18 Staff Report.Budget with attachments
PREPARED BY: Gitta Ungvari
Finance Director
Reviewed by: Town Manager, Town Attorney, and Assistant Town Manger
110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 06/04/2024
DATE: May 30, 2023
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Operating and Capital Budgets
a. Adopt a Resolution Approving the Town of Los Gatos Fiscal Year (FY)
2024/25 Operating Budget and FY 2024/25– 2028/29 Capital
Improvement Program (CIP), New Appropriations, Additional Council
Actions on May 21, 2024; Minor Corrections, and Carry-Forward
Appropriations;
b. Adopt a Resolution Approving Commitment of Fund Balances under
GASB 54;
c. Approve FY 2023/24 Budget Adjustments and Reclassifications as listed in
Attachment 3; and
d. Authorize an Expenditure Budget Adjustment from IRS 115 Restricted
Pension Trust to CalPERS up to the Amount Available in the Trust (the
Estimated Balance Available is $2,090,163).
RECOMMENDATION:
Operating and Capital Budgets
a. Adopt a Resolution Approving the Town of Los Gatos Fiscal Year (FY) 2024/25 Operating
Budget and FY 2024/25 – 2028/29 Capital Improvement Program (CIP), New
Appropriations, Additional Council Actions on May 21, 2024; Minor Corrections, and
Carry-Forward Appropriations (Attachment 1);
b. Adopt a Resolution Approving Commitment of Fund Balances under GASB 54
(Attachment 2);
c. Approve FY 2023/24 Budget Adjustments and Reclassifications as listed in Attachment 3;
and
d. Authorize an expenditure budget adjustment from IRS 115 Restricted Pension Trust to
CalPERS up to the amount available in the Trust (the estimated balance available is
$2,090,163).
PAGE 2 OF 3 SUBJECT: Operating and Capital Budgets DATE: May 30, 2024
BACKGROUND:
On April 21, 2024, the Proposed FY 2024/25 Operating and Capital Budgets were posted to the
Town’s website. Per Measure A, the Finance Commission received the Proposed Budgets 21
business days before May 21, 2024, which is the first meeting at which the Proposed Budgets
were considered by the Town Council. The Finance Commission held three public meetings at
which Commissioners discussed the Proposed Budgets and provided recommendations to the
Town Council per Measures A and G.
On May 21 2024, the Town Council conducted public hearings to discuss the proposed FY
2024/25 Operating and Capital Summary Budget and Proposed FY 2024/25– 2028/29 Capital
Improvement Program. The Town Council considered public testimony, discussed both
documents, considered the Finance Commission recommendations, and directed staff to bring
back the documents for final approval incorporating the Council recommendations.
DISCUSSION:
The draft resolution (Attachment 1) incorporates the budget direction provided by the Council
at the May 21, 2024 budget hearing.
One of the Council actions directed a $1,000,000 transfer from the Education Realignment
General Fund (ERAF) Risk Reserve to the General Fund Pension/OPEB Reserve. Attachment 2
contains the resolution to formally move General Fund balances based on the Town Council
General Fund Reserve Policy and additional Council direction consistent with Governmental
Accounting Standards Board (GASB) 54.
In anticipation of the end of the 2023/24 fiscal year, the Council is being asked to make several
revenue and expenditure budget adjustments as listed in Attachment 3. These adjustments
recognize impacts that have changed since the Mid-Year Review in February.
The FY 2023/24 adopted budget assumed a 4.6% salary and benefit position vacancy savings for
the fiscal year and that all vacant positions would be eventually filled through recruitment.
Based on the most recent estimates, certain individual Departments/Programs that are fully
staffed will not realize the 4.6% budgeted salary savings. Staff is requesting that Council
approve salary and expenditure budget adjustments up to the amount of the projected 4.6%
salary savings factor for individual Programs as needed based on year-end actual expenditures.
Staff is also requesting an expenditure budget increase to cover additional costs incurred due to
protective leaves (e.g., workers compensation leaves). In addition, Attachment 3 lists the salary
and benefit reclassification from the General Fund to the Capital Projects to recognize the
utilization of temporary staff for capital projects.
PAGE 3 OF 3 SUBJECT: Operating and Capital Budgets DATE: May 30, 2024
DISCUSSION (continued):
Just prior to the Council’s regular session, the Pension/OPEB Oversight Committee is
considering the Finance Commission’s recommendation to transfer the 115 Pension Restricted
Trust current balance to CalPERS for an Additional Discretionary Payment toward the Town’s
unfunded pension liability. The estimated balance available in the IRS 115 Restricted Pension
Trust is $2,090,163. If the Oversight Committee decides to move forward with the
Commission’s recommendation, an additional budget adjustment is needed as noted under the
Recommendation. The final amount will be determined at the time of the transfer based on
the available balance.
CONCLUSION:
Staff recommends approval of FY 2023/24 budget adjustments, adoption of a Resolution
approving the Town of Los Gatos Fiscal Year (FY) 2024/25 Operating Budget and FY 2024/25 –
2028/29 Capital Improvement Program (CIP), and adoption of a Resolution approving
commitment of Fund Balances under GASB 54.
COORDINATION:
The preparation of the budget documents involved the participation of all Town Departments.
FISCAL IMPACT:
The fiscal impact is presented in summary form in the Financial Summaries chapter of the
Proposed Operating and Capital Budget for FY 2024/25, resulting in a balanced budget for the
next fiscal year.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachments:
1. Resolution of the Town Council Approving FY 2024/25 Operating Budget and FY 2024/25 –
2028/29 Capital Improvement Program (with Exhibit A)
2. Resolution of the Town Council of the Town of Los Gatos Approving Commitments of Fund
Balance under GASB 54
3. FY 2023/24 Requested Budget Adjustments
4. Public Comments Received before Publishing the Staff Report
1 of 4
Resolution 2024- June 4, 2024
DRAFT RESOLUTION 2024-
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS APPROVING THE FISCAL YEAR (FY) 2024/25 OPERATING BUDGET AND FY 2025/26–
2028/29 CAPITAL BUDGET; NEW APPROPRIATIONS; OTHER ADJUSTMENTS;
MINOR CORRECTIONS; AND CARRY-FORWARD APPROPRIATIONS
WHEREAS, Section 2.30.295(b) of the Los Gatos Town Code requires the Town
Manager to annually prepare and submit a budget to the Town Council and be responsible for
its administration; and
WHEREAS, the Town Manager submitted to the Town Council and Finance
Commission a Proposed Operating Budget for FY 2024/25 on April 21, 2024; and
WHEREAS, the Town Manager submitted to the Town Council and Finance
Commission a Proposed Five-Year Capital Improvement Program for FY 2024/25 – 2028/29 on
April 21, 2024; and
WHEREAS, the Town Council conducted a noticed public hearing on the Proposed
Operating Budget and Capital Improvement Program on May 21, 2024; and
WHEREAS, per Measure A, the Town Council has considered and reviewed the
Finance Commission’s written recommendations to the Town Council on the said proposed
Budget and Capital Improvement Program during the public hearing on May 21, 2024; and
WHEREAS, per Measures G and A, the Town Council has considered and reviewed
the Finance Commission written recommendations to the Town Council regarding the potential
allocation of Measure G proceeds during its public hearing on May 17, 2022; and
WHEREAS, the Town Council has continued the use of Measure G proceeds in the
remainder of the forecast (FY 2024/25- FY 2028/29) to be 50% for operating expenditures and
50% for capital purposes; and
WHEREAS, the Town Council previously allocated residual Measure G proceeds for
capital should be programmed to the Shannon Road Repair Project; and
ATTACHMENT 1
2 of 4
Resolution 2024- June 4, 2024
WHEREAS, the future year Measure G proceeds for capital should be programmed
to the State Route 17 Corridor Project; and
WHEREAS, the Town Council has determined that 30% of the ERAF proceeds should
be reserved in an ERAF Risk Reserve until the lawsuit between the State and School Districts
regarding the ERAF calculation distribution is concluded; and
WHEREAS, the Town Council has determined that $1,000,000 of the ERAF Risk
Reserve should be transferred to Pension/OPEB General Fund Reserve; and
WHEREAS, the estimated FY 2023/24 expenditures and pass through revenues and
expenditures increased by $33,000 for additional money for the Chamber of Commerce
Agreement; and
WHEREAS, the estimated FY 2024/25 General Fund expenditures and revenues
increased by $100,000 for additional money for additional one-time Community Grants; and
WHEREAS, the estimated FY 2024/25 General Fund expenditures and revenues
increased by $25,000 for additional money for additional one-time rental assistance community
grants; and
WHEREAS, the estimated FY 2024/25 General Fund expenditures and revenues
increased by $25,000 for additional money for additional one-time nutrition support community
grants; and
WHEREAS, the estimated FY 2024/25 General Fund expenditures and revenues
increased by $100,000 for additional money for one-time contribution to New Museum of Los
Gatos (NUMU) History Project; and
WHEREAS, the Town Council has determined that once the American Rescue Plan Act
(ARPA) Revenues were fully recognized as loss revenue, they became part of the General Fund
and available for Council direction for any lawful government service. Staff is tracking the $7.2
million total revenue received against Council directed use through pass through revenues and
expenditures, and
WHEREAS, the Town Council has determined that the remainder of the $7.2 million
proceeds should be tracked in an Council Priorities – Economic Recovery Reserve; and
3 of 4
Resolution 2024- June 4, 2024
WHEREAS, on June 4, 2024, Town Council considered and reviewed the proposed
Budget and Capital Improvement Program and made final determinations.
NOW, THEREFORE, BE IT RESOLVED: that the Town Council hereby adopts as the
Operating Budget for the Town of Los Gatos for the 2024/25 fiscal year as depicted in Exhibit A
entitled “Total Town Revenues and Expenditures by Fund” including the first year (FY 2024/25)
of the Town’s Capital Improvement Program budget as contained in the Town’s FY 2024/25 –
2028/29 Capital Improvement Program.
BE IT FURTHER RESOLVED, that the final adopted Budget documents include minor
corrections and approved appropriations for unspent prior year allocations, and that they be
carried forward from prior years in a Reserve for Encumbrances whereby within each fund
there is an amount sufficient to cover approved outstanding encumbrances as of June 30, 2024.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of
Los Gatos, California, held on the 4th day of June, 2024 by the following vote:
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
DATE:
ATTEST:
TOWN CLERK OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
DATE:
TOTAL TOWN REVENUES AND EXPENDITURES BY FUND
EXHIBIT A
2024/25 Estimated 2024/25ProposedBudget RecommendedBudgetRevisionBudget
REVENUES
General Fund 56,428,459$ 250,000$ (1) 56,678,459$
Special Revenue Funds 337,280 - 337,280$
Internal Service Funds 6,846,909 - 6,846,909$
Capital Project Funds (does not include carryforwards)6,627,998 - 6,627,998$
Successor Agency Funds 3,828,264 - 3,828,264$
TOTAL REVENUES 74,068,910$ 250,000$ 74,318,910$
OTHER FUNDING SOURCES
Designated One-Time Use of General Fund Reserves 1,689,384 33,000$ 1,722,384 (2)
TOTAL TOWN REVENUES & OTHER FUNDING SOURCES 75,758,294$ 283,000$ 76,041,294$
TOTAL TOWN EXPENDITURES, TRANSFERS OUT & CARRYFORWARD APPROPRIATION
General Fund 56,942,743$ 283,000$ 57,225,743$
Special Revenue Funds 546,971 546,971
Internal Service Funds 7,566,991 - 7,566,991
Capital Project Funds (does not include carryforwards)7,629,123 - (3) 7,629,123
Successor Agency Funds 3,816,107 3,816,107
TOTAL TOWN EXPENDITURE & OTHER FUNDING USES 76,501,935$ 283,000$ 76,784,935$
OTHER FUNDING USES
Designated One-Time Use of General Fund Reserves 1,175,100 1,175,100 (4)
TOTAL TOWN EXPENDITURES & OTHER FUNDING SOURCES 77,677,035$ 283,000$ 77,960,035$
GENERAL FUND SOURCE(USE) OF FUND BALANCES -$ -$ -$
OTHER FUNDS SOURCE(USE) OF FUND BALANCES (1,918,741) (1,918,741) (5)
TOTAL SOURCE(USE) OF FUND BALANCES (743,641)$ -$ (743,641)$
(5) Other Funds Source (Use) represents planned one-time uses of Internal Service Funds, Special Revenue
Funds, Trust Funds, and Capital Project Funds primary for infrastructure and equipment
investment.
(1) Additional General Fund Revenues
$250,000 - Increase - From Downtown Streestscape Revitalization Project
(2) Designated One-Time Use of the General Fund Reserves during FY 2023/24
$1,110,000 - Transfer to Capital Projects (GFAR)
$568,051 - One-Time Reserve Use for One-Time Expenditures
$11,333 - ARPA Revenue Replacement Tracking
$33,000 - One-Time Reserve Use for Chamber Agreement
(3) General Fund Expenditures
$100,000 - Increase - Community Grant Program from Downtown Streestscape Revitalization Project
$25,000 - Increase - Nutrition Grants Program from Downtown Streestscape Revitalization Project
$25,000 - Increase - Rental Assistance Grants Program from Downtown Streestscape Revitalization Project
$100,000 - Increase - NUMU History Project from Downtown Streestscape Revitalization Project
$33,000 - Increase Chamber Agreement
(4) Other Funding Uses
$390,000 - To Restricted 115 Pension Trust
$785,000 - To ERAF Risk Reserve
(4) Capital Project Funds Expenditures
No Change in Total Expenditures
Transfer from Downtown Streestscape Revitalization Project (411-813-0235)
$100,000 - To Community Grants Program (General Fund)
$25,000 - To Nutrition Grants Program (General Fund)
$25,000 - To Rental Assistance Grants Program (General Fund)
$100,000 - To NUMU History Project (General Fund)
$100,000 - To Sport Court Resurfacing (411-831-4611)
$50,000 - To Civic Center and NUMU Signage (411-813-0242)
$50,000 - To Montebello Ballards (remains in 411-813-0235)
Transfer from Sport Club Resurfacing Project (411-831-4611)
$50,000 to Pinehurst Community Garden Project (411-831-4610)
$50,000 to Lynn Ave Pedestrian Path Design Project (411-832-4510)
1 of 5
Resolution 2023- June 6, 2023
RESOLUTION 2024- RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
APPROVING COMMITMENTS OF FUND BALANCE UNDER GASB 54
WHEREAS, the Governmental Accounting Standards Board (GASB) has issued its
Statement No. 54, Fund Balance and Governmental Fund Type Definitions with the intent of
improving financial reporting by providing fund balance categories that will be more easily
understood and to improve the comparability of governmental fund financial statements; and
WHEREAS, GASB 54 provides that the Town Council of the Town of Los Gatos classify
governmental fund balances as restricted, assigned, or committed fund balances; and
WHEREAS GASB 54 provides that restricted reserves are funds that are restricted for
externally imposed constraints such as legal contracts or state law, assigned amounts are
constrained by the Town’s intent to use them for specific purposes, and committed amounts are
dedicated for specific purposes under constraints and formal action taken by the Town Council
and these committed amounts cannot be used for any other purposes unless the Town Council
of the Town of Los Gatos removes or changes the specific use through the same formal action to
establish the commitment; and
WHEREAS, there exists a Restricted General Fund Pension Reserve in the form of an
IRS 115 Pension Trust; and
WHEREAS, there exists a balance of $2,090,163 as of June 30, 2024 in the restricted
Pension Reserve; and
WHEREAS, upon Council direction up the entire balance of the restricted General
Fund Pension Reserve will be appropriated for additional discretionary payment to CalPERS; and
WHEREAS, the Town Council of the Town of Los Gatos has established a General
Fund Reserve Policy providing for minimum fund balance dollar target amounts for Budget
Stabilization and Catastrophic Reserve fund balances and outlines policies and procedures for
use and restoration of these balances; and
ATTACHMENT 2
2 of 5
Resolution 2023- June 6, 2023
WHEREAS, there exists an assigned General Fund Compensated Absences Reserve
allocated to fund 50% of all vested hours of sick leave, compensation, and vacation time with the
actual reserve amount to be determined at the close of FY 2023/24; and
WHEREAS, there exists an assigned Capital/Special Projects Reserve to fund key
infrastructure and capital/special projects as identified in the Town’s five-year Capital
Improvement Plan, and/or other Council priorities; and
WHEREAS, there exists an assigned authorized Carry Forward Reserve for materials
and services on approved purchase order and contracts which were issued but not finalized or
fulfilled as of the end of the fiscal year but for which funds will be carried forward to the following
fiscal year. Actual reserve balance will be established at the close of FY 2023/24; and
WHEREAS, in June 2016, the Town Council established the committed Pension/OPEB
Reserve to provide funding toward pension and Other Post-Employment Benefits (OPEB)
unfunded obligations by placing discretionary amounts to the reserve with formal Council action
and transferring available year-end surpluses based on the General Fund Reserve Policy; and
WHEREAS, there is an anticipated excess balance of $300,000 as of June 30, 2024 in
the assigned OPEB/Pension Reserve, that will confirmed at the close of FY 2023/24 and
WHEREAS, on November 6, 2018, the Town Council provided direction to establish
an unassigned Surplus Property Revenue General Fund Reserve that any monies received from
the sale of the property located on Winchester Boulevard and any monies received from the sale
of future surplus property be placed in this reserve, and the provisions for the reserve specifically
indicate that Council may, at its discretion, distribute those funds as it deems appropriate; and
WHEREAS, The Town Council established the assigned Sustainability Reserve in FY
2008/09 by closing the Solid Waste Management fund and placing the initial residual balance
dedicated for conservation, recycling, and sustainability; and
WHEREAS, there exists an excess balance of $140,553 as of June 30, 2024 in the
assigned Sustainability Reserve; and
WHEREAS, there exists an assigned Market Fluctuation Reserve that represent fund
balance amounts for unrealized investment gains that have been recorded as investment income
3 of 5
Resolution 2023- June 6, 2023
in the financial statements in accordance with the requirements of GASB 31, actual reserve
balance will be established at the close of FY 2023/24; and
WHEREAS, there exists an assigned Measure G 2018 District Sales Tax Reserve to
track receipt and use of the 1/8 cent district tax funds collected by the Town; and
WHEREAS, the Town Council has determined the use of Measure G accumulated
and future proceeds to be 50% for operating expenditures and 50% for capital purposes; and
WHEREAS, the committed residual balance of $590,581 that was set aside for
operating purposes in FY 2020/21 is programmed to be used for operating expenses in FY
2024/25; and
WHEREAS, with the adoption of the Fiscal Year 2023/24 Budget, an assigned
Council Priorities – Economic Recovery Reserve has been established to track General Fund
revenues freed up from recognizing all American Rescue Plan Act (ARPA) “replacement” revenues
to the General Fund for essential government services, for economic recovery and business
support, enhanced senior services, capital program augmentations, and other one-time uses; and
WHEREAS, the assigned Council Priorities – Economic Recovery Reserve has an
estimated balance of $11,333 at June 30, 2024, with the actual reserve balance being determined
at the close of FY 2023/24; and
WHEREAS, with the adoption of the Fiscal Year 2023/24 Budget, an assigned
Education Realignment Augmentation Fund (ERAF) Risk Reserve has been established, reserving
the 30% of the anticipated ERAF proceeds from FY 2022/23 until a lawsuit between the State and
the School Districts concludes; and
WHEREAS, an excess balance of $1,430,054 exists as of June 30, 2024 in the
assigned ERAF Risk Reserve, with the actual amount will be determined at the close of FY
2023/24; and
WHEREAS, with the adoption of the Fiscal Year 2024/25 Budget, $1,000,000 will
be transferred from the ERAF Risk Reserve to the Pension/OPEB Reserve; and
WHEREAS, the $1,110,000 transfer from the Capital/Special Project Reserve to the
General Fund Appropriated Reserve provides funding to the five-year capital plan; and
4 of 5
Resolution 2023- June 6, 2023
WHEREAS, the Town Council established the assigned Open Space reserve in the
FY 1998/99 to be used for the preservation of open space, connection of open space trails, the
definition of the southern boundary of the Town with passive open space, and protection of
unique natural features; and
WHEREAS, there exists an excess balance of $410,000 as of June 30, 2024 in the
assigned Open Space Reserve; and
NOW, THEREFORE, THE TOWN COUNCIL OF THE TOWN OF LOS GATOS DOES
HEREBY RESOLVE that the following estimated Pension, Budget Stabilization, Catastrophic,
Pension/OPEB, Capital/Special Projects, Compensated Absences; Measure G District Sales Tax,
Surplus Property Revenue, Market Fluctuations, Sustainability, Open Space, and ARPA Reserves
as of June 30, 2024 and as of June 30, 2025 as restricted, assigned, unassigned or formally
committed as follows:
Actual
General Fund
Reserves
June 30, 2023
FY 2023/24
Budget, GF
Reserve Policy,
and this
Resolution
Approved
Increase
FY 2023/24
Budget, GF
Reserve
Policy, and
this
Resolution
Approved
(Decrease)
Estimated
General Fund
Reserves
June 30, 2024
FY 2024/25
Budget
Resolution
Approved
Increase
FY 2024/25
Budget
Resolution
Approved
(Decrease)
Estimated
General Fund
Reserves
June 30, 2025
Restricted Fund Balances
Pension 1,400,163$ 690,000$ -$ 2,090,163$ 390,000$ -$ 2,480,163$
Porperty Held for Resale 44,338 - - 44,338 44,338
Committed Fund Balances -
Budget Stabilization 6,129,774 607,007$ - 6,736,781 - - 6,736,781
Catastrophic 6,129,775 607,006 - 6,736,781 - - 6,736,781
Pension/OPEB 300,000 300,000 (300,000) 300,000 1,300,000 (300,000) 1,300,000
Measure G District Sale Tax - Operating 590,581 - 590,581 - (568,051) 22,530
Assigned Fund Balances
Capital/Special Projects 10,359,577 1,107,950 (3,259,013) 8,208,514 - (1,143,000) 7,065,514
Compensated Absences 1,580,623 - - 1,580,623 - 1,580,623
Open Space 410,000 - - 410,000 - - 410,000
Sustainability 140,553 - - 140,553 - - 140,553
Market Fluctuations - - - - - - -
Carryover Encumbrances 37,698 - - 37,698 - - 37,698
Council Priorities - Economic Recovery 1,556,614 - (1,545,281) 11,333 - (11,333) -
ERAF Risk Reserve 689,608 740,446 - 1,430,054 785,100 (1,000,000) 1,215,154
Rehab Loan Reserve (Nonspendable)159,000 - - 159,000 - - 159,000
5 of 5
Resolution 2023- June 6, 2023
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of
Los Gatos held on the 4th day of June 2024 by the following vote:
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
DATE: __________________
ATTEST:
TOWN CLERK OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
DATE: __________________
1
FY 2023/24 YEAR-END RECOMMENDED BUDGET ADJUSTMENTS
Budget adjustments are recommended for the following revenues and expenditures at the
year-end as described below:
ATTACHMENT 3
Fund Program Account Amount Comments
111 1201 41126 Excess ERAF 34,819$
Santa Clara County Property Tax
Estimates March 2024
111 1201 41211 Sales & Use Tax (324,154)
MuniServices Most Probable March
2024 Sales Tax Estimates
111 1221 41214 Measure G - District Sales Tax 4,630$
MuniServices Most Probable March
2024 Sales Tax Estimates 111 1231 45964 Pension Trust Contribution 300,000 Recognizing Pensition Trust 111 4101 43223 FEMA Covid 19 Reimbursement 76$ Funds Received 111 4201 43223 FEMA Covid 19 Reimbursement 272 Funds Received 111 4301 43223 FEMA Covid 19 Reimbursement 6,991$ Funds Received 111 5101 43223 FEMA Covid 19 Reimbursement 938 Funds Received 111 7101 43223 FEMA Covid 19 Reimbursement 7,193$ Funds Received TOTAL GENERAL FUND REVENUES 30,765$
Fund Program Account Amount Comments111 1201 99611 To General Liability 430,000$ Funds Partially Expended
111 Town-wide 5XXXX Salaries and Benefits Varies
Up to 4.6% Salary Saving Factor
Applied Up to the Amount of
$1,673,530 by Programs/Departments
111 Town-wide 5XXXX
Additional Expensed due to
Protective Leaves Varies Up to the Amount of $540,000
111 1101 5XXXX Additional Benefit Expenditures 5,000 Funds Partially Expended 111 2102 67222 Grant to KCAT (100,000) Grant Awarded Prior Fiscal Year 111 5101 62379 Miscellanious Services and Repairs 14,000 Funds Partially Expended
TOTAL GENERAL FUND EXPENDITURE 349,000$
Fund Program Account Other Fund Revenues Amount Comments49111430,000$ From General Fund 430,000$
612 2202 43223 FEMA Covid 19 Reimbursement 36,297$ Funds Received 36,297$
411411 411-821-2302 43223 FEMA Covid 19 Reimbursement 683$ Funds Received
683$
411 411-811-9901 43320
True up Anticipated Measure B
Funding 439,524$ Funds Anticipated
439,524$
421
421 421-812-0129 49611
ABAG Grant not Expected to be
Received (35,000)$ Funds not Received
(35,000)$
411 411-816-0425 82405 Transfer from Stormwater System 190,000$ Funds not Expended
411-816-0414 82405 Transfer to Storm Drainage Mapping (190,000) Funds not Expended
-$
471
471 471-811-0009 82405
North 40 Traffic Mitigation
Reimbursement for Transportation
Improvements 47,977$
Funds Expended
47,977$
Traffic Mitigation
GFAR
GFAR
Grants
Workers Compensation
General Fund Revenues
General Fund Expenditures
2
ERAF: $34,819 revenue budget increase to reflect current estimates and forecasts
provided to the Town from Santa Clara County.
Sales and Use Tax: $324,154 revenue budget decrease to reflect current sales tax trends
based on MuniServices’ current projections.
Measure G – District Sales Tax: $4,630 revenue budget increase to reflect the current
trends of the one-eight cent sales tax based on MuniServices’ projections.
Pension Trust Contribution: $300,000 revenue budget increase to recognize the
additional contribution to the Restricted Pension Trust.
Pension Trust Contribution: $106,978 revenue budget increase to recognize FEMA
Covid-19 Grant Reimbursement in Town-wide.
Transfer to General Liability: $430,000 expenditure budget increase for General Fund
transfer to the General Liability Program, and a $430,000 revenue budget increase in
transfer from General Fund. The transfer is needed due to the increased premium cost
experienced in the insurance pool.
Salaries and Benefits (Vacancy Factor): A salary and benefits expenditure budget
increase up to the amount of the 4.6% salary savings factor ($1,673,540) for individual
Departments/Programs as needed based on year-end actual expenditures. At this time,
it is estimated that $700,000 salary and benefits expenditure budget increase is needed,
however the final amount will be determined at the close of the Fiscal Year.
Salaries and Benefits (Protective Leaves): An expenditure budget increase up to the
amount of $540,000 to cover additional cost incurred due to protective leaves.
Salaries and Benefits (Benefits): $5,000 expenditure budget increase to cover additional
benefit cost incurred due to staff coverage change during the fiscal year.
Grant to KCAT: $100,000 expenditure budget decrease since the grant was provided to
KCAT at the end of FY 2022/23.
Miscellaneous Services and Repairs: $14,000 expenditure budget increase to recognize
the cost of personnel-related contract services.
Street Repair and Resurfacing Project: $439,524 revenue budget increase to true up
anticipated Measure B Funding.
ADA Transition Plan: $35,000 revenue budget decrease since the ABAG grant was not
received.
3
Capital Project Transfer: $190,000 expenditure budget transfer from the Storm Water
System – Pollution Prevention Compliance Project to the Storm Drainage Mapping
Project.
North 40 Traffic Mitigation Fee Reimbursement: $47,977 expenditure budget increase
to facilitate developer reimbursement for transportation-related improvements.
FY 2023/24 YEAR-END RECOMMENDED SALARY AND BENEFIT RECLASSIFICATION
FROM THE GENERAL FUND TO CAPITAL PROGRAMS
Staff is requesting the salary and benefit reclassification from the General Fund to the Capital
Projects to recognize the utilization of temporary staff for capital projects. Current projection
to reclassify is $300,000, the actual amount will be determined at the close of the fiscal year.
From:Phil Koen
To:Mary Badame; Matthew Hudes; Rob Rennie; Maria Ristow; Rob Moore; l ; Andrew Howard;Ashby Monk; Joseph Rodgers
Cc:Laurel Prevetti; Gitta Ungvari; Gabrielle Whelan; Wendy Wood
Subject:FY 2025 Operating Plan - June Town Council agenda item
Date:Saturday, May 25, 2024 8:24:35 AM
[EXTERNAL SENDER]
Dear Honorable Mayor and Council Members,
At last Tuesday's Council meeting the FY 2025 Operating
and Capital Plans were reviewed and discussed.
Unfortunately, two important recommendations the
Finance Commission made to the Town Council regarding
the budget were not discussed.
Before the Council officially adopts the FY 2025, the
Council should address the following recommendations.
First Recommendation
The Finance Commission in their written recommendation
to the Council pointed out there was a major risk
embedded in the FY 2025 Operating Budget. Not all
salaries and benefits increase for bargaining units whose
successor MOUs are currently being negotiated have been
reflected in the operating plan. The increases are material,
highly likely to occur during FY 2025, and for which no
funding source has been identified.
ATTACHMENT 4
It would be inappropriate for the Town Council to approve
an FY 2025 Operating Budget without disclosing the
anticipated increase in MOU expenditures as well as the
funding source to offset these increases. The Town is
required by State Law to approve a “balanced budget” and
such budget should include all highly likely expenditures
that Town intends to incur during the fiscal year. Simply
because the successor MOUs have not been approved is
not a sufficient reason to exclude them from the FY 2025
Operating Budget. Please note that the transmittal letter
from the Town Manager begins with the declaration that
the FY 2025 General Fund Operating Budget is “balanced”.
Second Recommendation
At the last Finance Commission meeting, the Commission
review and discussed the actuarial presentation prepared
by Foster and Foster. As part of that discussion the
Commission approved a resolution for the Town Council’s
consideration to make an ADP to Calpers using the entire
balance of the Town’s 115 Pension Trust to pay down the
longest negative bases (e.g., 2017 and 2018 Non-Asset
Loss and 2016 Asset Loss) in the Town’s Safety Plan
unfunded liability. For every $1 million of ADP the Town will
realize $1,068,000 in interest savings (reference page 64 of
the report) and results in the highest present value savings
to the Town.
Currently there is approximately $2.1m in the 115 Pension
Trust with an additional $390k programmed contribution
during FY 2025. The Commission found that using the
entire balance of $2.5m to immediately make an ADP is the
highest and best use of these funds.
The Town Council should include the ADP
recommendation as part of the FY 2025 Operating Plan.
One other important point the Town Council should
consider regarding the FY 2025 Budget. At the next Council
meeting, the Council will be adopting the FY 2025
Operating and Capital Budgets and will also consider
adopting a resolution - “Approving Commitment of Fund
Balances under GASB 54”. While technical in nature, this
is a very important resolution that requires careful
consideration because proper classification of fund
balance enhances the usefulness and transparency of the
financial statements.
Unfortunately, the Finance Commission did not take up
GASB 54 at our last meeting. However, there has been
much discussion in the past by the Commission regarding
the proper implementation of GASB 54 in reporting General
Fund balance and Staff is aware of these discussions. The
Commission has specifically discussed the benefit of re-
introducing an Unassigned Fund Balance to act as a
“shock absorber” for unplanned expenditures. The Town in
the past had an “unassigned fund balance” but for some
reason chose to assign all fund balance other than
restricted to either committed or assigned.
The Council should consider establishing an “unassigned”
fund balance to provide more transparency regarding the
intended use of the fund balances. Currently most
unplanned expenditures have been funded from the
assigned fund balance – Capital/Special projects. When
funds were originally “assigned” to this category, they were
done so for the intended use toward capital or special
projects not to fund unplanned expenditures such as
salary increases. This is not a best practice and should
stop. By establishing an “unassigned” balance, the Town
Council and the public will have more transparency
regarding the availability of fund balance usage for
unplanned expenditures.
Please do not reply to this email since it might be
construed as a potential Brown Act violation. This email is
being sent as a one-way informational communication as
permitted by the Brown Act.
Thank you for your consideration.
Phil Koen
Chair of the Finance Commission