Residents of El Cerrito are raising concerns about the city’s unrestricted general fund (GF) balance due to the lack of transparency in financial reporting. The city does not report the unrestricted balance separately; instead, they group all reserves together, occasionally breaking out portions such as the Section 115 or emergency fund balance. However, the unrestricted balance remains undisclosed.
The lack of clarity is concerning, particularly given that the city had the chance to adopt a policy mandating a 17% unrestricted reserve balance during the November 19th City Council meeting. Instead, on Mayor Tessa Rudnick’s recommendation, the City Council chose to label this as a “goal” rather than a binding policy—effectively signaling a vote of “no confidence.” This decision to weaken the proposed policy suggests the city is fully aware of the depleted unrestricted reserve balance but lacks any concrete plan to restore it to the 17% target.
Adding to the concern, the City Council also ignored the Financial Advisory Board’s (FAB) recommendation to establish a $1 million surplus reserve. This reflects a troubling pattern where the City Council consistently waters down FAB’s recommendations, allowing the City Manager to retain ultimate discretion and ignore these measures when it suits her.
Evidence of a Negative Unrestricted Balance
Analysis of the city’s financial data suggests the unrestricted GF may currently have a negative balance:
• 4th Quarter Reported Unrestricted GF: $12,584,277
• 1st Quarter Revenue (Q1): $7,427,375
• 1st Quarter Expenses (Q1): $14,239,057
• Unfunded Actuarial Liability Payment (UAL): $5,250,000 (only partially reported in Q1)
• October-November Revenue Estimate: $4,541,121.33
Using this data, the current GF is estimated at ($4,018,526.33):
This calculation assumes that the deficit reported for the first three months continued on a straight-line basis through October and November. However, the confusing nature of the city’s reports leaves room for unaccounted revenues or expenses.
Key Issues:
1. Transparency: The lack of separate reporting for the unrestricted balance obscures the true state of city finances.
2. Policy Avoidance: By rejecting both the 17% unrestricted reserve policy and $1 million reserve FAB recommendation, the city avoids accountability and retains financial flexibility without oversight.
3. City Manager’s Discretion: The consistent watering down of FAB’s recommendations ensures that the City Manager retains ultimate discretion, enabling her to bypass fiscal policies when convenient.
4. Potential Deficit: The analysis indicates a significant negative balance, raising questions about fiscal health and planning.
5 A goal is not a policy. A goal is an aspirational objective that outlines what an organization, individual, or group hopes to achieve. It is a target or desired outcome that provides direction and motivation. For example, “Reduce maintenance downtime by 20% this year” is a goal.
A policy, on the other hand, is a formalized, actionable guideline or rule established to govern decisions and behaviors in achieving those goals. Policies provide a framework that ensures consistency, compliance, and accountability. For example, “All maintenance requests must be addressed within 24 hours” is a policy.
Residents and stakeholders are urging the City Council to provide transparent reporting, adopt binding policies, and ensure stronger oversight to promote financial stability and accountability.
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El Cerrito Committee for Responsible Government (ECCRG) 