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.

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.





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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.