It turns out that the Government Finance Officers Association (GFOA) did, in fact, award the City of El Cerrito with a budget award. But before we break out the confetti, it’s important to understand what this award actually measures—and what it doesn’t.

The GFOA budget award, despite its name, isn’t actually a “budget award” in the traditional sense of evaluating financial health. It’s more accurately described as a Budget Presentation Award. The award focuses on how well a budget is presented, how clearly it communicates its contents, and how many public discussions were conducted. It does not require that the city include public recommendations in the budget. The budget award does not assess a city’s financial sustainability, long-term planning, or overall fiscal health.

In other words, a city can receive this award even while facing severe financial instability—as long as the budget document is well-organized and looks good on paper.

It’s worth noting that El Cerrito’s name does not appear on the GFOA website along with the other award recipients. Presumably, this is because the award was granted after the initial group was listed. This raises further questions, especially given El Cerrito’s financial struggles. Was the City’s budget award granted after an appeal or reconsideration? If so, it only underscores how misleading this recognition can be when taken out of context.

In 2023, 159 California cities—about one in three—received the GFOA budget presentation award, including several that are on the California State Auditor’s high-risk list of cities most likely to become bankrupt. Clearly, the GFOA award does not differentiate between cities with sound financial footing and those on the verge of insolvency. It’s simply a recognition of how well a city presents its budget, not how well it manages its finances.

When “Recognition” Means Nothing

To put this in context, let’s look back to the 2014 Comprehensive Annual Financial Report (CAFR)—now referred to as the Annual Comprehensive Financial Report (ACFR). The City of El Cerrito proudly displayed its GFOA award in the CAFR, but just a few pages later, the independent auditor expressed serious concerns that the City might not be able to continue as a going concern. The auditor’s report highlighted that El Cerrito’s financial position was so precarious that it questioned the city’s ability to meet its financial obligations and continue operating normally.

This contradiction makes it clear: a GFOA budget presentation award is no guarantee of financial well-being. In fact, it can be misleading when presented without context. The City’s financial documents showed severe issues—so severe that the independent auditor felt it necessary to issue a “going concern” warning. Yet, the City flaunted the GFOA award as if it were an indicator of sound financial management. And we know that the city has had deficit budgets in most years since then.

Why the Award Doesn’t Reflect Financial Health

The GFOA budget presentation award does not address several critical aspects of financial health, including:

• Pension Liability: The City of El Cerrito has nearly $100 million in unfunded pension liabilities. This looming financial obligation is a long-term burden that threatens the City’s ability to provide services and meet future obligations. The GFOA budget presentation award does not assess or reflect the status of pension liabilities, making it an incomplete measure of financial health.
• Unrestricted General Fund Reserve Balance: The unrestricted general fund reserve balance indicates the city’s financial flexibility and capacity to handle unforeseen expenses. The GFOA award does not evaluate whether a city has adequate reserves or whether reserve policies are aligned with best practices. Given El Cerrito’s reliance on reserves to balance budgets in the past, this is a crucial omission.
• Long-Term Financial Planning: The GFOA budget presentation award criteria do not assess a city’s ability to create and maintain long-term financial strategies. For a city like El Cerrito, which has struggled to address its structural deficit and has relied on short-term borrowing to cover basic operating costs, the lack of focus on long-term planning is a major shortcoming of the award.
• Debt Levels and Borrowing Practices: El Cerrito’s use of Tax Revenue Anticipation Notes (TRANs) and its fluctuating bond rating—from a low of BBB- to its current BBB—are not factored into the GFOA budget presentation award. A budget can be well-organized and clearly presented, but that doesn’t mean the city is not drowning in debt or making unsustainable financial decisions.

Misleading the Public?

The City’s press release and celebratory social media posts on Instagram and Facebook seem designed to distract from the city’s ongoing financial troubles. The narrative of receiving a prestigious financial award creates a false sense of security, making it appear as if El Cerrito has its finances under control when, in fact, the opposite is true.

Given the city’s troubled financial history, this could be more than just a misunderstanding—it may be part of a larger effort to shape public perception and deflect from real issues. The timing of the GFOA award also suggests that El Cerrito may have appealed or requested reconsideration after not being listed among the initial group of recipients. Residents deserve to know whether the city is being honest about its financial awards, and if not, what else might be misleading in its communications.

Why It Matters

Transparency and accountability are not just buzzwords; they’re essential for trust in local government. When a city like El Cerrito repeatedly asks residents to approve tax increases while failing to address the root causes of its financial woes, it’s reasonable to question its credibility. El Cerrito has one of the highest fire department staffing levels in the state for a city its size, and yet, crime rates remain high, and essential services have suffered. Why is there such a disconnect between spending and service outcomes?

Meanwhile, instead of taking decisive action to reduce expenses and rightsize operations, the city celebrates unverified awards and downplays the severity of its financial situation. This pattern of behavior erodes trust and prevents meaningful conversations about real solutions.

A Call for Clarity and Action

Residents deserve honest and transparent communication from their local officials. The focus should be on addressing El Cerrito’s significant financial challenges—not on flaunting an award that does not reflect fiscal stability. Suppose the City truly wants to build trust with its residents. In that case, it should start by presenting a clear picture of its financial health, including releasing the unrestricted general fund reserve balance and other critical metrics.

The GFOA budget presentation award may look good on paper, but it’s meaningless for a city teetering on the edge of financial disaster. The residents of El Cerrito deserve more than empty accolades. They deserve real solutions.

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