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Home My WebLink AboutStaff Report 2406-3140CITY OF PALO ALTO CITY COUNCIL Special Meeting Monday, June 17, 2024 Council Chambers & Hybrid 4:00 PM Agenda Item 28.PUBLIC HEARING: Adoption of Budget Ordinance for Fiscal Year 2025, Including the Operating and Capital Budgets and Municipal Fee Schedule; Adoption of a Resolution determining the Appropriations Limit for Fiscal Year 2025; Acceptance of Updates to the Retiree Healthcare Actuarial Report; and Approval of Contributions for Retiree Healthcare Benefits Presentation, Public Comments City Council Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Administrative Services Meeting Date: June 17, 2024 Report #:2406-3140 TITLE PUBLIC HEARING: Adoption of Budget Ordinance for Fiscal Year 2025, Including the Operating and Capital Budgets and Municipal Fee Schedule; Adoption of a Resolution determining the Appropriations Limit for Fiscal Year 2025; Acceptance of Updates to the Retiree Healthcare Actuarial Report; and Approval of Contributions for Retiree Healthcare Benefits RECOMMENDATION The Finance Committee and Staff recommends that the City Council: 1. Adopt the Fiscal Year 2025 Budget Ordinance (Attachment A), which includes: a. City Manager’s Fiscal Year 2025 Proposed Operating and Capital Budgets, previously distributed at the May 6 City Council Meeting (Attachment A, Exhibit 1) b. Amendments to the City Manager’s Fiscal Year 2025 Proposed Operating Budget (Attachment A, Exhibit 2) c. Amendments to the City Manager’s Fiscal Year 2025 Proposed Capital Budget (Attachment A, Exhibit 3) d. Fiscal Year 2025 City Table of Organization (Attachment A, Exhibit 4); and e. Fiscal Year 2025 Municipal Fee Changes (Attachment A, Exhibit 5) including Impact and In-Lieu Fees (Exhibit 6) 2. Accept the Fiscal Year 2025 – 2029 Capital Improvement Plan 3. Adopt a Resolution determining the Appropriations Limit for Fiscal Year 2025 (Attachment B) 4. Accept the June 30, 2023 biennial actuarial valuation of Palo Alto’s Retiree Healthcare Plan and approve funding of the Actuarial Determined Calculation (ADC) for Fiscal Year 2025 and Fiscal Year 2026 with a two-year phase-in of the adjusted assumptions using the staff recommended funding level of $19.4 million and affirm the continued practice of transmitting amounts at a lower 5.75 percent discount rate as an additional discretionary payment to the City’s California Employers’ Retiree Benefit Trust (CERBT) Fund (Attachment D) EXECUTIVE SUMMARY The FY 2025 Adopted Budget will be $1.1 billion including the FY 2025 capital budget of $441.8 million and $1.7 billion over the 2025-2029 five-year Capital Improvement Plan (CIP). This is an increase of approximately $82.1 million over the proposed budget, mainly due to reappropriation of funding for continuing capital projects as well as funding added for Council Priorities as part of the budget review by the Finance Committee and Council. This budget recommends citywide staffing levels to increase by 29.00 full-time equivalent positions (FTE) from the FY 2024 adopted level for a total authorized staffing of 1,092.10 FTE in FY 2025. This is a net increase of 9.00 FTE from the proposed budget to address Council Priorities and associated administrative support. This memorandum provides all necessary documents and transactions for the City Council adoption of the Fiscal Year (FY) 2025 Operating Budget, Capital Budget, and Municipal Fee schedule effective July 1, 2025, unless otherwise regulated. This action reflects two months of public dialogue by the Council and Finance Committee and provides a summary of all changes to the City Manager’s FY 2025 Proposed Budget received by the Council on May 6, 2024. The necessary supporting documents for formal adoption by the City Council include the FY 2025 Budget Ordinance and the Table of Organization, and Resolution for Appropriations Limit for FY 2025. On May 21st the Finance Committee “Committee” (CMR 2402-26641) unanimously recommended the City Council adopt the FY 2025 budget inclusive of the Final Recommended Changes section of this memorandum. On June 4 th the Finance Committee amended their recommendation to decrease the Real Property Investments Reserve by $1.5 million to $1.0 million in FY 2025 and ongoing; fund the Budget Stabilization Reserve at the 18.5% level of expenses in FY 2025; and increase the Uncertainty Reserve with remaining savings in FY 2025 for use in the FY 2026 Budget planning process. All changes to the Proposed Budget recommended by the Finance Committee are detailed for the FY 2025 Operating Budget, by fund and by department, in Attachment A Exhibits 2 through 6. Through the recommended budget actions, the community can expect continued high quality of services in Fiscal Year 2025, with a focus on building and strengthening services throughout the City. In addition, this budget invests in organizational resilience through continued workforce recruitment and retention efforts, furthers innovative service delivery and advances Council Priorities and related workplans. The City continues to make infrastructure a priority through capital project investments in FY2025 and through the 2025-20209 Capital Improvement Plan (CIP). The FY 2025 budget includes projects to maintain current infrastructure such as streets, sidewalks, and facilities as well as enterprise funded capital needs such as electric, gas, and water distribution networks and 1 May 21, 2024, Finance Committee, Discussion on the Fiscal Year (FY) 2025 Budget Wrap-Up and Recommended FY 2025 Budget including the FY 2025 Municipal Fee Schedule for City Council Adoption; https://cityofpaloalto.primegov.com/api/compilemeetingattachmenthistory/historyattachment /?historyId=543c404f-2b05-4cbb-b9df-75ffb768545d substantial improvements at the Wastewater Quality Control Plant. The 2025-2029 CIP also includes projects to upgrade the City’s infrastructure such as electric vehicle charging, electric grid modernization, and upgrading the fiber network to allow for Fiber to the Premises (FTTP). To balance the budget for FY 2025, one-time funding from the Council appropriated Uncertainty Reserve, the Development Services Reserve, and the Budget Stabilization Reserve will be used to fund service priorities. A total of $3.3 million in General Fund expenditures has been added to FY 2025 proposed funding levels to support a number of Council priority progra ms that are listed later in the report. In addition, during the Budget Hearings, certain items did not require additional funding at the time of budget adoption but were recommended as part of staff’s workplan for FY 2025. These items are listed later in the report and as a path forward staff will provide additional work throughout FY 2025, including the Ability Path request which will be considered during the FY 2025 Mid-Year Budget Review. FY 2025 Review Process: Segmentation of Certain Stanford-related Matters The California Political Reform Act (PRA) requires City officials to recuse themselves from matters where it is foreseeable that the City’s decisions may have a material impact on a person or entity that is a “financial interest” to that official, and allows the City to segment multi-part items, such as the City’s budget, so that the parts of the item that are the subject of the recusal are separated from the remaining parts of the item. This year, Council Member Veenker, who provides legal services to Stanford University on life sciences patent matters, will be recusing herself from certain Stanford-related elements of the budget. Those elements are listed in Attachment C. Council must consider and resolve the Attachment C items first. Once these items have been resolved, Council Member Veenker will rejoin and the Council will review and approve the remaining sections of the FY 2025 Operating and Capital Budgets and the Municipal Fee Schedule. Also included in this staff report is the approval of the FY 2025 Appropriations (GANN) Limit that is required under Article XIIIB to the California State Constitution, as amended by proposition 98 in 1988 and Proposition 111 in 1990 (Attachment B). The appropriations limit for Fiscal Year 2025 is $219.74 million for funds subject to the appropriation limits. The City's Fiscal Year 2025 budgeted appropriations are estimated to be $46.64 million under the limit (Attachment B, Exhibit 1). Links to the meetings with the Finance Committee and the City Council, as well as the memoranda, presentations, and additional information provided for discussion can be found on the City’s website under the FY 2025 Budget Process section. BACKGROUND Per the Municipal Code, the City Manager is charged with proposing a budget that provides a clear and complete financial plan for all City activities proposed for the coming budget cycle, or fiscal year. The FY 2025 Proposed Operating and Capital Budgets were released April 26, 2024 and transmitted to the City Council at their meeting on May 6, 2024. These documents represent the planned expenditures and revenues for FY 2025 for the various fund types that constitute the City’s Budget: General Fund, Capital Fund, Enterprise Funds, Internal Service Funds, Special Revenue Funds, and Debt Service Funds. The budget documents contain an overview section with descriptions of each of these fund types and detailed information of the revenues and expenses for each fund as well as for each individual department. The FY 2025 Proposed Operating and Capital Budgets May 6, 2024 Council Study Session presentation provided an overview of the budget for review and discussion, including Citywide budget strategies, assumptions used in budget development, and a summary of service investments. As part of this discussion, the City Council provided guidance to the Finance Committee for their review of the budget documents during hearings on May 7, 8, 21, and June 4. The Finance Committee review of operating and capital budgets is structured around p ublic hearings conducted prior to the City Council adoption to complete a detailed review of the budget documents and to incorporate opportunities for community input into the decision - making process. These meeting proceedings are organized by service area and include department presentations to highlight areas of emphasis for their respective department and fund(s). Department by department, the Finance Committee reviews individual budget sections for tentative approval of the budget, potential amendments, and requests for additional information to aid in their review. At the conclusion of these hearings (Budget Wrap-up), the Finance Committee is ultimately tasked to provide recommendations to amend the Proposed Operating and Capital Budgets and Municipal Fee Schedule for City Council consideration. These amendments, and additional information recommended for City Council review, are included in this adoption memorandum. In addition to the regular schedule, staff held an additional study session on May 13 to check-in with the City Council for their feedback before the final budget wrap meeting s on May 21 and June 4. In addition, a Community Information Session was held on May 15 to directly address questions from residents in the community. The City Council adoption of the City Manager’s FY 2025 Proposed Operating and Capital Budgets and FY 2025 Municipal Fee Schedule, including the amendments summarized in the Budget Wrap-up Memorandum on May 21, 2024 (CMR 2402-2664), will represent the ratification of the amendments that were approved by vote through the budget hearings. These amendments include all changes to the Municipal Fee Schedule and the Table of Organization. A comprehensive list of meeting materials issued during Finance Committee budget hearings is available on the City website2. DISCUSSION The report is organized by the following sections: • Background and Discussion: Summary of FY 2025 budget process and overall balancing strategies organized by fund type, including funding of Council Priorities and Objectives. 2 City’s Budget Website: https://www.cityofpaloalto.org/Departments/Administrative-Services/City- Budget • FY 2025 Final Recommended Changes: A summary of final direction given by the Finance Committee on May 21st and June 4th and additional recommended technical and staff adjustments organized by fund type. • Table of Organization: A summary of additional changes to the Table of Organization because of adjustments made to the proposed budget that was released on May 6, 2024. • Municipal Fee Schedule: A summary of the changes in the review and recommendations to Council for the FY 2025 Municipal Fee Schedule for incorporation in the FY 2025 Proposed Budget (CMR 2402-25873). • FY 2025 Utility Rate Changes: A brief overview of the rate changes reviewed by the Utilities Advisory Commission and Finance Committee and the final decision the City Council will make on June 17, 2024 (CMR 2404-2842); each of these rate changes are included in the FY 2025 budget assumptions. • Attachments: Attached to this report are several documents as outlined and referenced throughout the recommendation language and the report. In addition, links to all the materials presented throughout the budget process to the City Council such as staff reports, At Places Memorandums, presentations made during the budget hearings, and transcripts from City Council Budget Hearings are included. The FY 2025 Proposed Budget outlined a two-year budget balancing strategy, bringing financial planning through June 30, 2026 and recommends using one-time surpluses to bridge near-term shortfalls in FY 2025 and partially offset shortfalls in FY 2026 while investing in priority services, infrastructure, and saving for long-term liabilities. In addition, the strategy also recommends limiting ongoing costs to mitigate the potential for greater future deficits. Overall, the enhancements reflected in this FY 202 5 Budget will build and strengthen services throughout the City, support continued workforce recruitment and retention efforts, and advance City Council priority initiatives. While there are continued unknowns and uncertainties ahead, the FY 2025 Budget offers the Council, community, and staff reason for optimism that 2025 will continue progress to address community priorities and continue robust City services that the community expects through balanced financial strategies. FY 2025 FINAL RECOMMENDED CHANGES This section reviews amendments to the FY 2025 Proposed Operating and Capital Budgets presented to the City Council on May 6, including final adjustments recommended by the Finance 3 May 8, 2024, Finance Committee, FY 2025 Proposed Municipal Fee Schedule; https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=bd4434c1-37fa-440d-8e01- 71211721b2ed Committee and technical adjustments recommended by staff. A comprehensive list of these adjustments is included in Attachment A, Exhibit 2 for changes to the FY 2025 Operating Budget, and Attachment A, Exhibit 3 for changes to the FY 2025 Capital Budget. Changes to the Table of Organization are discussed later in this memorandum, and an updated Table of Organization is included in Attachment A, Exhibit 4. Overall for operating and capital budgets, this reflects an $84.5 million, or 8.2%, increase compared to the FY 2025 Proposed Budget. This includes an increase from the FY 2025 Proposed Budget of 9.00 FTE full-time staff (8.00 FTE in the General Fund and 1.00 FTE in Enterprise Funds) and a reduction of 0.96 FTE part-time staff (-1.92 FTE in the General Fund and +0.96 in the Enterprise Fund), resulting in an overall workforce of 1,092.10 full-time positions (602.57 FTE in the General Fund). OPERATING BUDGET – General Fund Overall, the City’s General Fund is recommended to have $287.6 million in revenues and $306.9 million in expenses. To balance the budget for FY 2025, one -time funding from the Council appropriated Uncertainty Reserve, the Development Services Reserve, and the Budget Stabilization Reserve will be used to fund service priorities. A total of $3.3 million in expenditures has been added to FY 2025 proposed funding levels to support a number of Council priority programs that are listed below in Table 1. Uncertainty Reserve As part of the FY 2025 Proposed Budget, Staff recommended using $6.9 million of the $9.6 million Uncertainty Reserve to balance FY 2025, leaving $4.7 million in the Uncertainty Reserve, including using $2.0 million from the Budget Stabilization Reserve (BSR) to increase the Uncertainty Reserve for anticipated needs in FY 2026. As a result of actions taken by the Finance Committee, there are additional savings of $1.5 million (including $0.6 million from the BSR) that will be added back into the Uncertainty Reserve and bring it up to $6.2 million. In total, $2.6 million from the BSR will be used to set aside funding in the Uncertainty Reserve. The Uncertainty Reserve of $6.2 million is recommended to fund the FY 2026 projected gross deficit of approximately $11.0 million, leaving a projected net deficit of $4.8 million. Budget Stabilization Reserve The FY 2025 Proposed Budget recommended using $2.0 million from the BSR to provide additional funding in the Uncertainty Reserve, leaving the BSR at $55.0 million or 18.8% of General Fund Expenditures for FY 2025. As part of the budget actions recommended for adoption by the Finance Committee, the BSR will be reduced by $0.6 million to $54.4 million or the 18.5% target level of the Council’s recommended range of 15-20% of General Fund Expenditures. The BSR calculation excludes reserves such as the Uncertainty Reserve and the Utility Transfer Legal Cost Reserve to avoid unintentional inflation of BSR needs. Finance Committee Recommended Adjustments Throughout budget hearings in May, the Finance Committee engaged in several meetings to review proposed budget documents and recommend tentative adjustments. Table 1 provides an overview of these adjustments at various touchpoints in the budget process. TABLE 1: FY 2025 General Fund Recommended Adjustments Dept FY 2025 General Fund Recommended Adjustments Description FY 2025 Revenue or Savings/ (Cost) Ongoing Revenue or Savings/ (Cost) NON Beginning Balance – City Council Priorities Reserve $- $- NON Increase Gas Transfer to General Fund in FY25 to 14.5% (from 11.9%) & in FY26 to 18% (previously scheduled in FY27) 1,958,000 916,000 NON Increase JMZ ticket prices from $10 to $14, during peak periods 350,000 350,000 NON Use BSR to balance FY 2025 – Reduce BSR to 18.5% 605,000 - OOT Review an alternative service approach for PA Link with reduced net costs (proposed FY2025 budget funds $0.9M) 223,000 60,000 CSD Account for Los Altos & Los Altos Hills contribution for animal control services Report #2403-2827 198,000 198,000 FIR Upstaff Fire Engine 62 with 3 Sworn Staff instead of Overtime 14,000 23,000 Subtotal Sources (Revenue) $3,347,000 $1,547,000 NON Other Post Employment Benefit (OPEB) 2-Year Phase-In (1,650,000) (3,300,000) NON Increase Uncertainty Reserve to $6.2M for Future Needs (1,470,000) - CSD JMZ additional staffing, new ticketing system and promotion (509,000) (702,000) CIP California Avenue Interim Improvements (450,000) - CIP Additional funding for Roth Building Rehabilitation (PF-23001) (revise terms and conditions of the tenant work letter) $1M total including $0.2M interest earnings previously appropriated (300,000) (500,000) NON Establish Citywide Special Events & Programming ($265k total program) [Requested UNAFF $45k, 3rd Thursdays $40k, Neighbors Abroad $30k (already in FY25 Proposed Budget), Magical Bridge $150k, Environmental Volunteers Foothills Nature Preserve Program $11k one-time] (246,000) (235,000) Dept FY 2025 General Fund Recommended Adjustments Description FY 2025 Revenue or Savings/ (Cost) Ongoing Revenue or Savings/ (Cost) NON Palo Alto Transportation Management Association (PATMA) increase to $400,000 Citywide (175,000) (175,000) PWD Public Services Streets 311 Requests to support catch-up and keep-up (100,000) (107,000) FIR Upstaff Fire Engine 62 with 3 Sworn Staff instead of Overtime (74,000) (120,000) NON Car-free Streetscape Design for Ramona Street (50,000) - CSD Administrative Support for new Citywide Special Events & Programming (1 FTE) - (125,000) CIP Study of artificial turf replacement with grass at up to 4 fields (recommend use of current CIP to fund a study) - - OOT Review an alternative service approach for PA Link with reduced net costs (proposed FY2025 budget funds $0.9M) 177,000 340,000 NON Reduce Real Property Investment Reserve to $1.0M Annually 1,500,000 1,500,000 Subtotal Uses (Expense) ($3,347,000) ($3,424,000) Potential Fund Remaining (Deficit)/Surplus $- ($1,877,000) OPERATING BUDGET – Enterprise Funds Electric Fund – Associate Sustainability Program Administrator This action adds 1.0 FTE Associate Sustainability Program Administrator to the Utilities Resource Management Division. Responsibilities of this position include tracking sales and marketing results, engaging in direct customer calls related to both sales and customer experience, and assisting with customer experience improvement for various programs, starting with the heat pump water heater program. This fulfills the Council ’s Climate Action priority by supporting programs to drive gas appliance conversion to electricity and electric vehicle adoption, both of which reduce emissions supporting the City’s green electricity portfolio. Gas Fund – Equity Transfer to General Fund and Rate Adjustments Consistent with Council direction, this action increases the Gas Fund equity transfer to the General Fund from 11.9% to 14.5%, an increase of $2.0 million. This is accompanied by an increase to retail revenues by $2.0 million, supported by an increase to the gas rate in FY 2025 from 9.0% in the proposed budget to 12.5%. Water Fund – Water System Operations Staffing and Rate Adjustments Staff recommends removing the Water System Operations Staffing Proposal from the FY 2025 Proposed Budget to allow time for discussions with the Service Employee International Union (SEIU). The proposal sought to reclassify four Water System Operator II’s and two Senior Water System Operators into four Utilities Install/Repairers and two Utility Install/Repairer Leads , respectively. Staff also recommends a technical adjustment to retail revenues based on the FY 2025 Water Fund Financial Plan, which decreases overall target revenue to $52.8 million. This target incorporates the SFPUC proposed rate of $5.55 per CCF, which has since increased to $5.67 per CCF. Due to this increase, staff originally proposed an increase of 10% to rates; however, the Finance Committee recommended a 9.5% increase instead with the remaining 0.5% rate to be offset by operations reserves. OPERATING BUDGET – Other Funds Gas Tax Fund – Gas Tax Revenue Adjustment This action is a technical update to increase Gas Tax revenue estimates for Palo Alto based on the California Department of Finance’s May 2024 updates for estimated Highway Users Tax Account (HUTA) and Road Maintenance and Rehabilitation Account (RMRA) taxes for FY 2025. This also increases the transfer to the Streets Maintenance capital project (PE -86070), which is discussed below in the Capital Budget section of this report. General Benefits Fund – Healthcare and Pension Pass-through Expenses The General Benefits Fund acts as a pass-through to pay the City’s pension and healthcare costs. These costs are allocated in the various funds across the City where staff are budgeted with the corresponding revenue budgeted in the General Benefits Fund. As staff were added to the budget as part of the FY 2025 Proposed Budget and actions recommended by Finance Committee, the costs were allocated to the funds across the City, but the corresponding revenue in the General Benefits Fund was not included. This net neutral technical action is usually done as part of the adoption memo in the General Benefits Fund and will increase the estimate for charges to other funds by $1.6 million and increase expenses for pension and healthcare costs by $1.6 million to keep the fund in alignment with staffing levels. Parks Development Impact Fee Fund – Transfer Adjustment A $1,851 reduction in the transfer to the Capital Improvement Fund is recommended to align with recommended adjustments to capital project reappropriations from FY 2024 to FY 2025. Retiree Healthcare Fund – Other Post-Employment Benefits (OPEB) Actuarial Valuation On June 4, 2024, the Finance Committee unanimously recommended approval of the June 30 , 2023 actuarial valuation of Palo Alto’s Retiree Healthcare Plan (CMR 2402-2673) included in Attachment D. This report is completed biannually to provide an actuarial valuation detailing the latest status of the City of Palo Alto’s Retiree Healthcare plans for employees and retirees. The analysis is used to determine the City’s retiree healthcare liability and the annual Actuarial Determined Contribution (ADC) to the trust. In addition, the report details funding status, results of assumptions such as discount rate (DR), healthcare plan premiums, and projected future healthcare costs. During the June 4, 2024 meeting, the Finance Committee recommended a two- year phase-in of the financial impacts of the June 30, 2023 valuation. The Finance Committee also affirmed the continued practice of transmitting amounts at a lower 5.75 percent discount rate as an additional discretionary payment to the City’s California Employers’ Retiree Benefit Trust (CERBT) Fund. This recommendation supports financial flexibility for the provision of services citywide while continuing to proactively prefund long-term obligations in alignment with the City Council’s Retiree Benefits Funding Policy. This action results in an FY 2025 Adjusted ADC of $19.4 million citywide (approximately $12.2 million in the General Fund), a $2.6 million ($1.7 million in the General Fund) increase from the $16.8 million ADC from the June 30, 2021 valuation used to develop the FY 2025 Proposed Operating Budget. A detailed list of impacts by department and fund can be found in Attachment D, Exhibit 1. University Avenue Fund – Palo Alto Transportation Management Authority (PATMA) Finance Committee recommends $200,000 in additional funding for the Palo Alto Transportation Management Association (PATMA), increasing the total funding allocation from $200,000 to $400,000, with $25,000 funded by the University Avenue Parking Fund and $175,000 supported by the General Fund, to maintain current service levels. This brings the funding level to $200,000 from each fund. Previously, PATMA spent down reserves to maintain service levels and has exhausted those funds. Additional information can be found in the PATMA annual report (Report #2403-27614). CAPITAL BUDGET The City’s Capital Improvement Plan reflects a $441.8 million FY 2025 budget, and a $1.7 billion plan over the five-year CIP (FY 2025-FY 2029). Of this, the Capital Improvement Fund FY 2025 budget reflects expected expense of $124.7 million and $845.8 million over the five-year CIP. Capital Reappropriations The Municipal Code requires City Council authorization to reappropriate funds for capital projects from one fiscal year to the next. The FY 2025 budget process continues this procedure, and the FY 2025 Proposed Capital Budget included approximately $147.1 million in reappropriated funds for project expenditures across all funds. In the time since the FY 2025 Proposed Budget figures, Staff refined the FY 2024 estimated project activity levels and provided further updates to increase the reappropriations by $81.6 million, to $228.7 million across all funds. The additional reappropriation adjustments are summarized in Attachment A, Exhibit 3. Other Capital Project Adjustments In addition to the reappropriations from FY 2024 to FY 2025, several capital projects need to be adjusted based on updated information that became available after the release of the FY 202 5 Proposed Capital Budget or as a result of actions recommended in this memorandum. These adjustments are discussed below and summarized in Attachment A, Exhibit 2. Capital Improvement Fund - Baylands Boardwalk Piling Repair (PE-24000) – The FY 2025 Proposed Budget includes $660,615. An additional $203,000 is needed in FY 2025 because bids received in early May were higher than the engineer’s estimate. A contract for repairs will be going to City Council on June 18, 2024, and if it is not awarded at the start of FY 2025, the Baylands Boardwalk will need to be closed. - California Avenue Streetscape Update (PL-23000) – The California Avenue interim improvements are within the 2024 City Council Priority objectives. Description and funding are specified as part of Supplemental Report #2405-29695. Finance Committee recommends a $450,000 transfer from the General Fund to the Capital fund to support street paving adjustments, signage, planters, and site furniture. - Roth Building Rehabilitation (PF-23001) – The Palo Alto Museum (PAM) requested reimbursement of $1 million for inflationary cost increases. Because $0.2 million of 4 April 24, 2024; Finance Committee; Receive and Discuss the Palo Alto Transportation Management Association (PATMA) 2023 Annual Report, Strategic Plan, and Commute Survey; https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=64493 5 May 7, 2024; Finance Committee; Supplemental Report: Additional Funding Proposal Options for FY 2025 Budget Process Consideration; https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=64538 interest earnings from Transfer Development Rights funding and other funding to support the project had already been allocated to the project in FY 2024 as part of the Mid-Year Review (Report #2311-22336), Finance Committee recommends increased funding of $0.8 million: $0.3 million in FY 2025, funded by a transfer from the General Fund to the Capital Improvement Fund; and $0.5 million in FY 2026. - Street Maintenance (PE-86070) – The budget is recommended to be increased by $79,378 annually to align with the California Department of Finance’s May 2024 estimates for FY 2024-25 Gas Tax revenue. Gas Fund - Gas System, Customer Connections (GS-80017) – The FY 2025 Proposed Budget included a technical error which added $147,200 to the project. The recommended correction would reduce the cost of the project from $847,200 to the appropriate amount of $700,000. - Gas Main Replacements #25 (GS-15000) – To mitigate further rate increases related to the increased Gas Fund equity transfer from 11.9% to 14.5 %, and to maintain a sufficient reserve balance, staff recommends reducing the FY2025 budget for this project by $0.7 million. There is an upcoming grant that will restore this capital project funding. TABLE OF ORGANIZATION During budget hearings and in subsequent City Council meetings, the Finance Committee and City Council recommended staffing adjustments of 9.00 FTE (net). A more detailed description of these actions is included in Attachment A, Exhibit 2, and an updated Table of Organization is included in Attachment A, Exhibit 4: • Add 3.00 Fire Fighter EMTs to the Fire Department • Add 1.00 Program Assistant I to the Community Services Department • Add 4.00 Animal Caretakers to the Community Services Department • Add 1.00 Associate Sustainability Program Administrator to the Utilities Department • Add 4.00 Water System Operator II to the Utilities Department • Add 2.00 Senior Water Systems Operator to the Utilities Department • Delete 4.00 Utilities Install/Repair from the Utilities Department • Delete 2.00 Utilities Install/Repair-Leads from the Utilities Department MUNICIPAL FEE SCHEDULE On May 8, 2024, the Finance Committee reviewed the FY 2025 Proposed Municipal Fee Schedule 6 February 12, 2024; City Council Item #11: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=13351 and recommended approval as outlined in CMR 2402-25877 and further amended on May 21, 2024 (CMR 2402-2664). Attachment A, Exhibit 5 provides a summary of a ll recommended changes as reviewed by the City Council on May 8, 2024. Additionally, Exhibit 6 provides a summary of changes to Impact and In-Lieu Fees. Affordable Housing Fee Waiver As part of this amendment, a new fee was introduced to waive City staff costs associated with processing one hundred percent (100%) affordable housing planning applications under the Housing Element Program Implementation 3.1 for Fee Waivers and Adjustments. The objective of the fee waiver is to support the production of affordable housing in Palo Alto. Approval of this fee is expected to reduce planning application costs by approximately $5,000 to $20,000 per affordable housing project that is processed for a planning entitlement. Due to the low volume of one hundred percent affordable housing applications, staff anticipates minimal revenue impact in FY 2025. FISCAL YEAR 2025 RATE CHANGES An overview of the rate changes was reviewed and approved by the Utilities Advisory Commission (UAC) and Finance Committee in April 2024. These rate changes are included in the FY 2025 budget assumptions. This section references those changes for informati onal purposes only; a separate report recommending final rate changes will be considered by the City Council on June 17, 2024 (CMR 2404-2842). • 9.0% rate change for Electric (recommended by UAC and Finance Committee); • 2.6% CPI increase for Fiber (recommended by UAC and Finance Committee); • 12.5% rate increase for Gas (recommended by UAC at 9% and Finance Committee at 12.5%); • 0.0% rate change for Refuse; • 2.6% CPI increase for Stormwater (recommended by UAC and Finance Committee); • 15.0% rate change for Wastewater (recommended by UAC and Finance Committee); and • 9.5% rate change for Water (recommended by UAC at 10% and Finance Committee at 9.5%) The proposed rate changes will allow Palo Alto to invest in utility infrastructure, gradually increase reserves to guideline levels, and to support community goals. As utility infrastructure ages, investment is needed to maintain the reliability of the electric, gas, stormwater, wastewater, and water utilities. These rate increases will support the maintenance and replacement of infrastructure including rebuilding Palo Alto’s wastewater treatment plant (Regional Water Quality Control Plant). Investment in modernizing the electric grid will allow the City to achieve the Council’s Sustainability and Climate Action goals. 7 5/8/2024, Finance Committee, FY 2025 Municipal Fee Schedule Amendments; https://cityofpaloalto.primegov.com/Portal/viewer?id=2114&type=0 The Finance Committee tentatively approved the rate changes listed above including the following modifications from the Proposed Budget: the 12.5% increase for Gas resulted from changing the Gas Equity Transfer to the General Fund from 11.9% to 14.5% of F Y 2023 gross revenue; and lowering the distribution rate increase to maintain an overall expected bill impact of 9.5% percent increase for Water through the use of additional rate stabilization reserve funds in FY 2025. In addition, the Finance Committee tentatively approved the 9.0% increase for the median residential electric customer which is a result of a cost of service analysis (COSA) for the City’s electric rates to ensure that electric rates continue to represent the Utility’s cost to serve customers; the 15.0% increase for Wastewater Collection due to increasing Capital costs in Wastewater Collection and at the Regional Water Quality Control Plant; the 2.6% CPI increase for Fiber customers on the EDF-1 rate in accordance with the original dark fiber leasing agreement; and 2.6% CPI increase for Stormwater, consistent with the 2017 Storm Water Management Fee ballot measure, to keep fund revenues consistent with inflationary cost increases and to provide sufficient funds for planned Stormwater Management capital and operating expenditures. STAFF WORKPLAN During the Budget Hearings, certain items did not require additional funding at the time of budget adoption but were recommended as part of staff’s workplan for FY 2025. The list below is reflective of the items from the Budget Hearings that staff will provide additional work throughout FY 2025. - Ability Path (Request $250,000) The Committee on June 4th requested that the Ability Path request be considered during the FY 2025 Mid-Year budget Review. - Analyze Fire Emergency Medical Response Fee Adjustments (Ongoing Revenue TBD) The Committee requested an analysis of Fire Emergency Medical Response Fees to offset the costs of City medical response costs. In FY 2025, the Citywide Cost Allocation Plan and Municipal Fee Study will be fully reviewed, including further analysis of Fire EMS response fees for appropriate alignment to cost recovery levels. Such draft fees will be presented to the Committee and Council for review and approval and take effect in July 2025. - Fire Emergency Medical Response; Supplemental Resources (Estimated costs: $1,000,000 - $4,000,000 Ongoing) The Committee requested staff analyze different EMS models and associated fiscal impacts that would improve the City’s capacity to cover ambulance call volume during peak hours. During the budget hearings, the Committee reviewed this contract option, and recommended the consideration of two different model options to establish a supplemental ambulance unit. One model is an activation through staffing, which can be accomplished through either traditional sworn staffing (i.e. Firefighters) or civilian staffing (i.e. Single Role). This staffing approach would require labor discussions, includes staffing engines at Fire Stations 2 and 4, and with a multi-year phased-in implementation ultimately costing approximately $3.2 million to $4.0 million annually. The second model is an activation through third-party contract services, which would require a robust procurement solicitation (i.e. RFP process), with an informal quotation of $1.0 million annually. This is an essential service that needs to be implemented correctly, and accordingly, staff proposes to analyze this during FY 2025 and provide the Committee and Council with an in-depth analysis of the two models, fiscal impacts, and feasibility and implementation. Budgetary appropriation would follow such analysis and Council authorization. - Review Parks Restroom Prioritization (Specifically Pardee Park (Ongoing capital project costs TBD) The Committee requested staff to review parks restroom prioritization with a focus on Pardee Park. Several considerations influence the prioritization of park restroom projects. The Parks, Trails, Natural Open Space and Recreation Master Plan (2017) states, “The City will actively pursue adding park restrooms in parks that are approximately 2 acres or larger, have amenities that encourage visitors to stay in the park, have a high level of use and have no nearby restrooms.” Using those criteria, the following potential locations were included in the Master Plan: Bol Park, Bowden Park, Eleanor Pardee Park, Johnson Park, Ramos Park, Robles Park, and Terman Park. These are further prioritized by the level of community support, existing amenities in the park that may draw large crowds, timing with other projects in the same park, and other factors such as access to utilities. Additionally, restrooms in other parks may be prioritized above those identified in the Master Plan if a need arises due to an incre ase in park visitation from adding new amenities such as playgrounds or pickleball courts. The 2025-2029 Capital Improvement Plan includes funding in the Park Restroom Installation project (PG-19000) for the installation of restrooms in City parks every other year. A restroom at Mitchell Park is scheduled for installation in FY 2024, while specific parks have not yet been identified for restroom installations in FY 2026 and FY 2028. Staff recommends adding Eleanor Pardee Park to the workplan in FY 2026 and evaluating the workplan for FY 2028 in line with the Foothills Nature Preserve Restroom Replacement project (PE-26000) to align with staff workload capacity to install park restrooms. CSD staff can do some initial outreach starting in Fall 2024 for Eleanor Pardee Park given the previous opposition to restrooms at that location in 2007 and 2013, with the goal of funding it in the FY 2026 Capital budget. - Active Recruitment Digital Marketing Services (Contract Services) On May 7, 2024, the Committee directed staff to analyze a pilot recruitment digital marketing services for talent attraction to support organizational resilience. While the original estimate is $250,000, later reduced to $50,000 placeholder, staff at this time proposes this as an FY 2025 work plan item to analyze a pilot program in collaboration with city departments and contract vendor(s). No budget appropriation is requested at this time, but should a need arise, staff will update Council at FY 2025 mid-year. - Establish Organizational Development & Safety Division ($135,000 Ongoing; 50% GF/50% ISF) On May 7, 2024, the Committee added 1.0 FTE focused on organizational development and safety division with Human Resources. Staff proposes this to be a FY 2025 work plan item to allow time to analyze and align with the risk function transition currently underway between Human Resources and Administrative Services. Funding for this position would be split equally between the General Fund and the General Liability Fund, but no appropriation is requested for FY 2025. - Explore financial, outreach, and policy processes for adding East Palo Alto to resident rates for the golf course (Ongoing revenue reduction TBD) The Committee directed staff to explore providing the discounted residents rates for Palo Alto golf to East Palo Alto (EPA) residents. Staff proposes this to be a FY 2025 work plan and estimates any fiscal impact, if significant, may be incorporated into the FY 2025 mid - year budget update. - Increasing Revenue-Generating CSD Programming to Meet Demand (Ongoing cost & revenue TBD) The Committee directed staff to analyze flexibility in increasing CSD classes to meet demand. This will likely entail a review of class demand, procurement, and facility capacity. Staff proposes this to be a FY 2025 work plan, and no budget adjustment is requested at this time. APPROPRIATIONS LIMIT FOR FISCAL YEAR 2025 California voters approved an initiative on November 6, 1979 that added Article XIIIB to the State Constitution, as amended by Proposition 98 in 1988 and Proposition 111 in 1990. The provisions of this article place limits on the amount of revenue that can be appropriated by all entities of government. The appropriation limit is adjusted annually on the basis of population and per capita income changes provided annually by the California Department of Finance . Based on Article XIIIB, the City of Palo Alto can use the larger of two measurements of population growth, (county or city population growth) in the appropriations limit calculation. For Fiscal Year 2025, the City is using the 2023-2024 percent change in population growth of the County of Santa Clara in the calculation. The City typically uses the highest factor in order to provide maximum appropriation flexibility. The appropriations limit for Fiscal Year 2025 is $219.74 million for funds subject to the appropriation limits. The City's Fiscal Year 2025 budgeted appropriations are estimated to be $46.64 million under the limit (Attachment B, Exhibit 1). As required by State law, documentation used to compute the appropriations limit has been made available to the public at least fifteen days prior to the Council meeting at which the appropriations limit is being adopted, and notice was published of the availability of these materials. RESOURCE IMPACT This report summarizes and seeks the City Council approval of the FY 2025 Operating and Capital Budgets, the supporting fee schedules, and table of organization in order to support the projections and appropriations included. The approval of the City Manager’s FY 2025 Capital and Operating Budget, as recommended to be amended in this report, would result in a projected General Fund Budget Stabilization Reserve of $54.4 million. At recommended expense levels of $294.2 million, after adjusting for reserves such as the Uncertainty Reserve and the Utility Transfer Legal Cost Reserve, the BSR is at 18.5%, the Council’s target in the recommended range of 15-20% of General Fund Expenditures. Exclusion reserve funding has been done to avoid unintentional inflation of the BSR. The projected changes to the fund balance for all other funds including Enterprise Funds, Internal Services Funds, Special Revenue Funds, and Capital Funds are outlined in Attachment A and accompanying exhibits and impacts to fund balance summarized in Table 2. TABLE 2: Resource Impact (Non-General Funds with Fund Balance Change) Fund Type Fund Name Fund Balance Change Capital Capital Improvement Fund -$6.3M Cubberley Infrastructure Fund -$1.0M Enterprise Airport Fund -$12k Electric Fund -$9.2M Fiber Fund -$6.4M Gas Fund -$4.1M Refuse Fund -$48k Stormwater Management Fund -$5.9M Utilities Administration Fund +$3k Wastewater Collection Fund +$35k Wastewater Treatment Fund -$7.3M Water Fund -$6.0M Internal Service General Benefits Fund +$0.3M Printing and Mailing Fund -$5k Technology Fund -$1.3M Vehicle Fund +$0.3M Special Revenue California Avenue Parking Permit Fund -$1k Parks Development Impact Fee Fund +$2k Residential Parking Permit Fund -$1k University Avenue Parking Permit Fund -$27k STAKEHOLDER ENGAGEMENT The budget process is structured around public hearings conducted before City Council adoption to complete a detailed review of the budget documents and incorporate opportunities for community input in the decision-making process. The community was encouraged to engage with the budget process through scheduled public meetings with the Finance Committee and City Council, a community informational session with City staff, and direct emails to the City Manager and City Council. Additionally, the City maintains a dedicated webpage for meeting materials and other budget information8. ENVIRONMENTAL REVIEW Adoption of the City budget and associated actions is not a project under California Environmental Quality Act (CEQA) Guidelines Section 15378(b)(5) (organizational or administrative activities that will not result in direct or indirect physical changes in the environment). Attachments: Attachment A - FY 2025 Budget Adoption Ordinance Attachment A, Exhibit 1 - City Manager's Fiscal Year 2025 Proposed Operating & Capital Budgets & Municipal Fee Attachment A, Exhibit 2 and 3 - Amendments to the City Manager's Fiscal Year 2025 Proposed Operating and Capital Budgets Attachment A, Exhibit 4 - Table of Organization Attachment A, Exhibit 5 - Fiscal Year 2025 Municipal Fee Changes Attachment A, Exhibit 6 - Impact and In-Lieu Municipal Fees Attachment B - FY 2025 City Appropriations Limit Resolution Attachment B, Exhibit 1 - Appropriations Limit Calculation Attachment C - FY 2025 Summary of Stanford Investments Attachment D - June 30, 2023 OPEB Actuarial Valuation Report (CMR 2402 -2673) Attachment D, Exhibit 1 - Central OPEB Adjustments in Various Funds Attachment E - Planning and Transportation Commission Letter of the 2025-2029 Capital Improvement Plan to the City’s Comprehensive Plan APPROVED BY: Lauren Lai, Administrative Services Director 8 City’s Budget Website: www.cityofpaloalto.org/budget ATTACHMENT A ORDINANCE NO. XXXX ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO ADOPTING THE BUDGET FOR FISCAL YEAR 2025 SECTION 1. The Council of the City of Palo Alto finds and determines as follows: A. Pursuant to the provisions of Section 6(g) of Article IV of the Charter of the City of Palo Alto and Chapter 2.28 of the Palo Alto Municipal Code, the City Manager has prepared and submitted to the City Council, by letter of transmittal, a budget proposal for Fiscal Year 2025; and B. Pursuant to the provisions of Section 12 of Article III of the Charter, the Council did, on June 17, 2024, hold public hearings on the budget after publication of notice in accordance with Section 2.28.070 of the Palo Alto Municipal Code; and C. In accordance with the provisions of Chapter 8 of Division 1, of Title 7, commencing with Section 66016 of the Government Code, as applicable, the Council did on June 17, 2024, hold a public hearing on the proposed amendments to the Municipal Fee Schedule, after publication of notice and after availability of the data supporting the amendments was made available to the public at least 10 days prior to the hearing. SECTION 2. Pursuant to Chapter 2.28 of the Palo Alto Municipal Code, the following documents, collectively referred to as “the budget” are hereby approved and adopted for Fiscal Year 2025: (a) The budget document (Exhibit “1”) containing the proposed operating and capital budgets submitted on May 6, 2024, by the City Manager for Fiscal Year 2025, entitled “City of Palo Alto - City Manager’s Fiscal Year 2025 Proposed Budget” covering General Government Funds, Enterprise Funds, Special Revenue Funds, and Internal Service Funds, a copy of which is on file in the Department of Administrative Services, to which copy reference is hereby made concerning the full particulars thereof, and by such reference is made a part hereof; and (b) The Amendments to the City Manager’s Fiscal Year 2025 Proposed Budget, attached hereto as Exhibit “2”and Exhibit “3” and made a part hereof; and (c) Changes and revised pages in the Table of Organization, as displayed on pages 503 through 524 in “Exhibit 1,” and amended in Exhibit “4” made a part hereof; and ATTACHMENT A (d) Fee changes of the Municipal Fee Schedule attached hereto as Exhibit “5” including changes to Impact and In-Lieu Fees attached hereto as Exhibit “6”. SECTION 3. The sums set forth in the budget for the various departments of the City, as herein amended, are hereby appropriated to the uses and purposes set forth therein. SECTION 4. All expenditures made on behalf of the City, directly or through any agency, except those required by state law, shall be made in accordance with the authorization contained in this ordinance and the budget as herein amended. SECTION 5. Appropriations for the Fiscal Year 2024 that are encumbered by approved purchase orders and contracts for which goods or services have not been received or contract completed, and/or for which all payments have not been made, by the last day of the Fiscal Year 2024 shall be carried forward and added to the fund or department appropriations for Fiscal Year 2025. SECTION 6. The City Manager is authorized and directed to make changes in the department and fund totals and summary pages of the budget necessary to reflect the amendments enumerated and aggregated in the budget as shown in Exhibit “2” and Exhibit “3” and the Fiscal Year 2024 appropriations carried forward as provided in Section 5. SECTION 7. As specified in Section 2.04.320 of the Palo Alto Municipal Code, a majority vote of the City Council is required to adopt this ordinance. SECTION 8. As specified in Section 2.28.140(b) of the Palo Alto Municipal Code, the Council of the City of Palo Alto hereby delegates the authority to invest the City’s funds to the Director of Administrative Services, as Treasurer, in accordance with the City’s Investment Policy for Fiscal Year 2025. SECTION 9. The Council of the City of Palo Alto adopts the changes to the Municipal Fee Schedule as set forth in Exhibit “5” including changes to Impact and In-Lieu Fees in Exhibit “6”.The amount of the new or increased fees and charges is no more than necessary to cover the reasonable costs of the governmental activity, and the manner in which those costs are allocated to a payer bears a fair and reasonable relationship to the payer’s burden on, or benefits received from, the governmental activity. All new and increased fees shall go into effect immediately; provided that pursuant to Government Code Section 66017, all Planning & Community Environment Department fees relating to a “development project” as defined in Government Code Section 66000 shall become effective sixty (60) days from the date of adoption. SECTION 10. Fees in the Municipal Fee Schedule are for government services provided directly to the payor that are not provided to those not charged. The amount of this fee does not ATTACHMENT A exceed the reasonable costs to the City of providing the services. Consequently, pursuant to Art. XIII C, Section 1(e)(2), such fees are not a tax. SECTION 11. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption. SECTION 12. The Council of the City of Palo Alto hereby finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: Enter Date Here AYES: NOES: ABSENT: ABSTENTIONS: NOT PARTICIPATING: ATTEST: _________________________ ___________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: City Attorney City Manager Director of Administrative Services Fiscal Year 2025 City Manager’s Proposed Operating & Capital Budgets and Municipal Fees These documents were originally distributed on May 6, 2024. Printed copies of the Proposed Budgets are available upon request for $52 per book (FY 2025 fee). Printed copies of the Municipal Fees are available upon request for $10 per book. These documents may be viewed at any City of Palo Alto Library or the City’s website: www.cityofpaloalto.org/Departments/Administrative-Services/City- Budget Changes to the Municipal Fee Schedule were distributed in the Finance Committee Packet on May 8, 2024. The City Manager’s Staff Report (#2402-2587) can be viewed on the City’s website: https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=64547 In addition, various at places memorandum and presentations were presented throughout the Finance Committee Hearings in May 2024 to provide additional information. These documents can be found on the City’s budget website under “FY 2025 Budget Process”: www.cityofpaloalto.org/Departments/Administrative- Services/City-Budget ATTACHMENT A, EXHIBIT 1 ATTACHMENT A, EXHIBIT 2 FTE Revenues Expenses Department Adjustment Adjustment Adjustment GENERAL FUND (102 & 103) Community Services Consistent with Finance Committee's direction, this action augments the Junior Museum and Zoo (JMZ) staffing by adding 1.0 Program Assistant I for Guest Services, and converting four Zoological Assistants (allocated at .48 FTE each) to four full-time Animal Caretakers. The conversion for the four positions will take effect in January. Additionally, the plan allocates $211,000 for a new JMZ ticketing system and increases revenue, reflecting peak hour ticket pricing. The costs will be partially offset by revenue from an increase to the ticket prices from $10 to $14 during peak operations. (Ongoing Net Costs: $352,000) Community Services Los Altos and Los Altos Hills Animal Care Revenue This action increases revenue from Los Altos and Los Altos Hills in accordance with the latest contract renewal (CMR 2403-2827), effective July 1, 2024, for providing animal care and control 198,338$ -$ Fire Revenue from Stanford University/ Upstaff Fire Engine 62 with three Sworn Staff instead of Overtime Consistent with Finance Committee's direction, this action adds 3.00 Firefighter EMTs to fill one Daily shift position at Fire Engine 62. These staff will increase fire response capability by converting the squad vehicle at Fire Station 2 to a full Fire Engine through be partially offset with revenue from Stanford University per the fire services agreement between the University and the City. (Ongoing Net Costs: $97,000) Non-Departmental Transfer to the Capital Improvement Fund for California Avenue Interim Improvements In support of City Council priority objectives, this action transfers $450,000 to the Capital Improvement Fund for street paving adjustments, signage, planters, and site furniture in the California Avenue Streetscape Update project (PL-23000). (Ongoing Costs: $0) -$ 450,000$ Non-Departmental Transfer to the Capital Improvement Fund for Roth Building Rehabilitation This action transfers $300,000 to the Capital Improvement Fund to reimburse the Palo Alto Museum (PAM) for inflationary cost increases related to the Roth Building Rehabilitation project (PF- 23001). (Ongoing Costs: $500,000, FY 2026 only) -$ 300,000$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2025 PROPOSED BUDGET ATTACHMENT A, EXHIBIT 2 FTE Revenues Expenses Department Adjustment Adjustment Adjustment GENERAL FUND (102 & 103) Non-Departmental This action provides $50,000 in one-time funding to begin engagement with stakeholders about the future of Ramona Street as a car-free street. Funding will be used to onboard consultant resources that will be responsible for conducting stakeholder permanent status as a car-free street, and addressing potential impacts for Ramona as a historic district. (Ongoing Costs: $0) Non-Departmental City Wide Special Event Funding Consolidation Consistent with Finance Committee Direction, this action adds ($45k), 3rd Thursdays ($40k), and Magical Bridge ($150k) as well as one-time funding for Environmental Volunteers Foothills Nature Preserve ($11k). During deliberations, Neighbors Abroad was also considered, but funding for this program is already included in the FY 2025 budget. (Ongoing Costs: $235,000) -$ 246,000$ Non-Departmental Uncertainty Reserve As a result of actions taken by the Finance Committee, funding of approximately $1.5 million is available to increase the Uncertainty Reserve for use during the FY 2026 Budget process. This action will increase the remaining funds in the Uncertainty Reserve to $6.2 million. (Ongoing Costs: $0, $6.2 million one-time reserve) -$ 1,470,442$ Non-Departmental Real Property Investment Reserve Consistent with Finance Committee Direction on June 4, 2024, this action reduces the Real Property Investment Reserve from $2.5 million to $1.0 million annually. (Ongoing Savings: $1,500,000) -$ (1,500,000)$ Office of Transportation Revenue from Stanford University/ Palo Alto Link This action reduces the net City cost of providing Palo Alto Link services by $400,000 through a combination of reduced service levels (including reduction of service hours and areas, and limitation of ridership) and increased revenue (including fare increases and additional support from Stanford). (Ongoing Net 223,000$ (177,000)$ Office of Transportation Palo Alto Transportation Management Authority (PATMA) This ongoing action increases the allocation for PATMA by $200,000, from $200,000 to $400,000, to maintain current service levels, with $25,000 funded by the University Avenue Parking Fund and $175,000 supported by the General Fund. Previously, PATMA spent down reserves to maintain service levels and has exhausted those funds. (Ongoing Costs: $175,000) -$ 175,000$ Public Works Public Services Streets & Sidewalks 311 Service Requests Staffing This ongoing action adds two hourly (0.46 FTE each) General Laborer positions to support work orders generated from Palo Alto 311 streets and sidewalks service requests and address an existing backlog. (Ongoing Costs: $107,000) ATTACHMENT A, EXHIBIT 2 FTE Revenues Expenses Department Adjustment Adjustment Adjustment GENERAL FUND (102 & 103) Utilities Consistent with Council direction, this action increases the Gas Fund equity transfer to the General Fund from 11.9% to 14.5%, an increase of approximately $2.0 million. This is accompanied by an increase to retail revenues in the Gas Fund by approximately $2.0 million, supported by an increase to the gas rate in FY 2025 from FY 2026 Only) Various Other Post-Employment Benefits (OPEB) Actuarial Valuation A detailed list of impacts by department and fund can be found in Attachment D, Exhibit 1. (Ongoing costs: $3,300,000) -$ 1,650,657$ Fund Balance Adjustment to Fund Balance (Budget Stabilization Reserve) This action adjusts the fund balance to offset adjustments -$ (605,000)$ GENERAL FUND (102 & 103) SUBTOTAL 7.04 2,743,416$ 2,743,416$ ATTACHMENT A, EXHIBIT 2 FTE Revenues Expenses Department Adjustment Adjustment Adjustment CAPITAL IMPROVEMENT FUNDS CAPITAL IMPROVEMENT FUND (471) Capital Capital Improvement Project Amendments to Proposed Reappropriations This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2024 to FY 2025, as outlined in Attachment A, Exhibit 3. Projects with other recommended adjustments are detailed below. (1,851)$ 6,088,590$ Capital Transfer from Gas Tax Fund/Street Maintenance (PE-86070) This action increases the transfer from the Gas Tax Fund and the Street Maintenance project's budget by $79,378 annually to align with the California Department of Finance’s May 2024 updates for estimated 2024-25 Gas Tax Revenue. 79,378$ 79,378$ Capital Baylands Boardwalk Piling Repair (PE-24000) To avoid boardwalk closure, this action increases the project's budget by $203,000 to support repair work for which bids were higher than the engineer's estimate. -$ 203,000$ Capital Transfer from the General Fund/ California Avenue Streetscape Update (PL-23000) In support of City Council priority objectives, this action increases the project's budget by $450,000 for street paving adjustments, signage, planters, and site furniture, offset with a transfer from the General Fund in the same amount. 450,000$ 450,000$ Capital Transfer from the General Fund/ Roth Building Rehabilitation (PF- 23001) This action provides a $300,000 reimbursement to the Palo Alto Museum (PAM) for inflationary cost increases, offset with a transfer from the General Fund in the same amount. (Ongoing 300,000$ 300,000$ Various Other Post-Employment Benefits (OPEB) Actuarial Valuation A detailed list of impacts by department and fund can be found in Attachment D, Exhibit 1. (Ongoing Costs: $108,000) -$ 54,109$ Fund Balance Adjustment to Fund Balance (Infrastructure Reserve) This action adjusts the fund balance to offset adjustments recommended in this report. -$ (6,347,550)$ CAPITAL IMPROVEMENT FUND (471) SUBTOTAL 0.00 827,527$ 827,527$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2025 PROPOSED BUDGET ATTACHMENT A, EXHIBIT 2 FTE Revenues Expenses Department Adjustment Adjustment Adjustment CAPITAL IMPROVEMENT FUNDS CUBBERLEY INFRASTRUCTURE FUND (472) Capital Capital Improvement Project Amendments to Proposed Reappropriations This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2024 to FY 2025, as outlined in Attachment A, Exhibit 3. Projects with other recommended adjustments are detailed below. -$ 1,031,944$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset adjustments recommended in this report. -$ (1,031,944)$ CUBBERLEY INFRASTRUCTURE FUND (472) SUBTOTAL 0.00 -$ -$ ATTACHMENT A, EXHIBIT 2 FTE Revenues Expenses Department Adjustment Adjustment Adjustment ENTERPRISE FUNDS AIRPORT FUND (530) Capital Capital Improvement Project Amendments to Proposed Reappropriations This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2024 to FY 2025, as outlined in Attachment A, Exhibit 3. Projects with other recommended adjustments are detailed below. 22,500$ 25,000$ Various Other Post-Employment Benefits (OPEB) Actuarial Valuation A detailed list of impacts by department and fund can be found in -$ 9,345$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset adjustments -$ (11,845)$ AIRPORT FUND (530) SUBTOTAL 0.00 22,500$ 22,500$ UTILITIES ADMINISTRATION FUND (521) Various Other Post-Employment Benefits (OPEB) Actuarial Valuation A detailed list of impacts by department and fund can be found in Attachment D, Exhibit 1. (Ongoing Savings: $7,000) -$ (3,364)$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset adjustments -$ 3,364$ UTILITIES ADMINISTRATION FUND (521) SUBTOTAL 0.00 -$ -$ ELECTRIC FUND (513 & 523) Capital Capital Improvement Project Amendments to Proposed Reappropriations This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2024 to FY 2025, as outlined in Attachment A, Exhibit 3. Projects with other recommended adjustments are detailed below. -$ 8,727,930$ Utilities Associate Sustainability Program Administrator This action adds 1.0 FTE Associate Sustainability Program Administrator to the Utilities Resource Management Division. This fulfills the Council's Climate Action priority by supporting programs to drive gas appliance conversion to electricity and electric vehicle adoption, both of which reduce emissions supporting the City's green electricity portfolio. (Ongoing Costs: $155,000) Various Other Post-Employment Benefits (OPEB) Actuarial Valuation A detailed list of impacts by department and fund can be found in Attachment D, Exhibit 1. (Ongoing Costs: $556,000) -$ 277,742$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset adjustments -$ (9,154,491)$ ELECTRIC FUND (513 & 523) SUBTOTAL 1.00 -$ -$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2025 PROPOSED BUDGET ATTACHMENT A, EXHIBIT 2 FTE Revenues Expenses Department Adjustment Adjustment Adjustment ENTERPRISE FUNDS FIBER FUND (533) Capital Capital Improvement Project Amendments to Proposed Reappropriations This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2024 to FY 2025, as outlined in Attachment A, Exhibit 3. Projects with other recommended adjustments are detailed below. -$ 6,355,164$ Various Other Post-Employment Benefits (OPEB) Actuarial Valuation A detailed list of impacts by department and fund can be found in -$ (3,028)$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset adjustments recommended in this report. -$ (6,352,136)$ FIBER FUND (533) SUBTOTAL 0.00 -$ -$ GAS FUND (514 & 524) Capital Capital Improvement Project Amendments to Proposed Reappropriations This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2024 to FY 2025, as outlined in Attachment A, Exhibit 3. Projects with other recommended adjustments are detailed below. -$ 4,690,727$ Capital Gas Main Replacements #25 (GS-15000) To mitigate further rate increases related to the Gas Fund equity transfer and to maintain a sufficient reserve balance, this action reduces the project's FY 2025 budget by $735,000. -$ (735,000)$ Utilities Gas Fund Equity Transfer Consistent with Council direction, this action increases the Gas Fund equity transfer to the General Fund from 11.9% to 14.5%, an increase of approximately $2.0 million. This is offset by an increase to retail revenues by approximately $2.0 million, supported by an increase to the gas rate in FY 2025 from 9.0% in the proposed budget to 12.5%. (Ongoing Costs: $916,000, FY 2026 Only) 1,958,000$ 1,958,000$ Utilities Water System Operations Staffing This action removes the Water System Operations Staffing Proposal from the FY 2025 Proposed Budget to allow time for discussions with the Service Employee International Union (SEIU). The proposal sought to reclassify four Water System Operator II’s and two Senior Water System Operators into four Utilities Install/Repairers and two Utility Install/Repairer Leads, respectively. (Ongoing Costs: $10,000) ATTACHMENT A, EXHIBIT 2 FTE Revenues Expenses Department Adjustment Adjustment Adjustment ENTERPRISE FUNDS Various A detailed list of impacts by department and fund can be found in Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset adjustments -$ (4,098,012)$ GAS FUND (514 & 524) SUBTOTAL 0.00 1,958,000$ 1,958,000$ REFUSE FUND (525) Various Other Post-Employment Benefits (OPEB) Actuarial Valuation A detailed list of impacts by department and fund can be found in Attachment D, Exhibit 1. (Ongoing Costs: $96,000) -$ 47,695$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset adjustments -$ (47,695)$ REFUSE FUND (525) SUBTOTAL 0.00 -$ -$ STORMWATER MANAGEMENT FUND (528) Capital Capital Improvement Project Amendments to Proposed Reappropriations This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2024 to FY 2025, as outlined in Attachment A, Exhibit 3. Projects with other recommended adjustments are detailed below. -$ 5,822,454$ Various Other Post-Employment Benefits (OPEB) Actuarial Valuation A detailed list of impacts by department and fund can be found in Attachment D, Exhibit 1. (Ongoing Costs: $72,000) -$ 36,272$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset adjustments -$ (5,858,726)$ STORMWATER MANAGEMENT FUND (528) SUBTOTAL 0.00 -$ -$ WASTEWATER COLLECTION FUND (527) Capital Capital Improvement Project Amendments to Proposed Reappropriations This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2024 to FY 2025, as outlined in Attachment A, Exhibit 3. Projects with other recommended adjustments are detailed below. -$ 40,000$ Various Other Post-Employment Benefits (OPEB) Actuarial Valuation A detailed list of impacts by department and fund can be found in -$ (74,921)$ ATTACHMENT A, EXHIBIT 2 FTE Revenues Expenses Department Adjustment Adjustment Adjustment ENTERPRISE FUNDS Fund Balance This action adjusts the fund balance to offset adjustments WASTEWATER COLLECTION FUND (527) SUBTOTAL 0.00 -$ -$ WASTEWATER TREATMENT FUND (526) Capital Capital Improvement Project Amendments to Proposed Reappropriations This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2024 to FY 2025, as outlined in Attachment A, Exhibit 3. Projects with other recommended adjustments are detailed below. 35,169,981$ 42,178,642$ Various Other Post-Employment Benefits (OPEB) Actuarial Valuation A detailed list of impacts by department and fund can be found in Attachment D, Exhibit 1. (Ongoing Costs: $590,000) -$ 295,490$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset adjustments -$ (7,304,151)$ WASTEWATER TREATMENT FUND (526) SUBTOTAL 0.00 35,169,981$ 35,169,981$ WATER FUND (522) Capital Capital Improvement Project Amendments to Proposed Reappropriations This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2024 to FY 2025, as outlined in Attachment A, Exhibit 3. Projects with other recommended adjustments are detailed below. -$ 5,632,547$ Utilities Water System Operations Staffing This action removes the Water System Operations Staffing Proposal from the FY 2025 Proposed Budget to allow time for discussions with the Service Employee International Union (SEIU). The proposal sought to reclassify four Water System Operator II’s and two Senior Water System Operators into four Utilities Install/Repairers and two Utility Install/Repairer Leads, respectively. (Ongoing Savings: $50,000) Utilities Water Rates Decrease In accordance with the FY 2025 Water Fund Financial Plan, this action reduces the annual water rate increase from 10.0% to 9.5%, reducing revenue by $297,381. (Ongoing Savings: $0) (297,381)$ -$ Various Other Post-Employment Benefits (OPEB) Actuarial Valuation A detailed list of impacts by department and fund can be found in -$ 75,809$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset adjustments -$ (5,962,639)$ WATER FUND (522) SUBTOTAL 0.00 (297,381)$ (297,381)$ ATTACHMENT A, EXHIBIT 2 Revenues Expenses Department Adjustment Adjustment SPECIAL REVENUE FUNDS PARKS DEVELOPMENT IMPACT FEE FUND (210) Non- Departmental Transfer to Capital Improvement Fund This action reduces the transfer to the Capital Improvement Fund as a result of recommended adjustments to capital project -$ (1,851)$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset the actions -$ 1,851$ PARKS DEVELOPMENT IMPACT FEE FUND (210) SUBTOTAL -$ -$ GAS TAX FUND (231) Non- Departmental Gas Tax Revenue Increase/ Transfer to Capital Improvement Fund for Street Maintenance (PE-86070) This action increases Gas Tax revenue estimates and increases transfers to the CIP for the Street Maintenance Project (PE-86070) based on the California Department of Finance's May 2024 updates for estimated 2024-25 HUTA and RMRA-SB1 taxes. 79,378$ 79,378$ GAS TAX FUND (231) SUBTOTAL 79,378$ 79,378$ CALIFORNIA AVENUE PARKING PERMITS FUND (237) Various Other Post-Employment Benefits (OPEB) Actuarial Valuation A detailed list of impacts by department and fund can be found in -$ 574$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset the actions -$ (574)$ CALIFORNIA AVENUE PARKING PERMITS FUND (237) SUBTOTAL -$ -$ RESIDENTIAL PARKING PERMIT PROGRAMS FUND (239) Various Other Post-Employment Benefits (OPEB) Actuarial Valuation A detailed list of impacts by department and fund can be found in Attachment D, Exhibit 1. (Ongoing Costs: $2,000) -$ 1,000$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset the actions -$ (1,000)$ RESIDENTIAL PARKING PERMIT PROGRAMS FUND (239) SUBTOTAL -$ -$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2025 PROPOSED BUDGET ATTACHMENT A, EXHIBIT 2 Revenues Expenses Department Adjustment Adjustment SPECIAL REVENUE FUNDS UNIVERSITY AVENUE PARKING PERMITS FUND (236) Office Of Transportation Palo Alto Transportation Management Authority (PATMA) Funding This ongoing action increases the allocation for PATMA by $200,000, from $200,000 to $400,000, to maintain current service levels, with $25,000 funded by the University Avenue Parking Fund and $175,000 supported by the General Fund. Previously, PATMA spent down reserves to maintain service levels and has exhausted those funds. (Ongoing Costs: $25,000) -$ 25,000$ Various Other Post-Employment Benefits (OPEB) Actuarial Valuation A detailed list of impacts by department and fund can be found in Attachment D, Exhibit 1. (Ongoing Costs: $5,000) -$ 2,413$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset the actions -$ (27,413)$ UNIVERSITY AVENUE PARKING PERMITS FUND (236) SUBTOTAL -$ -$ ATTACHMENT A, EXHIBIT 2 Revenues Expenses Department Adjustment Adjustment INTERNAL SERVICE FUNDS GENERAL BENFITS FUND (687) Non-Departmental This net neutral action increases the estimate for charges to other funds by $1.6 million due to staffing increases approved as part of the FY 2025 Adopted Budget. During budget hearings, the Finance Committee recommended staffing adjustments to the FY 2025 Proposed Budget in addition to the staffing adjustments included a pass-through for pension and healthcare costs; therefore this action increases expenditures correspondingly. 1,573,612$ 1,573,612$ Non-Departmental Other Post-Employment Benefits (OPEB) Actuarial Valuation Transfer for Implied Subsidy. A detailed list of impacts by department and fund can be found in Attachment D, Exhibit 1. -$ (254,500)$ Non-Departmental Adjustment to Fund Balance This action adjusts the fund balance to offset adjustments -$ 254,500$ GENERAL BENFITS FUND (687) SUBTOTAL 1,573,612$ 1,573,612$ RETIREE HEALTH BENEFITS FUND (694) Various Other Post-Employment Benefits (OPEB) Actuarial Valuation On June 4, 2024, the Finance Committee approved the June 30, 2023 actuarial valuation of Palo Alto's Retiree Healthcare Plan (CMR 2402-2673). This action results in an FY 2025 Adjusted ADC of $19.4 million citywide (approximately $12.2 million in the General Fund), a $2.6 million ($1.7 million in the General Fund) increase from the $16.8 million ADC from the June 30, 2021 valuation used to develop the FY 2025 Proposed Operating Budget. A detailed list of impacts by department and fund can be found in Attachment D, Exhibit 1. 2,603,214$ 2,603,214$ Non-Departmental Other Post-Employment Benefits (OPEB) Actuarial Valuation Transfer for Implied Subsidy. A detailed list of impacts by department and fund can be found in Attachment D, Exhibit 1. (254,500)$ (254,500)$ RETIREE HEALTH BENEFITS FUND (694) SUBTOTAL 2,348,714$ 2,348,714$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2025 PROPOSED BUDGET ATTACHMENT A, EXHIBIT 2 Revenues Expenses Department Adjustment Adjustment INTERNAL SERVICE FUNDS PRINTING & MAILING FUND (683) Various Transfer for Implied Subsidy. A detailed list of impacts by department and fund can be found in Attachment D, Exhibit 1. (Ongoing Costs: $10,000) -$ 5,296$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset adjustments -$ (5,296)$ PRINTING & MAILING FUND (683) SUBTOTAL -$ -$ TECHNOLOGY FUND (682) Capital Capital Improvement Project Amendments to Proposed Reappropriations This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2024 to FY 2025, as outlined in Attachment A, Exhibit 3. -$ 1,274,731$ Various Other Post-Employment Benefits (OPEB) Actuarial Valuation A detailed list of impacts by department and fund can be found in -$ 71,067$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset adjustments recommended in this report. -$ (1,345,798)$ TECHNOLOGY FUND (682) SUBTOTAL -$ -$ VEHICLE REPLACEMENT & MAINTENANCE FUND (681) Capital Capital Improvement Project Amendments to Proposed Reappropriations This action reflects the impact from adjustments to capital projects as a result of funds recommended to be reappropriated from FY 2024 to FY 2025, as outlined in Attachment A, Exhibit 3. Projects with other recommended adjustments are detailed below. -$ (290,553)$ Various Other Post-Employment Benefits (OPEB) Actuarial Valuation A detailed list of impacts by department and fund can be found in Attachment D, Exhibit 1. (Ongoing Costs: $40,000) -$ 20,134$ Fund Balance Adjustment to Fund Balance This action adjusts the fund balance to offset adjustments recommended in this report. -$ 270,419$ -$ -$ VEHICLE REPLACEMENT & MAINTENANCE FUND (681) SUBTOTAL Capital Improvement Plan FY 2024 Reappropriations to FY 2025 ATTACHMENT A, EXHIBIT 3 Fund Number and Name Project Title Project # Reappropriation Adjustment Reappropriation Adjustment Revenue Reappropriation Reappropriation Adjustment Americans With Disabilities Act Compliance PF-93009 800,000 800,000 Animal Shelter Renovation PE-19002 2,712,807 2,712,807 Art In Public Spaces AC-86017 1,637,708 1,637,708 Athletic Courts Resurfacing PG-06001 202,644 (28,617) 174,027 Baylands Comprehensive Conservation Plan PG-17000 43,100 43,100 Baylands Nature Preserve Entrance Gate OS-24000 120,000 (22,538) 97,462 Benches, Signage, Walkways, Perimeter Landscaping, and Site Amenities PG-06003 128,021 128,021 PL-04010 2,900,000 2,900,000 PL-15002 63,528 (6,130) 57,398 PE-20000 75,066 75,066 PG-13003 87,150 87,150 PE-24002 199,834 199,834 PE-24003 26,350 26,350 PF-16006 6,365,504 6,365,504 500,000 500,000 471 - Capital Improvement Fund Total 56,180,015 6,088,590 62,268,605 16,875,004 (1,851) 16,873,153 Cubberley Field Restroom CB-17002 137,828 510,848 648,676 Cubberley Gym HVAC Replacement CB-24000 770,000 30,000 800,000 Cubberley Repairs CB-17001 491,096 491,096 Cubberley Roof Replacements CB-16002 400,000 400,000 Capital Improvement Plan FY 2024 Reappropriations to FY 2025 ATTACHMENT A, EXHIBIT 3 Fund Number and Name Project Title Project # Expense Reappropriation Adjustment Reappropriation Adjustment Revenue Reappropriation Reappropriation Adjustment Airport Access Road Reconstruction AP-24000 300,000 300,000 270,000 270,000 Airport Parking Lot Electric Vehicle Charger AP-24001 25,000 25,000 22,500 22,500 Airport Temporary Office Buildings AP-22001 358,800 358,800 Airport Zero Emission Vehicle Fleet Replacement AP-23000 156,647 156,647 156,647 156,647 Automated Weather Observation System (AWOS)AP-19000 341,839 341,839 341,839 341,839 Colorado Power Station Equipment Upgrades EL-19001 1,733,011 1,733,011 Colorado Substation Site Improvements EL-19002 1,138,294 1,138,294 Foothills Rebuild (Fire Mitigation)EL-21001 1,742,878 460,974 2,203,852 Grid Modernization for Electrification EL-24000 15,000,000 3,182,640 18,182,640 15,000,000 15,000,000 Inter-substation Line Protection Relay EL-17005 462,505 462,505 Rebuild Underground District 24 EL-10006 139,066 139,066 Smart Grid Technology Installation EL-11014 710,177 297,572 1,007,749 Substation Breaker Replacement EL-17002 1,137,480 1,209,854 2,347,334 Substation Physical Security EL-16003 2,812,575 104,014 2,916,589 Fiber Optics Network - System Improvements FO-10001 400,000 400,000 Fiber Optics Network - System Rebuild FO-16000 12,314,530 30,000 12,344,530 Fiber-to-the-Premises (FTTP)FO-24000 5,925,164 5,925,164 Gas Distribution System Improvements GS-11002 666,723 666,723 Gas Main Replacement - Project 24 GS-14003 567,190 131,610 698,800 Gas Main Replacement - Project 25 GS-15000 3,703,849 3,703,849 Gas Meters and Regulators GS-80019 188,545 188,545 Corporation Way System Upgrades and Pump Station SD-21000 3,526,712 3,526,712 East Meadow Circle Connection to Adobe Creek Pump Station SD-26000 134,487 134,487 528 - Stormwater Management Fund Total 2,255,538 5,822,454 8,077,992 Wastewater General Equipment and Tools WC-13002 40,000 40,000 40,000 40,000 Headworks Facility Replacement WQ-16002 2,638,974 372,915 3,011,889 Horizontal Levee Pilot WQ-22001 246,666 (170,431) 76,235 Joint Intercepting Sewer Rehabilitation (Phase 1)WQ-24000 3,565,030 28,890 3,593,920 3,565,030 28,890 3,593,920 Outfall Line Construction WQ-19000 10,605,800 10,605,800 Plant Repair, Retrofit, and Equipment Replacement WQ-19002 5,057,207 4,816,716 9,873,923 Primary Sedimentation Tank Rehabilitation WQ-14003 1,000,000 1,989,461 2,989,461 Secondary Treatment Upgrades WQ-19001 1,132,679 34,996,091 36,128,770 1,132,679 34,996,091 36,128,770 Local Advanced Water Purification System WQ-19003 16,981,395 145,000 17,126,395 16,981,395 145,000 17,126,395 41,227,751 42,178,642 83,406,393 21,679,104 35,169,981 56,849,085 Water Distribution System Improvements WS-11003 670,388 670,388 Water General Equipment/Tools WS-13002 50,000 50,000 Water Main Replacement - Project 29 WS-15002 3,089,102 3,089,102 Water Main Replacement - Project 30 WS-16001 415,000 415,000 Water Regulation Station Improvements WS-07000 18,519 18,519 Water System Supply Improvements WS-11004 2,817,000 601,706 3,418,706 Water Tank Seismic Upgrade and Rehabilitation WS-09000 737,832 737,832 Water, Gas, Wastewater Utility GIS Data WS-02014 50,000 50,000 City Council Chambers Upgrade TE-19001 1,770,910 (10,000) 1,760,910 Computer Aided Dispatch (CAD) Upgrade TE-23000 640,000 640,000 Enterprise Resource Planning Upgrade TE-19000 530,620 (10,620) 520,000 Infrastructure Management System TE-13004 361,874 361,874 Radio Infrastructure Replacement TE-05000 259,900 259,900 Utilities Customer Bill System Improvements TE-10001 293,477 293,477 Emergency Repair and Replacement VR-15001 39,662 39,662 Scheduled Vehicle and Equipment Replacement - FY VR-20000 30,000 30,000 Scheduled Vehicle and Equipment Replacement - FY VR-21000 17,351 17,351 Scheduled Vehicle and Equipment Replacement - FY VR-23000 873,477 (144,146) 729,331 Scheduled Vehicle and Equipment Replacement - FY VR-24000 4,364,538 (186,069) 4,178,469 5,285,366 (290,553) 4,994,813 TABLE OF ORGANIZATION Table of Organization FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % General Fund Administrative Services Account Specialist 4.13 4.13 4.13 4.13 ——% Account Specialist-Lead 3.45 3.45 3.45 3.45 ——% Accountant 2.00 2.00 2.00 2.00 ——% Administrative Assistant 1.00 1.00 1.00 1.00 ——% Administrative Associate II 0.50 0.50 1.00 1.00 ——% Administrative Associate III 1.00 1.00 1.00 1.00 ——% Assistant Director Administrative Services 1.65 1.65 1.65 1.65 ——% Buyer 2.00 2.00 2.00 2.00 ——% Chief Procurement Officer 1.00 1.00 1.00 1.00 ——% Contracts Administrator 1.70 2.70 3.70 3.70 ——% Director Administrative Services/CFO 0.80 0.80 0.80 0.80 ——% Director Office of Management and Budget 1.00 1.00 1.00 1.00 ——% Management Analyst 2.00 2.00 2.00 3.00 1.00 50.0% Manager Budget 2.00 2.00 2.00 2.00 ——% Manager Real Property 1.00 1.00 1.00 1.00 ——% Manager Revenue Collections 0.62 0.62 0.62 0.62 ——% Manager Treasury, Debt & Investments 0.60 0.60 0.60 0.60 ——% Manager, Finance 1.00 1.00 1.00 1.00 ——% Payroll Analyst 2.00 2.00 2.00 2.00 ——% Senior Accountant 3.00 3.00 3.00 3.00 ——% Senior Buyer 1.00 1.00 1.00 1.00 ——% Senior Management Analyst 2.30 2.30 2.30 2.30 ——% Storekeeper 1.00 2.00 2.00 2.00 ——% Storekeeper-Lead 0.20 0.20 0.20 0.20 ——% Attachment A, Exhibit 4 TABLE OF ORGANIZATION Warehouse Supervisor 0.20 0.20 0.20 0.20 ——% Total Administrative Services 37.15 39.15 40.65 41.65 1.00 2.5% City Attorney Assistant City Attorney 3.00 4.00 4.00 4.00 ——% Chief Assistant City Attorney 1.00 1.00 1.00 1.00 ——% City Attorney 1.00 1.00 1.00 1.00 ——% Claims Investigator 1.00 1.00 1.00 1.00 ——% Deputy City Attorney 1.00 —0.50 0.50 ——% Legal Fellow 1.00 1.00 1.00 1.00 ——% Secretary to City Attorney 1.00 1.00 1.00 1.00 ——% Senior Management Analyst 1.00 1.00 1.00 1.00 ——% Total City Attorney 10.00 10.00 10.50 10.50 ——% City Auditor City Clerk Administrative Associate III 2.00 2.00 2.00 2.00 ——% Assistant City Clerk 1.00 1.00 2.00 2.00 ——% City Clerk 1.00 1.00 1.00 1.00 ——% Deputy City Clerk 1.00 1.00 ————% Total City Clerk 5.00 5.00 5.00 5.00 ——% City Manager Administrative Assistant 2.00 2.00 3.00 3.00 ——% Assistant City Manager 1.00 1.00 1.00 1.00 ——% Assistant to the City Manager 1.00 3.00 3.00 3.00 ——% Chief Communications Officer 1.00 1.00 1.00 1.00 ——% City Manager 1.00 1.00 1.00 1.00 ——% Deputy City Manager 1.00 1.00 1.00 1.00 ——% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Executive Assistant to the City Manager 1.00 1.00 1.00 1.00 ——% Management Fellow**———1.00 1.00 —% Manager Communications 1.00 1.00 1.00 1.00 ——% Senior Management Analyst —1.00 1.00 1.00 ——% Total City Manager 9.00 12.00 13.00 14.00 1.00 7.7% Community Services Administrative Assistant 1.00 1.00 1.00 1.00 ——% Animal Caretaker**,***———4.00 4.00 —% Assistant Director Community Services 1.00 1.00 2.00 2.00 ——% Building Serviceperson 1.00 1.00 2.00 2.00 ——% Building Serviceperson-Lead 0.60 0.60 2.00 2.00 ——% Coordinator Recreation Programs 4.00 4.00 5.75 5.75 ——% Director Community Services 1.00 1.00 1.00 1.00 ——% Division Manager Open Space, Parks & Golf ——1.00 1.00 ——% Inspector, Field Services 2.00 2.00 2.00 2.00 ——% Junior Museum & Zoo Educator 3.25 4.10 4.85 4.85 ——% Management Analyst 1.00 1.00 1.00 1.00 ——% Management Assistant 1.00 1.00 1.00 1.00 ——% Manager Community Services 5.00 5.00 5.00 5.00 ——% Manager Community Services Senior Program 4.00 4.00 4.00 4.00 ——% Manager Human Services 1.00 1.00 1.00 1.00 ——% Park Maintenance Person 6.00 6.00 6.00 6.00 ——% Park Maintenance-Lead 1.00 1.00 1.00 1.00 ——% Park Ranger 5.00 6.00 6.00 6.00 ——% Parks/Golf Crew-Lead 2.00 2.00 2.00 2.00 ——% Producer Arts/Science Program 11.00 12.25 9.50 9.50 ——% Program Assistant I***3.00 3.00 3.75 4.75 1.00 26.7% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Program Assistant II 4.00 4.00 4.00 4.00 ——% Project Manager 0.10 0.10 0.10 0.10 ——% Senior Management Analyst 1.00 1.00 1.00 1.00 ——% Sprinkler System Representative 4.00 4.00 4.00 4.00 ——% Superintendent Community Services 2.00 2.00 2.00 2.00 ——% Theater Specialist 2.00 2.00 5.00 5.00 ——% WGW Heavy Equipment Operator 0.07 0.07 0.07 0.07 ——% Total Community Services 67.02 70.12 78.02 83.02 5.00 6.4% Fire 40-Hour Captain —0.20 0.20 —(0.20)(100.0)% 40-Hour Training Battalion Chief 1.00 1.00 1.00 1.00 ——% 40-Hour Training Captain 1.00 1.00 1.00 1.00 ——% Administrative Assistant 1.00 1.00 1.00 1.00 ——% Administrative Associate II 2.20 2.20 2.20 3.00 0.80 36.4% Administrative Associate III —0.20 0.20 1.00 0.80 400.0% Assistant Fire Marshal ———1.00 1.00 —% Battalion Chief 3.00 3.00 3.00 3.00 ——% Business Analyst 0.80 0.80 0.80 0.80 ——% Deputy Chief/Fire Marshal 0.05 —————% Deputy Director Technical Services Division —0.20 0.20 0.20 ——% Deputy Fire Chief 1.00 2.00 2.00 2.00 ——% Emergency Medical Service Director 1.00 1.00 1.00 1.00 ——% Emergency Medical Services Data Specialist 1.00 1.00 1.00 1.00 ——% Fire Apparatus Operator 26.00 26.00 26.00 26.00 ——% Fire Captain 20.00 20.00 20.00 20.00 ——% Fire Chief 1.00 1.00 1.00 1.00 ——% Fire Fighter***29.00 34.00 34.00 37.00 3.00 8.8% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Fire Fighter Trainee —3.00 3.00 3.00 ——% Fire Inspector 0.40 0.40 2.40 3.20 0.80 33.3% Fire Marshal —0.05 0.05 0.75 0.70 1,400.0% Geographic Information System Specialist 0.50 0.50 0.50 0.50 ——% Hazardous Materials Inspector 0.30 0.70 0.70 3.93 3.23 461.4% Plans Check Engineer ———0.50 0.50 —% Senior Management Analyst 1.00 1.00 1.00 1.00 ——% Total Fire 90.25 100.25 102.25 112.88 10.63 10.4% Human Resources Administrative Assistant ——0.75 0.75 ——% Assistant Director Human Resources 1.00 1.00 1.00 1.00 ——% Director Human Resources/CPO 1.00 1.00 1.00 1.00 ——% Human Resources Representative 2.00 2.00 4.00 4.00 ——% Human Resources Technician 3.00 4.00 2.00 2.00 ——% Manager Employee Benefits 1.00 1.00 1.00 1.00 ——% Manager Employee Relations 1.00 1.00 1.00 1.00 ——% Recruitment Division Manager ———1.00 1.00 —% Senior Human Resources Administrator 3.00 3.00 4.00 4.00 ——% Senior Management Analyst 2.00 2.00 2.00 2.00 ——% Total Human Resources 14.00 15.00 16.75 17.75 1.00 6.0% Library Administrative Assistant ——1.00 1.00 ——% Administrative Associate III —1.00 ————% Assistant Director Library Services —1.00 ————% Business Analyst 1.00 1.00 ————% Coordinator Library Programs 1.00 2.00 5.00 5.00 ——% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Director Libraries 1.00 1.00 1.00 1.00 ——% Division Head Library Services 1.00 1.00 2.00 2.00 ——% Librarian 6.00 7.00 4.00 4.00 ——% Library Associate 6.00 6.00 10.00 10.00 ——% Library Specialist 10.50 12.50 8.00 8.00 ——% Management Analyst 1.00 1.00 1.00 1.00 ——% Manager Library Services 3.00 3.00 3.00 3.00 ——% Senior Business Analyst ——1.00 1.00 ——% Senior Librarian 6.00 6.00 8.00 8.00 ——% Supervising Librarian 4.00 4.00 5.00 5.00 ——% Total Library 40.50 46.50 49.00 49.00 ——% Office of Emergency Services Director Office of Emergency Services 1.00 1.00 1.00 1.00 ——% Office of Emergency Services Coordinator 1.00 1.00 2.00 2.00 ——% Total Office of Emergency Services 2.00 2.00 3.00 3.00 ——% Office of Transportation Administrative Assistant 0.60 0.60 0.60 0.60 ——% Associate Engineer 0.35 0.35 0.35 0.35 ——% Associate Planner 0.40 0.40 0.40 1.40 1.00 250.0% Chief Transportation Official 0.70 0.70 0.70 0.70 ——% Coordinator Transportation Systems Management 0.65 0.65 0.65 —(0.65)(100.0)% Management Analyst 0.50 0.50 ————% Parking Operations-Lead 0.05 0.05 0.05 0.05 ——% Planner ———0.40 0.40 —% Project Engineer 0.25 0.25 0.25 0.25 ——% Senior Engineer 0.20 0.55 0.55 0.55 ——% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Senior Management Analyst ——0.50 0.50 ——% Senior Planner 0.15 0.15 1.40 1.65 0.25 17.9% Traffic Engineering-Lead 0.35 —————% Transportation Planning Manager 1.00 1.00 1.00 1.00 ——% Total Office of Transportation 5.20 5.20 6.45 7.45 1.00 15.5% Planning and Development Services 40-Hour Captain —0.80 0.80 —(0.80)(100.0)% Administrative Assistant 1.00 1.00 1.00 1.00 ——% Administrative Associate I 1.00 1.00 ————% Administrative Associate II 2.80 2.80 0.80 —(0.80)(100.0)% Administrative Associate III 3.00 4.80 7.80 6.00 (1.80)(23.1)% Assistant Chief Building Official 1.00 2.00 2.00 1.00 (1.00)(50.0)% Assistant Director PCE 1.00 1.00 1.00 1.00 ——% Associate Engineer ——0.50 0.50 ——% Associate Planner 3.25 1.25 1.25 1.25 ——% Building Inspector Specialist 6.00 8.00 ————% Building/Planning Technician 2.00 2.50 2.50 2.50 ——% Chief Building Official 1.00 1.00 1.00 1.00 ——% Chief Planning Official 1.00 1.00 1.00 —(1.00)(100.0)% Code Enforcement Officer —1.00 1.00 1.00 ——% Code Enforcement-Lead 1.00 1.00 1.00 1.00 ——% Deputy Chief/Fire Marshal 0.80 —————% Development Project Coordinator II 2.00 2.00 2.00 2.00 ——% Development Project Coordinator III 3.00 3.00 3.00 3.00 ——% Director Planning/Community Environment 1.00 1.00 1.00 1.00 ——% Division Manager Planning ———1.00 1.00 —% Engineer 0.52 0.52 0.52 0.52 ——% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Engineering Technician III 1.50 1.50 1.00 1.00 ——% Fire Inspector 1.60 1.60 1.60 0.80 (0.80)(50.0)% Fire Marshal —0.80 0.80 0.25 (0.55)(68.8)% Hazardous Materials Inspector 1.60 3.20 3.20 0.07 (3.13)(97.8)% Industrial Waste Investigator 0.35 0.35 0.35 0.35 ——% Inspector, Field Services 0.68 0.68 0.68 0.68 ——% Landscape Architect Park Planner 0.50 0.50 0.50 0.50 ——% Manager Planning 4.00 4.00 4.00 4.00 ——% Plan Review Manager ———1.00 1.00 —% Planner 4.00 5.00 5.00 5.00 ——% Plans Check Engineer —1.00 1.00 0.50 (0.50)(50.0)% Principal Planner 1.00 2.00 2.00 3.00 1.00 50.0% Project Manager —0.50 0.50 0.50 ——% Senior Building Inspector ——8.00 8.00 ——% Senior Business Analyst 1.00 1.00 1.00 —(1.00)(100.0)% Senior Engineer 0.40 0.45 0.45 0.45 ——% Senior Management Analyst 2.00 2.00 2.00 2.00 ——% Senior Plan Check Engineer ——2.00 3.00 1.00 50.0% Senior Planner 3.65 4.65 7.65 8.75 1.10 14.4% Senior Program Manager ———1.00 1.00 —% Senior Technologist ———1.00 1.00 —% Supervisor Inspection and Surveying 0.25 0.25 0.25 0.25 ——% Supervisor of Code Enforcement ——1.00 1.00 ——% Technologist ———1.00 1.00 —% Traffic Engineering-Lead 0.05 —————% Transportation Planning Manager 0.05 0.05 0.05 0.05 ——% Total Planning and Development Services 54.00 65.20 71.20 67.92 (3.28)(4.6)% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Police Administrative Assistant 1.00 1.00 1.00 1.00 ——% Administrative Associate II 2.00 2.00 3.00 3.00 ——% Animal Control Officer 2.00 2.00 2.00 2.00 ——% Animal Control Officer-Lead 1.00 1.00 1.00 1.00 ——% Assistant Police Chief 1.00 1.00 1.00 1.00 ——% Business Analyst 1.20 2.20 2.20 2.20 ——% Code Enforcement Officer 1.00 1.00 1.00 1.00 ——% Community Service Officer 5.63 5.63 5.63 4.69 (0.94)(16.7)% Court Liaison Officer 1.00 1.00 2.00 2.00 ——% Crime Analyst 1.00 1.00 1.00 1.00 ——% Deputy Director Technical Services Division —0.80 0.80 0.80 ——% Forensic Coordinator ———1.00 1.00 —% Forensic Specialist ———1.00 1.00 —% Geographic Information System Specialist 0.50 0.50 0.50 0.50 ——% Police Agent 19.00 19.00 19.00 19.00 ——% Police Captain 2.00 2.00 2.00 2.00 ——% Police Chief 1.00 1.00 1.00 1.00 ——% Police Lieutenant 4.00 4.00 4.00 5.00 1.00 25.0% Police Officer 39.00 43.00 45.00 45.00 ——% Police Records Specialist II 6.00 6.00 6.00 6.00 ——% Police Records Specialist-Lead 1.00 1.00 1.00 1.00 ——% Police Sergeant 14.00 14.00 14.00 14.00 ——% Program Assistant II 1.00 1.00 1.00 1.00 ——% Property Evidence Technician 2.00 2.00 2.00 —(2.00)(100.0)% Public Safety Communications Manager —1.00 1.00 1.00 ——% Public Safety Dispatcher 12.00 14.00 16.00 16.00 ——% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Public Safety Dispatcher-Lead 4.00 4.00 4.00 4.00 ——% Public Safety Program Manager 1.00 1.00 1.00 1.00 ——% Senior Management Analyst 1.00 1.00 1.00 1.00 ——% Total Police 124.33 133.13 139.13 139.19 0.06 0.0% Public Works Administrative Assistant 0.50 0.50 0.50 0.50 ——% Administrative Associate II 2.65 2.65 2.65 2.65 ——% Assistant Director Public Works 0.73 0.73 0.73 0.73 ——% Associate Engineer ——0.45 0.45 ——% Building Serviceperson-Lead 1.00 1.00 1.00 1.00 ——% Building/Planning Technician —0.50 0.50 0.50 ——% Cement Finisher 2.00 2.00 2.00 2.00 ——% Cement Finisher-Lead 0.26 0.26 0.26 0.26 ——% Coordinator Public Works Projects 1.50 1.50 1.50 1.50 ——% Director Public Works/City Engineer 1.00 1.00 1.00 1.00 ——% Electrician 0.80 0.80 0.80 0.80 ——% Engineer 0.48 0.48 0.48 0.48 ——% Engineering Technician III 1.75 1.75 1.80 1.80 ——% Environmental Specialist —0.33 0.33 0.33 ——% Equipment Operator 2.46 2.46 2.46 2.46 ——% Facilities Carpenter 1.00 1.00 1.00 1.00 ——% Facilities Maintenance-Lead 1.85 1.85 1.85 1.85 ——% Facilities Painter 1.75 1.75 1.75 1.75 ——% Facilities Technician 4.05 4.05 5.05 5.05 ——% Heavy Equipment Operator 2.10 2.10 2.10 2.10 ——% Heavy Equipment Operator-Lead 0.85 0.85 0.85 0.85 ——% Inspector, Field Services 0.11 0.11 0.11 0.11 ——% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Landscape Architect Park Planner 0.60 0.60 0.60 0.60 ——% Management Analyst 1.45 0.70 0.70 0.80 0.10 14.3% Manager Environmental Control Program —0.33 0.33 0.33 ——% Manager Facilities 0.90 0.90 0.90 0.90 ——% Manager Maintenance Operations 1.20 1.20 1.20 1.20 ——% Manager Urban Forestry 1.00 1.00 1.00 1.00 ——% Manager Watershed Protection 0.05 0.05 0.05 0.05 ——% Project Manager 2.00 2.50 2.85 2.85 ——% Senior Engineer 0.60 0.60 0.60 0.60 ——% Senior Management Analyst 1.11 1.11 1.11 1.11 ——% Supervisor Inspection and Surveying 0.10 0.10 0.10 0.10 ——% Surveyor, Public Works 0.33 0.33 0.33 0.33 ——% Traffic Controller Maintainer I 1.94 1.94 1.94 1.94 ——% Traffic Controller Maintainer II 1.00 1.00 1.00 1.00 ——% Tree Maintenance Person 1.00 1.00 1.00 1.00 ——% Tree Trim/Line Clear 7.00 7.00 7.00 7.00 ——% Tree Trim/Line Clear-Lead 1.00 1.00 1.00 1.00 ——% WGW Heavy Equipment Operator 0.23 0.23 0.23 0.23 ——% Total Public Works 48.35 49.26 51.11 51.21 0.10 0.2% Total General Fund 506.80 552.81 586.06 602.57 16.51 2.8% Enterprise Fund Public Works Accountant 0.70 0.70 0.70 0.70 ——% Administrative Associate I —1.00 1.00 1.00 ——% Administrative Associate II 2.15 2.15 2.15 2.15 ——% Administrative Associate III 0.20 0.20 0.20 0.20 ——% Airport Specialist II ——2.50 2.50 ——% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Assistant Director Public Works 1.30 1.30 1.30 1.30 ——% Assistant Manager WQCP 2.00 2.00 2.00 2.00 ——% Associate Engineer 3.00 3.00 3.05 3.05 ——% Chemist 2.00 2.00 3.00 3.00 ——% Deputy Chief/Fire Marshal 0.07 —————% Electrician 3.00 3.00 3.00 3.00 ——% Electrician-Lead 2.00 2.00 2.00 2.00 ——% Engineer 0.90 0.90 1.90 1.90 ——% Engineering Technician III 0.25 0.25 0.20 0.20 ——% Environmental Specialist 2.00 2.33 2.33 2.33 ——% Equipment Operator 0.54 0.54 0.54 0.54 ——% Facilities Maintenance Lead 1.00 1.00 1.00 1.00 ——% Facilities Technician 1.50 2.50 ————% Fire Marshal —0.07 0.07 —(0.07)(100.0)% Hazardous Materials Inspector 0.04 0.04 0.04 —(0.04)(100.0)% Heavy Equipment Operator 0.90 0.90 0.90 0.90 ——% Heavy Equipment Operator-Lead 1.15 1.15 1.15 1.15 ——% Industrial Waste Inspector 3.00 3.00 3.00 3.00 ——% Industrial Waste Investigator 1.15 1.15 1.15 1.15 ——% Laboratory Technician WQC 3.00 3.00 3.00 3.00 ——% Landfill Technician 1.00 1.00 2.00 2.00 ——% Management Analyst 2.30 2.30 2.30 2.90 0.60 26.1% Manager Airport 1.00 1.00 1.00 1.00 ——% Manager Environmental Control Program 5.00 5.33 5.33 5.33 ——% Manager Laboratory Services 1.00 1.00 1.00 1.00 ——% Manager Maintenance Operations 1.96 1.96 1.96 1.96 ——% Manager Solid Waste 1.00 1.00 1.00 1.00 ——% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Manager Water Quality Control Plant 1.00 1.00 1.00 1.00 ——% Manager Watershed Protection 0.95 0.95 0.95 0.95 ——% Plant Mechanic 7.00 7.00 7.00 7.00 ——% Program Assistant I 1.00 1.00 1.00 1.00 ——% Program Assistant II 2.00 2.00 2.00 2.00 ——% Project Engineer 1.83 1.83 2.83 2.83 ——% Project Manager 1.35 1.35 1.35 1.35 ——% Senior Accountant 0.30 0.30 0.30 0.30 ——% Senior Buyer 1.00 1.00 1.00 1.00 ——% Senior Chemist 2.00 2.00 2.00 2.00 ——% Senior Engineer 3.76 3.76 3.76 3.76 ——% Senior Industrial Waste Investigator 1.00 1.00 1.00 1.00 ——% Senior Management Analyst 0.21 0.21 0.21 0.21 ——% Senior Mechanic 1.00 1.00 1.00 1.00 ——% Senior Operator WQC 6.00 6.00 6.00 6.00 ——% Senior Technologist 1.00 1.00 1.00 1.00 ——% Storekeeper 1.00 1.00 1.00 1.00 ——% Street Maintenance Assistant 1.00 1.00 ————% Street Sweeper Operator 1.63 1.63 1.63 1.63 ——% Supervisor WQCP Operations 3.00 3.00 3.00 3.00 ——% Surveyor, Public Works 0.12 0.12 0.12 0.12 ——% Technologist 1.00 1.00 1.00 1.00 ——% Traffic Controller Maintainer I 0.06 0.06 0.06 0.06 ——% WQC Plant Operator II 16.00 16.00 16.00 16.00 ——% Zero Waste Coordinator 1.00 1.00 1.00 1.00 ——% Total Public Works 101.32 103.98 106.98 107.47 0.49 0.5% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Utilities Account Specialist 1.00 1.00 1.00 1.00 ——% Accountant 1.30 1.30 1.30 1.30 ——% Administrative Assistant 1.00 1.00 1.00 1.00 ——% Administrative Associate II 6.00 6.00 6.00 6.00 ——% Assistant City Attorney —1.00 2.00 2.00 ——% Assistant Director Administrative Services 0.25 0.25 0.25 0.25 ——% Assistant Director Sustainability and Climate Action ——1.00 1.00 ——% Assistant Director Utilities Customer Support Services 1.00 1.00 2.00 2.00 ——% Assistant Director Utilities Engineering 1.00 1.00 1.00 1.00 ——% Assistant Director Utilities Operations 1.00 1.00 1.00 1.00 ——% Assistant Director Utilities/Resource Management 1.00 1.00 1.00 1.00 ——% Associate Sustainability Program Administrator*** —1.00 1.00 2.00 1.00 100.0% Business Analyst 6.00 6.00 6.00 6.00 ——% Cathodic Protection Technician Assistant 1.00 1.00 1.00 1.00 ——% Cathodic Technician 1.00 1.00 1.00 1.00 ——% Cement Finisher 2.00 2.00 2.00 3.00 1.00 50.0% Contracts Administrator 0.70 0.70 0.70 0.70 ——% Coordinator Utilities Projects 6.00 8.00 8.00 10.00 2.00 25.0% Customer Service Representative 7.00 7.00 7.00 7.00 ——% Customer Service Specialist 2.00 2.00 2.00 2.00 ——% Customer Service Specialist-Lead 2.00 2.00 2.00 2.00 ——% Deputy Chief/Fire Marshal 0.08 —————% Deputy City Attorney 1.00 —0.50 0.50 ——% Director Administrative Services/CFO 0.20 0.20 0.20 0.20 ——% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Electric Heavy Equipment Operator 2.00 1.00 1.00 1.00 ——% Electric Project Engineer 4.00 8.00 8.00 10.00 2.00 25.0% Electric Underground Inspector 2.00 2.00 2.00 2.00 ——% Electric Underground Inspector-Lead 1.00 1.00 1.00 1.00 ——% Electrical Equipment Technician 1.00 1.00 1.00 1.00 ——% Electrician Assistant I 3.00 3.00 3.00 3.00 ——% Electrician-Lead ———1.00 1.00 —% Engineer 4.00 4.00 5.00 5.00 ——% Engineering Manager - Electric 1.00 1.00 1.00 1.00 ——% Engineering Manager - WGW 1.00 1.00 1.00 1.00 ——% Engineering Technician III 3.00 3.00 3.00 3.00 ——% Environmental Specialist —0.34 0.34 0.34 ——% Equipment Operator —1.00 1.00 1.00 ——% Fire Marshal —0.08 0.08 —(0.08)(100.0)% Gas and Water Meter Measurement and Control Technician 4.00 4.00 4.00 5.00 1.00 25.0% Gas and Water Meter Measurement and Control Technician - Lead 1.00 1.00 1.00 1.00 ——% Hazardous Materials Inspector 0.06 0.06 0.06 —(0.06)(100.0)% Heavy Equipment Operator - Install/Repair 4.00 4.00 4.00 5.00 1.00 25.0% Human Resources Representative 1.00 1.00 1.00 1.00 ——% Industrial Waste Investigator 0.50 0.50 0.50 0.50 ——% Inspector, WGW Utilities Field Svc 5.00 5.00 5.00 5.00 ——% Lineperson/Cable Specialist 10.00 10.00 10.00 10.00 ——% Lineperson/Cable Specialist-Lead 4.00 4.00 4.00 4.00 ——% Maintenance Mechanic-Welding 2.00 2.00 2.00 2.00 ——% Management Analyst —1.00 1.00 1.00 ——% Manager Communications 1.00 1.00 1.00 1.00 ——% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Manager Customer Service 1.00 1.00 1.00 1.00 ——% Manager Electric Operations 1.00 1.00 1.00 1.00 ——% Manager Environmental Control Program —0.34 0.34 0.34 ——% Manager Information Technology ——1.00 1.00 ——% Manager Treasury, Debt & Investments 0.40 0.40 0.40 0.40 ——% Manager Utilities Compliance 1.00 1.00 1.00 1.00 ——% Manager Utilities Credit & Collection 1.00 1.00 1.00 1.00 ——% Manager Utilities Operations WGW 1.00 1.00 1.00 1.00 ——% Manager Utilities Program Services 1.00 2.00 2.00 2.00 ——% Manager Utilities Strategic Business 1.00 1.00 1.00 1.00 ——% Manager Utilities Telecommunications 1.00 1.00 3.00 3.00 ——% Meter Reader 6.00 6.00 5.00 5.00 ——% Meter Reader-Lead 1.00 1.00 1.00 1.00 ——% Metering Technician 3.00 2.00 2.00 2.00 ——% Metering Technician-Lead 1.00 1.00 1.00 1.00 ——% Offset Equipment Operator 0.48 0.48 0.48 0.98 0.50 104.2% Overhead Underground Troubleman 2.00 2.00 2.00 2.00 ——% Power Engineer 1.00 —————% Principal Business Analyst 1.00 1.00 1.00 1.00 ——% Principal Utilities Program Manager —1.00 ————% Program Assistant I 1.50 1.50 2.00 2.00 ——% Program Assistant II 1.00 —————% Project Engineer 5.00 5.00 5.00 5.00 ——% Project Manager 0.75 0.75 0.75 0.75 ——% Resource Planner 5.00 5.00 5.00 5.00 ——% Restoration Lead 1.00 1.00 1.00 1.00 ——% SCADA Technologist 2.00 —————% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Senior Accountant 0.70 0.70 0.70 0.70 ——% Senior Business Analyst 3.00 3.00 3.00 3.00 ——% Senior Electrical Engineer 5.00 5.00 5.00 5.00 ——% Senior Engineer 5.00 6.00 5.00 5.00 ——% Senior Management Analyst 0.70 0.70 0.70 0.70 ——% Senior Marketing Analyst ——1.00 1.00 ——% Senior Mechanic 1.00 1.00 1.00 1.00 ——% Senior Resource Planner 6.50 7.00 7.00 7.00 ——% Senior Utilities Field Service Representative 1.00 1.00 1.00 1.00 ——% Senior Utilities System Operator ——1.00 1.00 ——% Senior Water Systems Operator***2.00 2.00 2.00 2.00 ——% Storekeeper 1.00 1.00 1.00 1.00 ——% Storekeeper-Lead 0.80 0.80 0.80 0.80 ——% Street Light, Traffic Signal & Fiber Technician 5.00 4.00 4.00 4.00 ——% Street Light, Traffic Signal & Fiber-Lead 2.00 2.00 2.00 2.00 ——% Substation Electrician 6.00 6.00 6.00 6.00 ——% Substation Electrician-Lead 2.00 2.00 2.00 2.00 ——% Sustainability Programs Administrator 4.00 5.00 5.00 5.00 ——% Tree Maintenance Person 1.00 1.00 1.00 1.00 ——% Utilities Chief Operating Officer 1.00 1.00 1.00 1.00 ——% Utilities Compliance Technician 3.00 3.00 3.00 3.00 ——% Utilities Compliance Technician-Lead 1.00 1.00 1.00 1.00 ——% Utilities Credit/Collection Specialist 2.00 2.00 2.00 2.00 ——% Utilities Director 1.00 1.00 1.00 1.00 ——% Utilities Engineer Estimator 5.00 5.00 5.00 5.00 ——% Utilities Field Services Representative 5.00 5.00 5.00 5.00 ——% Utilities Install Repair-Lead-Welding Certified 2.00 3.00 3.00 3.00 ——% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Utilities Install Repair-Welding Certified 3.00 3.00 3.00 3.00 ——% Utilities Install/Repair***10.00 10.00 10.00 11 1 10.0% Utilities Install/Repair Assistant 1.00 1.00 1.00 1.00 ——% Utilities Install/Repair-Lead***5.00 4.00 4.00 4.00 ——% Utilities Key Account Representative 3.00 3.00 3.00 3.00 ——% Utilities Locator 3.00 3.00 3.00 3.00 ——% Utilities Safety Officer 1.00 1.00 1.00 1.00 ——% Utilities Supervisor 12.00 12.00 12.00 12.00 ——% Utilities System Analyst —2.00 2.00 2.00 ——% Utilities System Operator 5.00 6.00 5.00 5.00 ——% Utility Engineering Estimator - Lead 1.00 1.00 1.00 1.00 ——% Warehouse Supervisor 0.80 0.80 0.80 0.80 ——% Water System Operator II***4.00 4.00 4.00 4.00 ——% WGW Heavy Equipment Operator 4.70 4.70 4.70 4.70 ——% Total Utilities 257.42 267.60 273.60 283.96 10.36 3.8% Total Enterprise Fund 358.74 371.58 380.58 391.43 10.85 2.9% Other Funds Capital Project Fund Administrative Assistant 0.65 0.65 0.65 0.65 ——% Administrative Associate III 0.80 0.80 0.80 0.80 ——% Assistant Director Public Works 0.72 0.72 0.72 0.72 ——% Associate Engineer 1.65 1.65 1.65 1.65 ——% Associate Planner 0.35 0.35 0.35 0.35 ——% Building Serviceperson 1.00 1.00 ————% Building Serviceperson-Lead 1.40 1.40 ————% Cement Finisher-Lead 0.74 0.74 0.74 0.74 ——% Chief Transportation Official 0.30 0.30 0.30 0.30 ——% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Contracts Administrator 0.60 0.60 0.60 0.60 ——% Coordinator Public Works Projects 1.30 1.30 1.30 1.30 ——% Coordinator Transportation Systems Management 1.35 1.35 1.35 —(1.35)(100.0)% Engineer 2.10 3.10 3.10 3.10 ——% Engineering Technician III 0.50 0.50 0.50 0.50 ——% Facilities Technician 1.50 1.50 1.50 1.50 ——% Inspector, Field Services 1.21 1.21 1.21 1.21 ——% Landscape Architect Park Planner 0.90 0.90 0.90 0.90 ——% Management Analyst 0.95 0.95 0.80 0.90 0.10 12.5% Manager Facilities 0.10 0.10 0.10 0.10 ——% Manager Maintenance Operations 0.65 0.65 0.65 0.65 ——% Parking Operations-Lead 0.30 0.30 0.30 0.30 ——% Planner ———0.60 0.60 —% Project Engineer 7.92 7.92 7.92 7.92 ——% Project Manager 0.80 0.80 1.45 1.45 ——% Senior Engineer 4.04 4.64 4.64 4.64 ——% Senior Management Analyst 0.60 0.60 0.75 0.75 ——% Senior Planner 0.80 0.80 1.55 2.30 0.75 48.4% Supervisor Inspection and Surveying 0.65 0.65 0.65 0.65 ——% Surveyor, Public Works 0.55 0.55 0.55 0.55 ——% Traffic Engineering-Lead 0.60 —————% Transportation Planning Manager 0.45 0.45 0.45 0.45 ——% Total Capital Project Fund 35.48 36.48 35.48 35.58 0.10 0.3% General Liabilities Insurance Program Fund Senior Management Analyst ——1.00 1.00 ——% Total General Liabilities Insurance Program Fund ——1.00 1.00 ——% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Printing and Mailing Services Manager Revenue Collections 0.10 0.10 0.10 0.10 ——% Offset Equipment Operator 1.52 1.52 1.52 2.02 0.50 32.9% Total Printing and Mailing Services 1.62 1.62 1.62 2.12 0.50 30.9% Special Revenue Funds Account Specialist 1.37 1.37 1.37 1.37 ——% Account Specialist-Lead 0.55 0.55 0.55 0.55 ——% Administrative Assistant 0.25 0.25 0.25 0.25 ——% Administrative Associate II 0.20 0.20 0.20 0.20 ——% Community Service Officer 0.37 0.37 0.37 0.31 (0.06)(16.2)% Coordinator Public Works Projects 0.20 0.20 0.20 0.20 ——% Electrician 0.20 0.20 0.20 0.20 ——% Facilities Maintenance-Lead 0.15 0.15 0.15 0.15 ——% Facilities Painter 0.25 0.25 0.25 0.25 ——% Facilities Technician 0.45 0.45 0.45 0.45 ——% Management Analyst 0.35 0.35 ————% Manager Community Services Senior Program 1.00 1.00 1.00 1.00 ——% Manager Maintenance Operations 0.19 0.19 0.19 0.19 ——% Manager Revenue Collections 0.28 0.28 0.28 0.28 ——% Parking Operations-Lead 0.65 0.65 0.65 0.65 ——% Senior Management Analyst ——0.35 0.35 ——% Senior Planner 0.40 0.40 0.40 0.30 (0.10)(25.0)% Street Maintenance Assistant 2.00 2.00 2.00 2.00 ——% Street Sweeper Operator 0.37 0.37 0.37 0.37 ——% Transportation Planning Manager 0.50 0.50 0.50 0.50 ——% Total Special Revenue Funds 9.73 9.73 9.73 9.57 (0.16)(1.6)% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION Technology Fund Administrative Assistant 1.00 1.00 1.00 1.00 ——% Assistant Director Administrative Services 0.10 0.10 0.10 0.10 ——% Assistant Director Information Technology ———1.00 1.00 —% Business Analyst 1.00 1.00 1.00 1.00 ——% Desktop Technician 6.00 6.00 6.00 4.00 (2.00)(33.3)% Director Information Technology/CIO 1.00 1.00 1.00 1.00 ——% Management Analyst ——1.00 1.00 ——% Manager Information Technology 3.00 3.00 3.00 3.00 ——% Senior Business Analyst 2.00 2.00 2.00 2.00 ——% Senior Management Analyst 1.00 1.00 1.00 1.00 ——% Senior Technologist 14.00 16.00 17.00 17.00 ——% Technologist ———2.00 2.00 —% Total Technology Fund 29.10 31.10 33.10 34.10 1.00 3.0% Vehicle Replacement and Maintenance Fund Assistant Director Public Works 0.25 0.25 0.25 0.25 ——% Assistant Fleet Manager 1.00 1.00 1.00 1.00 ——% Equipment Maintenance Service Person 1.00 1.00 2.00 2.00 ——% Fleet Services Coordinator 1.00 1.00 2.00 2.00 ——% Management Analyst 0.20 0.20 0.20 0.40 0.20 100.0% Management Assistant 1.00 1.00 1.00 1.00 ——% Manager Fleet 1.00 1.00 1.00 1.00 ——% Motor Equipment Mechanic II 5.00 5.00 5.00 5.00 ——% Motor Equipment Mechanic-Lead 2.00 2.00 1.00 1.00 ——% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 TABLE OF ORGANIZATION *The FY 2024 Adopted Budget does not include City Council actions to amend staffing levels approved in the FY 2024 Mid-Year Budget Review (CMR 2311-2233). These positions appear as a base adjustment in the FY 2025 Proposed Budget. **The FY 2025 Budget includes new job classifications that require completion of appropriate review and potential discussions with bargaining groups. Proposals in this budget include estimated funding levels for financial planning purposes only and do not reflect the final terms of the proposed classifications. ***Positions approved by Finance Committee and/or City Council subsequent to the presentation of the FY 2025 Proposed Budget. Project Manager 1.00 1.00 1.00 1.00 ——% Senior Management Analyst 0.08 0.08 0.08 0.08 ——% Total Vehicle Replacement and Maintenance Fund 13.53 13.53 14.53 14.73 0.20 1.4% Workers' Compensation Program Fund Senior Human Resources Administrator 1.00 1.00 1.00 1.00 ——% Total Workers’ Compensation Program Fund 1.00 1.00 1.00 1.00 ——% Total Other Funds 90.46 93.46 96.46 98.10 1.64 1.7% Total Citywide Positions 956.00 1,017.85 1,063.10 1,092.10 29.00 2.7% FY 2022 Actuals FY 2023 Actuals FY 2024 Adopted Budget FY 2025 Adopted Budget FY 2025 Change FTE FY 2025 Change % Attachment A, Exhibit 4 3 9 6 0 Finance Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Administrative Services Meeting Date: May 8, 2024 Report #:2402-2587 TITLE FY 2025 Proposed Municipal Fee Schedule RECOMMENDATION Staff recommends that the Finance Committee review amendments to the Municipal Fee Schedule for FY 2025 and make recommendations to Council for incorporation into the FY 2025 budget. EXECUTIVE SUMMARY This report represents the annual update to over 960 fees as part of the budget process. It highlights proposed changes to the FY 2025 Municipal Fee Schedule. These changes encompass 18 new fees across the Community Services, Planning and Development Services, and Police Departments, the deletion of 26 fees within the Community Services and Police Departments, and adjustments to 281 existing fees. It is based on the general premise of exception reporting, which is reflected in the practice of applying a General Rate Increase (GRI) to fees to keep up with the cost of service, new service delivery, and changes in cost recovery levels, and reporting out any fees that are proposed to stay the same or change by an amount other than the GRI of 5.2% for FY 2025. Recommended approval will be incorporated in the FY 2025 budget process and ultimately result in the fees for FY 2025 services. BACKGROUND The City charges fees for a variety of services provided, such as fees for photocopies, building inspection services, and room rentals. As part of the annual budget process, staff submit changes to the Municipal Fee Schedule for review, followed by final approval during City Council’s budget adoption. In FY 2013, staff completed a cost of services study for most departments. Results from that study set the standards used by departments to review and calculate the City’s expenditures linked to a particular fee activity to determine the fee amount and cost recovery level. These Attachment A, Exhibit 5 3 9 6 0 expenditures represent the budgeted cost of staff time including salaries and benefits, related non-salary expenditures, department and citywide cost allocations to recuperate costs for department management oversight and internal support functions (e.g. purchasing, payroll, and human resources). As part of the FY 2025 Proposed Budget, staff is recommending appropriation of funding on a one-time basis ($50,000) for a consultant to conduct a study of the cost allocation plan and municipal fee schedule. A comprehensive review and analysis to ensure the City’s fees are collected appropriately and the City’s processes remain aligned with current best practices. Since it was last updated by Council in FY 2019, the User Fee Cost Recovery Level Policy has served as a guide for departments to update fees by ensuring proper alignment with user cost recovery levels. This Policy will also be assessed as part of the consultant study. Table 1: Summary of Municipal Fee Cost Recovery Policy Attachment A, Exhibit 5 3 9 6 0 This annual report brings forward amendments to the Municipal Fee Schedule organized into three categories (1) New fees, (2) Deletion of existing fees, and (3) Changed fees to attain a cost recovery level consistent with other fees or based on a market study for similar services. ANALYSIS The development of the Municipal Fee Schedule for FY 2025 reflects some department service realignments as most fees across the City have been updated to maintain cost recovery levels. The average increase of salaries and benefits from FY 2024 to FY 2025 was 5.2% and is the general rate of increase (GRI) that is applied to most fees to maintain current cost recovery levels, as directed by the policy. Fees that were updated by a factor greater or less than 5.2% to realize a higher cost recovery level, or were adjusted based on a fee study, market study, or staff recommendation are further detailed in Attachment A. New Fees As identified in Table 1 below, eighteen (18) new fees are recommended to be added to the FY 2025 Municipal Fee Schedule: Community Services Department (12 fees), Planning and Services Department (two fees), and Police Department (four fees). Community Services Department recommended additions: •11 fees for veterinary services for cats and dogs •These fees are being added for enhanced clarity and to provide a more detailed breakdown of services. •One fee for camping equipment rentals •This fee is for electric warming plates and serve as an alternative to open flames for keeping food at temperature during rentals, reducing the burden of fire permits and environmental impacts. Planning and Development Services recommended additions: •One fee for the Rental Registry Program •This fee will apply to residential rentals with five or more units. Per Council’s direction (CMR #2308-19041), this fee will be waived in FY 2025 and begin in FY 2026. •One fee for shelter permits •This fee will apply for elgible non-profits applying for a temporary use permit to establish a temporary shelter for the unhoused. 1 City Council November 27, 2023 Agenda Item #16: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=13307 Attachment A, Exhibit 5 3 9 6 0 Police Department recommended additions: •Four concealed carry weapon fees •This implements concealed carry weapon fees in response to a recent Supreme Court decision, requiring the City to take on the permitting process previously handled by the County Sheriff. Table 2. New Fees for FY 2025 Department Fee Title FY 2025 Proposed Fee Cost Recovery Level Community Services Animal: 4lbs - 20lbs (Cremation)Communal: $50.00 per pet Private: $200.00 per pet High Community Services Community Cat Package (Spay & Neuter)$55.00 per pet High Community Services Cat Package (Vaccination)$85.00 per pet High Community Services Dog Package (Vaccination)$85.00 per pet High Community Services Kitten Package (Vaccination)$125.00 per pet High Community Services Puppy Package (Vaccination)$125.00 per pet High Community Services Cryptorchid Abdominal - Fee $100.00 per pet High Community Services Medication - Injectable $15.00 - $250.00 each High Community Services Medication - Oral $15.00 - $250.00 each High Community Services Medication - Topical $15.00 - $250.00 each High Community Services Nail Trim $0.00 with surgery High Community Services Electric Warming Plates Resident Fee: $10.00-$100.00 Non-Resident Fee: $11.00- $115.00 High Planning and Development Rental Registry Fee Fees waived in FY25 High Planning and Development Temporary Use Permit - Minor, Temporary Shelter Provider Fees waived per program guidelines High Attachment A, Exhibit 5 3 9 6 0 Department Fee Title FY 2025 Proposed Fee Cost Recovery Level Police Department Concealed Carry Weapon a. New (Application fee) $130.00 per application High Police Department Concealed Carry Weapon b. New (Issuance fee) $522.00 per application High Police Department Concealed Carry Weapon c. Renewal fee $99.00 per application High Police Department Concealed Carry Weapon d. Modification/Duplicate fee $15.00 per application High Deleted Fees 17 fees in the Community Services Department and nine fees in the Police Department are recommended to be deleted in the FY 2025 Municipal Fee Schedule. Each fee, and the justification for its deletion, is detailed in table 3 below. Table 3. Deletion of Fees for FY 2025 Department Fee Title Justification Community Services 48-Hour Cancellation Fee (non-refundable)Additional fee no longer charged Community Services Antibiotic Injection Consolidated into new fee “Medication - Injectable” Community Services Canine Training Deposit Vendor recommended Community Services Common Procedures - Flushing Drains Consolidated into broader services such as wound care and minor surgery Community Services Common Procedures - Oral or Topical Treatment Split into two new fees “Medication - Oral” and “Medication - Topical” Community Services Feral/Rescue Own FeLV/FIV Test Vendor recommended Community Services Feral/Rescue Own Vaccine Vendor recommended Community Services Heartworm Testing Consolidated into “Labwork - Heartworm Test” Community Services Injectable Medication Name change to “Medication - Injectable” for consistency with other services Community Services Labwork - PCV Consolidated into “Labwork - PCV/TP” Community Services Oral Prescription Medication Name change to “Medication - Oral” for consistency with other services Attachment A, Exhibit 5 3 9 6 0 Department Fee Title Justification Community Services Pregnancy Fee plus Spay Fee Vendor recommended Community Services Rat, Guinea Pig - Neuter Vendor recommended Community Services Rat, Guinea Pig - Spay Vendor recommended Community Services Special Medications Vendor recommended Community Services Trap Rental (14 day maximum)Transition from a flat and daily fee structure to only a flat fee. Community Services Permit Fees (Art Center)Permit will no longer be offered Police Pushcart Vendor - Additional Cart Compliance with 2018 CA State Senate Bill 946 Police Pushcart Vendor - New Compliance with 2018 CA State Senate Bill 946 Police Pushcart Vendor - Location and/or Cart Change Compliance with 2018 CA State Senate Bill 946 Police Pushcart Vendor - Renewal Compliance with 2018 CA State Senate Bill 946 Police Pushcart Vendor Employee - New Compliance with 2018 CA State Senate Bill 946 Police Pushcart Vendor Employee - Renewal Compliance with 2018 CA State Senate Bill 946 Police Solicitation for Commercial Purpose Compliance with 2018 CA State Senate Bill 946 Police Solicitor Employee (Under Master License)Compliance with 2018 CA State Senate Bill 946 Police Solicitor/Peddler Master License Compliance with 2018 CA State Senate Bill 946 Changed Fees 281 fees are recommended to be adjusted by a factor other than the 5.2% GRI to adjust for the general change in salary and benefits adjustments between FY 2024 and FY 2025. Changes to these fees as detailed in Attachment A generally reflect changes to: (1)Attain a cost recovery level consistent with other fees; (2)Align with a market study; (3)Modify the fee structure to align with current service delivery; or (4)Hold the fee flat to avoid discouraging use of the service of activity Each fee is listed by name along with the Adopted FY 2024 rate, the Proposed FY 2025 rate, the percentage change, and the fee change justification in Attachment A. Attachment A, Exhibit 5 3 9 6 0 Parking In-Lieu fees Palo Alto Municipal Code (PAMC) Chapter 16.57.030 requires that the Parking In-Lieu Fee be recalculated in the event the City Council approved the construction of a public parking structure. Per the Municipal Code, the fee shall be adjusted at the time the construction contract is awarded to include actual costs to date, plus the projected construction cost, and authorized contingency. A second recalculation must occur after the project is completed, based on actual design and construction costs incurred. The recalculated fee may be higher or lower than the initial fee. In December 2018, Council awarded a construction contract to Swinerton Builders (CMR 9688) for the California Avenue Area Parking Garage. The total project cost was calculated per PAMC 16.57.030 and includes design costs plus additional services, the construction bid with authorized contingency, and all other staff and administrative costs incurred. This calculation was done and approved as part of the Fiscal Year 2020 budget development process (CMR 10225). The cost per parking space was calculated at $106,171 for the Fiscal Year 2020 Adopted Municipal Fee Schedule. The California Avenue Parking Garage was completed and opened in December 2020. Staff has completed all project close-out documents and recalculated the Parking In-Lieu Fee at $105,811. After adding the appropriate construction cost indexes for the San Francisco Bay Area for Fiscal Year 2021 through Fiscal Year 2024, the revised fee was set at $130,823. Adding the respective construction cost index for FY 2025 brings the fee to $135,514. Development Impact and In-Lieu Fees In the Planning and Development Services Department, impact fees (i.e., community center, park, library, and citywide transportation impact fees) and in-lieu fees were increased by 3.6% percent to reflect the most recently published Construction Cost Index (CCI) for the San Francisco Bay Area, as calculated by the Engineering News Record. This is in accordance with Municipal Code 16.64.110, as amended on November 28, 2016 (CMR 7518), to standardize when these fees are paid, bring uniformity to the calculation in effect, bring uniformity to the annual adjustment rate, and other updates. Since these fees are governed by the applicable Municipal Code section, they are not discussed in Attachment A. FISCAL/RESOURCE IMPACT This action aligns fees with expense increases associated with these services. It works to ensure the City can maintain cost recovery levels, and is part of the FY 2025 Proposed Operating Budget POLICY IMPLICATIONS These recommendations are consistent with existing City policies. Where a fee or charge is subject to Proposition 26, the amount of the new or increased fee or charge is no more than necessary to cover the reasonable cost of the City service, and the manner in which those costs Attachment A, Exhibit 5 3 9 6 0 are allocated to a payer bears a fair and reasonable relationship to the payer’s burden on, or benefits received from, the City service funded by the fee. Certain types of fees, such as fines, penalties and/or late charges, or charges imposed for entrance to or use of, as well as the purchase, rental, or lease of local government property, are generally not limited to the actual costs of providing service. Instead, these types of fees are more typically governed by local market rates, reasonableness, and potentially other policy factors. These types of fees may have rates that are higher than the full cost recovery level. STAKEHOLDER ENGAGEMENT Staff has coordinated internally with budget and management staff in each department citywide to develop the recommendations in this report. Conversations with the City Council throughout May and June prior to the adoption of the FY 2025 Operating and Capital Budgets and Municipal Fee Schedule allow for public participation in this annual process. ENVIRONMENTAL REVIEW Adjustment to the Municipal Fee Schedule is a governmental fiscal activity that does not involve any commitment to any specific project, and therefore does not constitute a “project” pursuant to CEQA regulation 15378(b)(4). ATTACHMENTS Attachment A: Municipal Fee Schedule Amendments for FY 2025 Changed Fees APPROVED BY: Lauren Lai, Chief Financial Officer/Director Administrative Services Attachment A, Exhibit 5 Municipal Fee Schedule Amendments for FY 2025 Changed Fees ATTACHMENT A Administrative Services Fee Title FY 2024 Adopted FY 2025 Proposed % Change Justification City Clerk Fee Title FY 2024 Adopted FY 2025 Proposed % Change Justification Community Services Fee Title FY 2024 Adopted FY 2025 Proposed % Change Justification A. Animals (0lbs - 3lbs) A. Neuter (0lbs - 50lbs) A. Oak Grove Picnic 1 – 50 People A. Performance Day Package A. Small Bucket Attachment A, Exhibit 5 Municipal Fee Schedule Amendments for FY 2025 Changed Fees ATTACHMENT A C. Rehearsal Day Package 1,075.00 each 1,075.00 each 0.0% Fees aligned with market rates C. Vehicle Entry - Daily Fee - Vehicle Capacity 25 or more passengers with a group permit $60.00 each $60.00 each 0.0% Fee set by Council Cats (5+ Years) $50.00 per cat $50.00 per cat 0.0% Fee set by vendor Cats (6 months - 5 years) $125.00 per cat $130.00 per cat 4.0% Fee set by vendor Cats (Two adopted at once) $175.00 per cat $185.00 per cat 6.0% Fee set by vendor Cats (Under 6 Months) Resident: $150.00 per cat; Non-Resident: $175.00 per cat Resident: $175.00 per cat; Non-Resident: $205.00 per cat 17.0% Fee set by vendor Classes, camps, corporate events $21.00 - $1,075.00 per event $21.00 - $1,075.00 per event 0.0% Fee set by vendor Clinic Board Fee $21.00 per pet $100.00 per pet 376.0% Fee set by vendor Common Procedures - Fluorescein Eye Stain $18.00 each $19.00 each 6.0% Fee set by vendor Common Procedures - Medical Grooming $87.00 per hour $93.00 per hour 7.0% Fee set by vendor Cryptorchid Subcutaneous - Fee $53.00 - $107.00 per pet $50 per pet -5.6%Change title from “Cryptorchid Fee” D. Animal: 50lbs - 79lbs Private: $204.00 per pet; Communal: $150.00 per pet Private: $250.00 per pet; Communal: $50.00 per pet -23.0%Change title from “C. Animal: 50lbs – 75lbs" D. Dark Day Package $290.00 each $290.00 each 0.0% Fees aligned with market rates D. Jumbo Bucket $11.00 - $19.00 per bucket $16.00 - $22.00 per bucket 43.0% Fees aligned with market rates D. Spay (0lbs - 50lbs) $125.00 per pet $250.00 per pet 100.0% Fee set by vendor D. Vehicle Entry - Annual Pass $0.00 - $86.00 each $0.00 - $86.00 each 0.0% Fee set by Council DA2PP $15.00 per pet $15.00 per pet 0.0% Fee set by vendor Deciduous Tooth Extraction $27.00 each $30.00 each 11.0% Fee set by vendor Dewclaw Removal $40.00 - $58.00 per dewclaw $75.00 per dewclaw 87.0% Fee set by vendor Dogs (5+ Years) $75.00 per dog $75.00 per dog 0.0% Fee set by vendor Dogs (6 months - 5 years) Resident: $150.00 per dog; Non-Resident: $175.00 per dog Resident: $175.00 per dog; Non-Resident: $205.00 per dog 17.0% Fee set by vendor Dogs (Under 6 Months) Resident: $150.00 per dog; Non-Resident: $250.00 per dog Resident: $300.00 per dog; Non-Resident: $350.00 per dog 100.0% Fee set by vendor Dressing Room - M3 $32.00 per hour $32.00 per hour 0.0% Fees aligned with market rates E. Animal: 80lbs - 99lbs Private: $220.00 per pet; Non-Communal: $174.00 per pet Private: $275.00 per pet; Non-Communal: $50.00 per pet 25.0% Change title from “D. Animal: 76lbs – 99lbs" E. Spay (51lbs and 99lbs) $175.00 per pet $300.00 per pet 71.0% Fee set by vendor Ear Cleaning $35.00 per pet $30.00 per each -14.0%Fee set by vendor Ear Mite Treatment (2 doses of Revolution) $32.00 per pet $60.00 per pet 88.0% Change title from “Ear Mite Treatment” Exotic Animals $10.00 per pet $10.00 per pet 0.0% Fee set by vendor F. Animal: 100lbs - 150lbs Private: $254.00 per pet; Non-Communal: $191.00 per pet Private: $300.00 per pet; Non-Communal: $50.00 per pet 18.0% Change title from “E. Animal: 100lbs – 150lbs" F. Cremation Services - Custom Engraved Plaque Fee $22.00 each $22.00 each 0.0% Fee set by vendor F. Spay (100 lbs and over) $225.00 per pet $350.00 per pet 56.0% Fee set by vendor Flea +/- Preventative (per dose) $28.00 per dose $30.00 - $100.00 per dose 7.0% Fee set by vendor Fluid Therapy - IV Fluids $26.00 per hour $27.00 per hour 4.0% Fee set by vendor Fluid Therapy - SQ (Cats) $41.00 each $44.00 each 7.0% Fee set by vendor Fluid Therapy - SQ (Dogs) $53.00 each $56.00 each 6.0% Fee set by vendor FVRCP $15.00 per pet $15.00 per pet 0.0% Fee set by vendor Individual Youth Sport Registration Resident: $197.00 - $395.00 per person; Non-Resident: Fee plus up to 50% Resident: $197.00 - $395.00 per person; Non-Resident: Fee plus up to 50% 0.0% To avoid discouraging use IV Catheter Placement $62.00 each $66.00 each 6.0% Fee set by vendor Attachment A, Exhibit 5 Municipal Fee Schedule Amendments for FY 2025 Changed Fees ATTACHMENT A Kitten Package (over 3 months) $100.00 per pet $100.00 per pet 0.0% Change title from “Kitten Package” Lab work - Fecal O & P $29.00 each $31.00 each 7.0% Change title from “Labwork – Fecal" Lab work - FeLV/FIV Test $35.00 each $37.00 each 6.0% Fee set by vendor Lab work - In-House Fungal Culture $37.00 each $39.00 each 5.0% Change title from “Labwork - Fungal Culture” Labwork - Heartworm Test $41.00 each $44.00 each 7.0% Fee set by vendor Labwork - Parvo Test $44.00 each $47.00 each 7.0% Fee set by vendor Labwork - PCV/TP $29.00 each $30.00 each 3.0% Change title from “Labwork - PCV” and “Labwork - TP” Labwork - Pre-surgical $150.00 per pet $150.00 per pet 0.0% Fee set by vendor Labwork - Reference Lab Labwork cost plus $28.00 service fee Labwork cost plus $28.00 service fee 0.0% Fee set by vendor Labwork - Skin Scraping $24.00 each $30.00 each 25.0% Fee set by vendor Labwork - Urine Dipstick $17.00 each $30.00 each 76.0% Fee set by vendor Labwork - USG $17.00 each $30.00 each 76.0% Fee set by vendor Large Animal (Horses, Cows, Pigs, etc.) Actual cost including transportation expense will be charged to house the animal at the appropriate facility Actual cost including transportation expense will be charged to house the animal at the appropriate facility 0.0% Fee set by vendor Late Fee for Spay/Neuter Pickup $25.00 per pet $50.00 per pet 100.0% Fee set by vendor Local Anesthetic $37.00 each $39.00 each 5.0% Fee set by vendor Long-Acting Topical Ear Medication $64.00 per pet $64.00 per dose 0.0% Fee set by vendor Microchip $25.00 per pet $25.00 per pet 0.0% Fee set by vendor Nail Trim $10.00 per pet $30.00 per pet 200.0% Change title from “Nail Clip” Neuter $70.00 per pet $75.00 per pet 7.0% Fee set by vendor No-Show Fee (non-refundable) $50.00 per pet $50.00 per pet 0.0% Fee set by vendor Organic Garden Clean-up/Security Deposit $100.00 - $200.00 per garden plot $100.00 - $200.00 per garden plot 0.0% Keep security deposit fee flat Organic Garden Plot $0.90 per square foot $0.90 per square foot 0.0% Fees aligned with market rates Peers Park, Mitchell Park Field House Resident: $187.00 per day; Non-Resident: $252.00 per day Resident: $209.00 per day; Non-Resident: $282.00 per day 12.0% Fees aligned with market rates Picnic Reservations - Arbor Group Site $56.00 per group $62.00 per group 12.0% Fees aligned with market rates Picnic Reservations - East Meadow Group Site $87.00 per group $97.00 per group 12.0% Fees aligned with market rates Picnic Reservations - Pine Grove Group Site $159.00 per group $178.00 per group 12.0% Fees aligned with market rates Picnic Reservations - Redwood Group Site $128.00 per group $143.00 per group 12.0% Fees aligned with market rates Picnic Reservations - Sequoia Group Site $71.00 per group $79.00 per group 12.0% Fees aligned with market rates Picnic Reservations (1 - 15 people) Resident: $32.00 per group; Non-Resident: $37.00 per group Resident: $35.00 per group; Non-Resident: $41.00 per group 12.0% Fees aligned with market rates Puppy Package (over 3 months) $100.00 each $100.00 each 0.0% Fees set by vendor Rabbit - Neuter Resident: $80.00 per pet; Non-Resident: $102.00 per pet Resident: $125.00 per pet; Non-Resident: $125.00 per pet 56.0% Fees set by vendor Rabbit - Spay Resident: $107.00 per pet; Non-Resident: $129.00 per pet Resident: $175.00 per pet; Non-Resident: $175.00 per pet 64.0% Fees set by vendor Rabbit Hemorrhagic Disease Vaccine $150.00 to $250.00 each $30.00 each -80.0%Fees set by vendor Rabbits $40.00 per pet $20.00 per pet -50.0%Fees set by vendor Rabies $15.00 per pet $15.00 per pet 0.0% Fees set by vendor Rabies (Actual Clinic Cost) $6.00 per pet $6.00 per pet 0.0% Fees set by vendor Rats, Hamsters, Guinea Pigs, & Mice $10.00 per pet $10.00 per pet 0.0% Fees set by vendor Rehearsal Hall Resident: $58.00 per hour; Non-Resident: $87.00 per hour Resident: $58.00 per hour; Non-Resident: $87.00 per hour 0.0% Fees aligned with market rates Attachment A, Exhibit 5 Municipal Fee Schedule Amendments for FY 2025 Changed Fees ATTACHMENT A Rescue Group (Non-Profit) - Cat Neuter $50.00 per pet $55.00 per pet 10.0% Fee set by vendor Rescue Group (Non-Profit) - Cat Spay $65.00 per pet $65.00 per pet 0.0% Fee set by vendor Rescue Group (Non-Profit) - Dog Neuter (over 50 lbs) $107.00 per pet $175.00 per pet 64.0% Fee set by vendor Rescue Group (Non-Profit) - Dog Neuter (under 50 lbs) $80.00 per pet $150.00 per pet 88.0% Fee set by vendor Rescue Group (Non-Profit) - Dog Spay (over 50 lbs) $125.00 per pet $300.00 per pet 140.0% Fee set by vendor Rescue Group (Non-Profit) - Dog Spay (under 50 lbs) $100.00 per pet $250.00 per pet 150.0% Fee set by vendor Routine Deworming (roundworms & hookworms) $31.00 each $31.00 each 0.0% Fee set by vendor Routine Deworming (roundworms & hookworms) $21.00 $30.00 42.9% Fee set by vendor Sedation/Anesthesia - Gas $93.00 for first 30 minutes; $1.70 per minute thereafter $100.00 for first 30 minutes; $1.80 per minute thereafter 7.5% Fee set by vendor Sedation/Anesthesia - IM $58.00 each $62.00 each 6.9% Fee set by vendor Sedation/Anesthesia - IV $82.00 each $88.00 each 7.3% Fee set by vendor Spay Specialized Feeding $5.00 each $30.00 each 500.0% Fee set by vendor Surgery - Major Surgery, Preparation and Recovery $116.00 per hour $500.00 - $1,500.00 per hour 331.0% Fee set by vendor Surgery - Minor Surgery, Preparation and Recovery $44.00 each $50.00 - $500.00 each 13.6% Fee set by vendor Tapeworm Treatment (Praziquantel) $18.00 per pet $18.00 per pet 0.0% Fee set by vendor Teen Center Membership - Monthly $5.00 - $10.00 per month $5.00 - $10.00 per month 0.0% Fees aligned with market rates Teen Center Membership - School Year Towle Camp (8 People) $30.00 per day $40.00 per day 33.3% Fees aligned with market rates Towle Camp Group (16 People) $50.00 per day $55.00 per day 10.0% Fees aligned with market rates Trap Rental - Deposit $100.00 each $75.00 each -25.0%Fee set by vendor Umbilical Hernia Repair $40.00 - $87.00 per pet $40.00 - $87.00 per pet 0.0% Fee set by vendor Veterinarian Exam $172.00 per hour $80.00 per hour -53.5%Fee set by vendor Visual and Performing Arts Activities $6.00 - $2,659.00 per hour $6.00 - $2,659.00 per hour 0.0% Fees aligned with market rates Wound Care $18.00 - $62.00 per pet $30.00 - $110.00 per pet 66.7% Fee set by vendor Fire Fee Title FY 2024 Adopted FY 2025 Proposed % Change Justification Keep fees flat due to recent rollout Library Attachment A, Exhibit 5 Municipal Fee Schedule Amendments for FY 2025 Changed Fees ATTACHMENT A Billing Fee for Overdue Items $5.00 per item $5.00 per item 0.0% Fees set by outside agency To avoid discouraging use Office of Transportation Fee Title FY 2024 Adopted FY 2025 Proposed % Change Justification Attachment A, Exhibit 5 Municipal Fee Schedule Amendments for FY 2025 Changed Fees ATTACHMENT A Southgate RPP - Daily Resident Parking Permit $5.00 per day $5.00 per day 0.0% FY 2025 pricing based on CMR #11795 Southgate RPP - Full Price Employee Parking Permit $375.00 each $375.00 each 0.0% FY 2025 pricing based on CMR #11795 Southgate RPP - Reduced Price Employee Parking Permit $93.75 each $93.75 each 0.0% FY 2025 pricing based on CMR #11795 Standard On-street Disabled Parking Space $1,010.00 each $1,010.00 each 0.0% FY 2025 pricing based on CMR #11795 Discounted Fare $1.00 per passenger trip $1.00 per passenger trip 0.0% To encourage further adoption and use of service Planning and Development Services Fee Title FY 2024 Adopted FY 2025 Proposed % Change Justification Fees set by outside agency Police Fee Title FY 2024 Adopted FY 2025 Proposed % Change Justification Fees set by outside agency Public Works Fee Title FY 2024 Adopted FY 2025 Proposed % Change Justification Adjustment of labor and materials costs $1,681.00 each $1,756.00 each 4.5% Attachment A, Exhibit 5 ATTACHMENT A, EXHIBIT 6 Fiscal Year 2025 Impact and In-Lieu Municipal Fees City Council approves the following Impact and In-Lieu Municipal Fees as part of its adoption of the Fiscal Year 2025 Budget. Fees subject to the California Mitigation Fee Act will be valid 60 days after adoption. Park Impact Fee Per net new 1,000 sq. ft. (hotel/motel) $3,377.00 Park Impact Fee Per single family unit $67,650.36 Park Impact Fee Per multi-family unit $50,034.40 Public Art Fee Applies to new commercial buildings including new construction, remodels, additions, and reconstruction that have a floor area of 10,000 sq. ft. or more and a million construction valuation and 0.9% of construction valuation for ATTACHMENT B RESOLUTION NO. XXXX Resolution of the Council of the City of Palo Alto Establishing the City’s Appropriations Limit for Fiscal Year 2025 WHEREAS, under Article XIIIB of the Constitution of the State of California, the City of Palo Alto (City) may not appropriate any proceeds of taxes in excess of its appropriations limit; and WHEREAS, since fiscal year 1991, the City is permitted to adjust its appropriations limit annually based on inflation and population adjustment factors; and WHEREAS, pursuant to Government Code Section 37200, the calculation of the appropriations limit and the total appropriations subject to the limit were set forth in the annual budget of the City for Fiscal Year 2025, which was adopted by ordinance of the Council on June 17, 2024; and WHEREAS, pursuant to Government Code sections 7901 and 7910, the final calculation of the appropriations limit has been determined, and the adjustment factors on which the calculation is based are a 3.62% percent change in California per capita income and a 0.02% percent change in the population growth for the County of Santa Clara; and WHEREAS, the documentation used in the determination of the appropriations limit has been made available to the general public for fifteen (15) days prior to the date of adoption of this resolution; and WHEREAS, according to the final calculation, the City’s net appropriations subject to limitation are approximately $173.10 million. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION 1. The Council of the City of Palo Alto hereby finds that, for Fiscal Year 2025, the final calculation of the appropriations limit of the City of Palo Alto has been determined in accordance with the adjustment factors referred to above, the documentation used in the determination of the calculation has been made available to the general public for the period of fifteen days as required by law, and the City’s appropriations are under the appropriations limit by approximately $46.64 million. SECTION 2. The Council hereby adopts the final calculation of the appropriations limit of the City for Fiscal Year 2025, a copy of which is attached hereto as Exhibit 1. ATTACHMENT B SECTION 3. The Council finds that the adoption of this resolution does not constitute a project under the Section 15378(b)(4) of California Environmental Quality Act Guidelines because establishing the annual appropriations limit is a fiscal activity, and, therefore, no environmental assessment is necessary. INTRODUCED AND PASSED: Enter Date Here AYES: NOES: ABSENT: ABSTENTIONS: NOT PARTICIPATING: ATTEST: APPROVED: _________________________ ___________________________ City Clerk Mayor APPROVED AS TO FORM: City Attorney City Manager Director of Administrative Services Attachment B, Exhibit 1 FY 2025 Adopted Budget 306.63$ 135.13$ 23.08$ 12.00$ 476.84$ Less: Interfund Transfers (38.84)$ (7.42)$ (17.04)$ -$ (63.31)$ Allocated Charges (26.95)$ (0.34)$ (0.53)$ -$ (27.82)$ Non-Proceeds (63.74)$ (129.40)$ (7.32)$ (12.14)$ (212.60)$ Net Appropriations Subject to Limit 177.10$ (2.04)$ (1.81)$ (0.14)$ 173.10$ FY 2024 Per Capita Income Change (CA Department of Finance)3.62% Factor A 1.0362 FY 2024 Population Change (County of Santa Clara)0.02% Factor B 1.0002 212.02$ 1.0364 $219.74 Net Appropriations Subject to Limit 173.10$ 2024*1.0444 0.9975 1.0418 212.02$ 157.94$ 54.08$ 2023*1.0755 1.0007 1.0763 203.52$ 138.39$ 65.13$ 2022*1.0573 0.9944 1.0514 189.10$ 127.09$ 62.01$ 2021 1.0373 1.0037 1.0411 179.86$ 113.06$ 66.80$ 2020 1.0385 1.0033 1.0419 172.75$ 127.42$ 45.33$ 2019 1.0367 1.0099 1.0470 165.80$ 114.94$ 50.86$ 2018 1.0369 1.0082 1.0454 158.36$ 131.49$ 26.87$ 2017 1.0537 1.0130 1.0674 151.49$ 109.51$ 41.98$ 2016 1.0382 1.0113 1.0499 141.92$ 100.60$ 41.32$ 2015 0.9977 1.0150 1.0127 135.17$ 82.93$ 52.24$ 2014 1.0512 1.0157 1.0677 133.48$ 90.28$ 43.20$ * FY 2022-2024 Appropriation Limits restated to correct for Total Adjustment Factor calculation error in those fiscal years. ($ IN MILLIONS) Total Budgeted Appropriations General Fund Debt Service Fund On November 6, 1979, California voters approved Proposition 4, an initiative that added Article XIIIB to the state Constitution. The provisions of this article place limits on the amount of revenue that can be appropriated by all entities of government. The Appropriations Limit is based on actual appropriations during the 1978-1979 fiscal year, as increased each year using specified population and inflationary growth factors. The City of Palo Alto remains well within its appropriations limit in FY 2025. Future year limit trends can be made based on the average change in regional population and income growth. The appropriations subject to limitation includes proceeds of taxes from the General Fund, Capital Projects Fund, and Special Revenue Funds. Fiscal Year Per Capita Income Factor Population Change Factor Factor Appropriations Limit Appropriations Subject to Limit Amount Under the Limit Attachment C: Summary of Stanford Related Programs and Services Operating Fire Stanford reimburses the City for providing Fire services to the University based on an agreement between the City and the University. Operating Office of Transp. Palo Alto Link (PAL) On Demand Transit Services Palo Alto Link services provide on-demand transit services, and Stanford provides funding for a portion of this service. Dispatch Communication Services Contract with Stanford University Stanford reimburses the City for providing dispatcher communication services to the University based on an agreement between the City and 16000 Quarry Road Improvements and Transit Center Access Stanford is the lead on this project, and in order to continue with it, Palo Alto voters must undedicate a portion of El Camino Park (which is owned by Stanford and leased to the City) so that the land can be used for transit center access. A ballot measure proposing this action is expected in 2024. Fire Training Facility Replacement This project will identify an appropriate site and construct a new fire training facility in Palo Alto. The current training facility is located on the Stanford University campus and is not owned by the City. A feasibility study will be conducted to determine the facility needs as well as an appropriate and available location for the new facility. Fire Equipment Replacement This project will replace variety of equipment required for different types of emergency response and training, a portion of which is funded by Stanford and used to provide services to the University. The Fire Department completed a comprehensive assessment of all current primary equipment categories, as well as estimated costs and CITY OF PALO ALTO Finance Committee Regular Meeting Tuesday, June 04, 2024 Agenda Item 2.Accept June 30, 2023 Actuarial Valuation of Palo Alto's Retiree Healthcare and Other Post Employment Benefits and Recommend to the City Council to Approve Annual Actuarially Determined Contribution for Fiscal Year 2025 and 2026; CEQA Status – Not a Project Finance Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Administrative Services Meeting Date: June 4, 2024 Report #:2402-2673 TITLE Accept June 30, 2023 Actuarial Valuation of Palo Alto's Retiree Healthcare and Other Post Employment Benefits and Recommend to the City Council to Approve Annual Actuarially Determined Contribution for Fiscal Year 2025 and 2026; CEQA Status – Not a Project RECOMMENDATION Staff recommends that the Finance Committee recommend the City Council: 1.Review and accept the June 30, 2023 actuarial valuation of Palo Alto's Retiree Healthcare Plan (Attachment B); and 2.Approve funding of the annual Actuarial Determined Contribution (ADC) for Fiscal Year 2025 and Fiscal Year 2026 using a two-year phase-in of the adjusted assumptions. EXECUTIVE SUMMARY In accordance with the Governmental Accounting Standards Board (GASB), the City Council is required to review and approve the actuarial valuation for retiree healthcare plan on a bi- annual basis for the upcoming two fiscal years and approve funding of the annual Actuarial Determined Contribution (ADC). This current study presents the fund's status as of June 30, 2023 and will be used to inform the FY 2025 and FY 2026 annual operating budgets. This report was finalized after the development of the FY 2025 Proposed Budget therefore, funding levels in the FY 2025 Proposed Budget reflect the out years of the prior completed study as of June 30, 20211. The City’s retiree medical trust is held by the California Employers Retirement Benefit Trust (CERBT) Fund that is managed by CalPERS. The City continues to select CERBT’s Strategy 1 asset allocation, currently projected at a 6.25% discount rate. With the adoption of the 1 Finance Committee, June 7, 2022, Agenda item #3, CMR ID 14112: https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=64042 Retiree Benefits Funding Policy2 the City Council directed staff to calculate additional discretionary payments ("prefunding") equivalent to a 5.75%discount rate and transmit amounts above payments at a 6.25% discount rate to the CERBT Fund. Through FY 2024, a total of $11.9 million in additional contributions are expected to be made to the CERBT due to this policy. The June 30, 2023, valuation includes several changes that have impacted the CERBT fund status, primarily due to healthcare and economic fluctuations resulting from the COVID-19 pandemic and continued proactive funding contributions: •Investment Returns: 2021-22 investment loss of -13.5%, compared to the 27.5% investment gains in 2020-21 (6.25% target); •Projected Payroll: Higher than projected salary growth; •Health Premiums: Higher than projected healthcare premiums; and •Pre-Funding Policy: Actuarially Determined Contribution “ADC” (full ADC payments and pre-funding) Compared to the favorable assumptions in the June 30, 2021 actuary study, these changes are advised to be taken in consideration of an uncertain environment. While the 2022-23 portfolio earnings yielded 6.4% and is within range of the 6.25% target, it is not known whether the recent change in healthcare premiums will be ongoing or an anomaly due to the significant governmental support of healthcare costs over the past two years. Because it is unknown whether these changes are the beginning of a trend, or merely a temporary anomaly, this report models short term significant rises in healthcare costs in alignment with inflation. The outyears of the June 30, 2021 valuation report were used to develop the OPEB assumptions in the FY 2025 Proposed Budget. Based on these assumptions and the attached actuary report, $5.2 million ($3.3 million General Fund) should be added to the FY 2025 Budget to maintain pre-funding levels in alignment with City Council policy. On May 21, the Finance Committee (“Committee”) recommended full funding of the ADC and a 2- year phase-in of prefunding levels in accordance with City Council policy as part of the FY 2025 Budget. This action reduces the funding need in FY 2025 to $2.6 million ($1.65 million General Fund). The below table provides a summary of the difference between the funding FY 2025 Proposed Budget in all funds between the June 30, 2021 and June 30, 2023 valuation reports. A more detailed discussion of these is included in this report. 2 City Council, February 6, 2023, Agenda Item #3, Staff Report# 2212-0513: https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=82218 Table 1: Funding for the FY 2025 OPEB Obligations* FY25 Proposed ADC (6/30/21 valuation) FY25 Adjusted ADC (6/30/23 valuation) $ Change Actuarially Determined Contribution •Proactive contribution at discount rate of 5.75% •15-year amortization period as of June 30, 2021 (13 years remaining) $16.8M $21.9M $5.1M *Approximately 65% of costs are allocated to the General Fund BACKGROUND The City of Palo Alto offers its employees and retirees a Retiree Healthcare benefit plan which is managed and administered by the California Public Employees' Retirement System (CalPERS), a State of California Retiree Healthcare Trust program. Bi-annually staff contracts with an actuary firm that provides an actuarial report detailing the latest status of the City of Palo Alto's Retiree Healthcare plans for employees and retirees. The actuarial report is used to calculate the annual ADC and pre-funding based on Council policy to the trust. In addition, updates on the rate of return, funding status, and changes to the trust based on various impacts are detailed in the report. Unlike the pension actuary reports, this actuary details impacts by Fund and Department, which inform the development of the annual budget. There are four groups of benefits within the CalPERS Retiree Healthcare benefit plans. Attachment A outlines the different benefits levels by Group. These benefit levels are negotiated and approved as part of the employee contracts. Employees and retirees have an open enrollment window in October each year in which they can make changes to their healthcare plans that take effect in January of the following year. CALPERS Projected Contribution Levels The actuary report has two components to the annual billing of the employer portion of retiree healthcare contributions that comprise the Actuarial Determined Contribution (ADC), (1) the Normal Cost (NC), and (2) the Unfunded Actuarial Accrued Liability (UAAL). •NC: This reflects a rate of contribution for the plan of retirement healthcare benefits provided to current employees based on the current set of assumptions. •Employer Amortization of UAAL: This is an annual payment calculated to pay down an agency's unfunded accrued liability. Assuming every assumption in the actuarial valuation was accurate, an organization would eliminate its unfunded pension liability if it made these payments annually for 30 years. The City Council approved a closed period to amortize the entire net pension liability over a specific timeframe, and 22 years (before the adoption of a Retiree Benefit Funding Policy remain as of June 30, 2021. The total liability will vary from one year to the next because of assumption changes and actuarial experience that is different from anticipated, such as actual investment returns that do not meet expectations. As established by the City Council, the City's CERBT Fund is invested in a Strategy 1 asset allocation at a 6.25% discount rate. With the adoption of the Retiree Benefits Funding Policy, directed staff to calculate additional discretionary payments ("prefunding") equivalent to a 5.75%discount rate and transmit amounts above payments at a 6.25% discount rate to the CERBT Fund. The City's CERBT Fund was established in May 2008 at a level of $33 million and it has grown to $173.0 million as of March 31, 2024. ANALYSIS Summary of Actuarial Report June 30, 2023 Staff contracted with Foster and Foster Actuary Consultants for this retiree healthcare actuarial report (Attachment B) to determine the City's retiree healthcare liability and the ADC for Fiscal Years 2025 and 2026. The actuarial analysis is based on current employees' accrued benefit, and retired employees as of June 30, 2023. This updated valuation includes several changes that have impacted the CERBT fund status, primarily due to healthcare and economic fluctuations resulting from the COVID-19 pandemic, inflation levels, and active employee salary growth. Most notably, investment returns for 2020-21 reached an unprecedented level of 27.5% for the period and then performance dropped to -13.5% for 2021-22. This volatile level of return had a significant impact on the overall status of the fund and is not expected to continue in future periods. Healthcare premiums are higher than anticipated due to significant current inflation levels and a return to pre-pandemic levels of utilization. Discount Rate Assumptions The City Council has taken steps to ensure long-term liability assumptions and costs for OPEB are being proactively addressed, including the adoption of a Retiree Benefit Funding Policy3 that invests at an estimated discount rate for OPEB of 6.25% and transmits additional contributions to prefund OPEB obligations at the equivalent of a 5.75% discount rate. Through FY 2024, a total of $11.9 million in additional contributions are expected. Discussed above, the ADC is impacted when actual experience differs from assumptions. One of the more significant impacts to ADC occurs when actual investment returns do not meet expectations. Chart 1 below presents historical returns since 2008-09. 3 City Council, February 6, 2023, Agenda Item #3: https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=82218 Chart 1: Historical Returns of the OPEB Trust (Market Value of Plan Assets (MVA) and Expected Return) Projected Unfunded Actuarial Accrued Liability This actuarial valuation includes the plan's "Funded Status." As of June 30, 2023, the CERBT Trust is funded at 56%, down 1,100 basis points from 67% in the June 30, 2021 actuarial valuation. As of June 30, 2023, the Unfunded Actuarial Accrued Liability (UAAL) was $120.5 million for all funds and $77.9 million for the General Fund. Beginning with the June 30, 2013 valuations, the City aligned its actuarial analysis to align with GASB's rules regarding the "implied subsidy". The calculation of implied subsidy requires an agency to recognize that it pays the same medical premiums for active employees as those that are retired. The implied subsidy identifies and accounts for the agency paying the same blended premium for both active employees and retirees, even though the medical cost for active employees is lower than retirees. Palo Alto had 902 active employees and 1,031 retirees as of June 30, 2023. The calculation increases the UAAL by $15.1 million or 18.9%; without the implied subsidy the UAAL for all funds would be at $76.8 million. Table 2: Unfunded Actuarial Accrued Liability (UAAL) June 30, 2021 June 30, 2023 Projected June 30, 2024 Citywide – UAAL $80,027 $120,511 $140,372 General Fund – UAAL $51,522 $77,914 $91,242 Citywide Funded Ratio 67%56%54% Citywide UAAL % Chg. from prior valuation 50.6%16.5% Sensitivity Analysis: Discount Rate and Amortization Period CalPERS recognizes the varying assumptions that may impact a plan's unfunded actuarial 3 As illustrated by tables four and five, these alternative assumptions cause significant impacts. For example, changing from a discount rate of 6.25% to 5.75% causes UAAL to increase by almost 15%. Table 3: Discount Rate Sensitivity 6.25% (Current CERBT Strategy) 5.75%5.25% Citywide – UAAL $120,511 $137,059 $155,266 General Fund – UAAL $77,914 $89,088 $100,923 Funded Ratio 56%53%50% Table 4: Amortization Sensitivity, 6.25% Discount Rate 20 Years (Current)18 Years Normal Cost $7,489 $7,489 UAAL Amortization*$8,933 $9,617 Total ACD $16,416 $17,105 ACD (% of payroll)12.8%13.4% *Includes administrative expenses Funding for the FY 2025 Including Actuarial Determined Contribution (ADC) This section outlines staff's recommended funding level for OPEB obligations beginning in FY 2025 for Finance Committee review and discussion. Staff recommend accepting the assumptions in this valuation report to inform the development of the FY 2025 and FY 2026 budgets, along with long range financial plans for the outyears. This is in alignment with the Retire Benefit Policy, including tenants such as continuing to use a reduced discount rate of 5.75% and an accelerated, closed amortization schedule of 15 years (as of the June 30, 2021 valuation). Staff recommends the Finance Committee continue with this funding approach that adjusts assumptions based on current data and the principles noted above. Included below is an optional two-year phase-in of the June 30, 2023 valuation results that the Finance Committee directed staff to consider, on May 21, 2024, in the development of the FY 2025 Budget for City Council adoption in June 2024. Staff have also outlined the actuarial "baseline" scenario for consideration that represents the minimal investment required but is incompliant with City policy. Funding levels may be adjusted annually based on City Council direction and policy adjustment, as long as the baseline ADC is met. Unlike the CalPERS pension plan, additional City contributions do not go into a separate Section Full ADC and Prefunding of FY 2025 OPEB Obligations Staff recommend adjusting funding from the typical baseline calculation to better align with City Council policy to continue to proactively fund long-term liabilities. Recommended revisions to baseline assumptions include: •Exclude proactive contributions at a lower discount rate towards the ADC: Consistent with the pension proactive funding, this would treat the proactive contributions assuming a lower discount rate of 5.75 as if in a separate "trust" or "saving account." ADC calculations will remain at consistent levels and these proactive contributions remain additive to baseline calculations of liability. •Continue to assume a shortened amortization period of 13 remaining years: This amortization period aligns OPEB with the City's Pension Policy goals to reach a 90% funded status over 15 years as of the June 30, 2021 valuation (by FY 2036). This results in an FY 2025 Adjusted ADC of $21.9 million citywide (approximately $13.9 million in the General Fund), a $5.1 million increase from the $16.8 million ADC from the June 30, 2021 valuation used to develop the FY 2025 Proposed Operating Budget. Finance Committee Recommendation: Two-Year Phase-In On May 21, 2024 the Finance Committee recommended a two-year phase-in of the financial impacts of the June 30, 2023 valuation. This recommendation mitigates the immediate impacts of this report’s expense escalation and supports financial flexibility for the provision of services citywide while continuing to proactively prefund long-term obligations in alignment with City Council policy. This results in an FY 2025 Adjusted ADC of $19.4 million citywide (approximately $12.2 million in the General Fund), Prior Valuation Additional Normal Cost Contributions In the prior valuation period the City Council approved factoring in funding for the addition of nearly 60 full-time staff since the June 30, 2021 valuation date. Based on the average salary reported in that valuation and the variable portion of ADC, or normal cost for current employees, the retiree healthcare cost of the additional staffing was approximately $400,000 citywide ($298,000 or 74% General Fund). This associated retiree health cost was included in the FY 2023 and FY 2024 Adopted budgets in alignment with the assumptions noted above. This funding was included to proactively address the expected deviation in actuarial assumptions though as noted, were insufficient to mitigate the full impact of the changes from the FY 2023 report. Staff recommends removing this additional retiree health cost as the position additions that prompted it are now included in the June 30, 2023 valuation. The $416,000 programmed in the FY 2025 Proposed Budget for additional normal cost contributions partially offset the cost increase from the new valuation to bring it down to $5.1 million for all funds. FISCAL/RESOURCE IMPACT The FY 2025 Proposed Budget includes an ADC of $16.9 million, an increase of $2.9 million from FY 2024 Adopted levels of $14.0 million. Funding of the full ADC and two-year prefunding phase in recommended by the Finance Committee on May 21, 2024 increases the ACD in FY 2025 to $19.4 million. This recommendation by the Finance Committee will be included as an amendment to the FY 2025 Proposed Budget for City Council consideration during the adoption of the budget on June 17, 2024. Staff will incorporate this direction on an ongoing basis beginning in FY 2026. STAKEHOLDER ENGAGEMENT The transmittal of the OPEB actuarial valuation as of June 30, 2023 begins conversations regarding the fiscal outlook for the City's OPEB liabilities and the appropriate contribution for the FY 2025 Actuarial Determined Contribution and prefunding levels. Initial public discussion was held with the Finance Committee on May 21, 2024, prior to City Council review and adoption of the FY 2025 Budget, scheduled for June 17, 2024. ENVIRONMENTAL REVIEW Committee action on this item is not a project as defined by CEQA because accepting and approving an annual actuarially determined contribution is a fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQA Guidelines section 15378(b)(4). ATTACHMENTS APPROVED BY: Attachment A: 4 Benefit Groups in the CalPERS Retiree Healthcare benefit plans City of Palo Alto Retiree Healthcare Benefit Plans and Tiers nd nd nd (All active Group 3 IAFF & FCA (All active Group 3 POA & PMA elected into Group 4) CITY OF PALO ALTO RETIREE HEALTHCARE PLAN June 30, 2023 Actuarial Valuation Contributions for 2024/25 & 2025/26 Drew Ballard, FSA, EA, MAAA Cathy Wandro, ASA, MAAA Joseph Herm Foster & Foster, Inc. May 21, 2024 CONTENTS L:\PaloAltoCity\OPEB\2023_Val\Reports\F&F_PaloAltoCity_24-05-21_OPEB_6-30-23_Funding_Report.docx Topic Page Benefit Summary 1 Implied Subsidy 7 Participant Statistics 9 Actuarial Assumptions Highlights 15 Actuarial Methods 21 Assets 23 Results 25 Results – Details 39 Sensitivity Analysis 49 Comparison to Other Agencies 54 Actuarial Certification 57 Exhibits 58 May 21, 2024 1 BENEFIT SUMMARY  Eligibility  Retire directly from the City under CalPERS (age 501 and 5 years of CalPERS service or disability)  Medical Provider  CalPERS health plans (PEMHCA)  CalPERS administrative fees paid by City  Retiree Medical Benefit for Current Retirees: Hired < 1/1/04 (1/1/05 SEIU, 1/1/06 PAPOA) & Did Not Elect into Group 4  GROUP 1 Retirees: Retired < 1/1/07 (3/1/09 for PAPOA) • Benefit = Full premium up to family coverage  GROUP 2 Retirees: Retired after GROUP 1 and before 5/1/11 (12/1/11 IAFF/FCA, 6/1/12 PMA, 4/1/15 POA) • Benefit = Same as above but premium limited to 2nd most expensive Basic (non-Medicare) medical plan in PEMHCA Region 1 (PERS Platinum in 2023 and 2024)  GROUP 3 Retirees: Retired after GROUP 2 • Benefit = same amount as active employees, which may change from time to time and in the future as bargaining agreements change (see next section for cap amounts) 1 Age 52 for Miscellaneous New Hires under PEPRA May 21, 2024 2 BENEFIT SUMMARY  Retiree Medical Benefit for Current Actives: Hired < 1/1/04 (1/1/05 SEIU, 1/1/06 PAPOA) & Did Not Elect into Group 4  GROUP 3 Future Retirees: Currently active and did not elect into Group 4 • No active Group 3 POA, PMA, IAFF or FCA • Only remaining Group 3 actives in MGMT, SEIU, UMPAPA (57 active members) • Benefit = up to full premium, but limited to flat dollar caps same as active contribution SEIU Mgmt/UMPAPA/ Other Groups 2023 2024 2023 & 2024 Single $ 906 $ 943 $ 871 2-Party 1,812 1,885 1,742 Family 2,350 2,444 2,260 May 21, 2024 3 BENEFIT SUMMARY  Retiree Medical Benefit for those: Hired ≥ 1/1/04 (1/1/05 SEIU, 1/1/06 PAPOA) & Employees Hired Before These Dates Electing into Group 42  GROUP 4 Future Retirees: Government Code §22893 “Vesting Schedule” (based on all CalPERS Service)3: Years of Service % Years of Service % < 10 0% 13 65% 10 50% 14 70% 11 55% ↓ ↓ 12 60% > 20 100%  100% vesting for disability retirements  Vesting applies to 100/90 formula amounts, which are the maximum amounts payable by the City (retirees pay any difference between these amounts and actual premiums): 2023 2024 Single $ 883 $ 983 2-Party 1,699 1,890 Family 2,124 2,366  If have 20 years City service do not need to retire directly from City 2 All currently active POA/PMA, IAFF/FCA are Group 4. Some Mgmt/Conf and some SEIU remained in Group 3, and some elected into Group 4. 3 Minimum 5 years City Service. May 21, 2024 4 BENEFIT SUMMARY  Dental, Vision & Medicare Part B  None  Surviving Spouse Benefit  100% of retiree benefit continues to surviving spouse if retiree elects CalPERS pension survivor allowance  Waived Re- election  Waived retirees/beneficiaries may re-elect coverage at a future date  Summary of Changes Since the Prior Valuation  None May 21, 2024 5 BENEFIT SUMMARY  Pay-As-You- Go ($000s) Fiscal Year Cash Implied Subsidy Total 2022/23 $ 11,269 $ 3,025 $ 14,294 2021/22 10,880 2,619 13,499 2020/21 10,631 2,346 12,977 2019/20 10,344 2,384 12,728 2018/19 9,960 2,197 12,157 2017/18 9,660 2,444 12,104 2016/17 9,713 2,203 11,916 2015/16 9,681 1,960 11,641 2014/15 8,995 1,916 10,911 2013/14 7,317 - 7,317 2012/13 8,766 - 8,766 2011/12 8,165 - 8,165 May 21, 2024 6 BENEFIT SUMMARY Monthly Benefit Cap Amounts 2023 2024 Group Single 2-Party Family Single 2-Party Family Group 14 $1,210.71 $2,421.42 $3,147.85 $1,339.70 $2,679.40 $3,483.22 Group 2 1,200.12 2,400.24 3,120.31 1,314.27 2,628.54 3,417.10 Group 3 SEIU 906.00 1,912.00 2,350.00 943.00 1,885.00 2,444.00 Group 3 Others5 871.00 1,742.00 2,260.00 871.00 1,742.00 2,260.00 Group 4 (100% vest) 883.00 1,699.00 2,124.00 983.00 1,890.00 2,366.00 % Decrease from Group 1 (assumes Group 1 is in most expensive plan) Group 2 1% 1% 1% 2% 2% 2% Group 3 SEIU 25% 25% 25% 30% 30% 30% Group 3 Others 28% 28% 28% 35% 35% 35% Group 4 27% 30% 33% 27% 29% 32% 4 No cap for Group 1. Amount shown is most expensive Non-Medicare Region 1 premium. 5 UMPAPA, Mgmt, IAFF, FCA, PMA, and PAPOA. May 21, 2024 7 IMPLIED SUBSIDY  For PEMHCA, employer cost for allowing retirees to participate at active rates. • Kaiser 2024 Region 1 plan:  The City included the implied subsidy beginning with the June 30, 2013 valuation. 25 30 35 40 45 50 55 60 64 Premium 1,021 1,021 1,021 1,021 1,021 1,021 1,021 1,021 1,021 Male Cost by Age 371 412 487 579 696 866 1,094 1,376 1,636 Female Cost by Age 612 780 857 876 927 1,044 1,196 1,386 1,579 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $C o s t / P r e m i u m Age Kaiser 2024 -Single Coverage May 21, 2024 8 IMPLIED SUBSIDY This page intentionally blank May 21, 2024 9 PARTICIPANT STATISTICS Participant Statistics 6 Excludes all waived retirees, regardless of age, except as noted. 7 Includes 68 waived retirees over 65. 8 Excludes all waived retirees over 65; includes 38 waived under 65 retirees. 6/30/15 6/30/17 6/30/19 6/30/21 6/30/23  Actives • Count 955 967 930 874 902 • Average Age 45.3 45.6 44.8 45.0 44.6 • Average City Service 10.8 10.9 10.8 11.2 10.4 • Average PERS Service 11.9 11.9 11.7 12.1 11.4 • Average Salary $91,714 $90,739 $110,969 $120,207 $134,338 • Total Salary (000’s) $87,586 $87,745 $103,201 $105,061 $121,173  Retirees: • Count6 1,0077 9598 974 1,009 1,031 • Average Age 68.9 68.9 70.0 70.9 71.5 • Average Retirement Age o Service 57.7 57.7 58.0 58.2 58.2 o Disability 45.6 45.9 46.1 46.3 45.8 May 21, 2024 10 PARTICIPANT STATISTICS Historical Active and Retiree Counts9 9 Retiree count is subscribers: retirees and surviving spouses 6/30/09 6/30/11 6/30/13 6/30/15 6/30/17 6/30/19 6/30/21 6/30/23 Active 955 923 948 955 967 930 874 902 Retired 710 860 968 1,007 959 974 1,009 1,031 43%48% 50% 51% 50%51%54%53% 57%52% 50% 49% 50%49%46%47% - 500 1,000 1,500 2,000 2,500 May 21, 2024 11 PARTICIPANT STATISTICS Participant Statistics June 30, 2023 10 Based on June 30, 2023 PERSable pay rate. 11 Excludes retirees who have waived coverage, regardless of age. Group 1 Group 2 Group 3 Group 4 Total  Actives • Count n/a n/a 57 845 902 • Average Age n/a n/a 55.8 43.9 44.6 • Average Entry Age n/a n/a 31.5 34.4 34.2 • Average City Service n/a n/a 24.3 9.5 10.4 • Average PERS Service n/a n/a 24.4 10.5 11.4 • Average Salary n/a n/a $134,880 $134,302 $134,338 • Total Salary (000’s)10 n/a n/a 7,688 113,485 121,173  Benefitting Retirees11: • Count 396 280 165 190 1,031 • Average Age 79.3 70.7 65.7 61.5 71.5 • Avg Service Ret Age 57.3 57.8 59.1 59.0 58.2 • Avg Disability Ret Age 44.7 46.9 51.2 48.1 45.8 May 21, 2024 12 PARTICIPANT STATISTICS Participant Statistics June 30, 2021 12 Actual 2020/21 PERSable compensation. 13 Excludes retirees who have waived coverage, regardless of age. Group 1 Group 2 Group 3 Group 4 Total  Actives • Count n/a n/a 69 805 874 • Average Age n/a n/a 54.1 44.2 45.0 • Average Entry Age n/a n/a 31.5 34.0 33.8 • Average City Service n/a n/a 22.6 10.2 11.2 • Average PERS Service n/a n/a 22.8 11.2 12.1 • Average Salary n/a n/a $114,220 $120,720 $120,207 • Total Salary (000’s)12 n/a n/a 7,881 97,180 105,061  Benefitting Retirees13: • Count 429 290 152 138 1,009 • Average Age 77.8 68.8 64.0 61.4 70.9 • Avg Service Ret Age 57.5 57.9 59.1 59.4 58.2 • Avg Disability Ret Age 45.5 46.9 51.2 49.3 46.3 May 21, 2024 13 PARTICIPANT STATISTICS Data Reconciliation14 6/30/2021 to 6/30/2023 Actives Retirees Disabled Benefic. Total  June 30, 2021 874 786 144 79 1,883 • New Hires/Rehires 199 - - - 199 • Disabled (8) - 8 - - • Terminated15 (100) - - - (100) • Died with Beneficiary16 - (8) (5) 13 - • Died, no Beneficiary - (25) (7) (10) (42) • Retired/covered (54) 54 - - - • Retired/waived (9) - - - (9) • Waived Retiree - (9) - (1) (10) • Adjustment/Other - 7 1 4 12  June 30, 2023 902 805 141 85 1,933 14 Excludes retirees who have waived coverage. 15 All actives in June 30, 2021 valuation and not in June 30, 2023 valuation assumed terminated. 16 Retirees in the June 30, 2021 valuation not in the June 30, 2023 valuation assumed deceased. May 21, 2024 14 PARTICIPANT STATISTICS This page intentionally blank May 21, 2024 15 ACTUARIAL ASSUMPTIONS HIGHLIGHTS June 30, 2021 Valuation June 30, 2023 Valuation  Valuation Date  June 30, 2021  ADC for Fiscal Years 2022/23 & 2023/24 (end of year)  1 year lag  June 30, 2023  ADC for Fiscal Years 2024/25 & 2025/26 (end of year)  1 year lag  Funding Policy  Full Pre-funding through CalPERS trust (CERBT) Strategy #1  City may contribute additional amounts based on lower discount rate  Same  Discount Rate  6.25%, net of expenses based on CERBT Strategy #1  Same  General Inflation  2.50%  Same May 21, 2024 16 ACTUARIAL ASSUMPTIONS HIGHLIGHTS June 30, 2021 Valuation June 30, 2023 Valuation  Payroll Increases  Aggregate Increases: 2.75%  Merit Increases: CalPERS 2000- 2019 Experience Study  Same  Increase to Group 3 Flat Dollar Caps17  ½ of Medical Trend, not less than assumed inflation (2.50%)  Same  Medical Trend  Non-Medicare: 6.50% for 2023, decreasing to an ultimate rate of 3.75% in 2076  Medicare: 5.65% (non-Kaiser) and 4.60% (Kaiser) for 2023, decreasing to an ultimate rate of 3.75% in 2076  Non-Medicare: 8.50% for 2025, decreasing to an ultimate rate of 3.45% in 2076  Medicare: 7.50% (non-Kaiser) and 6.25% (Kaiser) for 2025, decreasing to an ultimate rate of 3.45% in 2076 17 Increase is for purposes of financial projection only and does not imply any obligation to increase the cap in the future. May 21, 2024 17 ACTUARIAL ASSUMPTIONS HIGHLIGHTS June 30, 2021 Valuation June 30, 2023 Valuation  Participation at Retirement  Group 3: 98%  Group 4: if eligible for City contribution: 95%; if not: 0%  Based on Plan experience18  Same  Retirement, Mortality, Termination, Disability  CalPERS 2000-2019 Experience Study  Society of Actuaries mortality improvement scale MP-21  Same  Age-related Claims Costs for Medicare Advantage Plans  Included  Due to age-risk adjusted federal subsidies, no age-based claims costs were included for Medicare Advantage plans  Same 18 Actual participation percentage for Group 3 since 6/30/17 is 100% for Miscellaneous (there are no active Safety members in Group 3). Actual participation percentage for Group 4 since 6/30/17 who are eligible for a City contribution is 91%. Group 4 still has limited actual experience. We recommend continued monitoring for Group 4. May 21, 2024 18 ACTUARIAL ASSUMPTIONS HIGHLIGHTS June 30, 2021 Valuation June 30, 2023 Valuation  Basis for Assumptions (6/30/23 Valuation)  No experience study performed for this Plan  CalPERS experience study covering 2000 to 2019 experience was used  Mortality improvement is a Society of Actuaries table  Inflation based on our estimate for the Plan’s long time horizon  Capital market assumptions based on 2021 Foster & Foster stochastic analysis, taking into account capital market assumptions of investment advisory firms  Medical trends were based on expectations over the short term blended into long term medical trends developed using the Society of Actuaries Getzen Model of Long-Run Medical Cost Trends  Age-based claims costs are based on tables published by the Society of Actuaries and demographic data for the CalPERS health plans provided by CalPERS  Medical coverage and participation based in part on Plan experience May 21, 2024 19 ACTUARIAL ASSUMPTIONS HIGHLIGHTS CERBT Investment Options  Asset Allocation Strategy 1 Strategy 2 Strategy 3 Global Equity 49% 34% 23% Long US Fixed Income 23% 41% 51% TIPS 5% 5% 9% Commodities 3% 3% 3% Global REITs 20% 17% 14% Total 100% 100% 100% CalPERS’ projected 20-year 6.0% 5.5% 5.0% 19 CalPERS assumes 2.25% price inflation. May 21, 2024 20 ACTUARIAL ASSUMPTIONS HIGHLIGHTS Discount Rate  Future expected returns  Stochastic simulations of geometric average returns over 20 years – 5,000 trials  2.50% inflation assumption  Projections based on 8 independent Investment Advisors 2021 10-year Capital Market Assumptions and where available, investment advisors long-term trends  Confidence levels: Strategy 1 Strategy 2 Strategy 3 50% Confidence Level 6.25% 5.75% 5.25% 55% Confidence Level 6.00% 5.50% 5.00% 60% Confidence Level 5.75% 5.25% 4.75%  Expected returns, 50th percentile: Strategy 1 Strategy 2 Strategy 3 Expected Real Rate of Return20 3.90% 3.39% 2.92% Inflation Assumption 2.50% 2.50% 2.50% Investment Expenses (0.05%) (0.05%) (0.05%) Nominal Rate of Return 6.35% 5.84% 5.37% Rounded to nearest 0.25% 6.25% 5.75% 5.25%  City currently in Strategy 1: Recommend 6.25% discount rate 20 Includes investment expenses May 21, 2024 21 ACTUARIAL METHODS Method June 30, 2021 Valuation June 30, 2023 Valuation  Cost Method  Entry Age Normal Level % of Pay  Same  Unfunded Liability Amortization  22 years closed period  Level % of pay (2.75% annual escalation)  Sensitivity analysis: 20 & 18 years  20 years closed period  Level % of pay (2.75% annual escalation)  Sensitivity analysis: 18 years  Actuarial Asset Value  Market Value of Assets21  Same  Future New Entrants  Closed group – no new participants  Implied Subsidy  Implied subsidy valued  Plan Continuance  For purposes of financial projections, the plan and benefits are assumed to continue unchanged. The calculation of this obligation does not imply that there is any legal liability to provide or continue providing the benefits valued. 21 Using Market Value of Assets to determine the ADC will result in more volatile future ADCs than if a smoothed Market Value were used. For funding purposes, market value includes accrued contributions made for a previous fiscal year. May 21, 2024 22 ACTUARIAL METHODS This page intentionally blank May 21, 2024 23 ASSETS Market Value of Plan Assets (MVA) Invested in CERBT Strategy 1 Fund (Amounts in 000’s) 2019/20 2020/21 2021/22 2022/23  MVA (Beg. of Year) $118,497 $126,520 $164,170 $144,745 • Contributions 3,747 2,94622 2,904 2,032 • Benefit Payments23 - - - - • Admin. Expenses (59) (71) (80) (72) • Investment Return24 4,335 34,776 (22,249) 9,356  MVA (End of Year) 126,520 164,170 144,745 156,061  Approx. Annual Return 3.6% 27.5% (13.5)% 6.4% 22 Includes $1,358 paid on 1/10/2022; MVA shown is not the same as market value for financial reporting purposes. 23 Benefit Payments made outside of trust by City in years other than 2018/19. Refer to Slide 5 for fiscal year amounts. 24 Net of investment expenses. May 21, 2024 24 ASSETS Historical Returns 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 Market Value -22.5% 15.1% 24.4% 0.1% 11.2% 18.2% -0.2% 1.1% 10.4% 7.8% 6.3% 3.6% 27.5% -13.5% 6.4% Expected Return 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.61% 7.25% 7.25% 6.75% 6.75% 6.75% 6.75% 6.25% 6.25% (15%) (10%) (5%) 0% 5% 10% 15% 20% 25% 30% May 21, 2024 25 RESULTS Actuarial Obligations (Amounts in 000’s)  Valuation Date 6/30/2021 6/30/2023  Discount Rate 6.25% 6.25%  Present Value of Benefits PVB • Actives future retirees $131 926 $154 864 • Retirees 169,243 192,253 • Total 301 169 347 117  Actuarial Accrued Liabilit AAL • Actives future retirees 74 954 84 319 • Retirees 169,243 192,253 • Total 244 197 276 572  Market Value of Assets (MVA) 164,170 156,061  Unfunded AAL UAAL 80 027 120 511  Funded Ratio 67% 56%  Normal Cost25 6 316 7 614  Pa -As-You-Go Cost Cash 11 190 12 827  Pa -As-You-Go Cost IS 3 025 2 745 25 Includes Administration fees. May 21, 2024 26 RESULTS Historical Funded Status (Amounts in 000’s) 24% 27% 29% 33% 37% 49% 67%56% $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 1/1/11 6/30/11 6/30/13 6/30/15 6/30/17 6/30/19 6/30/21 6/30/23 Retiree pay-go Retiree AAL less pay-go Active AAL AVA MVA X% FundedRatio May 21, 2024 27 RESULTS Actuarial Gain/Loss (Amounts in $000’s) AAL Assets UAAL  Actual 6/30/21 $244,197 $164,170 $80,027  Expected 6/30/23 260,018 184,228 75,790  Ex erience (Gains)/Losses • Premiums/Caps different than expected 286 286 • Demographic & other (2,315) (2,315)  Assum tion Chan es increasin /(decreasin ) AAL • Medical Plan election percentages changed 1,269 1,269 • Updated medical trend 17,314 17,314  Contribution and Benefit Payment Gain 6,131 (6,131)  Investment Loss (34,297) 34,297  Total UAAL (Gain)/Loss 16,554 (28,167) 44,721  Actual 6/30/23 276,572 156,061 120,511 May 21, 2024 28 RESULTS Actuarially Determined Contribution (ADC) (Amounts in 000’s) 6/30/21 Valuation 6/30/23 Valuation 2022/23 2023/24 2024/25 2025/26  Discount Rate 6.25% 6.25%  ADC - $ • Normal Cost $ 6,196 $ 6,370 $ 7,489 $ 7,674 • Administrative Expenses26 120 126 125 133 • UAAL Amortization 5,112 5,253 8,802 9,044 • Total 11,428 11,749 16,416 16,851  Projected Payroll 110,919 113,969 127,929 131,447  ADC – Percent of Pay • Normal Cost 5.6% 5.6% 5.9% 5.8% • Administrative Expenses 0.1% 0.1% 0.1% 0.1% • UAAL Amortization 4.6% 4.6% 6.9% 6.9% • Total 10.3% 10.3% 12.8% 12.8% 26 Includes PEMHCA and CERBT administration fees. May 21, 2024 29 RESULTS Actuarially Determined Contribution (ADC) Payment to Trust (Amounts in 000’s) 6/30/23 Valuation 2024/25 2025/26  Discount Rate 6.25%  ADC - $ • Normal cost $ 7,489 $ 7,674 • Administrative expenses27 125 133 • UAAL amortization 8,802 9,044 • Total 16,416 16,851 • Less: Implied subsidy benefit payments 2,745 2,871 • Remaining ADC 13,671 13,980 • Less: Estimated cash benefit payments 12,827 13,565 • Total Trust contribution (If negative, indicates a reimbursement for City out-of-pocket payments may be requested.) 844 415 27 Includes PEMHCA and CERBT administration fees. May 21, 2024 30 RESULTS Historical Recommended Funding Contributions (Amounts in 000’s) May 21, 2024 31 RESULTS Amortization Bases & Payments (Amounts in 000’s) 6/30/21 Valuation 6/30/23 Valuation 6/30/22 6/30/23 6/30/24 6/30/25  Discount Rate 6.25% 6.25%  Payment Escalator 2.75% 2.75%  UAAL Balance $ 76,159 $ 75,807 $ 122,790 $ 121,662  Amortization Payment 5,112 5,253 8,802 9,044  Amortization Period (years) 22 21 20 19 May 21, 2024 32 RESULTS 10 Year Contribution Projection (Amounts in 000’s) FYE ADC28 Contribution Payroll ADC % of Pay Fund % Cash Benefit Payment Implied Subsidy BP Trust Pre- Funding Total UAAL Beg. Of FY 2025 $16,416 $12,827 $2,745 $844 $16,416 $127,929 12.8% $122,791 57% 2026 16,851 13,565 2,871 415 16,851 131,447 12.8% 121,662 59% 2027 17,318 14,286 3,017 15 17,318 135,062 12.8% 120,223 61% 2028 17,785 14,868 2,992 (75) 17,785 138,776 12.8% 118,444 62% 2029 18,276 15,590 3,089 (403) 18,276 142,593 12.8% 116,298 64% 2030 18,775 16,348 3,285 (858) 18,775 146,514 12.8% 113,755 66% 2031 19,271 16,933 3,312 (974) 19,271 150,543 12.8% 110,784 68% 2032 19,803 17,554 3,434 (1,185) 19,803 154,683 12.8% 107,350 69% 2033 20,347 18,086 3,516 (1,255) 20,347 158,937 12.8% 103,416 71% 2034 20,882 18,626 3,575 (1,319) 20,882 163,307 12.8% 98,944 73% 28 Actuarially Determined Contribution May 21, 2024 33 RESULTS -$15 -$10 -$5 $0 $5 $10 $15 $20 $25 $30 $ M i l l i o n s Net Trust Payment/Reimbursement Benefit Payments Total ADC ADC, Benefitand Trust Payment/Reimbursement Projection (6.25% Discount Rate, 20 years level % of pay amortization) May 21, 2024 34 RESULTS 0% 20% 40% 60% 80% 100% 120% $0 $20 $40 $60 $80 $100 $120 $140 F u n d e d R a t i o UA A L ( $ M i l l i o n s ) UAAL Funded Ratio UAAL and Funded Ratio Projection (6.25% Discount Rate, 20 years amortization) May 21, 2024 35 RESULTS % of Total Actuarial Accrued Liability for Actives and Retirees Miscellaneous 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 6/30/09 6/30/11 6/30/13 6/30/15 6/30/17 6/30/19 6/30/21 6/30/23 Actives Retirees May 21, 2024 36 RESULTS % of Total Actuarial Accrued Liability for Actives and Retirees Safety 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 6/30/09 6/30/11 6/30/13 6/30/15 6/30/17 6/30/19 6/30/21 6/30/23 Actives Retirees May 21, 2024 37 RESULTS This chart excludes the Implied Subsidy and is provided for informational purposes only (Amounts in 000’s) Cash Benefit  Present Value of Benefits $ 294,841  Funded Status 6/30/23 • Actuarial Accrued Liability 232,822 • Actuarial Value of Assets29 156,061 • Unfunded AAL 76,761  Funded Ratio 67.0%  ADC 2024/25 • Normal Cost 6,570 • Administrative Expenses 125 • UAAL Amortization 5,590 • Total 12,285 • ADC % of Payroll 9.6% 29 All assets allocated to the cash benefit for illustrative purposes only. May 21, 2024 38 RESULTS This page intentionally blank May 21, 2024 39 RESULTS - DETAILS Actuarial Obligations by Pre/Post 65 Benefits June 30, 2023 (Amounts in 000’s) Benefits Paid Before Age 65 Benefits Paid On or After Age 65 Total  Present Value of Benefits • Actives (future retirees) $78,087 $76,777 $154,864 • Retirees 48,369 143,884 192,253 • Total 126,456 220,661 347,117  Actuarial Accrued Liability • Actives (future retirees) 40,543 43,776 84,319 • Retirees 48,369 143,884 192,253 • Total 88,912 187,660 276,572  Normal Cost 2024/2530 3,872 3,741 7,614 30 Includes Administration fees. May 21, 2024 40 RESULTS - DETAILS Actuarial Obligations by Group June 30, 2023 (Amounts in 000’s) Group 1 Group 2 Group 3 Group 4 Total  Present Value of Benefits • Actives (future retirees) $ - $ - $12,507 $142,358 $154,864 • Retirees 47,911 53,548 36,227 54,567 192,253 • Total 47,911 53,548 48,734 196,925 347,117  Actuarial Accrued Liability • Actives (future retirees) - - 10,597 73,722 84,319 • Retirees 47,911 53,548 36,227 54,567 192,253 • Total 47,911 53,548 46,824 128,289 276,572  Normal Cost 2024/2531 n/a n/a 353 7,261 7,614  NC as % of Payroll n/a n/a 5.0% 6.0% 6.0%  Active Count n/a n/a 57 845 902  Projected Payroll n/a n/a 7,128 120,801 127,929 31 Includes Administration fees. May 21, 2024 41 RESULTS - DETAILS Actuarial Obligations by Cash/Implied Subsidy June 30, 2023 (Amounts in 000’s) Cash Subsidy Implied Subsidy Total  Present Value of Benefits • Actives (future retirees) $134,797 $20,067 $154,864 • Retirees 160,044 32,209 192,253 • Total 294,841 52,276 347,117  Actuarial Accrued Liability • Actives (future retirees) 72,778 11,542 84,319 • Retirees 160,044 32,209 192,253 • Total 232,822 43,751 276,572  Market Value of Assets32 131,374 24,687 156,061  Unfunded AAL 101,448 19,064 120,511  Normal Cost 2024/2533 6,695 919 7,614  Pay-As-You-Go Cost 2024/25 12,827 2,745 15,572 32 Allocated in proportion to AAL for illustrative purposes. 33 Includes Administration fees. May 21, 2024 42 RESULTS - DETAILS Actuarially Determined Contribution by Cash/Implied Subsidy 2024/25 Fiscal Year (Amounts in 000’s) Cash Subsidy Implied Subsidy Total  ADC - $ • Normal Cost $ 6,570 $ 919 $ 7,489 • Administrative Expenses 125 - 125 • UAAL Amortization 7,424 1,378 8,802 • ADC 14,119 2,297 16,416  Projected Payroll 127,929 127,929 127,929  ADC - % of Payroll • Normal Cost 5.1% 0.7% 5.9% • Administrative Expenses 0.1% 0.0% 0.1% • UAAL Amortization 5.8% 1.1% 6.9% • ADC 11.0% 1.8% 12.8% May 21, 2024 43 RESULTS - DETAILS Actuarial Obligations by Misc/Safety June 30, 2023 (Amounts in 000’s) Misc Safety Total  Present Value of Benefits • Actives (future retirees) $112,057 $42,807 $154,864 • Retirees 120,219 72,034 192,253 • Total 232,276 114,841 347,117  Actuarial Accrued Liability • Actives (future retirees) 63,059 21,260 84,319 • Retirees 120,219 72,034 192,253 • Total 183,278 93,294 276,572  Market Value of Assets34 103,418 52,643 156,061  Unfunded AAL 79,860 40,651 120,511  Normal Cost 2024/2535 5,495 2,118 7,614  Pay-As-You-Go Cost 2024/25 10,278 5,294 15,572 34 Allocated in proportion to the Actuarial Accrued Liability. 35 Includes Administration fees. May 21, 2024 44 RESULTS - DETAILS Actuarially Determined Contribution by Misc/Safety 2024/25 Fiscal Year (Amounts in 000’s) Misc Safety Total  ADC - $ • Normal Cost $ 5,412 $ 2,077 $ 7,489 • Administrative Expenses 83 42 125 • UAAL Amortization 5,848 2,954 8,802 • ADC 11,344 5,072 16,416  Projected Payroll 101,964 25,965 127,929  ADC - % of Payroll • Normal Cost 5.3% 8.0% 5.9% • Administrative Expenses 0.1% 0.2% 0.1% • UAAL Amortization 5.7% 11.4% 6.9% • ADC 11.1% 19.5% 12.8% May 21, 2024 45 RESULTS - DETAILS Actuarial Obligations by Bargaining Unit June 30, 2023 (Amounts in 000’s) FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total  PVB • Actives $1,362 $20,223 $32,491 $17,294 $2,521 $72,048 $8,927 $154,864 • Retirees 2,714 34,636 52,789 25,202 2,593 65,881 8,438 192,253 • Total 4,076 54,859 85,280 42,496 5,114 137,929 17,365 347,117  AAL • Actives 1,074 9,545 18,930 7,485 2,058 38,985 6,242 84,319 • Retirees 2,714 34,636 52,789 25,202 2,593 65,881 8,438 192,253 • Total 3,788 44,181 71,719 32,687 4,651 104,866 14,680 276,572  MVA36 2,137 24,930 40,469 18,444 2,624 59,173 8,283 156,061  UAAL 1,651 19,251 31,250 14,243 2,027 45,693 6,397 120,511  NC 24/2537 48 928 1,617 981 102 3,583 356 7,614  Pay-Go 205 2,624 4,315 1,771 174 5,749 734 15,572 36 Allocated in proportion to the Actuarial Accrued Liability. 37 Includes Administration fees. May 21, 2024 46 RESULTS - DETAILS Actuarially Determined Contribution by Bargaining Unit 2024/25 Fiscal Year (Amounts in 000’s) FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total  ADC - $ • Normal Cost $ 46 $ 908 $ 1,585 $ 966 $ 99 $ 3,536 $ 350 $ 7,489 • Admin. Expenses 2 20 32 15 2 48 7 125 • UAAL Amort 119 1,393 2,265 1,045 150 3,363 468 8,802 • ADC 166 2,321 3,881 2,026 252 6,947 824 16,416  Projected Payroll 803 10,826 34,117 11,174 1,880 59,705 9,424 127,929  ADC - % • Normal Cost 5.7% 8.4% 4.6% 8.6% 5.3% 5.9% 3.7% 5.9% • Admin. Expenses 0.2% 0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% • UAAL Amort 14.8% 12.9% 6.6% 9.3% 8.0% 5.6% 5.0% 6.9% • ADC 20.7% 21.4% 11.4% 18.1% 13.4% 11.6% 8.7% 12.8% May 21, 2024 47 RESULTS - DETAILS Actuarially Determined Contribution by Bargaining Unit 2025/26 Fiscal Year (Amounts in 000’s) FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total  ADC - $ • Normal Cost $ 47 $ 931 $ 1,624 $ 990 $ 102 $ 3,623 $ 358 $ 7,674 • Admin. Expenses 2 21 34 16 2 51 7 133 • UAAL Amort 122 1,431 2,327 1,073 154 3,456 481 9,044 • ADC 171 2,383 3,985 2,079 259 7,130 846 16,851  Projected Payroll 826 11,123 35,055 11,481 1,932 61,347 9,683 131,447  ADC - % • Normal Cost 5.7% 8.4% 4.6% 8.6% 5.3% 5.9% 3.7% 5.8% • Admin. Expenses 0.2% 0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% • UAAL Amort 14.8% 12.9% 6.6% 9.3% 8.0% 5.6% 5.0% 6.9% • ADC 20.7% 21.4% 11.4% 18.1% 13.4% 11.6% 8.7% 12.8% May 21, 2024 48 RESULTS - DETAILS This page intentionally blank May 21, 2024 49 SENSITIVITY ANALYSIS Discount Rate Sensitivity (Amounts in 000’s) CERBT Strategy #1 (Current) #2 #3  Discount Rate 6.25% 5.75% 5.25%  Present Value of Benefits $347,117 $375,439 $407,741  Funded Status 6/30/23 • Actuarial Accrued Liability 276,572 293,120 311,327 • Assets 156,061 156,061 156,061 • Unfunded AAL 120,511 137,059 155,266  Funded Ratio 56.4% 53.2% 50.1%  ADC 2024/25 • Normal Cost 7,489 8,379 9,394 • Administrative Expenses 125 125 125 • UAAL Amortization38 8,802 9,582 10,377 • Total 16,416 18,085 19,896 • ADC % of Payroll 12.8% 14.1% 15.6% 38 UAAL amortized over 20 years for all scenarios. May 21, 2024 50 SENSITIVITY ANALYSIS Amortization Period Sensitivity Discount Rate – 6.25%, Level % of Pay with 2.75% Payment Escalation (Amounts in 000’s)  Amortization Period Current 20 Years 18 Years  Funded Status 6/30/23 • Actuarial Accrued Liability $276,572 $276,572 • Assets 156,061 156,061 • Unfunded AAL 120,511 120,511  Total Projected Payroll 2024/25 127,929 127,929  ADC 2024/25 • Normal Cost 7,489 7,489 • Administrative Expenses 125 125 • UAAL Amortization 8,802 9,492 • Total 16,416 17,105 • ADC % of Payroll 12.8% 13.4% May 21, 2024 51 SENSITIVITY ANALYSIS Amortization Period Sensitivity Discount Rate – 5.75%, Level % of Pay with 2.75% Payment Escalation (Amounts in 000’s)  Amortization Period Current 20 Years 18 Years  Funded Status 6/30/23 • Actuarial Accrued Liability $293,120 $293,120 • Assets 156,061 156,061 • Unfunded AAL 137,059 137,059  Total Projected Payroll 2024/25 127,929 127,929  ADC 2024/25 • Normal Cost 8,379 8,379 • Administrative Expenses 125 125 • UAAL Amortization 9,582 10,371 • Total 18,085 18,875 • ADC % of Payroll 14.1% 14.8% May 21, 2024 52 SENSITIVITY ANALYSIS Actuarial Obligations by Bargaining Unit – 5.75% June 30, 2023 (Amounts in 000’s) FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total  PVB • Actives $1,487 $22,844 $36,048 $19,489 $2,733 $80,761 $9,832 $173,194 • Retirees 2,865 36,463 55,395 26,661 2,773 69,183 8,905 202,245 • Total 4,352 59,307 91,443 46,150 5,506 149,944 18,737 375,439  AAL • Actives 1,153 10,284 20,354 8,089 2,200 42,076 6,719 90,875 • Retirees 2,865 36,463 55,395 26,661 2,773 69,183 8,905 202,245 • Total 4,018 46,747 75,749 34,750 4,973 111,259 15,624 293,120  MVA39 2,139 24,889 40,330 18,501 2,648 59,236 8,318 156,061  UAAL 1,879 21,858 35,419 16,249 2,325 52,023 7,306 137,059  NC 24/2540 54 1,039 1,797 1,091 115 4,007 399 8,504  Pay-Go 205 2,624 4,315 1,771 174 5,749 734 15,572 39 Allocated in proportion to the Actuarial Accrued Liability. 40 Includes Administration fees. May 21, 2024 53 SENSITIVITY ANALYSIS 10 Year Contribution Projection – 5.75% 13 Year Amortization (Amounts in 000’s) FYE ADC41 Contribution Payroll ADC % of Pay Fund % Cash Benefit Payment Implied Subsidy BP Trust Pre- Funding Total UAAL Beg. Of FY 2025 $21,996 $12,827 $2,745 $6,424 $21,996 $127,929 17.2% $140,372 54% 2026 22,551 13,565 2,871 6,115 22,551 131,447 17.2% 134,951 57% 2027 23,180 14,286 3,017 5,877 23,180 135,062 17.2% 128,847 60% 2028 23,812 14,868 2,992 5,952 23,812 138,776 17.2% 122,011 63% 2029 24,474 15,590 3,089 5,795 24,474 142,593 17.2% 114,390 67% 2030 25,147 16,348 3,285 5,514 25,147 146,514 17.2% 105,928 70% 2031 25,821 16,933 3,312 5,576 25,821 150,543 17.2% 96,567 73% 2032 26,538 17,554 3,434 5,550 26,538 154,683 17.2% 86,242 77% 2033 27,272 18,086 3,516 5,670 27,272 158,937 17.2% 74,886 80% 2034 27,999 18,626 3,575 5,798 27,999 163,307 17.1% 62,429 84% 41 Actuarially Determined Contribution May 21, 2024 54 COMPARISON TO OTHER AGENCIES 50% of 90% of results results are are within within this this range range 5th Percentile 75th Percentile 50th Percentile 25th Percentile Foster & Foster California OPEB Database Sam le Percentile Gra h 95th Percentile 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% Pe r c e n t o f P a y May 21, 2024 55 COMPARISON TO OTHER AGENCIES NC ADC NC ADC 95th Percentile 10.9% 24.2% 12.3% 35.5% 75th Percentile 5.4% 10.8% 5.0% 15.8% 50th Percentile 2.8% 5.4% 2.6% 6.2% 25th Percentile 1.5% 2.6% 1.5% 3.3% 5th Percentile 0.7% 0.7% 0.7% 0.9% ` Percent of Pay (♦) 5.3% 11.1% 8.0% 19.5% Percentile 74% 76% 88% 84% Miscellaneous Safety Discount Rate = 6.25%, Average Amortization Period = 20.0 Years 0% 5% 10% 15% 20% 25% 30% 35% 40% Pe r c e n t o f P a y Foster & Foster California OPEB Database Normal Cost & Actuarially Determined Contribution May 21, 2024 56 COMPARISON TO OTHER AGENCIES General Miscellaneous Safet 95th Percentile 317% 440% 75th Percentile 173% 202% 50th Percentile 87% 88% 25th Percentile 40% 48% 5th Percentile 14% 15% Percent of Pay (♦) 185% 369% Percentile 79% 91% Discount Rate = 6.25% 0% 50% 100% 150% 200% 250% 300% 350% 400% 450% 500% Pe r c e n t o f P a y Foster & Foster California OPEB Database Actuarial Accrued Liability May 21, 2024 57 ACTUARIAL CERTIFICATION This report presents the City of Palo Alto Retiree Healthcare Plan (“Plan”) June 30, 2023 actuarial valuation. The purpose of this valuation is to:  Determine the June 30, 2023 Benefit Obligations,  Determine the Plan’s June 30, 2023 Funded Status, and  Calculate the 2024/25 and 2025/26 Actuarially Determined Contributions. The report provides information intended for funding the City’s Plan, but may not be appropriate for other purposes. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as: plan experience differing from that anticipated by the assumptions; changes in assumptions; changes expected as part of the natural progression of the plan; and changes in plan provisions or applicable law. Actuarial models necessarily rely on the use of estimates and are sensitive to changes. Small variations in estimates may lead to significant changes in actuarial measurements. Due to the limited scope of this assignment, we did not perform an analysis of the potential range of such measurements. The valuation is based on Plan provisions, participant data, and asset information provided by the City as summarized in this report, which we relied on and did not audit. We reviewed the participant data for reasonableness. To the best of our knowledge, this report is complete and accurate and has been conducted using generally accepted actuarial principles and practices. As members of the American Academy of Actuaries meeting the Academy Qualification Standards, we certify the actuarial results and opinions herein. Respectfully submitted, Drew Ballard, FSA, MAAA, EA Foster & Foster, Inc. Catherine A. Wandro, ASA, MAAA Foster & Foster, Inc. May 21, 2024 58 EXHIBITS Topic Page Premiums E- 1 Data Summary E- 5 Additional Actuarial Assumptions E-23 Results by Fund E-31 Results by GF Department E-33 Definitions E-35 May 21, 2024 E-1 PREMIUMS 2023 PEMHCA Monthly Premiums Region 1 Non-Medicare Eligible Medicare Eligible Medical Plan Single 2-Party Family Single 2-Party Family Anthem Select $1,128.83 $2,257.66 $2,934.96 $413.59 $827.18 $1,240.77 Anthem Traditional 1,210.71 2,421.42 3,147.85 413.59 827.18 1,240.77 Blue Shield Access+ 1,035.21 2,070.42 2,691.55 361.90 723.80 1,085.70 Blue Shield Trio 888.94 1,777.88 2,311.24 361.90 723.80 1,085.70 Health Net SmartCare 1,174.50 2,349.00 3,053.70 n/a n/a n/a Kaiser 913.74 1,827.48 2,375.72 283.25 566.50 849.75 Kaiser Summit n/a n/a n/a 336.29 672.58 1,008.87 UnitedHealthcare Alliance 1,044.07 2,088.14 2,714.58 n/a n/a n/a UnitedHealthcare Group n/a n/a n/a 299.68 599.36 899.04 UnitedHealthcare Edge n/a n/a n/a 357.70 715.40 1,073.10 Western Health Advantage 760.17 1,520.34 1,976.44 331.11 662.22 993.33 PERS Platinum 1,200.12 2,400.24 3,120.31 420.02 840.04 1,260.06 PERS Gold 825.61 1,651.22 2,146.59 392.71 785.42 1,178.13 PORAC 825.00 1,875.00 2,300.00 465.00 1,030.00 1,395.00 May 21, 2024 E-2 PREMIUMS 2024 PEMHCA Monthly Premiums Region 1 Non-Medicare Eligible Medicare Eligible Medical Plan Single 2-Party Family Single 2-Party Family Anthem Select $1,138.86 $2,277.72 $2,961.04 $405.83 $811.66 $1,217.49 Anthem Traditional 1,339.70 2,679.40 3,483.22 405.83 811.66 1,217.49 Blue Shield Access+ 1,076.84 2,153.68 2,799.78 392.68 785.36 1,178.04 Blue Shield Trio 946.84 1,893.68 2,461.78 392.68 785.36 1,178.04 Kaiser 1,021.41 2,042.82 2,655.67 324.79 649.58 974.37 Kaiser Summit n/a n/a n/a 386.55 773.10 1,159.65 UnitedHealthcare Alliance 1,091.13 2,182.26 2,836.94 n/a n/a n/a UnitedHealthcare Harmony 937.39 1,874.78 2,437.21 n/a n/a n/a UnitedHealthcare Group n/a n/a n/a 341.72 683.44 1,025.16 UnitedHealthcare Edge n/a n/a n/a 366.01 732.02 1,098.03 Western Health Advantage 807.23 1,614.46 2,098.80 268.62 537.24 805.86 PERS Platinum 1,314.27 2,628.54 3,417.10 448.15 896.30 1,344.45 PERS Gold 914.82 1,829.64 2,378.53 406.60 813.20 1,219.80 PORAC 931.00 2,117.00 2,651.00 465.00 1,030.00 1,395.00 May 21, 2024 E-3 PREMIUMS PEMHCA Monthly Premium Increases/(Decreases) Region 1 Non-Medicare Eligible Medicare Eligible Medical Plan 2023 2024 2023 2024 Anthem Select 11.1% 0.9% 14.8% (1.9%) Anthem Traditional (7.2%) 10.7% 14.8% (1.9%) Blue Shield Access+ (7.2%) 4.0% 2.5% 8.5% Blue Shield Trio (1.1%) 6.5% 2.5% 8.5% Health Net SmartCare 1.9% n/a n/a n/a Kaiser 6.6% 11.8% (6.4%) 14.7% Kaiser Summit n/a n/a n/a 14.9% UnitedHealthcare Alliance 2.3% 4.5% n/a n/a UnitedHealthcare Group n/a n/a 1.7% 14.0% UnitedHealthcare Edge n/a n/a 3.0% 2.3% Western Health Advantage 2.6% 6.2% 5.1% (18.9%) PERS Platinum 13.5% 9.5% 10.0% 6.7% PERS Gold 17.7% 10.8% 4.1% 3.5% PORAC 3.3% 12.8% 0.9% 0.0% May 21, 2024 E-4 PREMIUMS This page intentionally blank May 21, 2024 E-5 DATA SUMMARY Participant Statistics by Bargaining Unit June 30, 2023 FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total  Actives • Count 4 84 202 66 7 494 45 902 • Avg Age 48.0 39.1 46.9 38.9 48.9 44.8 50.5 44.6 • Avg City Svc 22.4 9.8 10.7 9.2 23.4 9.7 16.4 10.4 • Avg PERS Svc 22.4 10.3 12.4 10.2 24.2 10.4 17.6 11.4 • Avg Salary $190,356 $122,075 $159,976 $160,358 $254,449 $114,477 $198,351 $134,338 • Total Salary42 $761 $10,254 $32,315 $10,584 $1,781 $56,552 $8,926 $121,173  Retirees43: • Count 8 147 313 96 6 432 29 1,031 • Avg Age 64.3 71.4 73.0 66.4 53.2 72.6 62.9 71.5 • Avg Service Ret Age 55.8 54.7 58.1 52.5 50.4 59.7 58.2 58.2 • Avg Disab Ret Age 50.1 48.8 50.5 41.8 n/a 46.7 n/a 45.8 42 Amount in 000’s. Based on June 30, 2023 PERSable pay rate. 43 Excludes retirees who have waived coverage. May 21, 2024 E-6 DATA SUMMARY Participant Statistics by Bargaining Unit June 30, 2021 FCA IAFF M/C PAPOA PMA SEIU UMPAPA Total  Actives • Count 4 80 195 68 6 477 44 874 • Avg Age 42.6 42.5 47.3 39.8 46.9 44.8 49.1 45.0 • Avg City Svc 18.1 12.8 10.6 10.2 22.1 10.6 17.3 11.2 • Avg PERS Svc 18.1 13.3 12.2 11.2 23.1 11.2 18.1 12.1 • Avg Salary $209,498 $145,878 $134,380 $152,938 $228,619 $98,486 $172,711 $120,207 • Total Salary44 $838 $11,670 $26,204 $10,400 $1,372 $46,978 $7,599 $105,061  Retirees45: • Count 6 148 307 89 5 430 24 1,009 • Avg Age 64.7 71.0 72.0 66.9 57.5 71.6 62.2 70.9 • Avg Service Ret Age 56.7 54.6 58.3 52.3 50.4 59.6 58.8 58.2 • Avg Disab Ret Age 50.1 48.8 50.5 42.0 n/a 48.0 n/a 46.3 44 Amount in 000’s. Actual 2020/21 PERSable compensations. 45 Excludes retirees who have waived coverage. May 21, 2024 E-7 DATA SUMMARY Participant Statistics by CalPERS Pension Category June 30, 2023 46 Based on June 30, 23 PERSable payrate. 47 Excludes retirees who have waived coverage. Miscellaneous Police Fire Total  Actives • Count 738 72 92 902 • Average Age 45.6 40.3 39.9 44.6 • Average City Service 10.3 10.8 10.8 10.4 • Average PERS Service 11.3 11.8 11.2 11.4 • Average Salary $130,866 $173,099 $131,856 $134,338 • Total Salary (000’s)46 $96,579 $12,463 $12,131 $121,173  Retirees47: • Count 751 113 167 1,031 • Average Age 72.4 65.9 71.2 71.5 • Avg Service Ret Age 59.2 52.2 54.7 58.2 • Avg Disability Ret Age 47.1 41.9 48.9 45.8 May 21, 2024 E-8 DATA SUMMARY Participant Statistics by CalPERS Pension Category June 30, 2021 48 Actual 2020/21 PERSable compensations. 49 Excludes retirees who have waived coverage. Miscellaneous Police Fire Total  Actives • Count 711 76 87 874 • Average Age 45.7 40.7 42.7 45.0 • Average City Service 11.0 11.0 13.2 11.2 • Average PERS Service 11.9 12.0 13.7 12.1 • Average Salary $112,031 $161,950 $150,562 $120,207 • Total Salary (000’s)48 $79,654 $12,308 $13,099 $105,061  Retirees49: • Count 739 105 165 1,009 • Average Age 71.6 66.3 70.7 70.9 • Avg Service Ret Age 59.2 52.0 54.5 58.2 • Avg Disability Ret Age 48.1 42.1 48.9 46.3 May 21, 2024 E-9 DATA SUMMARY Medical Plan Participation – June 30, 2023 All Retirees Medical Plan Actives Under 65 65 or Older Total Miscellaneous/Sa et M S M S M S M S Anthem Select 2% 2% 3% - 1% - 1% - Anthem Traditional 3% 1% 5% 4% 6% 5% 6% 5% Blue Shield Access+ 10% 3% 7% 3% 1% 1% 3% 2% Blue Shiel Trio - - - 1% - - - - Health Net SmartCare - - 1% - - - - - Kaiser 68% 50% 43% 26% 29% 21% 32% 23% Kaiser Summit - - - - 2% - 2% - UnitedHealthcare - - 1% 1% 17% 10% 13% 7% UnitedHealthcare Ed e - - - - - - - - Western Health Advanta e - 1% - - - - - - PERS Gol 7% 4% 4% - 1% - 1% - PERS Platinum 10% 2% 35% 16% 42% 47% 41% 34% PORAC - 37% 1% 49% 1% 16% 1% 29% Total 100% 100% 100% 100% 100% 100% 100% 100% May 21, 2024 E-10 DATA SUMMARY Medical Plan Participation – June 30, 2021 All Retirees Medical Plan Actives Under 65 65 or Older Total Miscellaneous/Sa et M S M S M S M S Anthem Select 6% 3% 5% 1% - - 2% - Anthem Traditional 4% 1% 9% 8% 6% 5% 6% 6% Blue Shield Access+ - - 3% 7% - - 1% 3% Health Net SmartCare 1% 1% 1% 1% - - - - Kaiser 65% 51% 40% 36% 30% 23% 32% 29% UnitedHealthcare - - 1% 2% 18% 13% 14% 8% Western Health Advantage - - 1% - - - - - PERSCare - - 4% 9% 25% 37% 20% 25% PERS Choice 22% 3% 32% 3% 21% 15% 24% 10% PERS Select 1% 1% 3% - - - 1% - PORAC - 40% 1% 32% - 8% - 19% Total 100% 100% 100% 100% 100% 100% 100% 100% May 21, 2024 E-11 DATA SUMMARY Active Medical Coverage – Miscellaneous Medical Plan Single 2-Party Family Waived Total Anthem Select 3 3 5 - 11 Anthem Traditional 9 3 5 - 17 Blue Shield Access+ 15 18 31 - 64 Blue Shield Trio - - 1 - 1 Health Net SmartCare - - 1 - 1 Kaiser 162 90 200 - 452 Western Health Advantage - - 1 - 1 PERS Gold 13 11 20 - 44 PERS Platinum 26 12 30 - 68 PORAC 1 - - - 1 Waived - - - 78 78 Total 229 137 294 78 738 % as of June 30, 2023 31% 18% 40% 11% 100% % as of June 30, 2021 30% 22% 40% 9% 100% May 21, 2024 E-12 DATA SUMMARY Active Medical Coverage – Safety Medical Plan Single 2-Party Family Waived Total Anthem Select 1 - 2 - 3 Anthem Traditional 1 - - - 1 Blue Shield Access+ 1 - 3 - 4 Blue Shield Trio - - - - - Health Net SmartCare - - - - - Kaiser 23 15 39 - 77 Western Health Advantage - - 1 - 1 PERS Gold 5 - 1 - 6 PERS Platinum 1 1 1 - 3 PORAC 7 7 43 - 57 Waived - - - 12 12 Total 39 23 90 12 164 % as of June 30, 2023 24% 14% 55% 7% 100% % as of June 30, 2021 20% 14% 63% 2% 100% May 21, 2024 E-13 DATA SUMMARY Retiree Medical Coverage50 - Miscellaneous Medical Plan Single 2-Party Family Total <65 65+ <65 65+ <65 65+ Anthem Select 3 1 2 1 1 2 10 Anthem Traditional 7 11 2 21 - 2 43 Blue Shield Access+ 5 2 5 5 2 - 19 Health Net SmartCare 1 - - - - - 1 Kaiser 21 94 45 68 8 6 242 Kaiser Summit - 8 - 2 - 1 11 UnitedHealthcare - 64 1 32 - - 97 UnitedHealthcare Edge - 2 - 1 - - 3 Western Health Advantage - - - 1 - - 1 PERS Gold 1 1 2 2 4 - 10 PERS Platinum 19 129 32 111 10 7 308 PORAC - 3 1 1 - 1 6 Total 57 315 90 245 25 19 751 % as of June 30, 2023 8% 42% 12% 33% 3% 2% 100% % as of June 30, 2021 9% 41% 12% 32% 4% 2% 100% 50 Approximately 77% of retirees have coverage in a region 1 plan. The rest are in other state regions or out of state. May 21, 2024 E-14 DATA SUMMARY Retiree Medical Coverage51 - Safety Medical Plan Single 2-Party Family Total <65 65+ <65 65+ <65 65+ Anthem Select - - - - - - - Anthem Traditional 1 - 1 7 3 2 14 Blue Shield Access+ 1 - 2 - 1 1 5 Health Net SmartCare - - - - - - - Kaiser 7 12 11 21 12 1 64 Kaiser Summit - - - - - - 0 UnitedHealthcare - 11 - 6 1 - 18 UnitedHealthcare Edge - - - - - - 0 Western Health Advantage - - - - - - 0 PERS Gold - - - - - - 0 PERS Platinum 7 39 6 37 5 2 96 PORAC 12 4 15 19 29 3 82 Total 28 66 35 90 52 9 280 % as of June 30, 2023 10% 24% 13% 32% 19% 3% 100% % as of June 30, 2021 9% 25% 16% 29% 19% 2% 100% 51 Approximately 70% of retirees have coverage in a Region 1 plan. The rest are in other state regions or out of state. May 21, 2024 E-15 DATA SUMMARY Retirees Medical Coverage by Age – Miscellaneous Age Single 2-Party Family Total Under 50 - 1 - 1 50-54 2 3 4 9 55-59 12 19 9 40 60-64 43 67 12 122 65-69 63 68 11 142 70-74 73 66 5 144 75-79 76 65 3 144 80-84 59 22 - 81 85 & Over 44 24 - 68 Total 372 335 44 751 Average Age 74.5 71.2 64.0 72.4 May 21, 2024 E-16 DATA SUMMARY Retirees Medical Coverage by Age – Police Age Single 2-Party Family Total Under 50 3 1 6 10 50-54 - 1 7 8 55-59 3 1 6 10 60-64 9 6 9 24 65-69 3 13 5 21 70-74 10 6 - 16 75-79 3 7 - 10 80-84 3 4 - 7 85 & Over 4 3 - 7 Total 38 42 33 113 Average Age 68.1 70.5 57.5 65.9 May 21, 2024 E-17 DATA SUMMARY Retirees Medical Coverage by Age – Fire Age Single 2-Party Family Total Under 50 - - - - 50-54 - 1 7 8 55-59 6 10 11 27 60-64 7 15 6 28 65-69 3 14 4 21 70-74 5 11 - 16 75-79 7 12 - 19 80-84 17 9 - 26 85 & Over 11 11 - 22 Total 56 83 28 167 Average Age 76.7 71.7 59.0 71.2 May 21, 2024 E-18 DATA SUMMARY Retirees Medical Coverage by Age – Total Age Single 2-Party Family Total Under 50 3 2 6 11 50-54 2 5 18 25 55-59 21 30 26 7 7 60-64 59 88 27 174 65-69 69 95 20 184 70-74 88 83 5 176 75-79 86 84 3 173 80-84 79 35 - 114 85 & Over 59 38 - 97 Total 466 460 105 1,031 Average Age 74.3 71.2 60.6 71.5 May 21, 2024 E-19 DATA SUMMARY Actives by Age and Service – Miscellaneous City Service Age < 1 1-4 5-9 10-14 15-19 20-24 ≥ 25 Total < 25 8 4 - - - - - 12 25-29 21 26 4 - - - - 51 30-34 18 49 37 1 - - - 105 35-39 15 21 30 16 3 - - 85 40-44 7 23 35 22 10 10 1 108 45-49 8 14 23 19 19 21 1 105 50-54 2 12 18 13 13 19 13 90 55-59 1 13 14 16 13 22 10 89 60-64 5 5 9 10 10 10 15 64 ≥ 65 2 2 4 3 8 6 4 29 Total 87 169 174 100 76 88 44 738 May 21, 2024 E-20 DATA SUMMARY Actives by Age and Service – Police City Service Age < 1 1-4 5-9 10-14 15-19 20-24 ≥ 25 Total < 25 - 1 - - - - - 1 25-29 1 8 1 - - - - 10 30-34 - 7 5 - - - - 12 35-39 1 1 6 2 2 - - 12 40-44 1 1 2 8 4 - - 16 45-49 - - 1 2 1 7 1 12 50-54 - - - 1 1 2 1 5 55-59 - - 1 - - - 1 2 60-64 - - 1 - - 1 - 2 ≥ 65 - - - - - - - - Total 3 18 17 13 8 10 3 72 May 21, 2024 E-21 DATA SUMMARY Actives by Age and Service – Fire City Service Age < 1 1-4 5-9 10-14 15-19 20-24 ≥ 25 Total < 25 1 2 - - - - - 3 25-29 9 11 - - - - - 20 30-34 2 7 3 - - - - 12 35-39 2 1 4 5 1 - - 13 40-44 - - 1 4 6 1 - 12 45-49 - - 2 2 3 1 - 8 50-54 - - - 2 3 10 5 20 55-59 - - - - 1 1 1 3 60-64 - - - - - 1 - 1 ≥ 65 - - - - - - - - Total 14 21 10 13 14 14 6 92 May 21, 2024 E-22 DATA SUMMARY Actives by Age and Service – Total City Service Age < 1 1-4 5-9 10-14 15-19 20-24 ≥ 25 Total < 25 9 7 - - - - - 16 25-29 31 45 5 - - - - 81 30-34 20 63 45 1 - - - 129 35-39 18 23 40 23 6 - - 110 40-44 8 24 38 34 20 11 1 136 45-49 8 14 26 23 23 29 2 125 50-54 2 12 18 16 17 31 19 115 55-59 1 13 15 16 14 23 12 94 60-64 5 5 10 10 10 12 15 67 ≥ 65 2 2 4 3 8 6 4 29 Total 104 208 201 126 98 112 53 902 May 21, 2024 E-23 ADDITIONAL ACTUARIAL ASSUMPTIONS June 30, 2021 Valuation June 30, 2023 Valuation  Retirement  CalPERS 2000-2019 Experience Study- Expected retirement age for each tier Misc Fire & Police Tier 1 2.7%@55 3%@50 Exp. RetAge 60.7 56.4 & 54.0 Tier 2 2%@60 3%@55 Exp. RetAge 63.0 57.7 & 56.4 PEPRA 2.5%@67 2.7%@57 Exp. RetAge 62.4 57.1 & 56.7  CalPERS 2000-2019 Experience Study - Expected retirement age for each tier Misc Fire & Police Tier 1 2.7%@55 3%@50 Exp. RetAge 61.2 56.1 & 53.9 Tier 2 2%@60 3%@55 Exp. RetAge 63.1 57.7 & 57.2 PEPRA 2.5%@67 2.7%@57 Exp. RetAge 62.5 57.2 & 56.5  Spousal Coverage at Retirement  70% of covered retirees are assumed to cover spouses  Based on Plan experience  Same  Waived Retiree Re-election  0%  Same May 21, 2024 E-24 ADDITIONAL ACTUARIAL ASSUMPTIONS June 30, 2021 Valuation June 30, 2023 Valuation  Medical Trend Increase from Prior Year Calendar Year Pre- Medicare Post- Medicare Other Post- Medicare Kaiser 2019-20 n/a 2021 Actual Premiums 2022 Actual Premiums 2023 6.50% 5.65% 4.60% 2024 6.25% 5.45% 4.45% 2025 6.00% 5.25% 4.60% 2026 5.75% 5.05% 4.45% 2027 5.55% 4.90% 4.35% 2028 5.35% 4.75% 4.25% 2029 5.15% 4.60% 4.20% 2030 4.95% 4.45% 4.05% 2031-35 4.80% 4.35% 4.00% 2036-45 4.65% 4.25% 3.95% 2046-55 4.50% 4.20% 3.90% 2056-65 4.35% 4.15% 3.85% 2066-75 4.05% 3.95% 3.80% 2076+ 3.75% 3.75% 3.75% Increase from Prior Year Pre- Medicare Post- Medicare Other Post- Medicare Year Kaiser 2021 n/a 2022 n/a 2023 Actual Premiums 2024 Actual Premiums 2025 8.50% 7.50% 6.25% 2026 7.90% 6.90% 5.65% 2027 7.35% 6.50% 5.45% 2028 6.75% 6.10% 5.25% 2029 6.20% 5.70% 5.05% 2030 5.60% 5.25% 4.85% 2031 5.05% 4.85% 4.65% 2032-38 4.45% 4.45% 4.45% 2039-40 4.35% 4.35% 4.35% 2041 4.30% 4.30% 4.30% ↓ ↓ ↓ ↓ 2076+ 3.45% 3.45% 3.45% May 21, 2024 E-25 ADDITIONAL ACTUARIAL ASSUMPTIONS June 30, 2021 Valuation June 30, 2023 Valuation  Medical Plan at Retirement & Retirees Attaining age 65  Miscellaneous: <65 65+ Anthem Traditional 10% 5% Blue Shield Access+ 5% 0% Kaiser 50% 30% PERS Choice 30% 20% PERSCare 5% 25% UnitedHealthcare 0% 20%  Safety: <65 65+ Anthem Traditional 10% 5% Blue Shield Access+ 5% 0% Kaiser 40% 25% PERS Choice 0% 15% PERSCare 10% 35% PORAC 35% 10% UnitedHealthcare 0% 10%  Based on Plan experience  Miscellaneous: <65 65+ Anthem Traditional 10% 5% Blue Shield Access+ 5% 0% Kaiser 45% 30% PERS Gold 5% 0% PERS Platinum 35% 45% UnitedHealthcare 0% 20%  Safety: <65 65+ Anthem Traditional 5% 5% Blue Shield Access+ 5% 0% Kaiser 30% 25% PERS Gold 0% 0% PERS Platinum 15% 45% PORAC 45% 15% UnitedHealthcare 0% 10%  Based on Plan experience May 21, 2024 E-26 ADDITIONAL ACTUARIAL ASSUMPTIONS June 30, 2021 Valuation June 30, 2023 Valuation  Family Coverage at Retirement (for future retirees)  Misc: 15% until age 65 5% age 65-75  Safety: 50% until age 65 5% age 65-80  Based on Plan experience  Same  Spouse Age  Actives – Males 3 years older than females  Retirees – Males 3 years older than females if spouse birth date not available  Same  Surviving Spouse Participation  100%  Same May 21, 2024 E-27 ADDITIONAL ACTUARIAL ASSUMPTIONS June 30, 2021 Valuation June 30, 2023 Valuation  Medicare Eligibility  Actives and retirees hired before 4/1/86: • Miscellaneous – 80% • Safety – 90%  Actives and retirees hired on or after 4/1/86: 100%  Retirees before 65 with unknown hire date: 90%  Everyone eligible for Medicare will elect Part B coverage  Same  Future New Participants  None – Closed Group  Same  Retirees Missing Fund  No retirees missing Fund information.  Same May 21, 2024 E-28 ADDITIONAL ACTUARIAL ASSUMPTIONS June 30, 2021 Valuation June 30, 2023 Valuation  Retirees Missing Department  Assumed to have the same department as the prior valuation  Liability for retirees assumed to be 75% GF allocated proportionately across all Departments  Same  Actuarial Models  Our valuation was performed using and relying on ProVal, an actuarial model leased from Wintech. Our use of ProVal is consistent with its intended purpose. We have reviewed and understand ProVal and its operation, sensitivities and dependencies.  Data Quality  Our valuation used census data provided by the City and CalPERS OPEB data extract. We reviewed the data for reasonableness and resolved any questions with the City. We believe the resulting data can be relied on for all purposes of this valuation without limitation. May 21, 2024 E-29 ADDITIONAL ACTUARIAL ASSUMPTIONS June 30, 2021 Valuation June 30, 2023 Valuation  Sample Medical Claims Costs 2024  Sample estimated monthly claims costs: Region 1 – Non-Medicare Eligible Kaiser PERS Platinum PORAC Age M F M F M F 55 $1,094 $1,196 $1,197 $1,307 $1,083 $1,184 60 1,376 1,386 1,503 1,513 1,364 1,373 65 1,704 1,633 1,858 1,780 1,691 1,619 70 1,917 1,829 2,058 1,964 1,952 1,861 75 2,158 2,053 2,292 2,181 2,235 2,125 80 2,487 2,347 2,640 2,492 2,578 2,432 85 2,790 2,634 2,959 2,795 2,893 2,731 Region 1 – Medicare Eligible Kaiser PERS Platinum PORAC Age M F M F M F 65 n/a n/a $447 $428 $408 $391 70 n/a n/a 484 463 442 423 75 n/a n/a 516 495 471 452 80 n/a n/a 532 514 486 469 85 n/a n/a 526 512 480 468 May 21, 2024 E-30 ADDITIONAL ACTUARIAL ASSUMPTIONS This page intentionally blank May 21, 2024 E-31 RESULTS BY FUND Actuarial Obligations – June 30, 2023 – 6.25% Discount Rate (Amounts in 000’s) FUND AAL Assets52 UAAL  Airport $ 443 $ 250 $ 193  CIP 4,957 2,797 2,160  Elec53 31,933 18,019 13,914  Gas5353 12,636 7,130 5,506  GF 178,807 100,893 77,914  ISF – Technology 6,254 3,529 2,725  ISF – Vehicle 2,214 1,249 965  ISF – Printing & Mailing 125 70 55  ISF – Workers Comp 115 65 50  PARKING 656 371 285  Refuse 5,246 2,960 2,286  Storm Drain 2,344 1,324 1,020  Water5353 10,435 5,890 4,545  WWC53 3,028 1,708 1,320  WWT 17,379 9,806 7,573  Total 276,572 156,061 120,511 52 Assets allocated in proportion to AAL. 53 AAL for UTL employees allocated to Elec, Gas, Water, and WWC in proportion to each Fund’s AAL May 21, 2024 E-32 RESULTS BY FUND Actuarially Determined Contribution (ADC) – 6.25% Discount Rate (Amounts in 000’s) FUND 2024/25 2025/26  Airport $ 61 $ 63  CIP 440 452  Elec53 1,764 1,811  Gas53 781 802  GF 10,325 10,600  ISF – Technology 442 453  ISF – Vehicle 148 152  ISF – Printing & Mailing 11 11  ISF – Workers Comp 16 17  PARKING 76 77  Refuse 242 248  Storm Drain 172 177  Water53 616 631  WWC53 100 103  WWT 1,222 1,254  Total 16,416 16,851 May 21, 2024 E-33 RESULTS BY GF DEPARTMENT Actuarial Obligations – June 30, 2023 – 6.25% Discount Rate (Amounts in 000’s) GF Department AAL Assets54 UAAL  ASD $ 9,447 $ 5,331 $ 4,116  ATT 2,674 1,509 1,166  AUD 141 79 61  CLK 713 402 311  COU 1,257 709 548  CSD 16,738 9,445 7,293  DSD 5,734 3,236 2,498  FIR 50,675 28,590 22,083  HRD 2,727 1,539 1,188  LIB 6,637 3,746 2,892  MGR 2,772 1,564 1,208  PLA 6,764 3,817 2,947  POL 55,075 31,078 23,998  PWD 17,453 9,848 7,605  Total 178,807 100,893 77,914 54 Assets allocated in proportion to AAL. May 21, 2024 E-34 RESULTS BY GF DEPARTMENT Actuarially Determined Contribution (ADC) – 6.25% Discount Rate (Amounts in 000’s) GF Department 2024/25 2025/26  ASD $ 584 $ 599  ATT 157 162  AUD 4 4  CLK 36 37  COU 69 71  CSD 1,059 1,086  DSD 478 491  FIR 2,588 2,657  HRD 157 161  LIB 492 505  MGR 186 191  PLA 420 431  POL 3,175 3,260  PWD 920 945  Total 10,325 10,600 May 21, 2024 E-35 DEFINITIONS Present Value of Benefits May 21, 2024 E-36 DEFINITIONS  Actuarially Determined Contribution (ADC)  Contribution for the current period including: • Normal Cost • Administrative expenses • Amortization of:  Initial Unfunded AAL  AAL for plan, assumption, and method changes  Experience gains/losses (difference between expected and actual)  Contribution gains/losses (difference between ADC and actual) Attachment D, Exhibit 1 Fund Department/Fund Title Revenue Expense Comments GENERAL FUND General Fund Administrative Services Retiree Health Adjustment $ - $ 135,892 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) General Fund City Attorney Retiree Health Adjustment $ - $ 32,971 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) General Fund City Clerk Retiree Health Adjustment $ - $ (2,083) Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) General Fund City Council Retiree Health Adjustment $ - $ 3,361 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) General Fund City Manager Retiree Health Adjustment $ - $ 38,164 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) General Fund Community Services Retiree Health Adjustment $ - $ 192,818 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) General Fund Development Services Retiree Health Adjustment $ - $ 97,619 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) General Fund Fire Retiree Health Adjustment $ - $ 332,566 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) General Fund Human Resources Retiree Health Adjustment $ - $ 13,933 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) General Fund Library Retiree Health Adjustment $ - $ 51,003 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) General Fund Office of Emergency Services Retiree Health Adjustment $ - $ 11,424 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) General Fund Office of Transportation Retiree Health Adjustment $ - $ 17,277 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) General Fund Planning & Community Services Retiree Health Adjustment $ - $ 62,823 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) General Fund Police Retiree Health Adjustment $ - $ 500,199 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) General Fund Public Works Retiree Health Adjustment $ - $ 162,690 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) $ - $ 1,650,657 236 - University Avenue Parking Permits Administrative Services Retiree Health Adjustment $ - $ 536 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) 236 - University Avenue Parking Permits Office of Transportation Retiree Health Adjustment $ - $ 144 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) 236 - University Avenue Parking Permits Public Works Retiree Health Adjustment $ - $ 1,733 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) 237 - California Avenue Parking Permits Administrative Services Retiree Health Adjustment $ - $ 244 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) City of Palo Alto Central Other Post-Employment Benefits (OPEB) Adjustments in Various Funds 237 - California Avenue Parking Permits Office of Transportation Retiree Health Adjustment $ - $ 144 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) 237 - California Avenue Parking Permits Public Works Retiree Health Adjustment $ - $ 187 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) 239 - Residential Parking Permit Programs Office of Transportation Retiree Health Adjustment $ - $ 1,000 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) SPECIAL REVENUE FUNDS SUBTOTAL $ - $ 3,987 CAPITAL FUNDS 471 - Capital Improvement Fund Administrative Services Retiree Health Adjustment $ - $ 2,039 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) 471 - Capital Improvement Fund Community Services Retiree Health Adjustment $ - $ 1,699 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) 471 - Capital Improvement Fund Office of Transportation Retiree Health Adjustment $ - $ 13,611 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) 471 - Capital Improvement Fund Public Works Retiree Health Adjustment $ - $ 36,760 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) CAPITAL FUNDS SUBTOTAL $ - $ 54,109 ENTERPRISE FUNDS 513 - Electric Supply Fund Utilities $ - $ 19,110 Adjustments to align OPEB costs with the June 30, 2023 Valuation ENTERPRISE FUNDS SUBTOTAL Attachment D, Exhibit 1 INTERNAL SERVICE FUNDS 681 - Vehicle Replacement & Maintenance Fund Public Works Retiree Health Adjustment $ - $ 20,134 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) 682 - Technology Fund Information Technology Retiree Health Adjustment $ - $ 71,067 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) 683 - Printing & Mailing Services Fund Administrative Services Retiree Health Adjustment $ - $ 5,296 Adjustments to align OPEB costs with the June 30, 2023 Valuation (CMR 2402-2673) 687 - General Benefits & Insurance Fund 687 - General Benefits & Insurance Fund Retiree Health Adjustment $ - $ (254,500)Transfer for Implied Subsidy 694 - Retiree Health Benefits Fund - AB702 Retiree Health Benefits Fund - AB702 Retiree Health Adjustment $ 2,603,214 $ - OPEB Funding from City Funds 694 - Retiree Health Benefits Fund - AB702 Retiree Health Benefits Fund - AB702 Retiree Health Adjustment $ (254,500) $ - Transfer for Implied Subsidy 694 - Retiree Health Benefits Fund - AB702 Retiree Health Benefits Fund - AB702 Retiree Health Adjustment $ - $ 2,348,714 OPEB costs for increased Actuarial Determined Contribution (ADC) INTERNAL SERVICE FUNDS SUBTOTAL $ 2,348,714 $ 2,190,711 TOTAL ADJUSTMENT $ 2,348,714 $ 4,697,429 Attachment D, Exhibit 1 June 17, 2024 www.cityofpaloalto.org/budget1 ADOPTION OF FY 2025 OPERATING AND CAPITAL BUDGETS, MUNICIPAL FEE SCHEDULE, &APPROPRIATION LIMITS &RETIREE HEALTH CARE ACTUARIAL & CONTRIBUTION Item #28 CITY COUNCIL FY 2025 BUDGET ADOPTION OVERVIEW Tonight’s meeting concludes the FY 2025 budget process •Staff report provides summary of Finance Committee deliberations to date •Review final balancing actions •Summarize staff workplan items •Other Actions: approve municipal fees, appropriation limits and retiree health actuarial report & contribution. GOAL:Adopt the FY 2025 Operating & Capital Budgets and Municipal Fee Schedule and other actions above. 2 BUDGET CONVERSATIONS & CALENDAR 3 MAY 6 MAY 7 & 8 MAY 13 MAY 15 MAY 21 & JUNE 4 TODAY Finance Committee Budget Workshops: Review the proposed budgets and recommend amendments Study Session City Council: Finance Committee check-in with the City Council Community Budget Listening Session Finance Committee Budget Wrap-up: Based on the input from the May budget meetings, recommend final adjustments to proposed budgets for Council adoption City Council: FY 2025 Proposed Budget Overview: Discuss guidance for Finance Committee colleagues City Council Budget Adoption: Adopt Operating & Capital budgets (as amended by the Finance Committee) FY 2025 BUDGET SUMMARY 4 •Operating budget totals $1.1 billion ($306.9 million in General Fund) •Capital budget totals $441.8 million in FY 2025 and $1.7 billion over the five-year CIP General Fund Reserves •Budget Stabilization Reserve (BSR) -$54.4 million projected FY 2025 balance (18.5% of expenses) •Uncertainty Reserve -$6.2 million remaining for FY26 projected gross deficit of $11.0 million Staffing Levels:+29 Full-time FTE or 2.7% increase over the FY 2024 Budget (Citywide) •Includes +16.5 FTE in the General Fund FY 2020 Actuals FY 2021 Actuals FY 2022 Actuals FY 2023 Actuals FY 2024 ADOPTED FY 2025 ADOPTED GF Revenue $209.7 $201.0 $239.1 $254.8 $261.1 $287.5 GF Expense $226.3 $185.6 $201.9 $243.8 $279.6 $306.9 Full-time Staffing (Citywide)1,035 1,035 956 1,018 1,063 1,092 5 FY 2025 Finance Committee Recommendations (General Fund Uses) Dept FY 2025 General Fund Recommended Adjustments Description FY 2025 Revenue or Savings/ (Cost) Ongoing Revenue or Savings/ (Cost) NON Other Post Employment Benefit (OPEB) 2-Year Phase-In (1,650,000)(3,300,000) NON Increase Uncertainty Reserve to $6.2M for Future Needs (1,470,000)- CSD JMZ additional staffing, new ticketing system and promotion (509,000)(702,000) CIP California Avenue Interim Improvements (450,000)- CIP Additional funding for Roth Building Rehabilitation (PF-23001) (revise terms and conditions of the tenant work letter) $1M total including $0.2M interest earnings previously appropriated (300,000)(500,000) NON Establish Citywide Special Events & Programming ($265k total program) [Requested UNAFF $45k, 3rd Thursdays $40k, Neighbors Abroad $30k (already in FY25 Proposed Budget), Magical Bridge $150k, Environmental Volunteers Foothills Nature Preserve $11k one-time] (246,000)(235,000) NON Palo Alto Transportation Management Association (PATMA) (increase to $400,000 Citywide) (175,000)(175,000) PWD Public Services Streets 311 Requests (100,000)(107,000) FIR Upstaff Fire Engine 62 with 3 Sworn Staff instead of Overtime (74,000 (120,000) NON Car-free Streetscape Design for Ramona Street (50,000)- CSD Administrative Support for new Citywide Special Events & Programming (1 FTE) -(125,000) CIP Study of artificial turf replacement with grass at up to 4 fields (recommend use of current CIP to fund a study) -- OOT Review an alternative service approach for PA Link with reduced net costs (proposed FY2025 budget funds $0.9M) 177,000 340,000 NON Reduce Real Property Investment Reserve to $1.0M Annually 1,500,000 1,500,000 Subtotal Uses (Expense)($3,347,000)($3,424,000) Dept FY 2025 General Fund Recommended Adjustments Description FY 2025 Revenue or Savings/ (Cost) Ongoing Revenue or Savings/ (Cost) 6 Dept FY 2025 General Fund Recommended Adjustments Description FY 2025 Revenue or Savings/ (Cost) Ongoing Revenue or Savings/ (Cost) NON Beginning Balance –City Council Priorities Reserve $-$- NON Increase Gas Transfer to General Fund in FY25 to 14.5% (from 11.9%) & in FY26 to 18% (previously scheduled in FY27) 1,958,000 916,000 NON Increase JMZ ticket prices from $10 to $14, during peak periods 350,000 350,000 NON Use BSR to balance FY 2025 –Reduce BSR to 18.5%605,000 - OOT Review an alternative service approach for PA Link with reduced net costs (proposed FY2025 budget funds $0.9M) 223,000 60,000 CSD Account for Los Altos & Los Altos Hills contribution for animal control services Report #2403-2827 198,000 198,000 FIR Upstaff Fire Engine 62 with 3 Sworn Staff instead of Overtime (Funding from Stanford for Fire Services Agreement) 14,000 23,000 Subtotal Sources (Revenue)$3,347,000 $1,547,000 Potential Fund Remaining (Deficit)/Surplus $-($1,877,000) 7 •Add 1.0 FTE Associate Sustainability Program Administrator in the Electric Fund •Adjust Gas Equity Transfer to GF from 11.9% to 14.5% of Gross Revenues (+$2.0M) •Gas Rate increase from 9.0% to 12.5% in FY25 •Increase Equity Transfer to full 18% of Gross Revenues in FY26 •Decrease Gas Main Replacements #25 (GS-15000) -$0.7M •Capital Budget Adjustments •Reappropriations to continue projects in FY25 •Baylands Boardwalk Piling Repair (PE-24000) +$0.2M for higher bids •California Avenue Streetscape Update (PL-23000) +$0.5M for overall improvements •Roth Building Rehabilitation (PF-23001) +$1.0M in total for cost escalation ($0.2M interest earnings in project FY24 Mid-Year, $0.3M in FY25, $0.5M in FY26) 8 STAFF WORKPLAN ITEMS FOR FY 2025 •Ability Path request to be considered at FY 2025 Mid-Year Review •Fire Emergency Medical Response Fee Adjustments (Ongoing Revenue TBD) •Fire Emergency Medical Response; Supplemental Resources ($1.0-$4.0M Ongoing) •Review Parks Restroom Prioritization Specifically Pardee Park (Ongoing costs TBD) •Active Recruitment Digital Marketing Services (Ongoing costs TBD) •Organizational Development & Safety Division ($0.1M Ongoing; 50% GF/50% ISF) •Historical Grants Information 9 DRAFT MOTION FOR CITY COUNCIL CONSIDERATION 1)Adopt the Fiscal Year 2025 Budget Ordinance which includes the Operating and Capital Budgets, Table of Organization, and Municipal Fee Schedule, as amended by the actions outlined in this report: a.[…INSERT ANY CHANGES HERE…] 2)Accept the FY 2025-2029 Capital Improvement Plan as amended by the actions outlined in this report; 3)Adopt a Resolution determining the Appropriations Limit for Fiscal Year 2025; and 4)Accept the June 30, 2023 biennial actuarial valuation of Palo Alto’s Retiree Healthcare Plan and approve funding of the Actuarial Determined Calculation (ADC) for Fiscal Year 2025 and Fiscal Year 2026 with a two-year phase-in From:Penny Proctor To:Council, City; City Mgr; Parks; Administrative Services Subject:Eleanor FY 2026 Restroom - Thank You!! Date:Monday, June 17, 2024 10:55:41 AM CAUTION: This email originated from outside of the organization. Be cautious of opening attachments and clicking on links. > Dear Members of the City Council, Finance Committee, and City Staff, > > Thank you all so very much for the recommendation that a restroom be added to Eleanor Pardee Park in FY 2026! Wonderful! It is desperately needed, and we are grateful. > > Penny Proctor > Community Gardener > Greer Road From:Ann Balin To:Council, City Subject:Funding for Palo Alto Fire Stations Date:Sunday, June 16, 2024 3:41:32 PM CAUTION: This email originated from outside of the organization. Be cautious of opening attachments and clicking on links. Dear Mayor Stone, Vice-Mayor Lauing, & Council Members, It was my neighbor and former President of the College Terrace Residents’ Association now Treasurer, James Cook, who walking in the neighborhood observed smoke coming from a house in upper College Terrace on Bowdoin Street. He ran up to the home and helped an elderly resident out to safety. He was the first responder not the Hanover Street Station. Stanford responded but the Hanover Street Station was hamstrung because the station is not fully staffed. This station serves the hills, Foothills Park and the flats. How can fires be put out if there are only two fire personnel available? There MUST be three fire fighters in order for the fire engine to legally leave the station to combat fires. Again, how can this station’s fire fighters go west to put out fires when there are not personnel to board a fire truck? The Diablo Winds (North Winds) are blowing and Palo Alto needs to have our fire stations fully staffed. You the council need to step up and authorize funding to keep residents safe. This is not solely a College Terrace issue. Stanford Research Park and CPI are known for hazardous chemicals that would require an immediate response from our Palo Alto fire stations including Stanford. There have been hazardous leaks from CPI that have impacted residents in Barron Park. The council needs to have ALL of our fire stations fully staffed. Therefore address this timely issue by providing necessary funding to enable firefighters to perform their duty to safely support residents. Respectfully, Ann Lafargue Balin From:Margaret Heath To:Council, City Subject:Hanover Fire House staffing Date:Sunday, June 16, 2024 3:00:58 PM CAUTION: This email originated from outside of the organization. Be cautiousof opening attachments and clicking on links. Dear Mayor Stone and Council Members. I am writing to urge you to provide the resources to fully staff the Hanover Fire House 24 hours. It should go without saying that the number one responsibility of a city is the safety of the citizens. Especially as minutes and seconds can make all the difference as to how serious a fire becomes, especially in older homes without sprinkler systems. I was dismayed to learn recently an attic fire in upper College Terrace spread to become a more serious fire because of the extra minutes it took the Stanford Fire Department to arrive. And could have been fatal but for the quick thinking of a nearby resident who fortunately noticed the fire and was able to get an elderly disabled person out of the house before the fire trucks arrived. Especially as of all the Fire Stations in Palo Alto Hanover is the only firehouse with direct access to Page Mill Road leading directly into the foothills. We all know that only a few years ago the Santa Cruz mountain fires were only just stopped at Skyline short of the upper boundary of Foothill Park. Unfortunately, we also know that wildfires are becoming more frequent and the fire season much longer. It may only be a matter of time before another fire jumps Skyline. Or a fire starts in the Palo Alto foothills, as it did when nine houses burned on Page Mill and Arastradero in the mid 1990's before it was brought under control. And that was with a fully staffed Hanover Fire Station. Since then many more houses have been built up and down Page Mill Road. Of all your budget priorities, I urge you to put the safety of your city residents before all other responsibilities. Prioritize the immediate 24 hour staffing of the Hanover Fire Station, along with round the clock staffing for all the other Palo Alto fire stations. Sincerely, Margaret Heath 2140 Cornell Street From:Shannon Griscom To:Council, City Cc:Shannon Close Griscom Subject:Bathroom at Eleanor Pardew Park Date:Saturday, June 15, 2024 7:44:55 AM CAUTION: This email originated from outside of the organization. Be cautious of opening attachments and clicking on links. Dear Council Members: as you consider bathrooms at the various parks, please know that Eleanor Park is a very large area, including the public gardens. Many generations use the park, with no bathroom facilities. As a result, parents take their children behind bushes and trees to relieve themselves. The Council is overdue in making sure that all of who use the park can use a bathroom. In this wealthy community, it is shocking not to have bathrooms at all of the parks. I have lived in Palo Alto since 1965, paying taxes, and firmly ask that you provide these services. Sincerely, Shannon Close Griscom 815 Melville Ave. Palo Alto, CA 94301 508-237-1883