Item No. 23. Page 1 of 3
7 4
9 9
City Council
Supplemental Report B
From: Ed Shikada, City Manager’s Office
Meeting Date: June 16, 2025
Item Number: 23
Report #:2506-4776
TITLE
PUBLIC HEARING: Presentation on Status of Vacancies and Recruitment and Retention Efforts and Adoption of Budget Ordinance for Fiscal Year 2026, Including the Operating and Capital Budgets and Municipal Fee Schedule; Adoption of a Resolution determining the Appropriations Limit for Fiscal Year 2026; Vacancies and Recruitment Update (AB2561 Compliance); and Approval of FY 2026 Non-Profit Workplan Phase I Awards as Recommended by the Policy & Services Committee; and Adoption of a Resolution to Extend and Amend the Development Services Reserve Fund Policy; CEQA Status – Not a Project
RECOMMENDATION
The Policy and Services Committee and staff recommend that the City Council approve awards for the FY 2026 Nonprofit Partnership Workplan Phase I.
BACKGROUND/ANALYSIS
On June 4, 2025, the Policy and Services Committee (P&S) reviewed the Nonprofit Partnership Workplan Phase I proposals. A total of 22 proposals were considered, requesting a combined $819,089 in FY 2026 funding. In response to the Finance Committee’s request, the Policy and Services Committee gave particular consideration to previously funded nonprofits: UNAFF, Youth Community Service, Youth Connect (formerly known as Youth Connectedness Initiative (YCI)), Environmental Volunteers, Magical Bridge, and 3rd Thursday (via the Palo Alto Chamber of Commerce). A funding target budget of $396,000 was recommended for Phase I; however, the final funding amount would be determined be the full City Council. This memo transmits the results of the P&S Committee’s discussion and recommendations.
Palo Alto Museum Proposal
Subsequent to the Policy and Services Committee deliberations and recommendations, staff was contacted by the Palo Alto Museum (formerly Palo Alto History Museum) and realized that a proposal had been received from the Museum and inadvertently omitted from the evaluation. The organization submitted a proposal seeking $55,000 within the application
Item No. 23. Page 2 of 3
7 4
9 9
timeframe. The proposal is included in Attachment B for the City Council’s review and consideration. However, staff is not recommending that the Palo Alto Museum be considered for FY 2026 funding at this time due to the significant City investments made to date and additional funding included in the FY 2026 Proposed Budget.
Staff reviewed the Palo Alto Museum’s proposal using the City Council-recommended evaluation rubric. The proposal rated high across on the following criteria: Community Reach, Alignment with Goals, and Program Sustainability; and rated Medium in Equity Impact criteria.
In line with the Committee’s request to include past City funding details, staff notes that the Palo Alto Museum received a total of $8.6 million in FY24 and FY25 for construction costs at the Roth Building, an amount not disclosed in the proposal. This includes $835,440 in Santa Clara County grants for windows, elevator, and roof improvements. Additionally, the Museum leases 17,784 sq. ft. at the Roth Building at a below-market rate of $1 per year for 40 years. The FY 2026 Proposed Budget also includes $0.5 million for interior buildout, including exhibits, a stated goal for the intended use of funds by the proposer.
Policy & Services Committee Recommendations
Attachment A includes the P&S Committee-proposed scenarios summary table for City Council consideration.
The Attachment A summary table includes the following columns:
Line #- Included for ease of reference and review; not intended to indicate rank.
Organization- The proposer’s organization name and associated known acronym (if applicable).
Proposal request- The organization’s funding FY 2026 request.
P&S Initial Proposed Award- The Committee reviewed all 22 applications and this column reflects the general consensus of that initial review. The total base award amount is $433,646, which is $37,646 above the Finance Committee’s recommended target of $396,000. After its initial review the Committee then embarked in an effort to reduce the total award to be in alignment with the $396,000 target or no greater than $25,000 over. The Committee also discussed use of the Council contingency to solve the remaining gap.
In an attempt to maintain an award no greater than $421,000 the Committee discussed individual adjustments resulting in a recommendation that the City Council consider the Committee Notes and ranges for award under Scenario A and Scenario B.
P&S Proposed Scenario A (Majority)- Reflects a combination of organization award adjustments recommended by a majority of the P&S Committee (2 of 3 members) to Item No. 23. Page 3 of 3
7 4
9 9
bring total funding recommendations closer to the $396,000 target set by the Finance Committee. Under this scenario, the total award funding amount is $426,646, which is $30,646 above the Finance Committee’s recommended target.
P&S Proposed Scenario B (Minority)- Reflects a combination of organization award adjustments recommended by a minority of the P&S Committee (1 of 3 members) to bring total funding recommendations closer to the $396,000 target set by the Finance Committee. Under this scenario, the total award funding amount is $419,896, which is $23,896 above the Finance Committee’s recommended target.
Committee Notes- Summarizes the Committee’s discussion on Scenarios A and B, and/or any restrictions placed on the funding awards.
FISCAL/RESOURCE IMPACT
The FY 2026 Proposed Budget recommended for City Council adoption includes $396,000 to be allocated for this process. Should the Council wish to allocate additional funding, options include use of the City Council Contingent account ($125,000 annually), use of the Budget Stabilization Reserve (BSR) or Uncertainty Reserve, and/or through direction to further increase the directed $6 million in reduced General Fund impact which staff expect to bring back service impacts in August 2025 to the Finance Committee and City Council.
ATTACHMENTS
Supplemental Attachment A: P&S FY 2026 Nonprofit Partnership Workplan Phase I Proposals Supplemental Attachment B: Palo Alto Museum Proposal
APPROVED BY:
Ed Shikada, City Manager’s Office