Governance Matters: Expenses Continue to Outpace Revenue as Pension Liability Climbs – Microblog

In March 2023, El Cerrito unveiled its latest plan for financial improvement in response to a severe audit from the California State Auditor in 2021. This audit, part of a program targeting high-risk local governments, shed light on El Cerrito’s precarious financial state and tendency towards excessive expenditure.

One key factor in the city’s revenue boost was the unexpectedly strong real estate market. However, reliance on this market is risky, as evidenced by showing higher-than-anticipated real property transfer tax revenue since 2019. With the real estate market cooling due to rising mortgage rates, there’s a risk that the city’s spending might soon outstrip its income. This situation is exacerbated by the city’s habit of projecting revenues based on peak years, which can lead to overspending.

At best, El Cerrito’s approach to managing its pension liabilities has been tentative. Staff shortages in the finance department initially delayed plans to set up a Section 115 trust for pre-funding pension costs. Even though staffing levels are back to normal, the city has allocated only $1 million towards an $85 million pension liability deficit, a mere 1.2% contribution that might be further reduced by trust-related fees. This allocation falls significantly short of the recommended $5 million, indicating a prioritization of other expenses over pension costs.

Additionally, El Cerrito negotiated with its firefighter union for a 1% increase in pension contributions which helps the pension liability, but neglected to advise the State Auditor that this is offset by a corresponding 1% pay raise. Moreover, this means the net effect on pension funding is negligible.

Have you experience similar issues, or do you have a different perspective? Share your stories and suggestions for how our city can improve. Let’s start a conversation for change.

Here is how you can help:

• Share this post with other residents.
• Comment on the post
• Attend the monthly Financial Advisory Board meetings in person.
• Post on Next Door
• Voice your concerns with the Council.
• Council meetings are remote and in-person, but public comment is now limited to in-person attendees.

If you want to contact City Council Members or the City Managers, all their emails are below:

• Karen Pinkos-City Manager kpinkos@ci.el-cerrito.ca.us
• Councilperson Gabe Quinto gquinto@ci.el-cerrito.ca.us
• Councilperson Carolyn Wysinger cywysinger@ci.el-cerrito.ca.us
• Councilperson Tessa Rudnick trudnick@ci.el-cerrito.ca.us
• Mayor Lisa Motoyama lmotoyama@ci.el-cerrito.ca.us
• Councilperson Paul Fadelli pfadelli@ci.el-cerrito.ca.us