Item No. {{item.number}}
Town of Atherton
CITY COUNCIL – PUBLIC HEARING
TO: HONORABLE MAYOR AND CITY COUNCIL
GEORGE RODERICKS, CITY MANAGER
FROM: ROBERT BARRON III, FINANCE DIRECTOR
DATE: JUNE 18, 2025
SUBJECT: ADOPT THE ATTACHED RESOLUTIONS ADOPTING THE FY 2025/26
OPERATIONS AND CAPITAL BUDGET, SALARY & BENEFIT
RESOLUTION FOR UNREPRESENTED STAFF; 2025/26 SALARY AND
CLASSIFICATION SCHEDULE, GANN LIMIT APPROPRIATIONS, AND
TOWN MASTER FEE SCHEDULE
RECOMMENDATION
Adopt the accompanying Resolutions (adoption of all Resolutions may be done by one motion):
1. Resolution of the City Council of the Town of Atherton Adopting the Fiscal Year 2025- 2026 Operating and Capital Improvement Program Budget;
2. Resolution of the City Council of the Town of Atherton Adopting Salaries and Benefits for Unrepresented Staff;
3. Resolution of the City Council of the Town of Atherton Approving Fiscal Year 2025-2026 Salary Schedules and Classifications;
4. Resolution of the City Council of the Town of Atherton Establishing the Appropriations Limit for Fiscal Year 2025-2026 Pursuant to Article XIII B of the California Constitution;
5. Resolution of the City Council of the Town of Atherton adopting the attached fee resolution amending various fees and charges on the Town Master Fee Schedule.
BACKGROUND
Staff is pleased to present the Annual Operating Budget for FY 2025/26. The Council held four (4) public sessions in review of the Town Operational and Capital Budgets. The FY 2025/26 Operating Budget continues to reflect a positive outlook with a focus on Capital Projects and other Town Priorities. Staff strives to ensure that the Town’s fiscal position remains positive while continuing current programs, policies, and services. Traffic safety improvements continue to be a priority as the Alameda de las Pulgas Traffic and Safety Improvements project is currently in the conceptual design phase. The El Camino Real Complete Streets Gap Closure Project planning study is underway and is anticipated to be completed in FY2025/26. The Bicycle and Pedestrian Master Plan is currently being updated. Drainage improvements are another priority as upcoming projects include the Atherton Channel Assessment and Relining Upstream of Alameda de las FY 2025/26 Town Operations Budget
June 18, 2025
Pulgas design and construction, El Camino Real Long Term Drainage improvement solutions conceptual design, and Atherton Channel culvert and detention system improvements initiation of design projects are moving forward. The Park playground and restroom improvement projects are in design, as well as initial discussions on Town Center and Library Circulation Plan.
Staff incorporated all City Council feedback from the FY 2025/26 Budget meetings, together with additional adjustments, if any, to the Operational and CIP budgets based on identified priorities or projects that need to move forward in our CIP program. At the Budget Study Session on June 4, in addition to approving the $3m ADP allocation to CalPERS, the Council made the following adjustments:
• Move the Drainage Master Plan from FY 2027/28 to FY 2026/27 • Move the Park Master Plan from FY 2026/27 to FY 2027/28 • Reduce the Park Master Plan from a budget estimate of $350,000 to $250,000 • Reduce the allocation to the Facility Replacement Fund to $250,000 Reflected below are the final updates since the June 4 study session. All of these changes have been incorporated and the below represents the FY 2025/26 Proposed Operating and CIP Budget as directed by Council.
For FY 2025/26, General Fund revenues are projected at $24,712,266 and General Fund expenditures are projected at $22,134,254. This reflects a single year surplus of $2,578,012 before the addition below the line of ERAF and transfers in/out for CIP, debt service, and ADP. There is a projected year-end positive fund balance in the General Fund of $9.57 million.
The following Staff Report is broken down into the following areas:
• Revenue Highlights – Page 3 of Staff Report
• Expenditure Highlights – Page 6 of Staff Report
• Budgets by Department – Page 8 of Staff Report
• Other Restricted Funds – Page 15 of Staff Report
• Capital Improvement Fund – Page 19 of Staff Report
• Reserves – Page 27 of Staff Report
• GANN Limit – Page 28 of Staff Report
• Master Fee Schedule – Page 28 of Staff Report; reflects the addition of the Utility Underground Private Property Fee and the 2.7% CPI adjustment.
Beyond the additions made by the Council at the June 4 Study Session, there have been no additional changes made. The information presented reflects information previously shared with the Council.
It is recommended that the Council conduct the Public Hearing, take Public Comment and adopt the budget and five (5) associated Resolutions in one motion.
FY 2025/26 Town Operations Budget
June 18, 2025
REVENUE HIGHLIGHTS
FY 2025/26 Total General Fund revenues are projected at $24,712,266. Grants and contributions are only budgeted if they have been authorized and approved by the granting agency. A CalRecycle grant of $5,000, and a Community Oriented Policing Grant of $190,000 are included as known revenues.
The table below reflects major General Fund revenue categories for the Town’s budget. Some of the items in the table are expanded for additional detail and some include only the rolled-up amount.
Actual Orig. Budget Adjusted Recommended
Category FY 2023/24 FY 2024/25 FY 2024/25 FY 2025/26
Secured Property Tax
$12,024,626 $12,797,625 $13,182,117 $13,850,000
Other $2,457,130 $3,006,960 $2,983.225 $3,534,500
Subtotal Property Tax
$14,481,756 $15,804,585 $16,165,342 $17,384,500
Sales Taxes $434,106 $442,400 $487,400 $529,000
Franchise Fees $972,543 $1,076,000 $1,058,774 $943,000
Intergovernmental $42,066 $40,800 $46,767 $47,900
Business License Tax $279,184 $290,000 $290,000 $298,000 Planning Fees $346,190 $850,300 $435,300 $520,300
Building Fees $1,655,279 $2,203,280 $2,419,200 $2,449,400 Policing Fees $466,361 $368,861 $541,092 $540,450
Public Works Fees $467,571 $659,700 $535,700 $685,700
Park Program Fees
Social Fees $34,300 $60,700 $49,000 $40,000
Class Fees 9,963 $15,300 $13,500 $15,700
Weddings $800 $20,000 $0 $5,000
Day Use Fees $11,220 $19,000 $13,000 $19,000
Catering Service Fee
$5,178 $0 $0 $0
Subtotal $61,462 $115,000 $75,500 $79,700
Misc. Revenues
Admin Citations $71,800 $90,000 $45,000 $91,800
Cell Lease(s) $73,606 $74,816 $74,816 $74,816
Interest Income $1,044,261 $300,000 $300,000 $320,000
Knox Playschool $56,617 $55,000 $70,000 $70,000
C&D Forfeiture $1,022,800 $500,000 $500,000 $500,000
FY 2025/26 Town Operations Budget
June 18, 2025
Actual Orig. Budget Adjusted Recommended
Category FY 2023/24 FY 2024/25 FY 2024/25 FY 2025/26
Other $267,147 $130,280 $535,573 $177,700
Subtotal $2,536,231 $1,150,096 $1,525,389 $1,234,316
Total General Fund
$21,742,747 $23,001,022 $23,580,464 $24,712,266
Excess ERAF $2,663,605 $2,500,000 $2,771,578 $2,500,000 Total Revenues $24,406,352 $25,501,022 $26,352,042 $27,212,266 • Note – table includes ERAF.
Educational Revenue Augmentation Fund (ERAF)
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.
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. ERAF is set at $2.5 million for FY 2025/26.
Revenue Assumptions
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%.
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. It was recently confirmed that the FY2023/24 VLF shortfall is listed in the State’s FY 2025/26 Budget. 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. Staff have budgeted the VLF for FY2025/26 with the understanding of a shortfall occurring while also possibly receiving partial payment for prior shortfalls.
Other General Fund revenues for FY 2025/26 include conservative revenue assumptions and reflect current market assumptions. Revenue from activities in the Building, Planning and Public Works Departments comprise the majority of the fee revenue for the Town. With the recent increase in the Town fee schedule, revenue from Building, Planning and Public Works fees are projected to increase. These revenues are projected at approximately 4% and based on the current FY 2025/26 Town Operations Budget
June 18, 2025
trend of building activity for residential improvements and new construction. Franchise fee revenues are projected at 1 to 2 percent (%) and based on the current year’s trend. Miscellaneous and other revenues were evaluated based on current trends, eliminated revenues and one-time revenues.
FY 2025/26 Town Operations Budget
June 18, 2025
EXPENDITURE HIGHLIGHTS
Overall, General Fund expenditures are estimated at $22.13 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
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
Miscellaneous
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 FY 2025/26 Town Operations Budget
June 18, 2025
another purpose (such as, e.g., capital improvements or operating expenses) and do a cost-benefit analysis of the various uses.
During the June 4, 2025 study session, the Council reviewed the 5-Year Financial Outlook to address CIP programs and the ADP amount to include in the toward paying down the Town’s Unfunded Actuarial Pension obligation amount. Direction was given to include a $3 million ADP to the Classic Public Safety Pension Plan.
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.
FY 2025/26 Town Operations Budget
June 18, 2025
BUDGETS BY DEPARTMENT
During the review of department operations, each department evaluated service and maintenance needs required for the next fiscal year. General operations focused on anticipated needs and cost assumptions on meeting operational demands. Included are summaries by department and roll-ups of total operational expenditures.
CITY COUNCIL OPERATIONS
OVERALL NET DECREASE OF $7,415
The City Council budget includes expenditures related to City Council meetings, conference attendance such League of California Cities, 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 the municipal election budget line item as there are no general election costs in the fiscal year.
ADMINISTRATION DEPARTMENT
OVERALL NET INCREASE OF $63,345
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 $21,840. The majority of the increase is in CalPERS UAL, salary adjustment, 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 of budgeted expenses for the Town’s Earth Day event.
FY 2025/26 Town Operations Budget
June 18, 2025
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 City Attorney services are provided by the law firm Kronick Moskovitz Tiedmann & Girard on a retainer amount. The budget also includes a line item for Additional Services as needed.
FINANCE DEPARTMENT
OVERALL NET INCREASE OF $61,679
The Finance Department budget includes the salaries and benefits of three full-time employees (Finance Director, Sr. 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 $52,199. This includes the cost-of-living placeholder, job reclassification, 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 meetings.
PLANNING DEPARTMENT
OVERALL NET DECREASE OF $169,620
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.
FY 2025/26 Town Operations Budget
June 18, 2025
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. There was an increase of $35,000 for membership fees to the ADU Resource Center of San Mateo County
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 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 $42,702
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. Later in tonight’s meeting there is an adjustment to the contract to $175,440. 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.
FY 2025/26 Town Operations Budget
June 18, 2025
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. There was an additional increase of $15,200 that includes server storage replacement ($8K), an increase in Microsoft licenses for Office 365 ($4K), and cloud backup ($3K).
PUBLIC WORKS DEPARTMENT
OVERALL NET INCREASE OF $189,046
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 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 FY 2025/26 Town Operations Budget
June 18, 2025
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. There was an increase of $6,000 in Facility Repairs and Maintenance for plants and greenery in Town Center office spaces.
POLICE DEPARTMENT
OVERALL NET INCREASE OF $674,436
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.
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.
There was an additional increase of $49,892 due to an identified need to update the dispatch phone recording system. There was also funding added for the CAD RIMS system’s annual maintenance, as well as slight increases in Other Contract Services and Other Supplies and Materials.
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 FY 2025/26 Town Operations Budget
June 18, 2025
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 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.
GENERAL FUND SUMMARY
For FY 2025/26 the Town’s General Fund Revenues are projected at $24,712,266 against $22,134,254 in expenditure. This will result in a single year-end positive balance of $2,578,012 and a total ending Fund Balance of $9,572,799.
FY 2025/26 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 $5,555,000 and Transfers out of $3million for ADP. There will be a single-year projected change in fund balance by a negative $3,538,859. The negative change reflects the drawdown of unallocated reserves Fund Balance of $5.555 million for capital projects and $3milion ADP from the Town Financial Planning model.
Transfer Out to CIP Fund 401 for capital projects is $5,555,000 as there was a reduction of $50,000 allocation in the CIP Fund 401 due to the adjustment of the Facility Replacement Fund from $300,000 to $250,000.
LIBRARY FUND
REVENUES
The Town is a member of the San Mateo County Library JPA system. The Library is funded through property taxes that are collected and allocated to library services. Under the JPA, jurisdictions are permitted to retain excess funds generated from the local property taxes as long as the basic library services are met. These excess funds are held in trust by the County of San Mateo. The Town’s most recent use of all excess funds was for the new Library Project– as well as extended library hours of daily operation, utilities, maintenance costs and aesthetic upgrades to the Library café deck. Excess funds were advanced to the Town to allow completion of the Project.
With the completion of the new Library, annual excess funds, minus amounts needed for yearly operation of the Library, are retained by the Library JPA until the total advancement amount is reimbursed. Once the advancement of funds is reimbursed, any remaining funds will be evenly split between the Library and the Town for library-related activities. The County holds all future Town excess funds.
The FY 2024/25 beginning fund balance for the Library Fund is $2,717,591. This includes the SMCL funds in the amount of $2,162,098 held in trust retained by the Library JPA. The remaining balance of the advancement of the SMCL JPA funds to be paid back is $1,157,910. SMCL will deduct the remaining advancement amount from our Library funds held in trust. With the Town advancement of funds fully paid off, any remaining excess Library funds after the Library and the Town Library related activities expenses will be evenly split.
FY 2025/26 Town Operations Budget
June 18, 2025
The estimated FY 2025/26 revenue for the Atherton Library JPA is approximately $5.25million and the SMCL operations is estimated at $3.37million. The Town estimate for FY 2025/26 is $1,032,902. After deducting the Library related activities, the remaining excess Library funds is $847,098. This amount will be evenly split between the JPA and the Town at approximately $423,549 each. These funds will be held in the San Mateo County Library Trust for the Town.
EXPENDITURES
The FY 2025/26 projected expenditures for the Library are $1,207,902 for operations, utilities, maintenance costs, use of town facilities, development of spaces and Improvement Project Children’s Nature Garden.
These costs breakdown as follows:
• Contract Maintenance Services - $39,000
• Contract Custodial - $75,000
• Facility Repair/Maintenance - $4,000
• Utilities/Electrical - $120,000
• Utilities/Water - $40,000
• Contract Vector Management - $800
• Building Security - $250
• Other Contract Services - $95,000
• Other Supplies and Materials - $200,000
• Building Improvements/Capital Outlay - $440,000 & $175,000 • Building Maintenance Manager - $18,852
There is an allocation for Other Supplies and Materials of $200,000 for the use of Town facilities for Library programming, various Town programming, and aesthetics needs around the Library outdoor spaces. These include the use of Town facilities at the Park for various Library programs, purchases of various items for the development of spaces such as refresh of tables, canopies, umbrellas, café benches and community room furniture. The budget also includes an allocation of $440,000 for capital outlay related to the Children’s Nature Garden. This project is currently in the design phase and is anticipated to begin construction in the new fiscal year.
There were minor changes to the Library Funds for capital improvement expense increase in the amount of $175,000. During the CIP portion of the May 7 Study Session, there was discussion regarding Town Center and Circulation project (Holbrook-Palmer Park connection) review and analysis of pedestrian connectivity options including analysis of traffic improvements around the Town Center to facilitate access and mobility through the Town Center and to the Park. This includes Station Lane connection along Maple to Watkins Avenue as partial Library-related improvements for pedestrian pathway accommodation. The Town will be pursuing the design of these pathway improvements and $100,000 is allocated as the Library portion. Additional improvements for the design of parking lot modifications to add parking stalls along the mulch section along the track ($15,000) and design to add solar carports/EV charging ($60,000) along the track side of the Town Center.
FY 2025/26 Town Operations Budget
June 18, 2025
OTHER RESTRICTED FUNDS
The Town maintains a variety of Special Revenue and Internal Service funds that are “restricted funds” for specific purposes beyond basic capital improvement. Revenue to internal service funds are in the form of General Fund department charges based on allocations by department and uses.
EQUIPMENT REPLACEMENT FUND
The Equipment Replacement Fund is an internal depreciation fund for the replacement of large assets. The Fund is the Town’s set aside accumulation account to replace large equipment assets over time – such as computer equipment, software assets, vehicles, trailers, emergency equipment, etc. Annual depreciation-style departmental allocations to this Fund reduces the impact to the Town’s Operational year funding to replace the equipment. There continues to remain sufficient funds in the fund to accommodate emergency replacement needs as well as planned needs.
The FY 2025/26, departmental allocations (revenues) total $608,100 and the expenditures total $375,000. The largest allocation charge is $360,000 in the Police Department for FY 2025/26.
This allocaton reflects the purchase of 2 vehicles each year as part of the department’s regular maintenance and replacement schedule and for replacement purchase of new firearms. The Department is seeking the replacement of three (3) motorcycles for a total amount of $180,000 as part of its regular equipment replacement schedule. These are replacement motorcycles to the patrol fleet traffic division. These motorcycles are grant funded, (grant revenue and expenditure) will occur within the Equipment Replacement Fund. The Town uses the State and Federal Multiple-Award Schedule pricing to purchase vehicles from the Equipment Replacement Fund.
In FY 2025/26 the Police Department will also purchase $150,000 in new firearem replacements.
These supplemental items include the necessary firearm replacements for all sworn officers. There is a $150,000 allocation expense to the replacement fund in Police Department operations budget for the purchase of these firearms. These were noted in the General Fund Budget presentation.
Also within the Fund, the Finance Department anticipates an upgrade to the Town’s Financial Accounting Software. The cost for upgrade and migration is $45,000. There is sufficient allocation build to this fund for upgrade of the software.
WORKERS’ COMPENSATION FUND
The Workers’ Compensation Fund accounts for the cost and expense of managing the Workers’ Compensation Program through the Town’s self-insurance risk pool, Cities Group Joint Powers Authority. This Fund includes costs related to risk management and prevention – safety training, educational materials, and accident prevention programs. As a member of a JPA, the Town contributes an annual assessment to the JPA based on all recognized and potential liabilities. These assessments or contribution rates are calculated annually based on claims history and any increases in loss recovery due to excessive claims losses.
FY 2025/26 Town Operations Budget
June 18, 2025
As has been advised, the Cities Group JPA (Workers' Compensation) is experiencing some challenges. While the challenges do not affect the Town’s costs, they are related to the stability of the JPA and its continued viability. Member agencies have begun discussions to dissolve the JPA.
This will result in the Town and other member agencies having to identify alternatives. Agencies with higher risk exposure (i.e. those with public safety) will need to identify alternative pools with similar risk portfolios. As agencies explore options, the Cities Group JPA Pool agrees that the JPA will continue through the end of the 2025 calendar year and perhaps through June 2026. This will give agencies time to explore alternatives. If the JPA dissolves, each member agency would transition its claims out of the Cities Group and into alternative solutions. Loss tails and liability would follow each agency into any new JPA. The Town is currently exploring two alternative JPA’s for the Town’s Workers’ Compensation coverage.
There are approximately thirteen (13) open claims that have incurred a reserve claims cost of approximately $667,883 in the current year. This is a decrease of $269,168 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 $235,750, a decrease of $80,320.
The Workers’ Compensation Fund tracks expenditures on related expenses across the various departments. 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. The FY 2025/26 budget maintains a 1% charge of salary costs for all departments. In previous fiscal years the charge for the Police Department was 11%, as the Town experienced high claims liabilities in the Police Department. It was then reduced to 7% and now 1%. All other department charges were reduced from 3% to 1%. This was done to build up reserves for the Town’s replenishment of equity reserves with the JPA. The reduction was due to the Workers’ Compensation Fund maintaining enough reserves for future allocations of equity replenishments.
Staff will continue to monitor this expense and with the possibility of moving to a new Worker’s compensation carrier there may be need to increase the allocation in future years to maintain adequate reserves. Due to the Town’s diligence in building up its Workers’ Compensation Fund over the years, there is a healthy fund balance for transition from the Cities Group to a new JPA if there is a requirement for the establishment of an equity reserve.
The current year assessment is $188,709 and is projected to increase $250,000 in FY 2025/26.
Currently, there are enough reserves in the Town’s Worker’s Compensation Fund for equity replenishment and current reserve claims. The FY 2025/26 expense is $256,183 in the fund.
GENERAL LIABILITY FUND
The General Liability Fund accounts for the insurance cost of general liability claims and property losses. The Town is part of an insurance pool administered by PLAN JPA. The activities within this Fund provide for expenses related to general liability insurance, employment practice insurance and self-insured retention claims. Total internal service charges from the General Fund for FY 2025/26 are estimated at $634,331. This is an increase of 3.2%. The total FY 2025/26 projected expenditures for this fund are $734,331. This includes the self-insurance retention FY 2025/26 Town Operations Budget
June 18, 2025
expense of $100,000 that allows the payout of four (4) claims at $25,000 per claim. The Town does not anticipate expending retention expenses of four (4) claims in the fiscal year, however, the amount is a requirement established by PLAN JPA. Average retention claims are about 2 per year.
EMPLOYEE BENEFITS FUND
The Employee Benefits Fund tracks expenditures across various departments for employment, unemployment, retirement, and healthcare benefits. The Fund also represents an audit compliant set aside for compensated absences (time earned) – vacation, sick leave, holiday, compensatory time, etc.). Revenue to the fund comes through charges allocated back to each departmental budget based on number and type of personnel within each department. Revenue to the Fund for FY 2025/26 is $437,271. Expenditures for FY 2025/26 are $443,346. The expenditure includes $83,346 for the Town contribution of the minimum retiree health PEMHCA amount to CalPERS.
These costs are included and charged to the respective departments based on retiree health and allocated to the Employee Benefits Fund. The PEHMCA costs are paid directly to CalPERS and are reimbursable from the Town’s OPEB Trust. The Town is no longer budgeting the “pay as you go” retiree health benefit contribution as an operation expense as the retiree benefits are now funded through the OPEB Trust. The Employment Benefit Fund FY025/26 budget also includes an expense of $800,000 to the General Fund for a potential allocation towards CalPERS Additional Discretionary Payment (ADP). This was a recommendation by staff as an allocation in support of a General Fund allocation toward an ADP amount of $3million.
Within this fund is also the employee benefits charge of $274,223. This is a charge of 3% to 4% of the General Fund Operational Departments salary expense that is allocated for personal leave contributions of sick, vacation, and holiday pay. The Police Department allocation is 4% and all other departments 3%. The Town has a total compensated absences balance of $1,073,999.
Compensated absences comprise of accrued time-off, vacation, and holiday pay for all employees and are recorded as a liability. These are amounts that would be liquidated or mature due to the termination of Town staff.
Included within this fund are unemployment insurance charges if there are any future claims charged to the Town. This is a charge of 1% of Operational Departments salary expense Any claims would be paid out of this fund. The total budgeted charge is $75,202.
TENNIS FUND
The Tennis Fund projected revenues are $71,200. The majority of this revenue comes through the facility management servies contract with Player Capital. The contract provides yearly revenue of $50,000 to the Park. Keys are sold on an annual basis to any person (resident or non-resident) that wishes to use the Tennis courts. The standard key for residents is $105 and includes clay court key, and the non-resident key increased is $280 and clay court access of $30/ hour. These fees will increase based on a 2025 CPI of 2.7% in FY 2025/26.
Every year the Town reviews maintenance requirements for the courts and resurfaces courts as needed. The tennis court resurfacing treatment includes crack filling and taping, followed by a new FY 2025/26 Town Operations Budget
June 18, 2025
surface coating and striping. This is done on approximately every 3-5 years on a cyclical basis on each of the five (5) non-clay tennis courts.
The FY 2025/26 budget includes the purchase of tennis keys by residents and non-residents providing annual revenue of approximately $20,000. Each January, new tennis keys go on sale for the new court locks that get installed in February.
For FY 2025/26, the Town anticipates expenditures of $61,000. This includes $13,000 for contract maintenance services for MCE, general court maintenance and facility repairs needs of $45,000 and $3,000 for building security court gates upkeep.
COPS - CITIZEN’S OPTION FOR PUBLIC SAFETY
The COPS Office was created as a result of the Violent Crime Control and Law Enforcement Act of 1994. As a component of the Department of Justice, the mission of the COPS Office is to advance community policing in jurisdictions of all sizes across the nation. Community policing focuses on crime and social disorder through the delivery of police services that includes aspects of traditional law enforcement, as well as prevention, problem-solving, community engagement, and partnerships. In FY 1996/97, the California State Legislature created the Citizen’s Option for Public Safety (COPS) Program. Funds have been available through the State of California to local entities in the form of Citizen’s Option for Public Safety (COPS) Grant. The Town in recent years has seen an increase in funding. Recently received approximately $186,000 from the grant. We project to receive $190,000 in grant funds. These funds must be used for front-line law enforcement only. The Town anticipates receipt of this funding on an annual basis and funds are used for sworn personnel salary related expenditures.
FY 2025/26 Town Operations Budget
June 18, 2025
CAPITAL IMPROVEMENT FUND
The five-year CIP proposes projects to analyze, repair or improve Town infrastructure, and the funding for those projects. The major projects are categorized into three areas:
• Streets & Transportation
o Roadway Maintenance
o Bicycle and Pedestrian Improvements (Active Transportation) o Traffic and Safety
• Drainage
o Flood Control
o Regulatory and Green Infrastructure
• Town Buildings, Park and Facilities
o Town Center
o Holbrook-Palmer Park
Projects have been developed based on needs identified by City Council, residents, staff, and adopted master plans.
The 1st year (FY 2025/26) of the CIP is incorporated into the Town’s Budget and is the only year for which the City Council applies available funding. The remaining four (4) years of the CIP reflect proposed projects and funding. These “out years” are revised annually to reflect changes in City Council priorities, direction, needs and funding availability. The CIP is reviewed by the Town’s Planning Commission each year for consistency with the Town’s General Plan. This year’s CIP was reviewed by the Planning Commission at their May 29, 2025, meeting. The Planning Commission determined that the Town CIP for Fiscal Years 2025/2026 – 2029/2030 is consistent and in conformance with the Town’s General Plan.
The CIP program consists of (6) six capital improvement fund sources that the Town uses for capital improvement/infrastructure needs. The capital improvement fund sources include:
• Atherton General Fund
• Measure M – County Congestion Management Fee on vehicle registration • Measure A – County ½-cent Transportation Sales Tax
• Measure W- County ½-cent tax Congestion Relief Plan
• Gas Tax
• Atherton Channel Fund
This year the 5-year CIP was presented to City Council in the Study Session in a more detailed workshop format to allow for questions and discussion of individual projects, general discussion about broader objectives to be considered for future proposed projects and priorities for allocating funds. Though the Capital Improvement Program is funded with a variety of revenue sources, most of the revenue sources have restrictions on how the funds can be used. The General Fund is the FY 2025/26 Town Operations Budget
June 18, 2025
primary funding source for the Capital Improvement Program and thus affords the greatest opportunity for discretionary expenditures for capital projects.
During its May 7th Study Session workshop, staff provided the 5-Year Fiscal Outlook Spreadsheet and project list for Council review. FY 2025/26 and beyond include established priority projects that include the Annual Road Maintenance Program, necessary Traffic and Safety Improvements, and the completion of ongoing projects. As noted above, funding for the CIP consists of a variety of sources, some of which are restricted, such as Measures A, Measure M, and Measure W funds, as well as funds from Gas Taxes, and the General Fund. The established priority projects and ongoing projects were noted for FY 2025/26. These projects included approximately $4.7 M in general fund allocations for FY 2025/26.
Specific Projects the Council reviewed and provided feedback on included:
• Bicycle Pedestrian Master Plan Implementation Program o Support for El Camino Complete Streets – Project Initiation Document and Project Approval and Environmental Documents phases by others
o El Camino Real/Selby Lane intersection Improvements
• Traffic Safety Improvement Program
o Streetlight painting
o Middlefield Road/Fair Oaks Lane/Palmer Avenue traffic signal o Middlefield Road/Watkins Avenue traffic signal
• Drainage Improvements Program
o El Camino Real Drainage Solutions (North Segment)
o El Camino Real Drainage Solutions (South Segment)
o Drainage Master Plan Update
• Park Master Plan Implementation Program
o Clay Court Conversion Project
o HPP Master Plan Update
Policy discussion by the Council resulted in minor changes and/or updates to the baseline projects and continuing projects in Bike Pedestrian, Traffic Safety Improvement, Drainage, Park, and Park projects. The projects are included for the specific fiscal year for inclusion and extend within the Capital Improvement Program (FYs 2025/26 through FY 2029/30). Based on Council feedback from the May 7th meeting, the allocation amount from the General Fund for FY2025/26 was updated to $5,605,000. Below were the resultant updated changes to the CIP program:
Changes to Baseline Projects
— Reduce Town Center Improvements to $100k per year
— For 2025/26, allocate $150k in Green Infrastructure to ADLP Project Continuing Projects
— Reduce the ADLP allocation by $150k to account for Green Infrastructure CIP Added and Future Projects
FY 2025/26 Town Operations Budget
June 18, 2025
— ECR Complete Streets - $100 Support in 2025/26 (BP2)
— ECR/Selby Intersection - $250k Conceptual in 2025/26 (BP4) — ECR/Selby Intersection - $250k Design Remainder in 2026/27 (BP4), $2.5m in 2027/28 (BP4) — Station Lane Connection - $120k Study and Design in 2025/26 (BP7) has been updated to $200k, $600k in 2026/27 (BP7)
— Streetlight Painting - $100k in 2025/26 (TS1)
— Middlefield/Fair Oaks & Middlefield/Watkins - $100K Corridor Study in 2025/26 (TS1/3), $1m solution in 2027/28 (TS1/3)
— ECR Drainage/North & ECR Drainage South - $475k in 2025/26 for design (add $350 remaining from 2024/25) (DR2/3); $1.5m in 2027/28 (DR2), $4m in 2028/29 (DR3) — Solar/Battery @ Jennings Pavilion - $30k/$150k in 2025/26 (HPP5) — Parking Lot Modifications - $15k/$60k in 2025/26 (TC2) — Drainage Master Plan Update - $350k in 2027/28 (DR1)
— Park Master Plan Update - $350k in 2026/27 (HPP2)
Staff also discussed that some of the projects or priorities have potential grant or non-general funds offsets. These offsets were provided and incorporated in review of The Outlook spreadsheet (line 44). These amounts reduced the General Fund contribution reflected in the final Unallocated balance of $5.605million for CIP projects.
Grants are contingent funds and will need Council feedback to evaluate the feasibility of these projects in the event of unavailability of grant funds. The grant and offsets by Fiscal Year are as follows:
FY 2025/26
$175,000 from Library Funds
$800,000 from Employee Benefits Fund (Pension Allocation) $350,000 from CIP the remaining for DR2/3
$200,000 from GRANT – potential grant SMCTA/C/CAG or Caltrans FY 2026/27
$300,000 from Library Funds
$100,000 from GRANT – potential grant SMCTA/C/CAG or Caltrans FY 2027/28
$3,000,000 from GRANT - SMCTA/C/CAG or Caltrans/Agency Contribution Direction was also sought regarding the inclusion of an Additional Discretionary Payment (ADP) toward the Town’s Unfunded Actuarial Pension obligation with respect to the amount and timing of payment. For illustrative purposes the entire $3 million was allocated to the Pension UAL, with the $800,000 offset from the Employee Benefit Fund, resulting in a draw of $2.2 million from the General Fund.
Ongoing and new major Capital Projects in the CIP Program Book include:
Traffic Safety Improvement Program – Page 14, #56064
FY 2025/26 Town Operations Budget
June 18, 2025
Previously Funded Projects (Ongoing)
• Alameda de las Pulgas Traffic and Safety Improvements – This project includes a roundabout at the ADLP/Atherton Avenue intersection. The project is currently in the final design phase pending environmental clearance and grant funding approvals. Construction is anticipated to begin in FY 2025/26. Funding for this project includes a $2m Federal Grant.
- $600,000 (FY 2022/23)
- $1,850,000 (FY 2023/24)
- $600,000 (FY 2024/25)
Proposed FY 2025/26
• $1,600,000 - Alameda de las Pulgas Traffic and Safety Improvements (construction) - • $100,000 - Streetlight Painting Program
• $100,000 - Evaluation of traffic control devices and other improvements at both Middlefield Road/Fair Oaks Lane and Middlefield/Watkins Avenue • $15,000 (Annual) - Purchase/Replace fixed solar powered radar speed indicators (Measure M)
• $25,000 (Annual) - Traffic Counts and Speed Surveys (Measure A) Future Projects
• $1,000,000 - Traffic Signal at Middlefield Road/Watkins Avenue (construction) Bicycle Pedestrian Master Plan Implementation Program – Page 15, #56059 Previously Funded (Ongoing)
• FY 2023/24 - Stockbridge Avenue at Alameda de las Pulgas Pedestrian Crossing Improvements (Rectangular Rapid Flashing Beacons – Funded FY 2023/24). Design is complete, with construction anticipated to complete in FY 2025/26. • FY 2022/23 - Watkins Avenue Pedestrian Improvements, Middlefield Road to McCormick Lane (Funded in FY 2022/23). Conceptual design completed and final design is pending. • FY 2024/25 - Bicycle and Pedestrian Master Plan Update In Progress – $250,000 Proposed FY 2025/26
• $50,000 - Bicycle and Pedestrian Master Plan Update for additional public outreach • $100,000 - ECR Complete Streets Gap Closure Project – SamTrans lead (consultant support)
• $250,000 - ECR/Selby Lane Intersection Improvements to be funded over multiple fiscal years
• $200,000 - Station Lane Connection Design/Study to be funded over multiple fiscal years • $25,000 - Grant applications for funding and partnerships to design or implement improvement
Future Projects
• $250,000 - ECR/Selby Lane Intersection Improvements (Design – FY 2026/27) • $2,500,000 – ECR/Selby Lane Intersection Improvements (Construction – FY 2027/28) • $600,000 - Station Lane Connection Construction (FY 2026/27) FY 2025/26 Town Operations Budget
June 18, 2025
Drainage Improvements Program – Page 21, #56034
Previously Funded (Ongoing)
• Atherton Channel Assessment and Relining Upstream of Alameda de las Pulgas. Project design is underway and initial regulatory consultations are initiated. Completion of project design and start of construction is anticipated in FY 2025/26. - $400,000 (FY 2022/23)
- $2,400,000 (FY 2023/24)
• El Camino Real Long-Term Drainage Solutions. Conceptual design is complete. Final design is anticipated to be completed in FY 2025/26.
- $250,000 (FY 2023/24)
- $400,000 (FY 2024/25)
• The Atherton Channel culvert and detention system improvements at Alameda de las Pulgas and Las Lomitas Elementary School. This project has a $1.38m Federal grant (pending FEMA approval). Initiation of the project has been deferred pending grant approval.
- $225,000 (FY 2023/24)
- $2,750,000 (FY 2024/25) (includes anticipated grant)
• Replacement and installation of storm drain inlet markers. Installation of markers has been ongoing and is anticipated to be completed in FY 2025/26 in compliance with the Regional Storm Water Permit.
- $10,000 (FY 2024/25)
Proposed FY 2025/26
• $2,000,000 - Atherton Channel Assessment and Relining Upstream of Alameda de las Pulgas (construction)
• $475,000 – ECR Long-Term Drainage Solutions – toward pump stations and assorted improvements at both ECR/Selby w/extension to Stockbridge (N) and ECR/Isabella w/extension to Almendral (S). Timing contingent on permitting by Caltrans once design completes.
• $150,000 - Green Infrastructure Plan Implementation. Funds to be added to ADLP Project for green infrastructure requirements.
• $10,000 - Replacement and installation of storm drain inlet markers (continuing project) • $50,000 – Miscellaneous storm drain related improvements throughout Town Projects Future Projects
• $350,000 - Drainage Master Plan Refresh (FY 2027/28)
• Green Infrastructure Improvements – various locations (TBD) • $1,500,000 – Construction of ECR Drainage Solutions (N) (FY 2027/28) • $4,000,000 – Construction of ECR Drainage Solutions (S) (FY 2029/30) Civic Center Master Plan Implementation Program - Page 25, #54015 Proposed FY 2025/26
• $60,000 - Solar Carports/EV Charging design to add solar carports and EV Charging to Town Center (track side)
FY 2025/26 Town Operations Budget
June 18, 2025
• $15,000 - Parking Lot Modifications towards design to add parking stalls in mulch along tracks, near Corporation Yard
• $100,000 – Miscellaneous Town Center Infrastructure Improvements (FY 2025/26) Park Master Plan Implementation Program – Page 26, #56063 Previously Funded (Ongoing)
• Park Playground Improvements – construction anticipated to start in FY 2025/26 - $200,000 (FY 2023/24) Design
- $1,000,000 (FY 2024/25) Construction
• Fencing Improvements along Watkins Avenue, Middlefield Road to McCormick Lane – Funded in FY 2022/23. To be implemented with the Watkins Avenue Pedestrian Improvements Project.
• Park Playground Restroom Replacement
- $800,000 (FY 2024/25)
Proposed FY 2025/26
• $350,000 - Park Playground Restroom Replacement to support additional scope for project split between playground ($300k) and restroom ($50k) • $180,000 - Jennings Solar and Energy Resiliency Improvements for design and construction
• $100,000 - Holbrook Palmer Park General Assessment and repairs Future Projects
• $350,000 - Holbrook Palmer Park Master-Plan Refresh (FY 2026/27) During the June 4th Budget Study Session there was additional policy discussion by the Council that resulted in minor changes and/or updates to the Drainage, Bike Pedestrian, Park projects and Town Center Facility. Based on Council direction, below are the additional changes to the CIP program:
• Park Master Plan Implementation Program – Page 26, #56063 o Based on Council direction, the draft FY 2025/26 Budget included $350,000 towards Park Master Plan refresh in FY 2026/27.
o The Council directed that Park Master Plan refresh amount be reduced to $250,000 and moved out to FY 2027/28.
• Drainage Improvements Program – Page 21, #56034
o The Council directed to move up the Drainage Master Plan Refresh $350,000 from (FY 2027/28) to FY 2026/27.
• Bike Pedestrian Master Plan Implementation Program– Page 15, #56069 FY 2025/26 Town Operations Budget
June 18, 2025
o The Council discussed with staff the Station Lane Connection Design/Study to be funded over multiple fiscal years 2025/26 and the $600,000 - Station Lane Connection Construction (FY 2026/27)
o This was a discussion regarding Town Center and Circulation project (HolbrookPalmer Park connection) review and analysis of pedestrian connectivity options including analysis of traffic improvements around the Town Center to facilitate access and mobility through the Town Center and to the Park. o As this is a partnership between the Town and the SMCL Library, the study and project were updated and moved to Civic Center Master Plan Program-Page 25, in fiscal years 2025/26 and 2026/27.
• Facility Replacement – the council directed staff to reduce the allocation for the Facility replacement fund from $300,000 per year to $250,000 starting in FY 2025/26. • The Council approved a $3million ADP allocation. This included an $800,000 offset from the Employee Benefit Fund, resulting in a draw of $2.2 million from the General Fund.
The above changes only resulted in a reduction of $50,000 in Capital Improvement Fund expenditures in FY 2025/26. As a result, the General Fund allocation to the Capital Improvement Fund decreased from $5,605,000 to $5,555,000.
Expenditures in FY 2025/26 for the CIP are $7.56 million. The following are project/program expenditures:
Project FY 2025/26 Funding
Traffic Safety Improvements $1,840,000
Accessibility Improvements $100,000
Streets/Roads Maintenance $1,455,000
Park Improvement Program Projects $630,000
Drainage Improvement Projects $2,685,000
Bike/Ped Master Plan Program $425,000
Town/Library Facilities $375,000
Neighborhood Traffic Management $20,000
Traffic Control Devices $15,000
Upper Channel Monitoring $10,000
Total* $7,555,000
OVERALL SUMMARY
For FY 2025/26 the Town’s General Fund Revenues are projected at $24,712,266 against $22,134,254 in expenditures. This will result in a single year-end positive balance of $2,578,012 and a total projected year ending positive Fund Balance of $9,572,799.
FY 2025/26 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 $5,555,000 and $3 million ADP FY 2025/26 Town Operations Budget
June 18, 2025
allocation towards its CalPERS Public Safety Unfunded Liabilities. There will be a single-year projected change in fund balance by negative $3,538,859. The negative change reflects the drawdown of unallocated reserves Fund Balance of $7.755 million for capital projects and the ADP allocation.
FY 2025/26 Town Operations Budget
June 18, 2025
RESERVES
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 2025/26 budget process, the Council considered uses for the unallocated funds towards various priorities. For FY 2025/26, there is an allocation of $5.550 million for various set aside buckets for capital projects in the Town CIP.
The beginning of FY 2024/25 General Fund Balance was $12,597,358. The table below reflects all the changes noted above.
FY 2025/26 Beginning Fund Balance $13,111,658
FY 2025/26 Projected Revenues (inclusive of ERAF) $27,212,266 Total Available Funds $40,323,924
COP Debt Service for FY 2025/26 ($861,871)
FY 2025/26 Expenditures (Projected Budget) ($22,134,254) FY 2025/26 Transfer Out CIP 401 Fund -Financial Planning ($5,555,000) FY 2025/26 Transfer In - Employee Benefit Fund $800,000 FY 2025/26 Transfer Out CalPERS ADP ($3,000,000)
Projected FY 2025/26 Ending Fund Balance $9,572,799
As shown below, the Town will meet its new 30% reserve requirements total of $6,640,276 in FY 2025/26 and projects an unallocated reserve that is 13% of projected expenditures.
Unallocated Fund Balance
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 $2,932,523. This Unallocated Fund Balance represents funds that have not yet been assigned. With Council direction, the unallocated reserve balance can be appropriated towards operational use, capital projects or to pay down liabilities.
FY 2025/26 Expenditures $22,134,254
Projected FY 2025/26 Ending Fund Balance $9,572,799
15% Emergency Reserve $3,320,138
15% Budget Stabilization Reserve $3,320,138
TOTAL RESERVE REQUIREMENT $6,640,276
Less Above Reserve Requirement = Unallocated Reserves $2,932,523 FY 2025/26 Town Operations Budget
June 18, 2025
GANN LIMIT CALCULATION
The Finance Director calculated the FY 2025/26 GANN limit using the percentage change in population and the cost of living provided by the State Department of Finance. The GANN limit for 2025/26 is $18,303,221. The Town is in compliance with the GANN limit requirement for FY 2025/26.
MASTER FEE SCHEDULE CPI ADJUSTMENT
As part of the Fiscal Year 2025/26 Budget, staff is presenting a fee resolution for amending various fees and charges to the Town Master Fee Schedule. The Town completed its Master Fee Study in 2024. The Study recommended the Town also consider a regular escalator based on a local Consumer Price Index in the periods between adoption of the new fee resolution and until the next comprehensive fee review. The Council directed that such adjustments be made each year contiguous with the budget adoption. The attached Resolution adjusts fees in the Master Fee Schedule by CPI of 2.7% for FY2025/26. The Master Fee Schedule sets the fees for Planning, Building, Engineering, Public Works, Administrative, Police, and Parks and Facility Rentals. All fees except for State mandated fees have been adjusted by CPI escalator. Fees for at market rental of public spaces may also be adjusted independent of the CPI. Fees are rounded to the nearest “0” or “5”.
Underground Electrical Utility Service Exemption Request The City Council reviewed and approved of a request process for exemptions to underground utility service connections at its May 21, City Council meeting. Staff is including the Fee to review and potentially approve exemptions to the electrical service undergrounding requirement for new development projects. Staff estimated the level of service associated with such requests including preapplication meetings, field reviews, coordination with applicants and PG&E, as well as reviews, processing and bringing the item to the City Council for final consideration. The estimated fee amount is $21,132 and has been added to the master fee schedule under Engineering Fees.
CONCLUSION
This budget presents a roadmap for accomplishing the goals and objectives of the City Council within existing resources and a core strategy of financial stability. We continue to be fiscally prudent with our resources but are mindful of operational and infrastructure needs. The Town has many long-term infrastructure needs as priorities focus on the various CIP Master Plan projects.
POLICY FOCUS
The City Council adopts a fiscal year budget that addresses the policies and or priorities of the Council while addressing the needs of the community. At the forefront of the Town operations FY 2025/26 Town Operations Budget
June 18, 2025
budget is that it provides the appropriate level of service to the community while also providing the resources needed for the Town Center campus. The Town’s Operating and Capital Improvement Budget represents one of the most significant Policy Documents approved by the City Council. Staff have crafted the attached Budget based on specific policy objectives of the City Council
FISCAL IMPACT
None.
GOAL ALIGNMENT
This Report and its contents are in alignment with the following Council Policy Goals:
• Goal C – Maintain Conservative Fiscal Policies and Fiscal Transparency • Goal D – Be Forward-Thinking
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:
http://www.ci.atherton.ca.us/index.aspx?nid=192
FY 2025/26 Town Operations Budget
June 18, 2025
ATTACHMENTS
1. Budget Adoption Resolution FY 2025-2026 - (ATT 1 06-4- Appendix D budget Adoption Reso FY 2025-2026)
2. Resolution No 2025-XX Salaries & Benefits Resolution UNREP - (ATT 2 Reso No 2025- XX- Salaries and Benefits for UNREP)
3. Salaries Schedules and Classification Resolution CalPERS - (ATT 3 Salary Schedules and Classification Resolution FY25-26)
4. Appropriations GANN Limit Schedule Resolution 2026 - (ATT 4 Appropriations Limit Resolution for FY 2025-26)
5. Resolution of the Council Adopting Town Master Fee Schedule CPI Increase FY25/26- (ATT 5 06-5 Resolution No xx Master Fee Schedule FY 25-26 CPIRB)
6. Atherton Master Fee Schedule - (ATT 6 ATHERTON MASER FEE schedule UPDATERBV1 FY 25-26 SETFEES)
7. FY 25-26 GF Revenue & Expenditure Details By Dept- (ATT 7 FY 25-226 GF Revenues and Expenditures Details By Dept)
8. FY 25-26 Special Revenue Internal Service Funds Summaries -(ATT 8 Special Revenue and Internal Service Funds FY 25-26)
9. Final Draft Atherton CIP 2026-30 - (ATT 9 Final Draft Atherton CIP 2026-30 06052025_BTUPDATERB)
10. Draft FY 2025-26 CIP 5-Year Lookahead SPREADSHEET- (ATT 10 FY 2025-26 CIP Look Ahead)