Department of Personnel Administration v. Superior Court

Opinion

Petitioners, Department of Personnel Administration and its Director, David Tirapelle, seek a writ of mandate compelling respondent superior court to set aside its judgment issuing a peremptory writ of mandate. The writ issued by respondent court compels petitioners and Controller Gray Davis to desist and refrain from reducing the wages of state employees in recognized bargaining units, and from changing the health care premium contribution formula for those employees. At issue is whether, after bargaining to impasse with state employee unions, petitioners may impose their last, best offer on wages and health care premium contribution formulas. We shall conclude as a matter of statutory construction that the Legislature delegated to petitioners authority after impasse to impose their last, best offer with regard to health care premium contributions but not with regard to wages. We shall therefore issue a writ of mandate to vindicate the authority delegated to petitioners with regard to health care premium contributions and deny the petition in all other respects.

*163 I

The State of California faced an unprecedented budgetary crisis at the outset of fiscal year 1991-1992, with expenditures projected to exceed revenues by more than $14 billion. Although the Legislature and the Governor addressed the budget shortfall in a number of ways in the Budget Act of 1991 (the Act; Stats. 1991, ch. 118), the Act does not direct a pay cut for state employees. Rather, it requires a $351 million reduction of employee compensation, and orders the Director of Finance to allocate the necessary reductions to each item of appropriation in the Act, with three exceptions. 1 The Governor also reduced the funds provided by the Legislature for employee compensation and benefit increases. (Stats. 1991, ch. 118, § 2, pp. 473-477, items 9800-001-001, 9800-001-494, 9800-001-988 & 9800-011-001; Governor’s Objections to Budget Act of 1991, Stats. 1991, ch. 118, pp. 17-18.) 2 The Governor gave his reasons for the reductions and approved the Act on July 16, 1991. (Stats. 1991, ch. 118.)

In this setting, negotiations continued for new collective bargaining agreements between petitioner Department of Personnel Administration (DPA) and various unions representing state employees. For purposes of this proceeding, the parties do not dispute that by autumn 1991, DPA and many of the unions had reached impasse, after negotiating and participating in mediation in good faith.

On November 5, 1991, DPA sent letters to two of the employee unions which are real parties in interest herein, California Association of Professional Scientists (CAPS) and California Association of Highway Patrolmen (CAHP), informing them of actions DPA intended to take, effective November 12, 1991, as a result of the negotiations impasse. The letter to CAPS indicated DPA would implement terms and conditions of employment as follows: “1. Where a Government Code or DPA Rule exists, the State will *164 adhere to the provisions of the Code or Rules. In the absence of a collective bargaining agreement, these Code and Rule Sections must be followed regardless of whether the benefit is lesser or greater than the corresponding language of the expired contract, or the State’s last offer. . . . [ft] 2. Where no Government Code or DPA Rule is controlling, the State will maintain the status quo on all terms and conditions of employment specified in the expired [memorandum of understanding], except for the following conditions specified in our final offer, [ft] Salaries [ft] Effective November 12, 1991, salaries will be reduced five (5) percent as described in the State’s offer of June 24, 1991. A pay letter will be issued to effectuate this change. [SO Health Benefits [f] Effective December 1, 1991, the State employer’s contribution rates will be: $157.—employee; $292.—employee plus one dependent; and, $367.—employee plus two or more dependents. These rates, as well as the rural subsidy rates, are as described in the State’s last offer of August 12, 1991. [Note: Any increase in employee costs will be deducted from the November pay warrant.]” The letter to CAHP was substantially the same.

CAPS and CAHP responded to DPA’s notification of its intent to impose its final offer by filing a petition for writ of mandate and request for a stay in respondent superior court on November 8, 1991. That day, respondent court issued an alternative writ and a stay, ordering petitioners not to reduce the salaries or health care contributions for state employee members of CAPS and CAHP until respondent issued a final decision on the petition.

In addition to the two unions, the petition in the superior court named as petitioners Senators Cecil Greene and Lucy Killea, and Assemblyman Xavier Becerra. Subsequently, Senator Ralph Dills was named as a petitioner in the first amended petition in the superior court. 3 Later, a number of other unions representing state employees joined in the proceeding as real parties in interest and interveners. 4 In addition, the Public Employment Relations Board (PERB) filed a “Statement of Jurisdiction,” in the superior court *165 proceeding asserting PERB lacks exclusive initial jurisdiction over this dispute. 5

After a hearing, respondent superior court indicated it would issue a writ of mandate. The court explained that Government Code section 19826, subdivision (b) expressly precludes DPA from unilaterally reducing employee wages. 6 The court reasoned the Legislature in section 19826, subdivision (b) delegated to DPA limited authority to set salaries, retaining a portion of this authority in the event of an intractable dispute or impasse between DPA and an employee union. Moreover, the court concluded, in the absence of a memorandum of understanding (MOU) between DPA and an employee union (see § 3517.5), the formula for state contributions to employee health care premiums in section 22825.1, applies so as to preclude DPA from decreasing employee health care premium contribution rates. Finally, the court determined the issues presented are not within the exclusive initial jurisdiction of PERB because the ultimate question goes to the nature of the delegation of authority from the legislative branch to the executive branch, a question peculiarly within the purview of the judicial branch.

On November 27, 1991, respondent superior court entered judgment granting a peremptory writ of mandate. The writ issued that day, commanding DPA, its director and the Controller “. . . to desist and refrain from reducing the wages of State employees in recognized bargaining units, and desist and refrain from modifying the health care premium payment formula for said employees.”

DPA filed the instant petition for extraordinary relief on December 13, 1991. On January 9, 1992, we issued an alternative writ of mandate and notified the parties that any written return was to be filed on or before January 29, 1992, and any replication within 10 days thereafter. We also denied DPA’s request for a stay. On January 14, 1992, we directed the parties to address in their briefing the question, assuming PERB had exclusive initial jurisdiction, whether any exception to the doctrine of exhaustion of administrative remedies applies so as to excuse the failure to file unfair practice charges with PERB.

*166 II

By issuing an alternative writ of mandate, we have concluded there is no plain, speedy and adequate remedy in the ordinary course of law. (Langford v. Superior Court (1987) 43 Cal.3d 21, 27 [233 Cal.Rptr. 387, 729 P.2d 822]; Code Civ. Proc., § 1086.) “‘[T]he issues presented are of great public importance and must be resolved promptly[,]’ ” and we shall therefore exercise our original mandamus jurisdiction. (California Educational Facilities Authority v. Priest (1974) 12 Cal.3d 593, 598 [116 Cal.Rptr. 361, 526 P.2d 513], quoting County of Sacramento v. Hickman (1967) 66 Cal.2d 841, 845 [59 Cal.Rptr. 609, 428 P.2d 593]; see also Industrial Welfare Com. v. Superior Court (1980) 27 Cal.3d 690, 699-700 [166 Cal.Rptr. 331, 613 P.2d 579]; Rivera v. Division of Industrial Welfare (1968) 265 Cal.App.2d 576, 581 [71 Cal.Rptr. 739].)

III

At the threshold is the question whether respondent superior court improperly assumed jurisdiction over a matter which is committed to PERB’s exclusive initial jurisdiction. DPA contends PERB has exclusive jurisdiction because DPA’s action in implementing its last, best offer arguably is either protected or prohibited as an unlawful practice under the statutes regulating state employer-employee labor relations. DPA points out that resolution of the underlying questions regarding DPA’s authority after impasse to impose its last, best offer on wages and health contribution rates necessarily requires consideration and construction of the applicable labor relations statute, and contends such analysis should first be undertaken by PERB. DPA relies by analogy on authority under the Educational Employment Relations Act (EERA; § 3540 et seq.), as well as section 3514.5, part of the labor relations statute applicable to state employees, (§ 3512 et seq., the Ralph C. Dills Act, formerly, the State Employer-Employee Relations Act; hereafter, the Dills Act). (Stats. 1991, ch. 338, § 1.)

We shall assume without deciding that DPA is correct on the jurisdictional question. Nevertheless, we shall conclude the state employee unions’ failure to exhaust their administrative remedy by first filing charges of unfair practices with PERB is excused in this case because of the potential for irreparable injury and because filing with PERB would have been futile under the circumstances.

The rule requiring deferral to PERB’s exclusive initial jurisdiction is frequently labeled “preemption,” after the federal preemption doctrine developed under the National Labor Relations Act (NLRA). However, deferral *167 to PERB’s initial jurisdiction is actually a function of the well-established doctrine of exhaustion of administrative remedies, and the codification of that doctrine in the state labor relations statutes.

In San Diego Teachers Assn. v. Superior Court (1979) 24 Cal.3d 1, 7, 14 [154 Cal.Rptr. 893, 593 P.2d 838], a case arising under the EERA, the court annulled contempt orders against a union and its president who conducted a strike in violation of a restraining order and an injunction obtained by a school district. The court held the school district failed to exhaust its administrative remedy by first filing an unfair practice charge with PERB based on strike activity which was arguably prohibited by the EERA. (See also El Rancho Unified School Dist. v. National Education Assn. (1983) 33 Cal.3d 946, 953 [192 Cal.Rptr. 123, 663 P.2d 893] [explaining holding in San Diego Teachers Assn, as an adoption of the federal preemption doctrine under the NLRA whereby the National Labor Relations Board (NLRB) has exclusive jurisdiction over activities arguably protected or prohibited under the NLRA].) As in the EERA, the requirement of exhaustion of administrative remedies is codified in the Dills Act, in Government Code section 3514.5, which in relevant part provides: “The initial determination as to whether the charges of unfair practices are justified, and, if so, what remedy is necessary to effectuate the purposes of this chapter, shall be a matter within the exclusive jurisdiction of [PERB].”

In describing the need for exhaustion of administrative remedies with PERB, the court in San Diego Teachers Assn, analogized to the conflict between the NLRA and state courts which is the basis for the federal preemption doctrine: “Though the rule as it relates to NLRB has been enunciated in the context of conflict between a federal agency and state courts, a like principle applies to parallel conflicts between California agencies and courts. (United Farm Workers v. Superior Court (1977) 72 Cal.App.3d 268, 273 [140 Cal.Rptr. 87] (declaratory relief unavailable when issue could be raised in ALRB proceeding); cf. Morton v. Superior Court (1970) 9 Cal.App.3d 977 [88 Cal.Rptr. 533] (police officers’ suit over terms of employment precluded by failure to resort to grievance procedure).)” (San Diego Teachers Assn. v. Superior Court, supra, 24 Cal.3d at p. 12.) The United Farm Workers decision further explained the purpose of the rule as serving to develop the expertise of an administrative agency, and to avoid conflicting decisions between that agency and local tribunals. (United Farm Workers v. Superior Court, supra, 72 Cal.App.3d at pp. 272-273.)

However, San Diego Teachers Assn. made clear that PERB preemption ultimately involves the doctrine of exhaustion of administrative remedies, by *168 explaining it was unnecessary to consider the legality of public employee strikes “if the injunctive remedies were improper because of the district’s failure to exhaust its administrative remedies under the EERA.” (San Diego Teachers Assn. v. Superior Court, supra, 24 Cal.3d at p. 7, citing Environmental Law Fund, Inc. v. Town of Corte Madera (1975) 49 Cal.App.3d 105, 112 [122 Cal.Rptr. 282].) The court further indicated the preemption rule is grounded in the exhaustion doctrine by its reliance on Morton v. Superior Court, supra, 9 Cal.App.3d 977. Morton held a suit by police officers over terms of employment was precluded by the failure to exhaust the available administrative remedy, i.e., the union grievance procedure. (Id. at p. 981.)

Indeed, the preeminent policies underlying the judicially created exhaustion doctrine are identical to the policies underlying the federal preemption rule. In Abelleira v. District Court of Appeal (1941) 17 Cal.2d 280, 293 [109 P.2d 942, 132 A.L.R. 715], the court described the purpose of the exhaustion doctrine: “The courts have repeatedly recognized the necessity of placing the numerous and complex problems arising under statutes of the type involved herein in the hands of expert bodies, familiar with the subject matter through long experience. They have pointed out that to permit the initial consideration of these matters by the courts would not only preclude the efficient operation of the acts, but would overwhelm the courts with cases of a technical, specialized character, and seriously impair their capacity to handle their normal work.” (17 Cal.2d at p. 306.)

Later cases have described additional policies served by the exhaustion doctrine. Thus, the exhaustion doctrine facilitates the development of a complete record prior to resort to the courts (Yamaha Motor Corp. v. Superior Court (1986) 185 Cal.App.3d 1232, 1240-1241 [230 Cal.Rptr. 382]) and, because administrative procedure is part of the legislative process, the doctrine fulfills separation of powers concerns by requiring completion of the administrative procedure prior to court action (County of Contra Costa v. State of California (1986) 177 Cal.App.3d 62, 76-77 [222 Cal.Rptr. 750]).

However, none of these policies would be served by adherence to the exhaustion doctrine in this case. When the underlying mandate proceeding was filed in the superior court, PERB took the somewhat unusual step of filing a statement disavowing jurisdiction over the dispute. Under these circumstances, the separation of powers concern articulated in County of Contra Costa, supra, is not implicated because the administrative body has in fact invited judicial intervention. Moreover, the facts are undisputed, so there is no need for administrative development of the record. Nor does judicial intervention interfere with the expertise of the agency or create *169 problems of judicial economy, given that the underlying issues are within the expertise of the courts and would undoubtedly be resolved ultimately by the courts even if initial jurisdiction were found in PERB. Finally, given that this case raises questions of first impression which are bound for ultimate determination by the appellate courts, there is little concern of conflicting decisions between PERB and the courts.

Given the lack of policy support for the application of the exhaustion doctrine in this case, it behooves us to examine the exceptions to that doctrine. “Abelleira makes it abundantly clear that the exhaustion doctrine does not implicate subject matter jurisdiction but rather is a ‘procedural prerequisite’ ‘originally devised for convenience and efficiency’ and now ‘followed under the doctrine of stare decisis, . . .’ ([17 Cal.2d] at pp. 288, 291.) It is ‘jurisdictional’ only in the sense that a court’s failure to apply the rule in a situation where the issue has been properly raised can be corrected by the issuance of a writ of prohibition, ffl] Such a conclusion only makes sense when the underlying nature of the exhaustion doctrine is considered. While Abelleira indicates that the rule of exhaustion of administrative remedies has become ‘a fundamental rule of procedure’ (17 Cal.3d [sic] at p. 293), courts have repeatedly recognized it is not inflexible dogma. [Citations.] There are numerous exceptions to the rule including situations where the agency indulges in unreasonable delay [citation], when the subject matter lies outside the administrative agency’s jurisdiction, when pursuit of an administrative remedy would result in irreparable harm, when the agency is incapable of granting an adequate remedy, and when resort to the administrative process would be futile because it is clear what the agency’s decision would be. [Citations.]” (Green v. City of Oceanside (1987) 194 Cal.App.3d 212, 222 [239 Cal.Rptr. 470], original italics.)

Respondent superior court excused exhaustion of the administrative remedy in this case because the ultimate legal issues, touching upon the separation of powers between the legislative and executive branches, are better suited for determination by the courts. However, constitutional challenges are frequently raised to the application of an administrative statutory scheme, yet the courts typically require such issues be presented to the administrative agency in the first instance. (See, e.g., Security-First Nat. Bk. v. County of L. A. (1950) 35 Cal.2d 319, 321 [217 P.2d 946]; Lund v. California State Employees Assn. (1990) 222 Cal.App.3d 174, 183 [271 Cal.Rptr. 425]; Leek v. Washington Unified School Dist. (1981) 124 *170 Cal.App.3d 43, 53 [177 Cal.Rptr. 196].) Hence, exhaustion cannot be excused on this basis. 7

However, the unique circumstances presented here suggest exhaustion should be excused under the irreparable injury and futility exceptions. The irreparable injury exception was first recognized in Abelleira, where the court acknowledged the exception has been applied in cases “. . . dealing with rate orders of regulatory commissions, where the administrative body imposes a confiscatory rate on a public utility. Continued operation of the business at the rate imposed pending an appeal may in some instances be so unprofitable as to amount to a destruction of the business, and therefore a taking of property without due process of law.” (Abelleira v. District Court of Appeal, supra, 17 Cal.2d at p. 296.) The irreparable injury exception has been rarely applied. (See, e.g., Sail’er Inn, Inc. v. Kirby (1971) 5 Cal.3d 1, 6-7 [95 Cal.Rptr. 329, 485 P.2d 529, 46 A.L.R.3d 351] [bar owners sought writ of mandate to prevent Alcoholic Beverages Commission from revoking their licenses because they hired women bartenders, contrary to Bus. & Prof. Code, § 25656; owners “placed in the untenable situation of having to choose whether to obey possibly conflicting federal and state laws and face a penalty under the one they choose to disobey”]; Greenblatt v. Munro (1958) 161 Cal.App.2d 596, 605-607 [326 P.2d 929] [court reached question whether bar owner’s conduct violated Penal Code provision so that the Department of Alcoholic Beverage Control would have benefit of that decision in reconsidering extent of penalty to impose on bar owner].)

Here, the state and its employees may suffer irreparable injury if deprived of a judicial ruling on the underlying issues prior to the expiration of the 1991-1992 fiscal year. Indeed, DPA’s verified petition filed in this original proceeding acknowledges the immediate need for judicial intervention by arguing that unless the respondent court’s decision is immediately reversed, “. . . there will be an irrevocable impact on the State’s ability to balance the 1991/1992 budget which will force a reduction in the number of State employees and the layoff of an even greater number of State employees, with a corresponding greater reduction in the delivery of essential State services than would occur if Petitioners were permitted to implement the adjustments to the salary and health care premium contribution consistent with their last, best, and final offer.” This allegation is supported by the declaration of Susanne Burton, Chief Deputy Director of the Department of *171 Finance, filed contemporaneously with the original petition in this matter. Ms. Burton declares, “The expenditure reductions to meet the cut in state operations funding must be achieved within the 1991-92 fiscal years [sic], which is already over five months old. Every day that passes without achieving some savings proportionately increases the amount of savings that must be realized in the remaining days of the fiscal year. For example, if one thousand positions must be vacated for a full fiscal year to achieve a savings target then twice as many positions (two thousand) would have to be vacated to achieve the same savings within six months of the fiscal year.” (Italics added.)

We take seriously the urgent need for definitive judicial review of this matter prior to the end of the 1991-1992 fiscal year. Because of the unprecedented nature of the fiscal crisis faced by the state, the urgent need for resolution of these issues prior to the end of the year, and the great potential for irreparable harm in the nature of increased layoffs of state employees, we believe the failure of the unions to exhaust their administrative remedy by filing an unfair practice charge with PERB should be excused. We recognize that had the unions filed unfair practice charges with PERB, there was at least the possibility that PERB could have ordered the same relief as that provided by respondent superior court (see §§ 3513, subd. (h), 3541.3, subd. (j)). However, it is extremely unlikely the entire process of PERB adjudication followed by judicial review (see § 3520) would have been completed prior to the end of this fiscal year.

Exhaustion should be excused for another, interrelated reason. Exhaustion is excused for futility “. . . when the aggrieved party can positively state what the administrative agency’s decision in his particular case would be.” (Ogo Associates v. City of Torrance (1974) 37 Cal.App.3d 830, 834 [112 Cal.Rptr. 761].) Our record does not reveal whether the unions knew PERB was declining to take jurisdiction over this matter at the time they filed their petition for extraordinary relief in the respondent superior court. However, we note PERB filed its “Statement of Jurisdiction” one week after that petition was filed. Thus, virtually at the outset of this dispute, the parties were informed what PERB’s decision would be as to the underlying jurisdictional question. Assuming exhaustion of PERB’s remedy was required, PERB’s action in declining jurisdiction would have required the unions to seek extraordinary relief to compel PERB to consider their unfair practice charges. This process would undoubtedly have so extended the time to obtain a final judicial determination of the *172 merits of this dispute as to render it impossible of resolution during the 1991-1992 fiscal year. 8

For all of the reasons stated, we conclude that, assuming PERB had exclusive initial jurisdiction, the unions’ failure to exhaust their administrative remedy by pursuing unfair labor practice charges with PERB is excused.

IV

We turn now to the principal substantive issue, whether DPA may impose its last, best offer on wages after bargaining to impasse with the exclusive representatives of state employees in recognized bargaining units. The respondent court concluded section 19826, subdivision (b), in declaring DPA “shall not establish, adjust, or recommend a salary range,” unambiguously precludes DPA from implementing its final wage proposal at impasse. We agree. 9

*173 Although DPA concedes a literal interpretation of section 19826, subdivision (b) would preclude DPA from unilaterally reducing wages for represented employees, DPA argues this result would be repugnant to the policies of the Dills Act, which must include the authority of DPA to impose its final offer at impasse. 10 Further, DPA asserts this literal interpretation achieves an absurd result, rendering collective bargaining meaningless by returning the dispute at impasse to the legislative forum. As an alternative to a literal reading of the provision, DPA asserts the legislative history shows the Legislature intended section 19826, subdivision (b) to apply to DPA solely in its role as the salary-setter for state employees and not in its separate role as the Governor’s designated representative for meeting and conferring with state employees’ exclusive representatives. 11

“In construing a statute ‘we begin with the fundamental rule that a court “should ascertain the intent of the Legislature so as to effectuate the purpose of the law.” ’ [Citations.] ‘An equally basic rule of statutory construction is, however, that courts are bound to give effect to statutes according to the usual, ordinary import of the language employed in framing them.’ [Citations.] Although a court may properly rely on extrinsic aids, it should first turn to the words of the statute to determine the intent of the *174 Legislature. [Citations.] ‘If the words of the statute are clear, the court should not add to or alter them to accomplish a purpose that does not appear on the face of the statute or from its legislative history.’ [Citations.]” (California Teachers Assn. v. San Diego Community College Dist. (1981) 28 Cal.3d 692, 698 [170 Cal.Rptr. 817, 621 P.2d 856].) Of course, courts will not adopt a literal interpretation of a statute if it would achieve an absurd result, or a result repugnant to the obvious purpose of the statute. (Tiernan v. Trustees of Cal. State University & Colleges (1982) 33 Cal.3d 211, 218-219 [188 Cal.Rptr. 115, 655 P.2d 317]; Granberry v. Islay Investments (1984) 161 Cal.App.3d 382, 388 [207 Cal.Rptr. 652].)

The plain language of section 19826 supports the respondent court’s conclusion that DPA may not unilaterally decrease salaries for represented employees. Subdivision (a) of section 19826 requires DPA to “establish and adjust” the salary ranges of all civil service employees of the state. But section 19826, subdivision (b) acts as an exception to subdivision (a) by providing that notwithstanding other provisions of law, DPA shall not “establish, adjust, or recommend a salary range for any employees in an appropriate unit where an employee organization has been chosen as the exclusive representative pursuant to Section 3520.5.” Section 3520.5 is part of the Dills Act. Hence, subdivision (a) applies solely to excluded employees or nonrepresented employees, while subdivision (b) applies to represented employees. The latter subdivision unambiguously precludes DPA from adjusting represented employees’ salaries. DPA points to no statutory language in section 19826 or elsewhere that suspends subdivision (b)’s operation during impasse situations. 12

As we shall explain, respondent court’s conclusion is further supported by the legislative history of section 19826 and the Dills Act, and by related provisions of the Dills Act itself. Thus we shall conclude DPA lacked authority to impose its last, best offer on wages after negotiating to impasse with the state unions.

A

The Dills Act is a “supersession statute,” designed so that, in the absence of a MOU, as is the case when an existing MOU has expired and the parties have bargained to impasse, numerous Government Code provisions *175 concerning state employees’ wages, hours and working conditions take effect. One of the provisions which is effective in the absence of a MOU is section 19826.

Prior to the enactment of the Dills Act in 1977, state employees’ wages, hours and working conditions were determined by numerous provisions of the Government Code. For example, former section 18001 (now § 19824 [Stats. 1981, ch. 230, § 55, p. 1168]) governed the frequency of pay, former section 18025 (now § 19853 [Stats. 1981, ch. 230, § 55, p. 1168]) governed state holidays and former section 18854 (now § 19832 [Stats. 1981, ch. 230, § 55, p. 1168]) governed merit salary adjustments. The Dills Act, in section 3517.6, now expressly permits DPA and the state employee unions to supersede the above statutory provisions and more than 120 others governing state employees’ wages, hours and working conditions by agreeing to MOU’s which conflict with these provisions. 13

In this fashion, the Legislature structured the Dills Act differently than the Meyers-Milias-Brown Act (MMBA) (§§ 3500-3510) and EERA, earlier statutes dealing with public employer-employee relations, with implications *176 significant to the question of the post impasse process. Under the MMBA, the local public agency must negotiate with local public employee unions regarding “all matters relating to employment conditions and employer-employee relations, including, but not limited to, wages, hours, and other terms and conditions of employment,” except for “the merits, necessity, or organization of any service or activity provided by law or executive order” (§ 3504) and subject to provisions of existing state law and local charters, ordinances, and rules establishing a civil service system. (§§ 3500, 3505; Huntington Beach Police Officers’ Assn. v. City of Huntington Beach (1976) 58 Cal.App.3d 492, 499-505 [129 Cal.Rptr. 893].) Under the EERA, school districts must negotiate with school employee unions over “wages, hours of employment, and other terms and conditions of employment,” but the phrase “terms and conditions of employment” is expressly limited to certain specified subjects, and the parties are expressly prohibited from superseding provisions of the Education Code and school district rules and regulations pertaining to tenure or a merit or civil service system. (§§ 3540, 3543.2.)

Under the Dills Act, the parties may negotiate over “wages, hours, and other terms and conditions of employment,” except the “merits, necessity, or organization of any service or activity provided by law or executive order” and subject to the limitation that the State Personnel Board may declare certain provisions of MOU’s to be inconsistent with merit employment principles. (§§ 3516, 3517.6.) However, unlike the earlier public employer-employee relations statutes, the Dills Act permits the parties to supersede numerous statutory provisions relating to wages, hours, and terms and conditions of employment in the state service, as specified in section 3517.6.

None of these three labor relations statutes requires the parties to reach agreement, but merely to bargain in good faith in an endeavor to reach agreement. (MMBA, § 3505; the Dills Act § 3517; EERA, § 3540.1, subd. (h).) Having done so, but having failed to reach agreement, the parties are at impasse.

DPA contends the Dills Act implicitly permits DPA to impose its last, best offer at impasse, where the MOU, having by its terms expired, is no longer in existence. But, the Dills Act by its express terms does not permit DPA immediately to do so. Unlike the EERA and MMBA, where at impasse there is essenti