As CalPERS, the nation’s largest public pension fund, faces scrutiny over its growing investments in private equity, the City of El Cerrito is sitting on a fiscal time bomb: nearly $90 million in unfunded pension liability—and climbing. This burden, driven by a bloated payroll and decades of financial mismanagement, poses a threat to the city’s long-term solvency. And yet, El Cerrito has no serious or detailed plan to reverse course.
CalPERS is doubling down on private equity to meet its aggressive 6.8% return target. But that bet comes with high risk—especially now. Private equity valuations are often murky and rely heavily on internal estimates rather than market data. Liquidity is limited, meaning if the market turns, CalPERS—and by extension, its member cities—could be left exposed. Even Republican Rep. Elise Stefanik has raised red flags, pointing to inflated valuations in large institutional portfolios like Harvard’s endowment, funds managed by the same firms CalPERS increasingly uses. Retirees and watchdog groups are sounding the alarm over how these bets could backfire, especially for cities already on shaky ground.
El Cerrito owes nearly $90 million in unfunded pension liability, with no clear plan to pay it down. That number is expected to grow. Why? The city continues to overextend itself on payroll, paying salaries and benefits well above regional norms. Every raise today becomes tomorrow’s pension obligation—and those costs are compounding faster than the city’s revenues. Despite promises to rein in spending, El Cerrito keeps adding programs and staff it can’t afford.
Yes, the city has made gestures: a $1 million contribution to a Section 115 trust (a drop in the bucket). Monthly financial reports (more form than function). Occasional discussions about debt restructuring or cost containment (rarely implemented). But none of this addresses the central issue: El Cerrito is living beyond its means. Without a structural reset, the city is simply kicking the can—and placing blind trust in CalPERS’ high-stakes investment bets to bail it out.
The math doesn’t lie. A $90 million unfunded liability in a city of under 26,000 people equates to more than $3,400 per resident. That number will climb if CalPERS misses its return targets or if El Cerrito continues inflating its payroll. Residents are being asked to approve new taxes—like the proposed library bond—while the city refuses to face its core financial crisis.
El Cerrito needs to freeze or reduce payroll until pension costs are under control. Redirect surplus revenue into pension stabilization—not new programs. Disclose the true costs of pensions in all public-facing materials. Develop a long-term funding strategy tied to realistic return assumptions—not CalPERS’ rosy projections.
Call to Action: Ask your city leaders one question—how do they plan to pay off nearly $90 million in pension debt? If they can’t give you a clear, credible answer, don’t trust them with more of your money. Demand transparency. Demand a real plan. And if they won’t act, vote accordingly.
El Cerrito Committee for Responsible Government (ECCRG) 