Cerritos projects $2.9 million operating shortfall; council orders staffing, rate and fee studies

Cerritos City Council members on May 7 heard a combined hiring-transparency report and preliminary budget update that together left the city with a projected $2.9 million operating deficit for fiscal year 2025–26 and a slate of follow-up studies and committee work.

City staff presented metrics required under Assembly Bill 2561 showing the city had 14 vacant represented positions (a vacancy rate under about 9.5 percent), an average time-to-hire of roughly 54 days (down from 88 days the prior year) and an average of about 34 applicants per posted represented position. Director of Administrative Services Drew Schneider said the city had reduced hiring delays through standardized selection procedures, a compensation rubric and other process changes.

The hiring report drew praise from Rogan Girard, president of AFSCME Local 619, who told the council the human-resources team had improved communication and that additional HR staff — and returning payroll to finance — should be considered to speed recruitment and support succession planning. Girard and other union representatives also urged reconsideration of how the city applies the 960‑hour limit that affects part‑time employees’ CalPERS membership and asked for quicker interim solutions for departments that lose experienced part‑time staff at the fiscal-year boundary.

Why it matters: staff said the hiring improvements have helped but that part‑time staffing practices remain a fiscal and operational question; the budget picture tightened when the city incorporated a late, lower sales-tax forecast. The updated revenue figures reduced recurring general‑fund revenues and increased the FY26 operating gap to $2.9 million, staff said.

Budget details and follow-ups

Peter Kemp, the city’s finance and budget manager, told the council the preliminary budget as published reflected recurring revenues of roughly $127.4 million, but that updated sales-tax projections provided to the city after publication reduced the revenue outlook. Because staff did not have time to fully revise the printed document, Kemp said the revised numbers drive the $2.9 million operating deficit for FY25–26.

Staff proposed using a small portion of the city’s reserves to balance the shortfall while moving forward on several longer-term items to improve fiscal sustainability: enterprise rate studies for water, sewer and reclaimed water, a review of the electric utility, and a citywide fee study that staff said will begin the following day. Schneider also described a preliminary capital improvement program of roughly $23 million for the coming year and said staff is evaluating additional one-time strategic investments, including proposed additional discretionary payments toward CalPERS unfunded liability (staff cited illustrative amounts of $13 million and $2 million for current and next year as placeholders to be refined with final numbers).

Enterprise funds and water/sewer rates

Staff drew attention to persistent deficits in the water, sewer and electric enterprise funds. The presentation showed those funds have historically run short of expenses, and staff said prior general‑fund loans and recent policy changes are part of a multi-step plan to stabilize the enterprises. The city manager and public-works staff said a consultant has been retained and a water-rate study is underway; staff expects to bring rate recommendations and a Prop 218 (proposition 218) compliance process to council in the coming months so any new rates could take effect in early 2026 if approved.

Council direction and actions

Council members asked staff for a series of follow-ups: an expanded enterprise-rate study and fee study, faster completion of the water and sewer rate analysis, and a part-time staffing study. Mayor Pro Tem Linda Johnson moved to refer staffing issues — including a succession protocol and current practices for part-time employees — to the personnel committee; the motion was seconded and passed 5–0. Council also asked staff for a supplemental budget study session to review updated sales-tax numbers before final budget adoption.

Votes at a glance (actions recorded during the meeting)

- Consent calendar: motion to approve carried 5–0 (mover: Mark Pulido; second: Sofia Se). - Reappointment: Deepak Javeri to the Planning Commission — moved by Mayor Pro Tem Linda Johnson, seconded by Sofia Se; carried 5–0. - Mayoral ad‑hoc appointments (personnel and public-safety working groups): motion carried 5–0. - Personnel referral (motion by Mayor Pro Tem Johnson to refer succession protocol and part‑time staffing practices to the personnel committee): passed 5–0.

What’s next

Staff will return with: the expanded enterprise rate studies (water, sewer, reclaimed water and a review of the electric utility); the citywide fee study scope and timeline; the part‑time staffing study; and an updated sales‑tax analysis for a supplemental budget study session before the council adopts the final budget June 26.

Speakers quoted in this account are identified in the transcript and listed in the accompanying speakers field.