For the first time in a long time, we have an election with mostly outsiders running. There is one incumbent running, Paul Fadelli, who is endorsed by the El Cerrito Democratic Club, but there are 7 additional candidates. In no particular order they are:
El Cerrito Committee for responsible government sent each candidate a list of 8 questions. We want the community to be able to assess the candidate’s understanding of the fiscal crisis and what each candidate sees as potential solutions for the issues.
The questions are as follows:
What is your analysis of how the city became insolvent and what changes will you make to ensure it does not happen again?
How will you independently verify staff budget projections and analysis?
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 in the current culture, and if so, how would you go about it?
How will you evaluate the city manager’s performance and hold them accountable?
What role do you think short-term borrowing has in the budget?-Follow up: If there is no role: what is your plan to eliminate it. If there is a role then: what is the impact on the city’s Rating, borrowing costs, and our ability to finance other capital projects.
What are the details of your plan for El Cerrito getting out of the financial situation we are in?
What do you see as the issue behind the over 1 million overtime for the Fire Department each year? How would you resolve this issue and keep El Cerrito fire safe?
What changes would you make with the police budget?
We have asked the candidates to respond by Monday, August 31st. Whoever does respond we will post their answers here in a blog post. We may then do some analysis in other posts but each candidate will get a post that is their words to our questions.
El Cerrito is a city in crisis. We all know the November election is one of the most important elections this country has ever had. But we cannot forget our local issues we must pay attention to both. We encourage voters to educate themselves. Sign up for updates to this blog to get each blog post for the candidates. Join our IO group for updates.
El Cerrito Progressives along with El Cerrito Fire Safe are sponsoring a candidate forum on September 12th from 3-5 pm. They will be posting the video so it can be watched later and ECP will do a scorecard for candidates.
So there are many places you can get information about these candidates please take the time to do so!
This coming Tuesday, August 11th El Cerrito is having another meeting to discuss the budget. The consultants are recommending at least an additional 1.5 million dollars in cuts occur. Their recommendations are as follows:
The problem with both the 1.5 million dollar number and the recommendations that are made is that there is no specificity to them. We don’t know where the 1.5 million dollar number came from. What were the assumptions that created that number? How long are they predicting the shelter in place order will last? Are they looking at the latest economic numbers which were horrific? Given that we just took out an 8.5 million dollar loan to stay afloat all decisions moving forward be both data-driven and transparent. Having a packet of vague information does not allow residents to make adequate public comments for the meeting.
Some of us have been trying hard to analyze the budget and how decisions are made. We have been focusing on the Fire and Police Departments since those are half the city’s budget. I made several information requests to see how the city decided to not hire additional fire personal but rather pay overtime. I also requested information on how the amount of money to charge Kensington for their fire protection contract was determined.
For the Kensington contract, I was told there were no records responsive to my request. Which means there is no financial analysis of how El Cerrito determines the cost of the Kensington contract. The city could be benefiting greatly or being hurt financially-we simply do not know without financial analysis.
Regarding the OT I was given the chart below. It tells me how much a fire department employee costs the city. It does not have any analysis of OT hours and what they cost. I independently gathered data on fire department OT and put it together. Something that I believe the city staff should have been doing to decide to hire more staff or not. Again, the city may have made the correct decision but without data, we do not know.
Another person put in a request for information on the police department which is still pending. The request was for information on all police incidents over the past two years breaking them down into the type of incident and categories along with resolutions. We thought this would be an easy request that this data would be tracked. This is not the case. We were told there were numerous records to go through in order to obtain the information. Further upsetting was that the response was from an outside lawyer. Which means this request is costing the city money to obtain. Not the intention of our group.
I hope people will again make public comments at the meeting. The information on how to attend and make comment is at the bottom of this post. Please note this is a 4:30pm meeting.
I am suggesting 1. A monthly financial report given to the city council and published online. This should be an easily readable document summing up income and expenses and how they are tracing for the fiscal year. This way if the estimate of the 1.5 million is to late there can be quick action taken. It also increases transparency.
2. When there are recommendations put into slides they be very specific. What are these PD and FD staffing changes? What is this reduction in city administration? Are they job losses are something else.
3. Whenever there are staff predictions on how the finances are going we need written assumptions that go along with them. For example 1.5 million in cuts is based on a reduced sales tax income of 2% until June 2021. Etc. This allows us to see if the predictions are going far enough forward in time. I understand that things are fluctuating faster than usual and that assumptions may change over time and even quickly but the residents deserve to know what is behind each assumption.
If you are watching live using WebEx you can use the “Raise Hand” feature to request to speak. Each period of public comment will be announced.
To send in comment do the following-If the comment gets there 3 hours prior to the meeting it is submitted to the council in writing ahead of the meeting. If it is later than that the council will get the written comment in the supplemental packet. The city clerk is no longer reading the comments into the record, later. The agenda item for this financial item is 3A.
Via email to cityclerk@ci.elcerrito.ca.us. Email must contain in the subject line public comments – not on the agenda or public comments – agenda item #. The agenda item for this financial item is 3A.
The City of El Cerrito will be hosting a virtual town hall on the budget on Saturday, August 1st From 10-12. For information on joining the Town Hall click here. We urge you to participate, and this is why:
The city is facing a 5.5 million dollar budget deficit.
The city has been very slow to take action and COVID is exacerbating what was already a crisis situation. The longer the city takes to act the worse situation we will be in.
The city has not addressed the extreme amounts of overtime paid to the fire department (over 1.5 million last year). This is an issue that was called out by the state auditor. While we all agree we want El Cerrito to stay fire safe it seems it might be prudent to look at ways to control expenses.
Public safety is 50% of the budget. Members of the public need to decide what the priorities of the city should be and let their elected representatives know what they are. Cuts need to be made. Do you want to prioritize police or the recreation center? Let the council know.
The City Council and staff need to know that the community is paying attention and is going to hold them accountable. We need a more transparent process.Please participate in the meeting. You can send in questions via email to cityclerk@ci.el-cerrito.ca.us. Please note that all questions will not be answered and they are not guaranteeing answers subsequent to the meeting. If you email please encourage them to answer all questions in writing on the city website.
Management Partners, the consultants used to advise on budget issues, were first hired for a 25k contract to help revise the Strategic Plan. The original contract was for between $25,900 and $32,500 depending on whether the city had Management Partners do the public workshop or not. About half way through that contract the city modified the contract to have them to provide financial advice to the city. The scope of work includes the following:
You will note in the activities that there are several check ins with the City Manager before the report was to go to the City Council. The revised contract used $10,500 from the original contract and added an additional $12,500 to cost the city $23,000 for the consultants to bring up recommendations like cutting library hours that had already been voted on by the Council. The consultants did not have information to present on compensation rates comparisons between El Cerrito and comparably sized cities. We are left to suspect that the consultant prioritized only cuts suggested to them by City Staff.
Three City Council Seats up for Election in November
If you have felt like the City Council has not been representing you and the interests of the city now is the time to step up and run for council. In El Cerrito. traditionally the El Cerrito Democratic Club (which includes members that don’t live in El Cerrito) has designated the next council members. They do an endorsement and send out mailings to those who live in the city. All current members are of the Council are members of the ECDC with Council person Abelson and Mayor Lyman both part of the current leadership. The only declared person running for City Council is Margaret Kavanaugh Lynch and she too is a member of ECDC. It is anticipated that if Mayor Pro Tem Fadelli and Councilperson Pardue-Okimoto run again that ECDC will then again endorse them and it is likely that they will run unopposed. The only way for that to change is for other community members to step up and run. We encourage you to do so! The city information on running is reprinted below.
“In November of 2020, the terms of office for Mayor Lyman, Mayor Pro Tem Fadelli, and Councilmember Pardue-Okimoto will expire. On June 16, 2020, the City Council called an election for the purpose of electing three members to City Council. The term for each seat shall be four years, from November 2020 to November 2024. The nomination period for these offices will begin on Monday, July 13, 2020 and close on Friday, August 7, 2020 at 4 p.m.
If nomination documents from any of the three incumbent officers of the city are not filed by Friday, August 7, 2020, the nomination period will be extended until Wednesday, August 12, 2020 at 4 p.m. During this extension period, no incumbent is allowed to file nomination documents.
To be eligible to run for City Council, a candidate must be a resident of El Cerrito and a registered voter at the time nomination documents are issued. The City Clerk is the Elections Official and primary contact for El Cerrito candidates. To best serve candidates, individuals interested in running for office are encouraged to contact the City Clerk to ask questions. Appointments will be required for issuance, review, and submission of nomination documents. For more information or to schedule an appointment, please contact the City Clerk at cityclerk@… or (510) 215-4305. Election information is also available online at http://www.el-cerrito.org“
I wrote previously about the TRAN loans that have been keeping the city afloat since 2011. On May 21, 2020, I sent a request for information on the costs of these loans. It specifically said
“I saw in the supplemental slide set some info about the trans.
What I would like to know is
1. What year did the city first start getting trans? That year how much was it for, what was interest rate, and actual dollars of interest, and cost of obtaining the Tran (such as what is indicated in the contract you sent me for NBA) 2. From 2012 to current date the same info, interest rate, actual dollars paid in interest, and cost to obtain the loan.“
That is the link to all agendas and minutes for El Cerrito City Council meetings. I was expected to go through them all. Many of them are over 100 pages long.
I unhappily replied
“With all due respect that is a ridiculous response. I am expected to go through years of agenda items to find this? Information that should be easily gotten from the finance department. This is not transparent government. ”
I recevied the following responses
“All of the information you are requesting is contained in the staff reports and resolutions. The results in the first two pages provide all the information you requested”
She then immediately sent this reply
‘My apologies, I tried to paste a link and accidently hit send. The results in the first two pages provide all the information requested.”
If you click on that link there are 2560 links below it.
I actually tried to dig through the materials. But I could not find the information for 2011 and 2014. (Though with further digging later I did find 2014) so on May 29, 2020, I sent the following reply
“I did dig through this. I am unable to find the cost of the loans (fees to obtain) for 2011 and 2014. And also wanted to confirm if WestAmerica had them.
I found this for 2014 listed but it seems like there was further action taken. I did search agendas for a few meetings past this with no luck.
If you could fill in these pieces I would appreciate it.”
I never received a reply to that email.
Others have also tried and not fared any better. I have let the Mayor and some city council members know and still not gotten a response.
I have been connected with some policy wonk researchers in the community. One of them did a dive into California Debt and Investment Advisory Commission (CDIAC) data that is available on the State Treasurers website. He complied the data in an excel worksheet and sent it to me. I have linked to it here. It shows TRANS for lower amounts going back to the 1990’s. Which as you remember was one of the questions I had in the original request-how long has this been going on for?
This experience is the epitome of what has been happening in El Cerrito. There is no transparency. The law requires that the city give information to its constituents. That obligation is clearly not being met by sending pages of thousands of links. It also says something that the city council members and mayor I reached out to over the past weeks were not able to get the information to me either.
I just just sent a new request for information on Fire Department Data. Some of this data has been long requested by others. It is hard for any of us to do an analysis on the Fire Department without data on overtime usage. We have not gotten data on how the city decided to not hire new staff but instead pay OT. Or how much the Kensington contract costs the city. Or how much we were reimbursed by the state for OT for state fires. Or how much OT was given for the fire fighters that stayed in our community when others were fighting state fires. It shouldn’t be this hard to get information from the city. If I, someone who knows how to dig and push, can’t get it, how is an average citizen suppose to get information? I have documented my efforts in both the TRAN request and this new request. I recently learned that there are lawyers that love this type of case. Because if the city refuses to give information and loses they pay lawyers fees. I feel like a city bordering on bankruptcy should not put itself in the position of a citizen having to take such severe action to get results.
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.”
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
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?
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 #.
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
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 #.
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
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.
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
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.
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)
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.
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
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.
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.
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
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 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 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? Isthe 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.
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.
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
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.
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.
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.
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
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. Waiting until September as suggested by the Mayor will only deepen the crisis. It is time to act!
Resources
Link to most recent meeting on March 25th is below.
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.
California State Auditor Elaine Howle ranks El Cerrito the 7th 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
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.
El Cerrito Committee for Responsible Government (ECCRG) 