El Cerrito City Council’s MOU: Long-Term Costs and Impacts

Tomorrow, the El Cerrito City Council will vote on a new Memorandum of Understanding (MOU) with the United Professional Firefighters Local 1230, which includes modifications to salary and benefit language and an appropriation of $120,116 from the General Fund’s unassigned balance.
On the surface, that may sound routine — a standard labor adjustment. But beneath the surface lies one of El Cerrito’s deepest financial challenges: the city’s ongoing reliance on reserves to balance the budget instead of addressing the long-term fiscal impact of labor negotiations.

The Structural Problem

Each year, the city negotiates salary and benefit increases without conducting a meaningful analysis of how those changes affect future pension liabilities, long-term staffing costs, or service levels. The result is a budget in which 16% of the operating budget — about $8.5 million — goes to CalPERS pension payments, and nearly every available dollar is consumed by personnel-related costs.
That leaves almost nothing for the things residents care about most:

• Repairing the Swim Center
• Reopening the Senior Center
• Investing in the Library
• Maintaining parks, sidewalks, and basic infrastructure

A Pattern That Can’t Continue

This MOU, like others before it, is being funded from the General Fund’s “unassigned balance” — in other words, from reserves. This marks another withdrawal, this time $120,116, from funds that were never meant to cover ongoing expenses.
These withdrawals may seem minor in isolation, but over time, they have become routine, steadily depleting the city’s financial cushion. This exact pattern — drawing from reserves year after year to balance the budget — is what landed El Cerrito on the State Auditor’s High-Risk List.

Reserves are supposed to stabilize a city during emergencies or unexpected downturns. In El Cerrito, they have become a crutch for unsustainable spending.

The Missing Analysis

Most cities conduct long-term fiscal modeling when negotiating MOUs — examining how salary increases affect pension costs, health benefits, and the city’s ability to fund services over five or ten years.
El Cerrito does not.
That’s why the city’s pension contributions have ballooned to $8.5 million annually, even as facilities deteriorate and residents are asked to consider new taxes.

Fiscal Impact

Fiscal Year	Added Cost	Notes
FY 2025-26	$268,968	Includes an appropriation of $120,116 from the General Fund unassigned balance
FY 2026-27	$661,352	Projected to further draw on unrestricted reserves, which will fall below GFOA recommended levels (15 % of annual expenditures)
FY 2027-28	$964,837	Will be formally adopted in the next budget cycle
Context

• Annual CalPERS Pension Costs: ≈ $8.5 million (≈ 16 % of the operating budget) – other similar sized cities pay about $4 million or less
• Unfunded Pension Liability: Over $80 million and growing
• Result: Ongoing labor cost growth continues to outpace revenue growth, reducing available funds for community services like the Senior Center, Library, and Swim Center repairs.Packet

Staffing Levels and Their Cost

El Cerrito continues to maintain one of the highest staffing levels per capita in West Contra Costa County — higher than San Pablo, Albany, and Hercules, all of which deliver comparable or broader services with fewer employees.
The difference matters. Each additional position doesn’t just add to payroll — it increases CalPERS contributions every year and permanently adds to the city’s unfunded pension liability, now exceeding $80 million.
San Pablo and Hercules, by contrast, have kept staffing lean and redirected savings toward capital projects and community programs. El Cerrito’s approach does the opposite: using reserves to fund recurring payroll and benefit costs, then cutting or delaying community investments when the reserves run low.

What Residents Should Ask

As the City Council considers this MOU, residents deserve answers:

• What is the total long-term cost of this agreement, including pension implications?
• How will the city sustain this commitment without depleting reserves?
• Why does El Cerrito continue to staff above peer cities while falling behind on services?
• When will the city begin labor negotiations that align compensation with sustainable service delivery, not just short-term fixes?

We Agree — Fair Wages Matter

We agree that employees should be paid a fair wage. Public servants play an essential role in keeping the community safe and functional. But fairness must go hand in hand with fiscal responsibility.

The city should always understand the long-term cost of any agreement — including its effect on future budgets, reserves, and pension obligations. It should also consider staffing levels in relation to population, workload, and fiscal capacity.
El Cerrito is already overtaxed, and residents should not be asked to contribute more simply to maintain unsustainable spending patterns.

It’s Time for Fiscal Honesty

Responsible budgeting means ensuring that today’s agreements don’t compromise tomorrow’s services.

Until the city links labor negotiations and staffing decisions to long-term financial planning, every new contract will quietly widen the gap between what El Cerrito spends on itself and what it delivers to residents.

Stay Informed

The City Council meeting will be held on Tuesday, October 21, 2025, at 6:00 p.m. at City Hall and via Zoom.
Residents can review the Firefighters MOU beginning on page 139 of the official agenda packet, available on the city’s website or directly at el-cerrito.org.
Reading the whole document before the meeting ensures residents understand how each new agreement affects our reserves, services, and long-term fiscal health.