Item No. 3
Town of Atherton
CITY COUNCIL STAFF REPORT – STUDY SESSION
TO: HONORABLE MAYOR AND CITY COUNCIL
GEORGE RODERICKS, CITY MANAGER
FROM: ROBERT BARRON III, FINANCE DIRECTOR
DATE: FEBRUARY 7, 2024
SUBJECT: RECEIVE AND FILE THE MID-YEAR BUDGET REPORT FOR FY 2023/24
RECOMMENDATION
Receive and file the Mid-Year Budget Review for the General Fund for FY 2023/24.
BACKGROUND
The FY 2023/24 Mid-Year Budget Report provides the Council with information about the status of the Town’s financial condition at the half-way point in the Fiscal Year. The Report highlights the current year expenditures, year-end estimates, and identifies any significant issues which may impact the upcoming budget. A Mid-Year Budget Adjustment Resolution will return to the Council at the February Regular Meeting.
The FY 2023/24 Mid-Year Budget Report projects total revenues of $25.2m (an increase of $1.4m). This is an increase from the Adopted Budget of $23.7m. This is primarily due to increases in Property Taxes, ERAF, charges for services, and other revenues.
The FY 2023/24 Mid-Year Budget Report projects expenditures at $20.2m (an increase of $365,000). This is an increase from the Adopted Budget reflecting $19.8m. This is primarily due to one-time expenditures for operations and maintenance needs.
In summary, this is a net positive change (revenues over expenditures) of $1m resulting in a projected Year End Fund balance of $12m (inclusive of reserves).
FYI 2023/24 Mid-Year Budget Staff Report
February 7, 2023
FINDINGS | ANALYSIS
FY 2023/2024 Mid-Year Revenue Summary
FY 2023/2024
Adopted Budget
FY 2023/2024
Year End Estimate
FY2023/24 YearEnd Variance% Change
Revenues
Property Taxes $15,126,595 $15,124,003 ($2,592) (0.01%) ERAF $2,300,000 $2,633,605 $333,605 14.5%
Sales Taxes $321,100 $409,100 $88,000 27.4%
Franchise Fees $1,056,000 $1,056,000 0 0%
Intergovernmental $40,700 $40,700 0 0%
Business License $283,600 $283,600 0 0%
Planning $298,300 $405,300 $107,000 35.8%
Building $1,665,000 $2,107,000 $442,000 27.3%
Police $285,690 $561,690 $276,000 96.6%
DPW $769,700 $794,700 $25,000 3.2%
Park Program $207,500 $74,500 ($133,000) (178%)
Miscellaneous $1,412,289 $1,716,188 $303,899 21.51%
Total Revenue $23,766,474 $25,206,386 $1,439,911 6.05%
The FY 2023/24 Budget projected total property tax revenue at $15,126,271. Anticipated Property Tax Revenue for 2023/24 reflects a slight decrease of ($2,593). Secured and Unsecured property taxes show an increase of $181,900 for the fiscal year. Property Tax in lieu of VLF reflects a decrease of ($184,493). This is attributed to the Town anticipating receiving the remainder of FY 2022/23 VLF funds and continued estimated VLF shortfall for FY 2023/24.
The Town’s ERAF Revenue for FY 2023/24 is $2,633,605. This is an increase of $333,605 over the budget of $2,300,000. ERAF Revenue has fluctuated over the past several years from as low as $1,020,000 to now as high as $2,633,605. In FY 2022/23 the Town received $2,339,064 in ERAF and its use was toward additional allocation toward Town CIP. The Council will review and direct ERAF during the annual budget process. ERAF is not included as part of the Town’s required operational revenues.
Planning and Building Revenue anticipate increases for a total of $549,000. This is due to the anticipated increase in permit fees expected to go into effect in March. Police Revenue is experiencing an increase of $276,000 due to donations received for health and wellness programs and various training. Park Program activity is projecting a decrease in revenue due to the slowdown in Park reservations and the Town no longer having Catered Too as the Park Event Manager. There is an increase in Miscellaneous Revenue of $303,889 at Mid-Year. This is due to an increase in construction time limit forfeitures. These are one-time revenues. All other Town revenues remain static.
FYI 2023/24 Mid-Year Budget Staff Report
February 7, 2023
FY 2023/2024 Mid-Year Expenditure Summary
FY 2023/2024
Adopted Budget
FY 2023/2024 Year
End Estimate
FY2023/24 YearEnd Variance% Change
Expenditures
City Council $69,015 $69,015 0 0%
Administration $1,279,479 $1,279,479 0 0%
City Attorney $310,000 $310,000 0 0%
Finance $866,652 $866,652 0 0%
Planning $1,674,819 $1,674,819 0 0%
Building $1,361,829 $1,604,829 $243,000 17.8%
Interdepartmental $1,055,542 $1,102,542 $47,000 4.45%
Police $9,529,827 $9,584,827 $55,000 .56%
Public Works $3,661,445 $3,681,445 $20,000 .54%
Total $19,808,608 $20,173,608 $365,000 1.84%
Departments are expected to meet budget appropriations or may report lower operational expenses at end of the Fiscal Year. There are several adjustments needed to the Operating Budget. These adjustments total $365,000.
The Building Contract is revenue based. This is an adjustment in expenditures due to the anticipated increase in revenue. The projected increase in revenue requires an additional expenditure adjustment of $243,000.
The Town maintains IT support for the Town through Infinity Technologies that includes fulltime on-site tech support 3 days a week and 24-hour online support via the Interdepartmental Budget. Infinity provides services for all Town IT related needs at the Town Center, the Park, and the Library, plus special projects. The first two years of the contract for IT support set compensation at $163,200 per year. The service delivery model was 3 onsite days per week.
However, due to the complexity of systems, service required and networks, actual service is 4.5 days per week. The Fiscal Year 2023/24 Budget anticipated a reduction in IT Services during this 3 rd year of the contract. However, support is required at the current level of service. Most of the support is necessary due to IT upgrades within the Police Department. During the Fiscal Year 2024/25 Budget process, staff will work on developing an IT support budget that also includes funding for Police systems project needs that require additional IT support. This requires additional appropriations of $47,000.
The Police Department currently needs additional appropriations for overtime. In prior years, the Department has been able to use funds from regular budgeted salaries since the Department was not fully staffed but maintained a budget for approved staffing levels. The Department overtime applies to a large portion to backfill to maintain the 2 +1 staffing model for each shift.
Backfill is mainly attributed to filling in for sick time, required training, and other related absences such as vacation. This requires additional appropriations of $55,000.
FYI 2023/24 Mid-Year Budget Staff Report
February 7, 2023
With Catered Too no longer providing Park Event Service Management, the Public Works Department is releasing an RFP for Event Management services at the Park. It is anticipated that the new event services will not be onboard until June 2024. Until the new services are in place staff engaged a part-time temporary employee to manage events at the park. This is a one-time cost which requires an additional appropriation of $20,000.
There are no other adjustments required within the FY 2023/24 Budget. Below is a table that reflects the Budget Fund Balance Summary.
FY 2023/2024
Adopted Budget
FY 2023/2024
Year End Estimate
FY2023/24 YearEnd Variance
Excess (Deficiency) Revenues
over Expenditures
$3,957,866 $5,032,778
Transfers out:
COP Debt Service ($861,871) ($861,871)
CIP Future Projects ($5,890,000) ($5,890,000)
Net Change Fund Balance ($2,794,005) ($1,719,093) $1,074,911 Beginning Fund Balance $13,791,636 $13,791,636
FY 2023/24 Estimate Ending
Fund Balance
$10,997,631 $12,072,543
FY 2023/24 Projected Year End Balance $12,072,543
15% Emergency Reserve Requirement ($3,026,041)
15% Contingency Reserve Requirement ($3,026,041)
American Rescue Plan Reserve ($1,707,000)
FY 2023/24 Projected Unallocated Fund Balance $4,313,461 The FY 2023/24 beginning total Fund Balance was $13,791,636 (inclusive of the mandatory reserves). At the conclusion of FY 2023/24, after transfers out for Debt Service, the abovereflected departmental adjustments, and the transfer of funds to CIP future projects, the end of year fund balance projection is $12,072,543 (this includes all mandatory reserves).
POLICY CONSIDERATIONS
The Mid-Year Budget Report is an opportunity to make adjustments and operations corrections based on unanticipated changes and the goals and priorities of the City Council. If there are projects or priorities that the Council wishes to address at mid-year, this is the opportunity to do so. The Mid-Year Budget Report encompasses all changes to the budget thus far in the Fiscal Year. Staff will bring back a Budget Amendment Resolution to the February Regular Meeting to reflect the noted adjustments.
FYI 2023/24 Mid-Year Budget Staff Report
February 7, 2023
FISCAL IMPACT
Discussed above, the overall fiscal impact to the General Fund due to Mid-Year adjustments is a General Fund Net expenditure increase of $365,000 (1.8%) against a General Fund (plus ERAF) revenue increase of $1,439,911 (6.5%).
GOAL ALIGNMENT
Goal A- Maintain Fiscal Responsibility
PUBLIC NOTICE
Public notification was achieved by posting the agenda, with this agenda item being listed, at least 72 hours prior to the meeting in print and electronically. Information about the project is also disseminated via the Town’s electronic News Flash and Atherton Online. There are approximately 1,200 subscribers to the Town’s electronic News Flash publications. Subscribers include residents as well as stakeholders – to include, but be not limited to, media outlets, school districts, Menlo Park Fire District, service provides (water, power, and sewer), and regional elected officials.
ATTACHMENTS
None.