City leaders in El Cerrito often attempt to defend the city’s growing unfunded pension liability (UAL) by claiming “it’s not like a mortgage.” And on that point—they’re absolutely right.
It’s worse.
A mortgage has a fixed payment schedule. You know exactly how much you owe, when it’s due, and how long you’ll be paying. The UAL, on the other hand, is a volatile and growing liability with no such certainty. It’s a moving target—one based on assumptions about investment returns, workforce size, salary growth, and life expectancy.
In El Cerrito’s case, the UAL hasn’t just fluctuated—it has ballooned.
According to CalPERS actuarial data for the city’s two classic plans, the UAL payments have nearly tripled in less than a decade:
- 2014: $2.75 million
- 2023: $7.93 million
That’s a 188% increase in required annual payments—despite assurances that the city is on track. While it’s true that the city has never missed a CalPERS payment, it is also true that El Cerrito has made only the minimum payment year after year.
This strategy may technically meet the city’s obligations, but it does nothing to reduce the long-term debt burden. In fact, the minimum payments primarily cover interest—barely touching the principal. It’s the equivalent of making minimum payments on a high-interest credit card while the balance keeps growing.
Both the State Auditor and the city’s own financial advisors have raised red flags. The Auditor cited the city’s “rapidly increasing and uneven repayment shape” as a significant concern. The city’s financial consultant, NHA Advisors, also noted that the escalating UAL is placing severe pressure on the city’s budget and called for proactive planning to manage it.
Yet city leadership continues to resist more aggressive funding strategies. In 2021, financial advisors recommended starting a Section 115 trust with no less than $5 million. The city put in just $1 million—barely a symbolic gesture, especially when the UAL at the time stood at over $70 million. Today, it has grown to $89 million.
This isn’t just about fiscal policy—it’s about long-term sustainability and the ability to provide services to residents without cutting programs or raising taxes indefinitely.
El Cerrito’s pension liability isn’t like a mortgage. It’s a structurally compounding debt—one that grows while the city continues to make minimum payments and hope for optimistic CalPERS investment returns that may or may not materialize.
It’s time for El Cerrito to stop defending the status quo and start acting like a city serious about its financial future.
El Cerrito Committee for Responsible Government (ECCRG) 