Item No. 1
Town of Atherton
CITY COUNCIL STAFF REPORT – STUDY SESSION
TO: HONORABLE MAYOR AND CITY COUNCIL
FROM: GEORGE RODERICKS, CITY MANAGER
ROBERT BARRON III, FINANCE DIRECTOR
DATE: MARCH 6, 2024
SUBJECT: FY 2024/25 BUDGET KICK-OFF AND OVERVIEW
RECOMMENDATION
Review and Discuss.
BACKGROUND
The Budget Kick-Off Meeting is the first meeting in the FY 2024/25 Budget cycle. The Kick-Off Meeting is a high-level overview of the Budget and is not intended as a detailed discussion; instead, it focuses on a recap of the current Fiscal Year, current priorities, and identifies some of the Preliminary Budget Assumptions and introduces the 5-year Forecast. It provides a snapshot of future revenue and expenditure assumption based on information available through the County, State, and local information.
The Annual Budget serves as one of the most important policy documents of the City Council. It aligns the Town’s annual revenues with Goals and Objectives for the coming year. One of the Town’s core strategies is financial stability. The focus during budget preparations is maintaining operational and service needs. This includes creating a balanced budget that meets the Council’s Goals and Objectives while maintaining long-term financial stability.
The discussion overview includes the Town’s General Fund. It is the primary operating fund of the Town and most of the revenue to the fund comes from Property Taxes. The General Fund is also the single largest contributor to the Town’s Capital Improvement Fund for capital projects.
This staff report provides, in brief:
• An overview of the FY 2023/24 Year-End Projected Fiscal Condition (end of year projection)
• An overview of the Town’s Major Revenue Sources and 5-Year Forecasts • An overview of the Town’s Major Expenditure Categories and 5-Year Forecasts • An overview of the Budget Process and Policy Discussions Budget Study Session FY 2024/25
March 6, 2024
Forecasted revenues and expenditures do not represent actual budget expectations year over year. These forecasts may change yearly due to local and state economic conditions. Forecasts serve only to evaluate budget assumptions. Below is the FY 2024/25 Budget Review Calendar for the coming months.
FY 2024/25 Budget Calendar
City Council Meeting
March 6, 2024 – Meeting #1
An overview of the FY 2023/24 Year-End Projected Fiscal Condition An overview of the Town’s Major Revenue Sources and 5-Year Forecasts An overview of the Town’s Major Expenditure Categories and 5-Year Forecasts An overview of the Budget Process and Policy Discussions City Council Study Session Meeting
April 3, 2024 – Meeting #2
Review and Discussion of the Operations Budget
City Council Study Session Meeting
May 1, 2024 – Meeting #3
Review and Discussion of the Special Funds & Capital Projects Budget City Council Study Session Meeting
June 5, 2024 – Meeting #4
Review and Discussion of the Final Draft Budget
& Special Revenues/Other Funds
City Council Regular Meeting
June 19, 2024 – Meeting #5
Adoption of the Final FY 2024/25 Budget
ANALYSIS
Attachment 1 is a Summary of Revenues and Attachment 2 is a Summary of Expenditures. Staff will review each attachment.
Fund and Reserve Balances
The General Fund is the Town’s primary operating fund and maintains reserve balances for emergencies, operating reserves, capital reserves and unallocated reserves. A portion of the Town’s General is set aside an Emergency Reserve. Emergency Reserves represent 15% of the actual annual General Fund operating expenditures each year.
The Town also has an Operating Reserve set aside at 15% of the actual annual General Fund operating expenditures each year. There is no defined use for the Operating Reserve other than set aside funding. These Reserves provided financial assurance to the Town’s lender for the COP. The City Manager does not have the discretion to utilize the Emergency Reserve or the Operational Reserve without specific City Council direction. Any remaining fund balance not reserved or Budget Study Session FY 2024/25
March 6, 2024
committed is designated as Unallocated Fund Balance. This Unallocated Fund Balance represents funds that have not yet been assigned.
Budget Process and Policy Discussions
The budget process is done in stages to allow the City Council and public time to review the General Fund Operations Budget, the Capital Improvement Budget, Special Revenues, and Internal Service Funds. The budget process provides staff the opportunity to examine programs, propose changes in current Town services, outline operational needs and recommend capital outlay items to the City Council.
Budget Goals
As staff prepares the budget, staff will set goals for each department that continue to maintain or enhance the level of service throughout the community, while ensuring that the Town maintains its core strategy of fiscal stability. These goals are based on the overall Council Policy Goals.
POLICY FOCUS
The policy focus for this item is discussion and overview of the budget process, philosophy, and assumptions. There are policy areas for Council discussion and direction. Discussion includes budget revenue and expenditure assumptions, the use of excess ERAF, reserve policies, and a policy focus on the reduction of long-term liabilities.
GOAL ALIGNMENT
This report and its contents are in alignment with the following Council Policy Goals:
• Goal A – Maintain Fiscal Transparency
• Goal F – Be Forward-Thinking, Well-Managed, and Well-Planned
FISCAL IMPACT
None.
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.
The Town maintains a Fiscal Transparency web portal and includes all budget information on its website. Links to these various areas are below:
Budget Study Session FY 2024/25
March 6, 2024
Fiscal Transparency Web Page: http://www.ci.atherton.ca.us/index.aspx?NID=269 Archive of Town Budgets: http://www.ci.atherton.ca.us/index.aspx?nid=273 Financial Data Portal (OpenGov): http://www.ci.atherton.ca.us/index.aspx?nid=361 Financial Audit Archive: http://www.ci.atherton.ca.us/Archive.aspx?AMID=39&Type=&ADID= Actuarial Valuations Archive:
http://www.ci.atherton.ca.us/Archive.aspx?AMID=61&Type=&ADID= Labor Contracts, Agreements, and Salary/Benefit Information:
http://www.ci.atherton.ca.us/index.aspx?nid=192
ATTACHMENTS
1. Revenues
2. Expenditures
3. FY 2024/25 General Fund Five Year Forecast