Town of Atherton
2026/27
Budget Study Session
Highlights Of Budget
Kick-Off & Overview
• Recap of FY 2025/26 Year-End Projected Fiscal
Condition
• Review of Major Revenue Sources & 5-Year Forecasts
• Review of Major Expenditure Categories & 5-Year
Forecasts
• General Budget Process & Discussion
• Budget Calendar
General Fund
Revenues to Expenditures
(Impact to Fund Balance)
FY 25/26 Budget FY 25/26 Estimated
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000 $27,212,266 $27,728,040
$22,426,255 $22,748,755
$6,416,87 $6,416,871
Revenues Expenditures Transfers Out
Over/(Under): ($1,630,860) ($1,437,586)
Fund Balance and Reserves FY
2025/26
FY 2025/26 Expenditures (Adjusted) $22,748,755
Projected FY 25/26 Ending Fund Balance $10,512,552
15% Emergency Reserve $3,412,313
15% Contingency Reserve $3,412,313
TOTAL RESERVE REQUIREMENT $6,824,626
General Fund Unallocated Balance $3,687,926
GF Major Revenue Sources
5-Year Forecasts
• Property Tax (~62% of GF Revenue)
• Building Fees (~10% of GF Revenue)
• ERAF (~11% - below the line of GF revenue)
GF Major Revenue Sources
5-Year Forecasts
Major
Revenues
FY 2025/26 FY 2026/27 FY
2027/28
FY 2028/29 FY
2029/30
FY
2030/31
Property Taxes $16,965,50
0 $17,379,64
0 $18,074,82
6 $18,888,19
3 $19,832,60
2 $20,923,39
6 Building Fees $2,647,000 $2,741,822 $2,823,627 $2,902,885 $2,960,743 $3,019,758 Subtotal $19,612,90
0 $20,121,46
2 $20,898,45
3 $21,791,07
8 $22,793,34
5 $23,943,15
4 Excess ERAF $3,058,034 $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000 Total
Revenues
$22,670,93
4 $22,621,46
2 $23,398,45
3 $24,291,07
8 $25,293,34
5 $26,443,15
4 Property Taxes are projected at 4%, 4%, 4.5%, 5% & 5.5% Building Fees are projected at 3%, 3%, 3%, 2% & 2%
ERAF is set at $2.5m as "below the line” revenue
GF Other Revenue Sources
5-Year Forecasts
Major
Revenues
FY 2025/26 FY 2026/27 FY 2027/28 FY
2028/29
FY
2028/30
FY
2030/31
Sales/Use Tax $529,000 $539,580 $550,372 $561,379 $572,607 $584,059 Franchise Fees $943,000 $962,120 $976,552 $986,317 $996,180 $1,006,14 2 Business
License
$298,000 $303,960 $308,519 $311,605 $311,605 $317,868
Planning $560,300 $575,300 $620,300 $638,900 $638,900 $664,699 DPW $882,956 $742,130 $763,173 $784,847 $784,847 $814,911 Park $87,700 $89,454 $90,796 $91,704 $91,704 $93,547
Other $1,756,150 $1,890,927 $1,911,293 $1,931,743 $1,931,743 $1,974,04 9 Total $5,057,106 $5,103,471 $5,221,005 $5,306,495 $5,306,495 $5,455,27 5 Projections are conservative at 1%-2%. Planning revenues are at 2 to 3%.
Major Revenue Sources
Issues to Watch
• Property Tax revenue continues to be monitored
• Combined FY 23/24 & 24/25 VLF Shortfall ~$973,168
• VLF Shortfall will continue to be issue in future years • ERAF is still treated as one-time revenue at $2.5m; could be adjusted to $2.75m
• Franchise Fee Reduction to 5% will gradually return to 10% • To the extent possible, grant funds should continue to be used to augment capital projects, but not basic operations
GF Major Expenditures
% of Budget
Administration
6%
Finance
4%
Building
9%
Planning
4%
Police
51%
Public Works
17%
Interdepartmental
9%
Major Components of
Operational Costs
• Significant Professional Service Contracts
• Building Contract & IT Services
• MCE
• Contract Custodial Services
• Landscape Services
• Planning Services
• Legal Services
• Building Facility Maintenance Services
Major Components of
Operational Expenses
• Labor Costs (forecasting forward @ 3.5%, 3.5%, 4%, 3%) • Pension Costs
• 2026/27 Local Miscellaneous – 12.72%
• 2026/27 Local Safety – 29.38%
• Operational Expenses (forecasting forward @ 4.5%, 4.5%, 3.5%, 3%) • CalPERS UAL – Misc. $683K; Public Safety $1.36m
• The $5m payment to CalPERS reduced costs by $356K in FY 22/23, $422K in FY 23/24, $449K in FY24/25 and $68K in FY26/27.
• Savings from the $3m payment to CalPERS will be reflected in future actuarial reports but will result in a $5.4m savings once fully amortized.
Unfunded Accrued Liability
Unfunded Accrued Liability Payments
PLANS FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 Miscellaneous $598,108 $682,560 $708,000 $775,000 $782,000 $787,000 Public Safety $955,266 $1,366,330 $1,426,000 $1,583,000 $1,589,000 $1,588,000 Total $1,553,376 $2,048,890 $2,134,000 $2,358,000 $2,371,000 $2,375,000 Ø UAL Payments are invoiced at beginning of each FY
Ø FY 2025/26 UAL ($1.553m)actual
Ø FY 2026/27 UAL Payments ($2.05m):
Ø Miscellaneous - $598k
Ø Public Safety - $955m
Ø Total Pension Liability $18.67m:
Ø $3m ADP will be updated on June 30, 2025 Actuarial Report Reserve Balances
• General Fund (GF) Committed Fund Balances –
• Emergency Reserve - 15% of actual GF op. expenditures • Operating Reserve - 15% of actual GF op. expenditures • Unallocated Fund Balance – Any remaining balance not reserved, committed, or specifically assigned.
• The 5-Year Financial Planning Spreadsheet will be updated and will be part of the Operations and CIP Meetings
Summary & Forecast
General Fund FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30
FY
2030/31
Major Revenue
(includes ERAF)
$22,670,934 $22,621,462 $23,398,453 $24,291,078 $25,293,345 $26,443,154 Other Revenue $5,057,106 $5,103,471 $5,221,005 $5,306,495 $5,380,187 $5,455,275 Total Revenue $27,728,040 $27,724,933 $28,619,458 $29,597,573 $30,673,532 $31,898,429 Salaries/Benefits ($10,491,898) ($10,859,111) ($11,239,180) ($11,688,747) ($12,039,40 9)
($12,400,59
2)
Op Ex ($10,416,994) ($10,556,038) ($10,802,601) ($11,193,466) ($11,552,838 )
($11,914,73
2)
CalPERS UAL ($1,839,866) ($2,048,890) ($2,134,000) ($2,358,000) ($2,371,000) ($2,375,000) Debt Service ($861,871) ($861,871) ($861,871) ($861,871) ($861,871) ($861,871) CIP
Allocation/Other
($5,555,000) ($2,265,000) ($3,715,000) ($1,465,000) ($5,465,000) ($6,500,000) Net to Fund
Balance
Over/(Under)
($1,437,586) $1,134,021 ($133,194) $2,030,489 ($1,616,586) ($2,153,766) Projections are not actual expenditures.
Annual requirements may be different as we go through the budget process.
Fund Balance Projections
General Fund FY
2025/26
FY
2026/27
FY
2027/28
FY
2028/29
FY
2029/30
FY 2030/31
Beginning Balance 11,950,139 $10,512,553 $11,646,574 $11,513,380 $13,543,868 $11,927,282 Projected
Over/(Under)
($1,437,586) $1,134,021 ($133,194) $2,030,489 ($1,616,585) ($2,153,765) Est. Ending Fund
Balance (including
Reserves) $10,512,553 $11,646,574 $11,513,380 $13,543,868 $11,927,282 $9,773,517 Remaining
Unallocated
Fund Balance*
$3,687,927 $4,607,362 $4,260,646 $5,971,804 $4,138,308 $1,766,420 *Does Include Estimates: General Fund estimate allocations to Capital Projects.
The Unallocated Fund Balance is a rolling balance.
Process/Discussion/Calendar
• Operations Budget – April 1
• Capital Improvement Budget – May 6
• Budget Study Session – June 3
• Budget Adoption – June 17
Town of Atherton
Questions?