El Cerrito has a pension problem that’s been compounding for years. Instead of meeting it head-on, the city has continued to apply minor fixes to a rapidly growing financial burden. One glaring example? The decision to open a Section 115 Trust fund with just $1 million, despite the city’s economic advisors recommending at least $5 million.
To put it plainly, El Cerrito’s unfunded CalPERS pension liability stood at approximately $70 million in 2021 when the trust was opened. The current liability has now ballooned to $89 million. Placing $1 million in a Section 115 Trust under those conditions is the financial equivalent of tossing a glass of water on a house fire.
This is not a new issue. In March 2021, NHA Advisors warned of the growing pension pressure and its strain on El Cerrito’s operating budget. The California State Auditor echoed the concern, assigning the city a zero score for future pension liability planning. The message was clear: El Cerrito needed to do something—anything—beyond the minimum.
From the NHA Advisors’ 2021 presentation:
- “The rapidly increasing (and uneven) repayment shape of UAL is causing added pressure on the city’s budget.”
- “Planning for and evaluating options to manage these rising costs is important for budget predictability and fiscal health.”
- Over seven years, the miscellaneous plan UAL grew from $13.3M to $ 20.7 M.
- The safety plans UAL soared from $28.2M to $ 49.6 M.
Despite these red flags, the city only pays the actuarial minimum yearly, while the liabilities and required payments keep growing. These CalPERS payments are mandatory, leaving fewer dollars for essential services, infrastructure maintenance, or a long-awaited senior center.
Worse, El Cerrito continues to miss opportunities to stabilize long-term costs. In 2021, a serious proposal was to issue pension obligation bonds—not for risky investments, but to refinance the city’s pension debt at fixed rates. It was a conservative fiscal strategy, not a speculative one. The city let the opportunity pass, and the consequences are now being felt in escalating annual pension costs.
The state auditor report states:
“The amount El Cerrito pays toward its pension liability continues to grow because the city pays only the minimum amount required each year as determined by an actuary.”
El Cerrito’s pension generosity far exceeds that of its neighbors, like Albany, yet the city has failed to reexamine the sustainability of these plans.
Meanwhile, revenues have increased:
- Real Property Transfer Tax (RPTT) has surged, adding $3.3 million compared to FY 2018.
- Housing sales continue to reset property tax values upward.
- Sales tax revenue is booming, thanks to changes in the law.
Despite this, key services are shrinking. The senior center remains closed. The crime rate drives businesses away, and those who stay hire private security. The Pavement Condition Index (PCI) is deteriorating. The city runs deficits even while revenue streams have grown.
And now, the council is prioritizing $2 million for the swimming pool, but nothing for a senior center?
Where’s the comprehensive budget review? Why wasn’t the Financial Advisory Board (FAB) discussed before budget assumptions are locked in? FAB recommended a $1 million starting surplus buffer, but that advice was ignored.
If the city is serious about fiscal responsibility, it must:
- List primary fiscal needs upfront in budget discussions.
- Conduct scenario analyses.
- Engage residents, the FAB, and the council collaboratively from the outset.
- Before proceeding, disclose the actual cost estimates of new projects (e.g., bike lanes, Greenway, Richmond Street).
- Share survey results with the public.
- Justify and prioritize spending based on precise data, not preference.
And critically, FAB must be fully included when NHA Advisors return to discuss pension planning. Expertise is only helpful if it’s applied.
The community is watching. Council Member Ktsanes has taken a step toward transparency by holding open office hours. Others should follow suit—and commit to hearing from all residents, not just those who already agree.
El Cerrito must break this cycle of delay and deflection. It’s time to stop throwing cups of water at a five-alarm fire. The stakes—for our city’s fiscal health and community well-being—are simply too high.
El Cerrito Committee for Responsible Government (ECCRG) 