AGENDA PACKET
Town of Atherton
Joint Study Session City Council & Audit and
Finance Committee
APRIL 02, 2025
SPECIAL MEETING STUDY SESSION
3:00 PM
Council Chambers
80 Fair Oaks Lane
Atherton, CA 94027
Join Zoom Meeting:
One tap mobile: 16699006833,,97102770195#
US (San Jose)
Dial by your location: 1 669 900 6833 US (San
Jose)
Meeting ID: 971 0277 0195
Weblink: https://ciathertonca.zoom.us/j/97102770195
Remote Public Comments:
Meeting participants are encouraged to submit
public comments in writing in advance of the
meeting. The following email will be monitored
during the meeting and documented for the record.
Email: [email protected]
This Agenda may not reflect the actual order of items. The order of items is subject to change based on Council action.
SPECIAL MEETING STUDY SESSION
ROLL CALL –
City Council: HawkinsManuelian, DeGolia, Widmer, Vice Mayor Holland, Mayor Lewis Audit and Finance Committee: Patil, Sleeth, Scolnick, Hill, Walker PUBLIC COMMENT – Public Comments can be emailed directly to [email protected]
As a Special Meeting, this portion of the meeting is reserved for persons wishing to address the Council on any matter on the Agenda. Speakers’ time is limited to three minutes. Speakers may also speak when the item appears on the Agenda during the meeting. State law prohibits the Council from acting on items not listed on the Agenda except by special action of the City Council under specified circumstances. The Mayor may, at the Mayor’s discretion, restrict or grant additional speaker time based on such considerations as agenda length, number of speakers, complexity of the item, or looming threat of loss of quorum. Please refer to the footnote at the end of the posted agenda for additional notice regarding public comments.
ACTION ITEMS
STUDY SESSION
1. FY 2025/26 GENERAL FUND/OPERATIONS BUDGET
Report: ROBERT BARRON III, FINANCE DIRECTOR
Recommendation: It is recommended that Council review and discuss the fiscal year 25/26 general fund operational budget.
Description: This is a routine item that is a part of the annual budget process. This will appear on a future item for Council review and approval.
Demo Version - Select.Pdf SDK Meeting Agenda Packet – April 02, 2025
pfyy,y,
grant additional speaker time based on such considerations as agenda length, number of speakers, complexity of the item, or looming threat of loss of quorum. Please refer to the footnote at the end of the posted agenda for additional notice regarding public comments.
ACTION ITEMS
STUDY SESSION
1. FY 2025/26 GENERAL FUND/OPERATIONS BUDGET
Report: ROBERT BARRON III, FINANCE DIRECTOR
Recommendation: It is recommended that Council review and discuss the fiscal year 25/26 general fund operational budget.
Description: This is a routine item that is a part of the annual budget process. This will appear on a future item for Council review and approval.
2. DEPARTMENT OF POLICE INTERNAL AUDIT AND INSPECTION REPORTS Report: STEVE MCCULLEY, POLICE CHIEF
Recommendation: Review the annual audit and inspection reports and provide staff with feedback
Description: This is a routine item for council to discuss the annual audit of the Atherton Police Department.
COUNCIL REPORTS/COMMENTS
ADJOURN
PLEASE NOTE THE FOLLOWING INFORMATION:
If you challenge a Town zoning, planning, or any other decision in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this agenda, or in written correspondence delivered to the Town at, or prior to, the public hearing. Judicial review of any Town administrative decision may be had only if a petition is filed with the court not later than the 90th day following the date upon which the decision becomes final. Judicial review of environmental determinations may be subject to a shorter time period.
Copies of all staff reports and documents subject to disclosure that relate to each item of business referred to on the agenda are available for public inspection by 5:00 p.m. the Friday before each regularly scheduled City Council meeting.
Pursuant to the Americans with Disabilities Act, if you need special assistance in this meeting, please contact the City Clerk’s Office at (650) 7520500. Notification of 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. (29 CRF
35.104 ADA Title II)
PUBLIC COMMENTS:
The Town of Atherton Council and Committee or Commission meetings are a limited public forum, and all public comment must relate to something that is within the subject matter jurisdiction of the Council or Committees. If comments do not relate to the subject matter jurisdiction of the Council or Committee, we will stop the comment and a warning may be provided. If the comment continues to be outside of the subject matter jurisdiction the speaker will be stopped, and we will move on to the next speaker.
Speakers found in violation of this rule of procedure may be removed from the meeting.
Demo Version - Select.Pdf SDK Meeting Agenda Packet – April 02, 2025
contact the City Clerks Office at (650) 7520500. Notification of 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. (29 CRF
35.104 ADA Title II)
PUBLIC COMMENTS:
The Town of Atherton Council and Committee or Commission meetings are a limited public forum, and all public comment must relate to something that is within the subject matter jurisdiction of the Council or Committees. If comments do not relate to the subject matter jurisdiction of the Council or Committee, we will stop the comment and a warning may be provided. If the comment continues to be outside of the subject matter jurisdiction the speaker will be stopped, and we will move on to the next speaker.
Speakers found in violation of this rule of procedure may be removed from the meeting.
RULES OF DECORUM:
No person participating in a public meeting shall engage in disorderly or boisterous conduct — including but not limited to applause, whistling, feet stamping, booing or making any loud, threatening, profane, abusive, personal, impertinent or slanderous uttering or comments. No person is allowed to disturb, disrupt, or otherwise impede the orderly conduct of the meeting. If any person continues to breach the Rules of Decorum in a manner that disturbs, disrupts or otherwise impedes the orderly conduct of the meeting following an order from the Mayor, or Presiding Officer, to cease the offending conduct, the Mayor, or Presiding Officer, may order that person to leave the meeting.
Demo Version - Select.Pdf SDK Meeting Agenda Packet – April 02, 2025
Item No. 1
Town of Atherton
CITY COUNCIL AND AUDIT & FINANCE COMMITTEE – STUDY
SESSION
TO: HONORABLE MAYOR AND CITY COUNCIL
CHAIR AND AUDIT & FINANCE COMMITTEE
GEORGE RODERICKS, CITY MANAGER
FROM: ROBERT BARRON III, FINANCE DIRECTOR
DATE: APRIL 2, 2025
SUBJECT: FY 2025/26 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 5 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 2025/26 Total General Fund revenues are projected at $24,669,566 balanced against $22,010,066 in expenditures. Overall, the FY 2025/26 Budget is approximately $806K more than the FY 2024/25 adjusted Budget. The increase is spread across the various departmental budgets with the largest increase within the Police Department budget.
ANALYSIS
R E V E N U E S
FY 2025/26 Total General Fund revenues are projected at $24,669,566. Expenditures are projected at $22,010,066. This results in a single-year revenue surplus of $2.65 million; before the addition of 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 $12.45 million.
The Town’s ERAF revenue for FY 2024/25 was $2,771,578. This is an increase of $271,578 over the budget of $2,500,000. ERAF funding continues to be budgeted below the line for one time use.
FY 2025/26 General Fund Operations Budget
April 2, 2025
The Town uses ERAF revenue to help reduce long-term liabilities and fund one-time capital project needs (Town Center) and recently as an allocation to the Town’s Capital Improvement programs. It is not included as operational revenue. The use of ERAF revenue is a year-to-year decision by the City Council as part of the budget process. For the last couple of years, ERAF has trended higher. Staff recommends that the ERAF revenue projection remain at $2.5m in the FY2025/26 budget.
For FY 2025/26, Property Taxes still represent 70% of the Town General Fund Revenues. The total projected revenue from property taxes is $17,384,500, approximately 7.5% or $1,219,158 over the FY 2024/25 actuals estimate. Changes in property values are based mainly on a combination of the projected CPI growth plus a review of sales, and construction activity that will come online in the next assessment period. The Town’s Property Tax Consultant HdL Companies suggests that the Town use a projected increase of 4% to 5.5% in Property Tax revenues. Since FY 2011/12, the Town has seen an Assessed Property Value growth of about 157%.
Staff projected tax revenues based on current assumptions for Secured Taxes and Property Tax in lieu of VLF. This VLF revenue is the most vulnerable from a revenue perspective as there have been consistent shortfalls in the past several years. The Town is experiencing a $1,455,425 shortfall. The FY 2023/24 VLF amount was $1,651,448 and the funds available from the State were $946,881. There is a shortfall outstanding of $704,567. The County submitted a claim to the State for the FY2023/24 VLF shortfall to be addressed in the States upcoming FY 2025/26 budget.
The Town and other agencies continue to encourage the State to allocate funds within the yearly State Budgets. The adjacent table illustrates the shortfall of $114,322,993 for FY 2023/24 VLF revenue. This is a major source of revenue for all agencies in the County and is vital for operations.
The FY 2024/25 VLF amount for the
Town is $1,758,734 and the funds
available from the State are $1,023,549.
There is an estimated shortfall of
$735,185. The total VLF shortfall
outstanding to the Town is $1,455,425.
This includes a Countywide Total
shortfall of $118,381,000. Staff has
budgeted the VLF for FY2025/26 with
the understanding of a shortfall
occurring while also possibly receiving
partial payment for prior shortfalls.
The property tax projection ranges from
4.3% to 5.9% for FY 2025/26 property
tax revenues and will be revisited when
we receive our second installment.
Actual revenues may be higher.
FY 2025/26 General Fund Operations Budget
April 2, 2025
Source FY 2019/20
Actual
FY 2020/21
Actual
FY 2021/22
Actual
FY2022/23
Actual
FY 2023/24
Actual
FY 2024/25
Estimate
FY 2025/26
Projection
Property
Taxes
$11,611,597 $12,050,352 $13,232,475 $14,242,837 $14,481,756 $16,165,342 $17,384,500 Excess
ERAF
$1,784,091 1,863,658 $2,488,713 $2,339,065 $2,633,605 $2,771,578 $2,500,000 Total
Property
Taxes
$13,395,688 $13,914,010 $15,721,188 $16,581,902 $17,115,361 $18,936,920 $19,884,500 Sales & Use Tax
The Town is not heavily reliant upon Sales & Use Tax revenue. There is a projected increase in Sales & Use Tax of $41,600 for a total of $529,000. The State advances Sales Tax funds based on prior year transactions and then trues up the following year. The Town continues to experience steady Sales Tax revenues.
Source FY 2024/25
Estimate Budget
FY 2025/26 Projected
Budget
Projected Change to
FY 24/25 Est. Budget
Sales & Use Tax $365,000 $404,000 $39,000
Prop 172 Sales Tax Police $122,400 $125,000 $2,600
TOTAL $487,400 $529,000 $41,600
Building and Planning Revenues
Staff projects building permit revenues at approximately 4% for FY 2025/26. Building permit revenue is another major revenue source for the Town. The Town is in its first full year of updates to its Master Fee Schedule. The new fees were effective March 23, 2024. It had been approximately twelve years that the building valuation fees had increased. Most of the fees were set at full cost recovery; some services and costs were subsidized.
Total revenue includes the basic building permit fee (calculated based a valuation per square foot); various flat fees for plumbing, mechanical and electrical permits; grading and drainage permits; and plan check fees. The valuation driven fees Building Permit and Plan Check fees are based on building construction activity. The Building Department services are provided by contract and any projected increase in revenues are also reflected by a corresponding increase in expenditures. Staff is currently reviewing the contractual arrangement for this revenue-based contract. Planning services are not provided by a revenue-based contract. Most planning fees were set a full cost recovery; however, there are many fees that have been subsidized. When fees are subsidized, planning service contract costs are borne by the Town’s General Fund without a revenue offset.
Public Works Revenues
Public Works issues Encroachment Permits for construction activity. Permit revenue is projected at 4% based on construction activity. In addition to monitoring construction activity in the Public Right of Way, the Department is also responsible for the maintenance and operation of all public infrastructure.
FY 2025/26 General Fund Operations Budget
April 2, 2025
Revenue from activities in the Building, Planning and Public Works Departments (Community Development Departments) comprise most of the charges for services revenue for the Town. The revenue from Building, Planning and Public Works fees are projected to increase $209,200 for a total of $3,655,400 for FY 2025/26. These revenues will be revisited prior to final budget adoption.
Sources FY 2024/25
Est. Budget
FY 2025/26
Projected Budget
Projected Change to FY
24/25 Est. Budget
Building Revenue $2,395,200 $2,449,400 $54,200
Planning $435,300 $520,300 $85,000
Public Works $615,700 $685,700 $70,000
TOTAL $3,446,200 $3,655,400 $209,200
Franchise Revenue
Franchise revenues are projected at 2% based on current trends of individual revenues, to $906,000. In November 2024, the City Council amended the Franchise Agreement between the Town and refuse hauler GreenWaste. This amendment adjusted the Franchise Fee the Town receives from GreenWaste. The amendment adjusted the Franchise Fee from 10% to 5% of the Franchisee’s monthly gross billings. This was done to support the ratepayer impact of the annual rate adjustments for the refuse contract and thus will remain in effect until otherwise amended.
The annual refuse rate increase was supposed to be 11%, however with the 5% franchise fee reduction, the effective rate increase was 6%. There is a reduction of annual revenue of approximately $220,000 for refuse franchise fees. Miscellaneous revenues were evaluated on currents trends, one-time revenues, and eliminated revenues.
Summary of Projected General Fund FY 2025/26 Revenues
Source Revenue
Property Taxes $17,384,500
ERAF $2,500,000
Sales Tax $529,000
Franchise Fees $906,000
Charges for Services (Building, Planning, DPW, Police) $4,204,150 Licenses and Intergovernmental $345,900
Use of Money/Property (Total Misc.) $1,220,316
Park Program Revenue $79,700
Total General Fund Revenues $27,169,566
• Note – the preceding table includes ERAF.
E X P E N D I T U R E S
FY 2025/26 General Fund Operations Budget
April 2, 2025
Overall, General Fund expenditures are estimated at $22.01 million. Expenditures are evaluated and adjusted based on operational needs to provide a consistent level of services for the community. Staff reviewed operational expenditures and known expenditure adjustments were incorporated 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
The basic employee-paid CalPERS pension costs are 7% of salary for Miscellaneous employees (non-sworn personnel) and 9% of salary for Public Safety employees (sworn personnel). Through cost-sharing 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 $896,498 since FY 2019/20.
The employer cost for CalPERS pension costs for Miscellaneous employees is 12.74%. This represents an increase of .07% from the prior year. With the above cost sharing agreement, the actual cost is reduced to 11.74%. The Public Safety employee cost is 29.35% (an increase of .05%).
Through the cost-sharing agreement, the Town’s actual cost is 26.35%.
Listed below are the Unfunded Accrued Liabilities (UAL) dollar amounts the Town has paid for FY 2018/19 through FY 2024/25. The FY 2025/26 total UAL payment is $1,839,866 and is an increase of $320,297. These expenses are incorporated into respective department budgets.
CalPERS
Employer
Payment of
Unfunded
Liability
UAL
FY
2018/19
UAL
FY
2019/20
UAL
FY
2020/21
UAL
FY
2021/22
UAL
FY
2022/23
UAL
FY
2023/24
UAL
FY
2024/25
Miscellaneou
s Employees
$230,536 $288,470 $333,762 $393,774 $452,652 $431,925 $518,728 Public Safety
Employees
$607,679 $750,799 $860,123 $6,007,045 $813,210 $791,076 $1,000,841 Total
Contribution
$838,215 $1,039,269 $1,193,885 $6,400,819 $1,265,862 $1,223,001 $1,519,569 The Town Finance Committee reviewed an analysis from an Ad Hoc Subcommittee on the Unfunded Accrued Liability (UAL). At its March 18, 2025 meeting the Audit & Finance Committee reviewed a presentation concerning the effects on future annual minimum required UAL payments for the Classic Safety Plan with CalPERS of making a one-time Additional Discretionary Payment (ADP) of $1 million, $2 million or $3 million. As a result of this analysis, the Committee strongly encourages making an ADP and presents a recommendation that the Council must first consider whether the money used for making an ADP would be better used for another purpose (such as, e.g., capital improvements or operating expenses) and do a cost-benefit analysis of the various uses.
FY 2025/26 General Fund Operations Budget
April 2, 2025
The table below reflects the Town’s total Unfunded Actuarial Liability for all employee classes (PEPRA, Classic, Public Safety).
Unfunded Actuarial Liability
As of June 30, 2023
Retiree Class Liability Funded Unfunded Funded Ratio
Classic Miscellaneous $21,966,901 $14,752,981 $7,213,920 67.2% PEPRA Miscellaneous $1,221,528 $1,068,328 $153,200 87.5% Classic Safety $55,161,289 $41,750,395 $13,410,894 75.7% PEPRA Safety $2,758,417 $2,348,658 $409,759 85.1%
Totals $81,108,135 $59,920,362 $21,187,773 73.8%
OPEB
Town retiree health expenses are being paid through the PARS Trust. The operational cost savings expense to all General Fund operation departments for FY 2025/26 is ($524,960). The current OPEB Liability is $8.15 million and there is currently $8.66 million in the Trust. This results in an estimated Net OPEB Liability asset of $510,276.
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 $806,490 compared to the FY 2024/25 adjusted budget – an increase of
3.8%. The majority of departmental increases are due to salary and benefits adjustments, CalPERS UAL, job reclassifications, and a full year of the Management Analyst position in the Public Works Department. The Planning Department expenses include continued costs related to the Housing Element update, inclusionary housing, and zoning ordinance updates, continued savings due to OPEB retiree health paid from PARS Trust, building contract expense, tree maintenance, increase in landscape maintenance, police report writing system, radio batteries, chargers, and other equipment, fuel increase costs, training-professional development, one-time expenses, council priorities, purchases for continued level of service within the community, and contract services increases. Lastly, there is a contractual cost of living adjustment placeholder of 2.7% 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 $7,415
FY 2025/26 General Fund Operations Budget
April 2, 2025
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 2025/26 includes an advertising/publishing for Council meeting postcard notifications and minor increases in membership dues and meals. The allocation to HIP Housing ($15,000) was shifted to the Planning Department budget. There was a decrease in municipal election budget line item as there are no 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 I, 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 slightly to $17,359. The majority of the increase is in CalPERS UAL and cost of living adjustment placeholder.
Operations
There was an increase in operations expenses in the amount of $41,505. The majority of the increase is due to Other Equipment Repairs & Maintenance - copier lease, increased printing of materials, advertising noticing, and Laserfiche records management project, and support for refuse recycling reporting. There are continued sustainability programs and outreach efforts and maintaining budget expenses for the Town’s Earth Day event.
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 $48,264
FY 2025/26 General Fund Operations Budget
April 2, 2025
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 $38,964. This includes the cost-of-living placeholder, health insurance for active employees’ expense, and UAL payment increases.
Operations
Operation expenses for the Department increased by $9,300. Specific increases related to Printing Services for Town Budget and Other Contract Services for HDL services and meeting.
PLANNING DEPARTMENT
OVERALL NET DECREASE OF $204,620
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. Most costs are offset by fees. The Planning team has responsibility for onetime 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 has been working on finalizing the required environmental reviews, expanded objective design standards, Safety Element updates, In-lieu Exclusionary Fee Nexus Study and Financial Feasibility Analysis report. As the above updates have been in process during the current fiscal year, there is a budgetary decrease in FY 2025/26 of (-$261,300). Once the Housing Element is completed this will not be an operation expense until the next Housing Element update Cycle.
Operations
The Planning Department operations budget includes a decrease in operations budget due to Housing Element winding down, but the department has an increase in the basic planning services contract expense of $74,000 to ensure core staffing of planning services for the Town Community Development. There have been increases in the number of application reviews for SB 9, ADU, and other similar permits.
BUILDING DEPARTMENT
OVERALL NET INCREASE OF $76,305
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
FY 2025/26 General Fund Operations Budget
April 2, 2025
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 increased $23,433. There were adjustments in salaries, cost of living placeholder, and CalPERS UAL payment increases.
Operations
The majority of the increase is due to a corresponding Building and Life Safety Contract Services increase - $57,296. This is based on the revenue assumption for the department for the upcoming fiscal year. As mentioned previously this revenue sharing contract is currently being reviewed.
INTERDEPARTMENTAL
OVERALL NET INCREASE OF $27,502
The Interdepartmental budget provides for the accounting of costs that are incurred and supports 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 an amount that supports the Town’s IT service needs - $163,200. The majority of the departmental increase is in the general liability, employment practice, and property insurance cost increases - $20,000 - to maintain the Town’s cost for insurance and self-insured retention.
IT Infrastructure expense includes needs and upgrades identified with Town Center. The FY 2025/26 Budget maintains the 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 were increases in the IT infrastructure expense for the additions of AI engine search and legacy SKU for agenda automation.
PUBLIC WORKS DEPARTMENT
OVERALL NET INCREASE OF $183,046
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
FY 2025/26 General Fund Operations Budget
April 2, 2025
hiring of a Maintenance Manager. The current fiscal year saw the hiring of a Management Analyst.
The salaries and benefits of all or portions of six full-time employees (Public Works Director, Associate Engineer, Maintenance Manager, Town Arborist, Management Analyst and Office Specialist) are included in the budget. The budget includes contract services for the Town Maintenance Services (MCE), Custodial Services, 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 $79,760. The majority of the increase in salaries and benefits category is due to the cost-of-living placeholder. There was also an increase in active employee health insurance. The CalPERS UAL payment increased by $28,532.
Operations
There is an increase in operational expenses of $103,286. Most of the increase is due to the current contract Maintenance Service Budget (MCE) and a contractual 3% CPI adjustment expense of $41,150. Contract Tree maintenance expense had a slight increase, and there was a reduction in Contract Custodial Services allocation one-time expense. There is an increase in contract landscaping maintenance of $45,000 for ECR median required maintenance. This was an added service in the FY 2024/25 budget that has been continued. There was an increase in building maintenance improvement of $60,000 for the DG pathway repair behind the playschool. The Public Works Department operations budget includes professional engineering, town service needs, existing contracts for facilities maintenance services, repair and maintenance. The budget includes the maintenance of the Town service contracts with various vendors for the needs and services for the Town Center facility maintenance.
POLICE DEPARTMENT
OVERALL NET INCREASE OF $624,544
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, which is offset, in part, by overall salary savings at the end of the year.
FY 2025/26 General Fund Operations Budget
April 2, 2025
Personnel and Benefits
Overall, the salary and benefits category increased $725,699. This is largely due to the increase in estimated salary adjustments, cost of living adjustment and CalPERS UAL payment (~$200k).
This results in a salary adjustment of $554,816 for FY 2025/26 for a department budgeted as fully staffed. The line item for overtime expense (OT) has increased to $750,000 to address the expanded needs for directed enforcement and operations. Department overtime includes augmented categories for OT pay for dispatchers; OT for backfill staffing-court, training, investigations, special operations/directed enforcement OT, and holiday OT.
Operations
Overall, the Operations expenditure budget for the Police Department decreased by ($101,155).
The majority of this was due to a decrease in contract services expenses. There are donation driven programs (such as the health and wellness program (~$195,000), and perishable skills training (~40,000). The health and wellness and perishable skills programs are annual review programs that will seek donations for continued funding. These are anticipated to be reviewed during FY 2025/26 for program continuation and will be amended to the budget if successfully funded. They are not included in the budget unless they are funded.
There is an increase in telephone expenses for radio circuits, an increase in required POST Training, and slight increases in Training and Conferences. There are slight increases in Animal Control services, K-9 expenses, Other Supplies and Materials, and Machinery and equipment.
The Department is purchasing supplemental equipment from the separate Equipment Replacement Fund. These are purchases which are funded via annual departmental allocations into the Fund until purchases are necessary. These supplemental items include the purchase of necessary firearm replacements for the department. The Department is also anticipating the replacement of 3 motorcycles for a total amount of $225,000 as part of its regular equipment replacement schedule.
These are anticipated to be grant funded. Grant funds will reimburse the Equipment Replacement Fund. The standard Equipment Replacement Fund allocation for the department has increased from $190,000 to $210,000.
OVERALL SUMMARY
Overall, the Operational Budget increased $806,490 over last year’s Adjusted Budget. For FY 2025/26 the Town’s General Fund Revenues are projected at $24,669,566. Expenditures are project at $22,010,666. This will result in a single year-end positive balance of $2,659,500 and a total positive ending Fund Balance of $12,453,915.
FY 2025/26 includes below the line items of $2,500,000 for ERAF and budgeted debt service payment $861,871, the single year projected negative change in fund balance is ($502,371). 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.
FY 2025/26 General Fund Operations Budget
April 2, 2025
Reserve Calculations
Any remaining fund balance not reserved or committed is designated as Unallocated Fund Balance. The projected unallocated available fund balance for FY 2025/26 is $5,850,895. This Unallocated Fund Balance represents funds that have not yet been assigned. There is a current $4,800,000 allocation out to the CIP fund from previous year’s Out-Year Financial Tool. We will review the Out-Year Financial Planning Model, and with Council direction, the unallocated reserve balance can be adjusted or appropriated towards operational use, capital projects or to pay down liabilities. During review of the outlook forecasting model, staff will come back with adjusted or maintained 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 2024/25 beginning General Fund Balance was $12,597,358. The FY 2024/25 updated estimate actual projected year-end fund balance is $12,956,285. This includes the ERAF revenues, as allocated. With the inclusion of debt service, there is a total General Fund projected FY 2025/26 year-end fund balance of $12,453,915.
FY 2025/26 Beginning Fund Balance $12,956,285
FY 2025,26 Projected Revenues (inclusive of ERAF) $27,169,566 Total Available Funds $40,125,851
COP Debt Service for FY 2025/26 ($861,871)
FY 2025/26 Expenditures (Projected Budget) ($22,010,066) Transfer Out to CIP 401 ($4,800,000)
Projected FY 2025/26 Ending Fund Balance $12,453,915
As shown below, the Town will meet its reserve requirements in FY 2025/26 and projects an unallocated reserve that is 26% of projected expenditures. This is a change over last year’s reserve that was 47% 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 FY 205/26 Expenditures $22,010,066
Projected FY 2025/26 Ending Fund Balance $12,453,915
15% Emergency Reserve $3,301,510
15% Budget Stabilization Reserve $3,301,510
TOTAL RESERVE REQUIREMENT $6,603,020
Less Above Reserve Requirement = Unallocated Reserves $5,850,895
FY 2025/26 General Fund Operations Budget
April 2, 2025
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.
The attached Financial Planning Model is updated with the FY 2025/26 projected budget and staff can walk through the Model during the April 2 Study Session. The Model is General Fund Only and the Operational Revenues and Expenditures match those in the Operational Budget. There currently is an allocation from the Unallocated General Fund to reflect the Financial Planning Model set aside bucket amount of $4.80 million. This is the allocation from last year’s June 1 Study Session.
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 2024/25 the Town has made $4.28m 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 are $8.6m, which includes interest of $915k. Staff has appropriated the $861,871 amount for FY 2025/26 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 2025/26 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.
FY 2025/26 General Fund Operations Budget
April 2, 2025
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:
http://www.ci.atherton.ca.us/index.aspx?nid=192
ATTACHMENTS
FY 2025/26 General Fund Revenue and Expenditure details by department Financial Planning Model