Proposed Budget is a Mess

The El Cerrito Proposed Budget Department Preview is out and includes a proposed budget for 2021-2022 and it is a mess. (starts on page 95).

Our new budget year starts on July 1st and on May 18, 2021, they are presenting this packet that does not have sufficient information for the City Council to make a decision. Now I know the city is going to say that they are going to do more but the last page of the packet listed the next steps as these:

  1. The week of May 24th the budget will be released to Council and FAB. A little over a month before it needs approval.
  2. May 25th Special FAB meeting
  3. June 1 Council meeting and hearing
  4. June 15th Council meeting and hearing.

So my issues with this presentation are as follows.

  1. On page 97 they have the proposed budget. If this is the best the City Manager and Finance Director can do then we have a very large problem. I have looked at many other city’s budget processes and none of them look like this. Check out Albany’s two year budget. Everything is broken down by the Department (another request by the State Auditor) and there are no imaginary forecasts-just actuals and proposed. It is also easily accessible on their website and they have quarterly updates also posted.

    Meanwhile, in El Cerrito, they just subtract 2 million from the forecast for next year. We are not told if those are those structural cuts we have been promised or if they are going to use the bailout money to fill the gaps for two years and then we end up in the same mess again.
  2. Council has directed staff to start from a baseline of last year. They are not. Look at Personnel. For example: 2020-21 is $15,266,000 but he starts a forecast at 18,622,000 and then sets the budget at 17,025,000…..claims to save 1,637,00. Now based on the Finance Directors’ prior comments he might say this is adding COLAS etc. Which would be fine if it was spelled out. And then the reduction was spelled out. But it is also not savings. A savings would be an amount that is less than the prior year. 

This is a deception the City has been using for years. They forecast things to be high and then budget less and then say they are saving money. Instead of looking at mid-year 15,266,000 and saying we are budgeting 17,025,000 and that is an increase of $1,759,000. And how about explaining that increase. That is salary and benefits so what is the increase? Are COLAS back? Are benefit costs increasing? It is almost 2 million. We need to know what it means.

3. They continue to be deceptive in regards to police staffing. On page 98 they show a staffing chart that appears to show 10 positions cut from the police. Which is either going to scare residents or make them very happy. But it is not true. In January 2019 there were 54 filled positions with 40 sworn officers and the following January 2020 there were 51 filled positions and 37 sworn officers. No officer has been laid off. I verified this with Chief Keith. He also told me via email that for the next year they have 48 positions authorized with 37 sworn officers. Which is exactly the same as last year. Authorized positions mean they were in the budget not that they were on the streets. So cutting positions that were not filled does not remove officers from the beat.

4. The TRAN costs are going way up. For those of you new to this the TRAN is the payday loan the city gets every year to stay afloat. This year the financing costs are projected at 310,000. And next year he has a forecast of 550K and then budgets at 508. This is ridiculous. First off the Finance Director has been giving garbled explanations at FAB of how the TRAN does not even cost us money even though the State Auditor specifically called that out. Clearly next year the TRAN will cost more. It looks like at least 200k more. That is 4 times the library hours cost. And it costs more because we have mismanaged our city finances into a BBB- bond rating. See the chart the State Auditor created below.

5. Professional services are increased by half a million. Why? What for?

6. Dispatch services through Richmond are almost a million dollars a year. Have we looked at cheaper options? I know a few years back we were going to go into the County dispatch system which would have saved a lot of money but the Sheriff revoked the offer when we became a Sanctuary City. Are there no other options for dispatch? A quick look at our neighbor Albany and their police budget is less than 8 million while ours is over 10 million. They have 26 sworn staff and 11 support staff. So why are their policing needs so much less than ours? That is 11 fewer sworn officers. And crime is not higher in Albany with that many fewer officers.

Points to bring up at the May 18th meeting.

When is the City Council going to demand real data?

Can the city staff provide data that is true and not deceptive?

Is El Cerrito going to make structural cuts or just ride the bailout money for a bit? Is there going to be a real effort to get a community response if there are cuts?

Continued frustration with lack of movement on the budget issues

I have been lax in posting. The last council meeting was April 20, 2021, and the State Audit report was on the agenda.

First the good news

  1. Mayor Fadelli introduced the following motion which passed. He initially proposed it as 75% of the fed money to reserve and Councilperson Rudnick asked it to be 80%. It was a 5-0 vote.

“I MOVE that the City shall follow through and respond, as financially able, to the recommendations made by the March 2021 State Audit Report, that seek to increase transparency of the City’s budget process and provide City Council members with the information needed to make more informed budgetary decisions; and

I MOVE the City shall prepare a plan and work with Council in ways to encourage and implement additional annual CalPERS contributions from all city employees; and

I MOVE that the City shall update Council on the federal funds that may come from the American Rescue Plan Act and, make plans in the immediate future for Council to approve deposit of no less than 80% of those total funds into El Cerrito Reserve Fund.”

2. Councilpersons Rudnick and Motoyama are now going to form a subcommittee to help staff address state audit issues. This is great! They are the two councilpersons who seemed to have the strongest understanding of these issues and neither of them was on council when the mess was created.

3. Councilperson Motoyama pushed for a motion to link performance evaluations to budget performance. Though the city attorney weakened it this writer believes a strong message was sent to the City Manager and staff that these things are now related. As they should be. Councilperson Motoyama gets our hero of the meeting for this.

Now the bad news. 

  1. Our fiscal year starts July 1st and there has been no work that the public can see on the budget. Here is the county process. You will note they start in January. They just had budget hearings on April 20, 2021. Their budget is larger and more complex but starting a process in May for a July 1st budget is NOT enough time for public input.
  2. A few months ago the City Manager and Finance Director proposed 2 million in structural cuts for the next year. We have heard nothing about this since. We all know that amount of cuts is going to have a large community impact and there needs to be ample time for the public to weigh in with their thoughts. This is why the city needs a structured budget process that starts at the beginning of the year like the county.
  3. There is suppose to be some sort of budget workshop on May 8th. That is 8 days from today. There is no information on the city website about the meeting. There is a listing that shows it but if you click through there is no agenda or information on the meeting. THAT IS TOTALLY UNACCEPTABLE. People make plans for their weekends more than 8 days in advance. There has been no public outreach in regards to this meeting. Concerned community members want to do the outreach for the city but how do we do outreach when there is no information available to share?

Other Budget News

The City Manager entered into a new $45,000 contract with Management Partners to do the following.

We have a contract to deliver budget-related work products but there has been no information about this online or at the meetings. This contract will not exceed $45,000 which is the exact amount the City Manager can contract without City Council approval. It is also about 45% of the amount of the compensation study the City Manager has been resisting. Well, she says she wants it but can’t afford the budget or staff time. At the last meeting Councilperson Rudnick did suggest that we can use some of the bail-out money for that study which was recommended by the state auditor. We concur with that as an appropriate use of the one-time monies. Since 80% will go to reserve there is 20% remaining and it makes sense to use it for some one-time investments like stronger financial systems and a long-overdue compensation study.

This contract was entered into July 1, 2020, and ends July 30, 2021. We are getting close to the end of the project and have not heard at all about any of these work products. I am doing a public records request today on any information on any of them. Have Management Partners been doing financial forecast updates? What is the forecast tool?

To sum up 

  1. The City continues to not address structural cuts that are necessary.
  2. The City continues to have issues with transparency and public engagement.
  3. The City needs to create a comprehensive budget process.
  4. The City needs to make structural changes to how they are reporting financial information to the Council.

The questions that remain from the Town Hall meeting

The Town Hall supplemental materials were posted. Starting on page 37 are the chat questions that were asked during the meeting. Some were marked live answered and many were just acknowledged with no answer given. Those I am copying here. Some are comments that weren’t acknowledged and I am posting those also. I have bolded some of the questions I see as particularly important to be answered. Next Tuesday April 20th at 7pm is the next Council meeting and item 7A is the city’s response to the State Auditors report.

Questions

  1. To Gabe Quinto and then to Mayor Fadelli For the period 2015-19, what in your opinion prevented City Council from foreseeing, managing, and mitigating the current financial crisis?

2. Travel and conference attendance wasn’t frozen until THIS year? Why?

3. You have discretion over 23 management positions. I note that some positions enjoyed large increases over the last 3 to 4 years. Why? Note this was indicated as live answered. I remember the City Manager saying that she did not give a certain type of raise but I don’t recall this being fully answered

4. How can I (educated citizens) recommend or suggest ways we can increase City revenues through new projects that Improve and support the community?

5. Have we considered selling the pool? In a few years it will be an even larger liability due to needed repairs

6. Can you be clear as to exactly what the dollar amount is that the City needs to reduce in 2020-21 and 2021-22? Is this taking into account the Federal $4..8 million bailout? Would this result in an increase in the General Reserves?

7. I also have a question that I have not heard explained: what are the consequences to El Cerrito if we do not meet the Auditor’s recommendations?

8. Why did expenditures go up $10 million from 2014-2019?

9. Will there be additional meetings that ARE in Spanish (and Mandarin)? This is a huge inequity by design.

10. To know how to change our city’s financial culture we need to know where we went wrong. As the city manager presented, our “goal b” since 2013 is longterm financial stability. What is the city council and city manager’s SPECIFIC examples of what has gone wrong in the past and how they will change for the future? How, SPECIFICALLY, will you provide accountability and consequences for now and the future?

11. When you say the city is able to pay its expenses—is that with actual money at hand, or are you using money you have borrowed?

12. What human and financial resources need be allocated in order to come up with a viable corrective action strategy (including whether more skilled and objective professionals need be consulted or added to our management team)? We need – and deserve! – stronger analysis by the council based on reviews of accurate and sufficient data. To the extent that the Council concludes we have need new perspectives and impartial advice it needs to move now! Is City Attorney involved?

Comments:

1. Expenditures again doesn’t include a breakdown for how much we are required to spend on health care or retirement. This should be clear so people know what is and is not fixed.

2. Many of the “savings” were just costs that were deferred to next year. If the city had retained a two-year budget, suddenly many of the “savings” would disappear

3. Characterizing not getting raises as a sacrifice during this last year when many residents have taken large pay cuts or losing their jobs is insensitive. I appreciate it but it is fairer to say they are doing their part to keep the city afloat, not a sacrifice.

4. Can we discuss here that the Rec Dept, that you want to cut costs in, is a REVENUE GENERATING dept? The Police Dept costs large outweigh whatever “revenue” it brings.

5. Are you all going to answer the many great questions in this chat or are we going to have to continue to listen to speeches. The Mayor said this was to be a listening session. I thought he meant listening to us not us listening to the CM and the chiefs.

6. Manager Pinkos, this was a yes or no question. This answer is too much fluff. This type of response loses people’s attention and seems you’re going around just plainly stating why we are not seeing ACTUAL budget numbers.

7. The current system isn’t working. (26 people) of City Management take up the majority of the budget. We need to change how we offer services within the city and use more volunteers to provide services . Volunteers can offer time at the senior center, community center, community pool, recycle center, library, city hall, police department, fire department, and with basic services such as cleaning parks and streets. This will help to balance the city budget and change the culture. Local government shouldn’t be run like a business– it is a community serving the community

8. For future presentations about the city budget by the Financial Manager: the presentations need to be much more accessible to the public. Do not use acronymns like “TRAN” over & over without explaining them (it turns out they are loans. Do not post a detailed breakdown on the Zoom screen that many of us cannot view on our screens (unless it making it clear in advance where to see these charts). Tell us the facts and show them clearly … I heard someone else ask for PowerPoints & that would help.

9. I would like to reiterate my support for all of the recommendations in the
State Auditor’s report and urge you to get the city’s financial house in order. Structural changes are needed in how we prepare and carry out our budget, especially with the
monitoring of spending. I do not want slick answers. I need to see the action steps
and the action taken. If my personal budget was in this much of a mess, I would have long since had to cut my expenses!

10. Pensions: unfunded liability, according to Mayor Pro Tem Quinto, is over $70 million. This is NOT for existing employees.

11. Were the City Manager and councilmembers to admit her own culpability in this situation, it would go a long way to building trust with the taxpayers and residents of this city.

12. Thanks to attending the last City Council meeting, I found out where to find and read the State Auditor’s report (on the City Manager’s website, but not well advertised). I understand the Auditor’s report is supposed to be on a “Financial Transparency” page — I hope it is there now. ALSO – how does the city reach out these days to get citizens involved in attending city council meetings. Unless you are watching the website regularly, you might not even know the CRISIS we are in!

13. To City Manager. Why haven’t you eliminated the Finance Director position and taken full responsibility of the City’s Financials. This would be a savings of 200k +. We are small town… City Manager needs to take on more responsibilities of the Financials of over spending.

14. Mayor and City Council, I would like to reiterate my support for all of the
recommendations in the State Auditor’s report and urge you to get the city’s financial house in order. Structural changes are needed in how we prepare and carry out our budget, especially with the monitoring of spending.





William Ktsanes speaks

Mr. Ktsanes is a new member of the Financial Advisory Board. Some may also remember his name as he ran for City Council last year. From watching the FAB meetings it seems Mr. Ktsanes has had difficulty obtaining the financial reports he feels he needs to see to understand the city’s financial situation. I have heard him request information in Excel documents and with a higher level of detail.

During the April 13th meeting the staff and Chair decided the best use of time was to have the City Clerk present for an hour on the Brown Act. Wasting time by doing it publicly rather than doing it just for members.

Mr. Ktsanes wrote a letter to the Finance Director which he shared with me and gave me permission to post. We thank him for having the courage to speak up!

Here it is

“Dear Mr. Rasiah,

First, as Brown Act concerns were raised in response to a similar email I sent last month, for the sake of full transparency and compliance, I am doing the following:

  1. Copying all of the City Council members, Financial Advisory Board (“FAB”) members, the City Manager, the City Finance Manager, the City’s legal counsel and several concerned community members on this email.
  2. Providing my consent that any and all of my emails to City Council members, FAB Board members, the City Manager and the City Finance Manager be posted publicly in whatever manner the City and its counsel may see fit. (If the City feels it is appropriate, I consent to posting this email as an attachment to the FAB meeting materials.)
  3. Asking that any response to my requests for financial reports and records be done so publicly, with the requested materials made available not just to FAB members but also to the City Council and general public.
  4. Requesting that there be no private responses to this email from City Council members, FAB Board members, the City Manager or the Finance Manager.
  5. Aside from my ongoing request for financial documentation, asking that any response  or discussion related to the items below be done publicly in tomorrow’s FAB meeting.

Ralph M. Brown Act (Government Code sections 54950-54963, aka the “Brown Act”)

I understand the COVID-19-necessitated shift from in-person to online meetings raises new challenges for complying with the Brown Act. I recognize there are concerns around what remains relatively uncharted territory. I absolutely welcome discussion of the Brown Act and related restrictions, particularly those that might impact online forums such the City’s committee and board meetings. Although I have read the Brown Act and various interpretations carefully, I welcome the opportunity to learn more and hear differing perspectives.

I am very concerned by what appears to many as efforts in some communities to use the Brown Act to discourage or limit public participation and engagement. It is not an issue unique to El Cerrito. However, any such obtrusion – whether by intention or not – is clearly neither the purpose nor in the spirit of the Act, which is to assure transparency and promote honest, ethical governance through an informed public. As described in the act,

The people of this State do not yield their sovereignty to the agencies which serve them. The people, in delegating authority, do not give their public servants the right to decide what is good for the people to know and what is not good for them to know. The people insist on remaining informed so that they may retain control over the instruments they have created. (Gov’t Code § 54950)

Regarding the Brown Act, in tomorrow’s FAB meeting I will request the following:

  1. Rather than allotting 30 minutes in the FAB meeting for discussing the Brown Act with just ten minutes allotted to the monthly financials, I will ask that a separate meeting be set up for a thorough, in-depth, public discussion of the Brown Act with all City boards and commissions invited.
  2. To address any legal concerns, I will ask that the City’s legal counsel be present for any in-depth review and discussion of the Brown Act.
  3. I will ask that specific citations be provided whenever the Brown Act is used to justify limiting transparency, public requests and public engagement, all three of which are essential elements of good governance and the democratic process.

Financial Advisory Board Agenda

Thank you for assembling and distributing the agenda for Tuesday’s Financial Advisory Board meeting. While I understand we briefly discussed agenda items at the end of our last meeting a month ago, I would like the FAB and community be more involved in the process. With that in mind, in our meeting tomorrow I will ask for the following:

  1. Going forward, I will ask that a preliminary agenda be discussed and agreed upon at the end of each FAB meeting, as was done last month, but with the understanding there will be an opportunity to make changes and agree upon a final agenda as we get closer to the meeting date.
  2. I will ask that the community be provided opportunities to request updates, additions and changes to the preliminary agenda; and that their requests be considered and reviewed as the final agenda is set.
  3. I will ask that agenda items be solicited from the City Council, members of the community, FAB members, the City’s Finance Director and City Manager.
  4. I will ask that FAB agendas address all FAB-related requests from the City Council.
  5. I will ask that the FAB set the final meeting agenda collaboratively with the City’s finance director, perhaps with a targeted date one week in advance of the next scheduled FAB meeting.

Setting the final meeting agenda one week rather than one month before meetings allows for consideration of any new requests from the City Council; setting it collaboratively allows for greater public participation. Both are important.

Financial Advisory Board Membership

In February 2021 and, before that, in July 2020 the monthly Financial Advisory Board meetings were cancelled as they lacked the quorums required for decision-making. Several community members with strong interest in the City’s financial affairs and with significant financial expertise have expressed interest in joining the FAB. Many people—City Council members among them—have voiced concern that the FAB seemingly does so little. In our meeting tomorrow I will ask that the following either be addressed, or if deemed more appropriate, put onto the agenda of the next City Council meeting:

  1. I will recommend that the Financial Advisory Board membership be expanded from five to seven regular members.
  2. I will recommend adding one additional alternate FAB member who could vote should one of the regular members not be present.
    1. This would help ensure that future meetings are not cancelled if, for example, only two of five (or three of seven) members were present; having an alternate could assure that there is a quorum present and serve as a third (or fourth) vote.
  3. I will ask for guidance in identifying the steps necessary for these two changes.

Financial Advisory Board Meeting Structure

I joined the FAB believing it was an opportunity for residents of El Cerrito to constructively engage with and support the City Council in what is a particularly difficult financial period. You stated in the last FAB meeting that the Board’s roll is one of broad policy and not specific financial review, and that FAB members have neither the time nor desire to review detailed financial matters. I strongly disagree with both assertions. Additionally, City Council members have made it made abundantly clear that they would like a more engaged FAB that provides meaningful support and finance-related recommendations. To this end, I strongly believe the City should do more to involve the public in our work.

With this mind, in tomorrow’s FAB meeting I will ask for the following:

  1. I will ask that FAB meetings be recorded and made readily available to the general public.
  2. Regardless of whether the meeting is on WebEx or Zoom, I will ask that the chat function be enabled and community participation be encouraged. The reasons for enabling the chat function are varied:
    1. Anyone having difficulties raising their “hand” or being recognized can send a message indicating they are having problems.
    1. It provides an excellent, transparent, real-time opportunity for the public to provide comments, questions, observations and clarifications.
    1. It worked very well at last Saturday’s the “Concurrent Budget Townhall and Special City Council Meeting.”
  3. As requested last month, I will again ask for clarity about the procedures through which FAB recommendations are agreed upon and then conveyed to the City Council.
    1. How are recommendations proposed, drafted and voted upon?
    1. How can we make certain that City Council requests of FAB are on our agendas and addressed in our meetings?
      1. One recent example of this not happening is the City Council’s request for a wide and varied menu of choices from which the Council could draw upon to achieve an additional $1 million in cuts to the existing budget this fiscal year. This was requested first in February and then again in March, stated as something FAB could review but then never even brought up for discussion in FAB meetings. Nor was the menu of potential cuts ever presented to the Council. To be clear, the request was for a list of potential cuts from which the Council could construct varying scenarios and paths towards the $1 million reduction, hence the notion of a “menu” rather than a single list of staff reductions. Helping compile that menu of options seemed like a reasonable task for FAB, particularly if it was not going to be provided by City management.
  4. I will ask that we address concerns that the City Council is often left with the impression that the FAB is conducting financial reviews and analysis that, in fact, it is not doing.
    1. On several occasions, I have heard past and former Council members say “I thought that was something FAB reviewed” and express feelings of being misled.
    1. What FAB is reviewing and not reviewing needs to be made clear and conveyed honestly.

Recognizing Brown Act concern, I recommend the following:

  • I recommend FAB members not initiate or post to online meeting chat discussions (though they would certainly be free to read public questions and concerns posted through the chat function).
  • Rather than engaging in the online chats, I recommend that any response from FAB members to chat posts come through their verbal comments in the meeting.
  • I recommend that response from FAB members to anything included in the chats be done publicly, again, just as was done in Saturday’s Townhall and Council Meeting.
  • Regarding concerns expressed about disruption from the public (such as the extremely rare occurrences in which meetings have been “bombed”), I recommend that the meeting moderator be prepared to easily mute a disruption and prevent the sharing of screens.
  • Just as is done by FAB members and City’s Finance Director, I recommend allowing any community participant or observer to voluntarily turn their camera on and voluntarily post their name.
    • When people are speaking, this provides them the option of letting everyone know (or be reminded) who they are.
    • Many people, myself included, find it very helpful to know who is speaking, attending and participating in the FAB meetings.  
    • If anyone wishes to remain anonymous, that of course can be honored by their simply turning off their camera, not posting their name or dialing in remotely; Zoom and WebEx actually facilitate anonymity much more so than an in-person forum.
    • That some people choose to dial-in rather than join through Zoom or WebEx should not be used to limit public participation or justify opaqueness.

Financial Documentation

Among the stated purposes of the Financial Advisory Board are to “assist the City Council in making decisions on major expenditures and revenue sources” and “provide the City Council with recommended changes in financial practices.” As I have done every month since joining the FAB in December, I will again ask for more detailed financial reporting. Please note my requests are consistent with—and largely identical to—what was requested by Councilmembers Motoyama and Rudnick in the last City Council meeting.

Specifically, I will again ask for the following:

  1. Monthly financials be provided to the FAB and general public at least one week prior to each month’s meeting.
  2. Financials be provided in Excel format to facilitate their being spread and analyzed by anyone choosing to do so.
  3. Financial be presented in sufficient detail so that
    1. specific cost and revenue ledger entries can be identified,
    1. meaningful trends can be identified and analyzed,
    1. different scenario and sensitivity analyses can be constructed, and
    1. projected forecasts can be made that identify the impact and probability of alternative possible outcomes
  4. In response to the requests from Councilmembers Motoyama and Rudnick that monthly financials be presented in such a way to provide a more in-depth, period-by-period comparative analysis, I will ask that City management work collaboratively with FAB in determining how such reports might look.
    1. I have been told that City’s financial software was “propriety” and, as such, the detailed financial information and Excel documents I have requested could not be provided. If such is true, I will ask that the City consider adopting a software package or expanded license that permits adequate Council and Board access to data.

Auditor’s Report

Particularly given the initial resistance to even having the auditor’s report discussed by FAB, I am very appreciative and thank you for adding it to the agenda. Regarding the report, I ask the following:

  1. I ask that the Auditor’s Report be brought up to or near the top of the agenda, as the findings detailed in the Report and the City’s response to those findings are obviously a pressing concern for the City Council and general public).
  2. I will ask that FAB discuss the issue of budget overrides as highlighted by the audit.
  3. I will ask that FAB discuss the rationale for fund vs. departmental budgeting (or perhaps a combination of both), again, as highlighted by the audit.
  4. I will ask for clarity about the City’s Tax and Revenue Anticipation Note (“TRAN”) proceeds and Local Agency Investment Fund (“LAIF”) deposits/returns.
    1. On several occasions, I have heard you assert that the TRAN is profitable for the City, largely because it was sold at a premium above PAR and because the City earns more interest with its LAIF deposits than it pays in interest to TRAN investors. I believe the City pays 0.85% on the full TRAN and receives 0.4% on the partial LAIF deposits, less than half the TRAN cost. While I do not have sufficient financial documentation to precisely do the math, my instinct tells me that the premium paid by investors would not be enough to make up the difference between what the City pays and receives in interest. Debra Saunders, who has  much greater municipal finance experience and expertise than I, notes, “even if the whole TRAN was invested ALL YEAR they would earn less than $40k.” I believe this is still less than the borrowing costs, even when taking into account the premium-adjusted Note proceeds.
    1. Furthermore, because the TRAN is a tax-exempt security, if it was a net positive to the City, any “profit” earned would have to be forfeited to the IRS.
    1. One explanation may be that the interest you referred to as being earned by the LAIF was not on the TRAN deposits alone. Public clarification would be helpful.

Lastly, I would like to note that there were many finance-related questions posted during Saturday’s Concurrent Budget Townhall and Special City Council Meeting that the public was assured would be answered afterwards (as there was not sufficient time allotted to address most of the questions on Saturday). While the meeting minutes have been posted on the City’s website, the questions have not been answered—unless, of course, “Thank you for your comments” passes as an “answer.” Perhaps getting the finance questions answered could be an agenda item for the May FAB meeting.

I look forward to our meeting tomorrow and working together to provide the City Council with the input and advise they have requested.

Sincerely,

William Ktsanes”

Town Hall meeting assessment….Meh

The Town Hall meeting was today. It went about the way many of us expected. The staff took up entirely too much airtime dominating the first hour of the meeting. Then they quickly jumped to we want to listen to our residents. Which in theory is a good thing. Except that a lot of residents have not felt heard on other issues like building permits so spoke here on that issue. Not that I can blame them. You have the right to fight for your own needs but I am not certain that is a budget issue. It also meant very few questions in the chat were answered and even with the comments very few questions were answered.

I am not entirely sure what was accomplished. They did say that next week the chat comments would be posted. And there might be some answers there. If there were that would be great.

So here are a few observations in no particular order.

1. Councilperson Abelson did not attend. Councilperson Abelson’s seat is up for election in 2022.

2. The staff continues to express things in what feels like the most confusing manner possible. Their way makes them look better. So I asked a question about why if the slide set said 4 million in cuts were identified were expenditures this year down only 600k. First time I asked I got shut down in the chat. The second time (and when others asked also) we got an explanation that I think goes as follows

When we were planning the budget it was “suppose to be” X millions of dollars. I believe “supposed to be” includes an overall 3% increase in budgets based on what has been said in the past and the state auditors report. So when they cut from suppose to be (ie an increase for each department that had not been in a prior budget) they count it as an actual cut. Just like when they cut open police positions that were not be paid for and called that a cut. So no one (and I believe this includes the city council, not just us) knows what level of TRUE cuts have been made.

3. Mark Rasiah, the Finance Director, was noticeably absent from most of the meeting. He did take one question.

4. We need to understand what amount in the budget is going to pension liability. It needs to be broken out.

5. One person speaking about police cuts spoke about being racially profiled and pulled over often. That issue is beyond the scope of this blog but I hope that the City fully investigates these very serious allegations.

6. It appears 77 people signed on for the meeting. For a poorly advertised event on a sunny Saturday morning that was impressive.

7. A few people are proposing a City Oversight Committee. Since the Financial Advisory Board (FAB) is run by the Finance Director, making it ineffectual, it seems like something needs to change. A few options include a City Oversight Committee or turning the FAB into an actual commission to give it some actual power. FAB also needs more members. For some of the County Boards, there are alternates on the Board so that if a regular member is not there the meetings still occur. The alternate can always participate but can only vote if the regular member is absent.

8. How is the City going to promote great transparency? We were told at last year’s Town Hall meeting that there would be a web location where there would be one-stop shopping for the information. That has not happened. Which leads to us making public records requests. Which leads to the City staff feeling overwhelmed and getting upset with us. Seems like if they just got the data on the website everyone would be happier.

So things I would like to have follow up on

1. Putting either the restructuring of FAB or a creation of a new advisory board or task force on the City Council agenda for real discussion. The City Manager herself acknowledged that there is a lack of trust right now. Build trust by engaging the community. There are many of us out here ready and willing to help.

2. Getting good data to the public, the FAB, and the City Council. Good data includes using excel spreadsheets so our data geeks can analyze. This includes having the information broken down as much as possible. We should be able to see every department and what they are spending on everything. Consultants, transportation, pensions, salaries, office supplies. Every detail. We should also be able to access historical data.

3. Making and following long-term plans with real-time forecasting including a publication of all the assumptions. Many times we have had questions about how the Finance Director has made his assumptions. I have questioned his assumptions all year on recreation funding. I am no numbers person but I was predicting larger drops in revenue way before he was. Because of Covid.

4. Answering the unanswered questions particularly:

A. How are we going to deal with our massive pension liability?

B. What happened and is currently going on in regards to the budget overrides?

C. The budget was cut. How did that show up in actual spending reductions?

D. Did the city promise no layoffs in exchange for Cola deferrals. Do they have to give raises if they lay off public safety?

E. Was so much cut in admin that they can’t manage?

F. Why did they defer the COLA’s knowing that in 2-3 years they would face greater expenditures?

G. Are there ever going to be structural changes?

H. What level of cuts needs to be made for FY 21/22? I thought the City Manager was recommending 2 million in cuts a few meetings ago but nothing has really been said since?

I. The state auditor mentioned that spending increased by $10 million from 2014-2019. Where did all that money go?

Has the City Really Made the cuts they have said they have made?

Something doesn’t add up. If you look at the Finance Director’s report for April 6th council meeting it says in item #2 “Total expenditure was $25.2 million or 67% of budget, compared with a three year average of $25.8 million.” That means our total expenditures were down $600k from the three year average. We have been told that millions in cuts have been made. What is the truth?

The state auditor said in her report (page 24/64 highlights are mine)

“Another deficiency in El Cerrito’s fiscal year 2020–21 budget is the amount of inconsistent information provided. The budget makes reference to multiple cost reductions, yet none of them reconcile to the expenditure amounts budgeted. In addition to the reductions of $1.5 million proposed in the consultant’s fiscal response plan, the approved budget includes a narrative describing another set of cost reductions developed by the city totaling $2.7 million in ongoing costs and $1 million in one-time savings. And even though the budget projected total expenditures that are $1.7 million less than the fiscal year 2019–20 actual expenditures reported by the city, that total does not reconcile to specific actions described in either set of budget reductions. Moreover, the city’s budget does not clearly demonstrate that any of the proposed reductions actually resulted in decreases to budgeted expenditures. For example, the proposed reductions from the fiscal response plan specified that the police department’s budget would be reduced by $595,000 because of the restructuring of police operations, yet the budget presented an increase of $34,000 from prior-year actual costs. When we inquired about this apparent contradiction, the city manager stated that the $595,000 reduction was incorporated in the budget and that the police department’s costs would be higher if the reduction had not been included. However, El Cerrito’s budget document does not present information about amounts that the city initially intended to spend and how the stated reductions affected those amounts. Consequently, the budget document in its current format does not provide city council members with the necessary information to evaluate whether city management’s proposed reductions are reasonable and attainable. Moreover, the absence of a detailed description of the $1.7 million in budget reductions raises concerns as to whether the city actually adjusted its budgeted spending to align with the reductions it claims it will make, and if so, by how much. To provide clarity, the city could have prepared a summary identifying the total budget reductions for fiscal year 2020–21 compared to actual expenditures incurred in fiscal year 2019–20.”

Even though the City Staff keep telling us that they have made 2.7 million in cuts this is NOT reflected in the actual numbers. Many of those cuts seemed to be cuts of positions that were open. (See the state auditor example above). While a position may have been cut there was not a cut in actual expenditures since the position was open and no salary was being paid.

We have no idea what level of cuts have been made. As I stated in the beginning the current budget report states we have saved about 600k in expenditures this year. So something doesn’t work here. Either cuts were not made or other expenditure lines were increasing so much that they were negated. I tend to believe it is a combination of both. Higher pension costs and imaginary position cuts. But this is why the city has to make 2 million in additional cuts because they did not make real cuts before.

I would like to hear a Councilperson challenge this at the next meeting and require that staff show what cuts were made at the Town Hall meeting. Not the imaginary cuts the real cuts. Many of us have been asking for this information for months. Maybe a Councilperson can ask and get it.

On a final note they did not put the State Audit on the Agenda. The agenda is set by the City Manager and the Mayor. Maybe my readers can send Mayor Fadelli an email and let him know what you think of that decision. pfadelli@ci.el-cerrito.ca.us

Mayor Paul Fadelli responds to our questions….sort of

As promised here is his response unedited and without comment (except for the title of the post!). I do appreciate he took the time to respond. As of today he is the only person to respond.

“Thank you for the opportunity to respond to your survey on El Cerrito’s fiscal situation.  And thanks also for your continuing interest in our city’s wellbeing.

As the recently released State Audit on our financial condition attests, insufficient efforts to address our economic problems in the past will challenge our ongoing fiscal viability. The options we review and the choices we make in the next few months will be critical to our fiscal standing and the ability to provide important services going forward.

It is because of these decisions — yet to be made — that I believe my participating in your survey at this time would be inappropriate and could compromise my actions as Mayor. The questions listed in the survey would require me to take public positions on policy, city staff and specific actions that could undercut tough and collaborative discussions and negotiations going forward.  I also think making certain positions of mine public — that Council might vote on — could be in violation of the Brown Act, if other councilmembers likewise make their positions known.

El Cerrito is in need of a short term and long-term financial fix.  In the past, I worked on local ballot measures (V and H) to generate revenue for our city with voter approval.  Now we are on the take away side by necessity.

I have said that I think the State Auditor’s report should be a tool for us to correct past actions.  I ran for re-election saying every expenditure has to be on the table, where every city department contributes.  Unfortunately, every service or program cut also means the likelihood of personnel cuts — which troubles me greatly, so we must also require respect in our public debate.

So, with many critical issues and options before the City Council, I look forward to our public forum in April, our Council debate, staff options and comments from residents as we reconfigure our city budget.

I hope you understand that my participation in this survey as Mayor at this time could make difficult decisions going forward even more difficult.

Paul

Paul Fadelli

El Cerrito Mayor”

Questions we have for the City Council

Given the scathing state auditor’s report many of us had questions for council members. We compiled a list of questions and sent them to each council member asking for a response by April 1st. Thus far no responses. We are allowing them to answer with no limitations and they are allowed to add an addition comment. We will publish whatever they send us.

Here are the questions. We hope community members may use these as a a basis of questions at the Town Hall Meeting April 10th.

1. How are we going to absorb the growing expense related to pensions? Do you think further cuts will be needed to accommodate this rising expense?

2. What are the current operational objectives in regards to financial management? How are they measured i.e. what are the Key Performance Indicators in place?

3. Are you willing to tie the City Manager’s ongoing contract to how this report and the budget are addressed? What are the performance metrics used for her performance evaluation?

4. What role do you see FAB playing in this process? What information do you think they need to have in order to support them?

5. Do you still have confidence in the City Manager and Finance Director and concur with their response to the auditor’s report?

6. Do you believe that the city is on top of its fiscal situation? What (if any) changes in course do you believe are indicated as a result of the State Auditor report?

7. What do you suggest be done in regards to staff compensation (overpayment of senior managers, excessive overtime, excessive benefit costs, excessive fire department costs)? Do you think something can be done before a detailed compensation study?

8. Do you think that the auditor was correct in advising the city to analyze potential savings from contracting with other agencies for public safety services?

9. How do you envision the city making a permanent, ongoing $2 million reduction beginning with next year’s budget?

10. Do you think if those cuts are made that it will yield a budget that is sustainable in even the mid-term, much less the long-term, and since the city is already talking about needing another tax increase in several years?

11. What would you like the city to do that will restore residents’ confidence in the competence, accountability, and responsiveness of the city?