Magnolia Elementary School District (PERB 0676E)

STATE 	OF CALIFORNIA
DECISION OF 	THE
PUBLIC 	EMPLOYMENT 	RELATIONS 	BOARD
MAGNOLIA 	EDUCATORS
ASSOCIATION, 	CTA/NEA,
Charging 	Party,
v.
MAGNOLIA 	ELEMENTARY 	SCHOOL
DISTRICT,
Respondent.
Case No. 	LA-CE-2517
PERB Decision No. 	676
June 9, 	1988
Appearance; 	Robert E. 	Lindquist, 	Attorney, 	California Teachers
Association, 	for Magnolia Educators Association, 	CTA/NEA.
Before Hesse, 	Chairperson; 	Porter and Shank, 	Members.
DECISION
SHANK, 	Member: 	Charging party, 	Magnolia Educators
Association, 	CTA/NEA, 	appeals 	the Public Employment Relations
Board 	(Board) 	agent's partial dismissal, 	attached hereto, 	of
its 	charge 	alleging 	that 	respondent, 	Magnolia 	Elementary 	School
District, 	by 	joining 	the 	Orange 	County 	Fringe 	Benefits 	Joint
Powers Authority 	(JPA), 	made certain unilateral 	changes 	in
health 	insurance benefits 	in violation of 	sections 	3543.5(a),
(b), 	and 	(c) 	of the Educational Employment Relations Act
(EERA).1
1EERA 	is 	codified 	at 	Government 	Code 	section 	3540 	et
seq. 	Unless 	otherwise 	indicated, 	all 	statutory references
herein are 	to the Government Code. 	Section 3543.5 provides, 	in
pertinent part, 	as 	follows:
It 	shall be 	unlawful 	for 	a public 	school
employer 	to:
(a) 	Impose or 	threaten to 	impose 	reprisals
on employees, 	to discriminate or 	threaten to
)
)
)
)
)
)
)
)
)
)
)
)

Specifically, 	charging party appeals 	the dismissal 	of
paragraphs 10, 	11, 	17, 	and 18 of 	its amended charge which, 	in
essence, 	allege the 	following:
Paragraph 	10: 	As 	a 	consequence of 	joining 	the JPA,
respondent 	"effected 	a material 	and 	significant 	change 	in 	the
[total] 	amount 	of 	compensation 	received by 	the members 	of 	the
bargaining unit 	in 	the 	form of health 	and welfare benefits"
since:
a. 	The 	total 	amount 	of 	compensation provided became
subject 	to a 	"non-negotiable 	cost 	assessment 	unilaterally
established by 	the 	Unilateral 	Insurer."
b. 	The 	premium price 	and 	duration 	of 	insurance 	plans
became 	subject 	to 	adjustment by 	the 	JPA.
c. 	The penalties 	or disincentives 	for 	a 	change 	in 	insurer
"substantially increase[d] the 	cost 	to 	the 	union 	for, 	or
place[d] significant 	constraints 	on, 	bargaining any change 	in
health 	or welfare benefits 	which 	entails 	a 	change 	in 	insurer."
d. 	The basis 	for 	determining 	increases 	in premium prices
changed.
discriminate 	against 	employees, 	or otherwise
to interfere with, 	restrain, 	or coerce
employees 	because 	of 	their 	exercise 	of
rights 	guaranteed by 	this 	chapter.
(b) 	Deny to employee organizations 	rights
guaranteed 	to 	them by 	this 	chapter.
(c) 	Refuse or 	fail 	to meet 	and negotiate 	in
good 	faith 	with 	an 	exclusive 	representative.
22

e. 	A 	foreseeable 	change 	in 	the 	amount 	of 	premium 	costs 	has
occurred.
Paragraph 	11: 	As 	a consequence 	of 	joining 	the 	JPA,
respondent 	"effected 	a material 	and 	significant 	change 	in 	the
amount 	of 	the 	contribution 	individual 	bargaining unit 	members
must 	make 	to 	ensure 	continued 	eligibility 	for health 	and
welfare benefits."
Paragraphs 	17 	and 	18: 	Respondents 	attempted 	to 	"derogate
and undermine 	[charging parties'] 	authority 	[as] 	exclusive
bargaining 	representative^] 	by unilaterally 	implementing 	its
bargaining position 	on health 	and 	welfare benefits."
We have 	reviewed 	the 	partial 	dismissal 	and 	adopt 	that
portion of 	the 	regional 	attorney's 	analysis 	which dismisses 	the
allegations 	contained 	in paragraphs 	10, 	17, 	and 18 of the
amended charge. 	As 	to paragraph 11 of 	said charge, 	we disagree
with 	the 	regional 	attorney's 	conclusion.
For 	the 	purposes 	of 	determining 	the 	existence 	of 	a prima
facie 	case, 	the 	essential 	facts 	alleged by the 	charging party
are 	deemed 	true. 	(San Juan Unified 	School 	District 	(1977) 	PERB
Decision No. 	12.) 	On 	its 	face, 	paragraph 11 of 	the charge
alleges 	that 	respondent 	changed 	the 	amount 	individual
bargaining unit 	members 	must 	contribute 	to 	ensure 	continued
eligibility 	for health 	and welfare 	coverage. 	We 	view 	this 	as
more 	than 	speculative 	or 	merely an 	"alternate 	theory" 	as
construed by the 	regional 	attorney. 	Rather, 	charging party has
depicted 	an 	actual 	change 	that has 	happened which 	is 	alleged 	to
w
	3

have 	a material 	and 	significant 	impact 	on bargaining 	unit
employees. 	(Trinidad 	Union 	Elementary 	School 	District 	and
Peninsula Union 	School 	District 	(1987) 	PERB 	Decision No. 	629.)
We 	find 	a prima 	facie 	case has been alleged, 	requiring 	this
issue 	to be 	litigated. 	Therefore, 	we 	reverse 	the dismissal 	of
paragraph 	11 	of 	the 	amended 	charge 	and 	order 	that 	the partial
complaint 	already 	issued be 	amended 	to 	include 	this 	allegation.
ORDER
Based 	upon 	the 	foregoing, 	the 	Board hereby DISMISSES
paragraphs 	10, 	17, 	and 18 of the amended charge, 	and ORDERS
that 	the 	General 	Counsel 	incorporate paragraph 	11 	of 	the 	charge
into 	the 	complaint 	already 	issued.
Chairperson Hesse 	and Member 	Porter 	joined 	in 	this 	Decision.
A	4

STATE Of CALIFORNIA 	GEORGE DEUKMEJIAN, Governor
PUBLIC EMPLOYMENT RELATIONS BOARD
LOS ANGELES REGIONAL OFFICE
3470 WILSHIRE BLVD., SUITE 1001
LOS ANGELES, CALIFORNIA 	90010
(213) 736-3127
November 5, 	1987
Robert Lindquist, Attorney
California Teachers Association
Post Office Box 9 2888
Los Angeles, CA 	90009
Re: 	LA-CE-2517, Magnolia Educators Association, CTA/NEA v.
Magnolia School District
PARTIAL DISMISSAL OF UNFAIR PRACTICE CHARGE
Dear Mr. Lindquist:
In the above-referenced charge, 	as originally filed, 	the
Magnolia Educators Association 	(Association) 	alleged that the
Magnolia School District 	(District) 	made a unilateral change in
health 	insurance benefits by joining the Orange County Fringe
Benefits Joint Powers Authority 	(JPA or Authority). 	This
action is alleged to be a violation of Educational Employment
Relations Act (EERA) sections 3543.5 (a), (b) , and (c) .
I 	indicated to you 	in my attached letter dated August 12, 	1987
that the 	above-referenced charge did not 	state a prima 	facie
case. 	You were advised that 	if there were any factual
inaccuracies or additional facts which would correct the
deficiencies explained 	in that letter, you should amend 	the
charge accordingly. 	You were also invited to submit any legal
argument. 	You were 	further advised that unless you amended the
charge to state a prima facie case, 	or withdrew it prior to
August 20, 1987, 	it would be dismissed.
The 	time within which to file 	an amended charge was extended to
September 8, 	1987. 	On September 9, 	1987 an amended charge was
received, alleging violations of EERA sections 3543.5 	(a) , 	(b) ,
(c), 	and 	(d).
For the 	reasons which follow, 	the following allegations of the
amended charge will be dismissed: 	Sub-Paragraphs 10 	(a)-(e),
17, 	and 18.l
The allegations in paragraphs 15 and 16 have been withdrawn.
Under 	separate cover today a complaint has 	issued alleging 	that
1 The 	complaint which 	issued today 	includes allegations
from the 	introductory portions of paragraph 	10 	and 	from
paragraph 11. 	All other allegations of paragraph 10 	and 11 are
dismissed except those 	specifically 	included 	in the complaint.

November 	5, 	1987
PARTIAL 	DISMISSAL OF 	UPC
LA-CE-2517
Page 	2
the District's 	action of 	joining 	the JPA was 	an unlawful
unilateral change 	because 	it 	resulted 	in a change 	in 	benefits
and 	resulted 	in 	a 	significantly 	less 	reliable 	insurer.
SUB-PARAGRAPHS 10 (a)- (e):
Sub-Paragraph 10(a) 	- Compensation 	in the 	form of health and
welfare 	benefits:
The 	collective 	bargaining 	agreement 	provided 	for 	1986-87 	that
the District 	would 	contribute 	up 	to 	a maximum amount 	toward
employee 	health 	insurance.
This 	allegation merely 	restates 	the 	allegation 	in paragraph 	9
(1) 	and 	(5) 	of the original charge. 	The allegation, 	as made 	in
the amended charge 	and the original charge, 	is that the JPA,
rather 	than 	the 	District 	sets 	the cost 	assessment 	for 	health
and welfare benefits 	and 	therefore, 	the District will no longer
negotiate 	with 	the 	Association 	about 	the 	amount of compensation
to 	be provided 	for 	members 	of 	the 	bargaining unit 	in the 	form
of 	health 	and welfare 	benefits.
The 	JPA does 	set 	the 	contribution 	rate 	for 	the District 	to
receive 	health 	insurance 	coverage 	through 	the JPA. 	It does 	not
necessarily follow, 	however, 	that the District must then pass
on 	any 	increase 	or 	decrease 	assessed 	by 	the JPA to employees,
or 	a fortiori, 	that 	it must do 	so without 	fulfilling 	its
obligation 	to bargain with 	the Association. 	Faced with 	an
increased 	contribution 	rate 	from 	the 	JPA 	for 	continued 	health
insurance, 	the District can assume the 	increased costs; 	it can
bargain 	to 	impasse 	with 	the 	Association 	about 	increasing 	the
amount of 	employee contribution toward health; 	or 	it can
withdraw 	from 	the 	JPA and 	seek 	other 	means of providing 	the
bargained-for 	health 	insurance 	to 	employees.
2The 	discussion 	in 	this 	paragraph 	assumes 	that 	the 	status
quo 	in health 	insurance 	in 	the 	District 	is 	that employees
receive 	health 	insurance 	without making 	any contribution 	for
those benefits. 	An argument could be made, 	of course, 	based on
the contract 	language, 	that 	the 	status quo 	is that 	the District
only contributes 	up to 	the ceiling 	amount 	in the agreement, 	and
after 	that 	the employees pay 	the costs of health 	insurance. 	If
that were the 	status quo, 	however, 	to change employee
contributions 	for 	health 	insurance 	would 	not 	be 	an 	unlawful
unilateral 	action 	because 	it 	would 	not 	alter 	the 	status quo.

November 	5, 	1987
PARTIAL 	DISMISSAL OF 	UPC
LA-CE-2517
Page 	3
If 	the 	result 	of 	bargaining 	is 	that no 	increased costs can 	be
passed 	on 	to 	employees 	and 	if 	the 	District 	doesn't wish 	to
assume 	those costs, 	again the District can 	leave 	the JPA. 	It
is 	simply 	not 	an 	automatic 	consequence of 	an 	increase 	in 	the
contribution 	rate 	by 	the 	JPA that 	the District will change 	the
amount 	of 	compensation provided 	to 	employees 	in 	the 	form of
health 	and welfare 	benefits. 	As 	the Board 	stated 	in Trinidad
Union 	Elementary 	School 	District/Peninsula 	Union 	School
District 	(1987) 	PERB Decision No. 	629, 	there must be some
cogent 	evidence 	that changes 	have 	happened or 	will happen,
which 	have 	significantly 	changed 	or 	will 	significantly 	change
employee 	benefits. 	The fact that the JPA sets the contribution
rates 	for 	insurance 	is 	not 	such 	evidence.
For 	these 	reasons 	and 	for 	the 	reasons stated 	in my August 	12,
letter 	relating 	to paragraph 	9(1) 	and 	(5) 	of the original
charge, 	the 	allegation 	in paragraph 10(a) 	of the amended charge
is dismissed.
Sub-paragraph 	10(b) 	- 	Premium Price 	and 	Plan Duration3
This 	allegation 	is 	also 	similar 	to 	those contained 	in paragraph
9(1) 	and 	(5) 	of the original charge. 	It adds the element of
the duration of 	the 	health 	insurance plan, 	but other 	than that
addition, 	it merely applies 	the 	same 	logic 	and requires the
same 	level of 	speculation about 	how the District will 	respond
to a change 	in the contribution 	rate 	by the JPA, 	as 	noted 	above
under Paragraph 10(a).
Nor 	does 	the 	fact 	that 	JPA can change 	the premium cost 	at 	any
time, 	or even adjust 	it retroactively, 	change the fact that the
District 	is not 	required 	to remain 	in the JPA, 	nor 	is 	it
required 	to 	unilaterally 	change 	employee 	contribution 	for
health 	insurance 	even 	if 	the 	JPA does change 	the District's
contribution 	rate 	to 	the 	JPA.
You 	argue 	in your 	October 	7, 	1987 	letter 	that 	joining 	the 	JPA
has 	resulted 	in actual changes 	in 	insurance plan duration, 	and
that 	other 	changes 	are 	reasonably 	foreseeable 	as 	a 	result 	of
3 Y O U allege 	that 	the premium 	amount 	the 	employer pays 	for
health 	insurance 	is 	a matter 	within 	scope.
The 	discussion 	of 	the 	Board's 	decision 	in Plumas 	Unified
School District 	(1986) 	PERB Decision No. 	578, 	at page 	5 of 	this
letter, 	infra, 	however, demonstrates that a change in premium
amount 	(i.e. 	, 	employer costs for health 	insurance) 	without
more, 	is not an unlawful unilateral change.

November 	5, 	1987
PARTIAL 	DISMISSAL 	OF 	UPC
LA-CE-2517
Page 	4
that 	action. 	Insofar 	as 	the 	alleged 	actual 	and 	reasonably
foreseeable changes 	relate 	to the cost of 	insurance, 	or other
costs 	to 	the employer 	(whether 	during 	or 	after membership 	in
the JPA), 	they do not 	form an adequate basis for a prima 	facie
unilateral change case 	for 	the 	reasons 	stated at p. 	4 	of 	this
letter, 	supra. 	Insofar 	as 	the 	allegations 	in paragraph 10(b)
are 	intended 	to 	state 	that 	the 	employees 	in the 	bargaining 	unit
enjoyed 	the 	benefits of a 	"legally enforceable" 	contract 	of
insurance prior 	to 	joining 	the 	JPA, 	and do not enjoy 	such
benefits 	after 	the District 	joined 	the JPA, 	they do not 	state 	a
prima 	facie case 	under 	the Board's 	rationale 	in Plumas 	and
Trinidad, 	supra. 	In those cases the Board held 	that
self-funding 	of 	employee 	insurance 	(whether 	directly 	or 	through
a JPA) 	is not, 	without more, 	an unlawful unilateral change.
Inherent 	in any 	self-funding 	of 	health 	insurance 	is 	the
elimination of 	the contractual 	obligation of 	the prior
insurance carrier, 	at 	least up to the 	stop loss amount. 	And
those were 	the 	facts 	before 	the Board 	in both Trinidad 	and
Plumas, 	based upon which 	there was 	found to be no unlawful
unilateral change.
For 	these 	reasons, 	and 	the 	ones 	stated 	in my August 	12 	letter,
in response to paragraph 9(1) 	and 	(5) 	of the original charge,
the allegation 	in paragraph 10(b) 	is dismissed.
Sub-paragraph 	10(c) 	- Penalty for Change 	in Insurer
This 	allegation 	is 	similar 	to 	the 	one contained 	in paragraph
9(4) 	of the original charge. 	It alleges that as a result of
joining 	the JPA various disincentives 	or penalties 	exist 	to
bargaining 	a change 	in the 	insurer. 	You urge that 	these
potential cost 	items 	are 	such 	as 	to 	"increase the cost 	to 	the
Union for, 	or place 	significant constraints on, 	bargaining 	any
change 	in health or 	welfare 	benefits which entails 	a change 	in
insurer." 	(Amended Charge page 	8, 	lines 	4-6.) 	Even 	if 	one
assumes 	the 	existence 	of 	each 	of 	the 	alleged disincentives 	or
penalties, 	this allegation does not state a prima facie case.
During 	the course of our 	discussions about these allegations, 	I
pointed 	out 	that 	any penalties 	for 	or 	financial disincentives
to 	withdrawing 	from the JPA prior 	to 	three years do not
necessarily 	imply 	that 	faced 	with 	such penalties, 	the District
will 	bargain 	in bad 	faith, 	or 	that 	the District will bargain 	in
bad 	faith 	rather 	than accept 	such penalties. 	Joining 	the 	JPA
is 	not an adequate predictor, 	much 	less a predeterminer, of 	the
District's 	future 	bargaining 	behavior.

November 	5, 	1987
PARTIAL DISMISSAL OF 	UPC
LA-CE-2517
Page 	5
Sub-paragraph 	10(d) 	- Basis 	for 	Determining 	Increases 	in
Premium 	Price
This 	allegation 	is 	essentially the 	same 	as 	that made 	in
paragraph 	9(6) 	of 	the original charge, 	with the addition of
specifying 	the 	factors 	listed 	in 	the JPA Bylaws 	for 	determining
contribution 	rates. 	For 	the 	reasons stated 	in my
August 12, 	1987 letter 	relating to paragraph 9(6) 	of the
original charge, 	and 	for 	the 	reasons stated above 	relating 	to
the 	other 	subparagraphs of paragraph 	10 	of 	the 	amended charge,
this allegations 	is dismissed.
Sub-paragraph 	10(e) 	- Total 	Premium Amount
This 	allegation 	is merely a 	restatement of 	the 	first 	allegation
in paragraph 	10(b). 	For 	the 	same 	reasons 	stated herein above
under paragraph 10(b), 	it is dismissed.
In 	sum the allegations 	in sub-paragraphs 	10 	(a)-(e) 	do not
state 	a prima 	facie case 	because 	they 	assume 	that 	the 	District
must 	act 	in an unlawful manner 	in 	response 	to an 	increase 	(or
decrease) 	in contribution 	rate 	by the JPA. 	This 	is 	simply not
so. 	In the event 	the District were to act 	in such a manner, 	a
charge could 	then 	be 	filed, 	alleging 	an unlawful unilateral
action by 	the District, 	or 	failure 	to bargain 	in good 	faith 	at
the 	negotiating 	table.4
The Board's decision 	in Plumas, 	supra, 	supports the dismissal
of the allegations 	in sub-paragraphs 10 	(a)-(e). 	In that case,
the 	Plumas district 	unilaterally moved 	from a 	health 	insurance
plan administered 	by Equitable Benefit Plan 	(EBP) 	to a
self-funded plan 	(up to a 	stop-loss amount) 	administered
by EBP. 	The Board's decision 	states that the Plumas district
saved 	$100,000 	in 	health 	insurance costs 	by the 	shift 	to 	the
self-funded 	plan. 	Yet 	the 	Board 	found 	no 	unlawful 	unilateral
change 	in negotiable 	terms of employment	- , 	based on that 	fact
(and on others articulated 	in the decision). 	Thus, 	the Board
has not found a mere 	insurance cost 	saving, 	without more, 	to be
an unlawful unilateral change. 	The allegations 	in
sub-paragraphs 	10 	(a)-(e) 	rest 	squarely on the proposition that
such a cost 	saving 	(i.e., 	change 	in the employer's premium
costs), 	even if 	it has no 	impact on the amount of employee
contribution, 	is an unlawful unilateral change.
During 	the course 	of 	our 	discussions 	about 	the 	amended 	charge,
you cited 	various cases to 	support 	the 	issuance of 	a complaint
based on the allegations 	in paragraph 	10 	. 	Then on

November 	5, 	1987
PARTIAL 	DISMISSAL OF 	UPC
LA-CE-2517
Page 	6
October 	7, 	you 	submitted 	a memorandum detailing 	your 	arguments
and 	citing 	legal 	authorities 	for 	your 	position.5 The gist 	of
those arguments, 	insofar 	as 	they 	relate 	to the question of 	the
cost of premiums, 	is as follows:
Under 	Grant 	Joint Union High 	School 	District
(1982) 	PERB Decision No. 	196, 	two essential
elements of 	a prima 	facie case of 	an
unlawful unilateral change are first, 	that
the change 	be 	"legally cognizable," 	and
second, 	that the change be made 	in a matter
within scope. 	In the 	health and welfare
benefits area, 	there are 	two types of
"legally cognizable" changes: 	"non-de
minimis" changes in benefit coverage, 	or
changes 	involving 	a 	"third party" 	to 	the
negotiations which effect 	terms and
conditions of employment. 	[In either 	kind
of change, 	to state a prima facie case, 	the
charging party has 	to 	state 	facts to show
that 	the 	alleged 	unilateral 	change would
4 This 	is demonstrated 	by 	the 	fact 	that 	a complaint has
issued 	today 	under 	separate cover 	today, 	alleging 	that 	the
District 	did 	unilaterally 	change 	the 	amount 	of compensation
received 	by employees 	in 	the 	form of 	benefits by 	joining 	the
JPA. 	This 	is 	supported by the 	factual allegation that the
District 	unilaterally passed 	on 	to 	the Blue 	Shield 	covered
employees 	the 	savings 	it enjoyed 	as a 	result of 	joining 	the JPA.
5various 	ALJ decisions were 	cited 	in 	that memorandum.
Such decisions are, 	of course, 	not precedential. 	PERB
Regulation 32215. 	Additionally, 	none of the cited cases stand
for 	the proposition 	that a change 	in 	the employer's costs 	of
providing health insurance, 	without more, 	is an unlawful
unilateral change. 	Even 	if 	any 	of 	the cited ALJ decisions
could 	be 	so 	read, 	they have 	been overruled 	by the Board's
decision 	in Plumas.
Numerous NLRA decisions 	were 	also cited 	for 	the
proposition 	that 	the 	cost 	to 	the 	employer 	of providing 	health
insurance 	is negotiable, 	and that 	therefore to change those
costs without 	negotiations 	is 	an unlawful 	unilateral change.
None of 	the cited cases 	stand 	for 	that proposition, 	and even 	if
they did, 	PERB has declined to 	follow such precedent, 	as
demonstrated 	by 	Plumas.

November 	5, 	1987
PARTIAL DISMISSAL 	OF 	UPC
LA-CE-2517
Page 	7
either 	actually 	affect 	or 	have 	a 	"reasonably
foreseeable 	effect" 	on negotiable 	subjects.
The 	basis 	for 	this 	is 	found 	in Mt. 	Diablo
Education Association 	(DeFrates) 	(1984) 	PERB
Decision No. 	422 	and 	is 	reaffirmed by
Trinidad 	Union 	Elementary 	School
District/Peninsula 	Union 	School 	District
(1987) 	PERB Decision No. 	629, 	where the
Board 	stated 	that 	there 	had 	to 	be 	cogent
evidence 	that changes 	have 	occurred 	or 	will
occur.]
Examining 	each of 	the 	allegations 	in
paragraphs 	10 	and 	11 	under 	these 	standards
establishes 	that 	the 	changes 	enumerated
there 	are 	both 	legally 	cognizable 	and 	within
the 	scope 	of 	representation.6
The Board's decision 	in Trinidad
"reaffirmed" 	that 	insurance 	premium costs
are negotiable, 	"at least by implication."
(October 7, 	1987 letter, p. 	15.) 	In
addition, 	joining 	the 	JPA constituted an
illegal parity agreement under 	the Court 	of
Appeals 	analysis 	in Banning 	Teachers
Association 	v. 	Public 	Employment 	Relations
Board 	(1986) 	186 Cal.App.3d 	569, 	(Hg granted
- Case No LA 32300). 	Finally, 	even under
the 	totality of 	the 	circumstances 	rather
than the per 	se test, 	joining the JPA is a
violation of EERA section 3543.5 	(c).7
None of these arguments, 	or 	the cited cases, 	are persuasive.
First, 	whether 	on the basis 	that 	the claim is not 	legally
cognizable, 	or 	because 	the 	subject 	itself 	is not within the
scope 	of 	representation, 	the Board 	in Plumas Unified 	School
District 	(1986) 	PERB Decision No. 	578, 	found no unlawful
unilateral change 	in 	a case 	where 	the 	employer 	saved 	$100,000
in premium costs by 	self-funding 	insurance. 	That case 	is
dispositive 	of 	the 	issue 	that 	a mere 	savings 	in premium costs,
6The 	scope 	analysis 	is, 	first 	that premium costs 	are
"wages," 	an enumerated subject; 	or even if they are not
directly wages, 	under 	the Anaheim analysis, 	they are closely
related to wages, 	and therefore within scope.
7These 	latter 	two 	arguments 	were 	not 	raised 	previously.

November 	5, 	1987
PARTIAL 	DISMISSAL OF UPC
LA-CE-2517
Paqe 	8
without more, 	is not an unlawful unilateral change. 	To 	issue a
complaint on the allegations 	in sub-paragraphs 10 	(a)-(e) 	would
be contrary to 	that decision.
Second, 	even using 	the 	"reasonably 	foreseeable" 	standard 	for
determining 	whether 	joining 	the 	JPA 	is 	an unlawful 	unilateral
change, 	facts have 	not been 	alleged 	that 	show a 	reasonably
foreseeable change 	in negotiable 	subjects 	by a mere change 	in
the cost 	to the District 	for 	providing 	the 	insurance. 	[This of
course 	assumes 	that 	a mere change 	in costs 	is not 	negotiable,
following Plumas. 	It 	is not disputed- that 	there were premium
cost 	savings.] 	Additionally, 	as 	stated herein above, the
District's 	future 	bargaining 	behavior 	is 	not predetermined 	by
its 	joining 	of 	the JPA.
Third, 	the Board's decision 	in Trinidad 	follows the 	earlier
Plumas rationale that premium cost changes, 	standing alone, 	are
not unlawful unilateral changes. 	This 	is confirmed 	by the
following 	statement 	in Trinidad;
In sum, 	the evidence 	in the 	record 	supports
the conclusion that 	the 	Districts have
improved 	the 	ability 	to 	supply 	benefits 	at 	a
reduced cost 	to themselves. 	It 	is not
enough 	to 	theorize 	whether 	the JPA
arrangement 	could 	potentially 	cause 	problems
for 	its members, 	or whether 	the JPA resulted
in a 	less well-established 	or 	less 	reliable
carrier.
Nor 	is that statement, 	"dicta." 	It 	is an 	integral part of 	the
Board's discussion of 	the 	reasons 	it disagreed with 	the ALJ's
determination 	that 	there 	had 	been 	an 	unlawful 	relinquishment 	of
control 	over 	insurance costs 	to 	the 	JPA.
Fourth, 	entering 	into a joint powers agreement 	is not the 	same
as 	an 	illegal parity agreement. 	The JPA 	itself 	acknowledges
the 	bargaining 	obligations 	of 	the 	districts 	by permitting 	them
to 	leave 	the JPA prior 	to 	the usual 	three-year 	term, 	if 	that 	is
required 	as 	a 	result of collective 	bargaining. 	There 	is 	no
provision 	in the JPA which, 	like 	the one found to be 	illegal by
the Court of Appeals 	in Banning, 	requires the districts to
negotiate 	the 	same 	insurance 	benefits 	for 	their 	employees 	as
other districts 	in the JPA.
Fifth, 	whether 	one 	adjudges 	the 	allegations 	in sub-paragraphs
10 	(a)-(e) 	on the per 	se or 	the 	totality of 	the conduct 	test,
they do 	not 	state 	a prima 	facie case. 	There was no 	showing
that 	this 	is an unlawful unilateral change, 	nor were 	facts

November 	5, 	1987
PARTIAL DISMISSAL OF 	UPC
LA-CE-2517
Page 	9
alleged 	to 	support 	a 	finding 	that 	the conduct 	is one 	indication
of 	bad 	faith 	bargaining.
You 	also 	argue 	that 	an 	inevitable 	effect of 	joining 	a JPA for
health 	insurance 	is what you call homogenization of 	the benefit
programs. 	By this 	term you 	apparently mean that there will be
a tendency of 	this District 	to 	negotiate 	for 	the benefits that
are 	available 	through 	the 	JPA and 	to 	be 	unwilling 	to agree 	to
other 	changes 	in benefits 	that 	the Association may 	seek at 	the
negotiating 	table. 	The 	tendency 	toward 	homogenization,
assuming 	for 	the 	sake of argument that 	it will occur, 	is not 	in
and of 	itself 	indicative of 	bad 	faith bargaining. 	Again 	it 	is
speculation that 	such bad 	faith 	bargaining 	will occur. 	If
during 	the 	future course 	of 	negotiations 	about health
insurance, 	the District fails to negotiate in good faith, 	that
is 	the time 	to 	file 	a charge about 	that behavior.
For 	all the 	foregoing 	reasons, 	the allegations 	in
sub-paragraphs 	10 	(a)-(e) 	of 	the 	amended charge are
dismissed.8
PARAGRAPHS 	17-18 - Undermining
These 	allegations were not made 	in the original charge.
Assuming 	for 	the 	sake 	of 	this 	analysis 	that the 	allegations
would 	be 	considered 	timely 	by 	the 	application of 	the 	relation
back doctrine, 	they do not 	state 	a prima 	facie case of unlawful
undermining 	for 	the 	following 	reasons.
In 	some 	instances, 	direct communication by the employer with
the 	employees 	unlawfully undermines 	the exclusive
representative 	and the collective bargaining 	relationship. 	In
Muroc Unified School District 	(12/15/78) 	PERB Decision No. 	80,
the Board 	addressed 	the 	issue 	of communications or memoranda
directed 	at employees 	as 	follows:
8Paragraph 	9(b) 	of 	the 	amended charge could be 	read to
make 	the 	same 	or 	similar 	allegations 	as those 	in sub-paragraphs
10 	(a)-(e). 	I, 	however, 	read paragraphs 1-9 to be preliminary
to 	the 	allegations 	of 	the manner 	in which the alleged
unilateral 	change 	altered 	negotiable 	terms 	and conditions 	of
employment, 	and have 	not 	therefore 	formally dismissed 	any of
those 	allegations. 	Insofar 	as 	any allegations 	in paragraphs
(l)-(9), 	including but not limited to paragraph 9(b), 	are
intended 	to or 	actually 	restate 	in 	substance 	the 	allegations 	in
sub-paragraphs 10 	(a)-(e), 	they are also dismissed.

November 	5, 	1987
PARTIAL DISMISSAL OF 	UPC
LA-CE-2517
Page 	10
The 	EERA 	imposes 	on 	the 	public 	school
employer 	an 	obligation 	to meet and 	negotiate
with 	the 	exclusive representative, and
embodies 	the 	principle 	enunciated 	in 	federal
decisions 	that 	the 	employer 	is 	subject 	to
the 	concomitant 	obligation 	to meet 	and
negotiate with no others, 	including the
employees themselves. 	(See 	Medo 	Photo
Supply Corp. 	v. 	NLRB 	(1944) 	321 U.S. 	678 	[14
LRRM 	581].)
Consequently, 	. 	. 	. actions of a public
school 	employer 	which 	are 	in derogation of
the 	authority 	of 	the 	exclusive
representative 	are evidence of a 	refusal 	to
negotiate 	in good 	faith. 	(NLRB v. 	Goodyear
Aerospace Corp. 	(6th Cir. 	1974)
Evidence 	of 	bad 	faith 	includes 	undermining 	the 	ability 	of 	the
exclusive 	representative 	to act on behalf of 	the 	unit. 	Muroc
Unified School District 	(12/15/78) 	PERB Decision No. 	80;
Modesto City Schools 	(3/8/83) 	PERB Decision No. 	291. 	The
charge, 	as presently written, 	fails to allege actions of 	the
public 	school employer 	which 	are 	in derogation of 	the 	authority
of 	the 	exclusive 	representative. 	The 	allegations 	in paragraphs
17 and 18 are, 	therefore, dismissed.
In 	some 	instances, 	direct communication by the employer 	with
the 	employees 	unlawfully 	undermines 	the 	exclusive
representative 	and 	the 	collective 	bargaining 	relationship. 	In
Muroc Unified School District 	(12/15/78) 	PERB Decision No. 	80,
the 	Board 	addressed 	the 	issue 	of 	communications 	or memoranda
directed 	at 	employees 	as 	follows:
The 	EERA 	imposes 	on the 	public 	school
employer 	an 	obligation 	to 	meet 	and 	negotiate
with 	the 	exclusive representative, and
embodies 	the 	principle 	enunciated 	in 	federal
decisions 	that 	the 	employer 	is 	subject 	to
the 	concomitant 	obligation 	to meet 	and
negotiate with no others, 	including 	the
employees themselves. 	(See 	Medo 	Photo
Supply Corp. 	v. 	NLRB 	(1944) 	321 U.S. 	678 	[14
LRRM 581] .)
Consequently, 	. 	. 	. actions of a public
school 	employer 	which 	are 	in derogation of
the 	authority 	of 	the 	exclusive
representative 	are 	evidence of a 	refusal 	to
negotiate 	in good 	faith. 	(NLRB v. 	Goodyear
Aerospace Corp. 	(6th Cir. 	1974)

November 	5, 	1987
PARTIAL DISMISSAL OF 	UPC
LA-CE-2517
Page 	11
Evidence 	of 	bad 	faith 	includes 	undermining 	the 	ability of 	the
exclusive 	representative 	to act on behalf of 	the 	unit. 	Muroc
Unified School District 	(12/15/78) 	PERB Decision No. 	80;
Modesto City Schools 	(3/8/83) 	PERB Decision No. 	291. 	The
charge, 	as presently written, 	fails to allege actions of the
public 	school employer 	which 	are 	in derogation of 	the 	authority
of 	the exclusive 	representative. 	The 	allegations 	in paragraphs
17 and 18 are, 	therefore, dismissed.
Right 	to Appeal
Pursuant 	to Public Employment Relations Board regulations, 	you
may 	obtain a 	review of 	this 	dismissal 	of 	the 	charge 	by 	filing
an 	appeal 	to the Board 	itself 	within twenty 	(20) 	calendar 	days
after 	service 	of 	this 	dismissal 	(California Administrative
Code, 	title 8, 	section 32635(a)). 	To be timely filed, 	the
original 	and 	five 	copies 	of 	such 	appeal must 	be 	actually
received 	by 	the Board 	itself 	before 	the 	close of 	business
(5:00 p . m . ) , or sent by telegraph, 	certified or Express United
States mail postmarked 	no 	later 	than 	the 	last date 	set 	for
filing. 	Code of Civil 	Procedure 	section 1013 	shall 	apply.
(See 	section 32135.) 	The Board's address 	is:
Public 	Employment Relations 	Board
1031 	18th Street
Sacramento, 	CA 95814
If you 	file a 	timely appeal 	of 	the 	refusal 	to 	issue a
complaint, 	any other party may 	file 	with the Board 	an original
and 	five 	copies 	of 	a 	statement 	in opposition within 	twenty
calendar 	days 	following 	the 	date 	of 	service 	of 	the 	appeal
(section 32635(b)).
Service
All 	documents 	authorized 	to 	be 	filed 	herein must 	also 	be
"served" 	upon all parties 	to the proceeding, 	and a 	"proof of
service" 	must 	accompany each copy of 	a document 	served 	upon 	a
party or 	filed with 	the Board 	itself. 	(See 	section 	32140 	for
the 	required contents 	and 	a 	sample 	form.) 	The document will 	be
considered 	properly 	"served" 	when personally delivered 	or
deposited 	in 	the 	first-class mail postage paid 	and properly
addressed.
Extension 	of 	Time
A 	request 	for 	an extension of 	time 	in which 	to 	file 	a document
with 	the 	Board 	itself 	must 	be 	in writing 	and 	filed 	with 	the

November 	5, 	1987
PARTIAL DISMISSAL OF UPC
LA-CE-2517
Page 	12
Board 	at 	the previously 	noted 	address. 	A 	request 	for 	an
extension must 	be 	filed at 	least 	three calendar days 	before 	the
expiration of 	the 	time 	required 	for 	filing 	the document. 	The
request must 	indicate good cause for and, 	if 	known, 	the
position 	of 	each 	other 	party 	regarding 	the 	extension, 	and 	shall
be 	accompanied 	by proof of 	service of 	the 	request upon each
party 	(section 32132).
Final 	Date
If 	no appeal 	is 	filed within the 	specified time limits, 	the
dismissal 	will 	become 	final when the 	time 	limits 	have 	expired.
Sincerely,
JOHN 	SPITTLER
Acting 	General 	Counsel
By	By,_____ _
Sandra 	Owens 	Dennison
Regional 	Attorney
Attachment
cc: 	Dr. 	John Renley
Spencer 	Covert

STATE 	OF 	CALIFORNIA 	GEORGE DEUKMEJIAN, Governor
PUBLIC EMPLOYMENT RELATIONS BOARD
LOS ANGELES REGIONAL OFFICE
3470 WILSHIRE BLVD.. SUITE 1001
LOS ANGELES, CALIFORNIA 	90010
(213) 736-3127
August 	12, 	1987
Robert 	Lindquist, 	Attorney
California 	Teachers 	Association
Post 	Office Box 9 2888
Los Angeles, 	CA 	90009
Re: 	IA-CE-2517, 	Magnolia Educators Association, 	CTA/NEA
v. 	Magnolia 	School 	D i s t r i c t
Dear 	Mr. 	Lindquist:
In 	the 	above-referenced 	charge 	the 	Magnolia 	Educators
Association 	(Association) 	a l l e g e s 	that 	the 	Magnolia 	School
D i s t r i c t 	(District) 	made 	a 	unilateral change 	in 	health
insurance 	benefits 	by 	joining 	the 	Orange 	County 	Fringe Benefits
Joint 	Powers 	Authority 	(JPA 	or 	Authority). 	This 	action 	is
alleged 	to be 	a violation of 	Educational 	Employment 	Relations
Act 	(EERA) 	sections 3543.5 	( a ) , 	(b) , 	and 	( c ) .
My 	investigation of 	the 	charge 	revealed 	the 	following
information.
The 	JPA was 	formed on January 	1, 	1987, 	by 	the 	D i s t r i c t and
eight 	other 	public 	educational 	agencies. 	The 	D i s t r i c t ' s
membership was e f f e c t i v e on 	that date. 	The 	D i s t r i c t Board 	of
Education acted 	to 	join 	the JPA on 	December 	15, 	1986.
The 	Agreement 	establishing 	the 	JPA 	provides 	that 	it 	was 	formed
pursuant 	to 	Government 	Code 	sections 	6500 	et 	seq., 	to 	"jointly
provide 	for 	a 	seIf-insurance 	program for 	employee 	health 	and
welfare 	benefits." 	The JPA 	is 	a 	separate 	legal 	e n t i t y , 	and 	in
accord 	with 	Article 	4 	of 	the 	JPA Agreement, 	it 	has 	only 	those
powers 	which 	are common 	to 	the member d i s t r i c t s 	and 	which 	are
"in 	furtherance 	of 	the 	functions 	and 	objectives" 	of 	the
Agreement. 	(JPA Agreement, 	Article 	4. 	Section 	( a ) . ) 	The
Bylaws 	of 	the 	JPA 	give 	it 	the 	authority 	to 	set 	the 	annual
premiums 	for 	the 	insurance 	for 	the member 	d i s t r i c t s . 	(Bylaws,
Article 	V.) 	The 	contribution 	for 	premiums 	is 	determined 	by 	at
l e a s t 	the 	following 	factors: 	"cost 	price 	index 	(inflation
f a c t o r ) ; 	experience 	factor; 	cost 	of 	reinsurance; 	desired 	l e v e l
of 	self-insured 	retention; 	desired 	l e v e l 	of 	reserves; 	and 	plan
design." 	(By-Laws, 	Article V. 	Section 	B.1.) 	Premiums 	are 	to
be paid monthly or 	tenthly 	by 	the member 	d i s t r i c t s .
There 	was 	no 	change 	in 	the 	coverage 	for 	employees of 	the
D i s t r i c t , 	or 	in 	the 	administration of 	the 	plan 	by 	the 	action of
joining 	the 	JPA.

August 	12, 	1987
LA-CE-2517
Page 	2
Insurance 	companies 	assign 	insureds 	to 	experience 	rating 	pools 	which
are 	used 	as 	a 	partial 	basis 	for 	determining 	their 	insurance 	rates
for 	the 	upcoming 	insurance 	year. 	Larger employers may 	have 	an
experience 	rating 	pool 	of 	their 	own, 	and 	smaller 	districts may 	be
placed 	in a pool 	with 	other 	smaller 	employers. 	This 	district claims
that 	it 	is 	100% credible, 	that 	is, 	it 	is assigned to 	its own
experience 	rating 	pool. 	The 	Association claims 	that 	the 	District's
experience 	rating pool 	is 	now that of 	the 	JPA, 	not 	the District. 	No
facts 	have 	been provided 	to 	support 	that 	allegation. 	The 	District
denies 	that 	its 	experience 	rating 	pool was changed 	when 	it 	joined
the 	JPA.
The 	self-insurance 	aspect 	of 	the 	JPA funding 	of 	the 	health 	insurance
benefits 	is 	limited 	by an aggregate 	stop-loss provision of 	120% 	of
the 	District's 	anticipated claims. 	There 	is 	also 	an 	individual
stop-loss provision of $50,000 per 	employee. 	(This 	is 	not 	recited
in 	the JPA Agreement 	or 	bylaws, 	but 	it 	is undisputed 	by 	the
Association 	that 	these 	are 	the 	stop-loss 	amounts.) 	This 	stop-loss
aspect 	of 	the 	JPA 	self-funding 	arrangement provides 	that 	the
District 	is 	fully 	insured 	by Blue 	Shield, 	in 	the 	aggregate 	for
amounts 	beyond 	120% 	of 	its 	anticipated claims 	in a year. 	The JPA's
reserves 	(from member 	district 	contributions) 	are established 	so 	as
to cover 	the 	exposure 	up to 	120% 	of 	the 	initial 	anticipated claims.
The 	Agreement 	which 	establishes 	the 	JPA provides 	that 	its members
are 	jointly 	and 	severally 	liable 	"upon 	any 	liability 	which 	is
otherwise 	imposed 	on 	any one 	of 	the members 	or 	upon 	the Authority
for 	injury caused 	by 	a 	negligent 	or 	wrongful 	act 	or 	omission
occurring 	in 	the performance 	of 	the Agreement." 	The Agreement
requires 	the district 	to 	remain 	in 	the JPA for 	3 years 	unless
earlier 	termination 	is 	"required 	as 	a condition of 	collective
bargaining." 	If 	a member 	district 	terminates 	before 	three 	years,
however, 	there will 	be 	no 	refund 	or 	repayment of 	its contributions
to 	the JPA.
The 	JPA 	is governed 	by a Board 	of 	Directors, 	with most decisions
requiring 	only 	a 	majority vote. 	Each member 	district 	has 	one 	vote
on 	the Board 	of Directors, 	regardless of 	the number 	of 	employees 	of
the 	district.
The 	collective 	bargaining 	agreement 	in effect 	at 	the 	time 	the
District 	acted 	to 	join 	the 	JPA provided 	in 	Article 	XV 	that 	the
District 	would 	pay 	up 	to 	the 	specified 	annual 	dollar 	amounts 	toward
the 	employee 	benefit 	program for 	eligible 	unit members. 	Section
15.2.4 	of 	the 	Agreement 	provides:
The 	District 	may change 	carriers 	providing
insurance 	benefits 	as 	set 	forth 	in 	this
Article. 	In 	such event 	the 	District will
consult 	with 	the 	Association.

August 	12, 	1987
LA-CE-2517
Page 	3
The 	carrier 	for 	health 	insurance 	at 	that 	time 	was 	Blue 	Shield.
The 	Charge 	alleges 	that 	during 	reopener 	negotiations 	on 	salary
and 	fringe 	benefits 	for 	the 	1986-87 	school 	year 	in particular
in August 	27, 	September 	30, 	October 	10 	and 	October 	16, 	1986,
the 	District 	spokesperson, 	John 	Renley, 	stated 	that 	"District
entry 	into 	a 	Joint 	Powers 	Agreement 	was 	a 	bargainable 	subject
and 	that 	the 	District 	would 	not 	join 	the 	Orange 	County 	Fringe
Benefits 	JPA 	unless 	and 	until 	its 	bargaining 	obligation 	was
complete." 	(Paragraph 	5 	of 	the 	Statement 	of 	Charge.)
The 	charge 	alleges 	that 	the 	District's 	decision 	to 	join 	the 	JPA
reduced 	or 	eliminated 	benefits 	in 	the 	following 	ways:
(1) 	The 	determination 	of 	premium 	and
benefits 	levels 	now 	has 	been 	placed 	within
the 	exclusive 	control 	of 	the 	JPA 	and, 	as 	a
consequence, 	Charging 	Party 	is 	denied 	the
opportunity 	to 	bargain 	the 	cost 	of 	insurance
coverage 	for 	its 	members;
(2) 	The 	JPA is 	a 	"self-funded" 	program, 	and
thus, 	is 	a 	less 	reliable 	insurer 	and 	less
able 	to 	perform 	than 	the 	previous 	carrier,
Blue 	Shield, 	and 	as 	a consequence, 	Charging
Party 	receives 	a 	materially 	lower 	quality 	of
medical 	benefits;
(3) 	The 	JPA, 	rather 	than 	respondent,
maintains 	all 	control 	over 	reserves,
interests, 	premium 	overpayments, 	or 	rebates
from 	insurers, 	thus 	reducing 	the 	amount 	of
money 	available 	for 	negotiation 	with
Charging 	Party;
(4) 	JPA 	Rules 	prohibit 	withdrawal 	from
membership 	prior 	to 	a 	three-year 	period 	of
time 	with 	full 	pro-rata 	refund 	rights, 	thus
reducing 	the 	amount 	of 	money 	available 	for
negotiating 	with 	Charging 	Party, 	if 	such
negotiations 	occur 	with 	in 	(sic) 	the
three-year 	membership 	period;
(5) 	Control 	over 	retention, 	administrative
costs, 	marketing 	costs, 	have 	been
transferred 	from 	Respondent 	to 	the 	JPA, 	thus
eliminating 	Charging 	Party's 	opportunity 	to
bargain 	with 	Respondent 	over 	such 	fees 	and
their 	relationships 	to 	claims 	payments;

August 	12, 	1987
LA-CE-2517
Page 	4
(6) 	Respondent 	has 	transferred 	its claims
experience 	pool 	from 	the 	District 	as 	its 	own
claims 	pool 	to 	the 	JPA pooled claims
experience, 	thus 	affecting 	the 	benefits 	base
available 	for 	the premium rates 	agreed 	upon
between 	Charging 	Party 	and 	Respondent.
For 	the 	following 	reasons 	the 	charge 	does 	not 	state 	a 	prima
facie 	violation 	of 	the 	EERA.
In determining 	whether 	a party 	has 	violated 	section 	3543.5(c)
of EERA, 	the 	PERB 	utilizes 	either 	the 	"per 	se" 	or 	"totality of
the 	conduct" 	test, 	depending 	on 	the 	specific conduct 	involved
and 	the 	effect 	of 	such conduct 	on 	the 	negotiating 	process.
Stockton Unified 	School District 	(1980) 	PERB Decision No. 	143.
Unilateral changes 	are considered 	"per 	se" 	violations 	if
certain criteria 	are met. 	Those criteria are: 	(1) 	the
employer 	implemented 	a change 	in policy concerning 	a 	matter
within the 	scope 	of 	representation, 	and 	(2) 	the change was
implemented 	prior 	to 	the 	employer 	notifying 	the 	exclusive
representative 	and 	giving 	it 	an opportunity 	to 	request
negotiations. 	Walnut Valley Unified 	School District 	(1981)
PERB Decision No. 	160; 	Grant Joint Unified High School District
(1982) 	PERB Decision No. 	196.
The 	nub of 	the 	issue 	presented 	here 	is 	whether 	the 	change 	to
self-funding 	of 	health 	insurance 	through 	the 	JPA 	is 	a matter
within 	the 	scope 	of 	representation.
At 	the 	time 	the 	charge was 	filed, 	the 	latest 	PERB decision
dealing 	with 	self-funding 	of 	health 	insurance 	as 	a potential
unlawful 	unilateral 	change 	was 	Plumas Unified 	School 	District
(1986) 	PERB Decision No. 	578, 	in which the Board 	found the
district's decision 	to 	self-fund medical 	insurance 	not 	to 	be 	an
unlawful unilateral change. 	In Plumas, 	there was a 120%
stop-loss 	provision 	in 	the 	self-funding 	arrangement.
Since 	the 	charge 	was 	filed, 	the Board 	has 	decided 	Trinidad
Union 	Elementary 	School 	District 	and 	Peninsula Union 	School
District 	(1987) 	PERB Decision No. 	629. 	In 	that case, 	the Board
stated 	unequivocally 	that 	a 	"change 	to 	a 	self-funded 	plan 	does
not, 	without more, 	result 	in a per 	se violation of 	EERA." 	The
Board 	also 	found 	that 	joining 	a JPA 	to 	self 	fund 	benefits 	is
essentially 	the 	same 	as 	individually 	self-funding 	those
benefits, 	and 	therefore 	not 	negotiable 	under 	the 	Plumas
rationale. 	The 	Board 	articulated 	its 	reasons 	for 	finding 	the

August 12, 	1987
LA-CE-2517
Page 	5
JPA self-funding 	to 	be 	the 	same 	as 	individual 	self-funding, 	as
follows: 	first, 	the districts did not 	relinquish control over
insurance 	to the JPA;' 	second, 	the JPA did not 	result 	in less
reliability or 	greater 	risk; 	third, 	the 	lack of 	State
regulation of 	the 	JPA 	is 	not 	of 	consequence 	to 	the 	reliability
of 	the JPA; 	and 	fourth, 	the 	alleged 	lack of experience 	of 	the
JPA Board 	of 	Directors did 	not 	have 	any 	impact 	on 	the capacity
of 	the JPA to provide 	insurance coverage.
Further, 	in Trinidad, 	the Board reaffirmed that there must be
some 	"impact on services or 	benefits" 	in order 	to 	find 	a 	(c)
violation 	in a change 	in 	insurance carrier. 	Trinidad, 	supra,
at p. 12.
The 	facts 	alleged 	in 	this charge 	appear 	to 	require 	dismissal
for 	the 	same 	reasons which the Board 	stated 	in Trinidad. 	Each
of 	the Association's 	alleged 	areas 	of change 	in 	insurance
benefits will 	be 	analyzed 	in 	light 	of 	the Board's holding 	in
Trinidad.
Relinquishment 	of 	control
In Trinidad, 	the Board 	stated:
In 	sum, 	the evidence 	in the 	record 	supports
the 	conclusion that the 	Districts have
improved 	the 	ability 	to 	supply 	benefits 	at 	a
reduced cost to themselves. 	It 	is not
enough 	to 	theorize 	whether 	the JPA
arrangement 	could 	potentially 	cause 	problems
for 	its members, 	or whether 	the JPA resulted
in a 	less well-established or 	less 	reliable
carrier.5 [1]
No 	facts 	have 	been 	alleged 	here 	that provide 	any 	cogent
evidence 	that changes 	in control have happened or 	will happen,
which changes would 	cause 	a 	significant change 	in employee
benefits. 	It is merely speculation that, 	in the future, 	some
changes 	in 	those 	benefits might 	occur 	by an 	action 	of 	the JPA.
1 In 	the 	footnote of 	this quote 	the Board 	states, 	"There
must be 	some 	cogent evidence 	that changes 	have 	happened or 	will
happen, 	which have 	significantly changed 	or 	will 	significantly
change employee 	benefits."

August 	12, 	1987
LA-CE-2517
Page 	6
Risk 	and 	Reliability
No 	facts 	are 	alleged 	here 	that 	indicate that 	the 	JPA 	is 	less
reliable 	or 	puts 	employees 	at greater 	risk 	than 	they were 	under
the prior 	arrangement 	for 	funding 	health 	insurance. 	As 	in
Plumas 	and 	Trinidad, 	there 	is a 	stop-loss provision which
limits the exposure of the District, 	in this case, 	to 120% 	of
the 	anticipated claims 	for 	the 	insurance year. 	Beyond 	that
amount 	the 	District 	is 	fully 	insured 	by Blue 	Shield.2
The 	argument 	is made 	that 	the 	joint 	and 	several 	liability 	of
the 	Districts 	in 	the 	JPA for 	each 	others 	acts 	exposes 	this
district 	to 	liability 	for 	another 	district 	that might 	fail 	to
make 	its contributions. 	This 	argument 	fails 	to take 	into
account 	the 	fact 	that 	the 	JPA Bylaws 	provide 	that 	a member
district 	that 	fails 	to make 	the 	required 	contributions 	to 	the
Authority may 	be 	involuntarily 	terminated 	from the 	JPA, 	thereby
eliminating 	or 	cutting 	short 	the 	time 	within which 	the 	other
JPA members 	would 	arguably 	be 	incurring 	liability 	for 	the
contributions 	of 	the 	defaulting 	member. 	To 	speculate 	that 	such
exposure might 	continue 	for 	a 	long 	enough period of 	time 	to
make 	the 	JPA 	funding 	a 	less 	reliable method 	than 	the 	current
method, 	is 	just that, 	speculation. 	Under Trinidad, 	more 	than
just 	speculation 	is 	required 	to establish 	a change 	to 	a 	less
reliable 	insurer.
Moreover, 	the 	Board 	in Trinidad 	implicitly 	overruled 	the 	ALJ's
determination 	that 	the 	joint 	and 	several 	liability of 	the
member 	districts 	for 	each 	other 	was 	a 	factor 	creating 	increased
risk 	and 	lack 	of 	reliability. 	In 	his decision 	the ALJ 	stated:
The 	terms 	of 	the NCSMIG agreement 	and
bylaws, 	in particular, 	imposed joint and
several 	liability on the members, 	in accord
with 	the 	statute 	governing 	joint 	power
relationships. 	Small employers 	in the
NCSMIG, 	including 	Trinidad, 	are 	now exposed
to potential 	financial 	disaster 	by 	sharing
in 	liability up to 	the 	stop-loss 	amount.
This differs dramatically from Plumas, 	in
which 	the 	employer's 	exposure 	was 	no greater
after 	the 	switch 	to 	self-funding.
(Trinidad 	Proposed Decision 	(11/7/86) 	at
p. 	38.)
2 Here, 	as 	in Plumas, 	if the 	stop-loss aspect of the
District's 	health 	insurance coverage were 	cancelled, 	then 	a
charge could 	be 	filed, 	in which 	some cogent evidence 	of 	a 	loss
in 	reliability 	and 	increased 	risk 	could 	be 	presented.

August 	12, 	1987
LA-CE-2517
Page 	7
The Board, 	in deciding 	that 	the 	JPA 	in Trinidad did 	not 	result
in 	less 	reliability 	or greater 	risk 	to employees, 	stated,
"There 	was 	no 	evidence 	produced 	by 	the 	Charging 	Parties 	that
the 	JPA was 	not 	reliable 	. . . . 	The 	risk 	here 	was 	limited 	by
the stop-loss plan as 	it was 	in Plumas." 	By these 	statements,
the Board 	implicitly 	rejected 	the 	ALJ's 	finding 	regarding 	the
exposure 	from 	joint 	and 	several 	liability. 	In 	this case, 	as 	in
Trinidad, 	Government 	Code 	section 	6508.1 permits 	the 	joint 	and
several 	liability of 	the member districts. 	Here, 	as 	in
Trinidad, 	the 	implication 	that 	such 	joint 	and 	several 	liability
creates 	additional 	risk 	and 	lack 	of 	reliability 	is 	rejected.
Control 	Over 	Reserves
The 	Association 	claims 	that 	the 	JPA now has 	control 	over
reserves, 	interests, 	premium overpayments, 	or 	rebates from
insurers, 	thereby 	"reducing 	the 	amount 	of 	money 	available 	for
negotiations 	with Charging 	Party." 	The 	District claims 	that
these are matters within the control of 	the 	insurers, 	not 	the
District, 	and 	that 	the Association has never 	had the 	right
under 	the 	EERA 	to 	negotiate 	with 	the 	District 	over 	these 	moneys.
Even 	if 	one 	assumes 	that 	the 	District did 	shift control 	over
these matters 	to the JPA, 	however, 	there are no facts alleged
here 	to 	show how this 	alleged change 	in control 	impacts 	on
services 	or 	benefits. 	Without 	such facts, 	a prima facie case
cannot 	be 	stated.
Claims 	experience 	pool
The 	Association 	has 	not 	provided 	any 	evidence 	that 	would
demonstrate 	that the 	District 	has 	had a change 	in 	its
experience 	rating 	pool 	as 	a 	result 	of 	joining 	the 	JPA 	for
self-funding 	of 	health 	insurance. 	The 	District 	states 	that
both prior 	to 	and 	after 	joining 	the 	JPA the 	District 	has 	been
considered 	by 	its 	insurers to be 	100% credible, 	that 	is 	its
rates 	are 	set 	based 	on 	its own experience, 	not that of 	the
other 	districts 	in 	the JPA.
Even 	if 	there 	had 	been a change 	in experience 	rating 	pool 	by
the 	joining 	of 	the 	JPA, 	that 	fact 	alone would not constitute a
unilateral 	action 	by 	the 	District. 	The 	setting 	of 	experience
rating pools 	is an action of 	insurers, 	not of 	the 	insured.
Under 	the Board's 	holding 	in Trinidad, 	arguably, 	if 	a district
action caused 	the 	insurer 	to 	evaluate 	its placement 	of 	the
District 	in 	one 	or 	another 	experience 	rating pool, 	and 	that 	had

* ..
August 12, 	1987
LA-CE-2517
Page 	8
an 	impact on 	the 	level 	or 	quality 	of employee 	benefits, 	there
could 	be 	a basis 	for 	finding 	a prima facie 	(c) 	violation. 	This
case does 	not present 	such 	a 	scenario, 	however. 	There 	are
simply 	no 	facts 	alleged 	to 	show how a 	change 	in 	experience
rating 	pool 	would 	have 	any 	impact 	on 	the 	level 	or 	quality 	of
employee 	benefits.
Prohibition 	against 	withdrawal 	prior 	to 	three 	years
The 	JPA agreement 	does 	provide 	that member 	districts 	can
withdraw 	from membership 	prior 	to 	the 	initial 	three-year 	period
if 	that 	is 	required 	as 	a 	condition 	of collective 	bargaining.
(JPA Agreement, 	section 	8 ) . 	In the event of a voluntary
withdrawal prior 	to 	the 	three-year 	period, 	however, 	the Bylaws
provide 	that 	there 	will 	be 	no 	refund or 	repayment 	to 	the
withdrawing 	member 	(Bylaws Article 	VII, 	Section B.) 	From 	these
provisions 	the Association deduces 	that 	the 	amount 	of money
available 	for 	negotiating 	with 	Charging 	Party will 	be 	reduced
if 	the negotiations 	occur 	within the 	three-year period. 	This
is 	alleged 	to 	be 	one 	of 	the ways 	in which 	the District 	has
changed 	the 	benefits 	of 	employees. 	Even assuming 	the
Association's deduction to 	be valid, 	there 	are 	no 	facts 	alleged
that 	show 	that 	the 	three-year 	membership without 	full pro-rata
refund would 	materially change 	employee 	benefits. 	Under 	the
Board's 	decision 	in Trinidad, 	facts Must 	be 	stated 	to 	show 	such
a material change 	in 	benefits 	by 	the JPA provision 	regarding
three-year 	membership 	without 	refund.
Control 	over 	retention, 	administrative costs and 	marketing
costs.
The Association 	also 	alleges 	that 	employee 	benefits 	have 	been
reduced 	or 	eliminated 	by 	the 	transfer 	of 	control over
retention, 	administrative 	costs 	and marketing 	costs 	from 	the
District 	to 	the JPA. 	It 	is not clear 	from the 	facts 	alleged
that 	the 	District 	ever 	had 	control 	over 	retention,
administrative costs, 	or 	marketing 	costs 	in order 	to 	transfer
such control 	to 	the 	JPA. 	The District denies 	that 	it ever 	had
such control. 	Assuming, 	however, 	that the District did
transfer 	control over 	these 	items to the JPA, 	the 	issue at 	this
level 	of 	inquiry 	is 	whether 	that 	fact 	would 	arguably
demonstrate 	an 	impact on 	employee 	benefits. 	At most, 	this
transfer 	of 	control 	could 	result 	in 	higher 	or 	lower 	costs 	to
the District 	for 	employee 	benefits. 	A change 	in costs 	to 	the
employer, 	does 	not, 	however, 	necessarily 	imply a change 	in
employee 	benefits. 	As 	in 	so many of 	the 	other 	areas 	of 	this
charge, 	the 	Association 	theorizes 	about what might 	happen as 	a
result 	of 	this 	alleged 	change 	in control. 	What might 	happen,
without 	facts 	to 	demonstrate 	how 	it might 	happen 	and 	how 	the
events would 	affect 	employee 	benefits, 	is 	not 	enough 	to 	state 	a
prima 	facie 	case 	in 	this 	area.

August 	12, 	1987
LA-CE-2517
Page 	9
In 	sum, 	as 	in 	Plumas 	and 	Trinidad, 	the 	facts alleged 	here 	show
merely a 	change 	by 	the 	District 	in 	the 	method 	of 	financing 	its
health 	insurance 	benefits 	for 	employees. 	Without 	further 	facts
to 	show 	how 	this 	change 	in 	the 	funding 	mechanism materially
changes 	the 	benefits 	for 	employees, 	no prima 	facie 	case 	is
stated.
Nor 	do 	the 	statements 	Spokesperson 	Renley 	is 	alleged 	to 	have
made 	at 	the 	negotiating 	table 	about 	the 	negotiability 	of 	the
decision 	to 	join 	the 	JPA compel 	a different 	result. 	As 	noted
above, 	Spokesperson Renley 	is 	alleged 	to have 	stated 	that 	the
District 	would 	not 	join 	the 	Orange 	County Fringe 	Benefits 	JPA
unless and until 	its bargaining 	obligation was complete. 	Given
the 	interpretation most 	favorable 	to 	the 	Association's 	case,
the 	District's 	action 	in 	joining 	the 	JPA without 	negotiating,
after 	the 	alleged 	statements 	of 	its 	agent 	at 	the 	bargaining
table 	is most 	like 	reneging 	on a tentative 	agreement.3 In
Stockton, 	PERB Decision No. 	143, 	the Board found a 	(c)
violation 	in 	a district's 	action of 	reneging, 	but 	based 	its
finding 	on the 	"totality of 	the conduct" 	test, 	not 	the per 	se
test. 	PERB 	stated 	in Stockton;
The 	repudiation 	of 	an agreement on 	a 	single
issue has been held, 	by itself, 	not to
manifest a lack of good faith. 	Therefore,
the Board 	will 	look 	at 	the 	"totality of 	the
circumstances" 	to determine whether 	the
District's 	conduct 	indicated 	good 	faith
negotiating. 	(Footnote 	omitted.)
3 The 	statement 	as 	alleged 	is ambiguous, 	and 	is
susceptible 	to 	two 	interpretations. 	The 	first 	is 	that 	the
District 	would 	not 	unilaterally 	join 	the 	JPA unless 	and 	until
it 	had 	bargained 	to 	agreement with 	the Association 	even 	if 	the
District 	had 	no 	legal 	obligation under 	EERA to 	negotiate 	about
the 	decision 	to 	join 	the 	JPA. 	The 	second 	interpretation 	is
that 	the 	District 	would 	complete 	any 	bargaining 	obligation
which 	it 	had 	under 	the 	law prior 	to 	joining 	the JPA. 	In 	that
event, 	since 	there was 	no obligation to 	bargain, 	the 	District
acted 	in 	accord 	with 	its 	stated 	intention.
However, 	at this level of 	inquiry, 	it 	is appropriate 	to
give 	the 	Association's 	allegation 	the 	interpretation 	most
favorable 	to 	its case, 	and 	to assume 	that 	the District did
agree 	to 	bargain 	over 	the 	decision prior 	to 	joining 	the 	JPA.

August 	12, 	1987
LA-CE-2517
Page 	10
If 	the 	"totality 	of 	the 	conduct" 	test 	is 	applied 	to 	the
allegations here, 	they do 	not 	state a prima facie case 	of 	a 	(c)
violation. 	Nor 	have 	any 	facts 	been 	revealed during 	the 	course
of 	my 	investigation 	to 	show any 	other 	bad 	faith conduct 	that
would 	support 	a 	finding 	of 	a 	(c) 	violation 	by the 	application
of 	the 	totality of 	the conduct 	test.
Even assuming, 	for 	the 	sake 	of 	argument, 	that 	the district's
decision 	to 	join 	the 	JPA were 	shown 	in 	some 	way 	to 	affect
employee 	health 	insurance 	benefits or 	services, 	there 	is 	also
the 	issue 	here 	whether 	the Association 	waived 	its 	right 	to
negotiate 	over 	the 	decision 	by 	the 	inclusion of 	section 	15.2.4
in 	the Collective Bargaining Agreement. 	As noted 	above, 	that
section gives 	the 	District 	the 	right 	to 	change 	insurance
carriers, 	provided 	it consults with 	the Association. 	During
the 	course of my 	investigation 	of 	the 	charge, 	I 	asked 	the
Association's 	representative, 	Bill Harju, 	for his response 	to
the waiver 	defense, 	and 	specifically 	inquired whether 	the
Association was 	alleging 	a 	failure 	to consult, 	as 	required 	by
section 	15.2.4. 	His 	response was 	that 	the Association wasn't
really alleging 	a change 	in carrier 	in this case, 	so 	section
15.2.4 did not apply. 	The charge, 	however, 	in paragraph 	9 and
10, 	specifically states that there has been a change 	in
insurer/carrier. 	(See subsection 	(2) 	of paragraph 	9 and
paragraph 10.) 	It appears, 	therefore, 	that, unless the
Association 	is 	alleging 	that 	the 	District 	failed 	to 	consult
about 	the 	alleged 	change 	in carrier, 	that 	the District 	was
acting 	within 	its 	authority, 	as 	agreed 	to 	by the 	Association,
to change 	to 	another 	insurance carrier.4 For 	these 	reasons,
even 	if 	some 	facts were 	alleged 	to 	show some change 	in employee
benefits 	or 	services 	by 	joining 	the 	JPA, 	it appears 	that 	this
charge 	would 	have 	to 	be 	dismissed 	because 	the Association
waived 	its 	right 	to 	negotiate 	over 	changes 	in 	insurance
carriers. 	•
For 	these 	reasons, 	the charge 	as presently written does 	not
state 	a prima 	facie case. 	If you 	feel 	that there 	are 	any
factual 	inaccuracies 	in 	this 	letter 	or 	any 	additional 	facts
which 	would 	correct 	the 	deficiencies 	explained 	above, 	please
amend 	the charge 	accordingly. 	In addition, 	if 	there 	is 	legal
argument 	which you wish 	to 	submit, 	I 	will 	also consider 	it.
4 No 	facts 	have 	been 	alleged 	to 	show 	a 	lack 	of
consultation.

August 12, 	1987
LA-CE-2517
Page 	11
The 	amended 	charge 	should 	be prepared 	on 	a 	standard 	PERB 	unfair
practice 	charge 	form clearly 	labeled 	First Amended 	Charge,
contain all 	the 	facts 	and 	allegations you wish 	to make, 	and 	be
signed 	under penalty of perjury 	by 	the charging party. 	The
amended 	charge 	must 	be 	served 	on 	the 	respondent 	and 	the
original proof of 	service must be 	filed with PERB. 	If 	I do not
receive 	an amended 	charge or 	withdrawal 	from you 	by close 	of
business on August 20, 	1987, 	I shall dismiss your charge. 	If
you 	have 	any questions on how to proceed, 	please call me 	at
(213) 736-3127.
Sincerely,
Sandra Owens 	Dennison
Regional 	Attorney
cc: 	Bill Harju