, an employee earning less than $40,000 per year in 2003 paid $10.12 per
month for himself, $18.22 for himself and children, $21.26 per month for himself and an adult,
and $52.55 for himself and a family. And the 2003 contributions were based on a four-tier
structure, rather than a three-tier structure.
Although the changes for plan year 2002 were less dramatic, they were nevertheless
significant. In brief, the changes included the following: (1) 100 percent increases in
copayments for office visits, home visits, eye examinations, hearing examinations, allergy
testing and treatment, abortion, podiatry, outpatient mental health and substance abuse visits,
inoculations, and other outpatient services; (2) 43 percent increase in emergency room
copayments; (3) establishment of a new $250.00 per occurrence hospitalization copayment for
all inpatient services, maternity services and mental health/substance abuse inpatient care; and
52	52
also State of California (Department of Personnel Administration) (1998) PERB Decision
No. 1244-S, pp. 16-17 [record evidence fails to establish significant change in vision care
benefits, such as retail pricing of eyeglasses].) Therefore, the Board declined to find the
changes at issue significantly impacted actual benefits or the cost of those benefits.
I find the record evidence supports the conclusion that changes at issue in this case
constitute a material and significant impact on benefits. While every aspect of the changes in
health benefits need not be set forth here, a few are noteworthy. 	For instance, the change in the
benchmark methodology was significant. In 2002, the PacifiCare single, two-party or family
plan was free on a three-tier structure. If the University had continued its benchmark
methodology, the PacifiCare plan would have remained free. 	Instead, for PacifiCare in 2003,
rates increased so that an employee earning over $40,000 paid $ 18.12 per month for himse If,
$32.62 per month for himself and children, $38.06 per month for himself and an adult, and
$52.55 per month for himself and family. 	Due to the implementation of the transitional
allowance concept, an employee earning less than $40,000 per year in 2003 paid $10.12 per
month for himself, $18.22 for himself and children, $21.26 per month for himself and an adult,
and $52.55 for himself and a family. 	And the 2003 contributions were based on a four-tier
structure, rather than a three-tier structure.
Although the changes for plan year 2002 were less dramatic, they were nevertheless
significant. In brief, the changes included the following: 	(1) 100 percent increases in
copayments for office visits, home visits, eye examinations, hearing examinations, allergy
testing and treatment, abortion, podiatry, outpatient mental health and substance abuse visits,
inoculations, and other outpatient services; (2) 43 percent increase in emergency room
copayments; (3) establishment of a new $250.00 per occurrence hospitalization copayment for
all inpatient services, maternity services and mental health/substance abuse inpatient care; and

(4) approximately 100 percent increase in prescription drug copayments. The Board has found
similar changes sufficiently significant to trigger the duty to bargain. (Oakland, at pp. 4-5.)
REMEDY
Section 3563.3 gives PERB the authority to
. . issue a decision and order directing an offending party to
cease and desist from the unfair practice and to take such
affirmative action, including, but not limited to, the reinstatement
of employees with or without back pay, as will effectuate the
policies of this chapter.
It has been found that the University has implemented significant changes in health benefits
for calendar years 2002 and 2003 without affording UC-AFT notice and an opportunity to
negotiate, in violation of section 3571(c). By this conduct the University has denied UC-AFT
the right to represent its members, in violation of section 3571(b). By the same conduct, the
University has interfered with the right of Unit 18 employees to be represented by UC-AFT, in
violation of section 3571(a). It is therefore appropriate to order the University to cease and
desist from such activity.
In cases involving unilateral action, it is appropriate to order reinstatement of the status
quo that existed prior to the unlawful actions, including making employees whole for losses
suffered as a result of the unlawful actions, with interest at the rate of 7 percent per annum.
(Oakland Unified School District v. PERB, supra, 120 Cal.App.3d 1007, 1014-1015.)
However, liability under such a remedy will be cut off if the parties have, in the interim,
reached agreement on a new contract. (Compton at p. 24.) UC-AFT indicates in its brief that
the parties have reached an agreement under which the University is permitted to make
changes to health benefits without bargaining. Therefore, the make whole remedy will begin
the date the University implemented the unilateral actions covering calendar years 2002 and
2003 and end at the effective date of the parties' new collective bargaining agreement.
53
(4) approximately 100 percent increase in prescription drug copayments. The Board has found
similar changes sufficiently significant to trigger the duty to bargain. (Oakland, at pp. 4-5.)
REMEDY
Section 3563.3 gives PERB the authority to
... issue a decision and order directing an offending party to
cease and desist from the unfair practice and to take such
affirmative action, including, but not limited to, the reinstatement
of employees with or without back pay, as will effectuate the
policies of this chapter.
It has been found that the University has implemented significant changes in health benefits
for calendar years 2002 and 2003 without affording UC-AFT notice and an opportunity to
negotiate, in violation of section 3571(c). By this conduct the University has denied UC-AFT
the right to represent its members, in violation of section 357l(b). By the same conduct, the
University has interfered with the right of Unit 18 employees to be represented by UC-AFT, in
violation of section 3571 (a). 	It is therefore appropriate to order the University to cease and
desist from such activity.
In cases involving unilateral action, it is appropriate to order reinstatement of the status
quo that existed prior to the unlawful actions, including making employees whole for losses
suffered as a result of the unlawful actions, with interest at the rate of 7 percent per annum.
(Oakland Unified School District v. PERB, supra, 120 Cal.App.3d 1007, 1014-1015.)
However, liability under such a remedy will be cut off if the parties have, in the interim,
reached agreement on a new contract. (Compton at p. 24.) UC-AFT indicates in its brief that
the parties have reached an agreement under which the University is permitted to make
changes to health benefits without bargaining. Therefore, the make whole remedy will begin
the date the University implemented the unilateral actions covering calendar years 2002 and
2003 and end at the effective date of the parties' new collective bargaining agreement.
53

Specifically, the University will be ordered to make Unit 18 employees whole for losses
suffered as a result of the unilateral changes in health benefits with interest at the rate of
percent per annum. The make whole remedy shall include, but is not limited to, two main
areas. First, the University will be ordered to reimburse Unit 18 employees for the difference
between premiums they have paid since January 2003 and the premiums they would have paid
had the University followed its benchmark methodology of setting its contribution based upon
the lowest cost HMO after risk adjustment. Second, the University will be ordered to
reimburse Unit 18 employees for the difference between copayments they have paid since
January 2002, when the University made the discretionary decision to negotiate higher
copayments not in conformance with any past practice, and the copayments they would have
paid had the University not made the decision.
In the alternative, upon a request by UC-AFT, the University may comply with this
remedy by negotiating a different settlement with UC-AFT that effectuates the purposes of the
HEERA. (Oakland Unified School District v. PERB, supra, 120 Cal.App.3d 1007, 1015.)
It is further appropriate that the University be directed to post a notice incorporating the
terms of this order at all locations where notices customarily are posted for members of Unit
18. Posting of such a notice, signed by an authorized agent of the University, will provide
employees with notice that the University has acted in an unlawful manner, is being required to
cease and desist from this activity, and will comply with the order. It effectuates the purposes
of the HEERA that employees be informed of the resolution of this controversy and the
University's readiness to comply with the ordered remedy. (See The Regents of the University
of California (1990) PERB Decision No. 826-H, p. 13.)
54	54
Specifically, the University will be ordered to make Unit 18 employees whole for losses
suffered as a result of the unilateral changes in health benefits with interest at the rate of
7 percent per annum. The make whole remedy shall include, but is not limited to, two main
areas. First, the University will be ordered to reimburse Unit 18 employees for the difference
between premiums they have paid since January 2003 and the premiums they would have paid
had the University followed its benchmark methodology of setting its contribution based upon
the lowest cost HMO after risk adjustment. 	Second, the University will be ordered to
reimburse Unit 18 employees for the difference between copayments they have paid since
January 2002, when the University made the discretionary decision to negotiate higher
copayments not in conformance with any past practice, and the copayments they would have
paid had the University not made the decision.
In the alternative, upon a request by UC-AFT, the University may comply with this
remedy by negotiating a different settlement with UC-AFT that effectuates the purposes of the
HEERA. (Oakland Unified School District v. PERB, supra, 120 Cal.App.3d 1007, 1015.)
It is fu11her appropriate that the University be directed to post a notice incorporating the
terms of this order at all locations where notices customarily are posted for members of Unit
18. Posting of such a notice, signed by an authorized agent of the University, will provide
employees with notice that the University has acted in an unlawful manner, is being required to
cease and desist from this activity, and will comply with the order. 	It effectuates the purposes
of the HEERA that employees be informed of the resolution of this controversy and the
University's readiness to comply with the ordered remedy. 	(See The Regents of the University
of California (1990) PERB Decision No. 826-H, p. 13.)

PROPOSED ORDER
Based on the foregoing findings of fact and conclusions of law and the entire record in
this matter, it has been found that the Regents of the University of California (University)
violated the Higher Education Employer-Employee Relations Act (HEERA) by unilaterally
changing health benefits for calendar years 2002 and 2003 without affording the University
Council American Federation of Teachers (UC-AFT) notice and an opportunity to bargain. By
this conduct, the University has breached its duty to bargain in violation of section 3571(c),
interfered with the right of Unit 18 employees to be represented by UC-AFT in violation of
section 3571(a), and denied UC-AFT the right to represent its members in violation of section
3571 (b).
Pursuant to Government Code section 3563.3, it is hereby ordered that the University
and its representatives shall:
A. 	CEASE AND DESIST FROM:
1 . 	Failing and refusing to negotiate with the UC-AFT about the decision to
change health benefits;
2. 	Denying UC-AFT the right to represent Unit 18 employees in their
employment relations with the University; and
3. Interfering with the right of Unit 18 members to be represented by their
chosen representative.
B. 	THE FOLLOWING AFFIRMATIVE ACTIONS DESIGNED TO
EFFECUTATE THE POLICIES OF THE HEERA:
1 . 	Unless otherwise agreed to by the parties, make employees whole for
losses suffered as a result of the unilateral change in health benefits for calendar years
2002 and 2003. The make whole remedy shall include, but shall not be limited to,
55	55
PROPOSED ORDER
Based on the foregoing findings of fact and conclusions of law and the entire record in
this matter, it has been found that the Regents of the University of California (University)
violated the Higher Education Employer-Employee Relations Act (HEERA) by unilaterally
changing health benefits for calendar years 2002 and 2003 without affording the University
Council American Federation of Teachers (UC-AFT) notice and an opportunity to bargain. By
this conduct, the University has breached its duty to bargain in violation of section 357l(c),
interfered with the right of Unit 18 employees to be represented by UC-AFT in violation of
section 357l(a), and denied UC-AFT the right to represent its members in violation of section
357l(b).
Pursuant to Government Code section 3563.3, it is hereby ordered that the University
and its representatives shall:
A. 	CEASE AND DESIST FROM:
1. 	Failing and refusing to negotiate with the UC-AFT about the decision to
change health benefits;
2. 	Denying UC-AFT the right to represent Unit 18 employees in their
employment relations with the University; and
3. 	Interfering with the right of Unit 18 members to be represented by their
chosen representative.
B. 	THE FOLLOWING AFFIRMATIVE ACTIONS DESIGNED TO
EFFECUT A TE THE POLICIES OF THE HEERA:
1. 	Unless otherwise agreed to by the parties, make employees whole for
losses suffered as a result of the unilateral change in health benefits for calendar years
2002 and 2003. The make whole remedy shall include, but shall not be limited to,

(a) reimbursement for the difference between premiums they have paid since January 2003 and
the premiums they would have paid had the University followed its benchmark methodology of
setting its contribution based upon the lowest cost HMO after risk adjustment, and
(b) reimbursement for the difference between copayments they have paid since January 2002,
when the University made the discretionary decision to negotiate higher copayments not in
conformance with any past practice, and the copayments they would have paid had the
University not made the decision. The period covering the make whole remedy shall begin
with the date the changes were implemented and end with the effective date of a successor
agreement covering health benefits. All monetary losses will include interest at the rate of 7
percent per annum.
2. 	Within ten (10) workdays of service of a final decision in this matter,
post at all work locations where notices to Unit 18 employees are customarily posted, copies of
the Notice attached hereto as an Appendix. The Notice must be signed by an authorized agent
of the University, indicating that the University will comply with the terms of the Order. Such
posting shall be maintained for a period of thirty (30) consecutive workdays. Reasonable steps
shall be taken to ensure that the Notice is not reduced in size, altered, defaced or covered with
any other material.
3. 	Within five (5) workdays of service of a final decision in this matter,
notify the San Francisco Regional Director of the Public Employment Relations Board, in
writing, of the steps taken to comply with the terms of this Order. Continue to report to in
writing to the Regional Director periodically thereafter as directed. All reports to the Regional
Director shall be served concurrently on UC-AFT.
Pursuant to California Code of Regulations, title 8, section 32305, this Proposed
Decision and Order shall become final unless a party files a statement of exceptions with the
56	56
(a) reimbursement for the difference between premiums they have paid since January 2003 and
the premiums they would have paid had the University followed its benchmark methodology of
setting its contribution based upon the lowest cost HMO after risk adjustment, and
(b) reimbursement for the difference between copayments they have paid since January 2002,
when the University made the discretionary decision to negotiate higher copayments not in
conformance with any past practice, and the copayments they would have paid had the
University not made the decision. The period covering the make whole remedy shall begin
with the date the changes were implemented and end with the effective date of a successor
agreement covering health benefits. All monetary losses will include interest at the rate of 7
percent per annum.
2. 	Within ten (10) workdays of service of a final decision in this matter,
post at all work locations where notices to Unit 18 employees are customarily posted, copies of
the Notice attached hereto as an Appendix. The Notice must be signed by an authorized agent
of the University, indicating that the University will comply with the terms of the Order. 	Such
posting shall be maintained for a period of thirty (30) consecutive workdays. 	Reasonable steps
shall be taken to ensure that the Notice is not reduced in size, altered, defaced or covered with
any other material.
3. 	Within five (5) workdays of service of a final decision in this matter,
notify the San Francisco Regional Director of the Public Employment Relations Board, in
writing, of the steps taken to comply with the terms of this Order. Continue to report to in
writing to the Regional Director periodically thereafter as directed. All reports to the Regional
Director shall be served concurrently on UC-AFT.
Pursuant to California Code of Regulations, title 8, section 32305, this Proposed
Decision and Order shall become final unless a party files a statement of exceptions with the

Public Employment Relations Board (PERB or Board) itself within 20 days of service of this
Decision. The Board's address is:
Public Employment Relations Board
Attention: Appeals Assistant
1031 18th Street
Sacramento, CA 95814-4174
FAX: (916) 327-7960
In accordance with PERB regulations, the statement of exceptions should identify by
page citation or exhibit number the portions of the record, if any, relied upon for such
exceptions. (Cal. Code Regs., tit. 8, sec. 32300.)
A document is considered "filed" when actually received before the close of business
(5 p.m.) on the last day set for filing. (Cal. Code Regs., tit. 8, secs. 32135(a) and 32130.) A
document is also considered "filed" when received by facsimile transmission before the close
of business on the last day for filing together with a Facsimile Transmission Cover Sheet
which meets the requirements of California Code of Regulations, title 8, section 32135(d),
provided the filing party also places the original, together with the required number of copies
and proof of service, in the U.S. mail. (Cal. Code Regs., tit. 8, sec. 32135(b), (c) and (d); see
also Cal. Code Regs., tit. 8, secs. 32090 and 32130.)
Any statement of exceptions and supporting brief must be served concurrently with its
filing upon each party to this proceeding. Proof of service shall accompany each copy served
on a party or filed with the Board itself. (See Cal. Code Regs., tit. 8, secs. 32300, 32305,
32140, and 32135(c).)
Fred D'Orazio
Administrative Law Judge
57	57
Public Employment Relations Board (PERB or Board) itself within 20 days of service of this
Decision. The Board's address is:
Public Employment Relations Board
Attention: Appeals Assistant
I 031 18th Street
Sacramento, CA 95814-4174
FAX: (916) 327-7960
In accordance with PERB regulations, the statement of exceptions should identify by
page citation or exhibit number the portions of the record, if any, relied upon for such
exceptions. (Cal. Code Regs., tit. 8, sec. 32300.)
A document is considered "filed" when actually received before the close of business
(5 p.m.) on the last day set for filing. 	(Cal. Code Regs., tit. 8, secs. 32135(a) and 32130.) A
document is also considered "filed" when received by facsimile transmission before the close
of business on the last day for filing together with a Facsimile Transmission Cover Sheet
which meets the requirements of California Code of Regulations, title 8, section 32 I 35(d),
provided the filing party also places the original, together with the required number of copies
and proof of service, in the U.S. mail. 	(Cal. Code Regs., tit. 8, sec. 32135(b), (c) and (d); see
also Cal. Code Regs., tit. 8, secs. 32090 and 32130.)
Any statement of exceptions and supporting brief must be served concurrently with its
filing upon each party to this proceeding. Proof of service shall accompany each copy served
on a party or filed with the Board itself. (See Cal. Code Regs., tit. 8, secs. 32300, 32305,
32140, and 32135(c).)
Fred D'Orazi~
Administrative Law Judge