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El Cerrito auditors give city an unmodified opinion; staff highlight reserves and pension planning
Summary
The independent auditors reported an unmodified opinion for FY24–25 — the first on-time ACFR since 2013 — with no material weaknesses or significant deficiencies; staff and council discussed reserves, Section 115 pension trust performance, and longer-term pension costs.
City finance staff and the independent auditor presented the FY24–25 annual comprehensive financial report and audit results to the council on Feb. 3.
"We feel that the financial statements are free of material misstatement," said Sheldon Chavon, the CPA presenting the audit, and he told the council the audit produced an unmodified opinion with no material weaknesses or significant deficiencies. "So there you go. You get my stamp of approval on the audit." (Sheldon Chavon)
Finance Director Crystal Reams said the ACFR was completed on time (Dec. 31) and had been submitted to the Government Finance Officers Association for award consideration. She reiterated the city's improved timeliness and thanked staff across departments for the work that made the on‑time filing possible. (Crystal Reams)
Council members pressed staff on how to use reserves prudently. Sheldon Chavon described the classifications and said the city had about $7.5 million set aside as an emergency or disaster reserve as of June 30, 2025, and that the city’s fund balance provides flexibility. Crystal Reams and the auditor also discussed the Section 115 pension trust: staff said the trust is invested in a moderately conservative index with a one-year return the city reported as about 10.58% and a three-month return of 1.49% (figures presented in the council packet and during Q&A). (Sheldon Chavon; Crystal Reams)
Why it matters: An unmodified audit opinion is the standard for clean financial reporting and supports the city’s credibility with bond markets, grantors, and the public. Council members also received reminders that pension liabilities remain a multi-year pressure and that reserve policy and the Section 115 strategy will be tools for smoothing future budget impacts.
What officials decided: The council received and filed the ACFR and audit report; staff will continue to present quarterly updates on reserves, the Section 115 trust, and potential midyear budget adjustments at upcoming meetings.
