El Cerrito is in the midst of a major financial crisis. This the second of two blog posts addressing four issues we have found with how El Cerrito has managed it’s financial issues for years. Please refer back to the first post here and that post has the references used here also.
NO LONG TERM PLANNING BY STAFF
Although there were cautionary tales about limited revenues, etc. the city took a very short-term approach and narrow course of action when it came to growing reserves or managing costs. The City turned to the community for new taxes, but expenditures continued to rise.
Since 2013 every year the report has named General Fund Budgets, Cash and Available Fund Balances as an issue. While the auditors did not begin stating that the city was at risk of not remaining a going concern (not going bankrupt) until 2017 the four years prior they called the lack of financial resources an issue and often recommended cost cutting measures. The City typically responded by stating that they anticipated a growth in revenues and would be monitoring expenditures.
Since 2011 the city has been borrowing money to keep the city afloat. It started with 3.5 million dollars in 2011 and in 2019 last year was 9 million dollars. The interest in 2019 last year was $197,100 and the costs for the loans were an additional $33,000.
In 2014 when revenues were dropping the city decided to not look at budget cuts but to instead put a tax measure on the ballot (2014 CAFR page 32). They successfully passed Measure R, extending and RAISING the sales tax in El Cerrito. Many felt that the city was deceptive in their outreach for this tax and the city was warned by the California Fair Political Practices Commission for irregularities in a mailer backing Measure R. Many voters thought it was an extension of an existing tax, not a raise in taxes.
Again at the close of 2017, the report issued to the city recommends a move toward cuts in order to bring spending in line with revenues. The City response suggests otherwise, noting they are planning to launch another tax that will shore up revenue and reserves.
And as recently as June 2019, when the independent auditor called out the city’s ability to continue as a going concern for the third straight year, the City Manager and Finance Director went before City Council and said everything was fine. The City Manager told the Council, “The City will be taking steps to restore a positive fund balance position through the upcoming biennial budget cycle and expects to successfully achieve this by FY 2021.”
This was just 4 months before the state auditor called out that El Cerrito was 7th on the list of CA cities most likely to go bankrupt.
BELIEF THAT STAFF WAGES NEED TO BE HIGH FOR STAFF RETENTION
There appears to be an assumption that in order to have quality staff, we have to compete with wages paid in larger metropolitan communities, wherein other communities of comparable populations have significantly lower costs. This has been repeated at numerous community meetings and most recently at City Council regarding education. As a result our expenditures in salaries and benefits increase even when not prudent to make such increases.
Our city has 25k residents and 384 city employees of which 159 are full time. The cost per resident is $1,163, which is $328 per resident more than the next closest city of Albany. Our city has 132 more employees than San Pablo which has 5k more residents.
Per Transparent CA in 2018, employee compensation rose almost 5 MILLION dollars from 2017 to $29,323,885 for 384 positions 159 of which are full-time. In 2017 there were 375 total positions and 138 were full time year round. These raises and additional positions were added even though the auditor had for two years warned the city about their ability to continue as a going concern.
In the most recent negotiations with public safety staff COLAS were suspended for 2020 but promised for 2021.
In the City Council meeting on May 19th it was revealed that 25 staff members received car allowances of $300 a month. This is an outrageous number of staff with this benefit when a simple reimbursement for mileage for required travel could be implemented. This was costing the city 90K a year.
When citizens have sent in public comments questioning the high staffing numbers they have heard council statements full of praise for their excellent staff. They have said that no comparisons to other cities can be made because we are a full service city. This definition has yet to be adequately described as most local cities also have their own police and fire departments, recreation departments and senior services. Albany has all of the above and runs on half the budget El Cerrito does.
So is it time for El Cerrito to take a deeper look at how it provides services? The personnel classification system? The number of management positions? Since 50% of our budget is dedicated to public safety, we may want to start there.
There is a budget meeting June 9th at 1pm. Please send public comments in with your thoughts on the budget crisis. It is agenda item #2
To make a public comment
Public Comments may be submitted one of two ways:
Via email to Cityclerk@Ci.El-Cerrito.ca.us Email must contain in the subject line Public Comments Not on the Agenda OR Public Comments Agenda Item #.
Via Voicemail at (510)306-2558. The caller must start the message by stating Public Comments Not on the Agenda OR Public Comments Agenda Item # followed by their name and city of residence, followed by their comments