City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: City Manager
Meeting Date: October 26, 2026
Report #:2608-6606
TITLE
Approval of the FY 2028-2029 Human Services Resource Allocation Process (HSRAP) Program Expansion with Additional Annual Funding in the Amount of $428,000; CEQA- Not a Project
RECOMMENDATION
The Policy & Services Committee (P&S) and Human Relations Commission (HRC) recommend that the City Council:
1. Approve the Human Services Resource Allocation Process (HSRAP) grant program expansion for the FY 2028-2029 funding cycle with HSRAP expansion annual funding in the amount of $428,000.
2. Direct P&S to reevaluate the allocated amount after the two-year HSRAP cycle to ensure it is meeting community needs while balancing budgetary constraints.
EXECUTIVE SUMMARY
The proposed Human Services Resource Allocation Process (HSRAP) expansion would establish two funding lanes within one process and expand funding in the amount of $428,000 annually for the FY 2028-2029 HSRAP process. The first lane would retain the existing HSRAP process for proposals from organizations to provide professional services to meet human service needs established by the Priority of Needs and serve Palo Alto residents. The second lane, communitywide grants, would provide a funding path for nonprofit programs that demonstrate a broader Palo Alto community-wide need outside the formal Priority of Needs categories. Both lanes would use one application and a common evaluation process, with the distinction made during evaluation. Consistent with the Nonprofit Partnership Workplan, this approach supports clear and consistent funding decisions preferable to the previous need to respond to standalone funding requests through the annual budget process.
P&S and the HRC recommend an annual HSRAP expansion funding amount of $428,000 (i.e., $856,000 over the two-year span of the HSRAP grant). This amount is intended to preserve approximately the level of Nonprofit Partnership Workplan Phase I grant funding reflected in FY 2026. This amount does not include the $78,280 in funding that the City Council designated as ongoing departmental appropriations for three nonprofits. The $428,000 is not a separate community-wide grant allocation or a guarantee of funding to prior recipients, funding would be competitively allocated through the HSRAP process which is guided by the published criteria.
This work responds to a City Council referral to P&S to work with the Human Relations Commission (HRC) to consider refinements to HSRAP. This was to include consideration of whether the program should be expanded to accommodate nonprofit funding requests that may not fit within the existing HSRAP framework. At the September 8, 2026 joint P&S and HRC meeting, P&S and HRC discussed the proposed expansion, including the broad category of community-wide services, the evaluation criteria, funding approach, administrative considerations, and governance roles.
BACKGROUND
The Nonprofit Partnership Workplan (NPW) Phase I pilot was implemented in FY 2026 as part of the City’s broader effort to strengthen nonprofit partnership and contract management practices in response to the 2022 City Auditor’s report on nonprofit management. Phase I was designed to improve the City’s process for evaluating nonprofit funding requests that fall outside existing funding mechanisms during the annual budget process. Through the pilot, in FY 2026 the City awarded $506,646 to 16 nonprofit organizations serving the Palo Alto community.
At its April 6, 2026 study session,1 the City Council reviewed the purpose of the NPW Phase I pilot and discussed potential improvements for FY 2027. As part of that discussion, staff presented an inventory of nonprofit grants and service agreements over $10,000 to provide a broader overview of City funding relationships with nonprofit organizations beyond NPW Phase I grants.2 The inventory illustrated the range and complexity of those relationships, which total approximately $6.6 million in FY 2027 across multiple funding sources. The City Council discussion generally reflected interest in a transparent, equitable, and consistent framework for nonprofit funding, including clearer guidance regarding how different types of nonprofit requests should be reviewed, evaluated, and funded. Multi-year service agreements are a significant body of work that will be brought to the P&S Committee later this fiscal year.
During subsequent budget deliberations,3 City Council also recognized the City’s fiscal constraints, including projected FY 2027 budget pressures, and supported proceeding without 1 April 6, 2026 City Council Meeting:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=87042&dbid=0&repo=PaloAlto 2 FY 2026 Nonprofit Services Agreements, Page 9:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=87042&dbid=0&repo=PaloAlto 3 May 11, 2026 City Council Meeting:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=88043&dbid=0&repo=PaloAlto the NPW Phase I grant process. City Council indicated that grant funding should, where appropriate, be considered through HSRAP.
The City Council referred to the P&S Committee, in partnership with (HRC), consideration of potential refinements to HSRAP. This includes consideration of whether the program should be expanded to address additional nonprofit requests that may not be clearly accommodated under the current HSRAP framework. City Council comments also concluded that the current fiscal year (FY 2027) should be used to further develop options for FY 2028 rather than advancing a more substantial Phase I funding program in FY 2027. The discussion for P&S and HRC focused on preparing this process for nonprofit grants in FY 2028 through the HSRAP process and aligning it with the existing HSRAP process timeline.
On August 11, 2026, P&S provided feedback on the proposed HSRAP expansion, including funding levels and scope.7 Based on that feedback, staff proposed a two-lane approach for the FY 2028-FY2029 funding cycle.
On September 8, 2026, P&S and HRC held a joint meeting to discuss the proposed expansion.
Members of both bodies supported a single application and review process while expanding eligibility to include qualifying community-wide programs. The discussion generally supported a single, transparent process with HRC retaining a central role in evaluating applications and recommending awards.
Members emphasized the importance of clearly defining Palo Alto benefit, maintaining a transparent and flexible evaluation process, preserving HRC’s role in reviewing and recommending awards, and ensuring the expansion remains responsive to the City’s fiscal condition and administrative capacity. Members of both bodies also discussed maintaining flexibility to allocate expansion funding between the community-wide or the Priority of Needs grants based on the applications received.
The following motion was unanimously approved:
1) Recommend the City Council approve the HSRAP grant program expansion at $428,000 annually and place this recommendation on the consent calendar; 2) Direct staff to return to P&S 2 years after implementation of the HSRAP grant program expansion to reevaluate the allocated amount to ensure it is meeting community needs while balancing budgetary constraints; and 3) Direct the HRC to evaluate the current HSRAP evaluation criteria to ensure that criteria is still meeting our community’s needs. (Note: this item was completed at the October 8 HRC meeting where the existing criteria was confirmed). 7 August 11, 2026 Policy & Services Committee Meeting:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=897064&dbid=0&repo=PaloAlto
ANALYSIS
HSRAP Expansion
The collaboration between P&S and the HRC recommends a HSRAP expansion that considers two funding lanes for the FY 2028-FY 2029 funding cycle that can be completed all within the same grant process.
• HSRAP would retain the City’s original process for direct human services proposals that meet established Priority of Needs and serve Palo Alto residents as one funding lane. • HSRAP expansion would provide a funding path for community-wide nonprofit programs previously not meeting the Priority of Needs under HSRAP.
Nonprofit applications under the HSRAP expansion would need to respond to a demonstrated Palo Alto community-wide need outside the formal Priority of Needs categories. The community-wide need does not need to focus on vulnerable populations. The purpose is to create one process, one application, and a consistent evaluation criterion. The distinction will be made during evaluation rather than at the application entry point.
The HSRAP evaluation considerations include demonstrated community need, Palo Alto resident benefit, non-duplication of City-funded services or another funding mechanism, clear public value, organizational readiness, realistic budget and timeline, and measurable outcomes.
P&S and HRC discussed the importance of maintaining a clear, transparent and consistent evaluation framework while recognizing that the expanded applicant pool may include organizations addressing substantially different types of community needs.9 Both bodies highlighted the need to clearly define Palo Alto resident benefit, including circumstances where the benefit may be indirect, and to ensure that applicants understand what information is needed to demonstrate community benefit and outcomes.
Discussion also addressed the role of numerical scoring, with staff noting that scores are intended to support transparency and consistency while allowing HRC to consider applicationspecific circumstances and document the rationale for recommendations that differ from the numerical ranking. HRC discussion further emphasized retaining the core HSRAP focus on community need, Palo Alto resident benefit, outcomes, equity, organizational capacity and fiscal responsibility, while maintaining an application process that is accessible to organizations of different sizes. As a follow-up, both bodies agreed that the HRC should evaluate the current HSRAP criteria to ensure it will meet the community’s needs. This discussion on the HSRAP 9 September 8, 2026 Policy & Services and HRC Joint Meeting:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=897269&dbid=0&repo=PaloAlto criteria occurred at the October 8, 2026 HRC meeting and the HRC confirmed the current HSRAP criteria. 11
HSRAP Funding
HSRAP: Priority Needs Grants
Over the last five funding cycles, beginning with FY 2020-21, the City has funded approximately 78% of total HSRAP grant requests on average. During that period, HSRAP has received an average of approximately $1.2 million in annual application requests, with about $940,000 recommended for funding. These figures reflect HSRAP grant funding only and do not include other ways the City partners with nonprofit organizations to deliver services to the community, such as direct service agreements and co-sponsorship opportunities.
P&S and HRC both agreed that the ongoing level of investment for the Priority of Needs should be maintained, with annual CPI adjustments for the FY 2028-FY2029 funding cycle. Staff anticipates recommending City Council approval of $998,992 in FY 2028 and $1,027,620 in FY 2029. At its October 8 meeting, the HRC adopted the following Priority of Needs for the FY 2028-FY2029 funding cycle:
• Homelessness services
• Housing support services
• Services for individuals who are disabled
• Services for older adults and their caregivers
• Services for youth and their caregivers
• Food and nutrition services
• Physical and behavioral health services
The City also annually sets aside $50,000 through the Emerging Needs Fund to support nonprofit organizations serving Palo Alto residents with one-time human services-related funding needs. The Emerging Needs Fund is intended to address needs that arise outside the regular HSRAP grant cycle, including new applicants, pilot programs, emerging or adapted approaches to existing community needs, and special hardship cases.
P&S and HRC supported maintaining the existing Priority of Needs HSRAP process and keeping regular HSRAP funding distinct from the expansion. Members emphasized that the expansion should not diminish the City's existing commitment to Priority of Needs services.
HSRAP: Community-wide Grants [expansion]
11 October 8, 2026 Human Relations Commission Meeting:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=20430 The HSRAP community-wide grants would provide a funding opportunity for nonprofit programs that demonstrate a broader Palo Alto community-wide need outside the established Priority of Needs categories.
P&S and HRC recommended an annual HSRAP expansion funding amount of $428,000. Funding would not represent a guaranteed allocation to specific organizations who previously received funding. Rather, it would be available for competitive awards through the expanded HSRAP process. HRC would review eligible applications using the published criteria and recommend how expansion funds should be allocated based on the applications received.
Both bodies sought to preserve an appropriate level of funding for nonprofit support while recognizing the City's fiscal constraints. P&S and HRC ultimately supported the $428,000 expansion funding recommendation amount as a means of carrying forward the FY 2026 funding level while bringing eligible requests into a more transparent and consistent HSRAP process.
Members also supported flexibility between the two grant categories rather than establishing a fixed allocation for the community-wide grants. If sufficient qualifying applications are not received in the community-wide grants category, available expansion funding could be recommended for qualifying applications in the Priority of Needs category.
HSRAP Timeline and Governance Roles
Consideration of the HSRAP expansion is well-timed, as the regular HSRAP cycle typically begins in September. The proposed schedule would incorporate the HSRAP expansion communitywide grants into the existing HSRAP timeline without delaying nonprofit awards. The table below shows the proposed HSRAP expansion timeline. Key milestones include the joint P&S/HRC meeting in September, City Council approval on the expansion and funding levels in October, and P&S award recommendations to City Council in May (after HRC’s process), as well as Finance Committee’s review of overall budget recommendations during the annual budget review process.
The proposed change reflects the fact that City Council’s initial referral was made to P&S, and the proposed expansion was developed as part of that Committee’s workplan and policy discussion. As a result, P&S has reviewed recommendations related to the structure, criteria, and implementation of the HSRAP expansion, including how the expanded applicant pool would be evaluated and incorporated into the City’s broader human services funding framework.
The Finance Committee will retain its role through the annual budget process, to review and recommend the total funding for HSRAP and HSRAP expansion funding.
Governance Roles
Body Role
Human Relations
Commission (HRC)
Review applications and recommend awards using published criteria.
Policy & Services
Committee
Provide policy oversight; review HRC recommendations, including the expanded-grant awards and programmatic implications.
Finance
Committee
Consider total appropriations and fiscal tradeoffs through the annual budget process.
City Council Approve funding levels and final awards.
Staff Administer the RFP, verify eligibility, conduct technical review, and support applicants.
P&S and HRC supported clearly distinguishing policy oversight, application review, fiscal review, and final decision-making responsibilities. The joint discussion reinforced HRC’s role in evaluating applications and recommending awards, P&S’s role in policy oversight, Finance Committee’s role in the annual budget process, and full City Council’s authority over funding levels and final awards.
HSRAP Timeline Key Milestones
Month Proposed HSRAP Expansion Key Milestones
August • P&S to discuss HSRAP expansion opportunities
• Survey nonprofits & clients on human service needs
September • Joint P&S/HRC meeting on HSRAP expansion feedback • Nonprofit engagement on HSRAP expansion process
October • HRC sets Priority of Needs
• Council to approve HSRAP expansion to include community-wide grants and funding levels
November • Nonprofit engagement on HSRAP expansion process • Application period opens
January Application period closes
March Review committee evaluates applications
April HRC reviews and recommends awards
May • P&S reviews HRC award recommendations
• Finance Committee review overall budget allocations
June Council approves all HSRAP awards
Lastly, P&S recommended that the City Council referral for a return to P&S after the two-year HSRAP cycle to reevaluate the allocated amount to ensure it is meeting community needs while balancing budgetary constraints.
FISCAL/RESOURCE IMPACT
The City Council’s action tonight will inform the FY 2028 budget development, and if approved, include the appropriation of $428,000 for the HSRAP expansion and $428,000 for FY 2029.
STAKEHOLDER ENGAGEMENT
Community members, nonprofit partners, and service recipients were surveyed regarding human service needs and notified of upcoming meetings, including information sessions on the HSRAP expansion. A nonprofit information session was held on September 16, 2026, to share the outcome of the joint Policy & Services Committee and Human Relations Commission meeting and provide information regarding the proposed HSRAP expansion. Additionally, the City’s website will be updated to clearly communicate program changes, key dates, and the overall timeline.
ENVIRONMENTAL REVIEW
Committee action on this item is not a project as defined by California Environmental Quality Act (CEQA) because the City’s HSRAP program is a continuing administrative or maintenance activity. CEQA Guidelines section 15378(b)(2).
APPROVED BY:
Ed Shikada, City Manager