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 5, 2025
SUBJECT: RECEIVE AND FILE THE MID-YEAR BUDGET REPORT FOR FY 2024/25
RECOMMENDATION
Receive and file the Mid-Year Budget Review for the General Fund for FY 2024/25.
BACKGROUND
The FY 2024/25 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, at a high level, the current year expenditures, year-end estimates, and identifies any significant issues which may impact the upcoming budget. If staff is recommending adjustments, they will be incorporated into a Mid-Year Budget Adjustment Resolution that returns to the Council at the February Regular Meeting.
The FY 2024/25 Mid-Year Budget Report projects total revenues of $26.3m. This is an increase of $817,000 over the anticipated revenue in the Adopted Budget of $25.5m. This is primarily due to increases in Property Taxes, ERAF, charges for services, and other revenues.
The FY 2024/25 Mid-Year Budget Report projects expenditures at $21.2m. This is an increase of $183,900. After the initial adopted budget of $20.7m, the Council added an additional $5,000 for Earth Day and accepted donations of $240k for Police Department health wellness program and perishable skills training. These are all increases over the Adopted Budget of $21.01m. The increase of $183,900 is primarily due to one-time expenditures for operations and maintenance needs.
In summary, this is a net positive change (revenues over expenditures) of $634,000 resulting in a projected Year End Fund balance of $12.40m (inclusive of reserves).
FYI 2024/25 Mid-Year Budget Staff Report
February 5, 2025
FINDINGS | ANALYSIS
FY 2024/2025 Mid-Year Revenue Summary
FY 2024/2025
Adopted Budget
FY 2024/2025
Year End Estimate
FY2024/25 YearEnd Variance% Change
Revenues
Property Taxes $15,804,585 $16,084,471 $279,886 1.7%
ERAF $2,500,000 $2,771,578 $271,578 10.8%
Sales Taxes $442,400 $517,400 $75,000 17%
Franchise Fees $1,076,000 $1,111,000 $35,000 3.3%
Intergovernmental $40,800 $46,767 $5,967 1.4%
Business License $290,000 $290,000 $0 0%
Planning $850,300 $550,300 ($300,000) (35.2%)
Building $2,191,280 $2,341,280 $150,000 6.8%
Police $368,861 $535,361 $166,500 4.5%
DPW $816,700 $816,700 $0 0%
Park Program $115,000 $85,000 ($30,000) (26%)
Miscellaneous $1,005,096 $1,168,786 $163,690 16.28%
Total Revenue $25,501,022 $26,318,644 $817,622 3.20%
From the preceding table, the FY 2024/25 Budget projected total property tax revenue at $15,804,585 and anticipated revenue is $16,084,471 reflecting an increase of $279,886. Property Tax in lieu of VLF for FY 2024/25 is consistent with the adopted budget projections. Staff budgeted VLF In Lieu in anticipation of the State projected shortfall for FY 2024/25. The revenue projection for VLF In Lieu in the Adopted Budget for FY 2024/25 is $1,433,225. This includes a backfill of FY 2022/23’s shortfall of $424,698. The remaining amount of $1,008,527 is for FY 2024/25 VLF. Based on the FY2024/25 Update from San Mateo County, we received $504,147 in December 2024 and will receive $504,147 in April 2025 for a total amount of $1,008,295.
There is still a remaining VLF shortfall of $1,455,425 made up of a FY23/24 shortfall of $704,985 and a FY24/25 shortfall of $750,440.
The Town’s ERAF Revenue for FY 2024/25 is $2,771,578. This is an increase of $271,578 over the budget of $2,500,000. In FY 2023/24 the Town received $2,633,605 in ERAF. The Town treats ERAF as one-time revenue and uses it for long-term debt reduction and CIP. The Council reviews its allocation each year.
Planning Department revenues show a decrease at mid-year of $300,000. This is indicative of a slowdown in application for future construction permits. Building Department Revenue reflects an increase of $150,000 to total of $2.3m. Police Department Revenue reflects an increase of $166,500 due to continued 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 FYI 2024/25 Mid-Year Budget Staff Report
February 5, 2025
rental facility reservations. This is a direct reflection on the continuing vacancy of a Park Event Manager. There is an increase in Miscellaneous Revenue of $163,600 at Mid-Year. This is due to the receipt of mitigation funds from the Caltrain Peninsula Corridor Electrification Project for the planting and maintenance of trees in other areas of the Town. These are one-time revenues. All other Town revenues remain static.
FY 2024/2025 Mid-Year Expenditure Summary
FY 2024/2025
Adopted Budget
FY 2024/2025 Year
End Estimate
FY2023/24 YearEnd Variance% Change
Expenditures
City Council $66,615 $66,615 $0 0%
Administration $1,405,943 $1,430,943 $25,000 1.7%
City Attorney $310,000 $310,000 $0 0%
Finance $882,763 $882,763 $0 0%
Planning $1,426,970 $1,426,970 $0 0%
Building $1,659,166 $1,735,066 $75,900 4.57%
Interdepartmental $1,172,460 $1,172,460 $0 0%
Police $10,411,871 $10,464,871 $53,000 0.5%
Public Works $3,683,887 $3,713,887 $30,000 0.8%
Total $21,019,675 $21,203,575 $183,900 0.87%
There are several adjustments needed to the Operating Budget. These adjustments total $183,900.
Phase II of the Laserfiche Document Imaging implementation will begin in earnest in the Spring within Administration. A budget amendment to move to Phase II is included. Laserfiche is being implemented in a phased approach. Phase I included a comprehensive review of the Town records management program. This includes review and potential revisions to the records retention plan and policies; as well as a department-by-department review of how records are managed, stored, scanned, saved, and documented. Phase 2 includes a design of a workflow for each department to ensure retention is built in into each document type, meta-data and workflow. This requires additional appropriations of $25,000.
The Building Contract is a revenue-based contract such that when there is an increase in revenue, there is a corresponding increase in contractual costs. The projected increase in revenue requires an additional expenditure adjustment of $75,900.
The Police Department budget reflects additional appropriations for overtime and for an alarm monitoring system upgrade. The Department was able to use funds from regular budgeted salaries for additional overtime as the Department is not fully staffed; however, it maintains a budget for approved staffing levels. The Department additional overtime request of (+$13,000) applies in large part 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.
FYI 2024/25 Mid-Year Budget Staff Report
February 5, 2025
There are additional appropriations needed (+$40,000) for the alarm monitoring system upgrade.
The Department requires total additional appropriations of $53,000. The Police Command staff review the Overtime Budget and use with the City Manager and Finance Director throughout the year.
The Town continues without a Park Event Service Manager and previously engaged a part-time temporary employee to manage events at the Park in the first half of the year. The arrangement was not sustainable given the limited number of hours available or guaranteed (approximately 15- 20). The Public Works Department is currently revisiting the possibility of a part-time temporary employee to manage events at the park. An RFP was released last year for Event Management services at the Park with no success of proposals received. This activity requires an additional appropriation of $30,000.
There are no other adjustments required within the FY 2024/25 Budget. Below is a table that reflects the Budget Fund Balance Summary.
FY 2024/2025
Adopted Budget
FY 2024/2025
Year End Estimate
FY2024/25 YearEnd Variance
Excess (Deficiency) Revenues
over Expenditures
$4,481,347 $5,115,069
Transfers out:
COP Debt Service ($861,871) ($861,871)
CIP Future Projects ($4,450,000) ($4,450,000)
Net Change Fund Balance ($830,524) ($196,802) $633,722
Beginning Fund Balance $12,597,357 $12,597,357
FY 2024/25 Estimate Ending
Fund Balance
$11,766,833 $12,400,555
FY 2024/25 Projected Year End Balance $12,400,555
15% Emergency Reserve Requirement ($3,180,536)
15% Contingency Reserve Requirement ($3,180,536)
FY 2024/25 Projected Unallocated Fund Balance $6,039,483 The FY 2024/25 beginning total Fund Balance was $12,597,357 (inclusive of the mandatory reserves). At the conclusion of FY 2024/25, 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 $12,400,555 (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 FYI 2024/25 Mid-Year Budget Staff Report
February 5, 2025
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.
FISCAL IMPACT
Discussed above, the overall fiscal impact on the General Fund due to Mid-Year adjustments is a General Fund Net expenditure increase of $183,900 (.87%) against a General Fund (plus ERAF) revenue increase of $817,622 (3.2%).
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.