El Cerrito Committee for Responsible Government (ECCRG)

Looking backwards-El Cerrito did not get into a 5.5 million dollar hole yesterday. Part Two of Two

El Cerrito is in the midst of a major financial crisis. This the second of two blog posts addressing four issues we have found with how El Cerrito has managed it’s financial issues for years. Please refer back to the first post here and that post has the references used here also.

NO LONG TERM PLANNING BY STAFF

Although there were cautionary tales about limited revenues, etc. the city took a very short-term approach and narrow course of action when it came to growing reserves or managing costs. The City turned to the community for new taxes, but expenditures continued to rise.

EVIDENCE

Since 2013 every year the report has named General Fund Budgets, Cash and Available Fund Balances as an issue. While the auditors did not begin stating that the city was at risk of not remaining a going concern (not going bankrupt) until 2017 the four years prior they called the lack of financial resources an issue and often recommended cost cutting measures. The City typically responded by stating that they anticipated a growth in revenues and would be monitoring expenditures.

Since 2011 the city has been borrowing money to keep the city afloat. It started with 3.5 million dollars in 2011 and in 2019 last year was 9 million dollars. The interest in 2019 last year was $197,100 and the costs for the loans were an additional $33,000.

In 2014 when revenues were dropping the city decided to not look at budget cuts but to instead put a tax measure on the ballot (2014 CAFR page 32). They successfully passed Measure R, extending and RAISING the sales tax in El Cerrito. Many felt that the city was deceptive in their outreach for this tax and the city was warned by the California Fair Political Practices Commission for irregularities in a mailer backing Measure R. Many voters thought it was an extension of an existing tax, not a raise in taxes.

Again at the close of 2017, the report issued to the city recommends a move toward cuts in order to bring spending in line with revenues. The City response suggests otherwise, noting they are planning to launch another tax that will shore up revenue and reserves.

And as recently as June 2019, when the independent auditor called out the city’s ability to continue as a going concern for the third straight year, the City Manager and Finance Director went before City Council and said everything was fine. The City Manager told the Council, “The City will be taking steps to restore a positive fund balance position through the upcoming biennial budget cycle and expects to successfully achieve this by FY 2021.”

This was just 4 months before the state auditor called out that El Cerrito was 7th on the list of CA cities most likely to go bankrupt.

BELIEF THAT STAFF WAGES NEED TO BE HIGH FOR STAFF RETENTION

There appears to be an assumption that in order to have quality staff, we have to compete with wages paid in larger metropolitan communities, wherein other communities of comparable populations have significantly lower costs. This has been repeated at numerous community meetings and most recently at City Council regarding education. As a result our expenditures in salaries and benefits increase even when not prudent to make such increases.

EVIDENCE

Our city has 25k residents and 384 city employees of which 159 are full time. The cost per resident is $1,163, which is $328 per resident more than the next closest city of Albany. Our city has 132 more employees than San Pablo which has 5k more residents.

Per Transparent CA in 2018, employee compensation rose almost 5 MILLION dollars from 2017 to $29,323,885 for 384 positions 159 of which are full-time. In 2017 there were 375 total positions and 138 were full time year round. These raises and additional positions were added even though the auditor had for two years warned the city about their ability to continue as a going concern.

In the most recent negotiations with public safety staff COLAS were suspended for 2020 but promised for 2021.

In the City Council meeting on May 19th it was revealed that 25 staff members received car allowances of $300 a month. This is an outrageous number of staff with this benefit when a simple reimbursement for mileage for required travel could be implemented. This was costing the city 90K a year.

When citizens have sent in public comments questioning the high staffing numbers they have heard council statements full of praise for their excellent staff. They have said that no comparisons to other cities can be made because we are a full service city. This definition has yet to be adequately described as most local cities also have their own police and fire departments, recreation departments and senior services. Albany has all of the above and runs on half the budget El Cerrito does.

So is it time for El Cerrito to take a deeper look at how it provides services? The personnel classification system? The number of management positions? Since 50% of our budget is dedicated to public safety, we may want to start there.

There is a budget meeting June 9th at 1pm. Please send public comments in with your thoughts on the budget crisis. It is agenda item #2

To make a public comment

Public Comments may be submitted one of two ways:

Via email to Cityclerk@Ci.El-Cerrito.ca.us Email must contain in the subject line Public Comments Not on the Agenda OR Public Comments Agenda Item #.

Via Voicemail at (510)306-2558. The caller must start the message by stating Public Comments Not on the Agenda OR Public Comments Agenda Item # followed by their name and city of residence, followed by their comments

Looking backwards-El Cerrito did not get into a 5.5 million dollar hole yesterday. Part One of Two

El Cerrito is in the midst of a major financial crisis. In October 2019 the State Auditor stated that El Cerrito was #7 on the list of CA cities most likely to go bankrupt. The issue was so serious that the auditor got state approval to do a full audit of El Cerrito. Unfortunately due to COVID-19 the audit is currently on hold. If you read the City Manager’s reports you would think that prior to COVID-19, the city’s finances were smooth sailing. While COVID-19 certainly exacerbated an existing problem, the problem with El Cerrito’s financial issues is long standing.

After reviewing the Comprehensive Annual Financial Reports, The Memorandum of Internal Controls (MOIC), City Council Meeting Minutes, and press coverage from the last decade, we see a City that fails to analyze and anticipate the outside threats to City finances, or chooses to simply ignore them.

We have identified four issues that warrant further analysis.

They are

Staff not competent with governmental budgeting
Interfund Borrowing
No long term planning by staff
Belief that staff wages need to be high for staff retention

These posts are meant to give us additional depth to this crisis but the issues we have identified are not the only issues. This will be part one of the post and part two will cover the second two issues.

STAFF NOT COMPETENT WITH GOVERNMENTAL BUDGETING

Looking at past audits, clearly the staff were not experienced with governmental budgeting, having a particularly hard time when revenues were on the decline.

EVIDENCE

There is a document called the Memorandum on Internal Control and Required communications. (MOIC) This report is one that the auditor prepares as a part of the Comprehensive Financial Report (CAFR) every year. What has become clear in reviewing them is that the city has been financially mismanaged for years. During the period between 2013 -2016, records indicate that the Finance Department experienced high turnover with many positions filled with temporary workers or staff with little or no governmental accounting experinece.

The MOIC’s from 2013-2018 repeatedly cited evidence of accounting practices that were either missing or misinformed. The report basically stated a lack of financial controls that ultimately resulted in the city’s inability to fully close out a fiscal year and start a new fiscal year with accurate accounting. Although they repeated this as a problem, and the city made new hires in the Finance Department problems persisted.

Overall, a city agency that cannot successfully close out its books, collect reimbursements, and manage grants ultimately impacts the health of the general fund and hinders decision making on clear facts.

Interfund Borrowing

For at least the past 8 years, the other funds borrowed from the General Fund with the intention of replacing funds the next fiscal year, but never doing so. Funds were borrowed from the General Fund and the debt was listed as an asset even though the other funds had no funds to pay back the General Fund.

EVIDENCE

The 2015 MOIC reported that the General Fund and Capital Improvement Fund had borrowed $2.2 million from other funds as of fiscal year end, including borrowing from restricted funding resources such as the Integrated Waste Management Enterprise Fund and the Municipal Services Corporation Special Revenue Fund. “ (MOIC 2015 page 5) This interfund borrowing depleted the General Fund.

A review of the years 2015-2017 demonstrates that management ignored warnings and continued to make transfers that resulted in inaccurate accounting and budget information. As a result, the “so called” balance budget reported by the City staff, and passed by the Council, is by no means balanced. When funds were transferred out of the general fund it was done without action by the Council and without a plan for repayment. The auditor also reported most of those agencies did not have any identifiable ways to pay back the money.” In short, these were not loans, but a debit.

Who should we attribute or hold accountable to a continued pattern of what appears to be accounting practices that ultimately defer the inevitable situation that bring us to our situation today? The Finance Director? The City Manager? The City Council? In other words, who was reading the reports and who was holding City Management accountable to the promises made to redress these issues?

Please refer to part two here.

REFERENCES

2013 Memorandum of Inner Control

2014 Memorandum of Internal Control

2015 Memorandum of Internal Control

2016 Memorandum of Internal Control

2017 Memorandum of Internal Control

2018 Memorandum of Internal Control

2019 Memorandum of Internal Control

List of all the CAFRS

El Cerrito is in a major financial crisis-major cuts proposed

Today the city of El Cerrito put out a packet for the planned budget meeting June 9th at 1pm. The Consultants were brutally honest. The link is here. I will copy some slides below but it is really important to view the entire packet. The consultants call out that El Cerrito was in a fiscal crisis before COVID contrary to what the City Council and City Manager have been stating. See the slide above.

The cuts proposed are dramatic. LIBRARY HOURS are back on the table. Reduced fire station services at station 72 are on the table.

If you care about the library or any of these other services please send comments in for the meeting.

So what is confusing to me is that the first priority of cuts is service delivery cuts. There is no mention at looking at staff compensation which has been increased an astronomical amount over the past few years.

To make a public comment

Public Comments may be submitted one of two ways:

Via email to Cityclerk@Ci.El-Cerrito.ca.us Email must contain in the subject line Public Comments Not on the Agenda OR Public Comments Agenda Item #.

El Cerrito’s history of loans to keep afloat

El Cerrito has been using Tax Revenue Anticipation Notes (TRANS) since 2011 to keep the government afloat. Someone online calls them payday loans and to a large extent that is what they look like. Each year more is borrowed. It started in 2011 with 3.5 million and in 2019 it was 9 million which was a 3 million dollar jump from 2018.

At the next City Council meeting on June 2, 2020, this will be discussed. What is very significant is that since the start of these loans the majority of years (still confirming every year) West America Bank has taken the loan on. As the City staff said in their reports “By selling the TRAN directly to a single investor, the City avoids the costs associated with rating agencies, disclosure counsel, and underwriting firms.” You will see in the chart below how the cost of the loan is in the $17,000-$37,000 range.
This year West America declined to take on the $8,5000,000 loan. This means that the loan will be offered to the public and the estimated cost of OBTAINING the loan will be $105,000. Interest at the 2-3% rate will cost somewhere between $170,000 and $255,000.

This is yet again an example of how El Cerrito’s financial mismanagement has cost the city over a million dollars since 2011. If the city had not allowed their bond rating to drop (before COVID) perhaps West America would have taken the loan again and saved the city at least $70,000 this year alone. Nowhere in any of the many financial documents that I have reviewed is anything stated about working towards not needing a TRAN annually. The additional concern is that if it is more challenging to get the TRAN this year what about next when COVID effects and the effects of the recession will deepen? If a TRAN is not issued either this year or next then how does the city avoid bankruptcy?

If you are interested in learning more please join our IO group for El Cerrito residents concerned about these issues found here https://groups.io/g/ECCfRG

Please also consider making a public comment on this agenda item 7A before the meeting on Tuesday. If you send in your comments after 1pm they have to be read into the record. It is important for the City Council to understand that people are watching.

To make a public comment

Public Comments may be submitted one of two ways:

Via email to Cityclerk@Ci.El-Cerrito.ca.us Email must contain in the subject line Public Comments Not on the Agenda OR Public Comments Agenda Item #.

References

TRAN Chart-some information on the cost of 2011 and 2014 loans I have yet to access. The chart will be updated when I obtain the information. The interest rate estimate for 2020 was put into the spreadsheet at the higher 3% rate.

The packet for. the June 2, 2020 meeting has a lot of information on the 2020 TRAN found starting on page 68. Information on past TRANS were found here.

El Cerrito was giving over 100K in car allowances

Post Updated with information from public records request June 2, 2020. I have added the employee positions that received this benefit. I have also clarified that the benefit for everyone except the city manager is $300 (I was told the prior number from a Council Person so I apologize for the error). The City Manager receives $323.08

In the May 19, 2020, City Council meeting at around the 3:16 mark, it comes up about the city staff car allowances. The City Manager suspended those April 5th right before she tried to cut the library hours. At that time we did not get full details as to the amount and extent of those allowances. In this meeting Councilperson Fadelli asked more questions. It is worth watching how both the City Manager and Assistant City Manager evade the question of what the monthly amount was ($300). The Assistant City Manager does say that it is $100K savings. When Councilperson Fadelli pushed the City Manager stated that 25 people received this allowance. Which comes out to $105K. I have a public information request pending as to what positions were receiving this benefit.

The positions receiving this benefit are as follows

City Manager

Assistant City Manager

Assistant to the City Manager

City Clerk

Three Employees in the Finance Department including the Director

Two Employees in Information Technology Department

One employee in Environmental Science

Three Public Works Engineers

Two Employees Public Works Maintenance

Two employees in Community Development/Admin

One Employee from Community Development Planning

One Employee from Community Development Building Services

Two Employees from Recreation-Adults

One Employee Recreation Staff-Childcare Admin

One Employee Recreation Swim Center

One Employee Recreation Senior Services

One Employee Recreation Youth

It appears from the document I received that all senior management is getting this benefit. That is not confirmed.

The point here is that these benefits for those many staff members is outrageous. This is yet another example of the ongoing fiscal irresponsibility that got us into this crisis. The current IRS reimbursement rate is 57.5 cents a mile. This means the staff has to travel over 600 miles a month every month for the city to break even. Also, in the conversation, the City Manager stated that there are city cars available. Both the City Manager and Assistant City Manager minimized the benefit saying that it saved the reimbursement paperwork and the City Manager calling it a moot point right now as there is no travel.

I appreciate Councilperson Fadelli pushing back on the issue and hope he continues to be vigilant as I would expect as soon as the crisis is over that staff will try and get that benefit again. With the exception of the Fire Department and Police Chiefs who may have to respond to emergencies in their personal cars I have no understanding of why this benefit was necessary on top of staff’s already high salaries.

I also want to note that Councilperson Pardue-Okimoto was questioning the benefit packages of the management staff and requested that a comparison be done with other cities. Thank you for that.

https://elcerritoca.civicclerk.com/Web/Player.aspx?id=315&key=-1&mod=-1&mk=-1&nov=0

May 19 meeting

El Cerrito Staff Compensation compared to other local cities

Transparent CA has great information on salaries and pensions for all of CA.

There has been much discussion on different forums about the compensation of El Cerrito city employees so I did a quick check on Transparent CA for 4 cities. El Cerrito, Albany, San Pablo, and Pinole. All are reasonably close in size from 19k residents in Albany to 30K in San Pablo compared to El Cerrito’s 25k.

Albany

Albany has a little less than 20k residents. They have 208 total city employees, 76 of whom are full-time. The cost per resident for these employees is $835

Pinole

Pinole has close to 20k residents. They have 151 city employees and 68 of them are full-time. The cost for the employees per resident is $683.

San Pablo

San Pablo is the largest of the cities I looked at with almost 31k residents. They have 252 employees of which 114 are full time. The cost per resident for the employees is $704 per resident

El Cerrito

Our city has 25k residents and 384 city employees of which 159 are full time. The cost per resident is $1,163, which is $328 per resident more than the next closest city of Albany. Our city has a 132 more employees than San Pablo which has 5k more residents.

The question is why does El Cerrito have so many more employees than other cities the same size? Are we in El Cerrito getting services that residents in other cities are not receiving? I have listened to El Cerrito City Council speak of how high quality our staff is and how they need to be compensated well in order to keep them. In theory, I would agree with rewarding high quality employees with high compensation. The question I have is are we paying our employees wages that are not sustainable for our city? Why were wages raised dramatically in 2018 at a time that the city did not have adequate reserves? And if some employees have lead us into this financial disaster( that predates COVID) are they the high quality employees that we want?

El Cerrito total employee compensation over the last three years (2019 data is not yet available)

2016

Per transparent CA El Cerrito total employee compensation in 2016 was $23,427,687. This was for 354 positions 141 of which were full-time.

2017

For 2017 employee compensation rose to $24,639,703 for 375 positions 138 of which were full-time

2018

In 2018 employee compensation rose almost 5 MILLION dollars to $29,323,885 for 384 positions 159 of which are full-time. There were 9 added positions and 21 additional full-time positions.

Please also check out the related post below

El Cerrito City Compensation

The City takes some budget actions

At the City Council meeting on May 5, 2020 some budget announcements were made. The link to the video is below and the budget discussion started 4 hours in.

The city announced furloughs for management and SEIU staff. That is 45 SEUI staff and 25 Management staff. They will be furloughed one day every two week pay period after the noticing period. Essentially it looks like this will manifest as now having every Friday closed at city hall as this is the easiest way to manage the time. This furlough will last at least through the end of the calendar year and is projected to most likely go on through the end of the next fiscal year (June 2021) Management staff will also now pay in 1% of the employer part of their CAL-PERS contribution. The City Management will take the same furlough and pay in 3% of her CAL-PERS contribution.

I have copied the some of the slides from the presentation and put them below.

This cost savings is if the furloughs go on through the end of the next fiscal year (June 2021)

There have now been 4 million dollars in budget cuts for next year

I am happy to see the council and staff begin to take the aggressive actions needed to address this situation. Much more needs to be done and they do seem to be accepting that. I still have a few areas of concern

We will be ending this fiscal year with a deficit in the 2 million dollar range (subject to change) While these cuts are working on balancing the budget for 20/21 nothing is being done to reduce that deficit as of yet. The Mayor said that not addressing it would make getting the TRAN loan more challenging next year. Without these TRAN loans the city cannot pay it’s bills.
The Finance Manager is not making projects of a recession which seems pretty well guaranteed now. The Mayor did bring up the need for better forecasting using different models. The city has engaged Management Partners to further assist in that. While I have been critical of use of consultations Management Partners does seem to have expertise in this area.
CAL-PERS costs will rise. The Mayor did also say in his remarks that this needed to be factored into projections in the future. This could leave a HUGE hole in the budget.
The Fire Department overtime budget still has not been publicly addressed. The Fire Chief spoke at the meeting and was not enthusiastic about charging for EMT services for those with insurance. Councilperson Quinto did push hard on this issue so hopefully that will move forward. Most local cities do this.
The data accessible to the public is still confusing in many cases and many of us are spending hours looking for and analyzing data. Councilperson Fadelli pushed for this information to be more accessible and clearer so I am hoping that they will continue to request this. We should not have to be posting these blog posts. The information should be readily available on the city’s website.
We still need more information on the TRAN loan. The City Manager and Finance Director stated that they would be meeting with their financial advisor on May 6th and would report back next council meeting. We need specifics on this loan including the cost of the loan this time and how that compares to last year.

The video of the meeting is found here.

Library Hours on the Cutting Block but not high staff salaries

Notes Regarding City Council Meeting on April 21, 2020

There are two meetings on the 21st. The first is a Labor Negotiations meeting with Service Employees International Union (SEIU) Local 1021; El Cerrito Police Employees Association; United Professional Firefighters Local 1230; Public Safety Management Association Battalion Chief, Fire Chief, Police Chief, and Police Management; and Management and Confidential Employees. The only thing of note here is that the city hired a Labor Negotiator. I am not sure if this is something that they always do or not.

The regular meeting has a few things that are of note. If you are only interested in the library that is item 7D.

Item 5A a presentation by the independent auditor hired by the city.. This firm has been calling out El Cerrito’s financial issues since 2018 and been ignored. Questions I would like council members to ask the auditor include

1. What made you bring up the “going concern” issue in 2018. What does that mean exactly?

2. Do you feel like the city has taken appropriate actions to mitigate that concern?

3. What actions would you recommend now?

Item 7A–FY 201920 Third Quarter General Fund Budget Update and Covid19 Impacts

This is a report found in the packet on page 249.

Revenues are noted to close THIS Fiscal Year with an almost $3.8 million deficit. The reports appears to blame this on COVID and a few businesses closing in El Cerrito.

Property and Sales Taxes

They estimate no change in property taxes for the April payments and estimate a 1.1 million dollar reduction in sales tax.

Real Property Transfer Tax-One large 600k payment earlier this year helped this situation. A number is not attached to this but staff estimates no significant income here.

Recreation Department revenue down 1.3 million

Utility taxes and some other misc taxes and fees-900k reduction

As a results staff estimates a 3,780,000 decrease and that is not including the transfer tax which did not have a number attached.

Expenses Cut

$150,000 this is the layoffs of part-time recreation staff which is 100k and 50k by deferring some purchases.

So using the staff’s number is 3.78 million minus 150k =$3,630,000 deficit. This is for this Fiscal Year. The year in which staff knew there were issues and chose not to make any cuts nor build a reserve.

The next steps say that on top of the 2 million in cuts recommended the last meeting that 2 million more need to be made. Which is contrary to the amount of cuts that the consultants said were needed which was 8 million (see this post for the picture)

The city is applying for another loan and they say that without the loan they may be bankrupt (except they say insolvent).

So the staff recommendation given all of this is to NOT COMPLETE A BUDGET PROCESS UNTIL OCTOBER. This means not only FY 19/20 with no cuts but the over the first quarter of 20/21 where we already know we have a deficit of 4-8 million depending on who you listen to.

Items 7B and 7C Union negotiations-starts on page 256

One of these is for firefighters and the other is for Fire Battalion Chiefs of which the city has 4. The Firefighters waived their 3% COLA for 2020 and will get it in 2021. The Battalion Chiefs waived their 2020 COLA but managed to get a retroactive 3% COLA for 2019. So the negotiations with the Chiefs saved us almost nothing because of that cost. Savings is around 16k.

I wonder if they used a paid negotiator for the negotiation.

Item 7D City Council Division Budget Discussion–This begins on page 281 in the packet.

Essentially this entire discussion is on cutting only the City Council part of the budget which is a very minor part of the budget, except it includes the library hours and access to city council meetings via video.

So the staff thinks that not cutting any staff people is a great idea while cutting the city-funded 15 library hours for a savings of 129k is a great idea. We have three city managers (Manager, Assistant Manager, and Assistant to the Manager) Richmond which is much larger than us has a City Manager and an Assistant to the City Manager. Reducing one of these positions pays for the library hours. I would encourage people to read this report on the library and its hours found in the last packet starting on page 78.

Those library hours provide for much-needed services for many in the community including the most disenfranchised and to cut that access before cutting almost anything else is a travesty.

So to sum up the main issues

Staff and council continue to not make cuts in this fiscal year
Staff and council continue to not address salary and staff cuts that will be necessary
If we do not get the loan in July we will be bankrupt
The City Manager is recommending that the library hours need to be cut

Please Please Please make a public comment for the meeting. Below is how to do so. If you do it later in the day of the meeting it has to be read into the record and has to be less than 3 minutes. If you send it earlier it goes into the council packet and may or may not be read by the council.

You can submit testimony by emailing the city clerk, at cityclerk@ci.el-cerrito.ca.us. Your email must contain have a subject line which either states

public comments –not on the agenda

or public comments –agenda item #. So for the library, it would be 7D for the general budget it is 7A. You can make comments on both items!

Comments sent up until noon on the day of the meeting will be given to the council before the meeting. Comments sent in during the meeting and up until the public comment period on the relevant agenda item is closed, will be read into the record and will be limited to a maximum of 3 minutes. It is important that comments become part of the public record of the meeting. This creates a record of community concern.

You can also comment via voicemail at (510) 306-2558. The caller must start the message by stating public comments –not on the agenda or public comments –agenda item #followed by their name and place of residence, followed by their comments.

Key decisions coming soon: Make your voices heard!

Today we have a post by another member of the group. Whatever your opinions are we encourage you to make your voice heard! Information on public comment for the April 21st meeting are at the bottom of the page. I will post with information on agenda items prior to the meeting on the 21st.

At the April 7 City Council meeting, we learned a lot about where the city was headed pre-COVID and how the pandemic has impacted its financial trajectory.
The city manager shared the proposed $2MM in cuts, which was requested previously by the council and would have put the city on a better financial trajectory prior to the COVID pandemic. The largest general fund cuts involved keeping open several police department positions and transferring some park and recreation costs to Measure H. Many departments also had cuts in areas such as travel, training, and professional services. The good news was that these cuts largely avoided direct reductions to services for residents. Without COVID-19, these cuts would have put the city on a much better financial trajectory. From the Management Partners presentation:

There remain valid questions as to why these cuts were not asked for, proposed, or enacted sooner, given the general fund budget issues that existed prior to COVID-19. That said, it was good to see that $2MM in cuts was possible without dramatic cuts to city services.
Given the COVID-19 pandemic, there will be huge questions facing the council at the next meeting, and the public needs to make their voices heard prior to the meeting.
Some key questions:

1) What will happen to recreation programs, especially summer camps, swim center, and after school programs? At the April 7 meeting, there was discussion regarding reducing costs more extensively now (and preemptively cancelling future programs) during shelter in place, knowing that would prevent programs from starting back up as quickly once the shelter in place is lifted. Councilmember Pardue-Okimoto pointed out (correctly in my view) that these recreation programs represent critical childcare for El Cerrito working families, who have made very difficult sacrifices during the school closures. Additionally, she pointed to the Management Partners presentation which indicated that El Cerrito residents’ top priority is schools and education. I would encourage residents who agree with this sentiment to contact the council as soon as possible.

2) What will happen to library hours? The City Manager verbally indicated she would be recommending scaling back library hours given the newly intensified budget crisis. However, once again Councilmember Pardue-Okimoto correctly spoke up regarding the residents’ priority on schools and education. Other council members echoed this concern and suggested more modest reductions in hours.

3) How will negotiations go with city employee bargaining units? How closely will the city look at its management structure and compensation? The City Manager already brought up hiring freezes and negotiating to cancel cost of living salary increases, and she also made clear that more will need to be done. Multiple councilmembers suggested looking more closely at reducing city staffing and salary levels at all levels of management, in hopes of being able to minimize reductions to core city services if possible. Many residents have been suggesting this as well. What will the result look like?

4) Can outsourcing help? Councilmember Quinto made multiple suggestions in this area, most notably suggesting the East Bay Regional Park District take over vegetation management at the Hillside Natural Area, helping reduce our fire department OT costs. The City Manager also suggested having programs such as CERT rely more on volunteers as opposed to the fire department. Hopefully more suggestions such as these will be put forward and enacted.

5) What are the statuses of the major development projects on San Pablo Ave? Prior to COVID-19, many large projects were approved and on track to transform our city’s main thoroughfare (and help our city’s economic situation).
6) Aside from new development, what other revenue is possible? Multiple suggestions came up at the April 7 council meeting, such as charging for fire department 911 visits, and getting stormwater and lighting district fees in line with expenses. Will council push for these and enact them?

7) When will proposals be voted on and enacted? The council and City Manager all appear to appreciate the urgency of the situation, but thus far very little has been voted on and enacted aside from cancelling this year’s 4th of July festival. Councilmember Fadelli expressed a desire to act soon and not wait for the state auditor.
It appears the April 21 council meeting will have continued focus on these issues. The City Manager appears prepared to do what’s necessary to keep El Cerrito afloat, but the Council and residents need to make their voices heard regarding priorities.

Wherever you stand on these issues the council must hear your voice. I am copying information on how to make a public comment for the meeting below.

You can submit testimony by emailing the city clerk, at cityclerk@ci.el-cerrito.ca.us. Your email must contain have a subject line which either states

public comments –not on the agenda

or public comments –agenda item #. So for the second one refer to agenda item 7A if you are discussing the budget issue.

Comments sent up until noon the day of the meeting will be given to council prior to the meeting. Comments sent in during the meeting and up until the public comment period on the relevant agenda item is closed, will be read into the record and will be limited to a maximum of 3 minutes. It is important that comments become part of the public record of the meeting. This creates a record of community concern.

April 7th Council Meeting-More Talk No Real Action

The April 7th El Cerrito City Council meeting had the budget on the agenda. Staff used the $150 an hour consultants to make new slides saying how bad things are. One slide said that we are at risk of an 8 million dollar deficit in the next fiscal year. This is even with the 2 million dollars in cuts discussed at this meeting. @updated note 4/12 I have been told that the green line does NOT integrate the 2 million in cuts while the red line does. This is not what the slides says so it is confusing.

You will notice the green line is the no recession forecast and that was still bad. What I keep hearing council and staff imply is that we would have been okay without this recession. That is simply not true. Notice also that this fiscal year (19/20) it is showing a 2 million dollar deficit with this recession.

That is the reason I continued to be shocked that cuts are not being made in this fiscal year. The proposed cuts discussed at the meeting were for the next fiscal year. I have emailed Mayor Greg Lyman and asked why if this chart indicates an 8 million dollar deficit was he still talking about 4 million in additional cuts for NEXT YEAR. This slide was discussed at 2:15 in the video of the meeting which will be linked to below.

There was some discussion on additional cuts. The City Manager said that management is giving up their car allowances. She also recommended immediately cutting the additional 15 hours of library services that the city pays for. Councilperson Pardue-Okimoto pushed back on that. She asked why a cut that would so affect citizens was a first cut to make. She also pointed out that in the strategic plan residents said education was their #1 priority and the library and recreation services are how those services are provided by the city. Councilperson Fadelli stated he would only support a 5-10% cut in library hours that was more in line with other cut levels. Mayor Lyman stated that it would be about 4 hours and suggested cutting Sunday hours. This decision needs to be finalized at the next meeting as the city needs to let the county know by May 1st what their plans are. If you are a library supporter please email your comments in for that meeting (I will have the agenda up and info on sending in comments before that).

There seems to be a very big reluctance to lay off city management staff. There were 90 furloughed part-time employees. The City Manager said there are policies to follow in regards to lay-offs.

Other issues raised

Councilperson Quinto keeps pushing the out-sourcing of some services especially senior services. He also wants us to let the Hillside area be taken over by East Bay Parks to mitigate our fire prevention responsibilities. He also said he does not like the “attacks” on the city manager.

Councilperson Abelson stated public safety is the #1 priority.

The 4th of July was officially canceled for this year. At this point, it is a much a public safety issue as it is a financial one.

Several people brought up the idea that some funds might be raised by charging for ambulance services for persons with insurance. Staff is also looking at making some increases in the fees charged for services.

The City Manager stated several times that the management staff was small and that is why they needed consultants.

Issues not raised

Fire Department overtime-This was raised only in terms that at this time when a fire department staff person attends a public event (like a CERT meeting) they are always paid overtime. This is because they don’t want a shortage of staff if there is a fire. This is going to be stopped. Fire Department staff will not attend these events. There is a continued ignoring of the FD overtime budget in general.

2. Higher than normal management compensation. This has been explored here before.

3. Any cuts for 19/20 fiscal year

4. Details on the next short-term loan needed. El Cerrito has been using short-term loans to stay afloat and many of us are concerned that if we do not get the next loan bankruptcy is going to happen for sure. I will post more on this issue if/when I get more details. We need to know when this loan is needed, what happens if we do not get it and if we get it what the terms of.
I have followed up on this issue and will post more if I get more information.

5. Any discussion of how CAL-PERS issues will be handled. There will be an increase in unfunded liabilities due to the economic crisis. It is unclear to me how much that has been factored into the projections the consultants made.

The meeting can be found here

Supplemental Agenda items (including public comment and the slides from the consultants) can be found here.

April 7th City Council Meeting to address first level budget cuts

The agenda and packet are out for the April 7th City council meeting. There had been some discussion that there would be no cuts until September but the agenda includes some recommended cuts totaling $1,631,848. Pages 214-220 of the packet address the financial crisis and have some proposed cuts. It looks like once again the city has hired consultants (Management Partners) to make recommendations. It would be interesting to know how much their contract is for. I am going to make public records request for that information. (Please see below for the April 6th update on this issue.)

Pages 218-220 addresses the cuts, which to this layperson, look like cuts that should have been made back when the State Auditor made their statement of the city’s fiscal instability back in October.

Cuts include

Cuts in staff training
Cuts in consultant usage
A pension reduction because a past staff member passed away
A movement of park maintenance costs over to Measure H (something that many of us predicted would happen when Measure H passed) of over 46k
Permanent reduction in 1 School Resource officer $150,000
Vacant 3 sworn Police Officer positions $377,493 (salary & benefits)
Vacant Community Liaison Officer $160,265 (salary & benefits)
Vacant 1 Senior Records Specialist $113,660 (salary & benefits)

Things that stand out that have yet to be addressed are El Cerrito’s much higher levels of staff compensation compared to other cities of similar size. See links below to articles where that was discussed.

How to address the high ($1.7 million) costs of fire department overtime. Would more hiring drop that amount? Are there ways to keep the fire department efficient with cuts? Is the fire department efficient in the first place? What about charging for EMT services (which are going to increase with the current medical crisis) for those with insurance? We want our citizens to be protected but there may be ways to do so more efficiently. At the very least a public discussion needs to occur. The Fire Department was an area called out as a concern by the State Auditor.

Wherever you stand on these issues the council must hear your voice. I am copying information on how to make a public comment for the meeting below.

You can submit testimony by emailing the city clerk, at cityclerk@ci.el-cerrito.ca.us. Your email must contain have a subject line which either states

public comments –not on the agenda

or public comments –agenda item #. So for the second one refer to agenda item 7A if you are discussing the budget issue.

A sample message might be:

The state auditor, the independent auditor, and the Standard and Poor’s financial analyst all agree that El Cerrito is in financial peril. It is imperative that the city act now to reduce costs. With City Hall closed, now is the right time to reduce staff size and require the remaining staff to take pay cuts down to the levels of their 2016 compensation. Employee compensation has increased by $4 million per year over the past two years. If staff will not willingly share in the burden caused by poor council decisions for many, many years, then additional people will need to be laid off.

Resources

El Cerrito is in Financial Crisis and Residents need to step up their game

El Cerrito Employee Compensation

Update April 6th-So upon making a public records request for the contract and re-reading the staff report it looks like the Management Partners Contract is the consultant on the Strategic Plan and did not make the budget recommendations. They are instead spearheading Strategic Plan process for a cost not to exceed $32,500. I am continuing to gather information on the use of consultants and will do a future post on this issue.

The contract is found here.

El Cerrito on the verge of bankruptcy but the City Council is putting off cuts until September.

Time to Act Take Action Move Forward Clock Hands Ticking 3d Illustration

I get it. We are all at home trying to do our best and survive this crisis. The last thing people want to be thinking about is local politics. However, this national crisis has only exacerbated what was already a VERY BAD situation in El Cerrito. So action needs to be taken. El Cerrito faces bankruptcy, but council is planning on putting off any action until September

In October when the state auditor said El Cerrito was one of the most at-risk cities, El Cerrito had no financial reserves and no plans to remedy the situation.

Now that we are facing an imminent recession El Cerrito is at serious risk of going bankrupt. The council still has no meaningful plans and has taken no significant actions to improve the city’s financial condition. At the most recent meeting on March 25, 2020, there was talk about putting off any budget actions until September. Which is a quarter into the next fiscal year. Further delays only worsen the crisis.

A bankruptcy may mean that staff will lose pension benefits.

Forced reductions in public safety could mean higher insurance costs for homeowners.

Bankruptcy will surely make things much worse for many El Cerrito community members.

On Tuesday, April 7 the council will begin to discuss the budget but is not planning on taking any action for many, many months. Maybe not until September.

You can submit testimony by emailing the city clerk, at cityclerk@ci.el-cerrito.ca.us. Your email must contain in the subject line public comments –not on the agenda or public comments –agenda item #. The City Clerk will read your comments at the meeting. Please try to keep your message below two minutes. It is important that the comments be read into the record rather than just emailing the council. This creates a record of community concern.

A sample message might be:

Resources

Link to most recent meeting on March 25th is below.

https://elcerritoca.civicclerk.com/Web/Player.aspx?id=330&key=-1&mod=-1&mk=-1&nov=0

For the April 7th meeting members of the public will not be able to participate directly through the teleconference platform but can watch or listen to the meeting in the following ways:

Cable T.V.
Broadcast on KCRT Channel 8 or AT&T Uverse Channel 992.

Radio Broadcast on FM 88.1 Or 97.73.

Livestream Online At www.el-cerrito.org/CouncilMeetingMaterials

El Cerrito is in Financial Crisis and Residents need to step up their game

California State Auditor Elaine Howle ranks El Cerrito the 7^th most financially high-risk city in California, the most at-risk Bay Area city, and the city whose General Fund condition is worst in the state. On February 26, the State of California Approved her recommendation to audit El Cerrito.

Once ranked AA-, our bond rating declined steadily to BBB, severely limiting the city’s ability to borrow money.
For three consecutive years starting in 2016-17, our independent auditor warned that the city might not continue to be a “going concern,” meaning it was at risk of bankruptcy. The city failed to take effective action each time, and even increased personnel costs by about $4M since 2017!
Our General Fund balance declined from $3.3 million in 2012 to a $56,600 deficit for 2018-19. El Cerrito has a 10% reserve goal. Albany’s is 25%, which it meets.
El Cerrito increased local taxes four times since 2010. Today our combined sales, transfer, and utility taxes make El Cerrito the California city with the highest combined tax rate, yet the city continues to slide into more financial distress.
2019 revenues were up 10% but 2019 expenditures were up 11%. (From the CAFR*)
City staff reported that the 2018-19 fiscal year ended in a surplus, but a later audit revealed a $2.9M cost overrun, with no notification to the city council and no budget reductions. This signals serious incompetence.
The city’s taxable sales fell by 5% from 2009 to 2018, while those nearby cities grew substantially: Albany +25%, San Pablo +47%, Richmond +54%, Pinole +35%). During that period, only 17 cities in the state had a decline; the rest averaged 54% growth! City staff didn’t alert the city council or act to combat the decline.
El Cerrito salaries for upper managers are bloated when compared with nearby cities. Some 2018 comparisons, including overtime (fire department) and benefits:

—EC city manager: $361,578 / Albany city manager: $229,192.62

—EC asst. city manager: $276,890 / Albany asst. city manager: $165,269

—EC highest paid fire officer: $465,711, 10^th highest: $334,141 / Albany highest: $334,122

El Cerrito’s fire department is understaffed and clocks a HUGE amount of overtime, flagged as a concern by the state auditor.

What happens now?

The state auditor will investigate El Cerrito’s financial condition and management and is expected to present a report and recommendations in September.
The city’s own financial auditor is expected to make a presentation at a council meeting.
The city plans budget hearings in May to prepare its 2020-2021 budget for adoption in June. Mayor Lyman has directed staff to present a menu of $2 million in potential cuts.

What can residents do?

Watch city council agenda, attend council meetings, and speak your mind!
Tell council members to start working now to fix the budget, not to wait until May.
Tell council members to reduce salaries, benefits, overtime, and unnecessary expenses before considering cuts to important services.
Pass this flier on to your neighbors. Not everyone knows what is going on. Action needs to be taken NOW!

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

Karen Pinkos-City Manager kpinkos@ci.el-cerrito.ca.us

Greg Lyman-Mayor glyman@ci.el-cerrito.ca.us

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

Councilperson Pardue-Okimoto rpardueokimoto@ci.el-cerrito.ca.us

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

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

CA State Auditor to complete a full audit on El Cerrito

In October 2019 the State Auditor made a list of cities in CA that were most at risk of bankruptcy and El Cerrito was #7. They then met with city staff and council members and decided to recommend a full audit of the city, something that some council members and staff opposed. At a hearing on February 26, 2020, the Joint Legislative Audit Committee voted unanimously to order a full audit of El Cerrito. The full letter the state auditor submitted to the committee is found here. Below are the concerns that they identified.

Fire Department overtime which is budgeted at 1.3 million this fiscal year.
Overall cash flow-which now means an increase in short-term loans for the city to meet their obligations.
Pension costs
Lack of reserves
Overall lack of addressing any of these issues.

The chart below shows how the short term lending has increased since 2011. These figures can be found buried in the CAFR (Comprehensive Annual Financial Report). The current 9 million dollars can be found referenced here on pages 102-114 and is specifically called out by the auditor. Notice the increase in the interest rate due to our poor bond rating. The $62,100 increase in interest (2018-2019) is the amount of the 4th of July event that council was suggesting as a cut in the last few council meetings.

Here is the part of the letter that specifically calls out the above items.

The full audit will attempt to answer the following questions.

As residents of El Cerrito, we must remain vigilant in making sure that the city supports this audit and follows most, if not all, of the recommendations. Sadly, staff and council have a history of not acting in a fiscally responsible manner and the community has lost trust as a result of this. While they have made some recent efforts at transparency there have been no substantive cuts in the 2019/2020 budget and no hearings on how to manage the fire department in a manner that both protect public safety and is fiscally responsible.

We may all have different priorities for cuts to be made and services to be saved. It is important that each of us show up at meetings and email staff and council to hold them accountable. Two council members are up for reelection in 2020 and one seat is open with no incumbent running. We must challenge those running on what has been learned from the missteps made in the past years and how they will do things differently in the future.

El Cerrito Employee Compensation

I took a look at employee compensation for El Cerrito, Albany, and Richmond for 2017 and 2018. I got all information from Transparent California. 2019 data is not yet available.

I wanted to get a sense of how some of the city’s management staff salaries compared to a city much larger than ours and also one of similar size but with a smaller overall budget.

A few baseline facts to start

El Cerrito is a city that is 3.9 square miles with about 25k (as of the last census) people and has an annual budget of 52 million.

Richmond is a city that is 52.5 square miles with 104k people. The city’s annual budget is 176 million.

Albany is a city with 5.5 square miles of which 1.8 miles of land. Their population is about 20k people (this is more recent than 2010 census). Their budget is 25 million.

I picked some positions that seemed universal to many cities such as the city manager, public works director, finance director, etc. Some positions were different in different cities and that is generally noted on the spreadsheet and will be noted below also.

Both Richmond and Albany discussed their financial hardships within their budgets. Both had deficits to deal with.

Notes on positions

El Cerrito is the only one of the three cities to have a City Manager, Assistant City Manager, and an Assistant to the City Manager. Richmond, a much larger city, has just the executive assistant to the City Manger and Albany has an Assistant City Manager that is also a City Clerk.

Richmond has two Financial Managers but no Director like Albany and El Cerrito.

In several situations, a position was not filled for an entire year. This happened with the Finance Director for Albany and also for El Cerrito’s City Clerk. I have put the percentage increase in salary from 2017-2018. When 2019 data becomes available I will update then. You can see the entire pdf here.

Observations

The City Manager of El Cerrito. is paid almost as much as the City Manager of the much larger city of Richmond. That position also increased almost 20% from 2017-2018. She also has both an Assistant and an Assistant to the City Manger which is not true of the other cities.
Most of Richmond and Albany’s positions stayed fairly static in salary from 2017-2018 (the exception being the Community Development director and City Clerk of Richmond) while most of the El Cerrito positions received raises of 20% or more. These raises were given after the point that the auditor had raised concerns about the city’s ability to remain a going concern (which is accountant language for the city is at risk of bankruptcy).
At this look it appears that El Cerrito is paying much higher salaries than Albany which is a fairly similarly sized city. Often times El Cerrito is almost paying as much in salary as Richmond which is a much bigger and more complicated city to manage.

Benefits

Below are links to each city’s benefits packages. The cities all have the premier Kaiser benefits as a part of Cal-PERS. Those benefits include no deductible and $10 doctor visits. These benefits cost slightly less than $800 a month for each employee plus an additional cost if they have dependents. El Cerrito pays the full benefit of the lower cost Kaiser plan and the employee pays only in if they choose the Sutter Plan. They pay the difference between that and the Kaiser plan, which is the same as Albany Employees. . Richmond employees pay in a flat $125 a month for their benefits.

El Cerrito Benefits

Richmond Benefits

Albany Benefits

City Tax Measures of El Cerrito

It is important for the residents of El Cerrito to understand all of the city based taxes we pay (well important to understand them all but I am focused on city taxes).

Measure R

Measure R-the first version was a sales tax increase of .5 cents for 7 years. It passed in November of 2010.

Per the city’s website ” In November 2014, El Cerrito voters approved the extension of Measure R at the one percent sales tax rate for twelve years to enable the City to maintain the current level of program and services offered. The new sales tax rate went into effect on April 1, 2015 and will sunset (end) on March 31, 2027. Read more about Measure R” There was some controversy at the time as to whether or not the city advertising on the issue brought up the idea that this was an additional .5 cent raise to the sales tax, not just an extension.

Ballopedia raised some issues on the original measure. The $21,717 that was raised to fund the tax was largely supported by unions representing city employees. The city spent $8,000 also to push the passage of the tax.

The full description of the Measure is

“To continue to protect/ maintain City services, including fire
prevention/ emergency services; emergency response times;
neighborhood police patrols; firefighter/ police staffing; crime
prevention/ investigation resources; after-school programs;
library hours/ programs; senior services; open space, parks,
paths/ playfields; other general City services, shall El Cerrito
extend the existing voter-approved sales tax and set the future
rate at one cent for 12 years, with citizens’ oversight, annual
audits, and all funds staying local, none to Sacramento.”

There was an East Bay Times article at the time criticizing the language of the measure.

Utility User Tax

Utility User Tax-this was reaffirmed in 2004 and is collected by the different utilities and remitted to El Cerrito on a monthly basis. It is an 8% tax on electricity, gas, water, video, and telephone, including wireless. The city’s information on it is found here.

Measure J Storm Drains

Measure J Storm Drain was based in March 1993. This was to issue bonds not to exceed 6.3 million to improve the storm drains in the city. The rate for a single resident home is $52. The most recent report on the city’s website is from 2015/2016.

Measure A-Swim Center

In March 2000 the voters passed Measure A fund the renovation and reconstruction of the Swim Center, the rehabilitation of Canyon Trail Clubhouse, and the performance of access and restroom renovations to the Harding, Huber, and Poinsett Park Clubhouses. This is for 58.46 per single family. The city’s information on this is found here. See also Measure H below.

Landscape and Lighting District

In 1988 the city passed a Lighting and Landscape District The city’s website states the following

“On June 6, 1988, the City Council established Assessment District No. 1988-1 pursuant to the Landscape and Lighting Act of 1972. The purpose of this Landscape and Lighting Assessment District (or “LLAD”) is to raise funds to support improvements and maintenance of the City’s park areas, landscaping areas, and street lighting. Every year since 1988, this Assessment District has generated approximately $771,000 to support LLAD activities.”

“In order to impose this annual assessment, the City Council must annually authorize an Engineer’s Report to identify the costs, uses, and general benefits of those parcels within the Assessment District. As detailed in the Engineer’s Report, the revenues are used for eligible activities including staff salaries and wages, streetlight maintenance, utility costs for the District, landscaping services, graffiti removal, and park maintenance.”

The most recent engineers report found on the city website is from 2013/2014.

Measure H

This measure extends Measure A above, which was due to expire in June 2020. The current Measure has NO expiration date. While again the money is for Parks and Recreation only it does allow the money to also go for maintenance which was not something widely publized at the time. It did pass overwhelmingly as it needed a 2/3rds majority and it received over $78 yes votes. Here is the city’s page on this measure and also Ballotpedia’s page. At the time the East Bay Times came out strongly against the measure.

Measure A

This measure provided for a .5 cent sales tax increase to improve the roads When this measure was passed in 2008 El Cerrito had some of the worst roads in the state. The city’s website says this

“Prior to 2008, the City faced a backlog of street maintenance and repairs. The Measure A accelerated work plan was a multi-year , intensive pothole and street repair program designed to rapidly improve El Cerrito’s street system and to complete the repairs in the most efficient and quickest way possible. The Measure A accelerated work plan involved repairing or resurfacing at least 70% of local streets in El Cerrito within four years. The pavement resurfacing treatment (Asphalt Overlay or Inlay, Cape Seal or Slurry Seal) was chosen for each street based on pavement condition and economic factors.”

It does appear that this measure has been a success in improving roads.

City Council Meeting June 4, 2019-City Manager and Finance Director say it is all okay.

In November 2018, the independent auditor expressed the going concern statement for the second year in a row. It appears in the CAFR. In the June 4, 2019, meeting the city finance director expressed the view things were improving and the going concern statement would likely go away. This was backed up by Karen. When asked if he felt better, the finance director said something like “considerably so”.

Below are more verbatim quotes take from the video. The video of that meeting is found here. The budget information starts at 2:59 in the video. The packet is found here. Pages 47-110 are very detailed budget documents. At the very end of the packet (no page numbers are available is Karen Pinkos’s presentation on the budget.

Karen started out with the presentation at around 2:59.

Karen: “We are being cautious and conservative”

3:10 Karen reiterated the effort of Mark and her to be conservative and not spend money that has not been received. “We are trying to be as prudent as possible”.

We are seeking to increase the fund balance reserve.

3:15 Karen: “I would like to thank all of our staff, especially the department directors for being fiscally responsible… I would like to give special thanks to Mark Rasiah.” He has been great in making sure that we have been keeping to our fiscal discipline…. We are wanting to make sure we are as fiscally prudent as possible.

3:22 Paul: “I am wanting to make sure you are liking the two year budget effort”
Karen: “Absolutely”

3:28 Mark Rasiah: “We have proved him wrong (independent auditor). So I think the going concern concept will be removed at the end of fiscal 19.

3:29 “So you feel better?” Mark: “Substantially so.”

3:30 Greg: “It’s nice to see you smiling because that means we should worry less.”

At the next meeting, the council raised the wages of management. Not until January 2020 did staff disclose to council and the public that there was a $2.9 million cost overrun and that the going concern statement appeared for a third year in a row.

The question then becomes whose responsibility is this. The council was being told that everything was okay in June 2019 and just four months later El Cerrito was named the #7 city at risk of bankruptcy in the state of California.

For reference here is a copy of the City Managers contract

She receives a base salary of $19,166.67 a month. She is eligible for whatever COLA un-represented employees make July of every year. If there was satisfactory performance the first pay period of January 2020 she was eligible for up to a 4% increase. The same for January 2021. The contract ends December 31, 2021. She receives the same employee benefits and makes the same contributions (amount not currently known) that all un-represented employees make. She gets vacation and sick time on the same basis. She also gets 75 hours a year of administrative leave. She receives $350 a month as a car allowance. The city pays for her travel and expenses doing professionally related things such as conferences. If she joins local clubs etc the city will pay the membership.

I was unable at the time of this writing to see the contract of the Finance Director. I will be making a public records request for that information. What I did find was this chart of employee salaries. The chart below shows a range of salaries for the Finance Director.

Update on Finance Diirector’s Salary 2/10/2020.

Here is the page that covers that.

Update on resources 2/8/2020

The city manager issued her new report found here. There is no new information on the financial crisis in it. There are links to past and future meetings. There are two firefighter jobs listed. They mentioned one was a replacement position. I wonder if either of those hires will reduce the $1.2 million in overtime we are paying for the fire department.

One of our community members managed to get the audio somewhat fixed on the City’s Town Hall meeting. Not perfect but better than what we got from the city. Thanks Mike.

https://www.youtube.com/watch?v=7b60FON7j3Y&feature=youtu.be

The slides from that presentation are found here.

I am also adding the slides from Mark Rasiah (Finance Director) presentation here. The video can be found here. Click on the long-term plan study session to see the applicable video.

Here is some information from the 2019 Comprehensive Annual Budget Report (CAFR)

In November 2018 the independent auditor expressed the going concern statement for the second year in a row. It appears in the CAFR. In the June 4, 2019 meeting the city finance director expressed the view things were improving and the going concern statement would likely go away. this was backed up by Karen. When asked if he felt better, the finance director said something like “considerably so”. At the next meeting, the council raised the wages of management. Not until January 2020 did staff disclose to council and the public that there was a $2.9 million cost overrun and that the going concern statement appeared for a third year in a row.

The video of that meeting is found here. The budget information starts at 2:59 in the video. The packet is found here. Pages 47-110 are very detailed budget documents. At the very end of the packet (no page numbers are available is Karen Pinkos’s presentation on the budget.

In addition, here is the information from the Standard and Poors report downgrading the city’s bond rating to BBB.

“El Cerrito, CA COP Rating Lowered Two Notches To ‘BBB’ On Deteriorating Budgetary Flexibility

26-Nov-2019 16:38 EST

“The lowered rating reflects our view of the continued deterioration of the city’s already weakened budgetary flexibility, driven primarily by continued strain on the city’s revenue, rising fixed costs with projected pension pressures, and one-time costs associated with the state’s wildfires,” said S&P Global Ratings credit analyst Benjamin Geare.

El Cerrito, CA COP Rating Lowered Two Notches To ‘BBB’ On Deteriorating Budgetary Flexibility

26-Nov-2019 16:38 EST

The negative outlook is supported by our expectation that there is at least a two-in-three chance that we could lower the rating within the one-year outlook horizon.”

City Council Meeting February 4, 2020

Last night there was a council meeting with the budget situation on the agenda. Here is the link to the video and packet.

Here are some observations from two of us who watched the meeting. It did appear to both of us that council is now taking this issue very very seriously which is a win for the community that have been pushing them to do so.

First off we were told that EC usually contracts with Pinole to stream video. The reason for the video fail on Saturday was staff tried to save money and do it themselves. The slides will be going up from the workshop on EC website soon. I will post them here when they are. They also say they will answer the written questions that were not answered on Saturday and post those.

Mark Rasiah the Finance Director had a powerpoint presentation. That powerpoint is found here.

They did budget projections out for 5 years. At this time the baseline estimates 581 k left 19/20 with a surplus also expected 20/21 and 21/22. The following years are all in the red. That is without any action by the council and also does not put anything into the reserve account.

There was a long discussion on Cal-Pers and how a drop in the discount rate would be devastating. Karen is going to a meeting soon and will hopefully know more about whether or not that will happen.

The finance director believes that if we had a 2 million reserve our bond rating would improve from the current terrible rating that doesn’t allow us to borrow money.

Rochelle said and Paul agreed that they did not know that the reserve was not being funded. Gabe also went on about this being hidden at a different point in the meeting. My question is who was suppose to be telling them this?

There are currently 184 positions in city. Mark stated every million dollars in cuts would equal about 10 position cuts.

There is a slide on some suggested potential cuts. See the slide below.

There was discussion on staffing and potential furloughs. Paul did reiterate that all things should be on the table.

Councilperson Quinto brought up high overtime rate for public safety. The budget for overtime (this is overtime we are paying not reimbursed is going to be about 1.2 million this year. He does not want want public safety funds cut. also brought up issue of firefighters doing vegetation management and that is important.

8 speakers spoke on this issue at almost 10pm! Yay for community involvement. Here are some of their thoughts.

Thanked council for the town hall meeting

No new taxes until fiscal responsibility

Consider layoffs

Need more transparency and leadership from council

Tough decisions need to be made

Support for not cutting public safety staff- this was a few people

A 10% reduction across the board

Consultants as a line item cut. why can’t staff do that work?

Parks and Rec potential cuts to anything not supported by its own funding this includes the senior center.

Charge for 911 calls via medical insurance

Create a community task force to work in economic development

We need to diversify tax base and look at expanding revenues

We need for oversight from council to staff

Don’t cut library hours or senior center

Back to the council speaking

The mayor asked the staff to come back with 2 million in cuts. Said they might not make them all but they wanted to see them.

Quinto talked about council doing stuff for economic development and things he has done. He would love to get a car dealership.

They talked about cancelling the 4th of July event. They start planning it now Councilperson Quinto was for Councilperson Pardue-Okimoto was against it. She talked about potential cuts like not having staff paid overtime at the events. and not having it for 2 days. She also said she would rather cut every other event than and keep this one. She wants staff to come back with numbers on all of them and entire council seemed to agree with that. Councilperson Fadelli and Mayor Lyman were open to letting 4th of July go. It was also suggested to maybe get some sponsorships.

Councilperson Quinto talked about bringing in non profits to support seniors rather than the city funding services. He says that is what SF does. He also was pretty angry about lack of economic development and said he had been working on the issue and not been supported by staff and that when he made contacts and they called the city calls were not returned.

A few other issues

Councilperson Quinto stated that the city would do whatever the state auditor recommended though there was not further discussion about this.

There was no talk of the unintended consequences of sharply cutting all of the amenities in the city. Will property values go down? Will businesses want to open up in such a downer environment?

There is a strong aversion to laying off staff and looking at any possible cuts in public safety both from public and council. There was no discussion on ways to perhaps cut the fat without cutting valued services.

The Mayor wants the agenda for next meeting to include possible cuts so that public is aware of them and can come speak out.

Council members challenged some of the Finance Directors assumptions, particularly around RFT and suggested being less optimistic.

This meeting was a study session and next meeting will be real talk of the cuts. People must show up! Everything is on the line here!

Albany

Pinole

San Pablo

El Cerrito

El Cerrito total employee compensation over the last three years (2019 data is not yet available)

Some of Mark’s slides showing no reserve, revenue trends, and the current mid year adjustments to the budget.