El Cerrito Election Links

There is still time to vote! Do you need to cram to catch up on the issues? If so, this post is for you! You can find many of the essential links here. Enjoy!

Web pages

Vanessa Warheit’s web page

Vanessa Warheit’s YouTube Channel

Carolyn Wysinger’s web page

 Gabe Quinto’s web page 

Disclosures

El Cerrito Financial Disclosure

City of El Cerrito Campaign Disclosure

Forums and Debates

League of Women Voters Debate Well worth the 30-minute view

El Cerrito City Council Candidates’ Positions on Sustainable Mobility   

State Auditor’s Report

California State Auditor: City of El Cerrito: Excessive Spending and Insufficient Efforts to Address Its Perilous Financial Condition Jeopardize the City’s Ongoing Fiscal Viability

 State Auditor’s response to El Cerrito March 2022

News – El Cerrito finances are a factor in the city council race

East Bay Times – These Bay Area cities are facing the greatest financial risk, state auditor says

East Bay Express – Small City, Big Money Woes

Blog Posts

El Cerrito Committee for Responsible Government (ECCRG)   

Vanessa Warheit answers questions about El Cerrito

Councilperson Gabe Quinto’s record on financial issues

The Mayor has abandoned the Library!

Conflict of Interest

In this town, things are getting worse.  

They have scheduled an event titled “Lunch with El Cerrito’s Mayor and City Manager,” where members of the public join them to have a conversation with Mayor Gabe Quinto and City Manager Karen Pinkos on the latest happenings in the City of El Cerrito, and what’s next for the City coming up in 2023 and beyond.

There’s an ulterior motive for the November 3rd gathering.

  1. Gabriel Quinto’s seat is up for grabs on the November 8 ballot. If he loses, his term expires at the end of the year. Consequently, Gabe should not yet comment on what will happen in 2023.
  2. The City Manager comes dangerously close to violating the Conflicts of Interest and Ethics For Local Government Officials: Political Reform Act & Common Law Conflicts of Interest City of EI Cerrito dated September 2019. It may not be illegal, but it’s inappropriate to conduct a conversation about El Cerrito’s happenings outside of the Council Chambers just five days before the election.

The Political Reform Act states, “An official has a conflict of interest under the Political Reform Act when it is reasonably foreseeable that the decision has a material financial effect on an economic interest of the official or a member of their immediate family. A public official has a disqualifying financial interest if the decision will have a reasonably foreseeable material financial effect, distinguishable from the effect on the public generally, directly on the official or their immediate family, or on any financial interest of the official or his or her immediate family. (2. Cal. Code Regs, § 18700(a)”

The ICMA Code of Ethics with Guidelines for City Managers, tenet 7 “Elections of the Governing Body. clearly states that Members should maintain a reputation for serving equally and impartially all members of the governing body of the local government they serve, regardless of party. To this end, they should not participate in an election campaign on behalf of or in opposition to candidates for the governing body.

The City Manager, Karen Pinkos, has come under fire since the state of California released its first report in 2020 and most recently: Fiscal Health of California Cities. The Mayor has been one of her biggest supporters, publicly praising her hard work while leaving out the mediocre performance.

However, two other candidates have indicated they commit to transparency.   At least one of the candidates has committed to holding the City Manager accountable. Suppose Mayor Gabe Quinto isn’t reelected to the City Council. In that case, the City Manager could face accountability initiatives from the City Council regarding performance goals and objectives on the City’s current financial crisis, the lack of adequate public services from city departments or even her lack of transparency. Therefore, she has a financial interest in Gabe’s re-election.

Three weeks ago, you heard it here. The bottom line is that being in the bottom 3% (13 of 431) cities is not cause for celebration. Even with $20 million in new money ($14 million from Measure V real property transfer tax —  and $6 million from ARPA, round numbers) coupled with significant cuts in services, the City is doing very poorly. 

Gabe has interests too. He built his entire campaign on endorsements from electeds – most notably missing are electeds from neighboring cities. Moreover, his lone accomplishment relates to bringing Los Moles to El Cerrito. Unfortunately for city residents, he’s been on the Council for the last eight years, which happen to be the years of the City’s financial landslide to the crisis.

The luncheon is at the wrong venue. If the City Manager and the current Mayor wish to discuss the happenings in El Cerrito, the appropriate forum would be today’s November 1, 2022, City Council Meeting. But the agenda is silent on an update from the duo.

Vote by November 8, 2022, and vote wisely.


















	


	





	

		
Press Release Gone Bad
	


	
	

		






Last week, the Council Members posted on social media.  Then the City of El Cerrito issued a press release claiming victory over the financial crisis.  





Super Premature





Still, the State Auditor and the East Bay Times disagreed. On October 24, 2022, the East Bay Times article here said, “While this is the first year the city of just 26,000 residents has moved from “high-risk” to “moderate” since the dashboard launched, officials still face an uphill battle to fully fund employee benefits.”





Two weeks ago, you heard it here.  The bottom line is that a 1% improvement and being in the bottom 3% (13 of 431) cities is not cause for celebration. Even with $20 million in new money ($14 million from Measure V real property transfer tax —  and $6 million from ARPA, round numbers) coupled with significant cuts in services, the City is doing very poorly. 





There are many reasons for concerns:  





    

  1. The City did not make any structural changes to the budget. Without the government bailout and booming Measure V Transfer Tax, the City could quickly drop three positions and return to the list of ten worst cities.
    2. 




  2. If you take away the $6 million ARPA money that was supposed to help the citizens, the surplus would be just $2 million even though they have received over $14 million in new Measure V money.
    3. 




  3. There were $500,000 in planned expenses the City Manager did not include in the budget.
    4. 




  4. The City budgeted $4.3 million in Measure V Transfer Tax Revenue, which was ~$900,000 less than FY22. However, the transfer tax revenue during the first quarter is already 26% less than in FY22. As a result, the City could be $1 to $2 million short in the projections.
    5. 




  5. The City Manager is up to her old tricks again.  The numbers continually change with no explanation. Budget table has 2-8 reserves at $10.8 million versus the press release at $8.09 million. That equates to an almost $3 million unexplained change.
    6. 




  6. The City cut services:  They shut down the senior center, reduced library hours and barely have city hall open, yet their big spending budgets have gone from $29 million to $45 million – a 55% increase in just eight years.
    7. 






The current Mayor, Gabriel (Gabe) Quinto, is up for re-election. You should be concerned. He’s been on the City Council since 2014, when the financial landslide began.   You can see his record on financial matters here. 





The election is two weeks away.   Vote responsibly and wisely.

	


	





	

		
The Mayor has abandoned the Library!
	


	
	

		






El Cerrito has three candidates running for two seats on the City Council. Plaza for the People sent six questions to the candidates, whom all took the time to respond to the Plaza for the People questionnaire. The candidate responses provide a window into their ability to address some of the City’s current and future challenges; however, this blog focuses on question #4 – the El Cerrito Library.





The most recent evaluation by the state auditor ranks El Cerrito’s #13 (#1 is worst) and painfully close to earning the title of the worst-run City in California. El Cerrito currently ranks #1 (worst) in future retirement funding. Four of the ten categories on the state auditor’s concerns relate to retirement funding. El Cerrito has not made any meaningful advancements in pension funding in the last two years. El Cerrito also has a BBB- bond rating with Standard and Poors –one level above junk bonds. So, El Cerrito would have difficulty floating a bond to pay for the Library. And none of the other stakeholders has expressed any interest in paying for a library for El Cerrito.





Although each candidate responded, there’s more to see from what the candidates did NOT say in their responses. The link here has their complete answers.





Carolyn Wysinger acknowledged the difficulties in bonding “I do understand that bond rates have increased AND El Cerrito would need to have its bond rating updated and will work hard towards that end on the Council. For inspiration we can look to cities like Berkeley and Oakland who have somewhat analogous affordable housing and infrastructure measures on the ballot. Financing through bonding is among the most equitable ways forward in pursuing a vital development like this project, which, when completed, will benefit the El Cerrito community for years to come.”





Candidate Carolyn Wysinger





Carolyn’s response, while enthusiastic and thoughtful, falls woefully short in describing how she would address funding the Library. Carolyn suggests using Berkeley and Oakland as inspiration. Inquiring minds would like to know how those cities were able to meet the challenge and how those successes translate to an El Cerrito library.





Gabe Quinto, El Cerrito’s current mayor and incumbent, should have the most comprehensive and responsible response based on his eight years on the Council. Gabe 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 very strong connections to regional and statewide leaders who can help identify funding to build the Library. ”  Gabe remembers his promises to fund the Library when he lobbied for Measure V.





Gabe has selective memory.  





Current  Council Member and Mayor of El Cerrito





Not one penny of the $11 Million collected under measure V has been allocated to fund the Library.  





Remember our last blog post, which pointed out that On June 1, 2021, Councilperson Quinto said he would vote to direct staff to cut the additional library hours (over the County Funded Level). The amount was just $58,000. He said the City should raise funds for the Library because the City would not allocate money. After a massive public outcry, Gabe voted to reinstate the funding.   Later Gabe voted to remove the funds for a second time.





Even though Gabe has been in office for eight years and boasts endorsements and deep connections with important leaders and electeds, he has done nothing to support the Library. He does not even have a funding plan for the Library. His votes on the Council contradict his commitment to funding the Library because actions have all opposed funding the Library or senior center.





Candidate Vanessa Warheit





Vanessa Warheit had a considerably longer and arguably more complete response. “And, I am very concerned about our City’s current fiscal crisis, and what effect our current BBB- bond rating will have on our ability to finance a new library. I believe the first step is to create and make public an audited financial cost/benefit assessment of the cost to build the Library at Plaza, as compared with building it in another location in El Cerrito. The original library bond measure failed because El Cerrito voters didn’t have confidence in what the bond would be paying for – or an adequate understanding of how much a new library might even cost. If, as seems likely, building at the Plaza location proves to be significantly cheaper than at other locations, I am in favor of a bond measure, assuming that we can raise our bond rating and that the cost of doing it soon at BART, at a higher rate of interest, is still less expensive than doing it later somewhere else. In any event, it will be essential for the public to understand what they are voting on, and this assessment needs to be done ASAP to meet the time window of the BART development.”





Candidate Warheit acknowledges the last bond measure failure and the fiscal crisis, which the other candidates seem to gloss over. Vanessa’s response also indicates an answer to the Library lies on the other end of some significant evaluations on costs and location.





Please look closely at each candidate and decide which two are best for you and your family. None of us can afford to be on the sidelines this November. Vote wisely.

	


	





	

		
 Deep Denial by Council People
	


	
	

		






The State Auditor released its latest report earlier this week (Link to post) and scroll to the article.  El Cerrito has improved seven spots from the 6th worst-run city to the 13th worst-run city. That means 417 California cities are better managed than El Cerrito.





Yet some council members are patting themselves on the back. Councilmember Tessa seems ready to bring out the champagne. 










Tessa said,”…I’m not naïve enough to think that any City could move between High Risk and Low Risk from one fiscal year to the other. Moving into the Moderate Risk category is an important milestone and achievement….” Don’t be fooled. El Cerrito is a mere three positions from the bottom 10 – and back on the watch list.










These pictures are meant to deceive you. The 13th designation IS NOT a good number because #1 is the WORST performing city.





Councilmember Motoyama was considerably more reserved in her post but also claimed success. 










The truth is that only the bottom 10, or 2.3% of the state, is on the watch list. Technically, the City is off the watch list, but the city is far from danger. El Cerrito is the 13th worst-run city in California.





Although these council members pat each other on the back, the City continues to have a fiscal crisis.





First, the city balanced the budget on the backs of the residents. The ARPA funding of $6 million was intended to help small businesses, help residents impacted by COVID with assistance such as subsidizing rent or otherwise utilized for the community.  For example, Berkeley set aside $1.5 million for electrifying low-income homes using prevailing wage labor, funds for tenant rent relief, and grants to small businesses and arts organizations. But El Cerrito residents GOT NOTHING.





City Staff and Council Members refuse to admit that the ARPA funding fully funded any financial improvement (and all the reserves).  To compound the issue, the City produced overly optimistic projections for the Transfer Tax (Measure V). According to more recent calculations, the City overestimated the revenue by at least a MILLION dollars – maybe more.





The City has $500,000 of planned expenses not included in the “official” budget, but the City Manager intends to bring those items back to the board mid-year. Also, the City has not made any structural changes to the budget, so it could easily tap into the meager reserves.





Each of these tactics was intended to deceive you. The Council hoped you would not notice until after the election, but the finances remain in crisis.





The council members are claiming success, but the number is 417– the number of California cities better managed than El Cerrito. While the council members drink champagne, 97% of California cities are better managed than El Cerrito.





The election is just around the corner.  Vote as an educated person in November.






	


	





	

		
El Cerrito Finances Continue to Be Poorly Ranked by the CA State Auditor
	


	
			

				
			


		
	

		

El Cerrito continues to claim they have solved their financial issues. Every time something around finances comes up they are the first to pat themselves on the back and say the problem is solved. Guess what? The CA State Auditor does not agree. The new Dashboard ranking is out and while El Cerrito has improved the city is still #13 on the list of 431 cities in the state of CA. Not an auspicious performance. My guess is without the bailout monies we would still be at #6 but hey take the reserve and move us to #13.





If you go to this page you can download the raw data used. Here you can see El Cerrito’s biggest issue is its pension liability. The same liability they have refused to address these past few years. They finally had a consultant come in and say that they can start a Section 115 trust but they need to fund it with a starting minimum of 1 million dollars. Where would they get this money to fund it? There is no line item in the current budget dedicated to unfunded pension liabilities. In the multiple years, I have been following this issue the only accomplishment they have (and accomplishment is a stretch) is that they had the consultant come in and talk to them about the 115 Trust. Nothing has been done. The raw data supports this. El Cerrito is #1 (which is the WORST) for future pension liability costs. Our pension risk designation is high.





The election is coming up. There are 3 candidates for 2 positions. One of those candidates is an incumbent who has been on the council during this financial decline. Including serving as Mayor during the year we had our worst performance. Current Mayor Quinto has been part of the problem. He has refused to engage with us on these issues.





Of the two other candidates, Carolyn Wysinger appears to be running on endorsements alone. She also did not respond to our questionnaire.





Vanessa Warheit has responded to our questionnaire and appears to understand the depth of this issue.





The electorate has a chance to make a change and elect council members that address the financial issues. Any changes that have been made in the last few years have been led by Councilpersons Rudnick and Motoyama who were both new to the council last election. I wish more has been done but getting a third person who understands finance on the council can only improve the situation. Electing people that have been part of the problem continues the problem. Make an informed choice!

	


	





	

		
Councilperson Gabe Quinto’s record on financial issues
	


	
			

				
			


		
	

		

An Analysis of the record of El Cerrito Councilmember Gabe Quinto





With the election just around the corner, it is time to discuss candidates. As you may have read, we have sent a list of questions to each candidate. We only have one incumbent. For Gabe Quinto, we can analyze his past statements and votes to give us an idea of how he might act as a future councilperson. Here I will present an analysis of the record of Councilperson Quinto. I hope readers will evaluate this information and let it inform their decision in November.






A casual observer of El Cerrito council meetings is likely to hear Councilperson Gabe Quinto talk about how El Cerrito has spent too much and that there is a need for austerity. This report investigates the extent to which Councilmember Quinto’s voting record and his time in leadership match his public statements.






Councilperson Quinto was elected in November 2014 and took office in December 2014, which, was the middle of the Fiscal Year 2015, so his first full fiscal year was the Fiscal Year 2016. Councilmember Quinto was Mayor Pro-Tem in Calendar Year 2017 and Mayor in Calendar Year 2018.





During Councilperson Quinto’s time in office, there has been an explosive growth in spending and multiple credit downgrades by the S&P credit rating agency as well as negative reports from the independent auditor and the state auditor. The state auditor singled out the time that Councilmember Quinto was mayor for being a time of particularly reckless spending.







“For example, the city’s fiscal year 2018–19 budget included an 8 percent increase in planned expenditures over the prior year without providing an appropriate rationale for the increased amounts.” (CA State Auditor Report page 7 of 64 all pages refer to pdf page numbers)

















During this time of enormous spending growth, Councilmember Quinto voted for every budget presented by the City Manager. From 2016-17 through the 2019-20 budget, El Cerrito had negative reserves, according to the state auditor report table 1, page 12/64. From the fiscal year 2015 through FY 2019, so from Gabe’s start to the last budget not impacted by Covid, general fund expenditures increased from $29,144,613 to $40,202,753, an increase of over $11 million which comes to a 38% increase. During that same period, the Bay Area CPI increased by just 14%. Moreover, the expense growth far exceeded revenue growth, causing yearly financial shortfalls. At the same time the city’s net pension liability grew by 67 percent from the end of fiscal year 2014–15 through the end of fiscal year 2019–20.3 As of June 2020, the city had a net pension liability of $65.8 million. (CA State Auditor Report page 6 of 64 all pages refer to pdf page numbers)






For further reference, I would like to share a few of Mayor Quinto’s quotes during City Council meetings.






On October 6, 2020, then Councilperson Quinto makes comments that appear to say where he was not aware of the financial problems. By this time El Cerrito had no reserves and had been taking loans to manage their budget.(State Auditor report page 3; Figure 3, page 5 of the state auditor report and Table 1, page 6 ) He brings up austerity but he also says he is going to vote for the budget (as he always has) even when Councilperson Pardue-Okimoto has just stated that she will not vote for a budget that she feels did not make enough cuts. I have clipped the video here but below is the link to the original video so you can see the source. Councilperson Quinto also mentions that since he took office there were three tax increases passed. He again blames his colleagues for the City’s financial woes.














Link to original meeting His comments start at 3:57





On June 1, 2021, Councilperson Quinto said that he would vote to direct staff to cut the additional library hours (over the County Funded Level). This was an amount of $58,000. He said that the money needed to be raised by fundraising and that they would never again get that money. The following council meeting, after a massive public outcry, he voted to reinstate the money. This money has not been subsequently removed again.














Link to original meeting His comments start at 2:56










On August 17, 2021, Councilperson Quinto praised the current City Manager and says that everyone who criticized her and the council was liars, mean-spirited and partisan. He specifically stated that City Staff was not overpaid. 





The State Auditor did not agree. She said







Although El Cerrito’s financial condition has improved, the city still needs to take specific action to control the growth of its salary and benefit costs. In response to our recommendations to reduce costs, El Cerrito issued a request for proposals for a salary and compensation study. However, it has not committed to when it would actually perform the study and noted that such a study would likely result in increases in its management employees’ compensation. Nevertheless, most city employees who are not at the management level may have salaries above average for the region. Because El Cerrito notes in its response that it will soon enter negotiations with two of its employee unions, it would benefit the city to have updated information with which to base those negotiations.” (CA State Auditor Response to March 2022 submission)





















Link to original meeting His comments start at 3:56










The concerns we have repeatedly raised about El Cerrito finances are the following





    

  1. Lack of transparency in the budget process
    2. 




  2. Lack of structural changes when the budget was finally cut
    3. 




  3. Lack of reserves
    4. 




  4. Lack of City Council closely monitoring the budget
    5. 






While the reserve issue is currently stable, due to the Federal Government bailout, structural budget problems remain unaddressed. Councilperson Quinto has been on the Council when  spending erupted. In the 10/6/20 video he blames his fellow councilpersons for their spending and he speaks a lot of the lies. He voted YES on every budget presented. He may have made multiple speeches on austerity but he also (video 8/17/21) says that city staff were not overpaid.





In Mayor Quinto’s candidate statement he talks about building a new library, keeping senior services, and increasing revenue. He doesn’t mention that the El Cerrito Plaza project does not fund the library and that El Cerrito currently has a BBB- bonding rating. When he was elected to the City Council the city had an A+ bond rating, but the rating was lowered three times during his years in office. The BBB- credit rating came on September 24, 2020, just before this speech.





This means that El Cerrito might not be able to get funding for a bond measure to support this library or would have to pay a high interest rate. He also doesn’t mention that on 2/4/20 he said that the City should stop funding senior services because the city can’t afford it. (3:13 in the video) He also claims that San Francisco has all their senior services run by non-profits and we should do the same. San Francisco does have a city budget for senior services. Many of the non-profits that fund those services get some or all of their money from the city. 





We sent Councilperson Quinto the same list of questions we sent all of the candidates and he never responded. 

	


	





	

		
Vanessa Warheit answers our questions
	


	
	

		

Two weeks ago we sent questions to each of the three candidates running for the two open El Cerrito City Council seats. As of today, only one has responded. The deadline is today so perhaps others will respond. For me, the response or non-response is an indicator of how they will respond to constituent concerns. 










We very much appreciate Vanessa Warheit taking the time to respond. 






















What do you see as the most pressing financial issue for EC?  If elected, what are your plans to address this issue?





El Cerrito is currently #6 out of 423 cities on the State Auditor’s High Risk Dashboard, and our bond rating is BBB- – one step above junk bond status. The most pressing financial issue for our city is lifting our bond rating and moving our way down the State Auditor’s list. If elected, I plan to follow the State Auditor’s roadmap, which includes setting up a Section 115 Trust (like a 401k for cities) and establishing a plan to start funding it. 





 What do you think needs to be done to address the city’s pension crisis?





We need to prioritize funding our pension liabilities, and that requires fundamentally reshaping our budget. Much like responsible adults need to save regularly for their retirement, our city needs to fund our pension liabilities annually as a keystone of our city budget. 





 What would you want to see as far as financial reports to the Council? How often? What level of detail?





Despite the lack of an integrated system, our finance department should be able to provide to the Council, at a minimum, monthly line item variance data (year-over-year, and planned vs. actual expenditures). On a quarterly basis, Council should receive an analysis of this data, which includes detailed explanations for any variances above established thresholds. 





 What is your stance on accepting campaign contributions from Police and Fire Employees or their unions?





I am a clean money candidate – I am the only candidate in this race to refuse money from all corporations and from police and fire unions. I am also the only candidate to sign the No Fossil Fuel Money pledge. 





What are your plans for small business development?





Small businesses are the lifeblood of our city, and we should treat them better. I would like to streamline the permitting process for local businesses; to establish better lines of communication between the city and existing and prospective small businesses; and to implement a commercial vacancy tax to encourage landlords to lease out their properties and send a market signal that it is not acceptable to leave blighted properties in our city. I want to work with Richmond on their Green-Blue New Deal to create local green job development opportunities. I want to work with our planning commission to ensure that new development along San Pablo Avenue includes small, flexible ground floor commercial spaces appropriate for small-scale local businesses. I will also work to ensure El Cerrito local businesses are able to access funds coming from the federal government as part of the Bipartisan Infrastructure Law and the Inflation Reduction Act.





Are you satisfied with the budget process? If not, what changes would you suggest? Should FAB do an analysis of the budget’s assumptions or just make general recommendations such as “try to save $1 million”





I am not satisfied with the budget process as it currently exists. Our city is in a financial crisis, and much-needed federal COVID relief funds were spent balancing our city’s budget instead of helping needy members of our community. We owe it to El Cerrito tax-payers to be more transparent about how their money is being spent. I think we need to expand the FAB to include at least 7 members; we need to be prepared to fundamentally reshape our budget rather than simply rolling over from previous years, and to hold multiple open, inclusive, participatory budgeting sessions with members of the public. Council should ask FAB to do a more thorough analysis of the budget’s assumptions, and should heed and respect their input.





How will you evaluate the city manager’s performance?





I believe that Council should create performance criteria for the City Manager and her direct reports. Using a systematic and structured approach, Council should align the City Manager’s performance goals with the City’s goals and objectives. As an elected city council member, I would hold the City Manager accountable in reaching these goals and objectives through periodic conversations as well as a more formal annual review.





Describe what you understand to be the working relationship between the City Manager and the City Council. Are there any changes you would like to see, and if so, how would you go about it?





El Cerrito is governed under what is commonly referred to as a “weak mayor” model, in which day-to-day decision making is made by the City Manager under the oversight of the City Council. The key is for the City Manager to implement policies as established and directed by the City Council. It is essential that the Council be engaged and provide oversight. The Council is the voice of the City’s residents and, unlike the City Manager, directly reports to them. As a Council Member, I will work collaboratively with the City Manager, provide input and oversight, advocate for clear performance metrics, and ultimately hold the City Manager accountable to these agreed-upon goals and standards. 





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





El Cerrito needs a formal commitment to transparency. The city needs a fundamental culture change regarding public information; currently many El Cerrito residents feel like the city does not listen to them or care about what they think. Public funds support City Services, and residents should receive basic information as a matter of practice. The City should provide residents with more opportunities – at hours accessible to working families – to learn about city activities and provide meaningful input. This includes:





* easy access to relevant information on the website, in multiple languages; 





* access to departments providing services and prompt replies to public requests; 





* increased and/or more flexible hours for public access to city hall; 





* improved information dissemination via social media and a public activity calendar; and





* a more open and formal process for listening to and acknowledging the needs and desires of El Cerritans across city services.





The city should also implement performance standards and accountability. The performance plans for each department head should align with the overall City needs, including service level agreements with the public. This can effectively be implemented when the City aligns the funding (budget) with required public services.





Do you support a bond measure for the library? Are you concerned that El Cerrito’s BBB- credit rating will impact the ability to sell bonds at a reasonable interest rate?





I support efforts to build a 21st century library for El Cerrito; our current library is much too small, lacks appropriate HVAC, and does not adequately serve our community’s needs. A new library will improve our city in countless important ways. However, I am very concerned that such a project will be financially infeasible until we improve our city’s bond rating. Before we go to voters and ask them again to support a bond measure to fund a new library, the City needs to demonstrate that it has its financial house in order. Once the City’s fiscal management improves, its bond rating will improve, too, making a bond measure for a new library more feasible. I am also concerned that this improvement in our bond rating may not happen on a timeline that aligns with the ongoing construction planned for Plaza BART. Since siting the library at Plaza could potentially save the city millions in construction costs, I believe the city also needs to pursue other forms of possible financing for the library; this research and planning needs to begin immediately.















Vanessa’s website with more information about her campaign can be found here. 

	


	





	

		
City Manager Up to Her Tricks again aided by Mayor Quinto
	


	
			

				
			


		
	

		

The City Manager and the Mayor set the agenda for each council meeting. Things that are put on the consent calendar get passed all at once. Often this is for items  like proclamations etc but in recent El Cerrito history it was also used to pass the September response to the state auditor. Council members can pull something off of the consent calendar though I am uncertain as to whether there needs to be a vote to do this or not. 





The agenda for September 20, 2020 has a few financial issues on the consent calendar. The one I will discuss today is Item 5J. You can find the memo on this on page 171 of the packet. First the background. The California State Auditor specially called out “Ineffective Budget Development and Monitoring Practices Drive Overspending.”  (CA State Auditor Report page 18 of 64) There is a long discussion as to reasons behind this assessment. At the end the many recommendations were made including the following: 












• “To ensure accountability in monitoring
the budget, city management should
present monthly updates to the
city council on the current status of
departmental budgets and comparisons
to prior-year budgeted and actual
amounts. City management should
promptly seek approval from the city
council of proposed budget adjustments
by departments when warranted. City
management should also prepare and
provide to the city council supporting
documentation to justify any proposed
budget increases.” (CA State Auditor Report page 24 of 64)





Bold is mine.







If you read the City Manager’s Report she made the recommendation for the change to the Comprehensive Financial Policy not the Financial Advisory Board (FAB). This change stops the monthly reports the State Auditor recommended and changes the reporting to quarterly. She reports she brought this to FAB in April 2022 (where it failed by a 2-2 vote). She then brought it again to them again on June 26, 2022. At that time, the City Manager was advised that the policy does not incorporate the State Auditor’s recommendations and relaxes the requirement for monthly reporting, which directly opposes the State Auditor’s recommendations.  The City Manager’s memo states












“At the August 23, 2022 FAB meeting, staff again presented this proposal and shared their concerns with the FAB that with the current staffing situation in the Finance Department and City Manager’s office, at this time monthly reporting is not achievable. Further, City Council has been receiving quarterly reports over the past fiscal year as advised by the City Council adhoc subcommittee. While the original language proposed to the FAB by staff does not preclude the City Council requiring more frequent reporting as long as it is “no less than quarterly”, staff suggested including additional language to clarify that “Reports may be required on a monthly basis by the City Council if they deem it necessary to more frequently monitor the budget.” The FAB again discussed concerns about the frequency of the reporting to the City Council, and did not approve a recommendation by a 3-2 vote. The FAB did not consider or provide an alternative recommendation to send to the City Council.” (City Council packet for 9/20/22 page 172/233)












Per El Cerrito City Code 2.04.290 The Financial Advisory Board does the following







3. “To conduct an annual review of the city’s comprehensive financial policy and investment policy and make recommendations regarding the managing of the city’s financial reserves to assure maximum returns on approved investments;”









7.”To review the form and format of budget documents, agenda bills and other recurring financial reports prepared by the city and issue recommendations to the city council and the city manager regarding how the form and format of these documents may be modified to allow for greater clarity in the manner financial information is reported.”







In this instance, the City Manager did her own review and recommendation of a revision of the Comprehensive Financial Plan without the approval of FAB and disregards/does not engage with FAB on the financial reporting they recommend.





The City Manager states in her memo that the City Council Ad-Hoc Committee, appointed to oversee the response to the state auditor, (consisting of Councilpersons Motoyama and Rudnick) have said it was okay to do quarterly reporting even though it contradicts the State Auditor’s recommendation. I want to note that later on the agenda Item 8B is this “FY 2021-22 General Fund Budget Quarterly Update through June 2022“. On September 20, 2022 the City Council is receiving a quarterly budget update for a period that ended in June. Quarterly reporting that happens 3 months after the quarter end becomes semi-annual reporting. We already know that the Council and Staff are not nimble in their responses. By the time Council is aware of any issues that arise it will be too late to address them. I understand that there have been continual complaints that they are understaffed in the Finance Department but after being on the State Auditor’s list for multiple years it should be a Council and Staff priority to get off the list and stay off of the list. 





We have requested that all the candidates for the two open Council seats submit some answers to us by tomorrow September 20, 2022. One of the questions asked about reporting financial data issues. I truly hope that some of the candidates respond.





If you want to take an action I would suggest writing the council people and asking this item be removed from the consent calendar and discussed fully. 





Email addresses are as follows





Mayor Gabe Quinto gquinto@ci.el-cerrito.ca.us





Mayor Pro-Tem Motoyama lmotoyama@ci.el-cerrito.ca.us





Councilperson Rudnick trudnick@ci.el-cerrito.ca.us





Councilperson Janet Abelson jabelson@ci.el-cerrito.ca.us





Councilperson Paul Fadelli pfadelli@ci.el-cerrito.ca.us

	


	





	

		
CA State Auditor Response to El Cerrito Report of March 2022
	


	
			

				
			


		
	

		






Yesterday the CA State Auditor finally released its response to the El Cerrito March 2022 report. The State Auditor retired earlier this year and thus things are moving slowly. We have been told by their office that they anticipate updating the At Risk Dashboard in October/November. We hope it happens before the election. They are also releasing reports on two cities ranked even worse than El Cerrito in October.






All bold quotes are from this author, not the auditor.






What does the report say? It says the same things we have been saying. There is a reserve now which is good. However, the reserve is based on high real estate sales and federal bailout money. Which means it is not sustainable. They said







“El Cerrito’s ability to meet its goal of a sufficient reserve can be attributed to multiple factors that it may not be able to rely on in the future, risking the depletion of that reserve. First, the city’s increased revenue can largely be attributed to an unexpectedly robust real estate market. The city’s real estate transfer tax generated $4 million in fiscal year 2020–21, 53 percent more than expected. If the city’s real estate market slows, the city may not generate sufficient revenue to cover its costs. If the city had received the amount of the transfer tax that it budgeted for, the city would have $1.4 million less in revenue. A highly variable revenue source such as this tax can leave the city vulnerable to overspending if the city increases its revenue projection based on a peak year but ultimately receives a much lower amount. As we note in our audit report, El Cerrito’s financial challenges occurred in large part because it did not adjust its spending to match its revenue.” (CA State Auditor Response to El Cerrito March 2022 update.)












The Auditor is concerned that the city continues to ignore its pension crisis. 












Moreover, El Cerrito has taken only initial efforts to address its pension costs. As the city noted in its September 2021 update and reiterated in its March 2022 update, its police chief and fire chief, who are part of a union, agreed to pay a higher proportion of their pension costs. However, other unions that represent most employees have not agreed to deferrals of salary increases that could help control pension spending. El Cerrito also indicates that it is researching vendors to establish a Section 115 trust that can be used to pre-fund pension costs, but does not expect to finalize this strategy until fiscal year 2022–23.” (CA State Auditor Response to El Cerrito March 2022 update.)







The Auditor continues to be confused as to why El Cerrito is not addressing some of their hiring and compensation decisions.





 







“Further, El Cerrito continues to defer a decision to permanently end its system of allowing certain management employees the ability to receive salary increases above the threshold established in the city’s salary schedules. At this time, the city states that it has indefinitely suspended this process but does not indicate why it has not decided to discontinue it entirely. Our audit cited specific examples of management employees being paid in excess of the city’s salary schedule and greater than similar positions of nearby cities, so we are unclear why this process has not been eliminated.”(CA State Auditor Response to El Cerrito March 2022 update.)












Finally, they stated that the city is not following through on cost management for services. They wanted the city to be cost-neutral on senior services and recreation services. Certainly in the past recreation services were a money maker. Senior services were always subsidized. An argument can be made that they should be subsidized but at the end of the day if the money is not there it can’t happen.












“El Cerrito continues to defer taking specific actions that could increase its revenue and contribute to more financial stability. El Cerrito’s corrective action plan update notes that the city increased fees for its recreation services. However, it made those changes in May 2021 and previously reported them in its September 2021 corrective action plan update. The city continues to report that it will conduct a demand and cost recovery analysis for recreation services after normal operations resume but states that it cannot estimate when that will occur. Further, El Cerrito’s corrective action plan update states that the city is currently charging for senior services at normal cost recovery. However, when we asked for documentation of this practice, city staff provided budgetary and financial information indicating that the city continues to subsidize the senior services program. Moreover, El Cerrito expects the cost of operating its swim center in fiscal year 2021–22 to exceed the revenue obtained from fees, resulting in the city once again needing to subsidize those services. El Cerrito should prioritize efforts to ensure that its fees cover the cost of its services regardless of changes in demand.” (CA State Auditor Response to El Cerrito March 2022 update.)







For as many times as this author has been told they don’t know what they are talking about by City Staff and Council members it seems that the CA State Auditor agrees with everything, this blog has been saying for several years. 

	


	





	

		
Asking the 2022 City Council Candidates Some Questions
	


	
			

				
			


		
	

		






updated 9/7/22 with Gabe Quintos website.





There are three candidates running for two seats on the El Cerrito City Council. They are listed as they will be on the ballot. 










Carolyn Wysinger: Her website is here





Candidate packet is found here. 





Campaign Disclosures are found here. There are few for you to click on. 





Vanessa Warheit– Her website is here





Candidate packet is found here. 





Campaign Disclosures are found here. There are few for you to click on. 





Incumbent Mayor Gabe Quinto  His website is here. 





Candidate packet is found here. 





Campaign Disclosures are found here. There are few for you to click on. 










We sent each of the candidates the following questions. We have asked that they respond within 14 days. We will post responses as we receive them. 





    

  1. What do you see as the most pressing financial issue for EC?  If elected, what are your plans to address this issue?
    2. 




  2. What do you think needs to be done to address the city’s pension crisis?
    3. 




  3. What would you want to see as far as financial reports to the Council? How often? What level of detail?
    4. 




  4. What is your stance on accepting campaign contributions from Police and Fire Employees or their unions?
    5. 




  5. What are your plans for small business development?
    6. 




  6. Are you satisfied with the budget process? If not, what changes would you suggest? Should FAB do an analysis of the budget’s assumptions or just make general recommendations such as “try to save $1 million”
    7. 




  7. How will you evaluate the city manager’s performance?
    8. 




  8. Describe what you understand to be the working relationship between the City Manager and the City Council. Are there any changes you would like to see, and if so, how would you go about making them?
    9. 




  9. What would you like the city to do that will restore residents’ confidence in the competence, accountability, and responsiveness of the city?
    10. 




  10. Do you support a bond measure for the library? Are you concerned that El Cerrito’s BBB- credit rating will impact the ability to sell bonds at a reasonable interest rate?
    11. 


	


	





	

		
Is the 22/23 Budget Stable?
	


	
	

		











Last week I wrote a post updating you all on the current status of the budget. I brought up some points that were reiterated in the 8/16/22 Council Meeting. The question I have is this 22/23 budget sustainable and are the forecasts accurate?





The first issue is the Transfer Tax. 





I brought that up in the last post but William Ktsanes, who is also 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. Now Mr. Ktsanes says he could be wrong, but on the other hand, he could be correct. If he is correct, that money will wipe out any surplus in the budget. 





The second issue is inconsistencies and confusion in the budget.





The budget also has $465K in one-time projects that were not included in the budget document. Yea as I type this I get that does not make sense. They have listed the projects, but they did not subtract them from the budget. If you remember from the last post, there was an 812K surplus (not the FAB recommended 1 million) and there is this 465 K in expenses which, if subtracted, bring the surplus to 347K. You may also remember FAB asked the council to put a million dollar surplus in last year. You can see below the surplus as amended was a little less than 600k. This is not the way to be building a reserve. The reserve is all there because of ARPA (bailout) money and a strong real estate market which meant lots of dollars for the real property transfer tax. 















The forecast document below also shows a concerningly low 3% inflation rate estimated. If there is anything we have all heard a ton about this year it is about how high the inflation rate currently is. According to the Bay Area CPI it is not 3% but is 6%. It should be forecast as such for this year with a higher than 3% rate again next year.










The third concern is pension costs





The pension issue is the worst of El Cerrito’s financial issues and the one they have not addressed at all. CalPERS suffered significant losses in FY 2022, which will not show up for another year in municipal budgets, but it is likely to sting. A change in the discount rate is also likely coming in another year or so. You can see how the unfunded liability costs have increased since last year. We can expect a bigger leap next year. 










Is this budget sustainable? I think this year we will be fine if only because of the second 3.1 million in bail-out funds. The city will probably contribute less to the reserve than estimated. I do think the future projections continue to minimize the increasing pension problem and we are in trouble next year 23/24. There still have not been the structural changes necessary to stabilize this house of cards.

	


	





	

		
We’re Back and El Cerrito’s Budget Process is still a hot mess!
	


	
	

		






Gosh has it been 10 months since the last post? Holy Moley does time fly? The author of this blog moved out of state and tried hard to move on with their life. But in the past few weeks, they got a few emails begging them to come out of retirement. Or at least focus back on El Cerrito finances. I have agreed to do so because this November El Cerrito has a competitive election for City Council! This is a huge opportunity to add fiscally inclined people to the council. Three people are running for 2 openings. We will cover the candidates and we are creating a list of questions to ask all the candidates as we have in the past. If you have suggestions email betterelcerrito@gmail.com.





So enough of all of that! Let’s get down to the business of updating you on the El Cerrito finance situation. Because if you are watching the City Council meetings you might think all is well. The Biden Bail-Out of 3+ million last year and again this year along with an INSANE real estate market has helped the city quite a bit. No more pay-day loans (TRANS) to keep the city afloat. The budget planning documents now include much more detail on the assumptions used. There is a new Finance Director. There is an actual 17% reserve. That is all huge progress. However, problems remain.





What are the issues that remain?





  1. The City Bond rating continues to be BBB-. You can read my post when it dropped to that in September 2020. This low rating means borrowing is expensive or may not be able to happen. This potentially jeopardizes any Bond Measure. We expect that El Cerrito will push for a bond measure for a new library at some point. With this rating that is not possible. The rating is old so one wonders if the city has pursued getting re-evaluated at some point. 
  2. The outlook for Real Transfer Tax may be overly optimistic. They are assuming an 18% drop-off from FY 2022. The July data provided by the county indicated that July 2022 income was 36% below July 2021. If that happens there might be a $1 million shortfall. The Auditor called out not counting too much on such an unstable source of income.
  3. Pension costs continue to rise with NO real plan in place to address them. The Staff continues to research a 115 Trust plan which allows them to put money aside for future pension costs but they still need the money to put aside.
  4. There continues to be a serious lack of transparency in the budget process. This year’s budget was passed on June 21, 2022, by a 4-1 vote. (Motoyama voted NO). Much of the public comment was about that lack of engagement on the process with the public. Councilperson Rudnick acknowledged in her comments that the process was not inclusive of the public. Councilperson Motoyama tried to get the budget continued to the next meeting but that failed by a 3-2 vote. (Rudnick voted Yes).
  5. The City Council continues to not effectively utilize the Financial Advisory Board (FAB). When they do make recommendations to Council they have not been listened to. For example, FAB has been recommending a budget surplus of 1 million in every proposed budget. This year’s DRAFT budget has an 812K surplus (because 812k and 1 million are the same). The budget does not include some items such as the wage and compensation study which if included would lower the surplus by  465k. Dick Patterson, The Chair of FAB, (at the time of the meeting) spoke at the Council meeting June 21, 2022 and spoke to this and other concerns FAB had about the budget. (he starts speaking at 1:44)
  6. Complacency has returned. The City Council engaged once the financial crisis hit the news. They made some demands for information. They have been getting monthly financial reports for the past few years. Which allowed the public to closely watch also. Now it has been decided that quarterly reports are enough. Why has the Council not demanded continued monthly reports? Quarterly is not enough to catch things, especially with the slow pace for action in the city. The public also deserves to keep a close eye on the budget given that El Cerrito still shows as #6 on the High Risk City List. (We do not know when rankings will be updated. The State Auditor did not respond to the El Cerrito March 2022 update)















We’re back and we hope you will be back also. Engage with the council. Pay attention. And stay tuned here!

	


	





	

		
Will the Community Fight For Fiscal Responsibility?-El Cerrito Budget Update Part 3
	


	
	

		






This is the final part of a three-part series updating residents on activities related to the El Cerrito fiscal crisis. This is the final part of a three-part series updating residents on activities related to the El Cerrito fiscal crisis. In other big news, the Finance Director has resigned and has left the building. While a new Finance Director with more forecasting experience and experience in addressing fiscal issues could be a great thing for this city we also understand the City Manager makes this hiring decision. This City Manager has been historically non-transparent and not super willing to acknowledge past mistakes or shift the trajectory. This could be an opportunity for her to hire someone who can turn this ship around and make the tough decisions. Or she could hire someone that continues to deny issues and have fights with members of the FAB when they challenge their untruths. I hope Council encourages her to hire wisely.





The response to the State Audit also reported that “the incumbent Finance Supervisor will be retired as of September 30, and the position is proposed to be replaced by a Budget Manager position that will specifically focus on budgeting and financial analysis for the City, allowing City Management to be responsive to the City Council and the public in communicating budget strategies and information. This classification is being developed and is expected to be presented to the City Council for approval in October, and staff will seek to fill this position by the end of the calendar year.”





If we fill both of those positions with these new skill sets it could be transformative for the city. The lack of forecasting has been a great disservice to the city. As of the date of this report, I do not believe this position has yet been presented to the Council. These positions need to both be filled ASAP as the City now does not have a functioning Finance Department. I know an interim Director was going to be put in place soon. The Community needs to stay on this issue as it could be used as an excuse not to produce promised information and reports.





To end this series here are a few things to keep an eye on. 





  1. Does the City Council get regular budget reports? When the Ad-Hoc Committee reported back they detailed what they wanted to see in reports and stated that these would start in November. Given the Finance Director has left I anticipate the City Manager using that as an excuse to not have a comprehensive report. They have already used that as a reason to cancel the Financial Advisory Board meetings. 
  2. Will they fill the open Financial Advisory Board seat? It seems rather convenient that they decided to reassess the Board and Commission rules right at the time the FAB had an opening. Then they added criteria that applicants need to have attended some meetings. At the last council meeting, they said it might be February before the seat was filled. 
  3. Will the Council push the City Manager to hire a competent and experienced Finance Director who has the skill set to do accurate forecasting and present information to the community in a comprehensible manner? 
  4. Will the Council assign a team to do the City Manager’s evaluation that evaluates her performance and brings in the factors of community trust and how she is working on the budget?





As I have said before change will only happen if the community continues to hold the Council responsible for the fiscal state of the city finances

	


	





	

		
Will the Community Fight For Fiscal Responsibility-El Cerrito Budget Update Part 2
	


	
	

		






This is part two of three of the Fall update on what has been happening with the city budget. Today we cover the Ad-Hoc Committee report which includes the report sent to the State Auditor (click the link below)





City Council Financial Ad-Hoc Committee Update– Presented by Council Person Rudnick and Motoyama at the Meeting on September 21, 2021. There was an Ad-Hoc Committee formed with these two councilpersons working with city staff on preparing the response to the State Auditor Report. Councilperson Rudnick spoke some about their process and meetings and then Councilperson Motoyama stated that they had provided direction on budget updates moving forward. Updates should include actionable information, be provided quarterly to get fuller pictures, and have 5 and 10-year forecasts, and break down the budget department by department.





During the meeting, Mayor Fadelli asked will we get a response back? Karen Pinkos said yes that is anticipated. She stated that they are still working on the Fiscal Sustainability Plan which the council will need to approve. She believes they will be removed from the list.





This image has an empty alt attribute; its file name is screen-shot-2021-10-24-at-3.21.15-pm.png





As of the date of this blog post, the State Auditor has made no public online response to the response sent last month. I think it is highly unlikely we would be removed from the list as if you look at the high-risk dashboard above we have addressed only Fund Balance. We now have a few million dollar reserve. There has been no action on any of the pension issues. In fact in that area of the report, it says





“The City Council has directed City staff to establish a Section 115 Trust. Staff is now researching vendors and a recommended funding policy for the City Council’s consideration. Financial policies are also slated to be discussed by the City’s Financial Advisory Board in the coming months.





The action once again is research. They have been cancelling FAB meetings due to staffing issues (covered tomorrow) and are delaying the filling of the open position on FAB. 





Frankly, I found a few other responses in that report less than satisfactory. On page 2 they mention there will be a 4 million dollar reserve meeting our 10% goal. This is disingenuous because looking at the true policies we are also required to have an additional emergency reserve and the recommended reserve for a city our size is 17 million. That number was referenced in part one of this article which covered the Fiscal Sustainability Plan.





It is important that the community continue to follow these reports and if the state auditor posts responses to them. 

	


	





	

		
Will the Community Fight For Fiscal Responsibility?-El Cerrito Budget Update Part 1
	


	
	

		






It has been a long time since I posted. This writer is going to be leaving El Cerrito and it has been hard to motivate myself to continue with the blog. This blog has filled a void by informing residents about the Fiscal Crisis and I feel sad that it may not continue. There is a committed group of residents that have been working behind the scenes for a few years. Please if you care about the city email me at eccfrg@gmail.com and I can get you connected. The group can use people who can do some report backs from the Financial Advisory Board (FAB) and Council Meetings. They can use some people to help get the word out via this blog and social media. If others don’t step up all the work thus far may have been for naught.





I am ending with a three-part update. This can catch people up as to what has been happening or not around fiscal sustainability in El Cerrito. I will post one post each day for the next three days.





Study Session – Fiscal Recovery and Sustainability Plan-Last Meeting on August 31, 2021. 





I will admit I did not attend this meeting. I was so frustrated about the lack of publicity for it and the scheduling at 4 pm on a workday that I thought it a waste of time. Today I reviewed the slide set and saw that the Plan had made some major improvements since the first meeting.





The first thing to be very clear about is that the only reason El Cerrito is doing okay right now is the American Rescue Plan Act (ARPA) funds. Without those funds, our situation would continue to be dire. With those funds, we could be on the path for change IF pension issues are addressed in a meaningful manner.





A few highlights from the report:





This first slide is an accurate statement as to what is needed on the road to sustainability. I am especially pleased that strengthen transparency and community trust is called out. This is something I have been begging for. They also call out monitoring key financial drivers including PERS (pension plan) which is something that has been missing and is a significant piece of the future. The pension issue could bankrupt the city if not addressed. 










Below they also state their key assumptions. This is something that we have long asked the Finance Director to do. The two assumptions I am concerned about are the flexible COLA assumption since the represented employees have been reluctant to give back anything. Any COLAS not taken these last few years were deferred and I believe in 2022 they will get COLAS again. It also assumes no recession through FY 32-33 which seems rather improbable. That being said I understand that it would be hard to predict what the next recession will look like. I also hope the Cannabis revenues are not overstated. They are anticipating 300k a year from each of the two of them. One is not open yet.










The next few slides show how bad shape we would be in without the Rescue Funds. This proves my point of how that money is saving this city. It does have us obtaining a real reserve quickly. Which is great. My concern is that this report and the City as a whole are not addressing the Pension Issue which I suspect could change everything. I hope before the Council approves this document they ask for some data on that issue. 





The fo















This document is a reasonable start. Before it is approved I suggest the Council ask for more data on how the pension costs factor into each of these scenarios. It appears to be a huge missing piece. I also hope that the Council uses this document to hold the City Manager accountable. She has been historically anti-transparency. Transparency is the only thing that might build community trust again. I hope the Council holds her to it. I believe based on last year her evaluation is coming up in December or January. I hope the Committee assigned to do it includes one or both of the Council Ad-Hoc Committee members as they seem to best understand how the City Manager is navigating the budget. While the public is not permitted to see this document I hope it is an honest reflection of her work. I also hope it sets some quantifiable goals for her progress. 

	


	





	

		
CALL TO ACTION: El Cerrito’s Proposed Responsible Investment Policy – Fossil Fuels and Tobacco
	


	
	

		





As the October 2nd pipeline rupture off the Huntington Beach shoreline of reminds us, our reliance on fossil fuels is fraught with environmental and economic risk. An estimated 131,000 gallons of crude spewed into the Pacific Ocean, creating a highly-toxic 13-square mile oil slick that is now washing up onto Southern California beaches and into fragile coastal wetlands rich in biodiversity. Of course, damage is not limited to occasional oil spills. Every moment of every day, the burning of fossil fuels release carbon dioxide into the air, creating a greenhouse gas effect that traps heat in Earth’s atmosphere and accelerates global warming.


On September 28th I presented to the City of El Cerrito’s Financial Advisory Board (“FAB”) a proposed socially-responsible investing (“SRI”) clause to the City’s official Investment Policy that would prohibit the direct investment of City funds in fossil fuel and tobacco companies. After discussion and debate, the FAB voted 3-to-1 to recommend that the City Council adopt as policy the “3.6 Responsible Investing” directive below:


Investment Policy Addition – Fossil Fuels and Tobacco


The City of El Cerrito’s Financial Advisory Board (“FAB”) recommends that the City Council adopt an amended Investment Policy with language (1) encouraging socially responsible investing; (2) prohibiting investments in entities that engage in the direct exploration, drilling, production, refining, or marketing of fossil fuels; and (3) prohibiting investments in entities that engage in the direct production or marketing of tobacco products.


To this end, the Financial Advisory Board recommends that the following language be included in the City of El Cerrito Investment Policy:


3.6 Responsible Investing: The City of El Cerrito recognizes that it has a shared responsibility to protect the lives and livelihoods of its inhabitants from the catastrophic threat of climate change and societal costs of harmful tobacco products. The City believes that its financial investments should support a future where all its inhabitants can live healthy lives without the negative environmental, economic and/or health impacts of global warming and addictive tobacco.


    

  • 

      

    • 

        

      • Investments are encouraged in entities that are involved in the production of renewable energy and sustainable agriculture and have demonstrated a commitment to environmental sustainability and transparent, accountable corporate governance.
        • 

      • No investment is to be made directly in publicly-traded companies or private entities that engage in the direct exploration, drilling, production, refining, or marketing of fossil fuels.
        • 

      • No investment is to be made directly in publicly-traded companies or private entities that engage in the direct production or marketing of harmful tobacco and tobacco-related products, including but not limited to cigarettes and e-cigarettes.
        • 

      • All investments in the Local Agency Investment Fund (“LAIF”) are exempt from section 3.6.
        • 

      

      • 

    

    • 



The Financial Advisory Board is a City Council-appointed group of up to five resident volunteers with financial expertise. I am one of four current members; a fifth position has been vacant for several months. To be clear, a FAB “recommendation” is only that—a recommendation, with the City Council under no obligation to adopt it.


At least for now, the proposed SRI clause is largely symbolic as the City’s “rainy day” fund and emergency reserves have been depleted by overspending and mismanagement, leaving almost nothing to invest. El Cerrito’s finances are a mess—and have been so for many years, long before COVID-19. As you may recall, the California State Auditor conducted a thorough review in 2019 and placed the City in the State’s “Local High Risk Program.” Among the more than 400 cities monitored by the State Auditor’s office, El Cerrito ranked from sixth to eighth from the bottom between 2016-2020, consistently among the worst in the state in terms of overall fiscal health and financial risk (https://www.auditor.ca.gov/local_high_risk/at-a-glance-csa). In a letter to the Governor, the State Auditor wrote:


In general, we determined that the city is at high risk of financial instability because of its continual overspending, poor budgeting practices, and lack of a comprehensive plan to address its financial challenges, all of which threaten the future provision of city services.


To pay its bills on time, the City issues Tax Revenue Anticipation Notes (“TRANs”), short-term loans that serve a bit like a payday loan (with “payday” being the October and April property tax collection dates). Until the borrowed money is spent, it is held in the State of California’s Local Agency Investment Fund (“LAIF”), a low-cost, low-risk, investment account managed by the State’s Treasurer’s Office. Although the Treasurer’s Office is committed to socially responsible investing and does not directly invest the LAIF in either fossil fuels or tobacco, FAB members wanted to be absolutely certain that holding funds in the LAIF would not violate the City’s investment policy. That concern is addressed by the fourth bullet of the “Responsible Investing” clause exempting investments in the LAIF.


The City’s Finance Director Mark Rasiah, who attends but is not a voting member of FAB, strongly opposed the recommendation, falsely asserting it would cost the City between $40,000-$50,000 to implement. FAB Chairperson Dick Patterson was the lone “no” vote, expressing his belief that fossil fuel companies are leaders in the pursuit for renewable energy and that El Cerrito’s investment policy would do nothing to alter the behavior of individuals who are the end users of fossil fuels and ultimately responsible. While Finance Director Rasiah acknowledged his responsibility to present FAB’s recommendation to the City Council for review, he also made it clear that he would likely recommend that the responsible investing clause not be approved.


Initially, I was not terribly concerned about the Finance Director’s opposition. The proposed SRI addition is so well-researched, clearly and simply stated, common among municipalities, and unencumbering that it was hard to imagine City Council members voting against it when they met next on October 5th. What I did not anticipate is that FAB’s recommendation would simply be left off the City Council meeting agenda.


I ask for your help now in getting City Council approval of the above “3.6 Responsible Investing” guidelines. Please email El Cerrito’s city clerk, mayor and councilmembers and ask that the FAB-recommended “3.6 Responsible Investing” guidelines be added to the City Council’s agenda and approved as an addition to the City’s investment policy. Importantly, please include “Public Comments” in the subject line of your email (for example, “Public Comments – Responsible Investing”). Following the City’s “no less than 72 hours in advance” public notification policy, the agenda for the Tuesday, October 19th City Council meeting will be set on Thursday, October 14th. Public comment emails received by 4:00 pm Tuesday, October 19th (three hours before the 7:00 pm City Council meeting) will be included in the meeting packet. 


Mayor Paul Fadelli – pfadelli@ci.el-cerrito.ca.us


Mayor Pro Tem Gabe Quinto – gquinto@ci.el-cerrito.ca.us


Councilmember Lisa Motoyama – lmotoyama@ci.el-cerrito.ca.us


Councilmember Tessa Rudnick – trudnick@ci.el-cerrito.ca.us


Councilmember Janet Abelson – jabelson@ci.el-cerrito.ca.us


City Clerk Holly Charléty – cityclerk@ci.el-cerrito.ca.us


Lastly, please join the upcoming Tuesday, October 19th City Council meeting via Zoom and provide public comments in support of the proposed responsible investing guidelines. The Zoom link for City Council meetings changes with each meeting and can be difficult to find, but eventually it will be posted at the top of the meeting agenda and buried among the links at http://www.el-cerrito.org/114/City-Council-Meetings and http://www.el-cerrito.org/482/Council-Meeting-Videos-Materials.


Thank you.


William Ktsanes
(Guest Contributor)
	


	





	

		
City Council Congratulates themselves for doing nothing
	


	
	

		













There was a council meeting last night. The finance reports were buried until the end as per usual. The good news is we ended the year with 1.3 million on the books. Some will say we had a surplus of over 2 million but over one million of that had to be written off due to losing a lawsuit. The actual fund balance number is the one that counts and that is 1.3 million. The Council congratulated themselves and the staff.





The transfer tax received was OVER estimates by 1.7 million. The entire surplus was created by an unsustainably strong housing market. If that had not happened we would have been in the red once again. But yes let’s congratulate the staff on that.





The state auditor updated their dashboard. El Cerrito remains the #6 worst city in the state financially but our overall points declined from 36.32 to 35.76 out of 100. 





If you dig deeper into the El Cerrito numbers you will see nothing positive and the pension issues are horrific. We are the worst city in the state for future pension costs.





 










If you look at the required contributions (above) for 27/28 versus the budget you will see that 20% of the budget would be utilized for that. 





If you compare the prior year to this year you will see





2020 Actuarially Determined Pension Contributions $7,194,477





2019 Actuarially Determined Pension Contributions $6,351,717





2020 Accrued Pension Liabilities $214,921,896





2019 Accrued Pension Liabilities $203,153,960










El Cerrito does not acknowledge the fiscal trouble we are still in.  Instead the public got to listen to another diatribe from Council Person Quinto who said that those not supportive of the route the city is taking are liars, mean-spirited and partisan. (at 3:56 in the meeting video). He focused on staff costs and insists they are not to high and the public needs to look at Betty Yee’s website for proof. Regardless of whether the city staff is overpaid or not the city is still in terrible financial shape and Council Person Quinto and the Finance Director instead of addressing this use every opportunity to portray those disagreeing as horrible people. It is tone policing at its finest. Say something critical about the Council or Staff and be told you are making personal attacks. 





I ask Council Person Quinto if we are liars why do the State Auditor’s reports bear us out?





I ask the other Council Members why they continue to allow Quinto’s attacks to go without comment? He gets to say whatever he wants as his free speech right but is attacking the public the route to take? Silence implies agreement. 





Council Person Motoyama joined in the praise but also said there needed to be sustainable changes and we needed to see the 5-10 year projections. Remember the last attempt at that? I do. It showed us with no adequate reserve quickly. Make no mistake without the federal bailout we would be in grave danger right now.





Next week will be another performative meeting where Management Partners makes the suggestions they are told to make by city management. It is a follow-up to the town hall a few months back. It is August 31st at 4 pm. Seems to me not a great time to be accessible to the working public. 





Just a reminder 2022 is coming fast. Two seats will be up for election then. That includes Council Person Quinto’s seat. That man who calls the public liars. This is our opportunity to change the membership of the council to gain a third vote for fiscal responsibility. If you are thinking of running I encourage you to do so!

	


	





	

		
Will El Cerrito ever address the state auditor recommendations?
	


	
	

		






After passing a budget with no real cuts (except to seniors) in June the City Council will only meet once a month in July, August, and September (as per usual) because there is not hurry when you are on the verge of bankruptcy.





While Albany City Staff are preparing recommendations on how to spend the federal money (ARPA) our city staff continues to prepare budget documents that tell us nothing. Today’s post is going to focus on issues that state auditor brought up. I did a public records request to the state auditors office for the documents supporting their recommendations. Because after the report was released we heard the City Manager and Finance Director say that the auditors were wrong on many things. I wanted to see the source documentation. It is exhausting to continually be gaslighted about these things when the facts support our conclusions. 





In no particular order here are issues the State Auditor brought up and the City denied. 





  1. Cost of the TRAN Loans










This one actually made me laugh. Because I have heard the Finance Director deny the costs multiple times. When I got the state audit paperwork they based it on the City’s own accounting system reports. So one could speculate either the Finance Director is being deliberately deceptive or he doesn’t know what is going on. I am attaching the document here. Some parts were redacted by the State. 





C.3.17_RedactedDownload





2. The City is not following The Government Finance Officer Association (GFAO) guidelines





The State Auditor stated that the Government Finance Officers Association (GFOA) provides a framework for “Recommended Budget Practices” . This framework states that “A good budget process is characterized by several essential features including:
· Incorporates a long-term perspective,
· Focuses budget decisions on results and outcomes,
· Involves and promotes effective communication with stakeholders”





They added “The GFOA also recommends that budget documents should contain a financial overview (consisting of financial statements and accompanying narrative, charts, and graphics) which includes comparisons of prior period actual results, current period budget and/or estimated actual results and budget period projected figures. The rationale for this recommendation is that stakeholders need to have the financial plan of the government clearly identified in order to make the best budgetary decisions. (p.65)
Even further, the GFOA explicitly recommends that a government should prepare a summary of both the proposed and final budget as most stakeholders do not want to take the time to read and understand the details of a budget. A concise summary of key issues, choices, and financial trends is therefore needed to inform and direct the reader to the appropriate location for additional information. (p.68)”





Take a look at the budget documents. This is not at all the process or product we are seeing. There is no real 5-year plan. Stakeholders are not only not involved but criticized for speaking up. There are no comparisons to prior years.





Here is a document with more of what the state auditor specifically saw.





budgetmessDownload





In addition, you can look at the prior Finance Director’s report for mid-year 2016 below. While not stellar it does break things down. She left a few months later and Mark Rasiah took the job. 2016/2017 after he took over is when the city started its big downslide. Though in fairness to Mr. Rasiah decisions made back as far as 2008 have affected things. 





meeting2016Download










3. The City’s salaries are high in comparison to other cities.





The State Auditor used Richmond, Alameda, Pinole, Hayward, and Albany. They used these cities in our area and as cities that El Cerrito has also used to create comparisons from (though EC likes to throw in cities like Walnut Creek also).





Below is their analysis and a few of their supplemental documents (there were many-they spent some serious time on this issue). The highest discrepancies were with fire battalion chiefs and some police positions.





“The auditor identified 15 key positions in management and public safety which command high salaries and are commonly found in California cities.





Based on the auditor’s analysis of salary data, the auditor identified that El Cerrito’s firefighters have base salaries that are about 6% higher than the average of our comparison cities, respectively  Additionally, the city’s fire engineers have a top salary that is about 2.5% higher than the average of our comparison cities. Based on the auditor’s analysis of salary data, the auditor identified that El Cerrito’s battalion chiefs salaries are approximately 1 to 11 percent higher than the average of similar positions at other agencies. Based on the auditor’s analysis of salary data, the auditor identified that the higher amounts that El Cerrito’s firefighters earn total to about $55,000 annually. We determined that most of El Cerrito’s base salaries are comparable to those of the comparison cities.





The auditor analyzed El Cerrito’s 2020-21 personnel budget and identified eight individuals whose salaries currently exceed the city’s control point before factoring in furlough days that two of those employees have. The auditor estimated that the total annual cost of these salaries is approximately $123,000.”





Here are a few of the supplemental documents that were used to support this conclusion. 





controlpointsDownload





Control Points shows which city staff are getting paid above the steps designated. 





comparison dataDownload





Comparison Data looks at our salaries compared with the cities named above. 










So what do we do? We keep on keeping on. We must keep the pressure on. The City Council has not been able to shift the direction of the City Manager and Finance Director. While the newer Council Members ask many tough questions and even voted against the budget it is not enough. In 2022 there will be an election with two seats up. One incumbent Gabe Quinto is expected to run and one Janet Abelson is not. We need to get both of those seats filled with council members that believe in transparency and addressing the budget. However, if/until we can get our change on the City Council we need to keep the pressure on. I firmly believe that if the public did not uprise about the budget we would be in even worse condition. 





Things we want to see





  1. An ordinance to FORCE the city to have a reasonable reserve and spend it only in specific circumstances. This is something that has received huge resistance from the City Manager. However, the City Council and City Manager cannot be trusted to do this themselves. If they don’t want to do it we will be organizing a citizen-driven petition to do so. With about 2,500 signatures we can force the City Council to either accept the ordinance we will then write or they will have to call a special election. Obviously, we would prefer that City Council would direct the Financial Advisory Board to do this. But if they won’t we will go the petition/special election route. This is too important. It must be done.
  2. A Five-Year Budget.
  3. A review of everything we spend and the costs. Everything needs to be looked at even our favorites. The Swim Center, Public Safety, City Recycling (we provide our own trucks rather than outsource like other cities). What can we afford and what can we not afford? What are the trade-offs? What does the public think is most important? This discussion needs to start very soon. Put one topic on the agenda every month and do a deeper dive.
  4. Address our pension costs. The City’s own reports show this is quickly getting out of control. We may need to look at different formats for pensions moving forwards (we can’t change past contracts). We also need to follow through on funding the 115 plan to start putting aside money for pension costs. We made some preliminary moves on this but it needs to be funded.
  5. We need to spend the ARPA funds and do it correctly. Look above at what the Albany Staff recommends. We have outdated fire equipment. We are not prepared for an emergency. There are ways to spend that money responsibly rather than just using it to delay making other cuts.






	


	





	

		
El Cerrito Spends Over Half a Million to Settle Sexual Harassment Case
	


	
	

		






A few months ago I saw this in the budget document (page 71)





This is in the Human Resources Section of the Budget. You will note the $500,000 for a large legal settlement. If you remember 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 complaint was filed by a colleague on her behalf she alleges the retaliation began. The situation ended with her quitting her job. 





I did a public records request. Documents provided to me show that Ms. Perez received some back pay and a $544,341 settlement. The settlement agreement has no admission of liability. Three current members (Fadelli, Quinto, and Abelson) were on the  council when this was approved. When looking at the size of the settlement it is easy to  wonder if the lawsuit had no merit would there have been such a large settlement?





Remember just last month when the City Manager pushed to eliminate $58,000 from the budget by reducing library hours. Well, they are writing a half a million dollar settlement check for a police officer that is still employed by the ECPD. As is the Lieutenant alleged to have retaliated against her. It specifies in the settlement that Sergeant Wentworth will pay none of the settlement. So the taxpayers paid for it. And we’ll pay it again if allegations are made against him again.





This is deeply disturbing on many levels. The allegations are upsetting. The financial implications are horrible especially given El Cerrito continues to teeter on the financial brink. The money was attributed to the Human Resources Budget but perhaps it should have been taken out of the police budget.





My guess is that city staff and council will not talk about a legal issue. Fine. Then let’s start asking what policies and systems were put in place for ECPD to make sure something like this never happens again. Chief Keith should explain how many females currently work as sworn officers (in 2019 it was 4 of 40) and how he is protecting them from sexual harassment. 





One more example of the dysfunction of El Cerrito.