Could it be because Ann Arbor is far less radical and not lunatic-dominated like the City of Berkeley?
FYI, this likely wouldn't be a copyright issue, but a Trademark issue. More than likely, Cal has trademarked at least a couple of the terms or symbols your wife used in the posters. For example, my guess would be Cal, Cal Football, the yellow or blue bear symbol, the bear paw could be trademarked. Still, even though the terms or symbols might be trademarked, Cal probably wouldn't come after you unless you started to sell in quantity or market very publicly.
Just be aware, that even though under copyright she may be fine because it is an original design, there may be a trademark issue. (People would assume that the posters were licensed from Cal).