Item No. 1
Town of Atherton
CITY COUNCIL AND FINANCE COMMITTEE – STUDY SESSION
TO: HONORABLE MAYOR AND CITY COUNCIL
CHAIR AND FINANCE COMMITTEE
GEORGE RODERICKS, CITY MANAGER
FROM: ROBERT BARRON III, FINANCE DIRECTOR
DATE: APRIL 3, 2024
SUBJECT: FY 2024/25 GENERAL FUND/OPERATIONS BUDGET
RECOMMENDATION
Review and Discuss.
BACKGROUND
This is a review of the Town’s General Fund Operational Budget only. Expenditures include the Administration, Finance, Planning, Building, Inter-Departmental, Public Works, and Public Safety Departments. The Operations Budget focuses on the Town’s revenues and expenditures over time to the Town’s General Fund. The March 6 Study Session provided a high-level view of revenue and expenditure assumptions and a five-year forecast using those assumptions. Those assumptions are incorporated herein.
FY 2024/25 Total General Fund revenues are projected at $23,001,022 against $20,782,720 in expenditures.
The FY 2024/25 Budget is approximately $534K more than the FY 2023/24 adjusted Budget. The bulk of the increase is spread across the Administration, Building, Inter-department, Public Works, and Police Departmental budgets.
ANALYSIS
R E V E N U E S
FY 2024/25 Total General Fund revenues are projected at $23,001,022 against $20,782,720 in expenditures. This is a single year surplus of $2.21 million, before the addition one-time revenues or transfers in/out (such as ERAF or CIP). There is a projected year-end positive fund balance in the General Fund of $16.01 million.
FY 2024/25 General Fund Operations Budget
April 3, 2024
The Town’s ERAF revenue for FY 2023/24 was $2,633,605. This is an increase of $333,605 over the budget of $2,300,000. ERAF funding remains at risk and should still be considered below-theline for one-time use.
In FY 2024/25, Property Taxes represent approximately 70% of the Town General Fund Revenues. The total projected revenue from property taxes is $15,804,585, approximately 6.8% or $1,022,907 over the FY 2023/24 actuals estimate. Changes in property values are based mainly on CPI growth, residential remodels, and new construction on razed properties. The Town’s Property Tax Consultant HdL Companies suggests that the Town use a projected increase of 4.5 to 5.5 percent in Property Tax revenues. Since FY 2011/12, the Town has seen an Assessed Property Value growth of about 241%.
Staff projected the various property taxes based on current assumptions for Secured Taxes and Property Tax in lieu of VLF. The FY 2022/23 VLF amount was $1,527,046 and the funds available from the State were $1,101,651. There is a shortfall outstanding of $425,395. It was estimated that the FY 2022/23 shortfall would be appropriated in the State’s 2024/25 budget, however as of this month, it is not appropriated in the State Budget. The Town has participated with the County in encouraging the State to allocate the funds within the State Budget.
The FY 2023/24 VLF amount is $1,651,448 and the funds available from the State are $946,463.
There is an estimated shortfall of $704,985. The total VLF shortfall to the Town is $1,130,380.
Staff has budgeted the VLF for FY2024/25 with the understanding of shortfall occurring while also possibly receiving partial payment for above shortfalls. The property tax projection is 4.5% for FY 2023/24 property tax revenues and will be revisited when we receive our second installment. Actual revenues may be higher.
Source FY 2018/19
Actual
FY 2019/20
Actual
FY 2020/21
Actual
FY 2021/22
Actual
FY2022/23
Actual
FY 2023/24
Estimate
FY 2024/25
Projection
Property
Taxes
$11,016,883 $11,611,597 $12,050,352 $13,232,475 $14,242,837 $14,781,678 $15,804,585 Excess ERAF $1,691,772 $1,784,091 1,863,658 $2,488,713 $2,339,065 $2,633,605 $2,500,000 Total Property
Taxes
$12,708,655 $13,395,688 $13,914,010 $15,721,188 $16,581,902 $17,415,283 $18,304,585 Sales & Use Tax
The Town is not heavily reliant upon Sales & Use Tax revenue. There is a projected increase in Sales & Use Tax of $7,400 for a total of $442,400. The State advances Sales Tax funds based on prior year transactions and then trues up the following year.
Source FY 2023/2024
Estimate Budget
FY 2024/25 Projected
Budget
Projected Change to
FY 23/24 Est. Budget
Sales & Use Tax $315,000 $320,000 $5,000
Prop 172 Sales Tax Police $120,000 $122,400 $2,400
TOTAL $435,000 $442,400 $7,400
FY 2024/25 General Fund Operations Budget
April 3, 2024
Building and Planning Revenues
Staff projects that building permit revenues will increase slightly due to fee adjustments and with limited new home construction and remodel activity. Building Department services are provided by contract and any projected increase in revenues will also be reflected by a corresponding increase in expenditures. Planning services are not provided by a revenue-based contract.
Public Works Revenues
Public Works issues Encroachment Permits for construction activity. Permit revenue is anticipated to increase due to fee adjustments. The Department is also responsible for the maintenance and operation of all public infrastructure.
Revenue from activities in the Building, Planning and Public Works Departments comprise most of the fee revenue for the Town. With the recent increase in the fee schedule, revenue from Building, Planning and Public Works fees are projected to increase $990,989 for a total of $3,713,280 for FY 2024/25.
Sources FY 2023/2024
Est. Budget
FY 2024/25
Projected Budget
Projected Change to FY
23/24 Est. Budget
Building Revenue $1,781,291 $2,203,280 $421,989
Planning $405,300 $850,300 $445,000
Public Works $535,700 $659,700 $124,000
TOTAL $2,721,991 $3,713,280 $990,989
Franchise Revenue
Franchise revenues are projected to increase 1.5% - 3%, to $1,076,000. Miscellaneous revenues were evaluated on currents trends, one-time revenues, and eliminated revenues.
Summary of Projected General Fund FY 2024/25 Revenues
Source Revenue
Property Taxes $15,804,585
ERAF $2,500,000
Sales Tax $442,400
Franchise Fees $1,076,000
Charges for Services (Building, Planning, DPW, Police) $4,082,141 Licenses and Intergovernmental $330,800
Use of Money/Property (Total Misc.) $1,150,096
Park Program Revenue $115,000
Total General Fund Revenues $25,501,022
FY 2024/25 General Fund Operations Budget
April 3, 2024
• Note – the preceding table includes ERAF.
E X P E N D I T U R E S
Overall, General Fund expenditures are estimated at $20.78 million. Expenditures are evaluated based on operational needs to provide consistent services to the community. Staff reviewed operational expenditures and known expenditure adjustments were incorporated wherever possible based on upcoming contract costs, projected dues/fees for member agencies, as well as corresponding changes in rate adjustments for CalPERS, health costs, and Workers’ Compensation rate adjustments.
Overall Personnel Costs and Benefits
Basic, employee-paid CalPERS pension costs are 7% of salary for Miscellaneous employees (nonsworn personnel) and 9% of salary for Public Safety employees (sworn personnel). Through costsharing agreements with employees implemented in FY 2019/20, in addition to the preceding rates, employees pay an additional 1% (local miscellaneous) and 3% (public safety) of the employer cost. This has also resulted in operational savings of $743,744 since FY 2019/20.
The employer cost for CalPERS pension costs for Miscellaneous employees is 12.67%. This represents an increase of .04% from the prior year. With the above cost sharing agreement, the actual cost is reduced to 11.67%. The Public Safety employee cost is 29.30% (an increase of .21%).
Through the cost-sharing agreement, the Town’s actual cost is 26.30%.
Listed below are the Unfunded Accrued Liabilities (UAL) dollar amounts the Town has paid for FY 2017/18 through FY 2023/24. The FY 2024/25 total UAL payment is $1,570,384 and is an increase of $347,383. These expenses are incorporated into respective department budgets.
CalPERS
Employer
Payment of
Unfunded
Liability
UAL
FY
2017/18
UAL
FY
2018/19
UAL
FY
2019/20
UAL
FY
2020/21
UAL
FY
2021/22
UAL
FY
2022/23
UAL
FY
2023/24
Miscellaneous
Employees
$183,648 $230,536 $288,470 $333,762 $393,774 $452,652 $431,925 Public Safety
Employees
$498,416 $607,679 $750,799 $860,123 $6,007,045 $813,210 $791,076 Total
Contribution
$682,064 $838,215 $1,039,269 $1,193,885 $6,400,819 $1,265,862 $1,223,001 The table below reflects the Town’s total Unfunded Actuarial Liability for all employee classes (PEPRA, Classic, Public Safety).
FY 2024/25 General Fund Operations Budget
April 3, 2024
Unfunded Actuarial Liability
As of June 30, 2022
Retiree Class Liability Funded Unfunded Funded Ratio
Classic Miscellaneous $21,653,860 $14,881,263 $6,772,597 68.7% PEPRA Miscellaneous $977,995 $866,251 $111,744 88.6%
Classic Safety $53,881,366 $41,481,143 $12,400,223 77.0% PEPRA Safety $2,072,880 $1,771,540 $301,340 85.5%
Totals $78,886,101 $59,000,197 $19,585,904 74.8%
OPEB & Workers’ Compensation
Town retiree health expenses are now being paid through the PARS Trust. The operational cost savings expense to all General Fund operation departments for FY 2024/25 is ($454,888). The current OPEB Liability is $7.88 million and there is currently $8.36 million in the Trust. This results in an estimated Net OPEB Liability asset of $426,932.
Each department is responsible for an allocated cost for Workers’ Compensation. Allocations vary based on the risk assessed for each department (by type) and the number of employees. For the FY 2023/24 budget the Workers’ Compensation charge for the Police Department was reduced to 1% from 7% of salary costs and other departments charges reduced from 3% to 1%. This produced total savings of approximately $245,000 in the General Fund operating departments.
The reduction was due to the Workers’ Compensation Fund maintaining enough reserves for future allocations of equity replenishments. The FY 2024/25 budget maintains the 1% charge of salary costs for all departments. Staff will continue to monitor this expense and may need to increase the allocation in future years to maintain adequate reserves.
The Town is “self-insured” as part of a risk pool – Cities Group Joint Powers Authority. The Town also maintains an active Workers’ Compensation Risk Management Program. There are approximately 13 open claims (down from 15) that incur a reserve claims cost of approximately $937,052 in the current year. This is an increase of $357,426 in reserve claims from the previous fiscal year. Claim costs and reserves are established for each claim; however, these amounts are not indicative of the actual claim paid. The three-year average claim loss/expense is approximately $316,070, an increase of $118,955. The current year assessment is $141,568 and is expected to increase to $188,709 in FY 2024/25. The increase is due to the Town equity reserve share is at ($191,556) and The Town needs to make a replenishment of $263,798 to its Workers’ Compensation equity reserve to maintain a reserve balance of $72,242. Staff is recommending that this replenishment come from the Workers’ Compensation Internal Service Fund.
Departmental Budgets
During the review of department operations, each department evaluated service and maintenance needs required for the next fiscal year. Overall, the Town’s total combined operational expenditures increased by $534,112 compared to the FY 2023/24 adjusted budget – an increase of
2.6%. The majority of departmental increases are due to salary and benefits adjustments, job reclassifications, an additional Management Analyst position in the Public Works Department, FY 2024/25 General Fund Operations Budget
April 3, 2024
Planning Department expenses to include continued costs related to the Housing Element update, savings due to OPEB retiree health paid from PARS Trust, building contract expense, tree maintenance, police communication radios and other equipment, one-time expenses, council priorities, purchases for continued level of service within the community, and contract services increases. There is a COLA placeholder of 2.4% within the budget.
Operational expenditures within departments include items such as professional services (MCE, Interwest, Planning, Legal, Contract Custodial services, Park Event services etc.), advertising, utilities, equipment repair, copier leases, phone service, training, technology, computers, postage, etc. – everything net of salaries and benefits.
Each department summary provides general context for most of the major adjustments; however not every specific adjustment is noted in the narrative as minor adjustments are not noted.
CITY COUNCIL OPERATIONS
OVERALL NET DECREASE OF $2,400
The City Council budget includes expenditures related to City Council meetings, conference attendance, Council/Town memberships (LAFCO, C|CAG, HEART, HIP Housing, League of Cities, etc.), elections, utilities for the Council Chambers and incidentals.
Operations
FY 20244/25 includes an increase of $1,500 for advertising/publishing for Council meeting postcard notifications and minor increases in membership dues. There was a decrease of $15,000 for HIP Housing as this is now in the Planning Department budget. There was an increase in municipal election budget line item of $13,400 for anticipated general election costs in the fiscal year.
ADMINISTRATION DEPARTMENT
OVERALL NET INCREASE OF $46,464
The Administration Department budget includes the City Manager’s Office and City Clerk’s Office. This represents four full-time salaries and benefits (City Manager, City Clerk/Deputy City Manager, Management Analyst II, and Receptionist/Postal Clerk), contract support for human resources (legal), legal noticing and posting, conference attendance and support, memberships, municipal code publishing, office supplies, and the administrative share of general utilities and costs.
Personnel and Benefits
Overall, the salaries and benefits categories increased by $18,951. The majority of the increase is in salary and benefits in the department. There were minor increases for Workers’ Compensation and Unemployment insurance. There were reductions for retiree health insurance costs ($11,906) due to the reduction in OPEB retiree health expense as the PARS Trust is paying all retiree health FY 2024/25 General Fund Operations Budget
April 3, 2024
costs. The CalPERS UAL payment increased by $15,274. The CalPERS normal cost expense increased by $2,161.
Operations
There was an increase in operations expense in the amount of $27,513. The majority of the increase is due to Other Equipment Repairs & Maintenance - copier lease, increased printing of materials, and vehicle maintenance. There is an increase in Utilities ($2,304) and for Printing Services expense ($6,500) – assistance and printing of the Athertonian newsletter and banner poles marketing for Town events. There were smaller increases in Business Meetings ($300), Conferences ($1,000), Noticing and Mailers ($2,000), Subscriptions ($300), Dues ($609), and Special Events and Awards ($2,000). Other Contract Services expenses are maintained at $228,000 as the amount allows the Town to focus on areas of need. These include legislative advisory services, communications support, continued expansion of sustainability programs and outreach, public outreach on the Town’s Climate Action Plan, SB 1383 Compliance efforts, home energy audits, energy demonstration programs, battery loaner program, and several other programs and outreach efforts.
CITY ATTORNEY’S OFFICE
OVERALL NET INCREASE OF $0
The City Attorney’s Office budget consists of the legal retainer for the City Attorney and other associated legal services. The Town has a new City Attorney and adjusted retainer amount. The budget also includes a line item for Additional Services as needed.
FINANCE DEPARTMENT
OVERALL NET INCREASE OF $16,111
The Finance Department budget includes the salaries and benefits of three full-time employees (Finance Director, Senior Accountant and Jr. Accountant). The budget includes contract services for the Town’s Audit and Investment Services, financial software licensing and support, conference attendance and support, memberships, office supplies, and business license processing costs.
Personnel and Benefits
Overall, the salaries and benefits category increased by $15,703. There was a reduction in health insurance for active employees’ expense ($10,335) and retiree health insurance expense of ($2,641). There was a reduction in dental and vision expense total of ($1,910). Salaries and benefits had an increase of $18,998 due to reclassification of a staff member and includes salary place holder adjustment of 2.4%. The CalPERS normal cost contribution increased by $2,078 and the UAL payment increased by $9,150.
FY 2024/25 General Fund Operations Budget
April 3, 2024
Operations
Operation expenses for the Department increased by $408. Specific increases related to Business License processing ($2,000), Technical Services ($158), and a decrease in Other Contract Services (-$1,750).
PLANNING DEPARTMENT
OVERALL NET DECREASE OF $247,849
The Planning Department budget consists of contract planning services and associated services and costs. The Department also includes an allocation of arborist service costs related to planning activities. The budget includes necessary staff hours and counter review for day-to-day processing of basic applications. Costs are offset by fees. The Planning team has responsibility for one-time programmatic expenditures related to the Town various General Plan Updates that include the Safety Element, Housing Element, and the Zoning ordinance code updates, etc. During the last year the Town and staff have been finalizing the required environmental reviews for CEQA, expanded objective design standards, Safety Element updates, In-lieu Exclusionary Fee Nexus Study and Financial Feasibility Analysis report. As the above General plan updates have been in process during the current fiscal year, there is a budgetary decrease in FY 2024/25 of (-$265,149).
The Planning Department operation budget includes a $17,300 increase and $265,149 decrease (one-time costs) for anticipated Housing Element work.
Operations
The total operating budget decreased from $1,674,819 to $1,426,970. The current planning contract is estimated to be stable at $877,440. This is for the core staffing planning services component for the Town. This is three (3) full time equivalents of Town Planner, Senior Planner, Assistant Planner, Associate Planner at total of 480 hours per month. There are minor increases in Utilities ($1,000) and Advertising/Noticing ($1,000) and the added HIP Housing ($15,000).
BUILDING DEPARTMENT
OVERALL NET INCREASE OF $47,736
The Building Department budget consists mostly of the contract services for the building department (Interwest), portions of three full-time salaries and benefits are also allocated to the department (Arborist, Associate Engineer, and Office Specialist), general office supplies and materials, software costs, and a share of the building department share of utilities.
Personnel and Benefits
Overall, the salaries and benefits category decreased ($4,095). Salaries decreased due to FY 2024/25 having an Associate Engineer allocated to the building department whereas in previous years it included a Senior Engineer. There were adjustments in Salaries, Employee Benefits Earned, PERS Retiree Contribution, and Unemployment Insurance allocations for a total of FY 2024/25 General Fund Operations Budget
April 3, 2024
($17,692). Allocations for active employee and retiree employee health insurance costs decreased by combined ($7,231). Retiree health expenses are now being paid by the PARS Trust. The Town contributes the minimum PEHCHA amount only to CalPERS. The CalPERS UAL payment increased by $20,828.
Operations
The majority of the increase is due to a corresponding Building and Life Safety Contract Services increase - $53,054 This is based on the revenue assumption for the department for the upcoming fiscal year. There are minor increases in Technical Services ($2,000) and Utilities ($2,367).
INTERDEPARTMENTAL
OVERALL NET INCREASE OF $69,918
The Interdepartmental budget provides for the accounting of costs that are incurred and support all Town departments. Costs include liability insurance, IT support, County Tax administration costs, IT infrastructure costs and other charges that are Town-wide in nature.
Operations
The annual cost for IT support is set at the amount specified at mid-year of $163,200. This is based on Town IT services support needs. General liability, employment practice, and property insurance costs increased $78,137 to maintain the Town’s cost for insurance and self-insured retention. There is a decrease of ($7,000) in utilities telephones and a decrease of ($3,823) in membership dues as CalOpps is accounted for in the administration department. county tax administration cost.
IT Infrastructure expense includes needs and upgrades identified with Town Center. The FY 2024/25 Budget includes updates to the Town’s phone system continued cybersecurity, storage, various licenses, and software application needs. General technology services are within this department (maintenance as well as infrastructure) and include current Shoretel Phone Services, Data Storage Plans, Servers, virus protection systems, software licensing and transparency tools.
There is an increase of $2,600 in IT Infrastructure expense for cybersecurity stress test software.
PUBLIC WORKS DEPARTMENT
OVERALL NET INCREASE OF $2,442
The Public Works Department budget consists of 5 distinct areas of focus: Engineering, Streets, Park Maintenance, Park Programs, and Building Maintenance. The department recently went through a restructuring to a reclassification of the Senior Engineer to Associate Engineer and the hiring of a Maintenance Manager. The salaries and benefits of all or portions of five full-time employees (Public Works Director, Associate Engineer, Maintenance Manager, Town Arborist, and Office Specialist) are included in the budget. The FY 2024/25 includes the addition of a Management Analyst I/II position to assist with the expanding administration of projects, programs, and grants within the Department across all the various departmental operations. The budget includes contract services for the Town Maintenance Services (MCE), Custodial Services, FY 2024/25 General Fund Operations Budget
April 3, 2024
new Landscape Maintenance Services, Facility Maintenance services, Tree Trimming, Street Sweeping, Signal Maintenance, Street Light Maintenance, Contract Engineering, and Park Event Services. The equipment and facility servicing needs for the Town are incorporated to include systems maintenance and monitoring, landscaping, custodial, and utilities for these new Town facilities. Within the budget includes maintenance costs for building systems (heating systems, chilled water systems, BMS systems, radiant ceiling and flooring, elevator, green infrastructure, permeable paving, etc.), The budget also includes computers and equipment, training and workshops, software licensing and support, general office support, memberships, office supplies, and shares of general utilities and costs.
Personnel and Benefits
Overall, the salaries and benefits category increased $137,115. This includes net adjustments of savings from OPEB retiree health expense, worker’s compensation, and UAL. The majority of the increase in salaries and benefits category is due to the addition of the Management Analyst I/II and 2.4% salary adjustments estimation $134,288. There was a decrease in active employee health insurance of ($8,508) and retiree health OPEB insurance cost of ($19,035). The CalPERS UAL payment increased by $31,199.
Operations
There is a reduction in operational expenses of ($134,673). Most of the reduction is due to the onetime sidewalk repair program that was initiated in the current fiscal year for $182,000 and is not in the projected FY 2024/25 budget. Since this was an initial inspection and repair program, it is anticipated that future year costs will be part of the Town Capital Improvement Program under ADA projects. The Public Works Department operations budget includes, contract professional engineering town service needs, existing contract for facilities maintenance services, repair and maintenance. The Town has service contracts with various vendors for the needs and services for the Town Center facility maintenance. The Equipment Repair and Maintenance budget increased by $2,000. There are various service contracts within the Operational budget. These include servicing contracts for the elevator ($3k), Building Monitoring System ($32k), Fire Alarm ($12k), Generator ($4k), HVAC ($16k), Heat Pump ($7k), Water Treatment ($1k), etc. There is an increase in Utilities of $2,000. The total current contract Maintenance Service Budget is estimated at $957,000. This includes contractual adjustment of 5% CPI in the MCE contract. Tree maintenance expenses increased $30,000 for a total amount of $140,000. This is due to clearing trees during storms and pruning needs at the park and streets. • Contract maintenance for streets, building maintenance, and park events - $575,000 • New Landscape maintenance - Town Center Campus and Holbrook Palmer Park -$337,000; includes park enhancements of $45,000.
There are minor areas of adjustment in equipment repairs and maintenance, contract inspection and testing, membership dues, safety supply and materials, custodial supplies, minor tools and equipment, postage, and machinery and equipment for total of $11,476. Building Improvements expense budget increased $15,000 for painting of the Gilmore House and fireplace conversion to electric. Contract Park Event Services expenses decreased $10,000 in anticipation of temporary FY 2024/25 General Fund Operations Budget
April 3, 2024
contract services needed as we bring on a new park event management provider. There is an increase in computer equipment software expense of $40,000 for new asset management tracking software for building facility maintenance services.
POLICE DEPARTMENT
OVERALL NET INCREASE OF $595,089
The Police Department budget consists of four distinct divisions: Admin/Training, Patrol/Traffic, Investigations, and Communications/Records. Within these areas are specific areas of focus including: detectives, community service officers (and code enforcement), school resource officer, K-9s, dispatch, and administration. Deployment consists of 4 Patrol Teams of 12 hours shifts (2 day shift 7am – 7pm and 2-night shift 7pm – 7am). Minimum staffing consists of 1 supervisor, 2 officers, and 1 dispatcher. The Department currently has one officer vacancy. Vacancies often result in increased overtime offset by overall salary savings at the end of the year.
Personnel and Benefits
Overall, the salary and benefits category increased $720,670. This is largely due to the increase in estimated salary adjustments and CalPERS UAL payment (~240k). There is an estimated annual salary adjustment of 2.4% place holder in the budget. The Memorandum of Understanding (MOU) with the Atherton Police Officer’s Association was renewed in FY 2023/24. This results in a salary adjustment of $379,000 for FY 2024/25. This is for personnel represented by the APOA only.
Overtime expense (OT) is expected to remain at $570,000. Department overtime includes augmented categories for OT pay for dispatchers; OT for backfill staffing-court, training, investigations, court; special operations OT, and holiday OT.
There is an increase in deferred compensation expense of $19,141. There is a decrease in retiree and active health insurance of ($26,856). This decrease is due to the Town now using the PARS OPEB Trust to pay for retiree health. With the paying of the retiree health expense via the PARS Trust there is a realized decrease in operation expense for OPEB costs of ($329,000) in the department. Workers’ Compensation had a slight increase of $3,595. In the current fiscal year budget, the allocation was reduced from 7% to 1% for sworn and 4% to 1% for non-sworn. The expense allocation is maintained at 1% for personnel for FY 2024/25. This equates to a total approximate reduction in Workers’ Compensation expense of ($254,328) for the Department. The normal cost for CalPERS contribution increased by $80,002 as the contribution increased 0.21% to 29.30% in FY 2024/25. There was an increase in EE Benefits Earned/Medicare Tax and Unemployment/Insurance for a total amount of $23,186.
Operations
Overall, the Operations expenditure budget for the Police Department decreased by ($125,585).
The majority of this was due to a decrease in other contract services expenses. There were onetime items that were donation driven that included health and wellness program of (~$195,000), new K-9 unit training (~14,000), and perishable skills training (~40,000). The health and wellness, perishable skills programs are annual review programs that will seek donations for continued funding. These are anticipated to be reviewed during FY 2024/25 for program continuation and FY 2024/25 General Fund Operations Budget
April 3, 2024
will be amended to the budget if successfully funded. There is a decrease of ($30,000) in other supplies and materials from adjusted budget due to the replenishment of ammunition in the current year due to low inventory and use for training in the transition to red dot pistols. There is a decrease in POST training expense of ($10,000) disaster/emergency expense for ($11,000), and equipment maintenance vehicles for ($10,000). There was an increase in equipment replacement fund expense of $117,995 for a total amount of $363,658.
The Department is purchasing some supplemental budget items from departmental allocations to the Equipment Replacement Fund. These supplemental items include the remaining purchase of Red Dot pistols for sworn staff $5,658, drug detection mobile test system $6,000, Equipment CCTV installation in the bike storage, garage, and evidence room to monitor activity $20,000, a property and evidence audit contract $17,000, and new quality communication equipment radios (30) APX NEXT all band portable radios $420,462. The majority of the $420K purchase of radios is coming from the Equipment Replacement Fund. There is a $125,000 allocation expense to the replacement fund in operations budget for these radios as a portion of the expense is covered by a donation previously accepted by the Council. The Department is also anticipating the purchase of 2 Tahoe patrol vehicles as part of its regular equipment replacement schedule. There is a normal standard Equipment Replacement Fund allocation of $185,000 each year. With the slight increase in the price of vehicles this has increased to $190,000. These purchases will be from the Equipment Replacement Fund.
In addition to the preceding adjustments, animal control services increased $8,403 due to slight increase in operations costs and allocation of the construction costs of the new facility. There was an increase in safety supplies and materials for $9,000 for protective leather and motorcycle gear for (4) motors officers as well as eye/ear gun range safety gear for officers. Printing expenses increased by $2,000 as no parking signs, citations, forms, etc. There was an increase in citation processing expense of $1,500. There was an increase in Computer Equipment/Software of $56,794 due to an alarm system monitoring upgrade in the communication center $30,000 and updating townwide Flock cameras (51) fees that are now on annual billing basis.
OVERALL SUMMARY
Overall, the Operational Budget increased $534,112 over last year’s Adjusted Budget. For FY 2024/25 the Town’s General Fund Revenues are projected at $23,001,022, against $20,782,720 in expenditures. This will result in a single year-end positive balance of $2,218,302 and a total positive ending Fund Balance of $16,006,301.
FY 2024/25 includes below the line items of $2,500,000 for ERAF and budgeted debt service payment $861,871, the single-year projected change in fund balance is $1,638,129. The Town is now focusing on various priority buckets for the allocation of Unallocated General Funds to Town Master plans in the CIP, Town long-term liabilities, other Council priorities or one-time expenses.
Reserve Calculations
Any remaining fund balance not reserved or committed is designated as Unallocated Fund Balance. The projected unallocated available fund balance for FY 2024/25 is $9,771,485. This FY 2024/25 General Fund Operations Budget
April 3, 2024
Unallocated Fund Balance represents funds that have not yet been assigned. After review of the Out-Year Financial Planning Model, and with Council direction, the unallocated reserve balance can be appropriated towards operational use, capital projects or to pay down liabilities. During review of the outlook forecasting model, staff will come back with an allocation to CIP amount and other town priorities such long term liabilities at its next reiteration of the operating budget study session review.
The FY 2023/24 beginning General Fund Balance was $13,791,637. The FY 2023/24 updated estimate actual projected year-end fund balance is $12,149,869. This includes the ERAF revenues, as allocated. With the inclusion of debt service, there is a total General Fund projected FY 2024/25 year-end fund balance of $16,006,301.
FY 2024/25 Beginning Fund Balance $12,149,869
FY 2024/25 Projected Revenues (inclusive of ERAF) $25,501,022 Total Available Funds $37,650,891
COP Debt Service for FY 2023/24 ($861,871)
FY 2024/25 Expenditures (Projected Budget) ($20,782,720) Projected FY 2024/25 Ending Fund Balance $16,006,301
As shown below, the Town will meet its reserve requirements in FY 2024/25 and projects an unallocated reserve that is 47% of projected expenditures. This is a change over last year’s reserve that was 52% of projected expenditures. This is attributed to the General Fund use of unallocated reserves for the CIP allocation and priority projects.
Other Budgetary Issues
Financial Planning Model, Master Plan Projects, and Council Priorities An Out-Year Financial Planning Model was created to assist the Council in the discussion of the allocation of Unallocated General Funds over the next five (5) years to various identified Town priorities. Set aside buckets were used to illustrate funding towards various priorities. The set aside buckets are planning tools and do not lock the Town into funding in specific areas or specific projects. This provides the Council with an outlook based on current priorities and funding opportunities.
FY 2024/25 Expenditures $20,782,720
Projected FY 2024/25 Ending Fund Balance $16,006,301
15% Emergency Reserve $3,117,408
15% Budget Stabilization Reserve $3,117,408
TOTAL RESERVE REQUIREMENT $6,234,816
Less Above Reserve Requirement = Unallocated Reserves $9,771,485 FY 2024/25 General Fund Operations Budget
April 3, 2024
The attached Financial Planning Model is updated with the FY 2024/25 projected budget and staff can walk through the Model during the April 3 Study Session. The Model is General Fund Only and the Operational Revenues and Expenditures match those in the Operational Budget.
Allocations for FY 2024/25 CIP have not been incorporated. There currently is no allocation from the Unallocated General Fund to reflect the Financial Planning Model set aside bucket amount of $8.94 million (Line 39, FY 2024/25). An allocation of $8.94 million from the Unallocated $9.7 million would be required to conform to the Financial Planning Model projections. Identified priority projects are listed at the bottom of the spreadsheet and will be discussed as part of the CIP Budget Meeting.
COP Lease Payments
The Town issued COP Lease Financing of $7.68m for cash flow purposes for the Town Center Project. The COP is a ten (10) year financing tool with a five (5) year call option and average annual debt service of approximately $861,000. The first semi-annual payment began in December 2020. Including FY 2023/24 the Town has made $3.42m in payments on the COP Lease. If desired, the Town can exercise the call option in June 2025 and pay off the COP. However, the current Council direction is to retain the 2.1% interest rate on the lease payments and continue making the semi-annual payments until conclusion in FY 2029/30. The call option estimated payment amount is $4.3m. Through term, the total lease financing payments is $8.6m of which includes interest of $915k. Staff has appropriated the $861,871 amount for FY 2024/25 for its debt service payments.
POLICY FOCUS
This item discusses revenue and expenditure projections, the use of excess ERAF, reserve policies, priority set aside bucket for out-year financial planning, and recommendations for General Fund Budget. These are policy areas for Council discussion and direction as we prepare the FY 2024/25 budget.
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:
Fiscal Transparency Web Page:
FY 2024/25 General Fund Operations Budget
April 3, 2024
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
FY 2024/25 General Fund Revenue and Expenditure details by department Financial Planning Model