Item No. 7
Town of Atherton
CITY COUNCIL – PUBLIC HEARING
TO: HONORABLE MAYOR AND CITY COUNCIL
GEORGE RODERICKS, CITY MANAGER
FROM: ROBERT BARRON III, ASSISTANT CITY MANAGER/ FINANCE
DIRECTOR
DATE: JUNE 17, 2026
SUBJECT: ADOPT THE ATTACHED RESOLUTIONS ADOPTING THE FY 2026/27
OPERATIONS AND CAPITAL BUDGET, SALARY & BENEFIT
RESOLUTION FOR UNREPRESENTED STAFF; 2026/27 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 2026- 2027 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 2026-2027 Salary Schedules and Classifications;
4. Resolution of the City Council of the Town of Atherton Establishing the Appropriations Limit for Fiscal Year 2026-2027 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.
EXECUTIVE SUMMARY
Staff is pleased to present the Annual Operating Budget for FY 2026/27. The Council held four (4) public sessions in review of the Town Operational and Capital Budgets. The FY 2026/27 Operating Budget continues to reflect a positive outlook within existing resources and core strategy of financial stability. It addresses priorities of the Council and the needs of the community. There is a special 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.
Key project statuses and initiatives in FY 2026/27 include:
FY 2026/27 Town Operations Budget
June 17, 2026
• Alameda de las Pulgas Traffic and Safety Improvements project currently in the final design phase;
• Stockbridge Avenue at Alameda de Las Pulgas Pedestrian Crossing Improvements design complete and moving to next phase;
• El Camino Real Complete Streets Gap Closure Project planning study continues to move forward - this includes ECR/Selby Lane Intersection Improvements design and future construction;
• El Camino Real (ECR)/Atherton Avenue Intersection study; • active Transportation Plan Update finalizing;
• design of Middlefield Road Pedestrian Improvements;
• update to the Drainage Master Plan;
• Atherton Channel Assessment and Relining Upstream of Alameda de las Pulgas design underway and construction anticipated next year;
• El Camino Real Long Term Drainage improvement solutions conceptual design complete, and implementation is in two phases; and
• asphalt pathway repairs design and construction in Holbrook Palmer Park.
Staff incorporated all City Council feedback from the FY 2026/27 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. Reflected below are the final updates since the June 4 study session.
During the CIP budget study session, discussions included the use of unallocated General Fund Reserves toward Town capital projects. This budget includes an allocation from the Town Unallocated General Fund Balance toward the Town Capital Improvement Fund for CIP projects.
In short, after review of the CIP the Council removed the Selby Bicycle Lane Project but added 4 projects incorporated in the above.
Based on Council feedback, the updated FY 2026/27 allocation to CIP is $4,090,000 and $250,000 for Facility Replacement in the Financial Planning Model. This allocation is a transfer out from the General Fund in the FY 2026/27 budget towards the Capital Improvement Fund for Town project priorities in the Drainage, Bike & Ped, Streets, and Park Master plans. The Transfer out of $4.340 million is now incorporated below the line within the General Fund Revenues & Expenditure Summary.
For FY 2026/27, General Fund revenues are projected at $26,161,563 and General Fund expenditures are projected at $23,370,663. This reflects a single year surplus of $2,790,900 before the addition below the line of ERAF and transfers in/out for CIP, and debt service. There is a projected year-end positive fund balance in the General Fund of $11.702 million.
REVENUE HIGHLIGHTS
FY 2026/27 Total General Fund revenues are projected at $26,161,563. Grants and contributions are only budgeted if they have been authorized and approved by the granting agency. A Cal- FY 2026/27 Town Operations Budget
June 17, 2026
Recycle grant of $5,000, and a Community Oriented Policing Grant of $200,000 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 2024/25 FY 2025/26 FY 2025/26 FY 2026/27
Secured Property Tax
$12,787,864 $13,850,000 $13,955,000 $14,722,500
Other $2,876,273 $3,534,500 $3,005,000 $3,104,000
Subtotal Property Tax
$15,664,137 $17,384,500 $16,960,000 $17,826,500
Sales Taxes $383,728 $529,000 $445,000 $450,000
Franchise Fees $1,039,187 $943,000 $945,000 $984,000
Intergovernmental $44,738 $47,900 $44,980 $48,200
Business License Tax $271,108 $298,000 $298,000 $303,960 Planning Fees $489,938 $520,300 $520,100 $560,100
Building Fees $2,264,822 $2,449,400 $2,747,000 $2,792,000 Policing Fees $695,785 $540,450 $492,625 $458,840
Public Works Fees $491,820 $685,700 $720,700 $741,700
Park Program Fees
Social Fees $52,760 $40,000 $42,000 $55,000
Class Fees 9,780 $15,700 $12,500 $15,700
Weddings $0 $5,000 $0 $15,000
Day Use Fees $12,700 $19,000 $12,000 $19,000
Subtotal $75,240 $79,700 $66,500 $104,700
Misc. Revenues
Admin Citations $42,200 $91,800 $35,000 $40,000
Cell Lease(s) $76,550 $74,816 $79,612 $83,063
Interest Income $1,145,484 $320,000 $900,000 $900,000
Knox Playschool $69,155 $70,000 $72,000 $74,000
C&D Forfeiture $92,507 $500,000 $400,000 $500,000
Other $1,438,001 $177,700 $295,554 $294,500
Subtotal $2,863,897 $1,234,316 $1,782,166 $1,891,563
Total General Fund
$24,284,401 $24,712,266 $25,022,071 $26,161,563
Excess ERAF $2,771,578 $2,500,000 $3,058,034 $2,750,000 FY 2026/27 Town Operations Budget
June 17, 2026
Actual Orig. Budget Adjusted Recommended
Category FY 2024/25 FY 2025/26 FY 2025/26 FY 2026/27
Total Revenues $27,055,979 $27,212,266 $28,080,105 $28,911,563 • Note – table includes ERAF.
Educational Revenue Augmentation Fund (ERAF)
The Town’s ERAF revenue for FY 2025/26 was $3,058,034. This is an increase of $558,034 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. For the last couple of years, ERAF has trended higher. The use of ERAF revenue is a year-to-year decision by the City Council as part of the budget process. The Council directed that the Audit and Finance Committee review the FY 2025/26 ERAF and provide the Council with a recommendation for its allocation. The ERAF revenue projection is set at $2.750m in the FY2026/27 budget.
Revenue Assumptions
For FY 2026/27, Property Taxes still represent 70% of the Town General Fund Revenues. The total projected revenue from property taxes is $17,826,500, approximately 5.1% or $866,500 over the FY 2025/26 adjusted budget. 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 173%The current assessed value is $17.48b. During our first budget study session, discussion included the projected increase percentage to use for budgeting purposes. Staff updated the projection from 4% to 5.5% for FY 2026/27 property taxes. The total net increase is approximately 5.1% and this is due to the VLF revenue budgeted with no increase.
As the projected tax revenues were based on the 5% assumptions for Secured, and Unsecured Taxes, the Property Tax in lieu of VLF did not use the same assumption. This VLF revenue is the most vulnerable from a revenue perspective as there have been consistent shortfalls in the past several years. VLF in Lieu revenue continues to be closely monitored due to recurring shortfalls in State payments. Based on the FY 2025/26 update provided by San Mateo County, the Town will experience a cumulative VLF shortfall totaling $973,168 ($232,658 from FY 2023/24 and $740,511 from FY 2024/25). In addition, staff anticipates a shortfall in FY 2025/26 VLF revenues.
To date, the Town has received $422,436 in December and anticipates receiving an additional $661,725 in April 2026, for a total of $1,084,161. This amount represents approximately one-half of the estimated FY 2025/26 VLF allocation. This is a major source of revenue for all agencies in the County and is vital for operations. Adding the VLF shortfalls outstanding for previous years of $973,168 and the current FY 2025/26 of $788,602 leaves a total outstanding of $1,761,770 for the Town. Staff have budgeted the VLF for FY2026/27 with the understanding of a shortfall FY 2026/27 Town Operations Budget
June 17, 2026
occurring while also possibly receiving partial payment for prior shortfalls. They County and its cities are still working on a solution for the State to pay the local revenue that is due and eliminate the shortfall payments.
Other General Fund revenues for FY 2026/27 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. These revenues are projected at approximately 2% to 4% and based on the current trend of building activity for residential improvements and new construction. Franchise fee revenues are projected at 4 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.
EXPENDITURE HIGHLIGHTS
Overall, General Fund expenditures are estimated at $23.37 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 $1,049,455 since FY 2019/20.
The employer cost for CalPERS pension costs for Miscellaneous employees is 12.72%. This represents a decrease of .02% from the prior year. With the above cost sharing agreement, the actual cost is reduced to 11.72%. The Public Safety employee cost is 29.38% (an increase of .03%).
Through the cost-sharing agreement, the Town’s actual cost is 26.38%.
Listed below are the Unfunded Accrued Liabilities (UAL) dollar amounts the Town has paid for FY 2020/21 through FY 2025/26. The FY 2026/27 total UAL payment within the Actuarial Report is $2,048,890. With the $3m ADP the estimated UAL total is now $1,737,092. This is a decrease of $311,798 as a result of the ADP amortized savings for FY 2026/27. These expenses are incorporated into respective department budgets.
CalPERS Employer
Payment of
Unfunded Liability
UAL
FY
2020/21
UAL
FY
2021/22
UAL
FY
2022/23
UAL
FY
2023/24
UAL
FY
2024/25
UAL FY
2025/26
Miscellaneous
Employees
$333,762 $393,774 $452,652 $431,925 $518,728 $598,108
FY 2026/27 Town Operations Budget
June 17, 2026
Public Safety
Employees
$860,123 $6,007,045 $813,210 $791,076 $1,000,841 $955,268 Total Contribution $1,193,885 $6,400,819 $1,265,862 $1,223,001 $1,519,569 $1,553,376 The initial FY 2025/26 budget amount for UAL was $1,839,866. During FY 2025/26 budget discussions, the Town Audit and Finance Committee provided a recommendation for making a one-time Additional Discretionary Payment (ADP) of $3m to the Classic Public Safety Plan with CalPERS. The City Council approved the recommendation and in June 2025, the Town made a $3m ADP to CalPERS. This ADP decreased the FY 2025/26 UAL contribution of the Town. The total UAL payment was $1,553,376, a decrease of $286,490 in expense.
The table below reflects the Town’s total Unfunded Actuarial Liability for all employee classes (PEPRA, Classic, Public Safety). In the June 2024 actuarial reports, CalPERS combined the four classes into just two classes of Miscellaneous and Public Safety.
Unfunded Actuarial Liability
As of June 30, 2024
Retiree Class Liability Funded Unfunded Funded
Ratio
Classic & PEPRA
Miscellaneous
$24,248,833 $16,964,130 $7,284,703 70%
Classic & PEPRA Safety $59,429,388 $46,021,118 $13,408,270 77.4% Totals $83,678,221 $65,985,248 $20,692,973 78.8%
For the $5m ADP (2022), there is a guaranteed savings of $10.3m in future UAL payments. For the $3m ADP (2025), there is a guaranteed savings of $5.4m in future UAL payments. However, because CalPERS adds a new layer of payment structure each year the UAL obligation changes in ways that offset those savings. This is a combination of CalPERS investment returns (up and down of 6.8%) and other assumption changes. If the Town had not made the ADP payments, the UAL would be significantly higher.
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 2026/27 is ($530,317). The current OPEB Liability is $7.98 million and there is currently $9.05 million in the Trust. This results in an estimated Net OPEB Liability asset of $1,070,389.
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.
FY 2026/27 Town Operations Budget
June 17, 2026
CITY COUNCIL OPERATIONS
OVERALL NET DECREASE OF $3,800
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 2026/27 includes a slight increase in advertising/publishing for Council meeting notifications and minor increases in membership dues and meals. There was a reduction in Office Equipment and Furniture due to audio visual upgrades and needs were performed in the current year. There is an increase in the municipal election budget line item of $10,000 as there are general election costs in the fiscal year.
ADMINISTRATION DEPARTMENT
OVERALL NET INCREASE OF $82,665
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 II, and Deputy City 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 $61,965. The majority of the increase is in the cost-of-living adjustment of 2.5%, updated Management Analyst I to Management Analyst II salary range, and reclassification of Reception/Postal Clerk to Deputy City Clerk. The Town Post Office is due to close at the end of the current fiscal year. The front desk role will evolve. The CalPERS UAL increased to $10,974.
Operations
There was an increase in operations expenses in the amount of $20,700. 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 the maintaining of budget expenditures for the Town’s Earth Day event.
CITY ATTORNEY’S OFFICE
OVERALL NET INCREASE OF $0
FY 2026/27 Town Operations Budget
June 17, 2026
The City Attorney’s Office budget consists of the legal retainer for the City Attorney and other associated legal services. The budget includes expenses for the Town City Attorney adjusted retainer amount. The budget also includes a line item for Additional Services as needed.
FINANCE DEPARTMENT
OVERALL NET INCREASE OF $15,674
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 $14,689. This includes the cost-of-living adjustment of 2.5%, health insurance for active employees’ expense, and UAL payment (~$6,874) increases.
Operations
Operation expenses for the Department increased by $985, mainly audit and financial expenses.
PLANNING DEPARTMENT
OVERALL NET DECREASE OF $31,480
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 expanded objective design standards, Safety Element updates, with major focus on 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 2026/27 of (-$42,000). The Town just recently approved an In-lieu Exclusionary Fee. With the Housing Element update in its final stages the operation expense will decrease and include moderate budget expense for mid cycle Housing Element checkins and review of housing sites within the multifamily zones, RHNA numbers count and any legislative changes.
Operations
The Planning Department operations budget includes a decrease in operations budget due to Housing Element winding down. The department basic planning services contract expense has FY 2026/27 Town Operations Budget
June 17, 2026
remained static for FY 2026/27 budget for core staffing of planning services for the Town Community Development. There have been increases in the number of application reviews for SB 9, ADU, other similar permits and new legislative housing bills.
BUILDING DEPARTMENT
OVERALL NET INCREASE OF $214,605
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 to $17,255. There were adjustments in salaries, cost of living of 2.5%, and CalPERS UAL payment (~$10,191) increases.
Operations
Most of the increase is due to a corresponding Building and Life Safety Contract Services increase - $187,050. This is based on the revenue assumption for the department for the upcoming fiscal year. In the current fiscal year this revenue sharing contract was updated to a flat percentage increase in building revenues. If revenues decrease, the Building and Life Safety Contract services will also see a decrease. There were slight increases in Electricity and Office Supplies expense.
INTERDEPARTMENTAL
OVERALL NET INCREASE OF $83,840
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. The contract was updated during the current fiscal and includes an increase of $12,240. The Town IT support services now includes a Systems Engineer and Senior Systems Analyst on site. The majority of the departmental increase is in the general liability, employment practice, and property insurance cost increases of $38,000 - 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 2026/27 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 FY 2026/27 Town Operations Budget
June 17, 2026
Services, Data Storage Plans, Servers, virus protection systems, software licensing and transparency tools. There were increases in the IT infrastructure expense for the update of the access points for Townwide Wi-Fi and interconnectivity of $35,000. In addition, the department maintains a budget for upgrade to the phone system. There is a slight increase in county tax administration support charges for processing tax revenue. This is offset by the reduction of Post Office Expense due to the Town’s contract post office closing at the end of June.
PUBLIC WORKS DEPARTMENT
OVERALL NET INCREASE OF $147,430
The Public Works Department budget consists of 5 distinct areas of focus: Engineering, Streets, Park Maintenance, Park Programs, and Building Maintenance. 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 $69,074. The majority of the increase in salaries and benefits category is due to the cost-of-living adjustment of 2.5%. There was also an increase in active employee health insurance. The CalPERS UAL payment increased by $22,416.
Operations
There is an increase in operational expenses of $78,356. Most of the increase is due to the current contract Maintenance Service Budget (MCE) and placeholder estimate of 6%, an estimated contractual adjustment expense of $60,000. The Public Works Maintenance Services Contract with MCE Corporation expires at the end of the current fiscal year. The Town has been advised that there have been significant cost increases, particularly related to prevailing wage activities, which now constitute most of the work conducted by the MCE crew. Staff is working with MCE to better quantify the cost increases over the last three years and projections to better outline budgetary needs for FY 2026-27 and FY 2027-28. These estimates will be used to update the proposed operating budget as we return to the Council in the upcoming budget workshops. There is an increase in Contract Park Event Services of $30,400 for the new event management contract. This includes the base year amount and the revenue percentage split for park event rentals. Contract Tree maintenance expense had an additional increase for pruning program throughout Town streets/park and needed tree removals at the park. There was a slight increase in Contract Custodial FY 2026/27 Town Operations Budget
June 17, 2026
Services expenses. There was a reduction in Machinery and Equipment and Computer Equipment software for total amount of $73,000 due to whiteboard and audio visual and lighting upgrades taking place at the pavilion in the current fiscal year. There were slight increases in Landscape Supplies and Safety Supplies & Materials. 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 $112,975
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 and one dispatcher 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 $147,093. This is largely due to the increase in estimated salary adjustments, cost of living adjustment of 2.5%, increase in workers’ compensation allocation to 4 percent of salaries for sworn officers, and a CalPERS UAL payment reduction of (~167k) due to the $3m ADP to public safety reduced the UAL expense due. This results in a salary adjustment of $290,694 for FY 2026/27 for a department budgeted as fully staffed. The line item for overtime expense (OT) has increased to $775,000 to address enforcement needs and CPI adjustment. 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.
Since the operations study session the Police Department had an increase of $5,832 due to previous discussion and approval of adding specialty pay of 2.5% for the Therapy Canine Handler. The Police Department’s therapy canine program was established in July 2024. There were also minor funding adjustments for County of San Mateo annual maintenance and Animal Control contracts.
Operations
Overall, the Operations expenditure budget for the Police Department decreased by ($39,950). The majority of this was due to a decrease in transfer to equipment replacement fund for supplemental equipment expenses. This year there is a total expense request of $45,000 for the replacement of townwide AEDs ($35k) and purchase of an additional radar trailer ($10k) There are donation driven programs (such as the health and wellness program (~$200,000), and perishable skills training (~40,000). The health and wellness and perishable skills programs are annual review programs and are currently receiving donations for funding. These are anticipated to be continued FY 2026/27 Town Operations Budget
June 17, 2026
during FY 2026/27. There is an identical donation revenue in the amount of $240k within the budget.
There is an increase in Equipment Maintenance for vehicles due to increased costs and needs, Citation Processing for the required RIPA reporting guidelines, and an increase for Other Contract Services expenses for national night out, and for accreditation of crime intelligence services software. An increase in fuel expense due to SUV fleet and recent increase in prices. There are slight increases in Recruitment costs, 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. As discussed above there was a decrease in supplemental equipment in the budget. The previous year’s supplemental items included $150k budget for the purchase of necessary firearm replacements for the department. The Department is also not anticipating the purchase of vehicles in FY 2026/27. However, the standard Equipment Replacement Fund allocation for the department of $210,000 remains in the operations budget to accommodate future costs.
GENERAL FUND SUMMARY
For FY 2026/27 the Town’s General Fund Revenues are projected at $26,161,563 against $23,370,663 in expenditures. This will result in a single year-end positive balance of $2,790,900 and a total ending Fund Balance of $11,702,402.
FY 2026/27 includes below the line items of $2,750,000 for ERAF, budgeted debt service payment of $861,871, Transfer Out to CIP Fund 401 for capital projects of $4,340,000. There will be a single-year projected change in fund balance by a negative $2,451,871. The negative change reflects the drawdown of unallocated reserves Fund Balance of $4.340 million for capital projects and Facility Replacement from the Town Financial Planning model.
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. With the completion of the new Atherton Library and repayment of the construction advance, annual Library tax funds, minus amounts needed for yearly operation of the Library are retained by the Library JPA on a 50/50 basis. The County holds all excess funds.
The FY 2025/26 beginning fund balance for the Library Fund is $2,907,292. This includes the SMCL funds in the amount of $2,280,905 held in trust retained by the Library JPA. This balance is net of the repayment of the advancement of the SMCL JPA funds of $1,157,910.
FY 2026/27 Town Operations Budget
June 17, 2026
The estimated FY 2026/27 revenue for the Atherton Library JPA is $5.561 million and the SMCL operations for FY 2026/27 is estimated at $4.06 million. The Town operations estimate for FY2026/27 is $1,160,550. After deducting the Library related activities, the remaining excess Library funds is $340,376. This amount will be evenly split between the JPA and the Town at approximately $170,188 each. These funds will be held in the San Mateo County Library Trust for the Town. With the new 50/50 split basis process in effect, the $170k is added to the FY 2026/27 flow through to the Library Fund. The new estimated ending fund balance for FY 2026/27 Library Trust funds is $3,103,481.
EXPENDITURES
The FY 2026/27 projected expenditures for the Library are $1,160,550 for operations, utilities, maintenance costs, use of town facilities, development of spaces and remaining expenditures for the Children’s Garden. There is an increase in utilities costs of $5,000 for electricity and $8,000 for water as rates and usage have increased. There is an increase in Contract Maintenance Services of $3,000 due to contractual adjustment increase. Facility repair and contract custodial services costs increased an additional $5,500. Maintenance costs for facility contracts for Library increased an additional $35,000 for systems maintenance on the facilities. These amounts are based on the building needs and operations largely related to challenges with the HVAC system. There is Building Maintenance manager allocation of $20,000 of Town personnel to oversee management of Library facility and systems. There is an allocation for Other Supplies and Materials of $210,000 for the use of Town facilities for Library programming, various Town programming, additional storage, 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 for an estimate of $200,000. Building & Campus improvements also includes an allocation of $200,000 for the remaining construction expenses of the Children’s Garden. There is an allocation of $300,000 for the Library portion of the pedestrian improvements to Station Lane.
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.
FY 2026/27 Town Operations Budget
June 17, 2026
The FY 2027/26, departmental allocations (revenues) total $355,500 and the expenditures total $120,000. The largest allocation charge is $255,000 in the Police Department for FY 2026/27.
This allocaton reflects the purchase of two (2) vehicles each year as part of the department’s regular maintenance and replacement schedule ($210k) and for replacement of new equipment, including Automated External Defribillators (AED) and a new radar trailer. This year, the Department does not anticipate the purchase of patrol vehicles as part of its regular equipment replacement schedule.
The Town uses the State and Federal Multiple-Award Schedule pricing to purchase vehicles from the Equipment Replacement Fund.
n FY 2026/27 the Police Department will also purchase replacement Automated External Defribillators (AED) $35,000. There is an additional purchase of a new radar trailer $10,000. These supplemental items include the necessary replacement of equipent for safety operatons. There is a $45,000 allocation expense to the replacement fund in Police Department operations budget for the purchase of this new equipment. The Finance Department anticipates an upgrade to its financial software cloud based system. The upgrade and migration is $75,000. 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. As the Council is aware, the Cities Group JPA entered a dissolution plan under which the Cities Group would cease providing claims administration and all other benefit services on behalf of the Member Agencies on or before December 31, 2025. The Town joined the PLAN JPA Workers Compensation program beginning January 1, 2026. We currently are with PLAN JPA for general liability and property insurance programs. The consolidation of these programs with the workers’ compensation program creates a more coordinated risk management program. 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.
As part of the workers’ compensation program, the Town maintains a Self-Insured Retention (SIR) amount of $10,000 per claim. Since joining on January 1, 2026, there was also a half year assessment cost of $208,294. PLAN JPA offers reliable premium with a low SIR range, and an 85% confidence level on costs. A higher confidence level provides a greater likelihood that actual costs will fall within the projected estimate. The confidence level can be reduced over time by the JPA Board and is evaluated regularly. Estimated costs for a full fiscal year in PLAN JPA are $416,588. The current year’s assessment is 1% of salary for all departments and the total amount is $74,053. For FY 2026/27 staff is increasing the assessment for the Police Department from 1% to 4%. This will increase the allocation from $113,482 to $187,460 for FY2026/27. There are adequate reserves in the Workers Compensation Fund to absorb the difference for the year. Staff FY 2026/27 Town Operations Budget
June 17, 2026
will ramp up allocation charges in future years as we build history with our new JPA. The Town's exposure risk in the pool is significant due to liability related to having a Police Department.
The Town maintains an active Workers’ Compensation Risk Management Program. Due to the Town’s diligence in building up its Workers’ Compensation Fund over the years, there has been a healthy fund balance for transition from the Cities Group to the new PLAN JPA as the Town transitions its current (11) open clams to the JPA and for maintaining claims.
The current year assessment is $208,294 for half a year and is projected to increase $417,000 in FY 2026/27.
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 2026/27 are estimated at $672,391. This is an increase of 6%. The total FY 2026/27 projected expenditures for this fund are $772,391. This includes the self-insurance retention 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 two (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 2026/27 is $552,396. Expenditures for FY 2026/27 are $441,512. The expenditure includes $81,512 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. During the FY 2025/26 budget (June 2025) the Town elected to make an additional $3m ADP to CalPERS towards paying down the pension UAL for Town’s Public Safety plan. There was an allocation of $800K from the Employee Benefit Fund.
Within this fund is also the employee benefits charge of $282,987. 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 $1,229,506.
FY 2026/27 Town Operations Budget
June 17, 2026
Compensated absences represent accrued time-off, vacation, and holiday pay for all employees and are required to be 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 also 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 $77,386.
TENNIS FUND
The Tennis Fund projected revenues are $79,000. 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 $110 and includes clay court key, and the non-resident key increased is $290.
Every year the Town resurfaces and maintains courts as needed. The tennis court resurfacing treatment includes crack filling and taping, followed by a new 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. During the fiscal year the Town restriped the pickleball court to four courts on one tennis court, allowing for multiple games. We continue to monitor reservations and use of this court for pickleball.
The FY 2026/27 budget includes the purchase of tennis keys by residents and non-residents providing annual revenue of approximately $25,000. Each January, new tennis keys go on sale for the new court locks that get installed in February.
For FY 2026/27, the Town anticipates expenditures of $51,000. This includes $13,000 for contract maintenance services for MCE, general court maintenance and facility repairs needs of $35,000 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 and recently received approximately $194,000 from the grant. We project to receive $200,000 in grant funds for FY 2026/27. 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 2026/27 Town Operations Budget
June 17, 2026
CAPITAL IMPROVEMENT FUND
The five-year CIP proposes projects to analyze, repair or improve Town infrastructure, and the funding for those projects. The Town is focusing on capital project needs in the community. The General Fund continues to provide new funding capacity in the next several years for project priorities within the CIP Master Plans. Priority projects are derived from the Bicycle Pedestrian Master Plan, Drainage Master Plan, Green Infrastructure Plan, and Road Improvement Plan, and in consideration of the needs identified by the City Council, residents, staff. 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 2026/27) 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 26, 2026, meeting. The Planning Commission determined that the Town CIP for Fiscal Years 2026/2027 – 2030/2031 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
FY 2026/27 Town Operations Budget
June 17, 2026
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 primary funding source for the Capital Improvement Program and thus affords the greatest opportunity for discretionary expenditures for capital projects.
During its May 6th Study Session workshop, staff provided the 5-Year Fiscal Outlook Spreadsheet and project list for Council review. FY 2026/27 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. It was communicated that the Town was awarded two grant funds during the current fiscal year from the San Mateo County Transportation Authority Highway Program as follows:
• Alameda de las Pulgas Traffic and Safety Improvements - $1,000,000 (construction) • ECR/Selby Intersection Improvements - $3,000,000 (design and construction) The established priority projects and ongoing projects were noted for FY 2026/27. These projects included approximately $3.665 M in general fund allocations for FY 2026/27.
There remains an unallocated General Fund balance available for Capital Improvement Project for FY 2026/27. Additionally, there are a few projects funded in previous years that were funded and have either been placed on hold or not started/completed that may be reallocated to current priorities. Those projects were identified and prioritized. Some of the Town’s Master Plans are dated and should be refreshed to assist in identification and prioritization of community needs.
These are included in the out years as identified by Council.
Specific Projects the Council reviewed and provided feedback on included:
• Bicycle Pedestrian Master Plan Implementation Program o Selby Lane Bicycle Lanes Project – placed on hold pending the BPMP Update o Watkins Avenue Walkway (Caltrain – Middlefield) – conceptual design completed
o Middlefield Road Pedestrian Improvements (new)
o Other Active Transportation Plan Priorities, TBD
• Traffic Safety Improvement Program
o Middlefield Road Signalization, TBD.
• Drainage Improvements Program
o Drainage Master Plan Update – Programmed FY 2026/27
o Atherton Channel Culvert and Detention System – grant allocation is still pending • Park Master Plan Implementation Program
o HPP Master Plan Update – Programmed FY 2027/28
FY 2026/27 Town Operations Budget
June 17, 2026
o Jennings Pavilion Solar and Energy Resiliency project (not started) o o HPP Pathway asphalt resurfacing (new)
o Handball Court area conversion to Pickleball (potential donation) o Carriage House rehabilitation and enhancement (potential donation) • Town Center Parking Lot Solar Carports (not started)
Policy discussion by the Council resulted in confirmation of current priorities and continuation of on-going projects with the noted exception of the Selby Bicycle Lane Project. Below are the resultant updated changes to the CIP program:
Added CIP Projects FY 2026/27:
- Middlefield Road Pedestrian Improvements (Design): $300,000 - El Camino Real/Atherton Avenue Intersection Study (study only): $350,000 - Drainage Master Plan Update: $350,000
- HPP Asphalt Pathway Repairs (design and construction): $325,000 Staff provided the 5-Year Fiscal Outlook Spreadsheet and project list for Council review. Based on Council feedback, the total allocation amount from the General Fund for FY2026/27 is $4,340,000. The City Council reviewed the various baseline, on-going, and potential projects identified for funding consideration. Based on Council feedback, the allocation amount from the General Fund for the FY2026/27 CIP is $4,090,000 and $250,000 for facility replacement.
Staff noted that some of the projects or priorities have potential grants or non-general funds offsets.
These amounts reduced the General Fund contribution reflected in the final Unallocated balance of $4.090 million for CIP projects.
The grant and offsets by Fiscal Year are as follows:
FY 2026/27
$300,000 from Library Funds
$1,000,000 – Alameda de las Pulgas Traffic and Safety Improvements (SMCTA – Awarded) $125,000 – El Camino Real/Selby Intersection Improvements (SMCTA – Awarded) FY 2027/28
$2,875,000 – El Camino Real/Selby Intersection and Drainage Improvements (SMCTA – Awarded)
$750,000 – Middlefield Road Pedestrian Improvements (SMCTA, C/CAG, or other - Potential) Without these funds, the General Fund would be required to make up the funding difference, or the projects would not move forward. The Town reviewed the 5-year Outlook at its June 6th study session that included the above recommended updates and changes based on the Council's feedback on projects and priorities for General Fund allocation.
Below are the ongoing and new major Capital Projects resultant of updated changes to the CIP program and are in the attached CIP Program Book:
FY 2026/27 Town Operations Budget
June 17, 2026
Traffic Safety Improvement Program – Page 14, #56064
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 2026/27.
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)
- $1,600,000 (FY 2025/26)
• Evaluation of traffic control devices and other improvements at both Middlefield Road/Fair Oaks Lane and Middlefield/Watkins Avenue - $100,000 (FY 2025/26)
FY 2026/27 Projects
• $1,000,000 – Alameda de las Pulgas Traffic and Safety Improvements (SMCTA Grant) • $350,000 – El Camino Real / Atherton Avenue Intersection Improvements Study • $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 – FY 2027/28)
Bicycle Pedestrian Master Plan Implementation Program – Page 15, #56059 Previously Funded (Ongoing)
• Stockbridge Avenue at Alameda de las Pulgas Pedestrian Crossing Improvements (Rectangular Rapid Flashing Beacons – Funded FY 2023/24).
Design is complete, with construction in 2026.
• Watkins Avenue Pedestrian Improvements, Middlefield Road to McCormick Lane (Funded in FY 2022/23). Conceptual design is completed and final design is pending.
• Bicycle and Pedestrian Master Plan Update. In Progress –$250,000 (2024/25) and $50,000 (FY 2025/26). Draft Active Transportation Plan developed, and final adoption anticipated in 2026.
• ECR Complete Streets Gap Closure Project – SamTrans lead (consultant support) - $100,000 (FY 2025/26).
• ECR/Selby Lane Intersection Improvements multi-year project - $250,000 (FY 2025-26).
This project will be partially funded with a grant from the San Mateo County Transportation Authority (SMCTA)
FY 2026/27 Projects
• $250,000 – ECR/Selby Lane Intersection Improvements (design) • $300,000 – Middlefield Road Pedestrian Improvements (design) • $25,000 – Grant applications for funding and partnerships to design or implement improvement
Future Projects
FY 2026/27 Town Operations Budget
June 17, 2026
• $2,500,000 – ECR/Selby Lane Intersection Improvements (Construction – FY 2027/28) • $1,000,000 – Middlefield Road Pedestrian Improvements (Construction – FY 2027/28) Drainage Improvements Program – Page 19, #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)
- $2,000,000 (FY 2025/26)
• El Camino Real Long-Term Drainage Solutions. Conceptual design is complete and includes proposed de-watering stations, piping and appurtenances. Project design and implementation split into two phases:
1) ECR Drainage North (ECR/Selby w/extension to
Stockbridge) - project design initiated and will be integrated with planned intersection improvements at ECR/Selby.
Timing contingent on permitting by Caltrans for the
integrated project
2) ECR Drainage South (ECR/Isabella w/extension to
Almendral) – project design will follow design of the North segment.
- $250,000 (FY 2023/24)
- $400,000 (FY 2024/25)
- $475,000 (FY 2025/26)
• 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) (included anticipated grant)
FY 2026/27 Projects
• $350,000 - Drainage Master Plan Refresh
• $150,000 - Green Infrastructure Plan Implementation.
• $50,000 – Miscellaneous storm drain related improvements throughout Town Future Projects
• $1,500,000 – Construction of ECR Drainage Solutions (N) (FY 2027/28) • $4,000,000 – Construction of ECR Drainage Solutions (S) (FY 2029/30) Town Center Master Plan Implementation Program - Page 23, #54015 Previously Funded (Ongoing)
• $60,000 - Solar Carports/EV Charging design to add solar carports and EV Charging to Town Center (design)
• $15,000 - Parking Lot Modifications towards design to add parking stalls in FY 2026/27 Town Operations Budget
June 17, 2026
mulch along tracks, near Corporation Yard
• Town Center & Library parking and Circulation Project – Holbrook-Palmer Park Connection - $215,000 (FY2025/2026) towards review and analysis of providing additional parking at the Town Center/Library complex as well as pedestrian connectivity options, including analysis of traffic adjustments around the Town Center to facilitate access and mobility through the Town Center and to Holbrook-Palmer Park.
FY 2026/27 Projects
• $100,000 – Miscellaneous Town Center Infrastructure Improvements (FY 2025/26)
• $600,000 – Town Center & Library Parking Circulation Project – Holbrook-Palmer Park Connection - towards implementation of connectivity improvements between Town Center/Library complex to/from Holbrook-Palmer Park – Funding split between Library and Capital Improvement.
Future Projects
• Solar Carports/EV Charging at Town Center/Library (construction) Park Master Plan Implementation Program – Page 24, #56063 Previously Funded (Ongoing)
• Park Playground Improvements – under construction
- $200,000 (FY 2023/24) Design
- $1,000,000 (FY 2024/25) Construction
- $300,000 (FY 2025/26) Construction
• Park Playground Restroom Replacement
- $800,000 (FY 2024/25) Construction
- $50,000 (FY 2025/26) 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.
• $180,000 - Jennings Solar and Energy Resiliency Improvements for design and construction
FY 2026/27 Projects
• $100,000 - Holbrook Palmer Park General Assessment and repairs • $325,000 – Park Asphalt Pathway Repairs
Future Projects
• $250,000 - Holbrook Palmer Park Master-Plan Refresh (FY 2027/28) Expenditures in FY 2026/27 for the CIP are $5.165 million. The following are project/program expenditures:
Project FY 2026/27 Funding
Traffic Safety Improvements $1,390,000
FY 2026/27 Town Operations Budget
June 17, 2026
Project FY 2026/27 Funding
Accessibility Improvements $25,000
Streets/Roads Maintenance $1,455,000
Park Improvement Program Projects $425,000
Drainage Improvement Projects $550,000
Bike/Ped Master Plan Program $575,000
Town/Library Facilities $700,000
Neighborhood Traffic Management $20,000
Traffic Control Devices $15,000
Upper Channel Monitoring $10,000
Total* $5,165,000
OVERALL SUMMARY
For FY 2026/27 the Town’s General Fund Revenues are projected at $26,161,563 against $23,370,663 in expenditures. This will result in a single year-end positive balance of $2,790,900 and a total ending Fund Balance of $11,702,402.
FY 2026/27 includes below the line items of $2,750,000 for ERAF, budgeted debt service payment of $861,871, Transfer Out to CIP Fund 401 for capital projects of $4,340,000. There will be a single-year projected change in fund balance by a negative $2,451,871. The negative change reflects the drawdown of unallocated reserves Fund Balance of $4.340 million for capital projects and Facility Replacement from the Town Financial Planning model.
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 2026/27 budget process, the Council considered uses for the unallocated funds towards various priorities. For FY 2026/27, there is an allocation of $4.340 million for various set aside buckets for capital projects in the Town CIP.
The beginning of FY 2025/26 General Fund Balance was $11,950,140. The FY 2025/26 updated estimate actual projected year-end fund balance is $11,363,374. The table below reflects all the changes noted above.
FY 2026/27 Beginning Fund Balance $11,363,374
FY 2026/27 Projected Revenues (inclusive of ERAF) $28,911,563 Total Available Funds $40,274,937
COP Debt Service for FY 2026/27 ($861,871)
FY 2026/27 Expenditures (Projected Budget) ($23,370,663) FY 2026/27 Transfer Out CIP 401 Fund -Financial Planning ($4,340,000) FY 2026/27 Town Operations Budget
June 17, 2026
Projected FY 2026/27 Ending Fund Balance $11,702,402
As shown below, the Town will meet its new 30% reserve requirements total of $7,011,199 in FY 2026/27 and projects an unallocated reserve that is 21% 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 2026/27 is $4,691,203. 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.
GANN LIMIT CALCULATION
The Finance Director calculated the FY 2026/27 GANN limit using the percentage change in population and the cost of living provided by the State Department of Finance. The GANN limit for 2026/27 is $19,412,848. The Town is in compliance with the GANN limit requirement for FY 2026/27.
MASTER FEE SCHEDULE CPI ADJUSTMENT
Standard Adjustments – Consumer Price Index (CPI)
As part of the Fiscal Year 2026/27 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 2.5% for FY2026/27.
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”.
FY 2026/27 Expenditures $23,370,663
Projected FY 2026/27 Ending Fund Balance $11,702,402
15% Emergency Reserve $3,505,000
15% Budget Stabilization Reserve $3,505,000
TOTAL RESERVE REQUIREMENT $7,011,199
Less Above Reserve Requirement = Unallocated Reserves $4,691,203 FY 2026/27 Town Operations Budget
June 17, 2026
New or Amended Fees
There are several new or amended fees incorporated into the Master Fee Schedule for FY 2026/27 and are mainly due to newly passed housing laws pertaining to planning review applications:
1. Planning: The Preliminary Application (SB330) fee has been added to account for staff time related to preliminary review of certain planning applications to ensure compliance with the Housing Accountability Act. This fee has been set at $1,525 for FY 2026/27 based on the estimated staff time required.
2. Planning: An existing fee for Planning review related to new construction was divided into two fees for FY2026/27. The existing fee covers single-family new construction, and the new fee covers multi-family construction to account for new zoning designations in the Town’s Housing Element. The fee for multi-family review has been set at $8,775 and was developed based on estimates of staff time required for singlefamily new construction.
3. Planning: The existing SB 9 tentative and final map fees have been amended to also incorporate SB 1123. The actual fees for FY2026/27 were increased by CPI, with the inclusion of SB 1123 verbiage intended for clarity.
4. Building: An hourly rate for a Code Enforcement Officer has been added ($200). Code enforcement investigations, which have been added to the Master Fee Schedule, will be billed at this hourly rate.
5. Engineering: An hourly rate for a Town Arborist has been added ($245).
6. Fees for the Alarm Permit and Alarm Permit Renewal were set to $0.
7. Community Development Fees are effective July 6, 2026.
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 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 crafted the attached Budget based on specific policy objectives of the City Council.
FY 2026/27 Town Operations Budget
June 17, 2026
FISCAL IMPACT
None.
GOAL ALIGNMENT
This Report and its contents are in alignment with the following Council Policy Goals:
• Goal A – Maintain Fiscal Transparency
• Goal F – Be Forward-Thinking, Well-Managed and Well-Planned
PUBLIC NOTICE
Public notification was achieved by posting the agenda, with this agenda item being listed, at least 72 hours prior to the meeting in print and electronically. Information about the project is also disseminated via the Town’s electronic News Flash and Atherton Online. There are approximately 1,200 subscribers to the Town’s electronic News Flash publications. Subscribers include residents as well as stakeholders – to include, but be not limited to, media outlets, school districts, Menlo Park Fire District, service provides (water, power, and sewer), and regional elected officials.
The Town maintains a Fiscal Transparency web portal and includes all budget information on its website. Links to these various areas are below:
Fiscal Transparency Web Page:
http://www.ci.atherton.ca.us/index.aspx?NID=269
Archive of Town Budgets:
http://www.ci.atherton.ca.us/index.aspx?nid=273
Financial Data Portal (OpenGov):
http://www.ci.atherton.ca.us/index.aspx?nid=361
Financial Audit Archive:
http://www.ci.atherton.ca.us/Archive.aspx?AMID=39&Type=&ADID= Actuarial Valuations Archive:
http://www.ci.atherton.ca.us/Archive.aspx?AMID=61&Type=&ADID= Labor Contracts, Agreements, and Salary/Benefit Information:
http://www.ci.atherton.ca.us/index.aspx?nid=192
ATTACHMENTS
FY 2026/27 General Fund Revenue and Expenditure details by department, Internal and Special Funds, CIP, and accompanying resolutions