Overtaxed and Underperforming

El Cerrito recently distributed a mailer seeking support for an upcoming tax increase proposal while emphasizing the importance of accountability and transparency. However, examining the City Manager’s track record in these areas is crucial before embracing the rhetoric.

One concerning instance is the city’s expenditure of half a million dollars to settle a sexual harassment lawsuit, with the City Manager and Council remaining conspicuously silent. Additionally, no discernible policies or procedures were put in place to prevent a recurrence of such incidents.

Despite being home to a thriving senior population, with the Senior Center being a central hub, El Cerrito’s City Council made the baffling decision to slash the Recreation (Senior Center) budget by a staggering $263,743 (a 37% reduction) between FY2020 and FY2024, ultimately leading to the Senior Center’s closure.

El Cerrito introduced a transfer tax, Measure V, to fund the library at the station. Yet, none of the $18+ million collected under Measure V has been allocated for this purpose. Instead, these funds were misappropriated to cover irresponsible fiscal management.  There’s no reason to trust that any new tax measure will be handled differently than Measure V.

A critical issue raised in 2022 regarding the Real Property Transfer Tax remains unaddressed, with concerns about a potential budget shortfall. El Cerrito has taken no action to mitigate this risk.  EECRG brought up the issue then the then Vice-Chair of the Financial Advisory Board (FAB), wrote a lengthy comment about his concerns about the Real Estate Transfer Tax that was submitted as a public comment.. (pgs. 10-14). His projected scenarios are 1 million less in income than the El Cerrito scenario. 

Several significant financial decisions were made without proper scrutiny. For instance, the City Manager failed to present the City Council with a $450 monthly car allowance (the city has vehicles available for business use)  and a $1.1 million budget adjustment for Trucks to FAB for consideration. These actions have resulted in a perilously depleted level of non-restricted reserves, with further spending commitments amid declining Real Estate transfer tax receipts.

Despite the fiscal year ending on June 30, 2023, the City Council agenda did not mention the year-end close in July, August, September, but finally in October, violating established standards of financial reporting timeliness recommended by the GFOA.

Furthermore, El Cerrito falls short of the GFOA’s recommendation for a minimum of two months of unrestricted general fund reserves due to a depleted General Fund Balance. The GFOA recommends a minimum of two months of unrestricted general fund reserves. The City General Fund Budget is shy of $60 million; therefore, the General Fund Balance recommended amount is shy of $10 million, yet the City Manager and City Council have depleted reserves to half of the recommended level of unrestricted funds.  The lack of unrestricted reserves jeopardizes the city’s financial stability.

The state auditor’s evaluation ranked El Cerrito as the 13th worst-run city in California, with a particularly dire outlook on future retirement funding. El Cerrito has made no meaningful progress in addressing pension funding issues over the past three years.

The pension crisis in El Cerrito is especially concerning, with an $85 million Unfunded Liability, which increased from $70 million. The city’s lack of a clear plan to address this issue is alarming. As Greta Thunberg told the world…” it is time to panic.” And plan. And act.

Additionally, the City Manager’s frequent trips under the guise of official business raise questions about her commitment to addressing the concerns of El Cerrito’s residents. City officials must prioritize transparency, accountability, and the community’s well-being over personal interests and wasteful spending. She could accomplish this goal by spending more time with the public than she spends on the road.

A City of 25,000 people should not incur credit card expenditures at this rate.  Credit card expenditures continue to demonstrate that the City lacks financial or operational oversight and is unable to self-govern.

The City Manager’s claims of accountability and transparency ring hollow in the face of her leadership record. As El Cerrito considers a ballot measure to increase taxes, the city must undertake substantial reforms to ensure greater accountability to its taxpayers before seeking another financial bailout.

Here’s how you can help:

  1. Share this post with other residents.
  2. Attend the monthly Financial Advisory Board meetings in person.
  3. Council meetings are both remote and in-person. The City Council meeting will be on tonight. The schedule is here.
  4. Share your voice with the Council Members, the Mayor and the City Manager.

If you have ideas for a quick fix or hope for another gift from above, you are dreaming. If you want to discuss shifting blame, making excuses or justifying mismanagement, please start a separate Next Door thread.

Business as Usual

While other cities placed a moratorium on travel and meals when revenues decreased during the pandemic, El Cerrito was business as usual, spending recklessly and mismanaging public funds.


On April 30, 2022, the city manager spent $583.66 at San Rafael Joe’s – not an El Cerrito establishment. Apparently, there was a gathering for department heads, according to documents. Please see below for details.


The San Rafael Joe’s order- Departmental Head Dinner- $507.70

2 Espresso $6.50
3 Cappucino $12.00
2 Calamari Appetizer $24.50
2 Bruchetta $22.00
1 House Salad $6.75
4 Prime Rib $152.00
1 Veal Scal $25.50
1 Veal Parmigiana $25.50
1 Chick Piccata $21.00
1 Veggie W/Snapper $22.00
1 Prawns Saute $24.50
2 Tiramisu $10.00
1 Bread Pudding $7.50
1 NY Cheese Cake $7.50
1 Crème Brulee $7.00
1 Cup Chowder $7.00
Gratuity $84.62
Total Due $507.70*

*The credit card expense was $583.66. The City did not explain the difference.

El Cerrito, a city of just 25,000 continues to spend exorbitantly. In June of 2019, the city clerk incurred an expenditure of $6,259.75 at Los Moles. The city possibly had a negative general fund balance at that time, and spending more than $6 thousand for non-essential expenses is not prudent for public funds.


These are the Fiscal Year credit card expenditures by the city manager.


Y2019 $15,146.39
Y2020 $3,832.16
Y2021 $7,190.49
Y2022 $12,231.47 10 months
Y2023 $12,111.97 8 months


These are some monthly credit card expenditures for everyone.


Month Amount
Jan-19 $48,296.69
Feb-19 $54,181.88
Mar-19 $39,949.30
Apr-19 $57,205.99
May-19 $67,210.24
Jun-19 $84,405.24
Jul-19 $95,727.55
Aug-19 $67,231.14
Sep-19 $60,378.61
Oct-19 $65,963.00
Nov-19 $48,289.57
Dec-19 $53,729.65
Total $742,568.86

Like many other cities, the federal government restricts entertainment expenses, travel and employer-provided meals, but El Cerrito continues the tradition of excessive spending and fiscal mismanagement.

El Cerrito Needs You

City leaders are clearly out of touch and have behaved irresponsibly for so long that they think it is a Commonplace practice of incompetence and abuse.

The City plans a ballot measure requesting more taxes. Before El Cerrito gets another taxpayer bailout, reforms need to be implemented to make the agency more accountable to taxpayers.

Here’s how you can help:

Performance Management

Series: Performance is only as good as the evidence indicates.

Why does El Cerrito pay the City Manager over $235,000 plus generous benefits and perks just to have a pulse?

Scott Hanin, who served as the City Manager at that time, announced his retirement, effective at the end of the calendar year 2018. In response to this, the City Council initiated the process of selecting his successor and decided to interview Karen Pinkos, the dedicated and experienced Assistant City Manager, for the position. Ms. Pinkos had a 17-year tenure with the City, initially starting as Assistant to the City Manager and steadily advancing to the role of Assistant City Manager.

The City Council unanimously appointed Karen Pinkos as the new City Manager. This decision reflected their confidence in her abilities and commitment to the community.

It’s worth noting that the City’s contract with the City Manager entails several substantial benefits, including an attractive salary, comprehensive benefits, various perks, and a severance package. Notably, the contract lacks specific performance requirements, with the only expectation being that Ms. Pinkos maintains compliance with the law and continues to be active in her role.

The contract was extended through the end of calendar year 2023. To date, there are ZERO requirements for the City Manager’s performance. There’s nothing in the contract that requires her to perform the fundamental requirements of a Chief Executive Officer.

Any Chief Executive including the El Cerrito City Manager should be held to a minimum level of performance.

Managing a City Manager’s performance involves several key steps:

1. Setting Clear Expectations: Define the City Manager’s role, responsibilities, and performance metrics. These should align with the city’s strategic goals and service-level agreements.

2. Regular Performance Reviews: Conduct regular evaluations to assess the CM’s performance against established criteria. These reviews should be conducted quarterly and eventually annually.

3. Goal Setting: Collaboratively set specific, measurable, achievable, relevant, and time-bound (SMART) goals with the CM. These goals should tie into the city’s objectives. 

4. Feedback and Communication: Maintain open and honest communication with the CM. Provide constructive feedback and encourage them to seek input from the council, executives, employees, FAB and the public

5. Accountability: Hold the CM accountable for their actions and decisions. Ensure they are aligned with the city’s performance standards

6. Compensation and Incentives: Linking compensation and incentives to performance outcomes. This can motivate the CM to achieve established goals.

7. Professional Development: Support the CM’s growth by providing professional development and training opportunities. 

8. Succession Planning: Develop a succession plan to ensure a smooth transition if the CM’s performance falters or they decide to leave. 

9. Board Oversight: The City Council oversees CM performance and makes necessary decisions, including retention or replacement. 

10. Adaptability: Be prepared to adapt the performance management process as needed to address changing business conditions and strategic priorities.

Ultimately, effective CM performance management is a dynamic process that requires ongoing attention and collaboration between the CM and the Council.

While the principle that public employees should serve the community is widely accepted, its implementation can vary from one country or jurisdiction to another. It’s essential for governments and communities to establish clear expectations, mechanisms for accountability, and opportunities for feedback to ensure that public employees fulfill their roles effectively and in the best interests of the public.

However, city leaders are clearly out of touch and have behaved irresponsibly for so long that they think it is a Commonplace practice of incompetence and abuse.

The city plans a ballot measure requesting more taxes. Before El Cerrito gets another taxpayer bailout, reforms need to be implemented to make the agency more accountable to taxpayers.

Here’s how you can help:

Performance Management

Part ii

Karen Pinkos is the City Manager for the City of El Cerrito. As the City Manager, Karen serves as the City’s chief executive officer and is responsible for the management of all affairs and departments operating within the City. Karen is committed to the mission, vision, and values of El Cerrito and works with the City Council to turn policies into results for the residents, businesses, and visitors of our community.

The community recently received good news.

After years of plummeting, the sales tax and bond ratings have rebounded. But for how long? How does the Council sustain the growth?

Has anyone else wondered about the requirements for the CM? How does the Council determine contract extensions, salary increases and other perks?

El Cerrito City Council, please do share.

EECRG conducted some research and consulted with Council members from healthier cities that are of similar size. There were common themes among them. One theme centered around, transparency and accountability. Community leaders also stressed the importance of honoring your commitments. For example, the El Cerrito website says the city manager turns policies into results.

Has anyone seen such policies?  And if so, where are the results?  

EECRG was able to speak to 11 of the 13 community leaders we reached out to. Read on for more of their feedback:  

 

Managing a City Manager’s performance involves several key steps:

 

1. Setting Clear Expectations: Define the City Manager’s role, responsibilities, and performance metrics. These should align with the company’s strategic goals. Enlist the CM in establishing those goals

 

2. Regular Performance Reviews: Conduct regular evaluations to assess the CM’s performance against established criteria. These reviews should be conducted quarterly and eventually annually.

 

3. Goal Setting: Collaboratively set specific, measurable, achievable, relevant, and time-bound (SMART) goals with the CM. These goals should tie into the city’s objectives.

 

4. Feedback and Communication: Maintain open and honest communication with the CM. Provide constructive feedback and encourage them to seek input from the the council, executives, and employees.

 

5. Accountability: Hold the CM accountable for their actions and decisions. Ensure they are aligned with the city’s values and culture.

 

6. Compensation and Incentives: Consider linking compensation and incentives to performance outcomes. This can motivate the CM to achieve established goals.

 

7. Professional Development: Support the CM’s growth by providing opportunities for professional development and training.

 

8. Succession Planning: Develop a succession plan to ensure a smooth transition if the CM’s performance falters or they decide to leave.

 

9. Board Oversight: The City Council is crucial in overseeing CM performance and making necessary decisions, including retention or replacement.

 

10. Adaptability: Be prepared to adapt the performance management process as needed to address changing business conditions and strategic priorities.

Ultimately, effective CM performance management is a dynamic process that requires ongoing attention and collaboration between the CM and the Council.

How does El Cerrito line up?

Performance Management

Series: Performance is only as good as the evidence indicates. ICYMI, working hard in and of itself is not a reflection of outstanding leadership.

Performance measurement is essential to the success of any City Manager because executives do not get paid to tread water, or make excuses but to consistently deliver measurable results.

 

Performance Management

Performance management is crucial for several reasons:

 

1. **Alignment with Objectives:** It helps align individual and team goals with the organization’s strategic objectives. When employees understand how their work contributes to the bigger picture, they are more motivated and focused.

 

2. **Improved Productivity:** Regular performance evaluations and feedback can lead to increased productivity as employees receive guidance on how to improve their performance and overcome obstacles.

 

3. **Enhanced Employee Engagement:** It fosters employee engagement by recognizing and rewarding achievements, boosting morale and job satisfaction.

 

4. **Clear Expectations:** Performance management sets clear expectations for job roles and responsibilities, reducing confusion and misunderstandings.

 

5. **Identification of Development Needs:** It identifies training and development needs, allowing employees to acquire new skills and grow professionally.

 

6. **Feedback Loop:** It establishes a continuous feedback loop, enabling managers to provide ongoing guidance and employees to express concerns or seek assistance.

 

7. **Performance-Based Rewards:** Many organizations tie compensation and promotions to performance, making performance management critical for fair and transparent rewards.

 

8. **Succession Planning:** It helps identify high-potential employees for leadership roles, contributing to effective succession planning.

 

9. **Legal and Ethical Compliance:** Performance management can help organizations ensure they are complying with labor laws and treating employees fairly.

 

10. **Data-Driven Decision-Making:** It generates valuable data that organizations can use to make informed decisions about workforce planning, resource allocation, and strategy.

 

In summary, performance management is essential for fostering a motivated, productive, and aligned workforce, ultimately contributing to an organization’s success and growth.

 

El Cerrito City Council, City Manager, EECRG appreciates your remarks on performance metrics for service delivery.

El Cerrito Bond Rating Increase

In 2013, the rating was lowered from AA- to A+.
In 2018, the rating was lowered from A+ to A-.
In 2019 the rating was lowered from A- to BBB.
In 2020 the rating was lowered from BBB to BBB-.
In 2023, the rating was upgraded from BBB- to BBB.

https://www.spglobal.com/ratings/en/

Let’s hope the overspending and depletion of nonrestricted reserves don’t bite EC in the rear end. Meanwhile, let’s take a moment to congratulate the City.

S & P Press Release

ENGLEWOOD (S&P Global Ratings) Sept. 29, 2023–S&P Global Ratings raised its underlying rating (SPUR) to ‘BBB’ from ‘BBB-‘ on El Cerrito, Calif.’s outstanding certificates of participation (COPs). The outlook is positive. 

“The raised rating action our view of the city’s improved financial position and internal controls, resolution of the ‘going concern’ opinions by the auditors and restored structural balance,” said S&P Global Ratings credit analyst Alyssa Farrell. “The positive outlook reflects our opinion that we could raise the rating further if the trend of structural balance and at least adequate reserves is sustainable beyond short-term budgetary relief and if its recently enhanced financial management policies and practices are maintained,” Ms. Farrell added. 

The outstanding COPs are secured by lease rental payments made by the city of El Cerrito, as lessee, to the El Cerrito Public Financing Authority, as lessor. We rate this obligation one notch lower than the city’s general creditworthiness to account for the risk of nonappropriation associated with the lease payments.

Located just 17 miles northeast of San Francisco in a corridor defined by mountains on one side and the San Francisco Bay on the other, El Cerrito is well integrated with its larger region via an interstate highway and two stops on the region’s commuter rail system.

Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.spglobal.com/ratings for further information. Complete ratings information is available to RatingsDirect subscribers at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings’ public website at www.spglobal.com/ratings.

https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3062626

The deceit from El Cerrito has no bounds

YOU CAN’T JUST LEAVE THOSE WHO CREATED THE PROBLEM IN CHARGE OF THE SOLUTION is titled -The deceit from El Cerrito has no bounds

Last week, EECRG reported the lack of transparency in presenting the financials to the public. The October meeting agenda, released Thursday, continues silence on Financial Updates and the fiscal year ending June 30, 2023.

Now, they’re spending money like drunken sailors and depleting unrestricted reserves.   The next stop is municipal payday loans; they’ll hold the residents’ hostage with a voter tax increase.

Like other public agencies that conduct business as usual and oppose advisory and oversight, El Cerrito is blocking its Financial Advisory Board from executing activities of their charter. According to the charter, FAB reviews the proposed annual budget and long-term financial plan for the City to assist the City Council in deciding major expenditures and revenue sources. Develops a long-term financial plan for the City, conducts an annual review of the City’s investment policies and considers the management of the City’s financial reserves to assure maximum returns on approved investments. Reviews the annual audit and management letter and provides the City Council with recommended changes in financial practices. Reviews and recommends all proposed bonds or other debt instruments to be issued.

City leaders have severely limited the effectiveness of FAB by holding the membership to three.   This construct degrades the effectiveness in two ways. First, a quorum of three is needed. Conduct meetings. As you may recall, the September FAB meeting was canceled because of an absence. Second, with these three members, all subcommittee meetings are forbidden by the Brown Act.

City leaders resist any oversight of their millions of dollars of spending. They are beholden to the City Manager at the expense of residents and taxpayers.

What was shocking was the statement from El Cerrito City Manager Karen Pinkos indicating she works collaboratively with FAB.

What disingenuous poppycock!

Like most high-value expenditures creating upward pressure on the budget, she neither placed on the agenda nor presented the City Manager’s recent $450 per month car allowance nor the $1.1 million budget adjustment for Trucks to FAB for consideration.   City leaders have already recently depleted non-restricted reserves to a dangerously underfunded level and have committed to spending another million amid the Real Estate transfer tax receipt decline. City leaders don’t want objective advice. They’ve spent the past three years trying to undermine the Financial Advisory Board,

In a few days, the City Manager will release the Newsletter with lots of “happy talk” while the City finances remain in shambles.

City leaders are clearly out of touch and have behaved irresponsibly for so long that they think it is a Commonplace practice of incompetence and abuse.

The City plans a ballot measure requesting more taxes. Before El Cerrito gets another taxpayer bailout, reforms need to be implemented to make the agency more accountable to taxpayers.

Here’s how you can help:

  • Share this post with other residents.
  • Comment on the blog.
  • Attend the monthly Financial Advisory Board meetings in person.
  • Council meetings are both remote and in-person. The City Council meeting will be on October 3. The schedule is here.  
  • Please write to the City Council requesting that they fill the vacancies.

GFOA Best Practices Budget on Timely Financial Reports

YOU CAN’T JUST LEAVE THOSE WHO CREATED THE PROBLEM IN CHARGE OF THE SOLUTION is titled –

 GFOA Best Practices Budget on Timely Financial Reports

It’s easy to get excited about organizational changes when you’re the force behind them. Still, it’s typically disastrous for an outside entity to recommend a necessary change.

There are seven steps in overcoming change. However, when the state auditor released their findings, El Cerrito spent about five minutes in shock the next year attempting to discredit the state auditor and has been in deep denial in the nearly three years since the original findings and recommendations in March 2021.

In addition, the City has implemented a practice of withholding financial information. 

GFOA recommends that governments improve the timeliness of financial reports.

The fiscal year ended June 30, 2023, yet the City Council agenda made no mention of the year-end close in September, made no mention of the year-end close. 

The GFOA states, “Financial reports are intended to meet decision-makers’ needs. Accordingly, timeliness is identified as one of the characteristics of information in financial reporting in Concepts Statement No. 1 of the Governmental Accounting Standards Board (GASB), Objectives of Financial Reporting. To accomplish this objective, financial reports must be available in time to inform decision-making.

Therefore, financial reports should be published as soon as possible after the end of the reporting period. To save time and avoid potential delays, the government should distribute its financial report electronically (e.g., posting on the website or e-mailing an electronic file).

Ignoring the advice of the GFOA and withholding financial information has become commonplace. For years, the City has leaned on the excuse of not having sufficient staff. Yet they found staff time to set aside two-thirds of the non-restricted general fund and then spin the story on social media and in the monthly Newsletter.

The GFOA recommends a minimum of two months of unrestricted general fund reserves. The City General Fund Budget is shy of $60 million; therefore, the General Fund Balance recommended amount is shy of $10 million, yet the City Manager and City Council have depleted reserves to half of the recommended level of unrestricted funds.

City leadership asks for decisions from the Council and but the Council has no basis for an intelligent response. These poorly thought out decisions, are the same types of decisions that led the City to the brink of bankruptcy.

The lack of publicizing financial information has been a years-long excuse. It is no longer an issue of lack of resources. The years-long practice of circumventing the requirement to provide financial reports and withholding year-end results amounts to deception by omission.

In addition to the long term reprocussions of bad decisions, the unfunded liability continues to climb. According to the City, the unfunded liability has blossomed by 21% in two years. You’ll find it buried on page 287 of the packet. The amount has grown from $70 million to a whopping $85 million.

You may recall that EECRG reported just 60% FAB membership, creating a risk of meeting cancellation. El Cerrito, someone could not make it, and today’s September 26th meeting is CANCELED. Although interviews for a new FAB member were scheduled for last Tuesday, they have neither publicly disqualified nor appointed them.

In a few days, the City Manager will release the Newsletter with lots of “happy talk” while the City finances remain in shambles.

City leaders are clearly out of touch and have behaved irresponsibly for so long that they think it is a Commonplace practice of incompetence and abuse.

The City plans a ballot measure requesting more taxes. Before El Cerrito gets another taxpayer bailout, reforms need to be implemented to make the agency more accountable to taxpayers.

Here’s how you can help:

  • Share this post with other residents.
  • Comment on the blog.
  • Attend the monthly Financial Advisory Board meetings in person.
  • Council meetings are both remote and in-person. The City Council meeting will be on October 3. The schedule is here.  
  • The next FAB had to be canceled due to an absence. Please write to the City Council requesting that they fill the vacancies.

YOU CAN’T JUST LEAVE THOSE WHO CREATED THE PROBLEM IN CHARGE OF THE SOLUTION is titled GFOA Best Practices Budget on Achieving a Structurally Balanced Budget

Adopt rigorous policies for all operating funds aimed at achieving and maintaining a structurally balanced budget

According to the Government Finance Officers Association (GFOA), “Most state and local governments are subject to a requirement to pass a balanced budget. However, a budget that may fit the statutory definition of a “balanced budget” may not be financially sustainable. For example, a budget balanced by such standards could include using non-recurring resources, such as asset sales or reserves, to fund ongoing expenditures and thus not be in structural balance. A true structurally balanced budget supports financial sustainability for multiple years into the future. A government must ensure that it knows the distinction between satisfying the statutory definition and achieving a true structurally balanced budget.”

For El Cerrito, it means adding all planned expenditures to the budget, including one-time expenditures and expenses related to employee benefits like unfunded liabilities.

The City falls afield of this standard. The City established a long-awaited Emergency Disaster Relief Fund (EDRF) of $9 million and set aside $1 million for a Section 115 Trust. However, the funding for both efforts left the City with $5 million in unrestricted reserves. The GFOA recommends a minimum of two months of unrestricted general fund reserves. The City General Fund Budget is shy of $60 million; therefore, the General Fund Balance recommended amount is shy of $10 million, yet the City Manager and City Council have depleted reserves to half of the recommended level of unrestricted funds. That means the City could have more expenses than funding fairly soon. Why are City leaders patting themselves on the back?

Moreover, these set-asides were not generated from surpluses created by fiscal prowess. The funding for these efforts was compliments of the Federal bailout – which will not occur again in the foreseeable future.

For those of you who care, the City is in big trouble. Following the State Auditor’s report indicating that El Cerrito was on the brink of bankruptcy, City leaders elected NOT to adopt rigorous policies for all operating funds, and the City has not developed long-term sustainable expenditure reductions. In addition, considerable expenses and revenue shortfalls have yet to be addressed.

Unfunded Pension Liability

For fiscal year 2020-21, the City’s $70 million pension liability accounted for 123% of the City’s $57 million in revenues. El Cerrito missed another opportunity to address a significant liability. As early as 2021, El Cerrito was advised to adopt a plan to address the $70 million pension fund liability. The City was advised to either a) prepay the unfunded liability or b) set up Section 115 Trust – A separate trust solely dedicated to pension/OPEB, including Lump Sum Direct Pay Down of UAL to reduce UAL with PERS and annual payment.

Unfortunately, City leadership ignores the elephant in the room by carefully avoiding an open discussion of the $70 million in arrears. City leaders characterize the Section of 115 Trust as a means to prepay future expenses. This characterization signals to everyone that City Leadership will take care of employees who plan to retire soon.

The unfunded liability negatively impacts less tenured and prospective employees primarily because of the $70 million in funding that has not been set aside for their pensions. But those approaching retirement are secure. By their actions (and inactions), City leaders have indicated they only care about themselves, their pension benefits, and their public image.  

Real Property Transfer Tax

Fiscal Year (FY) 2021 receipts were $4.5 million, FY 22 receipts were $5.3 million, and FY23 was just $3.6 million, a reduction of 20% from 2021 to 2023.   Ignoring the warning signs of declining receipts and increasing interest rates, the City budgeted a Real Property Transfer Tax of $4.3 million for this fiscal year, FY24. However, the City is currently on track for receipts of $2.5 million, creating a $1.8 million shortfall. The City has yet to discuss a plan to address the shortfall openly.

City Council members say they know about the shortfall and expect to cover it with Sales Tax revenue. This explanation is flimsy at best. At worst, the City Council has no idea what’s going on and is blindly and willingly jeopardizing the City’s financial future as there are long-term implications. Any revenue shortfall must be factored into the FY25 budget. City leaders only know three things:  Business as usual, seeking bailouts and more taxes.

Generally, for sales taxes, there are two distribution frequencies:

Monthly: Applicable “monthly distribution” sales tax categories are remitted to the State 30 days after the prior month’s close (unless the business remitter has an arrangement to send quarterly).  The State completes its financial reconciliation and remits to the County 45 days following the close of the tax month (i.e., month ending May 31, sales taxes remitted on June 30 to the State; the State reconciles and distributes to Counties on July 15; each County has an agreement with their cities on date sales tax funds will be deposited through ACH to each City’s bank accounts).  Contra Costa County remits an “advance notice of the amount of tax deposit” to each City (received before the ACH funds transfer occurs and includes the date the funds will be deposited in the City account).

Quarterly: Applicable “quarterly distribution” sales tax categories are remitted to the State 30 days after the prior quarter’s close.

Either way, FY24 began July 1.   How can just two months – July and August – of sales tax receipts provide confidence that the City knows enough to rest on its laurels? The fact is, they cannot realistically trust that all is well.

The City manager said she briefed the Council on financial and current affairs.

ICYMI, all communications to the Council are subject to the Brown Act. The Brown Act specifies that meetings must be noticed in advance, include only business described in the agenda, take place within agency boundaries, and be utterly accessible to the public. Notice and agenda for regular meetings must be Posted 72 hours in advance, posted in an accessible location, and mailed to persons who request information.

If the City Manager’s account is accurate, the City Manager briefed the Council privately; she and the Council violated the Brown Act. Either way, the City is not publicly discussing the massive RPTT shortfall. Otherwise, the City Manager neither advised the Council nor the residents.

Quarterly Financial Reporting

The City Manager agreed to provide quarterly updates on the City’s financials, and this practice was made policy. Has anyone else noticed that it’s been several quarters since the last update? The previous update was verbal – no documentation, handouts, quarter-over-quarter comparisons, trend analysis or helpful information.   Again, the City Manager says she briefed the Council on the financials.   Is it just EECRG, or has anyone else wondered why the public has not been privy to these private conversations – further violations of the Brown Act?

City leaders tout transparency yet have not routinely disclosed financial information. The policy the Council adopted requires quarterly reports at minimum. When they inform the Council, according to the Brown Act, they must inform the public simultaneously. Not doing so is also the opposite of transparency.

Financial Advisory Board

Speaking of the lack of transparency, two of the five positions on the FAB are vacant. If just one person goes on vacation, becomes sick or otherwise cannot attend, there will not be sufficient members to conduct a meeting.   Although the City Council has had at least one viable candidate for a while, they have not interviewed them.   Traditionally, non-hand-picked candidates must wait an unreasonable time for an interview, which means the City Manager does not believe this person will rubber stamp their requests. 

City leaders are clearly out of touch and have behaved irresponsibly for so long that they think it is a Commonplace practice.

The City plans a ballot measure requesting more taxes. Before El Cerrito gets another taxpayer bailout, reforms need to be implemented to make the agency more accountable to taxpayers.

Here’s how you can help:

  • Share this post with other residents.
  • Comment on the blog.
  • Attend the monthly Financial Advisory Board meetings in person.
  • Council meetings are both remote and in-person. The City Council meeting will be on September 19. The schedule is here.  
  • The next FAB meeting will be on September 26 at City Hall. The schedule is here.

Waste and Abuse

This Series:

YOU CAN’T JUST LEAVE THOSE WHO CREATED THE PROBLEM IN CHARGE OF THE SOLUTION

Part I

Tyree Scott was a U.S. labor leader and civil rights activist deeply involved in many minority workers’ and equal opportunity organizations. His quote, ‘You can’t just leave those who created the problem in charge of the solution should inspire us all.

Several weeks ago, one of our readers provided examples that should inspire us to be more active. It took a while for the El Cerrito Committee for Responsible Government (EECRG) to investigate and corroborate the allegations raised.

EECRG contacted six municipalities of comparable size to gather data, information and documentation regarding employee perks and employee credit cards. Five of six cities responded within 48 hours, and all responded within four days.

On the contrary, the City of El Cerrito responded 12 days later. While the law requires Cities to respond to public information requests within ten business days, the City typically abuts the deadline, particularly when the information provided casts a dark shadow on El Cerrito.

The accusations were serious, so ECCRG did not want to publish this information before vetting. Here is what we found:

  1. Consultants paid to perform staff work. The hiring practices of El Cerrito have come under scrutiny due to additional structural issues. According to reports, the City hires people into positions with specific responsibilities. Subsequently, the City contracts with consultants to do the same jobs the City pays employees to perform. This practice has resulted in consultant agreements totaling $3 million to $5 million yearly. The practice has raised questions about the efficiency and cost-effectiveness of the City’s hiring process and management of staff. The city officials have yet to comment on the issue of paying for the same job twice.

The City was a victim of a ransomware attack, which had begun with other agencies around the Bay Area starting Jan 2023. The City has four I.T. staff on the payroll but agreed to pay $332k in March this year (source-city council meeting) to prevent this.

For perspective, the salaries are approximately $125k each for four employees ($125k x 4 = $500k) plus $200k in benefits for a $700k total. Employees should mitigate the risk of cyber-attacks. Still, the failure required the City to hire I.T. consultants in addition to existing employees. It is irresponsible for I.T. staff to neglect to perform intrusion tests and I.T. security evaluations; the City spent $1M yet suffered a significant breach and remains vulnerable to future occurrences.

2. Excessive Employee Perks -The City has a contract for $75k a year to fund a vending machine full of junk food in the Police department. Since the program’s inception, the City has spent $45,243, with $24k spent on energy drinks, candy/chocolates, chips, and cookies. The signed contract is for $75k annually for three years. Do people need free junk food?

In addition to the $75k for vending machines, increasing City Council travel by $50k.

3. Dining on Us In addition to salary and benefits, staff receive free dry cleaning. Over the five years, the City Manager dines out an average of 2.5 times per week using the city credit card. The City Manager routinely takes staff and council to lunch at taxpayers’ expense. The City Manager’s average expenditure on lunches per week often exceeds $150/week – approximates $5k per year.

The City Manager’s expenses often include food, alcohol and visits to the Berkeley Country Club.

While the City was on the brink of bankruptcy, requiring the equivalent of payday loans, the City Manager jet-setted across the U.S. and abroad on the taxpayer’s dime. There is no reason a city with 25,000 residents needs to sponsor an international junket. Frankly, there’s no valid business reason to travel outside California.

Doesn’t this luxury international travel resemble a City-funded vacation? El Cerrito residents, does your company foot the bill for your leisure?

City leaders are clearly out of touch and have behaved irresponsibly for so long that they think it is normal. ECCRG contacted six California cities of comparable size to El Cerrito. Not one City CEO routinely conducts meetings at restaurants at taxpayer expense. Not one City CEO purchased alcohol at taxpayer expense.

As the City Manager’s supervisor, a member of the City Council should review and address the City Manager’s credit card expense report. The signatory line says “supervisor,” yet the Assistant City Manager – a subordinate signs the City Manager’s expense report, which clearly violates El Cerrito expense report requirements as well as the Government Finance Officers Association (GFOA) and circumvents the requirement for an objective review. The City has yet to comment on this practice or the remedy,

El Cerrito residents, this is not the private sector. You are paying the cost of this continued practice of waste and abuse.

The City plans a ballot measure requesting more taxes. Before El Cerrito gets another taxpayer bailout, reforms need to be implemented to make the agency more accountable to taxpayers.

El Cerrito, the City needs you. You can help by

– Sharing this post

– Commenting on the post

– Attending the monthly Financial Advisory Board meetings in person. Council meetings are both remote and in-person.

The City Council meeting will be on September 19. The schedule is here.  

The next FAB meeting will be on September 26 at City Hall. The schedule is here.

Karen Pinkos, City Manager

Oversight Needed

The last blog focused on DEEP DENIAL: More than Guard Rails Needed.

This episode spotlights FUTURE TAX INITIATIVES SHOULD BE ATTACHED TO OVERSIGHT AND OTHER REQUIREMENTS.

When finding a solution to the operating crisis facing El Cerrito, the only plan coming from City leaders is more taxes.

Like many other Cities, El Cerrito adopted a summer schedule.

Unfortunately for residents, El Cerrito is unlike most California cities.

Nearly all – 97% of other California Cities are more fiscally responsible than El Cerrito.

In case you missed it, the original State Auditor designation of High Rick occurred on March 21, 2021 – 2.5 years ago. However, El Cerrito wasted the first year criticizing the State Auditor. In the nearly three years since the High-Risk designation, the City has made unsustainable cuts around the fringes which have not led to long-term, strategic or sustainable reforms.

In addition to fiscal responsibility, many of these 400 better-positioned Cities have performance standards. El Cerrito is neither financially stable nor does the City have published performance standards or performance metrics.

El Cerrito began its summer recess, having passed the latest state budget. The $73 million plan reflects the City’s stated values:

  • Ethics and Integrity
  • Fiscal Responsibility
  • Inclusiveness and Respect for Diversity
  • Innovation and Creativity
  • Professional Excellence
  • Responsiveness
  • Transparency and Open Communication

The Adopted Budget supports service delivery for Administration, including Council Travel, Community Development, Public Works, Recreation, Police and Fire, which on the surface sound quite admirable. But as many El Cerrito residents know, the City has already spent millions of dollars on the same problems — with very little to show for it.

There are significant failures where City Leaders refuse to govern.

Police

You read it here, on CBS and in the East Bay Times. In 2019 Sarah Perez sued the ECPD for sexual harassment and retaliation. She alleged she was sexually harassed by her supervisor David Wentworth. When a colleague filed a complaint on her behalf, she alleges the retaliation began. The situation ended with her quitting her job. Ms. Perez received some back pay and a $544,341 settlement. The settlement agreement has no admission of liability and not only condoned the problem, but the City also created the culture that allowed the sexual abuse to happen.

The City has not implemented any reforms to mitigate the risk of future occurrences or to keep women safe. And they wonder why it is difficult to get female officers. Hmmm, the writer is sure you have all figured it out.

Also, the City can ill afford such unnecessary and avoidable cash expenditures.

Real Property Transfer Tax

The forecast was overly optimistic. The estimated $4.3M in RPTT assumes an average of $358,000 annually. However, the May, June and July receipts were approximately $259,000, $332,000, and $175,000 for $766,000 vs. 1,075,000 in City Projections. Yet, the City has no plan to address any revenue shortfalls.

Houston, we have a problem.

The City has a pension liability in the tens of millions of dollars yet focuses on establishing a Trust for FUTURE liabilities. Still, they keep pushing for Section 115 Trust to pay future liabilities.

By ignoring the nearly $70M in pension liabilities (in arrears), the City leadership is on track to ensure their pensions are intact at the expense of abandoning the less-tenured and future employees.

And they wonder why they cannot find competent employees.   Hmmmm…..everyone knows this except City Leadership.

Sounds like an even more significant problem.

These failures prove that good intentions and lots of money are not enough to fix what troubles El Cerrito. To make the City’s progressive beliefs mean anything, the City must ensure that the money the City spends is actually improving the lives of the people the City says it is committed to helping.

El Cerrito can meet these goals with three significant changes in how the City works. First, the City must stop hamstringing progress, programs and services with special interest demands that do little for the City. Second, the City must establish and make public “service level agreements” that provide minimum standards for El Cerrito’s services.   Third, the City needs to gather and evaluate data on how its programs work, including supporting independent watchdogs to tell El Cerrito that it wastes the City’s money and fails to get the job done.

The City plans a ballot measure requesting more taxes. But, until the City develops a long-term fiscally responsible plan, the City doesn’t deserve any new money.

Before El Cerrito gets another taxpayer bailout, reforms need to be implemented to make the agency more accountable to taxpayers.

El Cerrito, the City needs you. Please attend the monthly Financial Advisory Board meetings in person. Council meetings are both remote and in-person.

The City Council meeting with be on September 19. The schedule is here.  

The next FAB meeting will be on August 22 at City Hall. The schedule is here.

Deep Denial; More Guard Rails Needed

The last edition spotlighted the Need for Guard Rails.  This edition highlights DEEP DENIAL: More than Guard Rails Needed.

El Cerrito Council members have already missed and plan to miss future opportunities to address community challenges because they opted for an abbreviated summer schedule.

According to the National League of Cities, local legislators and councilmembers are responsible for and responsive to the citizens who elected them. Depending on the City’s charter and state laws, they may perform the following functions:

  • Review and approve the annual budget.
  • Establish long- and short-term objectives and priorities.
  • Oversee the performance of the local public employees.
  • Oversee the effectiveness of programs.
  • Establish tax rates;
  • Enter into legal contracts.
  • Borrow funds.
  • Pass ordinances and resolutions.
  • Modify the City’s charter.
  • Regulate land use through zoning laws.
  • Regulate business activity through licensing and regulations.
  • Regulate public health and safety.
  • Exercise the power of eminent domain.
  • Communicate policies and programs to residents.
  • Respond to constituent needs and complaints; and
  • Represent the community to other levels of government.

City Council members are in deep denial, acting as if attending grand openings for new businesses, adopting proclamations, and attending special interest events, photo ops, and junkets to schmooze with high-ranking electeds is sufficient for their reasonable service.

Workshops, Town Hall meetings mean nothing if the public comments do not influence leadership decisions. It’s just window dressing and attempts to pretend that the public’s needs matter. Sometimes public comment doesn’t feel great, but it’s an opportunity to prioritize in a way that improves resident’s lives

These efforts have a place in City government. Still, these efforts do not absolve Councilmembers from governing and addressing City issues. A host of topics should and could be addressed:

  1. How to handle the $1.5M in planned expenditures left out of the FY24 budget without using reserves.
  2. Having a meaningful discussion of optimistic Real Property Transfer Tax revenue and what happens now that revenue estimates have not been realized.
  3. The City indicated that Measure V funds would be used for community services. Yet, in 2020, the City quietly paid for overtime, balanced the budget, and could not highlight any meaningful service increase.
  4. The City has a pension liability in the tens of millions of dollars yet focuses on establishing a Trust for FUTURE liabilities. How about paying off the existing debt first?
  5. The Pavement Condition Index (PCI), an evidence-based metric, fell from 84 to 70.
  6. Safety on the Ohlone Greenway
  7. Economic Development as Measured by Taxable Sales.

FAB Recommendations

  1. FAB recommended $1M in general fund savings, yet FY24 has no actual savings and may experience a deficit.
  2. FAB recommended monthly financial reporting. The Council agreed to quarterly financial reporting. The result is no documentation, vague reporting, and no forecasts.
  3. FAB requested a waterfall approach to general fund reserves, but the City Manager argued for a flexible approach. As you know, the current City Manager was either Assistant City Manager or City Manager during the entire downfall from 2014 to the present mismanagement. Still, Council members continue to laude her expertise and blindly trust the recommendations.
  4. FAB requested 33% reserves, but that didn’t happen.

Until El Cerrito develops a long-term fiscal plan that responsibly meets the resident’s needs, the City doesn’t deserve any new money.

El Cerrito residents, the City needs you. Please attend the monthly Financial Advisory Board meetings in person. Council meetings are both remote and in-person. City leadership is much more careful with the future when you attend.

The next FAB meeting will be on August 22nd. The schedule is here.

The City Council meeting with be on August 15th. The schedule is here.  

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Time For The Guard Rails

The last blog focused on Deceit: How City Leadership Has Repeatedly Misled the Community. Today’s blog is titled Time For The Guardrails!

The competing goals are playing themselves out as the volunteer three-member Financial Advisory Board tries to implement a policy for the General Reserve Fund for the City.

What are these goals?

  • A clear General Fund Reserve is set at a minimum of 10% or possibly higher. 
  • A clear Emergency Fund sets either a percent or a monetary figure representing three months of the budget.
  • A Trust to begin to pay off the pension debt, which appears to be $70 million.

Obviously, the Council and the City Manager hadn’t discussed this issue much for the past years, as we didn’t have much to set aside yearly with rising personnel costs and stagnant revenues. The Financial Advisory Board did make recommendations, but they were met with silence.

With COVID, a State Audit and a Federal bailout, the City sits more comfortably. Not only are they talking about setting money aside, they are also talking about spending more money. They want a new library and must be financially able to make this project a reality.

The Financial Advisory Board is supposed to make recommendations for prudent financial actions. They came to the meeting to refine policy, specifically ensuring the establishment of the Emergency Fund.

The City Manager suggested that for the purposes of the bond market (money lenders) that the Emergency Fund be part of the General Reserve Fund, with clear language spelling out the use of the funds.

Ultimately as the dialogue unfolded at the FAB meeting, it seemed clear that the discussion boiled down to flexibility and maneuverability of funds. I totally get it. When you want to build programs and add services, etc., it’s necessary to have some flexibility.

However, and this is a big, history thus far has shown that the City Manager, along with past city council members, may not always show good judgment. Who is going to provide the reality check? We thought it might be the Financial Advisory Board. Still, as the City Manager joked at the meeting, the City had a policy for a 10 percent reserve for years but, time again and again, fell short of this goal.

Ultimately the FAB should make recommendations that are prudent for the City’s financial health and not tailored to the needs of the CM or City Council. If the final truth is that it really doesn’t matter because the policy is not legally binding, and the City Council can do as they please, guided by the City Manager, then at a minimum, establishing a separate Emergency Fund would be most prudent. Creating a clear distinction may have the appearance of smaller reserves from the view of the moneylenders.

Still, it should put residents at ease knowing we could trust that the funds hadn’t been raided in times of disaster or apparent emergency.

Until El Cerrito develops a long-term plan that responsibly accounts for service delivery, it doesn’t deserve any new money

El Cerrito, the City needs you. Please attend the monthly Financial Advisory Board meetings in person. Council meetings are both remote and in-person. City leadership is more accountable to taxpayers when citizens attend meetings.

The City Council meeting with be on August 15th. The schedule is here.  

The next FAB meeting will be on August 27th.   The schedule is here.

Deceit

The last blog focused on the Broken Promises: The myth that City Leadership allocates resources to improve the lives of El Cerrito residents.

This follow-up episode spotlights

Deceit: How City Leadership Has Repeatedly Misled the Community

Merriam-Webster defines deceit as a noun:  de·​ceit di-ˈsēt 

Deceit: the act of causing someone to accept as accurate or valid what is false or invalid: the act or practice of deceiving: DECEPTION

We know City leadership is biased and prone to painting a rosy picture. Far from a political spin, much of the communication is inaccurate and flat-out misleading.  

We are living in a time that requires evidence-based information. But as great as that need is, we see many instances of elected officials and policymakers failing to address these challenges adequately.

We also see data and performance standards providing answers and viable approaches. Still, too often, these lifelines are brushed aside or ignored. Too frequently, our elected officials and City leaders fail us, elevating artful pandering and lack of honesty regarding the City’s financial affairs using three types of deception tactics:

Deceit by Commission — using false statements or occurs when an important fact is left out to foster a misconception. 

Deceit by Omission — holding back relevant information.

Paltering — a subtle form of lying using correct information but presenting it misleadingly.

  • The City Manager touted a balanced FY24 budget, but the budget is far from balanced. Although there’s a small surplus in the so-called balanced budget, there are over $475,000 planned operating expenses and another $1.1M in capital expenses conveniently omitted from the so-called “balanced budget.” 
  • The City Manager has repeatedly misrepresented a Section 115 Trust as a vehicle to PREPAY Pension Payments. In this on month’s June 28th city manager update, she states, Among other initiatives, in the coming months Crystal and I will be working, in coordination with the Financial Advisory Board, on developing options for City Council consideration relating to pre-funding pension costs and reviewing the policies surrounding the General Fund Reserve and how to handle annual budget surpluses. We’re eager and excited to move those discussions forward. The City Manager is accurate because payment could be made for future liabilities. She cleverly omits the glaring issue: The City has a multi-million-dollar Pension Liability. In October 2022, the East Bay Times reported, “For the fiscal year 2020-21, the city’s $70 million pension liability accounted for 123% of the city’s $57 million in revenues.”
  • Looking at the F.Y. 2022 budget on page 37, Table 2-8, you will see that they predicted $2,600,000 mid-year for F.Y. 2021, the Real Property Transfer Tax. At that time, the City had already collected $2,364,194 in the first six months of the fiscal year.
  • When El Cerrito was in the state’s top 10 worst-run cities, City Management convinced the City Council to relax monthly financial results in favor of quarterly reporting. Since then, no financial report has included documentation supporting the oral recitation.
  • NEWS & VIEWS, SPECIAL EDITION, JULY 2023 is a slick, 4-page document that just came in the mail and is all about a new E.C. library. The document contains additional misleading statements. For example, “Any measure would be budget stable and will continue the high standards in El Cerrito for fiscal accountability and transparency. The budget is not sound; there’s almost no accountability or transparency. Given the current state of affairs, with El Cerrito ranking El Cerrito remains the 13th most financially troubled among over 400 cities in California, this statement couldn’t be further from the truth, as stated below by the State of California.

Corrective Action Plan and Assessment—City of El Cerrito

El Cerrito’s Failure to Manage Its Spending Resulted In the Depletion of Its General Fund Reserves

ICYMI The Financial Advisory Board recommended a policy to the Council requesting they disapprove any further depletion of the General Country Reserves. Like every document from the Clerk, they received an advance copy of the FAB recommendation. Although the Council approved EVERY other initiative brought forth by the City Manager, they decided to kick the can, indicating they will review the FAB policy request in August. The City Manager’s report and the initial Council calendar are both mute on the recommendation. The City Council has not implemented one Financial Advisory Board recommendation. They have an opportunity to implement a bit of sound advice. Tune in or attend and see for yourself.

Repeatedly, City leaders have demonstrated that they cannot be trusted. They have little accountability, credibility, honesty, or transparency. Whether intentionally, through sloppy analysis, incompetence or something else, the result is the same: residents get inaccurate, incomplete and misleading information.

Given the lack of solid, evidence-based information, residents have relied on the City Manager’s rosy “characterization” of financial affairs. The City has done little to address the budget problems. It’s time for the City to act with accountability, transparency and integrity.

Before El Cerrito gets another taxpayer bailout, reforms must be implemented to make the City more accountable to taxpayers.

El Cerrito, the City needs you. Please attend the monthly Financial Advisory Board meetings in person. Council meetings are both remote and in-person. City leadership is more accountable and accountable to taxpayers when citizens attend meetings.

The City Council meeting with be on August 15th. The schedule is here.  

The next FAB meeting will be on August 27th.   The schedule is here.

Broken Promises

The last blog focused on the MORE TAXPAYER MONEY, PLEASE, and the eminent ask for more taxpayer bailouts.

This episode spotlights Broken Promises: The myth that City Leadership allocates resources to improve the lives of El Cerrito residents.

A new Library, a Senior Center, better services — these things elected El Cerrito Officials mindlessly assure the public of their commitments.

This casual campaigning and posturing occur far too often. Whether well-intended or self-serving, the result is the same –  too many empty promises. Consequently, the trust between the public and the El Cerrito Council has been severely shattered. Elected officials should aspire to be amongst the brightest minds and be respected for prudent leadership in challenging situations. When they come up short on that expectation — especially on the back of an empty promise or outright deceit, it leaves those with faith in them deflated and unsure of what to expect moving forward. 

Councilmember Quinto made many commitments regarding the library and senior center.

You may recall that in 2018 Gabe, as Mayor, said, “Vote YES on V to expand local control over local funds for local needs. El Cerrito residents enjoy the benefits of our clean, safe, and well-maintained full-service City. Because of our high level of service, El Cerrito is a desirable place to live. Let’s keep it that way! Yes, on V reestablishes a guaranteed funding source to maintain and improve the city services we need and want.”

You may recall the June 18, 2018, City Council meeting @ 1:43 into the discussion, Councilmember Quinto said, ” Our senior center is by far the most popular and busiest one in West Contra. We have a large senior population that actively uses that. They use the kitchen. They go there for exercises and company.”

Nevertheless, between FY2020 and FY2024, the City Council voted to reduce the Recreation (Senior Center) budget by $263,743 (37%), forcing the closure of the Senior Center.

You read it here in the October 2022 blog, during councilmember Gabe Quinto’s years-long episode of selective memory when he said, “El Cerrito passed a transfer tax (Measure V) to help fund the library at the station, but we need more funding to ensure that we build the library. I have strong connections to regional and statewide leaders who can help identify financing to build the library. ” Gabe remembers his promises to fund the library when he lobbied heavily for Measure V.

Gabe has selective memory. Not one penny of the $18+ Million collected under Measure V has been allocated to fund the library. Instead, Measure V funding was used to cover irresponsible fiscal management.

Gabe may be one of the most vocal council members; all the others are also complicit.

They are all completely opposing the policies they swore to live by. Deception to this degree is dangerous to the community. A fundamental aspect of being an elected official is being truthful. When accountability is lost within the council chambers, it leads to a City full of discord — unsure of whom to look for guidance.

The writer once spoke to a leader of a thriving City of similar size and population to El Cerrito and asked the City Manager why they were so successful. The City Manager replied, “Most City leaders spend money on the things important to them and then ask the taxpayers to fund the City’s needs. We prioritize what we need and develop a funding plan for what we want.”

El Cerrito leaders should take notes from thriving cities.

El Cerrito’s coffers benefitted $18 million in Real Property Transfer Tax and an additional $6 million compliments of the American Rescue Plan Act (ARPA) funds from the federal government. El Cerrito received $24+ million, and none was dedicated to the Library or Senior Center – the people have gotten nothing.

El Cerrito residents do not get lulled into thinking the City cares about a library or senior center – they have had plenty of time to develop a funding plan but have given residents nothing but empty words. City leaders have almost no credibility in addressing the challenges to improve residents’ lives.

The City plans to return to you with a ballot measure requesting more taxes. City leaders have repeatedly demonstrated ineffective self-governance and have failed at improving your lives.

Before El Cerrito gets another taxpayer bailout, reforms must be implemented to make the City more accountable to taxpayers.

El Cerrito, the City needs you. Please attend the monthly Financial Advisory Board meetings in person. Council meetings are both remote and in-person. City leadership is more accountable and accountable to taxpayers when citizens attend meetings.

The next FAB meeting will be on July 25th.   The schedule is here.

The City Council meeting with be on August 15th. The schedule is here.  

MORE TAXPAYER MONEY, PLEASE

The last blog focused on the unbalanced budget and the eminent use of general fund reserves to balance the budget.

This episode spotlights on MORE TAXPAYER MONEY, PLEASE.

When finding a solution to the operating crisis facing El Cerrito, the only plan coming from City leaders is more taxes. That’s not a plan, but unlimited overdraft protection for a City that can’t live within its means.

The City Manager often speaks about accountability, fiscal responsibility, and transparency. These are hollow words, duplicity, and empty talk. The City has done little to address the budget problems. El Cerrito remains the 13th most troubled among over 400 cities in California and currently running unreported deficits of over $1.5 million.

El Cerrito City Management continues to place all the blame for its fiscal problems squarely on the disruption caused by the Pandemic, forgetting that the agency consistently operated with annual deficits before the Pandemic struck. COVID simply accelerated the process and amplified existing problems.

The $13.7 million in Real Property tax and $6 million federal gift from taxpayers that filled El Cerrito’s operating deficits for the last three years and funded the general fund balance may be exhausted soon. The City Manager excludes millions in planned expenditures from every budget only to return after budget adoption to ask for case-by-case permission to spend. The Council may ask a question or two, but ultimately they rubber stamp each request –

Suppose a Councilmember questions her actions. In that case, the  City Manager threatens them regarding service cuts, death spiral, layoffs, and other public relations scare tactics.

Service cuts, bailouts, more taxes and layoffs are the only City’s only options when the City Manager relies heavily on short-term non-sustainable measures like hiring freezes, cutting vacant positions and omitting planned expenses to address the over expenditures.

Those upcoming operating deficits will likely continue and exhaust the general fund balances, and the only solution will be more taxes. The real death spiral is the City Management’s and Council’s insistence on repeating the same failed cost-cutting measures and expecting a different outcome.

The City Manager now takes credit for the general fund balance, but the balance didn’t increase because of the City’s financial expertise.

The general fund balance increase is compliments of $6 million from Uncle Joe Biden and the $13.7 million in Real Property Transfer Tax  – NOT FINANCIAL PROWESS.

Without the bailout and tax initiative, the City would still be on the State’s watch list – one of the ten most financially irresponsible Cities. Without a turnaround in El Cerrito’s finances, the City will likely be on the watch list again.

The City needs long-term, sustainable measures to provide financial security and better service delivery. It may be time to step down or be replaced since current leadership cannot achieve these goals.

El Cerrito residents don’t get lulled into thinking the City cares about a library or senior center – the City has had plenty of time to develop a funding plan but has given residents nothing but empty words and substandard fiscal management. Consequently, the City is subject to usury interest rates –  a rate of interest that is considered to be excessive as compared to prevailing market interest rates. One alternative is additional taxes for El Cerrito.

All of this can be attributed to poor fiscal management by the El Cerrito City Council and Leadership.

Before El Cerrito gets another taxpayer bailout, reforms need to be implemented to make the agency more accountable to taxpayers.

El Cerrito residents, the City needs you. Please attend the monthly Financial Advisory Board meetings in person. Council meetings are both remote and in-person. City leadership is less likely to lie with witnesses present.

The next FAB meeting will be on July 25th.   The schedule is here.

The City Council meeting with be on August 15th. The schedule is here.  

El Cerrito’s Unbalanced Budget – Part I of a series on Fiscal Responsibility

El Cerrito had long been flagged on the California State Auditor’s dashboard of cities in distress. The City ranked as the sixth most troubled on the 2020 list, and the audit laid out how it wound up in such bad shape.

City Manager Karen Pinkos spent 12 years as Assistant City Manager before becoming City Manager in early 2019. Not much has changed after more than three years after the auditor report. The City moved up a mere seven points to the bottom 3% and 13th most troubled City, meaning over 400 California cities are managed better than El Cerrito.

There was a short-lived bright ray of hope in 2022 during the brief tenure of Sandra Dalida as Finance Director and Treasurer. After tremendous strides in accountability, transparency and fiscal responsibility, she lasted just over a year before leaving the City earlier this year. Rather than wait to secure a high-performing successor, within a month, the City Manager replaced the high-performing Finance Director and Treasurer with someone with little experience addressing troubled finances.

The City Manager touted a balanced FY24 budget, but the budget is far from balanced. Although there’s a small surplus in the so-called balanced budget, there are over $475,000 planned operating expenses and another $1.1M in capital expenses conveniently omitted from the “balanced” budget. If properly accounted for, the $1.5M deficit would again be covered by – you guessed it, the general fund balance.

The City Manager alleges close collaboration with the Financial Advisory Board (FAB). Yet, despite recommendations regarding the Emergency Disaster Relief Fund (EDRF) and increasing general fund reserves, the City Manager ignored the FAB recommendations in May. The City Council ignored the recommendations and rubber-stamped the budget in June.

In addition to these woes, the Council asked the Financial Advisory Board to review their salaries. This request comes on the heels of significantly increasing their own junket budget. The Council now wants paid vacations and a salary increase to run one of California’s most troubled and mismanaged cities. All while ignoring community feedback and FAB recommendations.

El Cerrito also plans a compensation study which undoubtedly will suggest increased salaries – all paid for by the general fund.

In addition to the unacknowledged budget deficit, pension liability costs have continued to rise; the City has done little to set aside the money needed to cover pension costs.

El Cerrito Hiring Challenges…and solutions

The City of El Cerrito is conducting a classification and compensation study. Presumably, the study is commissioned to support their assertion that they can’t fill their positions because the salaries are too low. The premise of wages as the sole reason for the City’s inability to attract talent is not only erroneous, but it also focuses on a factor that does not require them to make any changes in how they manage the city assets: operations, finances, and people.

Digging just a bit deeper, they will find many more factors to consider attracting qualified candidates. Many studies, including SHRM (Society for Human Resource Management) and the federal government equal opportunity commission, have concluded that salary is not the number one selling point for professionals. Candidates care about company culture, leadership and stability and their priorities typically look like this:

  1. Appreciation for their work
  2. Good relationships with colleagues
  3. Good work-life balance
  4. Good relationships with superiors
  5. Company’s financial stability
  6. Learning and career development
  7. Trust
  8. Attractive fixed salary
  9. Interesting job content
  10. Alignment with Company Values

The reader may ask why the author references SHRM or the Federal Government. El Cerrito is a lovely bedroom community and does not fit that model. The writer is glad they asked. El Cerrito remains a bedroom community and behaves like a “small town.”  Conversely, El Cerrito spends money like a metropolitan city. In other words, City (over) spending does not reflect a bedroom community’s “Mayberry RFD” persona nor the City’s revenue base.

Because of this misalignment, the City has difficulty attracting qualified candidates because candidates in 2023 seek many attributes that the City does not consistently offer:

Value

A paycheck is nice, but that goes straight to the bank. On the other hand, they carry appreciation in their soul every day. This appreciation can be communicated through respect or an old-fashioned “thank you.” Employees who feel valued are their best advertisements in recruitment.

Good Relationships with Colleagues

Given that they will spend much of their day at work, be sure they enjoy the people around them. It is comforting to know that they support them, they trust them, cheer for them, and work together as a team.

Balance to Life

Work is not so bad when they love it. But suppose they cannot explore other endeavors (play/hobbies/family) because of work-related demands. In that case, it is unhealthy for their soul, life, or body. Find a job that allows them to enjoy their life outside of work.

Good Relationship with Superiors

The most important part of a boss-employee relationship is trust. Employees seek a manager who will ALWAYS be honest with their employees and never twist their words. Always tell the truth. Employees require managers to be more transparent when they approach them.   However, the City is not known for transparency or complete honesty. The City paid over $500,000 to address a sexual harassment claim in the police department in 2021. Yet, the City has not released a statement about the sexual harassment claim itself, nor has it adopted any policies or practices to prevent future occurrences.

Financial Stability

City leadership behaves as if the financial challenges are over.   Yet the State Auditor says otherwise in a recently released evaluation. The City is not only running at a deficit, but they should prepare for an appeal for more taxes. The Council approved a  request to increase the Professional Services expenditure budget by $60,000 for costs associated with services related to exploring a ballot measure. El Cerrito already among the highest sales tax rates in the State and takes a portion of each home sold in El Cerrito through the Real Estate Transfer Tax: which is  $1.10/per $1,000 property value (comprised of City Rate: $0.55/per $1,000 property value plus County Rate: $0.55/per $1,000 property value).

Learning and Career Development

Candidates are looking for a job that will make them better and allow them to accomplish something meaningful. Whether through challenging assignments, educational opportunities, demanding excellence, or informal mentors, a job that requires employees to grow beyond their current skill set will make them a better person and company.

Choose a job that adds value to our world, leaves it better than it found, and genuinely helps others. As many know, the City is woefully inadequate In service delivery.

Trust

It’s nice to know that somebody isn’t always looking over their shoulder. And when given a task, they are given the freedom to complete it. They aren’t encouraged to “hush-hush” existing or looming issues but are free to address them.

Attractive fixed salary

Salary is generally NOT the number one currency for professionals seeking employment. No one works for “free”-otherwise, it’s a volunteer role.   But there are so many factors necessary to job seekers, yet El Cerrito focuses only on dollars.

Interesting Job Content

The adage is true: “Find a job that you love, and you will never have to work a day in your life.” Candidates are looking for a job that keeps them motivated by its nature, not solely by the paycheck – because that wears off quickly.

Anyone who has ever taken a personality test knows we all have unique personalities that thrive in certain environments. Some enjoy working with people; others enjoy completing tasks. Some like making the decisions, while others don’t. Looking back at their day, year, or life with satisfaction is more valuable than any number of digits in the bank.

The company’s values align with the Candidate.

At the end of the day, integrity is what matters most. Candidates won’t compromise their integrity when they walk into the when workplace. If they are at a job that requires them to suspend their personal convictions, they don’t need to be there—nor should they be. The City will continue to have difficulty finding qualified candidates until they acknowledge their operational and financial challenges AND subsequently outline a plan to address these issues.

A flexible, results-oriented culture

A culture of flexibility suggests a results-driven focus—one that is more interested in completing their job with excellence than clocking in a set amount of work hours during a specified time of the day.

The City has and continues to focus on compensation as a pivotal factor necessary to attract and retain qualified and committed employees.   But several factors are essential to current seekers. The City has so much more work to do; the first step is acknowledging its shortcomings. The City must make consistent and continuous strides toward attributes important to qualified candidates if they want to attract and retain employees.

5–7 minutes

The City Council Did Nothing

This blog has been consistently focused on the critical aspects of governance, accountability, and transparency within El Cerrito’s city administration. The Chief Executive Officer, who also holds the position of City Manager, carries the responsibility for overseeing both the operational and financial performance of El Cerrito.

It is essential to note that the City Manager is accountable to the City Council. Unfortunately, despite concerns about the City Manager’s subpar performance, the City Council has not acted in the community’s best interest. Their responsibilities should extend beyond mere photo opportunities, attending business openings, adopting proclamations, and promoting the city. The Council’s primary duty is to safeguard the community’s well-being, and regrettably, they have not fulfilled this duty adequately.

State Auditors Report: In a state audit conducted in 2021, El Cerrito’s financial practices were found to be severely deficient, placing the city perilously close to financial collapse. This audit ranked El Cerrito among the ten most mismanaged cities in the region. Unfortunately, the situation has not shown significant improvement, as the city now ranks 13th worst out of over four hundred California cities. Surprisingly, no substantial actions have been taken by the City Council in response to these alarming findings. 

BBB- Bond Rating: Before Karen Pinkos assumed the role of City Manager, El Cerrito enjoyed the prestigious AAA- bond rating. However, shortly after her tenure began in 2018, the city’s bond rating plummeted to BBB-, just one step above junk bond status. Yet, the City Council did nothing.

Costly Sexual Harassment Settlement: Despite facing financial distress and bankruptcy threats, El Cerrito paid out over half a million dollars for a settlement, and the city has not implemented policies to prevent such incidents from happening in the future. Yet, the City Council did nothing.

Unfunded Pension Liability: El Cerrito’s failure to align pension payments with its unfunded liability has resulted in an enormous $85 million pension liability. Although the city allocated $1 million for the Section 115 trust, the city is not legally obligated to use these funds to reduce the unfunded liability. This places the city’s financial future at risk, potentially leading to state recommendations for bankruptcy. Yet, the City Council did nothing except watch the UAL grow and grow and grow.

Lack of Accountability in Leadership: The absence of performance standards for city leadership, including the City Manager, allows for a range of behavior without consequences and zero performance standards. This lack of accountability has serious repercussions, as evidenced by a recent incident where the City Manager used inappropriate language and told the Director of Public Works to be silent. Such mismanagement not only affects staff well-being but also exposes the city to potential legal actions by its employees. Yet, the City Council did nothing and said nothing.

The City Manager and the Mayor set the agenda of Council Meetings.  Including Financial reports in the City Council packet, but no mention on the agenda: This strategy bypasses meaningful discussion about the City’s budget performance. Only those diligent citizens who read all 167 pages of the October 17th packet can locate the 5-10 pages of financial statements hidden within.

Moreover, the City Manager often presents items for FAB and City Council approval at the last minute, leaving no room for meaningful changes. This rushed decision-making has resulted in ill-advised choices that have pushed the city to the brink of bankruptcy. Yet, the City Council did nothing.

All these issues have arisen during the tenure of a highly compensated City Manager. Any one of these infractions should raise significant concern, yet the City Council has failed to address these matters adequately.

El Cerrito’s financial and operational management is facing dire challenges, stemming from a lack of governance, transparency, accountability, and sound decision-making. It is imperative to address these concerns promptly to prevent further financial deterioration and restore the city’s fiscal health and the well-being of its staff and community.

Your Thoughts? What are your experiences with city services in El Cerrito? Do you see similar issues, or do you have a different perspective? Share your stories and suggestions for how our city can improve. Let’s start a conversation for change.

Here is how you can help:

  • Share this post with other residents.
  • Comment on the post
  • Attend the monthly Financial Advisory Board meetings in person.
  • Post on Next Door
  • Voice your concerns with the Council.
  • Council meetings are remote and in-person, but public comment is now limited to in-person attendees.

If you want to contact City Council Members or the City Managers, all their emails are below:

  • Karen Pinkos-City Manager kpinkos@ci.el-cerrito.ca.us
  • Councilperson Gabe Quinto gquinto@ci.el-cerrito.ca.us
  • Councilperson Carolyn Wysinger cywysinger@ci.el-cerrito.ca.us
  • Councilperson Tessa Rudnick trudnick@ci.el-cerrito.ca.us
  • Mayor Lisa Motoyama lmotoyama@ci.el-cerrito.ca.us
  • Councilperson Paul Fadelli pfadelli@ci.el-cerrito.ca.us

Low Voter Turnout

Low voter turnout has allowed Gabe Quinto to keep his seat on the Council. As readers of this blog will likely surmise, this author is not pleased.  Akin to a few other Contra Costa County results like the Sherriff’s and County Assessor’s races, El Cerrito lacks accountability, transparency and humanity in El Cerrito.

Even so, it is notable that the incumbent, Gabe Quinto, was not the frontrunner.   Carolyn Wysinger led the pack in her first bid for Council, receiving 6,063 or 37% of the vote. As the city’s newest Councilmember, Wysinger has an opportunity to help send a message to the City Council and the City Manager that mediocrity is no longer acceptable; El Cerrito needs to make immediate and substantial structural changes in the FY23 mid-year budget, including a reduction in expenditures and Service Delivery improvements.   

It’s not the first time independent candidates have lost.  Wysinger herself was unsuccessful in her previous run for office.  Like Floy Andrews, who lost her 2022 primary race for County Assessor to an incumbent who had been censured for multiple ethics violations, Vanessa Warheit is a capable candidate who faced an uphill battle against an entrenched incumbent. For the best results in any election, high turnout is key. In the 2022 general election, only 59% of El Cerrito’s eligible voters turned out to vote – an incredibly sobering figure, given the city’s current financial straits and inadequate services. 

Although the East Bay Times posted the El Cerrito press release, the only local newspaper that issues endorsements did not cover or make any endorsements in this year’s El Cerrito City Council election. The Times claims they omitted El Cerrito because “there were too many races in larger cities”.   Maybe the writer of this blog is mistaken, but the races in all East Bay cities are typically similar for each election. It is our hope that the East Bay Times will choose to cover our city in upcoming elections; future candidates are encouraged to reach out to them to ask for this, and members of the El Cerrito community are encouraged to do the same.

Complacency continues to hurt our City. El Cerrito ranks #13 of 430 California cities on the State Auditor’s High-Risk Dashboard – meaning our City is among the top 3% worst-managed cities in the entire State. El Cerrito also has a BBB- bond rating – just one step above junk bonds. 

The City has so far missed opportunities to address a long list of  issues that continue to keep us on this woeful list, including:

  • Excessive spending began before the initial state auditor report.   From FY 2015-2019, general fund spending increased from $29 million to $40 million, far more than the inflation rate.
  • Using ARPA funds to balance the city’s budget instead of using government funding to help residents and local businesses recover from the pandemic
  • The Measure V money should have helped fund the senior center, yet the senior center was closed.
  • The reserve increase was less than the $1 million recommended by the City’s finance committee, even though Measure V brought in over $5 million and ARPA bought in over $3 million. 
  • Despite the state auditor’s warning that the City should not count on one-time money or big money from real property transfer tax in its budgeting, City leadership continues to budget based on a steady increase in tax money
  • For five consecutive years, the City received a 0 from the state auditor for future pension costs
  • The City has not made any structural changes to the budget, despite the fact that direct instructions to do so from the State Auditor CityHall is open just 16 hours per week. And closed for the entire week between Christmas and New Year’s.
  • The Council sorely needs community input and feedback yet does nothing to solicit or receive it.

Although the City blames the pandemic for its lack of service delivery,  service delivery in many departments was severely lacking prior to 2020; the Covid pandemic illuminated and exacerbated existing problems. It’s infrequent for leaders who led during inadequate service delivery and a fiscal crisis to recover successfully, particularly when they do not own any portion of the downfall.  

As a result, the incoming Council Member, along with newcomers Council Members Tessa Rudnick and Lisa Motoyama, must take the lead on positive change. The vote for the FY 2022 budget was 3-2, so Wysinger’s election could potentially swing things in the Council Chamber.

Progress is possible, but it is fragile – and in El Cerrito, the battles for our most basic services and our democracy remain.   However, there’s no power for change more significant than a community discovering what we can do.   Here are a few ways to participate: 

  • Attend the City Council and Financial Advisory Board meetings; if you can’t attend in person, tune in online.
  • Develop actions to strengthen the inclusion of excluded groups – such as seniors, underserved communities and youth – in decision-making processes;
  • Specify conditions and do’s and don’ts for successful participation projects;
  • Identify instruments for increasing social accountability.

We must become more informed and engaged voters if we want a better El Cerrito. Become more informed, and make a plan to vote in 2024. Our democracy depends on local government success.