Item No. 1
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: JUNE 5, 2024
SUBJECT: REVIEW OF THE FY 2024/25 TOWN BUDGET – ALL FUNDS
CHANGES ONLY
RECOMMENDATION
Review and Discuss Operating Budget for FY 2024/25.
BACKGROUND & EXECUTIVE SUMMARY
The June 5 Study Session is the 4th meeting of the Council to discuss the FY 2024/25 Town Budget.
Prior meetings focused on each fund area individually.
This Study Session returns the entirety of the budget back to the City Council and incorporates any adjustments since the last review. Staff incorporated feedback from the prior meetings, together with additional adjustments, if any, to the Operational and CIP budgets based on identified priorities or projects that need to be adjusted within the CIP program for the fiscal year. This Staff Report only discusses changes made to the Budget since the last Study Session of the City Council.
For FY 2024/25, General Fund revenues are projected at $23,001,022 and General Fund expenditures are projected at $20,774,676. This reflects a single year surplus of $2,226,346 before the addition below the line of ERAF and transfers in/out for CIP. There is a projected year-end positive fund balance in the General Fund of $10.68 million. This is a decrease of approximately $5.325m as an allocation to the CIP is now included below the line. The new fund balance amount includes an Unallocated Fund Balance of $4.45 million.
Summary of Changes Since Last Council Meeting
Town Financial Planning Model
During the May 1 CIP Budget Study Session, discussions included the use of unallocated General Fund Reserves toward Town capital projects. The Town Financial Planning Model included set aside buckets that correlated with funding toward various Bike|Ped, Drainage, Park Master Plans FY 2024/25 Town Operations Budget
June 5, 2024
and other capital projects priorities. Staff presented the Financial Planning Model with the FY 2024/25 projected budget. Identified priority projects were listed at the bottom of the spreadsheet and were discussed as part of the May 1 CIP Budget Study Session meeting. The Council made changes and provided feedback in the out years within the Financial Planning Model. Some CIP projects were moved down in the 5-year program.
The FY 2024/25 allocation to CIP is $5,325,000 in the Financial Planning Model. This allocation is a transfer out from the General Fund in the FY 2024/25 budget towardsthe Capital Improvement Fund for Town project priorities in the Drainage, Bike & Ped, Streets, and Park Master plans.
The Transfer out of $5.325 million is now incorporated below the line within the General Fund Revenues & Expenditure Summary. The Council feedback on the draft CIP is addressed further in the CIP section of this report. With the changes made, there is a net available fund balance (after set-asides) of $3,069,459 (line 42) beginning in FY 2025/26 in the Financial Planning Model.
Summary of Revenue/Departmental Budget Changes
There were no adjustments to Revenues to the General Fund FY 2024/25. There was an overall reduction in General Fund Department expenditures in the amount of $8,045. This was due to a decrease in salary and benefits expense of $8,045 in the Police Department.
Internal Service Fund Changes
There are no major changes to the Internal Service Fund and Special Service Funds. During the previous Study Session there was a question raised by a member of the Audit and Finance Committee regarding the purpose of the Employee Benefit Fund and questions regarding use of those funds for other projects, such as an allocation to the Capital Project Fund. The Audit and Finance Committee will continue to review this during the upcoming fiscal year. There is an Ad Hoc Subcommittee performing a pension fund analysis. Once the Subcommittee completes their analysis, the Audit and Finance Committee will consider a recommendation to the City Council.
That recommendation may interrelate the approximate $450k to $500k surplus in the Employee Benefits with an allocation toward initiation of the Town’s Pension Rate Stabilization Trust.
Capital Improvement Program (CIP)
Staff provided the 5-Year Fiscal Outlook Spreadsheet and project list for Council review. Based on Council feedback, the allocation amount from the General Fund for FY2024/25 is $5,325,000.
This amount reflects Council direction.
Policy discussion by the Council resulted in minor changes and/or updates to the Park, Drainage, Traffic Safety Improvement, and Bike Pedestrian projects. Below are the changes to the CIP program:
• Drainage Improvements Program – Page 21, #56034
o The FY 2023/24 Budget included funding to initiate evaluation of long-term drainage improvements along El Camino Real $250k. The draft FY 2024/25 Budget FY 2024/25 Town Operations Budget
June 5, 2024
programmed $2.75m for the remainder of the project. The design proposal received was significantly higher than the available budget. After discussion the City Council decided to allocate $400k in FY 2024/25 for design of long-term solutions and the remainder $2.35m in FY 2025/26 for construction of the project. o The City Council directed that a refresh of the Drainage Master Plan be moved up to FY 2025/26 ($250,000).
o Funding for the Atherton Channel Culvert and Detention project was revised to include an allocation of $400,000 from the Atherton Channel District, with a corresponding reduction in the allocation from the Capital Improvement Program.
The local match is $725K and staff incorporated $400k of the match to Atherton Channel funds.
• Park Master Plan Implementation Program – Page 27, #56063 o As major projects at the Park are completed, the Council identified a need to refresh the Park Master Plan. The draft FY 2024/25 Budget included a refresh of the Master Plan in FY 2025/26. The Council decided to move that out to FY 2026/27 ($200,000).
• Traffic Safety Improvement Program – Page 13, #56064
o As the Alameda de las Pulgas Traffic and Safety Improvements project moves through design and into construction, input on future projects is desired, including potential traffic signals, HAWK beacons or other major traffic improvements for planning purposes.
o Staff included an additional $450,000 in the draft FY 2024/25 budget for the Alameda de las Pulgas Traffic and Safety Improvements. The City Council agreed with these possible improvements as future projects.
• Bicycle Pedestrian Master Plan Implementation Program – Page 15, #56059 o Based on Council direction, the draft FY 2024/25 Budget included $250,000 for a refresh of the Town’s Bicycle and Pedestrian Master Plan. Previously programmed projects, including the design of Class II bike lanes on Atherton Avenue and evaluation of a walkway along Watkins Avenue from the Dinkelspiel Station Lane to El Camino Real, have been deferred to allow for the Bicycle and Pedestrian Master Plan to provide additional guidance and project prioritization.
The Town Capital Improvement Program was presented to the Planning Commission at its May 22, 2024 meeting. The Planning Commission determined that the Town CIP for Fiscal Years 2024/2025 – 2028/2029 is consistent with the Town’s General Plan.
As noted in the Capital Improvements Program, there are several ongoing projects in various stages of development and implementation with funding from the current and prior fiscal years. These efforts include:
FY 2024/25 Town Operations Budget
June 5, 2024
• The Selby Lanes Bicycle Lanes Improvements project which is currently under conceptual design. The project is intended to implement the improvements outlined in the Town’s Bicycle and Pedestrian Master Plan by widening portions of the improved roadway to accommodate a continuation of Class II bike lanes along Selby Lane. There are existing Class II bike lanes along Selby Lane from El Camino Real to Oakwood. This project would continue the existing bike lanes along Selby Lane past Selby Spanish Immersion School to Selby Lane, add required green infrastructure, and reduce the traveled way from 12 feet to 11 feet as a traffic calming measure. The project would also add required green infrastructure. This project is still in the early conceptual phase and will require additional public engagement based on current public feedback. Current feedback that is being evaluated by staff include: add additional green infrastructure at key locations to alleviate surface runoff, consider the addition of pedestrian pathways, and protect parking. • The El Camino Real Complete Streets Gap Closure Planning Study, predominantly funded with a grant from the San Mateo County Transportation Authority, is evaluating alternatives to provide complete street improvements that accommodate all users of the roadway including vehicle, bicycle, pedestrian, and transit riders. The outreach effort for this cooperative project has been initiated to better understand the needs and concerns along the corridor.
• The El Camino Real Long Term Drainage Improvements Project looks to resolve persistent drainage issues along El Camino Real, particularly at the intersecting cross streets that flood regularly during storm events. Staff solicited proposals for evaluation and design services. Staff has been negotiating scope and fees with the sole design firm that submitted the proposal to phase the scope to focus on evaluation and development of conceptual design of improvements, with full design to follow. It is anticipated that the services contract will be presented to Council for approval at the regular Council meeting in June 2024.
• The Alameda de las Pulgas Traffic and Safety Improvements project, predominantly grant funded, follows the recommendations of the Alameda de Las Pulgas Corridor Study. The project is currently in the conceptual design phase. Staff is initiating the public outreach effort of the project to present the conceptual layout of improvements and to understand the needs and concerns of the community. The project includes the removal of the midblock pedestrian activated crossing between Mills Avenue and Camino al Lago, adjustments to the Camino al Lago intersection to include a traffic signal, reconfiguration and signalization of the Atherton Avenue intersection, and restriping of the roadway to improve safety along the corridor. Following approval of the design services contract, the Council requested an evaluation of a potential roundabout at the Atherton Avenue intersection. The study is currently on going.
OVERALL SUMMARY
For FY 2024/25 the Town’s General Fund Revenues are projected at $23,001,022 against $20,774,676 in expenditures. This will result in a single year-end positive balance of $2,226,346 and a total ending Fund Balance of $10,689,345.
FY 2024/25 Town Operations Budget
June 5, 2024
FY 2024/25 includes below the line items of $2,500,000 for ERAF, budgeted debt service payment of $861,871, Transfer Out to CIP Fund 401 for capital projects of $5,325,000. There will be a single-year projected change in fund balance by a negative $1,460,525. The negative change reflects the drawdown of unallocated reserves Fund Balance of $5.325 million for capital projects from the Town Financial Planning model.
Reserve Calculations
With Council direction, the unallocated reserve balance can be appropriated towards operational use, capital projects or to pay down liabilities. During its review of the Town Financial Planning model during the fiscal year 2024/25 budget process, the Council considered uses for the unallocated funds towards various priorities. For FY 2024/25, there is an allocation of $5.325 million for various set aside buckets for capital projects in the Town CIP.
The beginning FY 2023/24 General Fund Balance was $13,791,637. The table below reflects all the changes noted above.
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) ($20,774,676) FY 2024/25 Transfer Out CIP 401 Fund -Financial Planning ($5,325,000) Projected FY 2024/25 Ending Fund Balance $10,689,345
As shown below, the Town will meet its new 30% reserve requirements total of $6,232,403 in FY 2024/25 and projects an unallocated reserve that is 21% of projected expenditures.
This budget presents a plan for accomplishing the goals and objectives of the City Council within existing resources and core strategy of financial stability. Town priorities will focus again on CIP Master Plan projects and paying down long-term liabilities. We continue to be fiscally prudent with our resources but are mindful of operational and infrastructure needs.
POLICY FOCUS
FY 2024/25 Expenditures $20,774,676
Projected FY 2024/25 Ending Fund Balance $10,689,345
15% Emergency Reserve $3,116,201
15% Budget Stabilization Reserve $3,116,201
TOTAL RESERVE REQUIREMENT $6,232,403
Less Above Reserve Requirement = Unallocated Reserves $4,456,941 FY 2024/25 Town Operations Budget
June 5, 2024
The Town’s Operating and Capital Improvement Budget represents one of the most significant Policy Documents approved by the City Council. Staff has crafted the attached Budget based on specific policy objectives of the City Council. This item discusses revenue and expenditure projections for FY 2024/25. The Council adopts a fiscal year budget that addresses any policies and or priorities of the Council while addressing the needs of the community.
FISCAL IMPACT
None.
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
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:
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:
FY 2024/25 Town Operations Budget
June 5, 2024
http://www.ci.atherton.ca.us/index.aspx?nid=192
ATTACHMENTS
FY 2024/25 General Fund Revenue and Expenditure details by department FY 2024/25 Internal Service, Library, Tennis Funds
FY 2024/25 Capital Improvement Program
5-Year Fiscal Outlook Planning Spreadsheet