HomeMy WebLinkAbout2025-08-12 Policy & Services Committee Agenda PacketPOLICY AND SERVICES COMMITTEE
Regular Meeting
Tuesday, August 12, 2025
Council Chambers & Hybrid
6:00 PM
Policy and Services Committee meetings will be held as “hybrid” meetings with the option to
attend by teleconference/video conference or in person. Information on how the public may
observe and participate in the meeting is located at the end of the agenda. The meeting will be
broadcast on Cable TV Channel 26, live on YouTube https://www.youtube.com/c/cityofpaloalto,
and streamed to Midpen Media Center https://midpenmedia.org.
VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/94618744621)
Meeting ID: 946 1874 4621 Phone: 1(669)900-6833
PUBLIC COMMENTS
General Public Comment for items not on the agenda will be accepted in person for up to three
minutes or an amount of time determined by the Chair. General public comment will be heard
for 30 minutes. Additional public comments, if any, will be heard at the end of the agenda.
Public comments for agendized items will be accepted both in person and via Zoom for up to
three minutes or an amount of time determined by the Chair. Requests to speak will be taken
until 5 minutes after the staff’s presentation or as determined by the Chair. Written public
comments can be submitted in advance to city.council@paloalto.gov and will be provided to the
Council and available for inspection on the City’s website. Please clearly indicate which agenda
item you are referencing in your subject line.
PowerPoints, videos, or other media to be presented during public comment are accepted only
by email to city.clerk@paloalto.gov at least 24 hours prior to the meeting. Once received, the
Clerk will have them shared at public comment for the specified item. To uphold strong
cybersecurity management practices, USB’s or other physical electronic storage devices are not
accepted.
Signs and symbolic materials less than 2 feet by 3 feet are permitted provided that: (1) sticks,
posts, poles or similar/other types of handle objects are strictly prohibited; (2) the items do not
create a facility, fire, or safety hazard; and (3) persons with such items remain seated when
displaying them and must not raise the items above shoulder level, obstruct the view or passage
of other attendees, or otherwise disturb the business of the meeting.
1 August 12, 2025
Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for
public inspection at www.paloalto.gov/agendas.
CALL TO ORDER
PUBLIC COMMENT
Members of the public may speak in-person ONLY to any item NOT on the agenda. 1-3 minutes depending onnumber of speakers. Public Comment is limited to 30 minutes. Additional public comments, if any, will be heard at the
end of the agenda.
ACTION ITEMS
1. Update, Discussion, and Potential Direction Regarding State and Federal Legislation,
Executive Orders and Other Regulatory and Funding Activity
2. Office of the City Auditor Presentation of the Purchasing Card Audit Report
3. Recommend City Council Approval to Extend the Deadline for Two FY2024 Audit Project
Task Orders and Amend the FY2024 and FY2025 Task Order Budgets to Realign the
Authorized Budgets with a Net Zero Impact
4. Wellness and Belonging Update Report to the Policy and Services Committee; CEQA
Status – Not a Project
FUTURE MEETINGS AND AGENDAS
Members of the public may not speak to the item(s)
ADJOURNMENT
2 August 12, 2025
Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for
public inspection at www.paloalto.gov/agendas.
PUBLIC COMMENT INSTRUCTIONS
Members of the Public may provide public comments to teleconference meetings via email,
teleconference, or by phone.
1.Written public comments may be submitted by email to city.council@PaloAlto.gov.
2.For in person public comments please complete a speaker request card located on the
table at the entrance to the Council Chambers and deliver it to the Clerk prior to
discussion of the item.
3.Spoken public comments for agendized items using a computer or smart phone will be
accepted through the teleconference meeting. To address the Council, click on the link
below to access a Zoom-based meeting. Please read the following instructions carefully.
◦You may download the Zoom client or connect to the meeting in- browser. If using
your browser, make sure you are using a current, up-to-date browser: Chrome 30 ,
Firefox 27 , Microsoft Edge 12 , Safari 7 . Certain functionality may be disabled in
older browsers including Internet Explorer. Or download the Zoom application onto
your smart phone from the Apple App Store or Google Play Store and enter in the
Meeting ID below.
◦You may be asked to enter an email address and name. We request that you
identify yourself by name as this will be visible online and will be used to notify you
that it is your turn to speak.
◦When you wish to speak on an Agenda Item, click on “raise hand.” The Clerk will
activate and unmute speakers in turn. Speakers will be notified shortly before they
are called to speak.
◦When called, please limit your remarks to the time limit allotted. A timer will be
shown on the computer to help keep track of your comments.
4.Spoken public comments for agendized items using a phone use the telephone number
listed below. When you wish to speak on an agenda item hit *9 on your phone so we
know that you wish to speak. You will be asked to provide your first and last name before
addressing the Council. You will be advised how long you have to speak. When called
please limit your remarks to the agenda item and time limit allotted.
CLICK HERE TO JOIN Meeting ID: 946-1874-4621 Phone: 1-669-900-6833
Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public
programs, services and meetings in a manner that is readily accessible to all. Persons with
disabilities who require materials in an appropriate alternative format or who require auxiliary
aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at
(650) 329-2550 (voice) or by emailing ada@PaloAlto.gov. Requests for assistance or
accommodations must be submitted at least 24 hours in advance of the meeting, program, or
service.
3 August 12, 2025
Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for
public inspection at www.paloalto.gov/agendas.
California Government Code §84308, commonly referred to as the "Levine Act," prohibits an
elected official of a local government agency from participating in a proceeding involving a
license, permit, or other entitlement for use if the official received a campaign contribution
exceeding $500 from a party or participant, including their agents, to the proceeding within the
last 12 months. A “license, permit, or other entitlement for use” includes most land use and
planning approvals and the approval of contracts that are not subject to lowest responsible bid
procedures and have a value over $50,000. A “party” is a person who files an application for, or
is the subject of, a proceeding involving a license, permit, or other entitlement for use. A
“participant” is a person who actively supports or opposes a particular decision in a proceeding
involving a license, permit, or other entitlement for use, and has a financial interest in the
decision. The Levine Act incorporates the definition of “financial interest” in the Political Reform
Act, which encompasses interests in business entities, real property, sources of income, sources
of gifts, and personal finances that may be affected by the Council’s actions. If you qualify as a
“party” or “participant” to a proceeding, and you have made a campaign contribution to a
Council Member exceeding $500 made within the last 12 months, you must disclose the
campaign contribution before making your comments.
4 August 12, 2025
Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for
public inspection at www.paloalto.gov/agendas.
7
7
7
8
Policy & Services Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: City Manager
Meeting Date: August 12, 2025
Report #:2507-4954
TITLE
Update, Discussion, and Potential Direction Regarding State and Federal Legislation, Executive
Orders and Other Regulatory and Funding Activity
RECOMMENDATION
Staff recommends that the Policy and Services Committee receive an update on state and federal
legislation and provide feedback on advocacy efforts.
BACKGROUND AND ANALYSIS
The City Council adopted the 2025 Federal and State Legislative Guidelines1 on January 13, 2025.
The guidelines provide a baseline for the City’s legislative advocates at the state and federal level
to advocate on the City’s behalf in relation to proposed legislation and other federal and state
governmental activity. Where the guidelines provide sufficient direction, the City’s legislative
advocates may discuss Palo Alto's interests with state legislators and their staff and/or prepare a
letter of advocacy in alignment with the guidelines for the Mayor's signature. This is key to
enabling the City to weigh in on fast-moving developments.
The Policy and Services Committee receives regular updates from Townsend Public Affairs (TPA),
the City’s legislative advocates, and recommends legislation for TPA to monitor on behalf of the
City. The most recent update2 to the Committee was on April 8. At that meeting, the Committee
received an update, discussed upcoming advocacy efforts related to state legislation, confirmed
positions, and recommended the following: Refer to the Policy and Services Committee an
update to the City of Palo Alto Advocacy Process Manual to address sponsorship of legislation.
Staff later advanced that recommendation to the City Council on June 16, 20253 and it was
1 City of Palo Alto’s 2025 Federal and State Legislative Guidelines:
https://www.cityofpaloalto.org/files/assets/public/v/1/city-manager/legislation/2025-legislative-guidelines.pdf
2 Policy and Services Committee April 8, 2025 Meeting (Item 3):
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16030
3 June 16, 2025 City Council meeting, Item 4. Link:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16147
Item 1
Item 1 Staff Report
Item 1: Staff Report Pg. 1 Packet Pg. 5 of 117
7
7
7
8
unanimously approved on Consent by the City Council. Staff will bring the Legislative Manual to
the Policy and Services Committee for review and discussion in Fall 2025.
For the August 12th Committee discussion, TPA prepared Attachment A outlining major
legislative and budgetary updates for the state as well as some federal updates. Attachment B
includes a list of legislation with potential Palo Alto impacts that TPA and staff have been
monitoring or plan to monitor. If desired, Committee members may also raise for discussion
other legislation of Palo Alto interest that is not listed in the memos or may recommend action
on any of the bills listed on the monitoring list. At this time, staff does not have additional bills
recommended for the City to take a position on. A summary of the state legislative positions the
City has taken this session is below with bill status information included as well. Staff and TPA are
available to answer questions about those bills for the Committee.
Bill City Position Bill Status
SB 239 (Arreguin)Support 06/03/2025 - Ordered to inactive file on request
of Senator Arreguín.
AB 259 (Rubio)Support 06/27/2025 - In committee: Hearing postponed
by committee.
AB 306 (Schultz)Oppose unless
amended
06/23/2025 - From committee chair, with
author's amendments: Amend, and re-refer to
committee. Read second time, amended, and re-
referred to Com. on HOUSING.
AB 650 (Papan)Support 07/14/2025 - In committee: Referred to APPR.
suspense file.
AB 736 (Wicks) Support if amended 06/04/2025 - In Senate. Read first time. To Com.
on RLS. for assignment
AB 1273
(Patterson)
Support 07/22/2025 – From committee: Amend, and do
pass as amended and re-refer to Com. on APPR.
(Ayes 15. Noes 0)
SB 79 (Weiner)Oppose 07/17/2025 - Assembly Rule 63 suspended. From
committee: Do pass as amended and re-refer to
Com. on APPR. (Ayes 6. Noes 1.) (July 16). Read
second time and amended. Re-referred to Com.
on APPR
SB 346 (Durazo)Support 07/17/2025 - Read second time. Ordered to third
reading
SB 417 (Cabaldon)Support if amended 02/18/2025 – Read first time. To Com. On RLS for
assignment
SB 456 (Ashby)Support 07/08/2025 - Coauthors revised. From
committee: Do pass and re-refer to Com. on
APPR. (Ayes 17. Noes 0.) (July 8). Re-referred to
Com. on APPR.
Item 1
Item 1 Staff Report
Item 1: Staff Report Pg. 2 Packet Pg. 6 of 117
7
7
7
8
SB 457 (Becker)Support April 29 set for first hearing. Failed passage in
committee. (Ayes 1. Noes 2.) Reconsideration
granted.
The 2025 State legislative calendar (which includes deadlines and other important dates) can be
found online at: https://www.assembly.ca.gov/schedules-publications/legislative-deadlines and
the state legislative session is concluding soon. This calendar provides helpful context when
reviewing the bills included in the Townsend memo.
Lastly, on March 17, 20254 the City Council adopted a Resolution Reaffirming City Council's
Commitment to Palo Alto Values which links to actions at the Federal government.
FISCAL/RESOURCE IMPACT
There is no fiscal impact associated with this action. The City Council budgets annually for the
legislative advocacy services and these efforts are led by staff in the City Clerk’s Office in close
collaboration with the City Manager’s Office with stakeholder support across other City
departments on key issues.
STAKEHOLDER ENGAGEMENT
Staff from multiple departments are involved in the legislative process in helping to review the
impacts of bills as well as discussing grant opportunities linked to state and federal programs.
ENVIRONMENTAL REVIEW
The City’s legislative advocacy activities are not a project under section 15378(b)(25) of the
California Environmental Quality Act Guidelines (administrative activities that will not result in
direct or indirect physical changes in the environment).
ATTACHMENTS
Attachment A: Townsend Public Affairs State and Federal Legislative Updates
Attachment B: Priority Bill Matrix
APPROVED BY:
Ed Shikada, City Manager
Item 1
Item 1 Staff Report
Item 1: Staff Report Pg. 3 Packet Pg. 7 of 117
1
M E M O R A N D U M
To: City of Palo Alto
Policy and Services Committee From: Townsend Public Affairs Christopher Townsend, President Niccolo De Luca, Vice President Alex Gibbs, Grants Director Carlin Shelby, Senior Associate
Joseph Melo, Senior Federal Associate
Date: July 28, 2025 Subject: State and Federal Legislative Updates
Townsend Public Affairs, Inc. (TPA) has prepared this report for the City of Palo Alto Policy and
Services Committee to provide a summary of State, Federal, and funding efforts and highlight the
current status of the legislative process. STATE LEGISLATIVE UPDATES
July 18 marked the first week of the Legislature’s summer recess, following the July 18 deadline for second house policy committees to advance bills in order for them to remain eligible this session. The Legislature will reconvene on August 18 to begin the final stretch of the 2025
session. When lawmakers return, second house fiscal committees will have until August 29 to consider
and move remaining bills. From September 2 through September 12, both houses will convene for floor sessions only, during which eligible measures must be voted on and sent to the Governor. Governor Newsom will then have until October 12 to sign or veto any legislation passed by that deadline. A comprehensive matrix of priority measures that are still alive and progressing is provided in the Attachment “Palo Alto – Priority Bill Matrix.” State Budget Update On Friday, June 27, Governor Gavin Newsom signed into law the FY 2025–26 State Budget along
with 17 trailer bills, framing the package as fiscally balanced and people-centered in the face of slowed revenue growth and federal uncertainty. However, the budget architecture was incomplete without the enactment of two pivotal trailer bills—AB 130 and AB 131—which were approved by
both houses of the Legislature today, June 30, and are expected to be signed by the Governor before midnight to meet a built-in deadline embedded in SB 102, the “poison pill” mechanism that would have rendered the budget void without these measures.
Item 1
Attachment A - Townsend
Public Affairs State and
Federal Legislative Updates
Item 1: Staff Report Pg. 4 Packet Pg. 8 of 117
2
Together, AB 130 and AB 131 represent some of the most sweeping housing, homelessness, and environmental streamlining reforms California has advanced in years. While included in the
budget process, their impacts extend far beyond traditional fiscal implementation—making long-term changes to land use, project delivery, and local control.
AB 130: Reshaping Housing Entitlements and Local Authority AB 130 consolidates provisions from over two dozen housing-related bills, with language previously debated—and in some cases rejected—during the policy session. Most notably, it makes the Housing Crisis Act of 2019 (SB 330) permanent, removing its 2034 sunset and ensuring streamlined housing approvals remain law indefinitely. This means local jurisdictions will continue to be restricted from downzoning, imposing growth caps, or limiting housing project applications once preliminary applications are filed. The bill also codifies CEQA streamlining measures from AB 609, exempting qualifying infill housing projects from full environmental review—provided they meet criteria around transit proximity, existing zoning, and environmental baselines. In addition, AB 130 imposes a six-year moratorium on cities and counties adopting new or amended residential building standards, effectively freezing local oversight over construction-related regulations unless tied to immediate
public health or safety concerns. Notably, these provisions were incorporated from the policy vehicle AB 306, which the City of Palo Alto took an Oppose Unless Amended position to allow for the adoption of the 2025 building standards code and provide the continued authority for local
governments to adopt and enforce reach codes. Summary of AB 306-Derived Provisions in AB 130 (Effective October 1, 2025 – June 1, 2031)
Local governments are prohibited from adopting or amending building standards affecting residential units—including energy standards and green building codes—unless one or more of the following conditions apply: 1. Substantial Equivalence The proposed standard is substantially equivalent to one previously filed and in effect as of September 30, 2025.
2. Emergency Determination by CBSC: The California Building Standards Commission (CBSC) determines the modification is
necessary for immediate health and safety. 3. Home Hardening:
The change relates to wildfire risk mitigation and structural fire resilience. 4. Fire Protection District Standards:
The standard is adopted by a fire protection district pursuant to existing statutory authority. 5. Consistency with General Plan and Mixed-Fuel Construction: The modification is necessary to implement a general plan adopted by June 10, 2025, and supports mixed-fuel construction while encouraging all-electric development under a local GHG reduction strategy.
6. Administrative Practices:
Item 1
Attachment A - Townsend
Public Affairs State and
Federal Legislative Updates
Item 1: Staff Report Pg. 5 Packet Pg. 9 of 117
3
The change pertains to ministerial procedures that do not materially alter building performance.
Under AB 130, CBSC is required to reject any filing from a city or county that does not meet these exceptions.
AB 131: Homelessness Funding and Expanding CEQA Exemptions AB 131 carries forward the state’s Homeless Housing, Assistance, and Prevention (HHAP) Program into Round 7, appropriating $500 million for FY 2026–27. This essentially means that despite eight years of precedent wherein the state has dedicated $1 billion to the program, this fiscal year the Legislature has appropriated $0, with delayed access to Round 7 funds until FY 26-27. However, round 6 of the program, comprised of the previous $1 billion allocation, has yet to be released, meaning there should not be a delay until 2026 for access to new funds. To access HHAP funds via Round 7, jurisdictions must meet a slate of eligibility criteria—compliant housing elements, alignment with state encampment policies and the adoption of the Governor’s model ordinance, progress on housing metrics, and sufficient obligation of prior HHAP funds—before funds will be disbursed. This shift marks a more prescriptive, performance-based approach to homelessness spending, emphasizing accountability and local alignment with state priorities.
In tandem, AB 131 introduces one of the most significant expansions of CEQA exemptions in recent memory. The bill exempts an array of public interest projects from environmental review,
including wildfire risk reduction activities (like prescribed burns, fuel breaks, and defensible space efforts), and park and trail development projects funded by Proposition 4 (2024). The wildfire exemption is particularly notable, as it applies to projects up to 50 acres in scope and within wildland-urban interface areas. Beyond wildfire and parks, AB 131 also streamlines CEQA for specific infill housing projects, federally qualified health centers, food banks, daycare centers, advanced manufacturing facilities, broadband infrastructure in public rights-of-way, and climate adaptation planning. The bill introduces a new “near-miss” CEQA review pathway for projects that nearly qualify for full exemption but fall short on a single criterion—requiring environmental analysis only for the disqualifying factor and eliminating the need for cumulative impact or project alternative evaluations. Beyond the signing of the initial budget act and corresponding trailer bills, the State’s budget
situation will continue to evolve through the end of the legislative session to account for new shortfalls that have been contributed from the passage of the federal government’s reconciliation package.
July 2025 Finance Bulletin: Year-End Revenue Update On July 24, the California Department of Finance released its July 2025 Finance Bulletin, reporting that the state ended the 2024–25 fiscal year with General Fund revenues approximately $2.7 billion above estimates included in the Governor’s May Revision. While this result exceeds expectations, a closer breakdown shows that nearly half of the total stems from one-time federal reimbursements for prior-year expenses.
These temporary payments, while beneficial in easing short-term fiscal pressure, do not reflect ongoing growth in California’s primary revenue sources, such as personal income taxes, sales
Item 1
Attachment A - Townsend
Public Affairs State and
Federal Legislative Updates
Item 1: Staff Report Pg. 6 Packet Pg. 10 of 117
4
taxes, or corporate taxes. As a result, the revenue overage does not indicate a sustained upward trend in the state’s economic performance or tax base.
The State Controller’s Office reported, as of June 30, the General Fund held a cash balance of $34 billion, enough to meet current obligations. In addition, the State Treasurer's most recent
evaluation of the Pooled Money Investment Account, which includes funds from state and local governments, placed its market value at $178 billion at the end of the fiscal year. While the year-end figures offer some positive indicators, the reliance on nonrecurring funds underscores the importance of cautious budgeting and long-term planning. The coming fiscal cycles will likely require continued attention to both revenue trends and expenditure pressures. Legislative Spotlight: SB 63 (Wiener) Bay Area Transportation Revenue Measure As part of a coordinated legislative and regional effort, SB 63 (Wiener) advances a framework for a district-wide transactions and use tax dedicated to funding public transportation throughout the Bay Area. Developed in conjunction with negotiated agreements between major Bay Area transit operators and regional agencies, the legislation enables the creation of a Transportation Revenue Measure District (TRMD) encompassing five counties—Alameda, Contra Costa, San Mateo, and
Santa Clara, along with the City and County of San Francisco. Under the proposal, a uniform sales tax would be levied across the region, with a rate of 0.5
percent in Alameda, Contra Costa, San Mateo, and Santa Clara Counties, and a higher rate of 1.0 percent in San Francisco. The tax would be authorized for a duration of 14 years. Revenue generated under the measure would be allocated according to a detailed expenditure plan
informed by technical modeling and negotiated interagency input, ensuring each recipient jurisdiction receives a proportional share of funding tied to agreed-upon service, ridership, and operational metrics. A nominal share of the total revenue—0.22 percent—is set aside for the TRMD itself, to cover both ongoing administrative operations and a limited suite of one-time expenditures, including the costs of a financial efficiency audit and expenses related to ballot placement and voter education. The Metropolitan Transportation Commission (MTC), acting as the coordinating entity for regional integration, will receive 4.4 percent of total revenues to implement priority rider-focused improvements consistent with the 2021 Transit Transformation Action Plan (T-TAP). These improvements are expected to include expanded regional fare coordination through programs
such as Clipper START and free or reduced-cost intersystem transfers, as well as enhancements to accessibility, transit signal prioritization, and standardized passenger information systems such as signage and wayfinding.
MTC will also be tasked with the regional allocation of operational support funding to the Bay Area’s largest transit providers. These include BART, AC Transit, Muni, the SF Bay Ferry system,
and Golden Gate Transit, with Caltrain also expected to participate pending formal confirmation by its member agencies. In addition, smaller bus operators serving subregional markets in Alameda and Contra Costa Counties will receive funding through allocations determined by the Alameda County Transportation Commission (ACTC) and the Contra Costa Transportation Authority (CCTA), respectively. These operations-based distributions reflect a coordinated effort to stabilize and improve core transit service levels across a fragmented regional landscape.
Ongoing discussions among agency partners have focused on ensuring transparency and fiscal accountability, with particular attention given to the structure and independence of the proposed
Item 1
Attachment A - Townsend
Public Affairs State and
Federal Legislative Updates
Item 1: Staff Report Pg. 7 Packet Pg. 11 of 117
5
financial efficiency review. Stakeholders in San Mateo County have emphasized the importance of robust oversight, with negotiations continuing to refine the measure’s governance and reporting
architecture. Following these regional and MTC-directed allocations, the remaining revenues will be distributed
directly to each participating county’s designated transportation agency for local use. These agencies include ACTC in Alameda County, CCTA in Contra Costa County, the San Francisco County Transportation Authority (SFCTA), the San Mateo County Transit District (SMCTD), and the Santa Clara Valley Transportation Authority (VTA). Importantly, each agency will receive its share of funds independently and without administrative interference from either the TRMD or MTC, allowing for the implementation of county-level transit investments aligned with local priorities and adopted expenditure plans. The measure is pending action in the second house fiscal committee before moving to the floor for final consideration. FEDERAL UPDATES Congressionally Directed Spending Submittal
As part of the Fiscal Year 2026 federal appropriations process, the City of Palo Alto, in coordination with Townsend Public Affairs, prepared and submitted a Congressionally Directed
Spending (CDS) request to secure funding for the completion of the Fire Station No. 4 Replacement Project. The project, which had previously garnered support from former Representative Anna Eshoo, was determined to meet key eligibility criteria for federal community
project funding, including its shovel-ready status, advanced stage of implementation, and strong record of local and state support. Representative Liccardo selected the Fire Station No. 4 project for submission and formally advanced a $3,000,000 funding request on the City’s behalf. Following his selection and associated advocacy efforts with appropriations committee staff, the House Transportation, Housing and Urban Development (THUD) Appropriations Subcommittee included the project in its FY 2026 draft spending bill with a proposed funding level of $850,000. This amount reflects ongoing bipartisan negotiations, national funding constraints, and the need to balance project requests across all fifty states.
The current funding recommendation is expected to remain intact as the appropriations process continues through the House and Senate. TPA will maintain active engagement with key federal stakeholders throughout the remainder of the cycle to support retention of the funding in final
legislative packages and to position the City for future federal funding opportunities aligned with its capital priorities. Federal Reconciliation Package and Impacts to California On July 4, President Donald Trump signed HR 1, the One Big Beautiful Bill Act (OBBBA). The bill was modified by the Senate after passing the House on May 22, and constitutes the largest tax/spending bill ever passed at an estimated $3.4 trillion. The budget reconciliation package aimed to deliver the majority of the President’s legislative agenda, from extending the 2017 Tax
Cuts and Jobs Act, providing supplements to tax credits, enacting no tax on tips and overtime, and enacting defense and border/immigration spending.
Item 1
Attachment A - Townsend
Public Affairs State and
Federal Legislative Updates
Item 1: Staff Report Pg. 8 Packet Pg. 12 of 117
6
In order to offset the costs of these policies, the OBBBA makes cuts to social spending programs like the Supplemental Nutrition Assistance Program (SNAP) and Medicaid, alongside other
programs in the 2021 Infrastructure Investment and Jobs Act (IIJA), the 2022 Inflation Reduction Act energy tax credits, and funding for financial watchdogs. It also makes modifications to student loans, student loan repayment, oil and gas drilling, immigration fees, and environmental review
rules. Importantly, many of the immediate benefits in the OBBBA, including the increase in the State and Local Tax Deduction (SALT Cap) from $10k to $40k, no tax on tips, overtime, and car loan interest, and a $1k deposit for a newborn child into a “Trump” (investment) account all expire or phase out at the end of the President’s term in 2028. At the same time, the cuts to social spending programs and clean energy tax credits will ramp up through 2035. A Congressional Budget Office estimate projects the bill will lead to a $3.4 trillion dollar loss in revenue for the federal government over the 10-year budget window, with $1.2 trillion in spending cuts, nearly a trillion of those cuts being to Medicaid. Importantly, the spending reductions did not generally come from cuts to services themselves, but instead via cost-shifting the administration and benefits of the programs onto the states and introducing new work requirements and more frequent eligibility checks. How the state of California will respond to these changes, estimated
between a $20- and $40 billion loss in revenue over the 10-year budget window, was not addressed in the recent state budget negotiations for this year.
Counties are likely to face a significant portion of the additional administrative burdens imposed by the more frequent eligibility verifications and enhanced work requirements. They will have to negotiate with the state on how to address the costs.
California Specific Impacts of the Legislation OBBBA proposes sweeping changes to federal tax policy, healthcare funding, and regulatory authority, with potentially significant consequences for California. As one of the largest and most populous states, California could be disproportionately impacted by reductions in federal support for Medi-Cal, CalFresh, and other safety net programs, along with new limitations on the state’s ability to regulate environmental and technological standards. Outlined below are the potential impacts of the OBBBA on California’s CalFresh and Medi-Cal programs.
SNAP/CalFresh
OBBBA increases state financial responsibility for the Supplemental Nutrition Assistance Program (SNAP/CalFresh) while imposing new restrictions on program flexibility and eligibility.
Cost Share Specifically, beginning in fiscal year (FY) 2028, states will be required to cover a portion of the cost of SNAP (benefits if their payment error rate exceeds 6%. The cost-sharing requirements are as follows:
• States with an error rate below 6%: no cost share (0%)
• States with an error rate between 6% and 8%: 5% cost share
• States with an error rate between 8% and 10%: 10% cost share
Item 1
Attachment A - Townsend
Public Affairs State and
Federal Legislative Updates
Item 1: Staff Report Pg. 9 Packet Pg. 13 of 117
7
• States with an error rate 10% or higher: 15% cost share For FY 2028 only, states may choose to use either their FY 2025 or FY 2026 error rate to determine their share. Starting in FY 2029 and beyond, the applicable rate will be based on the
state's error rate from three years prior. Additionally, if a state's SNAP payment error rate reaches 13.35% or higher, the state may postpone its required cost-sharing contribution until fiscal year 2030. This delay provides temporary relief for states with exceptionally high error rates, allowing
additional time to improve program accuracy before being subject to the financial penalty. In addition, beginning in FY 2027, the federal share of SNAP administrative costs will be reduced
from 50% to 25%, increasing the financial responsibility of states for program administration, placing pressures at the local level. With the state’s payment error rate at nearly 11% in FY24, California would be required to contribute the maximum 15% share of SNAP benefit costs under the proposal. This would cost California approximately $1.8 billion a year unless it significantly reduced its payment error rate to below 6%.
Eligibility OBBBA also restricts SNAP eligibility to individuals residing in the U.S. who are:
• US citizens or nationals;
• Lawful permanent residents (with certain exceptions);
• Cuban or Haitian entrants; or
• Lawfully residing individuals covered under the Compacts of Free Association
(Micronesia, Marshall Islands, and Palau). Restricting SNAP eligibility to certain categories of noncitizens could have a significant impact on
California, which is home to one of the largest immigrant populations in the nation. This change may increase food insecurity among vulnerable communities and place additional strain on state-funded nutrition and social services programs that serve individuals excluded under the new federal rules. Medicaid/Medi-Cal OBBBA poses significant risks to California’s healthcare system. The legislation threatens to eliminate Medi-Cal coverage for up to 3.4 million Californians and could result in the loss of more than $30 billion in federal funding. These cuts would jeopardize the financial stability of hospitals, community clinics, and critical public health programs across the state. OBBBA imposes sweeping changes to the structure of Medicaid, particularly in states like California that have expanded coverage and relied on program flexibility. The bill includes federal
caps on core Medicaid funding, estimated to reduce California’s share by at least $28.4 billion. By 2034, an estimated 17 million individuals in the nation are projected to become uninsured as a result of significant cuts to Medicaid and the elimination of enhanced premium subsidies. These
changes would reduce access to affordable health coverage for millions of low-income and working families, reversing gains made in recent years under federal health programs.
It also restricts the state’s ability to draw down federal matching funds through mechanisms like the provider tax, an essential financing tool for the Medi-Cal program. Severely limiting new
Item 1
Attachment A - Townsend
Public Affairs State and
Federal Legislative Updates
Item 1: Staff Report Pg. 10 Packet Pg. 14 of 117
8
provider taxes will severely constrain the state’s capacity to fund Medi-Cal and maintain current service levels.
The legislation also introduces mandatory work requirements for certain Medicaid beneficiaries, a policy that could lead to widespread disenrollment, especially among low-income individuals
facing employment barriers. Furthermore, the OBBBA requires eligibility reverification every six months. As currently interpreted, the statute requires an almost entirely new Medicaid application be resubmitted and processed each time, inclusive of immigration status checks with the federal government. It also caps supplemental federal payments to hospitals, threatening major reductions in revenue for both public and private hospitals, and compromising their ability to sustain services, staffing, and access to care. The bill includes a provision that blocks Medicaid funding to Planned Parenthood, a change that could disrupt health care access for approximately 1.1 million patients and potentially lead to the closure of nearly 200 health centers, in 24 states across the nation. OBBBA introduces new cost-sharing requirements for Medicaid beneficiaries with incomes 100-138% federal poverty level. Beginning in 2028, these enrollees may be required to pay up to $35 for each healthcare service, with total charges capped at 5% of their household income. While
certain services, such as those provided by federally qualified health centers, rural health clinics, and behavioral health providers, are exempt from this requirement, the policy represents a significant departure from California’s current approach. Medi-Cal does not currently impose co-
payments for most services, meaning this shift could create new financial barriers for low-income individuals accessing care.
In total, the bill’s provisions disrupt Medicaid financing, increase administrative costs, reduce access to services, and place added financial pressure on both beneficiaries and healthcare providers. The impacts would fall most heavily on vulnerable Californians, including low-income families, seniors, and individuals with disabilities who depend on Medi-Cal for consistent, affordable healthcare.
Item 1
Attachment A - Townsend
Public Affairs State and
Federal Legislative Updates
Item 1: Staff Report Pg. 11 Packet Pg. 15 of 117
M E M O R A N D U M
To: City of Palo Alto Policy and Services Committee From: Townsend Public Affairs Date: July 28, 2025 Subject: Palo Alto Priority Bill Matrix
Community Services
AB 421 (Solache, D) Immigration enforcement: prohibitions on access, sharing information, and law enforcement collaboration.
Status: 04/08/2025 - In committee: Set, second hearing. Hearing canceled at the request of author.
Summary: The California Values Act generally prohibits California law enforcement agencies from investigating, interrogating, detaining, detecting, or arresting persons for immigration enforcement purposes. Current law provides certain limited exceptions to this prohibition. This bill would prohibit California law enforcement agencies from collaborating with, or providing any information in writing, verbally, on in any other manner to, immigration authorities regarding proposed or currently underway immigration enforcement actions when the actions could be or are taking place within a radius of one mile of any childcare or daycare facility, religious institution, place of worship, hospital, or medical office. To the extent this bill would impose additional duties on local law enforcement agencies or officials, the bill would impose a state-mandated local program. (Based on 02/05/2025
text)
Position: Watch
SB 456 (Ashby, D) Contractors: exemptions: muralists.
Status: 07/08/2025 - Coauthors revised. From committee: Do pass and re-refer to Com. on APPR. (Ayes 17. Noes 0.) (July 8). Re-referred to Com. on APPR.
Summary: The Contractors State License Law establishes the Contractors State License Board within the Department of Consumer Affairs and sets forth its powers and duties relating to the licensure and regulation of contractors. Current law makes it a misdemeanor for a person to engage in the business, or act in the capacity, of a contractor without a license, unless exempted. Current law exempts from the Contractors State License Law a nonprofit corporation providing assistance to an owner, as specified. This bill would exempt from that law an artist who draws, paints, applies, executes, restores, or conserves a mural, as defined, pursuant to an agreement with a person who could legally authorize the work. (Based on 04/02/2025 text)
Position: Support
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 12 Packet Pg. 16 of 117
SB 627 (Wiener, D) Law enforcement: masks.
Status: 07/17/2025 - Read second time and amended. Re-referred to Com. on APPR.
Summary: Current law makes it a misdemeanor to wear a mask, false whiskers, or any personal disguise, as specified, with the purpose of evading or escaping discovery, recognition, or identification while committing a public offense, or for concealment, flight, evasion, or escape from arrest or conviction for any public offense. This bill would make it a crime for a law enforcement officer to wear a facial covering in the performance of their duties, except as specified. The bill
would define law enforcement officer as anyone designated by California law as a peace officer and any officer or agent of a federal law enforcement agency, or any person acting on behalf of a federal law enforcement agency. The bill would make a violation of these provisions punishable as an infraction or a misdemeanor, as specified. By creating a new crime, this bill would impose a state-mandated local program. (Based on 07/17/2025 text)
Position: Watch
SB 805 (Pérez, D) Crimes.
Status: 07/18/2025 - Coauthors revised.
Summary: Current law prohibits credibly impersonating a peace officer, firefighter, or employee of a public utility, state or local government agency, or search and rescue team, as specified. Current law also prohibits willfully and credibly impersonating a peace officer, firefighter, or employee of a public utility, state or local government agency, or search and rescue team through or on an internet website, or by other electronic means, for the purposes of defrauding another. A violation of these prohibitions is punishable as a misdemeanor. This bill would clarify that a peace officer, for these purposes, includes a federal law enforcement officer. The bill would extend these offenses to include willfully and credibly impersonating any of those entities through any means for the purpose of defrauding another. By expanding the scope of a crime, this bill would impose a state-mandated local program. (Based on 07/17/2025 text)
Position: Watch
Energy, Utilities, and Communications
AB 306 (Schultz, D) Building regulations: state building standards.
Status: 06/23/2025 - From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on HOUSING.
Summary: Current law establishes the Department of Housing and Community Development (department) in the Business, Consumer Services, and Housing Agency. The California Building Standards Law establishes the California Building Standards Commission (commission) within the Department of General Services. Current law requires the commission to approve and adopt building standards and to codify those standards in the California Building Standards Code (code). The State Housing Law establishes statewide construction and occupancy standards for buildings used for human habitation. Current law requires, among other things, the building standards adopted and submitted by the department for approval by the commission, as specified, to be adopted by reference, with certain exceptions. Current law authorizes any city or county to make
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 13 Packet Pg. 17 of 117
changes in those building standards that are published in the code, including to green building standards. Current law requires the governing body of a city or county, before making modifications or changes to those green building standards, to make an express finding that those modifications or changes are reasonably necessary because of local climatic, geological, or topographical conditions. This bill would, from October 1, 2025, to June 1, 2031, inclusive, prohibit a city or county from making changes that are applicable to residential units to the above-described building standards unless a certain condition is met, including that the commission deems those changes or modifications necessary as emergency standards to protect health and safety. (Based on 06/23/2025 text)
Position: Oppose Unless Amended
AB 737 (Quirk-Silva, D) Energy: building decarbonization: notice and recordation of a decarbonization charge.
Status: 07/08/2025 - Read second time and amended. Re-referred to Com. on APPR.
Summary: Current law requires the Public Utilities Commission, or the governing board of a local publicly owned electric utility or electrical cooperative, to require an energy supplier, defined as an electrical corporation, local publicly owned electric utility, electric service provider, community choice aggregator, or electrical cooperative, administering a decarbonization upgrade program or initiative, to record, no later than 30 days after funding a decarbonization upgrade, a notice of decarbonization
charge, as defined, with the county recorder of the county where the property subject to the decarbonization charge is located, as specified. Current law requires an energy supplier, within 30 days of full cost recovery of the outstanding charges related to the recorded notice of decarbonization charge, to record a notice of the full cost recovery and removal of the decarbonization charge with the county recorder of the county where the property subject to the decarbonization charge is located. This bill would add gas corporations to the definition of “energy supplier” for purposes of the above-described provisions and make conforming changes. (Based on 07/08/2025 text)
AB 1020 (Schiavo, D) Public utilities: energy: taxpayer funding: reporting.
Status: 07/16/2025 - From committee: Do pass and re-refer to Com. on APPR. (Ayes 12. Noes 3.) (July 15). Re-referred to Com. on APPR.
Summary: Current law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations and gas corporations. Current law requires electrical corporations and gas corporations to submit various information to the commission, and requires the commission to annually report to the Legislature on, among other things, all sources and amounts of funding and actual and proposed expenditures, including any costs to ratepayers, related to entities or programs established by the commission, as specified. This bill would require each utility, defined as an investor-owned electrical corporation or gas corporation, to report certain information for any taxpayer funding, as defined, greater than or equal to $1,000,000 that the utility has applied for or
received. The bill would require the commission, for each application in which a utility is seeking ratepayer funding, to require the utility to report all relevant taxpayer funding greater than or equal to $1,000,000 that the utility is pursuing or has secured, and, if the commission determines that a utility is not in compliance with that requirement, the bill would authorize the commission to impose a penalty against the utility, as specified. The bill would require the commission to require each utility to promptly deliver to ratepayers the financial benefits of taxpayer funding received, as provided. (Based on 06/24/2025 text)
Position: Watch
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 14 Packet Pg. 18 of 117
AB 1273 (Patterson, R) Public utilities: ratesetting proceedings: local publicly owned electric utilities: California Renewables Portfolio Standard Program.
Status: 07/22/2025 - From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 15. Noes 0.) (July 15). Read second time and amended. Re-referred to Com. on APPR.
Summary: Current law requires all charges demanded or received by a public utility for a product or commodity furnished or to be furnished or a service rendered or to be rendered to be just and reasonable. Current law, except as provided, prohibits a public utility from changing a rate unless there is a showing before the Public Utilities Commission (PUC) and a finding by the PUC that the new rate is justified. Current law requires the PUC to publish and maintain on its internet website particular documents regarding the PUC’s agendas, actions, decisions, resolutions, rules, and other information. This bill would prohibit the PUC from placing the consideration of an electrical corporation ratesetting proceeding on its consent calendar. The bill would, except as provided, require the PUC to provide, at a meeting to vote on a ratesetting proceeding, before its vote on the ratesetting proceeding, a public comment period of at least 30 minutes on the ratesetting proceeding. (Based on 07/22/2025 text)
Position: Support
SB 593 (Hurtado, D) Voltage changes: consumer protection: study and report.
Status: 06/30/2025 - Read second time and amended. Re-referred to Com. on APPR.
Summary: Current law requires the Public Utilities Commission to annually publish a report that includes all investigations into gas or electric service safety incidents reported, pursuant to commission requirements, by any gas corporation or electrical corporation, as provided. This bill would require that annual report to also include the number of significant voltage-related service incidents that damaged customer equipment and appliances, the number of claims submitted, and the number and total dollar amount of the resolved claims. (Based on 06/30/2025 text)
Position: Watch
Environmental Quality
AB 961 (Ávila Farías, D) Hazardous materials: California Land Reuse and Revitalization Act of 2004.
Status: 07/09/2025 - From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 13. Noes 0.) (July 8). Re-referred to Com. on APPR.
Summary: The California Land Reuse and Revitalization Act of 2004 provides, among other things, that an innocent landowner, bona fide purchaser, or contiguous property owner, as defined, qualifies for immunity from liability from certain state statutory and common laws for pollution conditions caused by a release or threatened release of a hazardous material if specified conditions are met, including entering into an agreement for a specified site assessment and response plan. The act prohibits the Department of Toxic Substances Control, the State Water Resources Control Board, and a California regional water quality control board from requiring one of those persons to take a response action under certain state laws, except as specified. Existing law repeals the act on
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 15 Packet Pg. 19 of 117
January 1, 2027. Current law provides that a person who qualifies for immunity under the act before January 1, 2027, shall continue to have that immunity on and after January 1, 2027. This bill would extend the repeal date of the act to January 1, 2037, and would provide that a person who qualifies for immunity under the act before January 1, 2037, shall continue to have that immunity on and after January 1, 2037, if the person continues to be in compliance with the requirements of the former act. (Based on 02/20/2025 text)
Position: Watch
SB 682 (Allen, D) Environmental health: product safety: perfluoroalkyl and polyfluoroalkyl substances.
Status: 07/17/2025 - Read second time and amended. Re-referred to Com. on APPR.
Summary: (1)Existing law requires the Department of Toxic Substances Control, on or before January 1, 2029, to adopt regulations to enforce specified covered perfluoroalkyl and polyfluoroalkyl substances (PFAS) restrictions, which include prohibitions on the distribution, sale, or offering for sale of certain products that contain specified levels of PFAS. Existing law requires the department, on and after July 1, 2030, to enforce and ensure compliance with those provisions and regulations, as provided. Existing law requires manufacturers of these products, on or before July 1, 2029, to register with the department, to pay a registration fee to the department, and to provide a statement of compliance certifying compliance with the applicable prohibitions on the use of PFAS to the department, as specified. Existing law authorizes the department to test products and to rely on third-party testing to determine compliance with prohibitions on the use of PFAS, as specified. Existing law requires the department to issue a notice of violation for a product in violation of the prohibitions on the use of PFAS, as provided. Existing law authorizes the department to assess an administrative penalty for a violation of these prohibitions and authorizes the department to seek an injunction to restrain a person or entity from violating these prohibitions, as specified. This bill would, on and after January 1, 2028, prohibit a person from distributing, selling, or offering for sale a cleaning product, dental floss, juvenile product, food packaging, or ski wax, as provided, that contains intentionally added PFAS, as defined, except for previously used products and as otherwise preempted by federal law. The bill would, on and after January 1, 2030, prohibit a person from distributing, selling, or offering for sale cookware that contains intentionally added PFAS, except for previously used products and as otherwise preempted by federal law. The bill would authorize the department, on or before January 1, 2029, to adopt regulations to carry out these provisions. (Based on 07/17/2025 text)
Position: Watch
Governance and Transparency
SB 707 (Durazo, D) Open meetings: meeting and teleconference requirements.
Status: 07/17/2025 - Assembly Rule 63 suspended. From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 6. Noes 2.) (July 16). Read second time and amended. Re-referred to Com. on APPR.
Summary: (1)Existing law, the Ralph M. Brown Act, requires, with specified exceptions, that all meetings of a legislative body, as defined, of a local agency be open and public and that all persons be permitted to attend and participate. This bill would, until January 1, 2030, require an eligible legislative body, as defined, to comply with additional meeting requirements, including that, except as specified, all open and public meetings include an opportunity for members of the public to attend via a 2-way telephonic service or a 2-way audiovisual platform, as defined, and that the eligible
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 16 Packet Pg. 20 of 117
legislative body take specified actions to encourage residents to participate in public meetings, as specified. (Based on 07/17/2025 text)
Position: Watch
Homelessness
SB 16 (Blakespear, D) Ending Street Homelessness Act.
Status: 07/10/2025 - July 16 hearing postponed by committee.
Summary: Current law requires each city, county, and city and county to revise its housing element according to a specified schedule, as provided. Current law, for the 4th and subsequent revisions of the housing element, requires the Department of Housing and Community Development to determine the existing and projected need for housing for each region, and requires the appropriate council of governments, or the department for cities and counties without a council of governments, to adopt a final regional housing need plan that allocates a share of the regional housing need to each city, county, or city and county, as provided. At least 2 years before a scheduled revision of the housing element, as specified, existing law requires each council of governments, or delegate subregion as applicable, to develop, in consultation with the department, a proposed methodology for distributing the existing and projected regional housing need to jurisdictions, as specified. Current law requires that the final allocation plan ensure that the total regional housing need, by income category, determined as specified, is maintained, and that each jurisdiction in the region receive an allocation of units for low- and very low income households. For the 7th and subsequent revisions of the housing element, current law also requires that the allocation to each region include an allocation of units for acutely low and extremely low income households. This bill, until January 1, 2032, would require the council of governments, or delegate subregion, as applicable, in developing the proposed allocation methodology that allocates each jurisdiction’s share of the regional housing
need for acutely low income housing, to count any newly constructed interim housing, as specified, as meeting the needs of acutely low income households. By imposing additional duties on local governments, this bill would impose a state-mandated local program. (Based on 06/23/2025 text)
Position: Watch
SB 692 (Arreguín, D) Vehicles: homelessness.
Status: 07/16/2025 - Read second time and amended. Re-referred to Com. on APPR.
Summary: Current law makes it unlawful for a peace officer or an unauthorized person to remove an unattended vehicle from a highway, except as provided. Current law authorizes a city, county, or city and county to adopt an ordinance establishing procedures for the abatement and removal, as public nuisances, of abandoned, wrecked, dismantled, or inoperative vehicles or parts of vehicles from private or public property. Current law requires that any ordinance for the removal of abandoned vehicles contain certain provisions, including a provision exempting vehicles under certain circumstances, and a provision providing no less than a 10-day notice of intention to abate and remove the vehicle or part thereof as a public nuisance, unless the property owner and the owner of the vehicle sign releases. Current law also exempts from the 10-day notice prior to removal provision, a vehicle meeting specified requirements, including being valued at less than $200 and being determined to be a public nuisance, if the property owner has signed a release. This bill would specifically authorize a local government to perform emergency summary abatement of vehicles creating imminent health and safety hazards. The bill would modify the exemption from prior 10-day notice of intention to abate and remove a vehicle to no longer require that both the
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 17 Packet Pg. 21 of 117
vehicle be determined to be a public nuisance and that the property owner sign a release. (Based on 07/16/2025 text)
Position: Watch
Housing and Land Use
AB 253 (Ward, D) California Residential Private Permitting Review Act: residential building permits.
Status: 07/17/2025 - Read second time and amended. Re-referred to Com. on APPR.
Summary: The State Housing Law establishes statewide construction and occupancy standards for buildings used for human habitation. Current law authorizes a county’s or city’s governing body to prescribe fees for permits, certificates, or other forms or documents required or authorized under the State Housing Law. This bill, the California Residential Private Permitting Review Act, would require a county or city to prepare a residential building permit fee schedule and post the schedule on the county’s or city’s internet website, if the county or city prescribes residential building permit fees. (Based on 07/17/2025 text)
Position: Watch
AB 592 (Gabriel, D) Business: retail food.
Status: 07/21/2025 - From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 10. Noes 0.) (July 16). Read second time and amended. Re-referred to Com. on APPR.
Summary: The Alcoholic Beverage Control Act requires the Department of Alcoholic Beverage Control to make and prescribe rules to carry out the purposes and intent of existing state constitutional provisions on the regulation of alcoholic beverages, and to enable the department to exercise the powers and perform the duties conferred upon it by the state constitution and the act, not inconsistent with any statute of this state. The act makes it unlawful for any person other than a licensee of the department to sell, manufacture, or import alcoholic beverages in this state, with exceptions. The department, pursuant to its powers and in furtherance of emergency declarations and orders of the Governor under the California Emergency Services Act regarding the spread of the COVID-19 virus, established prescribed temporary relief measures to suspend certain legal restrictions relating to, among other things, the expansion of a licensed footprint, sales of alcoholic beverages to-go, and delivery privileges. Current law authorizes the department, for a period of 365
days following the end of the state of emergency proclaimed by the Governor on March 4, 2020, in response to the COVID-19 pandemic, to permit licensees to exercise license privileges in an expanded license area authorized pursuant to a COVID-19 Temporary Catering Authorization approved in accordance with the Fourth Notice of Regulatory Relief issued by the department, as specified. Existing law makes these provisions effective only until July 1, 2026, and repeals them as of that date. This bill, instead, would make those provisions operative until January 1, 2029, repeal those provisions on that date, and make conforming changes. The bill would also prohibit the department from issuing any new COVID-19 Temporary Catering Authorizations on or after January 1, 2027. (Based on 07/21/2025 text)
Position: Watch
AB 609 (Wicks, D) California Environmental Quality Act: exemption: housing development projects.
Status: 05/20/2025 - In Senate. Read first time. To Com. on RLS. for assignment.
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 18 Packet Pg. 22 of 117
Summary: The California Environmental Quality Act (CEQA) requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment. CEQA exempts from its requirements various projects, including, but not limited to, housing projects that meet certain requirements. This bill would exempt from the requirements of CEQA a housing development project, as defined, that meets certain conditions relating to, for example, size, density, and location,
including specific requirements for any housing on the project site located within 500 feet of a freeway. The bill would require a local government, as a condition of approval for the development, to require the development proponent to complete a specified environmental assessment regarding hazardous substance releases. If a recognized environmental condition is found, the bill would require the development proponent to complete a preliminary endangerment assessment and specified mitigation based on that assessment. Because a lead agency would be required to determine whether a housing development project qualifies for this exemption, the bill would impose a state-mandated local program. (Based on 05/05/2025 text)
Position: Watch
AB 610 (Alvarez, D) Housing element: governmental constraints: disclosure statement.
Status: 07/17/2025 - Read second time and amended. Re-referred to Com. on APPR.
Summary: The Planning and Zoning Law requires a city or county to adopt a general plan for land use development that includes, among other things, a housing element. Current law, commonly referred to as the Housing Element Law, prescribes requirements for a city’s or county’s preparation of, and compliance with, its housing element, and requires the Department of Housing and Community Development to review and determine whether the housing element substantially complies with the Housing Element Law, as specified. Current law requires the housing element to include an analysis of potential and actual governmental constraints upon the maintenance,
improvement, or development of housing for all income levels, including, among others, locally adopted ordinances that directly impact the cost and supply of residential development. Current law also requires the analysis to demonstrate local efforts to remove governmental constraints that hinder the locality from meeting its share of the regional housing need. This bill would require the housing element to include, in addition to the above-described analysis, a potential and actual governmental constraints disclosure statement that contains, among other things, an identification of each new or amended potential or actual governmental constraint, or revision increasing the stringency of a governmental constraint, that was adopted after the due date of the previous housing element and before submittal of the current draft housing element to the department. By imposing new requirements upon local governments submitting a housing element, the bill would impose a state-mandated local program. (Based on 07/17/2025 text)
Position: Watch
AB 628 (McKinnor, D) Hiring of real property: dwellings: untenantability.
Status: 06/26/2025 - Read second time. Ordered to third reading.
Summary: Current law requires that any building with a dwelling unit maintain certain characteristics in order to be tenantable, including the maintenance of adequate heating and hot water systems that conform to the standard of quality set by applicable law. This bill would add a
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 19 Packet Pg. 23 of 117
stove and refrigerator that are maintained in good working order and are capable of safely generating heat for cooking purposes and capable of safely storing food, respectively, to the list of characteristics required for the dwelling unit to be tenantable for leases entered into, amended, or extended on or after January 1, 2026. The bill would require a landlord to repair or replace a stove or refrigerator that is subject to recall by the manufacturer or a public entity within 30 days of receiving notice that the stove or refrigerator is subject to recall. (Based on 06/12/2025 text)
AB 650 (Papan, D) Planning and zoning: housing element: regional housing needs allocation.
Status: 07/14/2025 - In committee: Referred to APPR. suspense file.
Summary: Current law requires a public agency to administer its programs and activities relating to housing and community development in a manner to affirmatively further fair housing, and take no action that is materially inconsistent with its obligation to affirmatively further fair housing. Current law defines “affirmatively furthering fair housing,” as provided. The Planning and Zoning Law requires that a housing element include, among other things, a program that sets forth a schedule of actions during the planning period. Current law requires the Department of Housing and Community Development to develop a standardized reporting format for programs and actions taken pursuant to the requirement to affirmatively further fair housing. This bill would require the department to develop the above-described standardized reporting format on or before December 31, 2026. (Based on 04/24/2025 text)
Position: Support
AB 660 (Wilson, D) Planning and Zoning Law: postentitlement phase permits: Housing Accountability Act.
Status: 07/17/2025 - Read second time and amended. Re-referred to Com. on APPR.
Summary: The Planning and Zoning Law requires a local agency, as defined, to compile one or more lists that specify in detail the information required from any applicant for a postentitlement
phase permit, as defined. Current law also establishes time limits for completing reviews regarding whether an application for a postentitlement phase permit is complete and compliant, and whether to approve or deny an application. If a local agency finds that a complete application is noncompliant, existing law requires the local agency to provide the applicant with a list of items that are noncompliant and a description of how the application can be remedied by the applicant within specified time limits. Current law requires the time limits to be tolled, if the local agency requires review of the application by an outside entity, until the outside entity completes the review and returns the application to the local agency, as specified. This bill would prohibit the local agency from requiring or requesting more than 2 plan check and specification reviews in connection with an application for a building permit, as part of its review, except as specified. The bill would authorize a local agency to deny an application that is not compliant with the permit standards following 2 plan check and specification reviews. The bill would also authorize an applicant to request additional submittals of applications that are not compliant with the permit standards. The bill, if a local agency
finds that a complete application is noncompliant, would prohibit a local agency from requesting or requiring any action or inaction as a result of a building inspection undertaken to assess compliance with the applicable building permit standards that would represent a deviation from a previously approved building plan or similar approval for the building permit, except as specified. (Based on 07/17/2025 text)
Position: Watch
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 20 Packet Pg. 24 of 117
AB 712 (Wicks, D) Housing reform laws: enforcement actions: fines and penalties.
Status: 07/16/2025 - From committee: Do pass and re-refer to Com. on APPR. (Ayes 13. Noes 0.) (July 15). Re-referred to Com. on APPR.
Summary: Current law within the Planning and Zoning Law describes various reforms and incentives enacted by the Legislature to facilitate and expedite the construction of affordable housing. Current law within the Planning and Zoning Law, in certain civil actions or proceedings against a public entity that has issued specified approvals for a housing development, authorizes a
court to award all reasonably incurred costs of suit to a prevailing public entity or nonprofit housing corporation that is a real party in interest and the permit applicant of the low- or moderate-income housing if the court makes specified findings. This bill, where the applicant for a housing development is a prevailing party in an action brought by the applicant to enforce the public agency’s compliance with a housing reform law as applied to the applicant’s housing development project, would entitle an applicant for a housing development project to reasonable attorney’s fees and costs and would require a court to impose fines on a local agency, as specified. The bill would extend any period of limitation for actions under any state law for a period of 60 days beginning on the date the applicant provides written notice to the local agency indicating its intent to commence an action. The bill would prohibit a public agency from requiring the applicant to indemnify, defend, or hold harmless the public agency in any action alleging the public agency violated the applicant’s rights or deprived the applicant of the benefits or protection provide by a housing reform law. (Based on 07/03/2025 text)
Position: Watch
AB 736 (Wicks, D) The Affordable Housing Bond Act of 2026.
Status: 06/04/2025 - In Senate. Read first time. To Com. on RLS. for assignment.
Summary: Would enact the Affordable Housing Bond Act of 2026, which, if adopted, would authorize the issuance of bonds in the amount of $10,000,000,000 pursuant to the State General
Obligation Bond Law. Proceeds from the sale of these bonds would be used to finance programs to fund affordable rental housing and home ownership programs, including, among others, the Multifamily Housing Program, the CalHome Program, and the Joe Serna, Jr. Farmworker Housing Grant Program. (Based on 04/10/2025 text)
Position: Support if Amended
AB 782 (Quirk-Silva, D) Subdivisions: security.
Status: 07/16/2025 - Read second time and amended. Re-referred to Com. on APPR.
Summary: The Subdivision Map Act requires prescribed security from a developer if the act or a local ordinance authorizes or requires the furnishing of security in connection with the performance of any act or agreement. Current law requires the Real Estate Commissioner to make an examination of any subdivision, and to, unless there are grounds for denial, issue to the subdivider a public report authorizing the sale or lease of the lots or parcels within the subdivision. Current law specifies the grounds for denial, including, among other things, the inability to demonstrate that adequate financial arrangements have been made for all offsite improvements included in the offering or the inability to demonstrate that adequate financial arrangements have been made for any community, recreational, or other facilities included in the offering. This bill would prohibit the
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 21 Packet Pg. 25 of 117
Real Estate Commissioner, in issuing a public report for a residential development or project, from requiring the furnishing of a security in connection with the performance of any act or agreement related to an improvement if the Real Estate Commissioner determines that security sufficient to protect the interests of purchasers, owners, and lessees, as necessary, has been furnished to a local agency for the same improvement pursuant to the provisions above requiring security under the Subdivision Map Act. (Based on 07/16/2025 text)
Position: Watch
AB 818 (Ávila Farías, D) Permit Streamlining Act: local emergencies.
Status: 07/17/2025 - Read second time and amended. Re-referred to Com. on APPR.
Summary: The Permit Streamlining Act requires a public agency to determine whether an application for a development project is complete within specified time periods, as specified. The act requires a public agency that is the lead agency for a development project to approve or disapprove that project within specified time periods. The California Emergency Services Act, among other things, authorizes the governing body of a city, county, or city and county to proclaim a local emergency under certain circumstances, as specified, and grants political subdivisions various powers and authorities in periods of local emergency. This bill would exempt projects related to the rebuilding or repair of an affected property, as defined, from specified requirements for solar panel installations, as provided. The bill would require a city, county, or city and county to approve an or deny a complete application, within 10 business days of receipt of the application, for a building permit or an equivalent permit for any of the specified structures intended to be used by a person until the rebuilding or repair of an affected property is complete. By imposing new duties on local agencies, this bill would impose a state-mandated local program. (Based on 07/17/2025 text)
Position: Watch
AB 893 (Fong, D) Housing development projects: objective standards: campus development zone.
Status: 07/16/2025 - From committee: Do pass and re-refer to Com. on APPR. (Ayes 5. Noes 2.) (July 16). Re-referred to Com. on APPR.
Summary: The Affordable Housing and High Road Jobs Act of 2022 (act), until January 1, 2033, authorizes a development proponent to submit an application for an affordable housing development or a mixed-income housing development that meets specified objective standards and affordability and site criteria, including being located within a zone where office, retail, or parking are a principally permitted use. The act makes a development that meets those objective standards and affordability and site criteria a use by right and subject to one of 2 streamlined, ministerial review processes depending on, among other things, the affordability requirements applicable to the project. The act requires the Department of Housing and Community Development to undertake at least 2 studies, one completed on or before January 1, 2027, and one completed on or before January 1, 2031, on the outcomes of the act. This bill would provide that, for purposes of determining whether a property or site satisfies the criteria, objective development standards, or
other requirements for receiving streamlined, ministerial review under the act, a local government’s review of the property or site is limited to the area described in the application for streamlined, ministerial review and does not include, unless expressly stated otherwise, other contiguous or noncontiguous areas even if under the ownership or control of the project proponent. The bill would provide that easements for public right-of-way, public or private utilities, or other public improvements in, under, or over the property shall not make the property ineligible to receive streamlined, ministerial review for either affordable or mixed-income housing developments. (Based on 07/03/2025 text)
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 22 Packet Pg. 26 of 117
Position: Watch
AB 1007 (Rubio, Blanca, D) Land use: development project review.
Status: 07/14/2025 - In committee: Referred to APPR. suspense file.
Summary: The Permit Streamlining Act requires a public agency that is the lead agency for a development project to approve or disapprove a development project within specified time periods. The act requires a public agency, other than the California Coastal Commission, that is a
responsible agency for specified development projects to approve or disapprove the project within 90 days of the date on which the lead agency has approved the project or within 90 days of the date on which the completed application has been received and accepted as complete by the lead agency, whichever is longer. This bill would reduce the time period that a responsible agency is required to approve or disapprove a project, as described above, from 90 days to 45 days. By increasing the duties of local officials, this bill would impose a state-mandated local program. (Based on 03/24/2025 text)
Position: Watch
AB 1050 (Schultz, D) Unlawfully restrictive covenants: housing developments: reciprocal easement agreements.
Status: 07/16/2025 - From committee: Do pass and re-refer to Com. on APPR. (Ayes 8. Noes 2.) (July 15). Re-referred to Com. on APPR.
Summary: Current law provides that specified recorded covenants, conditions, restrictions, or private limits on the use of land contained in specified instruments affecting the transfer or sale of any interest in real property are not enforceable against the owner of an affordable housing development, as defined, if an approved restrictive covenant affordable housing modification document has been recorded in the public record, as provided. As part of this process, current law requires the owner to submit to the county recorder a copy of the original restrictive covenant and
any documents the owner believes necessary to establish that the property qualifies as an affordable housing development and requires the county counsel to determine, among other things, if the property qualifies as an affordable housing development and if a modification document may be recorded. Current law provides that these provisions do not authorize any development that is not otherwise consistent with local general plans, zoning ordinances, and any applicable specific plan. This bill would extend those provisions to any housing development that is owned or controlled by an entity or individual that has submitted a development project application to redevelop an existing commercial property, and the development project includes residential uses permitted by state housing laws or local land use and zoning regulations and would make various conforming changes. The bill would additionally make these provisions applicable to covenants, conditions, restrictions, or private limits contained in a reciprocal easement agreement, as provided. (Based on 07/07/2025 text)
Position: Watch
AB 1206 (Harabedian, D) Single-family and multifamily housing units: preapproved plans.
Status: 07/17/2025 - Read second time and amended. Re-referred to Com. on APPR.
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 23 Packet Pg. 27 of 117
Summary: The Planning and Zoning Law provides for the adoption and administration of zoning laws, ordinances, rules and regulations by counties and cities and the implementation of those general plans as may be in effect in those counties or cities. In that regard, current law requires each local agency, by January 1, 2025, to develop a program for the preapproval of accessory dwelling unit plans. This bill would require each local agency, as defined, to develop a program for the preapproval of single-family and multifamily residential housing plans, whereby the local agency accepts single-family and multifamily plan submissions for preapproval and approves or denies the preapproval applications, as specified. The bill would require a large jurisdiction, as defined, to develop this program by July 1, 2026, and a small jurisdiction, as defined, to develop a program by January 1, 2028. The bill would authorize a local agency to charge a fee to an applicant for the preapproval of a single-family or multifamily residential housing plan, as specified. The bill would require the local agency to post preapproved single-family or multifamily residential housing plans and the contact information of the applicant on the local agency’s internet website. The bill would require an application for preapproval to include a statement by the applicant that the applicant has sufficient authority, license, or ownership interest in the plan to submit the plan for preapproval and, if approved, posted as described above. This bill would prohibit the preapproval program from applying to single-family or multifamily residential housing plans intended for use in certain communities and developments, as specified. The bill would require a local agency to either approve or deny an application for a single-family or multifamily residential housing unit, both as defined, within 30 days if the lot meets certain conditions and the application utilizes either a single-family or multifamily residential housing unit plan preapproved within the current triennial California Building Standards Code rulemaking cycle or a plan that is identical to a plan used in an application for a single-family or multifamily residential housing unit approved by the local agency within the current triennial California Building Standards Code rulemaking cycle. (Based on 07/17/2025 text)
Position: Watch
AB 1276 (Carrillo, D) Housing developments: ordinances, policies, and standards.
Status: 07/14/2025 - Read second time and amended. Re-referred to Com. on APPR.
Summary: The Housing Accountability Act prohibits a local agency from disapproving, or conditioning approval in a manner that renders infeasible, a housing development project, as defined for purposes of the act, for very low, low-, or moderate-income households or an emergency shelter unless the local agency makes specified written findings based on a preponderance of the evidence in the record. The act provides that for its purposes, a housing development project or emergency shelter shall be deemed consistent, compliant, and in conformity with an applicable plan, program, policy, ordinance, standard, requirement, or other similar provision if there is substantial evidence that would allow a reasonable person to conclude that the housing development project or emergency shelter is consistent, compliant, or in conformity. The act requires a housing development project to be subject only to the ordinances, policies, and standards adopted and in effect when a preliminary application, as specified, was submitted, except as otherwise provided. The act defines “ordinances, policies, and standards” to include general plan, community plan, specific plan, zoning, design review standards and criteria, subdivision standards and criteria, and any other rules, regulations, requirements, and policies of a local agency, as defined, including those relating to development impact fees, capacity or connection fees or charges, permit or processing fees, and other exactions. This bill would include in the definition of “ordinances, policies, and standards” materials requirements, postentitlement permit standards, and any rules, regulations, determinations, and other requirements adopted or implemented by other public
agencies, as defined (Based on 07/14/2025 text)
Position: Watch
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 24 Packet Pg. 28 of 117
AB 1308 (Hoover, R) Residential building permits: inspections: Housing Accountability Act.
Status: 07/16/2025 - From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 10. Noes 0.) (July 15). Re-referred to Com. on APPR.
Summary: The State Housing Law establishes statewide construction and occupancy standards for buildings used for human habitation. Current law requires a county’s or city’s building department to enforce the State Housing Law and the California Building Standards Code, and other rules and
regulations promulgated pursuant to the State Housing Law pertaining to standards for buildings used for human habitation. Current law requires a county or city, upon the applicant’s request, to contract with or employ temporarily a private entity or person to check the plans and specifications submitted with an application for a residential building permit to comply with the State Housing Law or local ordinances adopted pursuant to the State Housing Law, when the building department takes more than 30 days, as specified, to complete the plan check. Current law authorizes an enforcement agency to inspect any building to secure compliance with the State Housing Law and the California Building Standards Code, and other rules and regulations promulgated pursuant to the State Housing Law. This bill would require the building department to conduct an inspection of the permitted work for specified new residential constructions of a building and residential additions to an existing building within 10 business days of receiving a notice of the completion of the permitted work authorized by a building permit issued for those projects. (Based on 07/10/2025 text)
Position: Watch
SB 79 (Wiener, D) Housing development: transit-oriented development.
Status: 07/17/2025 - Assembly Rule 63 suspended. From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 6. Noes 1.) (July 16). Read second time and amended. Re-referred to Com. on APPR.
Summary: The Planning and Zoning Law requires each county and city to adopt a comprehensive,
long-term general plan for the physical development of the county or city, and specified land outside its boundaries, that contains certain mandatory elements, including a housing element. Current law requires that the housing element consist of an identification and analysis of existing and projected housing needs and a statement of goals, policies, quantified objectives, financial resources, and scheduled programs for the preservation, improvement, and development of housing, as specified. Current law requires that the housing element include, among other things, an assessment of housing needs and an inventory of resources and constraints that are relevant to the meeting of these needs, including an inventory of land suitable for residential development, as provided. Current law, for the 4th and subsequent revisions of the housing element, requires the Department of Housing and Community Development to determine the existing and projected need for housing for each region, as specified, and requires the appropriate council of local governments, or the department for cities and counties without a council of governments, to adopt a final regional housing need plan that allocates a share of the regional housing need to each locality in the region.
Existing law requires each local government to revise its housing element in accordance with a specified schedule. This bill would require that a housing development project, as defined, within a specified distance of a transit-oriented development (TOD) stop, as defined, be an allowed use as a transit-oriented housing development on any site zoned for residential, mixed, or commercial development, if the development complies with applicable requirements, as specified. Among these requirements, the bill would establish requirements concerning height limits, density, and floor area ratio in accordance with a development’s proximity to specified tiers of TOD stops, as provided. The bill would provide that, for the purposes of the Housing Accountability Act, a proposed development consistent with the applicable standards of these provisions shall be deemed consistent, compliant, and in conformity with prescribed requirements, as specified. (Based on 07/17/2025 text)
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 25 Packet Pg. 29 of 117
Position: Oppose
SB 328 (Grayson, D) Hazardous waste generation and handling fees: Department of Toxic Substances Control oversight responses: housing development projects.
Status: 07/15/2025 - July 14 set for first hearing. Placed on REV. & TAX. suspense file. From committee: Do pass and re-refer to Com. on APPR. (Ayes 7. Noes 0.) (July 14). Re-referred to Com. on APPR.
Summary: The hazardous waste control laws require the Department of Toxic Substances Control to regulate the handling and management of hazardous waste and hazardous materials. Current law, which is part of the Planning and Zoning Law, establishes time limits for a local agency, as defined, to complete reviews regarding whether to approve or deny an application, as specified, and makes any failure to meet these time limits a disapproval of the housing development project and a violation of specified law. Upon the department receiving a request for a housing development project seeking oversight of investigation, characterization, and remediation activities, this bill would require the department to provide written notice to the requestor within specified timelines regarding subsequent actions in the review process, as specified. The bill would require, for a housing development with 25 units or fewer, the department to provide the written notice within 60 business days of receiving the request. The bill would require, for a housing development with 26 units or more, the department to provide the written notice within 120 business days of receiving the request. The bill would make these provisions operative on July 1, 2028. (Based on 06/25/2025 text)
Position: Watch
SB 417 (Cabaldon, D) The Affordable Housing Bond Act of 2026.
Status: 02/19/2025 - From printer. May be acted upon on or after March 21.
Summary: Would enact the Affordable Housing Bond Act of 2026, which, if adopted, would
authorize the issuance of bonds in the amount of $10,000,000,000 pursuant to the State General Obligation Bond Law. Proceeds from the sale of these bonds would be used to finance programs to fund affordable rental housing and home ownership programs, including, among others, the Multifamily Housing Program, the CalHome Program, and the Joe Serna, Jr. Farmworker Housing Grant Program. (Based on 02/18/2025 text)
Position: Support if Amended
SB 489 (Arreguín, D) Local agency formation commissions: written policies and procedures: Permit Streamlining Act: housing development projects.
Status: 07/17/2025 - Read second time and amended. Re-referred to Com. on APPR.
Summary: The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 governs the procedures for the formation and change of organization of cities and special districts and establishes a local agency formation commission in each county consisting of members appointed as provided. The act expresses the intent of the Legislature that each local agency formation commission, by January 1, 2002, establish written policies and procedures and exercise its powers in a way that encourages and provides planned, well-ordered, efficient urban development patterns,
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 26 Packet Pg. 30 of 117
as specified. The act requires these written policies and procedures to include forms to be used for various submittals to the commission, as provided. The act requires each commission to provide access to notices and other information to the public on an internet website, as specified, including notice of all public hearings and commission meetings. This bill would require that each local agency formation commission establish the written policies and procedures described above. The bill would require that the written policies and procedures include any forms necessary for a complete application to the commission concerning a proposed change of organization or reorganization. (Based on 07/17/2025 text)
Position: Watch
SB 786 (Arreguín, D) Planning and zoning: general plan: judicial challenges.
Status: 07/16/2025 - Coauthors revised. From committee: Do pass and re-refer to Com. on APPR. (Ayes 9. Noes 3.) (July 15). Re-referred to Com. on APPR.
Summary: The Planning and Zoning Law requires each county and city to adopt a comprehensive, long-term general plan for the physical development of the county or city, and of certain land outside its boundaries, and requires the general plan to contain specified mandatory elements. Current law specifies that these provisions generally do not apply to a charter city but requires a charter city to adopt a general plan that contains the mandatory elements, among other things. Current law prescribes a process to challenge the validity of a general plan. Current law requires a petitioner to
request a hearing or trial, as specified. Current law requires a court to set a date for the hearing or trial to be heard no later than 120 days after the filing of the request, as specified. Current law authorizes a court to continue for a reasonable time the date of the hearing or trial upon written motion and finding of good cause. Current law requires a court to grant the petitioner temporary relief if the court grants a continuance to a respondent, as specified. This bill would apply to the above-described process to challenge the validity of a general plan to a charter city and state that this is declaratory of current law. The bill would limit the period for which a court may continue a trial or hearing, as described above, to no more than 60 days and would additionally authorize a court to grant a continuance on the court’s own motion. The bill would extend the requirement that a court grant temporary relief, as described above, in any instance in which the court orders a continuance, rather than only if the court grants a continuance to a respondent. (Based on 05/01/2025 text)
Position: Watch
Revenue and Taxation
SB 346 (Durazo, D) Local agencies: transient occupancy taxes: short-term rental facilitator.
Status: 07/17/2025 - Read second time. Ordered to third reading.
Summary: Current law authorizes a local authority, by ordinance or resolution, to regulate the occupancy of a room or rooms, or other living space, in a hotel, inn, tourist home or house, motel, or other lodging for a period of less than 30 days. This bill would authorize a local agency, defined to mean a city, county, or city and county, to enact an ordinance to require a short-term rental facilitator, as defined, to report, in the form and manner prescribed by the local agency, the physical address, including 9-digit ZIP Code, of each short-term rental, as defined, during the reporting period. The bill would also authorize a local agency to request additional information, as provided, when the physical address is not sufficient for the local agency to identify a specific short-term
rental. The bill would authorize the local agency to impose an administrative fine or penalty for failure to file the report, and would authorize the local agency to initiate an audit of a short-term rental facilitator, as described. The bill would require a short-term rental facilitator, in a jurisdiction
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 27 Packet Pg. 31 of 117
that has adopted an ordinance, to include in the listing of a short-term rental any applicable local license number associated with the short-term rental and any transient occupancy tax certification issued by a local agency. (Based on 07/07/2025 text)
Position: Support
SB 358 (Becker, D) Mitigation Fee Act: mitigating vehicular traffic impacts.
Status: 07/07/2025 - Read second time and amended. Re-referred to Com. on APPR.
Summary: The Mitigation Fee Act imposes various requirements with respect to the establishment, increase, or imposition of a fee by a local agency as a condition of approval of a development project. Current law requires a local agency that imposes a fee on a housing development for the purpose of mitigating vehicular traffic impacts to set the rate for that fee, if the housing development satisfies all of certain prescribed characteristics, to reflect a lower rate of automobile trip generation associated with such housing developments in comparison with housing developments without the prescribed characteristics, unless the local agency adopts findings after a public hearing establishing that the housing development, even with those characteristics, would not generate fewer automobile trips than a housing development without those characteristics. This bill would require those findings to be supported by substantial evidence in the record before or as part of the housing development project approval process. (Based on 07/07/2025 text)
Position: Watch
Transportation, Infrastructure, and Public Works
SB 63 (Wiener, D) San Francisco Bay area: local revenue measure: transportation funding.
Status: 07/15/2025 - From committee: Do pass and re-refer to Com. on APPR. (Ayes 4. Noes 2.) (July 14). Re-referred to Com. on APPR.
Summary: Current law creates the Metropolitan Transportation Commission as a local area planning agency for the 9-county San Francisco Bay area with comprehensive regional transportation planning and other related responsibilities. Current law creates various transit districts located in the San Francisco Bay area, with specified powers and duties relating to providing public transit services. This bill would establish the Transportation Revenue Measure District with jurisdiction extending throughout the boundaries of the Counties of Alameda and Contra Costa and the City and County of San Francisco and would require the district to be governed by the same
board that governs the commission, thereby imposing a state-mandated local program. The bill would authorize a retail transactions and use tax applicable to the entire district to be imposed by the board of the district or by a qualified voter initiative for a duration of 10 to 15 years, inclusive, and generally in an amount of 0.5%, subject to voter approval at the November 3, 2026, statewide general election. (Based on 07/09/2025 text)
Position: Watch
SB 71 (Wiener, D) California Environmental Quality Act: exemptions: environmental leadership transit projects.
Status: 07/17/2025 - Assembly Rule 63 suspended. From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 12. Noes 0.) (July 14). Read second time and amended. Re-referred to Com. on APPR.
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 28 Packet Pg. 32 of 117
Summary: The California Environmental Quality Act (CEQA) requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment. CEQA, until January 1, 2030, exempts from its requirements active transportation plans, pedestrian plans, or bicycle transportation plans for the restriping of streets and highways, bicycle parking and storage, signal timing to improve street and highway intersection operations, and the related signage for bicycles,
pedestrians, and vehicles. This bill would extend the operation of the above-mentioned exemption indefinitely. The bill would also exempt a transit comprehensive operational analysis, as defined, a transit route readjustment, or other transit agency route addition, elimination, or modification, from the requirements of CEQA. Because a lead agency would be required to determine whether a plan qualifies for this exemption, the bill would impose a state-mandated local program. (Based on 07/17/2025 text)
Position: Watch
SB 445 (Wiener, D) High-speed rail: third-party agreements, permits, and approvals: regulations.
Status: 07/17/2025 - Assembly Rule 63 suspended. From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 10. Noes 4.) (July 16). Read second time and amended. Re-referred to Com. on APPR.
Summary: Current law creates the High-Speed Rail Authority Office of the Inspector General (office) and authorizes the High-Speed Rail Authority Inspector General (inspector general) to initiate an audit or review regarding oversight related to delivery of the high-speed rail project undertaken by the authority and the selection and oversight of contractors related to that project. Current law requires the inspector general to submit annual reports to the Legislature and Governor regarding its findings. This bill would require the authority, on or before July 1, 2026, to develop and adopt internal rules, as defined, setting forth standards and timelines for the authority to engage utilities to ensure coordination and cooperation in relocating utility infrastructure or otherwise resolving utility conflicts affecting the delivery of the high-speed rail project. The bill would require the authority to ensure that the internal rules, among other things, identify the circumstances under which the authority would be required seek to enter into a cooperative agreement with a utility that, where relevant, identifies who is responsible for specific utility relocations, as specified. (Based on 07/17/2025 text)
Position: Watch
Item 1
Attachment B - Priority Bill
Matrix
Item 1: Staff Report Pg. 29 Packet Pg. 33 of 117
7
8
6
9
Policy & Services Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: City Auditor
Meeting Date: August 12, 2025
Report #:2507-5006
TITLE
Office of the City Auditor Presentation of the Purchasing Card Audit Report
RECOMMENDATION
The Office of the City Auditor recommends the Policy & Services Committee accept the results
of the Purchasing Card Audit Report.
BACKGROUND
Baker Tilly Advisory, in its capacity serving as the Office of the City Auditor (OCA), performed a
citywide risk assessment that evaluated a wide range of risk areas, including strategic, financial,
operational, compliance, technological, and reputational risks. The purpose of the assessment
was to identify and prioritize risks to develop the annual audit plan.
During the FY23 risk assessment, the OCA identified purchasing card processes as a potential
area of risk and was originally included in the FY24 Audit Plan but was deferred to prioritize
other audit projects. The audit was reintroduced and included as part the FY25 Audit Plan.
ANALYSIS
The objective of the Purchasing Card (P-Card) Audit was to:
Determine whether P-Cards are used appropriately in compliance with the City’s policies
and pertinent laws and regulations.
Evaluate the administration of the P-Card Program for adequate internal controls to
safeguard the City from fraud, waste, and abuse.
The City’s P-Card Program is intended to streamline and simplify the Purchasing and Accounts
Payable (AP) functions by eliminating steps for low dollar purchases below $10,000. The
Program is administered by the Administrative Services Department (ASD), but P-cards are used
by all City departments. The P-Card is a tool that can reduce transaction costs, facilitate timely
acquisition of materials and supplies, automate data flow for accounting purposes and offer
Item 2
Item 2 Staff Report
Item 2: Staff Report Pg. 1 Packet Pg. 34 of 117
7
8
6
9
flexible controls to help ensure proper usage.
OCA assessed P-Card transactions from FY2023 through the first 6 months of FY2025,
interviewed key program administrative staff and users, analyzed policies, procedures and
internal controls governing the program, and assessed the overall efficiency and effectiveness
of the program’s oversight functions, as well as, the program itself. Audit findings and
recommendations focused on the following areas for improvement:
While the City’s P-Card Program demonstrates strong internal controls and sampled
purchases are in line with procurement policies, user compliance with program policies
and procedures could be improved.
Some P-Card Program oversight and administrative functions are not consistently
completed and documented. Also, more efficient review processes could save staff
time.
OCA made an additional observation that the City may be able to increase operational
efficiencies and save staff time by increasing P-Card spending limits which have not
been updated since 2016. As this observation is outside of ASD’s direct control it is not a
finding since it would most likely require amending the municipal code to increase the
maximum threshold at which designated employees are authorized to make purchases
to $15,000 from $10,0001.
The attached report summarizes OCA’s analysis, audit findings, and recommendations.
FISCAL/RESOURCE IMPACT
The timeline and resource needs for implementation of management’s corrective action plans
are identified by management within the attached report.
STAKEHOLDER ENGAGEMENT
The OCA worked with and would like to thank the Administrative Services Department for their
assistance in conducting this audit. In particular, we would like to thank the Purchasing Card
Program and Accounts Payable staff for their thorough review and collaboration on this audit.
ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by CEQA because contracting for auditing
services is an organizational or administrative activity that will not result in direct or indirect
physical changes in the environment. CEQA Guidelines section 15378(b)(5).
ATTACHMENTS
1 Municipal Code Section 2.30.230 Designated Employee Purchases of $10,000 or Less
https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-61903
Item 2
Item 2 Staff Report
Item 2: Staff Report Pg. 2 Packet Pg. 35 of 117
7
8
6
9
Attachment A: Purchasing Card Program Audit
APPROVED BY:
Kate Murdock, City Auditor
Item 2
Item 2 Staff Report
Item 2: Staff Report Pg. 3 Packet Pg. 36 of 117
1
+
July 29, 2025
City of Palo Alto
Office of the City Auditor
Purchasing Card Program Audit
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 4 Packet Pg. 37 of 117
Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structure and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are
not licensed CPA firms.
Contents
Executive Summary ............................................................................................................................ 1
Purpose of the Audit ........................................................................................................................... 1
Report Highlights ................................................................................................................................ 1
Introduction ........................................................................................................................................ 4
Detailed Analysis ................................................................................................................................. 6
Audit Results ....................................................................................................................................... 9
Appendix A: ....................................................................................................................................... 22
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 5 Packet Pg. 38 of 117
1
Executive Summary
Purpose of the Audit
Baker Tilly Advisory Group, LP (Baker Tilly), in its capacity serving as the Office of the City Auditor
(OCA) for the City of Palo Alto (the City), conducted a Purchasing Card (P-Card) Program Audit
based on approved Task Order 4.29 as part of the City’s FY25 Audit Plan. The objective of this audit
was to:
• Determine whether P-Cards are used appropriately in compliance with the City’s policies and
pertinent laws and regulations.
• Evaluate the administration of the P-Card Program for adequate internal controls to safeguard
the City from fraud, waste, and abuse.
Report Highlights
Finding 1: (Page 9) Overall, the City's P-Card program demonstrates strong internal controls and adherence to procurement policies, however, user compliance with policy requirements could be improved. The OCA confirmed that all P-Card expenses analyzed complied with the "General
Guidance for Use" section of the P-Card Guidebook (Guidebook), ensuring purchases were not personal and directly supported City operations. However, OCA noted that some P-Card purchases were not documented as required by City
policy and could not confirm timeliness of approver review in the system due to system reporting limitations. The OCA noted that while the City does have a Guidebook and training videos, the City does not have an established, ongoing training program for P-Card users. However, prior to 2020 and staffing reductions due to the COVID pandemic, staff stated that in-person trainings were held monthly. Administrative staff and department leaders agree that regular, recurring formal training is important and will help improve compliance with program requirements and are currently working to formalize training. Key Recommendations
To further strengthen compliance with P-Card program guidelines, we recommend that management enhance cardholder and approver training on specific documentation requirements.
We also recommend exploring system enhancements for approval timestamps by collaborating with the City’s P-Card system vendor, to explore adding timestamp
functionality to the system for approver actions and automating system notifications of non-compliance to users.
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 6 Packet Pg. 39 of 117
2
EXECUTIVE SUMMARY
Management should consider the merits of implementing clearly defined, tiered consequences for P-Card policy non-adherence vs. the cost of implementing such measures.
Finding 2: (Page 14)
Some P-Card Program oversight and administrative functions are not consistently completed and documented; more efficient review processes could save staff time.
The OCA noted three areas for improvement in program oversight and
administration: the post-audit process, tracking and documenting P-Card misuse, and documenting approved exceptions to P-Card spending limits.
The OCA noted that the post-audit process is not always completed due to staffing shortages, and the process can be overly time-consuming. In addition, Accounts Payable's (AP) post-audit of P-Card transactions focuses on all software/hardware
purchases and transactions over $1,000. Approximately 88% of transactions are not reviewed which may limit the effectiveness of the post-audit activity to identify areas of concern. A statistically significant sampling process, encompassing all transaction sizes, may provide a more accurate and complete picture of compliance while also taking less staff time. AP notifies relevant departments and P-Card administrators of discrepancies like missing documentation or policy violations, with common infractions including
purchase splitting and unauthorized acquisitions. However, the current manual tracking system for P-Card misuse is inconsistent and incomplete, lacking specific dates, categorized infraction types, and documented resolutions, which hinders
effective policy enforcement and the identification of misuse trends. Finally, the City's process for documenting P-Card spending limit increases, which
relies on a "P-Card Credit Limit Request Form," lacks formal documentation for different types of exceptions to purchase limits and the OCA found some instances where evidence of approvals could not be located.
Key Recommendations
To strengthen the P-Card internal control environment and potentially realize cost savings through a more efficient post-audit process, we recommend that AP
consider adopting a multi-faceted strategy centered on consistent operations and statistically valid sampling. This means shifting from the current review methods to a statistically random sampling methodology, with the precise sample size
calculated monthly to ensure findings accurately represent all transactions. We recommend that the P-Card Administrator ensure all instances of misuse are formally and comprehensively tracked including the type of infraction, infraction date, and resulting resolution. We recommend formalizing and standardizing the P-Card limit exception process. The "P-Card Program Credit Limit Request Form" should be revised to include
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 7 Packet Pg. 40 of 117
3
EXECUTIVE SUMMARY
fields for all types of card limit exceptions, ensuring consistent documentation of the rationale and approver concurrence.
Additional Observation: (Page 18)
As part of our assessment, we also looked at the overall objectives of the P-Card Program to assess its effectiveness and efficiency in aiding departmental staff to procure items. We identified potential cost savings the City could achieve by raising
the P-Card transaction limits versus continuing to use purchase orders to procure items with certain dollar thresholds.
The City's current procurement procedures, particularly for lower-value transactions exceeding the micro-purchase threshold, create significant administrative burdens and consume substantial staff time due to council approval and solicitation
requirements. This inefficiency is exacerbated by an unchanged P-Card limit since 2016, despite inflation. Raising the P-Card limit, potentially aligning with the anticipated federal micro-purchase threshold increase to $15,000, could save thousands of staff hours currently spent processing purchase orders within the $10,000 to $15,000 range. Such a change could potentially streamline operations, reduce incentives for purchase splitting, and prevent delays in acquiring essential goods and services, reallocating resources to more strategic initiatives.
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 8 Packet Pg. 41 of 117
4
Introduction
Objective Determine whether P-Cards are used appropriately in compliance with the City’s policies, pertinent laws, regulations and evaluate the administration of the P-
Card Program for adequate internal controls to safeguard the City from fraud, waste, and abuse. Background The City’s P-Card Program is intended to streamline and simplify the Purchasing and AP functions by eliminating steps for low dollar purchases below $10,000. The P-Card is a tool
that reduces transaction costs, facilitates timely acquisition of materials and supplies, automates data flow for accounting purposes and offers flexible controls to help ensure proper usage. Managed by a designated Agency
Program Administrator in the Purchasing Department, the program provides designated employees with City-issued credit cards to facilitate timely and cost-effective purchases, reducing the administrative burden associated with traditional purchase orders. Each cardholder is assigned a monthly credit limit of $15,000 and is required to follow established purchasing policies and procedures, including documentation, reconciliation, and supervisory approval of transactions. The program aims to
improve operational efficiency while maintaining strong internal controls to ensure responsible spending of public funds.
The P-Card program is governed by the City’s Procurement Card Guidebook. This document outlines roles and responsibilities, allowable and restricted purchases, and monitoring requirements. Regular oversight and audits are key to
ensuring the program’s integrity and alignment with the City’s financial and ethical standards.
Scope The OCA obtained purchase card transactions from FY 2023 to FY 2024 and assessed P-Card transaction approvals and internal controls for managing the P-Card Program across all applicable departments.
Methodology To achieve the audit objectives, the OCA performed the following procedures:
• Interviewed the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to the P-Card Program.
• Analyzed policies and procedures as well as legislative and regulatory requirements to identify criteria to evaluate control design and effectiveness.
• Judgmentally selected a sample of P-Card users, transactions, and misuse log from FY2023, FY2024, and the first half of FY2025 to determine if P-Card use is in compliance with pertinent laws and
regulations, City policies, and procedures, if the P-Card Program is
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 9 Packet Pg. 42 of 117
5
INTRODUCTION
1 Government auditing standards require an external peer review at least once every three (3) years. The last peer review of the Palo Alto
Office of the City Auditor was conducted in 2017. The Palo Alto City Council approved a contract with Baker Tilly U.S, LLP for internal audit services for October 2020 through June 2022 with an extension through June 2025. City Council appointed Kate Murdock, Audit Manager in Baker Tilly’s Risk Advisory practice, as City Auditor in May 2024. As a result of transitions in the Audit Office and peer review delays due to the COVID pandemic, an external peer review is targeted for 2025. It should be noted that Baker Tilly’s most recent firmwide peer review was completed in November 2024 with a rating of “Pass”. The scope of that peer review includes projects completed under government auditing standards.
effectively administered to users, and if P-Card activity is adequately audited and reviewed by the Administrative Services Department (ASD).
• Completed audit report of findings, conclusions, and recommendations based on the supporting evidence gathered.
Compliance Statement
This audit activity was conducted from January 2025 to June 2025 in accordance with generally accepted government auditing standards, except for the
requirement of an external peer review1. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings, observations, and conclusions based on our
audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings, observations, and conclusions based on our audit objectives.
Organizational Strengths
During this audit activity, we observed a strong spirit of collaboration and a clear dedication to continuous improvement among the ASD leadership – particularly within the P-Card Program and AP teams. Their efforts reflect a shared commitment to providing the City with accurate, reliable information to support informed decision-making. The OCA appreciates the support of the ASD in conducting this audit activity. Thank you!
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 10 Packet Pg. 43 of 117
6
Detailed Analysis
P-Card Program Management Criteria and
City Code
Procurement Card Guidebook The City’s Procurement Card Guidebook, version 15, updated November 2024,
governs the Program and serves as a comprehensive resource for the City's P-Card users. The P-Card itself is a MasterCard issued by JPMorgan/Chase, designed to streamline purchasing and AP by eliminating steps and reducing transaction costs for
purchases $10,000 and under. The program operates under guiding principles of transparency, accountability, integrity, consistency, efficiency, and manageability, and is intended to complement existing procurement processes rather than bypass them. The Guidebook outlines processes for using P-Cards, details permissible and prohibited purchases, and specifies the record-keeping and reconciliation requirements for each billing cycle. It emphasizes that cardholders are committing City funds and are responsible for all charges made to their card, with misuse
potentially leading to disciplinary action. The Guidebook also defines the responsibilities of various participants in the P-Card
Program, including Cardholders, Account Group Managers, Approvers/Level Managers, AP staff, the Agency Program Administrator (APA), and the system vendor. It details card limits, such as a $10,000 maximum for a single purchase, no
more than 10 daily transactions, and a $15,000 maximum in a 30-day cycle, which can be temporarily increased via departmental request and approval from the APA. Palo Alto Municipal Code The current P-Card purchasing authority and maximum for single purchases is based
on established purchasing limits detailed in Palo Alto’s Municipal Code. “Chapter 2.30 Contracts and Purchasing Procedures” of the Palo Alto Municipal Code states the following: 2.30.230 Designated employee purchases of $10,000.00 or less.
Employees authorized, in writing, by their department heads may award and sign
contracts for the purchase of goods and the procurement of general services,
where the contract price does not exceed $10,000.00 and the contract term does
not exceed one year. All purchases and procurements shall be made in
accordance with the contracting procedures and requirements contained in this
chapter and in the purchasing manual. The written authorizations of department
heads shall be kept on file by the Procurement Officer.
2.30.240 Designated employees’ use of petty cash, P-card or other credit
card.
Employees designated in writing by their department heads, including by
completed P-card authorization request form, may make purchases by using petty
cash or make payments by using a city P-card or other credit card. All purchases
shall be made in accordance with the contracting procedures and requirements
contained in this chapter and in the purchasing manual. The written authorizations
of department heads shall be kept on file by the Procurement Officer.
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 11 Packet Pg. 44 of 117
7
Program Environment
The OCA conducted a comprehensive analysis of P-Card transaction data spanning
from July 1, 2022, to December 31, 2024, alongside cardholder data from July 1, 2023, to January 29, 2025. Our analysis identified a total of 42 unique departmental divisions participating in the P-Card Program. The transaction amount totaled
$9,033,155.92 in FY2023, $9,515,758.87 in FY2024, and $ 4,604,414.13 in the first half of FY2025 revealing a total transaction amount of $23,153,328.92 across 44,705 purchase line items. Over the two-and-a-half-year period the OCA examined, the
departments with the highest P-Card usage in terms of transaction amount were PWD Public Services – FAC, which led with $3,927,234.77, followed by PWD Env. Services - WQCP ($2,201,246.41) and IT ($1,636,975.63). Table 1: Top 10 Departments by Transaction Amount
Department Total Amount
PWD Public Services - FAC $3,927,234.77
PWD Env. Services - WQCP $2,201,246.41
IT $1,636,975.63
CSD Open Space, Parks, & Golf $1,323,946.17
Utilities Electric Operations $1,295,651.97
Police Department $1,190,825.79
Utilities WGW $1,134,320.06
PWD Public Services $1,061,659.67
Fire Administration $979,260.20
CSD JMZ & Interpretive $797,260.14
Note: Dataset 07/01/2022 - 12/31/24 Regarding the number of transactions, PWD Public Services - FAC was the most active with 5,659 purchase line items, with Utilities WGW closely behind at 5,022.
CSD JMZ & Interpretive (3,350 line items), Police Department (2,764 purchase line items), and CSD Recreation (2,299 line items) also demonstrated high transaction volumes. Table 2: Top 10 Departments by Number of Transactions
Department Number of Purchase Line Items
PWD Public Services - FAC 5,658
Utilities WGW 5,022
CSD JMZ & Interpretive 3,350
Police Department 2,764
CSD Recreation 2,299
PWD Env. Services - WQCP 2,275
Utilities Electric Operations 1,969
CSD Open Space, Parks, & Golf 1,898
CSD Children's & Community Theatre 1592
IT 1559
Note: Dataset 07/01/2022 - 12/31/24
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 12 Packet Pg. 45 of 117
8
The OCA’s analysis of cardholders’ data revealed there were 254 current active cardholders across 42 unique departmental divisions as of the end of January 2025. The Police Department had the most cardholders (34), followed by Fire
Administration (20) and PWD Env. Services - WQCP (16). Table 3: Top 10 Departments by Current Active Cardholders
Department Number of Active Cardholders
Police Department 34
Fire Administration 20
PWD Env. Services - WQCP 16
PWD Public Services - FAC 15
CSD Open Space, Parks, & Golf 12
CSD JMZ & Interpretive 10
CSD Recreation 10
PWD Env. Services - WP 10
Utilities Electric Operations 10
Utilities WGW 10
Note: Data as of 1/29/25 Currently, AP conducts comprehensive post-audits of P-Card transactions to ensure
adherence to established P-Card guidelines, focusing on those valued at $1,000 or more. To better understand the coverage of post-audit review, the OCA performed a distribution analysis across all transactions in the scope period. After removing all
$0.00 and negative dollar amount transactions from the data set which represented returns or voided transactions, the purchase line item population for the distribution analysis went from 44,705 line items to 43,588. The distribution analysis shows that
77.66% (33,852 line items) were less than $500.00 and 9.92% (4,325 line items) were between $500.00 and $999.99, indicating that most transactions from the scope period would not be subject to comprehensive post-audits. Table 4: Purchase Line Item Distribution by Dollar Amount
Distribution Subgroup Number of Purchase Line Items Percentage of Purchase Line Items
$0-499.99 33,851 77.66%
$500-999.99 4,325 9.92%
$1,000-4,999.99 4,520 10.37%
$5,000-9,999.99 881 2.02%
$10,000+ 10 0.02%
Note: Dataset 07/01/2022 - 12/31/24
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 13 Packet Pg. 46 of 117
9
Audit Results
Finding 1:
Overall, the City's P-Card Program demonstrates strong
internal controls and adherence to procurement policies, however, user compliance
with policy requirements could be improved.
The City’s P-Card program, utilizing a MasterCard credit card issued by JPMorgan/Chase, serves as a streamlined procurement and payment tool. The purpose of the program is to reduce transaction
costs, facilitate the timely acquisition of materials and supplies, and automate data flow for enhanced accounting efficiency, all while providing flexible controls to ensure proper usage. Designed as an
alternative to traditional methods such as petty cash, check requests, and low-dollar purchase orders, the P-Card Program is intended to complement, not bypass, established procurement and payment
procedures. Program requirements include adherence to spending limits and policy guidelines, diligent record-keeping and reconciliation, thorough review and approval, and consistent program administration and oversight. There are several key roles involved in the P-Card process:
• Cardholder
• Approver
• AP
• Agency Program Administrator (APA)
• JPMorgan/Chase
The City has a Procurement Card Guidebook that establishes the purpose, policies, procedures, and responsibilities for cardholders and approvers. This policy requires that:
• Cardholders upload receipts to SmartData daily and/or weekly.
• Cardholders assign their purchases, on a daily or weekly basis, to the correct cost centers/GL accounts,
• Approvers review and authorize cardholder purchases, ensuring compliance and correct accounting by the 5th of every month.
The OCA tested a sample of 39 transactions made between July 7, 2022, and December 31, 2024, for adherence to the City’s Guidebook. The OCA selected a representative sample of transactions.
Cardholder purchases consistently align with the Guidebook, demonstrating that expenditures are directly supportive of City operations and are not personal in nature. The OCA examined expense descriptions and receipts to ensure
purchases were not personal in nature and directly support City operations, in compliance with allowable card uses cited in the "General Guidance for Use" section of the Guidebook, and there were
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 14 Packet Pg. 47 of 117
10
2 City of Palo Alto, Procurement Card Guidebook: Travel upgrades and business travel meals are not allowed. The card cannot be used for certain event-related food (e.g., retirement parties, holiday events), alcoholic beverages, or consultant meals. Prohibited items also extend to bottled drinking water, pesticides (with limited exceptions), foam foodware, and specific antibacterial soaps. Furthermore, using the P-Card for purchases with existing City contracts, gift cards for employees, safety shoes for certain staff, or Amazon Prime memberships is not permitted. Small appliances for employee-only spaces are generally restricted without an Assistant City Manager's approval. IT software and hardware purchases are allowed but require approval before purchase.
no exceptions. This section explicitly prohibits personal purchases, cash advances, and unauthorized travel/entertainment expenses. Specific restrictions include the purchase of safety products (i.e. glasses, hard-hats, earplugs, insect repellent), personal items, fuel for personal vehicles, and payments to the City itself.2
It is important to note that the ultimate determination of whether purchases are authorized, appropriate, and correctly allocated rests
with cardholders and designated approvers, and department leadership. Some P-Card purchases were not documented as required by City policy.
Based on our P-Card transaction testing, we found strong internal controls and compliance with P-Card policies with respect to documenting purchases. For all transactions tested, the OCA noted that receipts were uploaded documenting transactions and GL cost centers were assigned for each purchase. However, some required documentation was missing.
Out of 39 transactions reviewed, 35 were fully compliant, demonstrating that most purchases were properly documented, assigned to general ledger cost centers, and reviewed by designated
approvers. This reflects positively on the overall management of the P-Card Program.
However, there were three transactions (10%) that did not have the Guidebook-specified documentation required.
The Guidebook states food purchases must have a separate sheet of paper uploaded, along with the receipt, which specifies the business purpose of the meal and a list of participants. OCA found two
instances where a separate sheet of paper detailing the business purpose and list of participants was not provided, however, most of this information was provided in the vendor p-card system. The Guidebook states when making IT software or hardware purchases, an email must be sent to the City’s Help Desk stating the specific request to purchase the IT related item. If IT Management approves (via email) the purchase, the P-card user is
required to attach a copy of the approving email along with the purchase receipt when submitting supporting documentation for
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 15 Packet Pg. 48 of 117
11
processing. OCA found two instances of IT purchases that where the email documenting IT Management approval was not provided. However, AP staff noted that approvals documented in the JP Morgan
Chase were performed by IT Management. The City may want to revisit the Guidebook and determine if the
existing requirements are still relevant or if less labor-intensive documentation is sufficient, such as leaving comments in JP Morgan Chase as opposed to submitting separate paperwork. These
exceptions, while few, pose a risk of non-compliance with policies and make it difficult for reviewers to timely confirm purchases. Such policies are in place to prevent any potential fraud, waste and abuse, which was not found. These exceptions also highlight the need for continued training to ensure users understand the importance of documentation and adherence to policy. All tested P-Card transactions showed system-generated
evidence of approver review, however, the timeliness of review could not be verified.
Per the Guidebook, in addition to reviewing a cardholder’s transactions, ensuring the cardholder has uploaded sales receipts and any supporting documentation for each purchase, and that each
transaction has a cost center account assignment, approvers must also ensure all cardholder transactions are approved in the system by the 5th of the month.
For all transactions tested, the OCA noted that every transaction had
system-generated evidence of review by an approver confirming required review. However, the system does not provide timestamps, making it impossible to verify whether approvals occurred within the
required timeframe. Program administration staff stated that they have to routinely send
reminders to p-card approvers when approvals have not been submitted timely. This, in turn, creates process delays with monthly review responsibilities potentially resulting in lost time and may limit staff time for other Accounts Payable activities. The City does not have an established, ongoing training program for P-Card Program users. The Guidebook states that the APA is responsible for facilitating training for the P-Card Program. When a department submits an application for a new cardholder, the potential cardholder is required
to complete mandatory training. Once training is completed, the cardholder can self-register for a system login. As part of the new account process, the City also requires each user to sign the P-Card
Cardholder User Agreement via the system.
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 16 Packet Pg. 49 of 117
12
Program administration stated that while users are provided with the Guidebook and have to sign a user agreement via the vendor system website in order to initiate use of their card, they frequently have to
explain the program parameters to users suggesting that actual review of the Guidebook may be limited. While the City has training materials and user agreements in place, evidence that activities were completed
could not be provided by the APA or the system vendor. The Guidebook also notes that training may be required because of
improper or flagrant violation of P-Card authorized use, loss of receipts, or failure to complete monthly transaction processing by designated deadlines. This mandatory refresher course would involve both the cardholder and the approving official. However, program administrators indicated this training does not typically happen. While all program stakeholders, including cardholders, approvers, and AP, can access a step-by-step guide and training video on the
Purchasing Resource Library to assist with uploading receipts, cost center coding, reviewing, and approving P-Card transactions, it is not clear how often this resource is accessed. Administrative staff stated
the need for regular, recurring training to eliminate confusion and to reduce time spent responding to individual inquiries. P-Card Program
leaders of departments with high P-Card utilization corroborated this
need, expressing a desire to develop a formal, recurring training program. In addition, our analysis of AP’s monthly reconciliation process and the APA’s P-Card misuse tracker showed instances of
non-compliance with the P-Card policy. According to the APA, apart from the initial training provided when a
card is issued, some ad hoc departmental training, and the recently created training videos, there is no structured training program for P-Card users. The APA stated that this lack of training has led to frequent policy-related questions and potential misuse of cards. The primary source of guidance for program stakeholders is the lengthy Guidebook, which administrators said does not appear to be read thoroughly. A lack of adequate P-Card training may result in incomplete receipt uploading, incorrect cost center coding, and hinder
the effective review and approval of transactions. This can lead to operational inefficiencies, increased errors, and heightened financial and compliance risks for the City.
Departmental personnel also reported concerns regarding recurring instances of inadequate purchase review, budget overruns, and the
use of P-Cards as a matter of convenience rather than adhering to established procurement channels. While staff expressed a desire for a regular, formalized P-Card training program to mitigate these issues,
staff also said that since there are no consequences for violating the policy, there is little to deter repeat offences. This absence of corrective measures could impact effective policy enforcement and compliance.
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 17 Packet Pg. 50 of 117
13
The APA did note that in the past, some limited training sessions have been conducted for new employees, but a more comprehensive approach is needed. There are plans to develop computer-based
training modules to educate employees on P-Card policies and procedures. Additionally, annual refresher courses are planned to ensure ongoing compliance and to keep users updated on any policy
changes. These planned initiatives aim to improve user understanding and reduce instances of misuse, which are currently a concern due to the lack of formal repercussions for policy violations.
Recommendation Strengthen Compliance: To further strengthen compliance with P-Card program guidelines, we recommend that management enhance cardholder and approver training on specific documentation requirements which may include providing targeted training and quick reference guides or checklists.
In addition, management may want to consider a form(s) for
documenting purchases such as food, fuel reimbursement, and IT purchases to simplify documentation procedures for users and approvers. However, management will need to determine if this will
create efficiencies and enhance compliance or add unneeded steps. We also recommend exploring system enhancements for approval
timestamps by collaborating with City’s P-Card system vendor, to explore adding timestamp functionality to the system for approver actions and automating system notifications of non-compliance to
users. Finally, management should consider the merits of implementing
clearly defined consequences for non-adherence against the time and resources necessary to do so. Such a system could range from written warnings and remedial training for minor first offenses to temporary suspension of cardholder or approval privileges for repeat issues, and potentially permanent expulsion from the P-Card Program. If the City were to adopt a system of disciplinary action for non-adherence, management would need to formalize this tiered policy in the Guidebook, communicate it clearly to all approvers, apply
consequences consistently, and document all violations in collaboration with Human Resources. Training: We recommend that the City continue working to establish and implement a formal, structured, and ongoing P-Card training program for all stakeholders, including cardholders, approvers, and
AP personnel. This program should continue to mandate initial training for all new P-
Card applicants, requiring completion of the JP Morgan-administered training as outlined in the Guidebook, and ensure that all completed training is documented and tracked. A comprehensive curriculum should be developed, expanding beyond current guides to explicitly cover appropriate use, prohibited purchases, spending limits, limit
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 18 Packet Pg. 51 of 117
14
increase procedures, consequences for misuse, and detailed documentation. Finally, regular, periodic refresher training for all active P-Card users and approving officials should be required to ensure
ongoing compliance and policy awareness. Management Response
Responsible Department(s): Administrative Services Department Concurrence: Agree Target Date: November 2025 Action Plan: ASD will resume in person and hybrid training while continuing to pursue technology-based training solutions such as automated classes, videos, and tests. This will include disseminating reference guides and checklists. The in-person training will focus on allowable transactions, non-
permissible transactions, approval process, required supporting documents for transactions, and due dates. The training will be
required for all new P-Card holders and approvers. Technology solutions will be explored for refresher trainings.
ASD will evaluate adding a form for documenting purchases such as food, fuel reimbursement, and IT purchases. This evaluation will determine if the form creates efficiencies or adds unneeded steps. If
the former, then a form will be added to the process. Adding timestamp information will be explored with the P-Card system vendor along with notifications to users for non-
compliance.
ASD will implement a system of consequences for non-compliance. Such a system might include an escalation of consequences after a certain number of infractions. The ultimate
consequence would be removing P-Cards from users. This will
include mandatory training for repeat infractions. Additional resources will be provided to those with infractions to ensure their understanding of the rules.
Finding 2:
Some P-Card Program oversight and administrative functions are not consistently
completed and documented; more efficient review
AP and the APA are tasked with the oversight and administration of the P-Card Program. AP staff is responsible for ensuring that cardholder activity is documented, supported, and authorized, and verifying that cardholders and approvers adhere to program policies.
To maintain compliance with P-Card policies and procedures, AP staff conducts post-audits and actively monitors P-Card activity.
The APA holds comprehensive authority and responsibility for the P-Card Program's operation, including closely monitoring it and acting as the primary liaison between the City and JPMorgan/Chase. The
APA is also responsible for managing procurement card
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 19 Packet Pg. 52 of 117
15
processes could save staff time.
administration, including card activation, issuance, assisting in developing citywide policies and procedures, overseeing program activity, and maintaining and tracking credit limits for cardholders’
authorized limits. We found that AP's mandated monthly post-audits may be hampered
by staffing shortages and high transaction volume, which undermines the effectiveness of these reviews. Additionally, current methods for tracking and documenting P-Card misuse are inconsistent, hindering
management's ability to identify patterns and enforce policy effectively. Furthermore, our analysis revealed a lack of adequate documentation for approved exceptions to P-Card spending limits. This indicates a need for more formal and transparent procedures in this area. Overall, these findings highlight opportunities to enhance the P-Card Program's controls and administrative efficiency.
The post audit process is not always completed due to staffing shortages and is overly time-consuming. More efficient review
processes could save staff time. AP is responsible for conducting comprehensive post-audits of P-Card
transactions to ensure adherence to established P-Card guidelines. Their current review protocol mandates a monthly examination of all P-Card transactions valued at $1,000 or more, as well as all software
and hardware acquisitions. Additionally, AP performs ad-hoc spot checks on transactions that may indicate potential cost-splitting or appear unusual. Through interviews with AP and ASD leadership, the
OCA learned that timely review is often a challenge for staff due to staffing capacity and the volume of transactions eligible for review. The OCA selected three months from the scope period and requested the post audit reviews conducted to assess the process. AP was able to provide evidence for 2 of the 3 selected months, stating that review for the third month was not completed due to staffing shortages. This indicates that while the post-audit review process is established, it is not always completed which may compromise the purpose of the review.
The OCA also performed a deeper analysis of the most recent month within the scope period, December 2024. During that post audit review, AP reviewed 203 of the 1,310 purchase line items made. This
represented approximately 15% of the total number of purchases made that month and 73% of the total dollar amount. Of the 203 transactions, 164 (approximately 12% of the total number) exceeded
the $1,000 threshold for required review. The post audit review documentation indicated that of 61 transactions, approximately 30 reviewed required additional follow-up with cardholders, approvers, or department leadership. Of those 61, 10 transactions were identified as cost-splitting violations. While this represents less than 1% of the total transactions for the time period, it still represents a policy violation.
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 20 Packet Pg. 53 of 117
16
According to AP staff, post audit can take anywhere from 3 minutes to an hour per transaction, depending on the level of review needed.
This highlights the labor-intensive nature of the process. This time commitment, especially when coupled with staffing shortages, directly contributes to the inability to achieve comprehensive review coverage
directly impacts control effectiveness and efficiency. Further, the high follow-up rate, combined with the limited review
coverage, could mean there are issues present within the unreviewed 88% of transactions and a new approach to post audit review may be needed. It is often assumed that only large-value transactions present a significant risk of misuse or error. However, this assumption may be misleading. In practice, individuals may be more inclined to commit smaller, seemingly insignificant infractions, under the perception that such transactions are less likely to be selected for review and therefore less likely to be detected. This is another instance where
staff could incorporate the use of Excel data analytics tools to identify spending trends over time that may require further investigation. For instance, PivotTables and COUNTIF functions can be effectively
utilized to quantify transaction volumes per employee or per vendor. A high frequency of small-value transactions by a single employee, or a notable volume of transactions consistently falling just below the
$1,000 review threshold, could indicate a need for more in-depth scrutiny. (See Appendix A)
A statistically significant sampling, encompassing all transaction sizes, may provide a more accurate and complete picture of compliance. While formal internal guidance for transaction sampling may not be
established, our analysis suggests that a comprehensive approach to sampling would involve examining all transactions, rather than a select subset. This would promote a more complete and robust review. For example, if AP were to conduct a random sample and applied a 95% confidence level with a +/- 10% margin of error rate to the 1,310 purchase line item population, this confidence level would require a testing sample of 90. In addition, there are other data analytic procedures AP may be able to administer to identify trends
and issues such as split transactions. There is potential for use of these analytics to further save staff time and increase the rigor or AP’s review. (See Appendix A) The current process for tracking and documenting P-Card misuse is inadequate and lacks comprehensive and consistent record-keeping. Upon identifying discrepancies such as missing documentation or
policy violations, AP initiates communication with the relevant department and formally notifies Purchasing and the AP Administrator, who are responsible for overseeing instances of P-Card misuse. Common infractions include purchase splitting and the acquisition of unauthorized appliances. The current tracking process for these issues is manual, relying on a log.
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 21 Packet Pg. 54 of 117
17
The OCA assessed the P-Card Misuse tracker to identify recurring themes and evaluate the resolution process. Our analysis revealed
that instances of misuse are not consistently or comprehensively documented. While the tracker dates back to 2022, the tracking system frequently lacks specific dates for when misuse occurred and
does not categorize the types of infractions, such as cost splitting or unauthorized purchases. Additionally, the types of program misuse (e.g., cost splitting, professional services, safety equipment) are not
categorized, hindering clear tracking of infraction types. Furthermore, the outcomes of investigations and their resolutions are not formally documented within the tracker.
The existing P-Card misuse tracking process has several significant
limitations. Since all instances of misuse are not formally and completely documented, management could be left with an incomplete understanding of policy violations. Without the outcomes
of investigations and their resolutions being consistently recorded, it may hinder management’s ability to identify common themes in P-Card misuse, effectively analyze the resolution process, and pinpoint trends related to specific departments or staff. This may in turn undermine effective policy enforcement and the deterrence of repeat offenses. There is a lack of adequate documentation to evidence approved exceptions to P-Card spending limitations. Currently, the City utilizes the “P-Card Credit Limit Request Form” to
document the request, review, and approval of card spending limitation increases. In order to gain an understanding of processes for approved exceptions to card spending limitations, the OCA
examined three transactions that exceeded the $10,000 card limit. The sample documentation provided for these transactions did not
include evidence of a completed request form or an email from the cardholder’s approver to the P-Card administrator documenting the approver’s concurrence with the exception rationale and/or
justification, as required by the Guidebook. The APA provided support for one of these transactions showing that
an exception to exceed the single purchase limit was granted, however the approval lacked formal documentation. No documentation was readily available for the other two selected transactions. It should also be noted that while the "P-Card Program Credit Limit Request Form" includes a comments section that could detail other types of card limit exceptions (single purchase transaction limits,
number of daily transactions limits, daily spending limits), the language of the form only explicitly documents the request and approval of exceptions to the monthly spending limit of $15,000.
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 22 Packet Pg. 55 of 117
18
Recommendation Post Audit: To strengthen the P-Card internal control environment,
enhance compliance assurance, and mitigate associated risks, we recommend that AP should implement a multi-faceted approach focusing on operational consistency and statistically valid sampling.
AP should transition from the current review approach and volume to a statistically random sampling methodology, implementing a
sampling strategy designed to achieve a desired confidence level, thereby providing a high degree of assurance that the sample findings are representative of the entire population. The precise sample size should be dynamically calculated each month based on the actual transaction volume. Misuse Tracking: The OCA recommends that the P-Card Administrator ensure all instances of misuse are formally and
comprehensively tracked including a categorization of infraction types, infraction dates, and the resolution of each instance of misuse. By maintaining a complete misuse tracker, the P-Card Administrator will
be better equipped to identify repeat offenders and allow make informed decisions regarding appropriate repercussions, such as mandatory training or, if warranted, the suspension or revocation of P-
Card user access. In cases where repeat offenses are observed within a specific department, management should consider implementing department-wide training to reinforce awareness of City
policies and procedures. Oversight of Card Limit Exceptions: We recommend formalizing
and standardizing the P-Card limit exception process. The existing "P-Card Program Credit Limit Request Form" should be revised to explicitly include fields for requesting and documenting approval for all types of card limit exceptions, not just monthly spending limits. The revised form, or an equally formal documented process, should be consistently used for all exceptions, clearly stating the rationale and evidence of the approver’s agreement. The APA and other relevant stakeholders must consistently follow this formalized process to document and retain all limit exception approvals. Management Response
Responsible Department(s): Concurrence: Agree Target Date: November 2025 Action Plan: Post Audit AP will implement a new, multi-faceted review criteria to capture a
more statistically random sampling of P-card transactions. Misuse Tracking ASD will add to the current misuse tracker to include infraction types, infraction dates, and resolution. This information will be used to focus additional training where repeat offenses are identified.
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 23 Packet Pg. 56 of 117
19
Oversight of Card Limit Exceptions ASD will standardize the P-Card limit exception process with a revised
form that includes fields for requesting and documenting. The form will include a section for the rationale for the increase. It should be noted that P-Card exception increases are currently very limited and only 10
out of 254 cards are in place currently. These exceptions have been documented on the existing form. The existing form will be evaluated for use as a single form with all exceptions or possibly a separate
form for single limit exceptions approvals will be created based on what incorporates best into workflow.
Additional
Observation:
The City may be able to increase operational efficiencies and save
staff time by increasing P-Card spending limits
The City's current procurement procedures impose a significant administrative burden, especially for lower-value transactions exceeding the micro-purchase threshold. Requirements for council
approval and solicitation for each purchase order consume considerable staff time, driving up processing costs and diverting resources from more strategic procurement initiatives. This highlights an opportunity to streamline these processes. By optimizing procedures for these transactions, the City can achieve substantial efficiency gains and reallocate valuable staff resources to essential responsibilities.
According to ASD management, the current procedure for obtaining approvals and completing solicitations for each purchase order (PO) requires, on average, approximately 10 hours of staff time. This
represents a significant investment of staff and managements’ time. The City’s P-Card limit has not been increased since 2016. Since
that time, inflation has continued to increase the costs of goods. If the City were to raise the purchasing limit, there could be substantial time saved in preparing POs.
The OCA performed an analysis of recent fiscal years and found that in FY2023, the City processed 59 POs ranging from $10,000 to $12,000. At an estimated 10 hours per PO of staff time, raising the threshold to $12,000 and reducing the number of POs by 59 would save an estimated 590 hours of staff time. An additional 41 POs between $12,000 and $15,000 were processed which if eliminated could save an estimated 410 hours. FY 2024 projections showed 70 POs in the $10,000 to $12,000 range, equating to 700 hours, and 60 POs in the $12,000 to $15,000 range, totaling 600 hours. The increase in the number of POs at these dollar thresholds year over
year is also an indicator that more goods that used to be procured through a simple P-Card transaction may be shifting to the PO process due to inflation.
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 24 Packet Pg. 57 of 117
20
These figures highlight a recurring and considerable investment of time in the procurement process for these specific PO value ranges. By reviewing and potentially streamlining the approval and
solicitation procedures for these categories of purchases, the City could realize substantial cumulative time savings, allowing staff to reallocate their efforts to other critical municipal functions.
Concurrently, a prevalent issue associated with lower limits is the incentive for cardholders to split legitimate purchases into multiple,
smaller transactions to circumvent established single transaction limits. This behavior undermines internal controls and complicates effective monitoring and reconciliation. Furthermore, essential goods and services exceeding the lower limits may experience procurement delays as employees await approvals through more formal channels, potentially impacting mission-critical activities or operational responsiveness.
The OCA reviewed a proposed amendment to the Federal Acquisition Regulation (FAR) concerning the inflation adjustment of
acquisition-related thresholds. This amendment indicates that the micro-purchase threshold, as defined in FAR 2.101, is projected to increase from $10,000 to $15,000. Given the anticipated increase of
the federal micro-purchase limit to $15,000 in October 2025, the City should also evaluate its current P-Card purchase limit and consider adjusting it to align with this inflationary change.
Consideration: With consideration given to the official increase of the federal micro-purchase limit to $15,000 in October 2025, the
City should consider increasing the single purchase card limit from $10,000 to $15,000 and the monthly purchase power from $15,000 to $20,000. Increasing these card limits may enable the City to realize significant time savings. Based on historical data, this change could save the City approximately 1,000 to 12,000 staff hours on average per fiscal year when processing transactions within the $10,000-$15,000 range. Further, increased card limits may also potentially discourage cost splitting and reduce administrative processing.
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 25 Packet Pg. 58 of 117
21
Appendices
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 26 Packet Pg. 59 of 117
22
Appendix A:
Basic Excel Analytics for P-Card Transaction Review
The following basic analytics can be performed in Excel by the AP team to enhance oversight of P-Card
transactions. These techniques rely on standard Excel functions and features such as Pivot Tables,
Conditional Formatting, and built-in formulas:
• Transaction Volume and Spend by Cardholder
Use Pivot Tables to group transactions by cardholder and calculate the total number of transactions
and total spend. This helps identify high-use individuals and potential misuse.
• Vendor Spend Analysis
Group transactions by vendor using a Pivot Table to determine total spend per vendor. This can help
evaluate vendor concentration and opportunities for negotiated pricing or consolidated purchasing.
• Weekend and Holiday Transactions
Use the WEEKDAY() function to identify transactions occurring on weekends. Flag transactions that fall
on known holidays for further review.
• Duplicate Transactions Check
Use COUNTIFS() or Conditional Formatting to flag potential duplicates based on identical transaction
dates, amounts, vendors, and cardholders.
• Split Purchases
Sort by cardholder, vendor, and date to identify multiple transactions that may have been used to
circumvent single-transaction thresholds.
• Threshold Breach Detection
Apply Conditional Formatting to highlight transactions exceeding predefined dollar thresholds (e.g.,
$2,500), which may require additional documentation or approval.
• Inactive or Terminated Cardholder Usage
Use VLOOKUP() or XLOOKUP() to compare cardholder names against a current employee roster and
identify activity associated with terminated employees.
• High-Risk Keyword Search
Use the SEARCH() function to flag keywords in the transaction description that may indicate
unallowable purchases (e.g., “gift card,” “alcohol,” “Amazon,” “electronics,” etc.).
• Self-Approval Detection
Compare cardholder and approver names using an IF() statement to detect instances where
cardholders may be approving their own transactions.
• Trend Analysis Over Time
Use Pivot Tables and line charts to analyze monthly or quarterly spend trends. This can help detect
unusual spikes or seasonal patterns in card usage.
Item 2
Attachment A - Purchasing
Card Program Audit
Item 2: Staff Report Pg. 27 Packet Pg. 60 of 117
7
8
7
1
Policy & Services Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: City Auditor
Meeting Date: August 12, 2025
Report #: 2507-5007
TITLE
Recommend City Council Approval to Extend the Deadline for Two FY2024 Audit Project Task
Orders and Amend the FY2024 and FY2025 Task Order Budgets to Realign the Authorized
Budgets with a Net Zero Impact
RECOMMENDATION
The Office of the City Auditor (OCA) recommends that the Policy & Services (P&S) Committee
Recommend City Council approve the extension of the following task orders from the FY2024
Audit Plan. Due to the complexity of the audit topics and management discussions they have
generated, as well as, additional analysis required, reporting has been delayed. Requesting the
deadline for these projects be extended from June 30, 2025 through October 31, 2025:
FY2024 Task 4.25: Emergency Preparedness (Wildfire)
FY2024 Task 4.28: Dispatch Center Assessment
The OCA recommends that the P&S Committee Recommend City Council approve the
amendment of the FY2024 and FY2025 task order budgets to realign budgets with a net zero
impact:
FY 2025 Task 4.34: Follow-Up Audit Activities - decrease budget by $14,500
FY 2024 Task 4.25: Emergency Preparedness (Wildfire) - increase by $1,500
FY 2024 Task 4.28: Dispatch Center Assessment - increase by $13,000
BACKGROUND
In accordance with our agreement with the City, Baker Tilly is required to execute the Annual
Audit Plan each year which consists of specific, approved audit task orders.
Task 4: Execute Annual Audit Plan
Item 3
Item 3 Staff Report
Item 3: Staff Report Pg. 1 Packet Pg. 61 of 117
7
8
7
1
Task Orders approved by the Council are executed by the P&S Committee Chair as the Project
Manager for the Baker Tilly contract as stipulated in the contract terms.
ANALYSIS
The OCA is seeking for the P&S Committee to recommend Council approval to extend the
deadlines and amend the budgets for task orders still underway from FY2024 and FY2025
Annual Audit Plans. The recommended amendment would extend the term of the FY 2024 task
orders from June 30, 2025 to October 31, 2025.
Task Order 4.25: Emergency Preparedness (Wildfire) Audit was presented to and
approved by the P&S Committee on April 8, 2025. The Audit Report was pulled from City
Council Consent on June 16, 2025.
Task Order 4.28: Dispatch Center Assessment was provided to management in May
2025. Management requested additional analysis be included in the report. This report
is scheduled for reporting to the P&S Committee on September 9, 2025.
Th OCA is also seeking to amend the task orders below to realign budgets to cover additional
expenses incurred in the execution of these tasks. This budget realignment will have a net zero
impact on the FY2024 and FY2025 budgets.
FY2025 Task 4.34: Follow up Audit Activities budget of $59,390 will be reduced by
$14,500 to $44,890. As of the end of June 2025, only $12,081 in funds had been
expended for this activity and the remaining budget is sufficient to complete the task.
FY2024 Task 4.25: Emergency Preparedness (Wildfire) budget will be increased by
$1,500 to $81,610 to cover the additional costs associated with the additional City
Council meeting and preparation.
FY2025 Task 4.28: Dispatch Center Assessment will be increased by $13,000 to $107,040
to cover the additional data analysis required and report edits. As well as coordinating
responses from two departments.
FISCAL/RESOURCE IMPACT
Work recommended in these tasks is within both the approved scope and compensation of the
contract with Baker Tilly and funding levels in the FY2024 and FY2025 Operating Budgets for the
Office of the City Auditor.
ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by CEQA because the audit activities do
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).
Item 3
Item 3 Staff Report
Item 3: Staff Report Pg. 2 Packet Pg. 62 of 117
7
8
7
1
ATTACHMENTS
Attachment A: Task Orders 4.25, 4.28 & 4.34
APPROVED BY:
Kate Murdock, City Auditor
Item 3
Item 3 Staff Report
Item 3: Staff Report Pg. 3 Packet Pg. 63 of 117
PROFESSIONAL SERVICES TASK ORDER
TASK ORDER FY24-4.25 Emergency Preparedness
Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the
Agreement referenced in Item 1A below. All exhibits referencedFY24 in Item 8 below are incorporated
into this Task Order by this reference. The Consultant shall furnish the necessary facilities, professional,
technical and supporting personnel required by this Task Order as described below.
CONTRACT NO. C21179340A
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A.
1B.
MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340A
TASK O RDER NO.: FY23-4.25
2.CONSULTANT NAME: Baker Tilly Advisory Group, LP
3.PERIOD OF PERFORMANCE: START: March 1, 2024 COMPLETION: December 31, 2024
4 TOTAL TASK ORDER PRICE: $73,110 $75,110.00 Increased by $2,000.00
BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD
5. BUDGET CODE_______________
COST CENTER________________
COST ELEMENT______________
WBS/CIP__________
PHASE__________
6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:
Lydia Kou, Chair of the City Council’s Policy and Services Committee
7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A)
MUST INCLUDE:
SERVICES AND DELIVERABLES TO BE PROVIDED
SCHEDULE OF PERFORMANCE
MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)
REIMBURSABLE EXPENSES, if any (with “not to exceed” amount)
8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A
I hereby authorize the performance of the
work described in this Task Order.
APPROVED:
CITY OF PALO ALTO
BY:____________________________________
Name __________________________________
Title____________________
Date ___________________________________
I hereby acknowledge receipt and acceptance of
this Task Order and warrant that I have
authority to sign on behalf of Consultant.
APPROVED:
COMPANY NAME: ______________________
BY:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________
Docusign Envelope ID: E008AC75-7AE6-49DD-B29E-91EE8C83AC25
Baker Tilly Advisory Group, LP
12/23/2024Manager/ City Auditor
Kate Murdock
12/25/2024Council Member
Council Member Lydia Kou
Item 3
Attachment A - Task Orders
4.25, 4.28 & 4.34
Item 3: Staff Report Pg. 4 Packet Pg. 64 of 117
Attachment A
DESCRIPTION OF SCOPE OF SERVICES
Introduction
Attachment A, the Description of Scope of Services, contains the following four (4) elements:
Services and Deliverables To Be Provided
Schedule of Performance
Maximum Compensation Amount and Rate Schedule (As Applicable)
Reimbursable Expenses, if any (With “Not To Exceed” Amount)
Services & Deliverables
Baker Tilly’s approach to conducting an internal audit of Emergency Preparedness involves three
(3) primary steps:
Step 1: Audit Planning
Step 2: Control Review and Testing
Step 3: Reporting
Step 1 – Audit Planning
This step consists of the tasks performed to adequately plan the work necessary to address
the overall audit objective and to solidify mutual understanding of the audit scope,
objectives, audit process, and timing between stakeholders and auditors. Tasks include:
Gather information to understand the environment under review
o Understand the organizational structure and objectives
o Review the City code, regulations, and other standards and expectations
o Review prior audit results, as applicable
o Review additional documentation and conduct interviews as necessary
Assess the audit risk
Write an audit planning memo and audit program
o Refine audit objectives and scope
o Identify the audit procedures to be performed and the evidence to be obtained
and examined
Announce the initiation of the audit and conduct kick-off meeting with key
stakeholders
o Discuss audit objectives, scope, audit process, timing, resources, and
expectations
o Discuss documentation and interview requests for the audit
Docusign Envelope ID: E008AC75-7AE6-49DD-B29E-91EE8C83AC25
Item 3
Attachment A - Task Orders
4.25, 4.28 & 4.34
Item 3: Staff Report Pg. 5 Packet Pg. 65 of 117
Step 2 – Control Review and Testing
This step involves executing the procedures in the audit program to gather information,
interview individuals, and analyze the data and information to obtain sufficient evidence to
address the audit objectives. The preliminary audit objective is to determine whether the City
is working to prevent wildfire and adequately prepared to respond to wildfire as part of the
City’s emergency management plan. Procedures include, but not limited to:
Interview the appropriate individuals in all relevant departments to gain an
understanding of the organizational structure, processes, and controls related to
wildfire prevention and response as well as the City’s overall emergency
preparedness.
Review policies and procedures as well as the legislative and regulatory requirements
to identify the criteria to be used for evaluation of control design and effectiveness.
Review the existing emergency management plan and other related documents such
as prevention activities, training and exercises, equipment, and service contracts.
Compare the process and controls against the best practices.
Step 3 – Reporting
In Step 3, the project team will perform tasks necessary to finalize audit working papers,
prepare and review a draft report with the stakeholders, and submit a final audit report. Tasks
include:
Develop findings, conclusions, and recommendations based on the supporting
evidence gathered
Validate findings with the appropriate individuals and discuss the root cause of the
identified findings
Complete supervisory review of working papers and a draft audit report
Distribute a draft audit report and conduct a closing meeting with key stakeholders
o Discuss the audit results, finings, conclusions, and recommendations
o Discuss management responses
Obtain written management responses and finalize a report
Review report with members of City Council and/or the appropriate Council
Committee
Deliverables:
The following deliverable will be prepared as part of this engagement:
Audit Report
Schedule of Performance
Anticipated Start Date: March 1, 2024
Anticipated End Date: December 31, 2024
Docusign Envelope ID: E008AC75-7AE6-49DD-B29E-91EE8C83AC25
Item 3
Attachment A - Task Orders
4.25, 4.28 & 4.34
Item 3: Staff Report Pg. 6 Packet Pg. 66 of 117
Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this
Task is $73,110. The not-to-exceed budget is based on an estimate of 385 total project hours, of
which 25 are estimated to be completed by the City Auditor.
Reimbursable Expenses
We plan to complete all work remote including all interviews and documentation review.
However, during the planning and fieldwork phases of this audit, the City and Baker Tilly may
mutually determine it will be beneficial to perform a portion of the work on-site. Given this
possibility, Baker Tilly could incur reimbursable expenses for this Task.
The not-to-exceed maximum for reimbursable expenses for this Task is $6,500.
The following summarizes anticipated reimbursable expenses:
Round-trip Airfare – $2,000 (1 round trip flights x 2 auditors)
Ground Transportation (car rental or Uber/taxi) - $800
Hotel accommodation - $3,000 (2 rooms x 4 nights)
Food and incidentals – $700
Docusign Envelope ID: E008AC75-7AE6-49DD-B29E-91EE8C83AC25
Item 3
Attachment A - Task Orders
4.25, 4.28 & 4.34
Item 3: Staff Report Pg. 7 Packet Pg. 67 of 117
PROFESSIONAL SERVICES TASK ORDER
TASK ORDER FY24-4.28 Dispatch Center Program
Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the Agreement
referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this Task Order by this
reference. The Consultant shall furnish the necessary facilities, professional, technical and supporting personnel required
by this Task Order as described below.
CONTRACT NO. C21179340A
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340
1B. TASK O RDER NO.: FY24-4.28
2.CONSULTANT NAME: Baker Tilly Advisory Group, LP
3.PERIOD OF PERFORMANCE: START: August 15, 2024 COMPLETION: February 28, 2025
4.TOTAL TASK ORDER PRICE: $76,540 $79,040 Increased by $2,500.00
BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD
5.BUDGET CODE_______________
COST CENTER________________
COST ELEMENT______________
WBS/CIP__________
PHASE__________
6.CITY DEPARTMENT PROJECT MANAGER’S NAME & Lydia Kou, Chair of the City
Council’s Policy and Services Committee
7.DESCRIPTION OF SCOPE OF SERVICES (Attachment A)
MUST INCLUDE:
SERVICES AND DELIVERABLES TO BE PROVIDED
SCHEDULE OF PERFORMANCE
MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)
8.ATTACHMENT REIMBURSABLE EXPENSES, if a Task Order Scope any of Service “not to
exceed” (with amount) B (if any): N/A
9.
I hereby authorize the performance of the work
described in this Task Order.
APPROVED:
CITY OF PALO ALTO
BY:____________________________________
Name __________________________________
Title______________________
Date __________________________
I hereby acknowledge receipt and acceptance of this
Task Order and warrant that I have authority to sign
on behalf of Consultant.
APPROVED:
COMPANY NAME: Baker Tilly Advisory Group, LP
BY:____________________________________
Name __________________________________
Title___________________________________
Date _ _________________________
Docusign Envelope ID: E008AC75-7AE6-49DD-B29E-91EE8C83AC25
Kate Murdock
Manager/ City Auditor
12/23/2024
Council Member
12/25/2024
Council Member Lydia Kou
Item 3
Attachment A - Task Orders
4.25, 4.28 & 4.34
Item 3: Staff Report Pg. 8 Packet Pg. 68 of 117
Attachment A
DESCRIPTION OF SCOPE OF SERVICES
Introduction
Attachment A, the Description of Scope of Services, contains the following four (4) elements:
Services and Deliverables To Be Provided
Schedule of Performance
Maximum Compensation Amount and Rate Schedule (As Applicable)
Reimbursable Expenses, if any (With “Not To Exceed” Amount)
Services & Deliverables
Baker Tilly’s approach to conducting an assessment of the Dispatch Center Program involves three (3) primary steps:
Step 1: Assessment Planning
Step 2: Control Review and Testing
Step 3: Reporting
Step 1 – Assessment Planning
This step consists of the tasks performed to adequately plan the work necessary to address the overall assessment
objective and to solidify mutual understanding of the project scope, objectives, process, and timing between
stakeholders and auditors. Tasks include:
Gather information to understand the environment under assessment
o Understand the organizational structure and objectives
o Review the City code, regulations, and other standards and expectations
o Review prior audit and/or assessment results, as applicable
o Review additional documentation and conduct interviews as necessary
Write an assessment program
o Refine objectives and scope
o Identify the assessment procedures to be performed and the evidence to be obtained and examined
Announce initiation of the assessment and conduct kick-off meeting with key stakeholders
o Discuss objectives, scope, assessment process, timing, resources, and expectations
o Discuss documentation and interview requests for the assessment
Step 2 – Control Review and Testing
This step involves executing the procedures in the assessment program to gather information, interview
individuals, and analyze the data and information to obtain sufficient evidence to address the audit objectives. The
preliminary assessment objective is to: (1) Determine whether the City’s Dispatch Center Program is operating
efficiently and effectively to meet community needs. Procedures include, but are not limited to:
Interview the appropriate individuals to gain an understanding of the organizational structure, processes,
and controls related to the Dispatch Center Program.
Review policies and procedures as well as the legislative and regulatory requirements to identify the
criteria to be used for evaluation of control program effectiveness.
Review overall Dispatch Center Program performance, including selecting a sample of Dispatch Center
Calls to test for efficiency and effectiveness of response and triage for services.
Compare the performance, process, and controls against the best practices.
Docusign Envelope ID: E008AC75-7AE6-49DD-B29E-91EE8C83AC25
Item 3
Attachment A - Task Orders
4.25, 4.28 & 4.34
Item 3: Staff Report Pg. 9 Packet Pg. 69 of 117
Step 3 – Reporting
In Step 3, the project team will perform tasks necessary to finalize assessment working papers, prepare and review
a draft report with the stakeholders, and submit a final report. Tasks include:
Develop findings, conclusions, and recommendations based on the supporting evidence gathered
Validate findings with the appropriate individuals and discuss the root cause of the identified findings
Complete supervisory review of working papers and a draft report
Distribute a draft report and conduct a closing meeting with key stakeholders o
o Discuss the results, finings, conclusions, and recommendations
o Discuss management responses
Obtain written management responses and finalize a report
Review report with members of City Council and/or the appropriate Council Committee
Deliverables:
The following deliverable will be prepared as part of this engagement:
Report
Schedule of Performance
Anticipated Start Date: August 15, 2024
Anticipated End Date: February 28, 2025
Maximum Compensation Amount
The not-to exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $76,540. The
not-to exceed budget is based on an estimate of 415 total project hours, of which 100 are estimated to be completed by the
City Auditor.
Reimbursable Expenses
If circumstances allow, Baker Tilly anticipates planning one on-site fieldwork week. Given this possibility, Baker Tilly
could incur reimbursable expenses for this Task.
The not-to-exceed maximum for reimbursable expenses for this Task is $8,500
The following summarizes anticipated reimbursable expenses (for three team members):
Round-trip Airfare - $2,000 (3 round trip flights)
Ground Transportation (car rental or Uber/taxi) - $1,500
Hotel Accommodation - $3,500 (12 nights)
Food and incidentals - $1,500
Confidential Information
1.In the performance of this Task Order, Baker Tilly (“AUDITOR”) may have access to CITY’s
Confidential Information (defined below). AUDITOR will hold Confidential Information in strict confidence, not disclose
it to any third party, and will use it only for the performance of its obligations to CITY under this Task Order and for no
other purpose. AUDITOR will maintain reasonable and appropriate administrative, technical and physical safeguards to
ensure the security, confidentiality and integrity of the Confidential Information. This includes the use of encrypted, access-
controlled storage for any Confidential Information stored in electronic form. Notwithstanding the foregoing, AUDITOR
Docusign Envelope ID: E008AC75-7AE6-49DD-B29E-91EE8C83AC25
Item 3
Attachment A - Task Orders
4.25, 4.28 & 4.34
Item 3: Staff Report Pg. 10 Packet Pg. 70 of 117
may disclose Confidential Information to its employees, agents and subcontractors, if any, only to the extent they have a
need to know in order to perform AUDITOR’s obligations to CITY under this Task Order and for no other purpose, and
provided that the AUDITOR informs them of, and requires them to follow, the confidentiality and security obligations of
this Task Order.
2.“Confidential Information” means all data, information, and materials of a non-public, proprietary
or confidential nature, in any form or medium, tangible or intangible, provided or otherwise made available to AUDITOR
by CITY, directly or indirectly, pursuant to this Task Order. For this Task Order, such Confidential Information may include
dispatch calls, dispatch radio/phone traffic (including recordings, summaries, and transcripts of such traffic), dispatch logs
and computer-aided dispatch (CAD) data, observations of the dispatch service (including recordings, summaries, notes, and
transcripts of such observation), any information protected by law obtained by AUDITOR in conducting this Task Order
(including but not limited to criminal background data, customer utility data, medical information, mental health
conservatorship data, witness and victim identities protected by law, law enforcement intelligence, law enforcement
investigations, law enforcement personnel file information protected by law, and “Personal Information” about a California
resident as defined in Civil Code Section 1798 et seq., as amended from time to time)). In addition to the Confidential
Information itself, AUDITOR agrees that deliberations, conversations and discussions pertaining to the Confidential
Information shall be kept confidential and shall not be disclosed without approval of CITY, and any required reporting
incorporating Confidential Information will present findings in de-identified or summary formats as agreed by the Parties.
2.1. Exceptions: Confidential Information excludes information that AUDITOR can show by appropriate
documentation: (i) was publicly known at the time it was provided or has subsequently become publicly known other than
by a breach of this Agreement and is not otherwise protected from further sharing by law; (ii) was rightfully in AUDITOR’s
possession free of any obligation of confidence prior to receipt of Confidential Information; (iii) is rightfully obtained by
AUDITOR from a third party without breach of any confidentiality obligation; (iv) is independently developed by
employees of AUDITOR without any use of or access to the Confidential Information; or (v) AUDITOR has written consent
to disclose signed by an authorized representative of CITY.
2.2 Confidential Markings: As practicable, the Confidential Information shall be marked with the words
“Confidential” or “Confidential Material” or with words of similar import. To the extent possible, the disclosing party
(whether CITY or AUDITOR) shall endeavor to mark any electronic document intended to be covered by the terms of these
confidentiality provisions with the words “Confidential” or similar words, shall notify the receiving parties (for example,
by cover e-mail transmitting the electronic document) that the electronic document is Confidential Information, and, for
documents shared via encrypted cloud storage, shall file such Confidential Information in folders so labeled. The City’s
failure, for whatever reason, to mark any material at the time it is produced to the AUDITOR, or to notify AUDITOR that
oral or electronic material is Confidential Information at the time it is provided, shall not remove the material from the
coverage of these confidentiality obligations, and the AUDITOR shall treat the material as Confidential Information once
the CITY has notified it that the material is to be covered by these provisions.
3.Notwithstanding the foregoing, AUDITOR may disclose Confidential Information to the extent
required by order of a court of competent jurisdiction or governmental body, provided that AUDITOR will notify CITY in
writing of such order immediately upon receipt and prior to any such disclosure (unless AUDITOR is prohibited by law
from doing so), to give CITY an opportunity to oppose or otherwise respond to such order.
Docusign Envelope ID: E008AC75-7AE6-49DD-B29E-91EE8C83AC25
Item 3
Attachment A - Task Orders
4.25, 4.28 & 4.34
Item 3: Staff Report Pg. 11 Packet Pg. 71 of 117
4.AUDITOR will notify City promptly upon learning of any breach in the security of its systems or
unauthorized disclosure of, or access to, Confidential Information in its possession or control, and if such Confidential
Information consists of Personal Information, AUDITOR will provide information to CITY sufficient to meet the notice
requirements of Civil Code Section 1798 et seq., as applicable, as amended from time to time.
5.Prior to or upon termination or expiration of this Task Order, AUDITOR will honor any request
from the CITY to return or securely destroy all copies of Confidential Information. All Confidential Information is and will
remain the property of the CITY and nothing contained in this Agreement grants or confers any rights to such Confidential
Information on AUDITOR. Notwithstanding the return or destruction of tangible Confidential Information as contemplated
by this subsection, AUDITOR and its representatives will continue to be bound by all obligations of confidentiality with
respect to the CITY’s Confidential Information.
Docusign Envelope ID: E008AC75-7AE6-49DD-B29E-91EE8C83AC25
Item 3
Attachment A - Task Orders
4.25, 4.28 & 4.34
Item 3: Staff Report Pg. 12 Packet Pg. 72 of 117
22
PROFESSIONAL SERVICES TASK ORDER
TASK ORDER FY25-4.34 Follow-Up Audit Activities
Consultant shall perform the Services detailed below in accordance with all the terms and conditions of the
Agreement referenced in Item 1A below. All exhibits referenced in Item 8 below are incorporated into this
Task Order by this reference. The Consultant shall furnish the necessary facilities, professional, technical
and supporting personnel required by this Task Order as described below.
CONTRACT NO. C21179340A
OR PURCHASE ORDER REQUISITION NO. (AS APPLICABLE)
1A. MASTER AGREEMENT NO. (MAY BE SAME AS CONTRACT / P.O. NO. ABOVE): C21179340A
1B. TASK ORDER NO.: FY25-4.34
2. CONSULTANT NAME: Baker Tilly Advisory Group, LP
3. PERIOD OF PERFORMANCE: START: January 1, 2025 COMPLETION: June 30, 2025
4. TOTAL TASK ORDER PRICE: $59,390
BALANCE REMAINING IN MASTER AGREEMENT/CONTRACT TBD
5. BUDGET CODE_______________ COST CENTER________________ COST
ELEMENT______________ WBS/CIP__________ PHASE__________
6. CITY PROJECT MANAGER’S NAME & DEPARTMENT:
Lydia Kou, Chair of the City Council’s Policy and Services Committee
7. DESCRIPTION OF SCOPE OF SERVICES (Attachment A)
MUST INCLUDE:
SERVICES AND DELIVERABLES TO BE PROVIDED
SCHEDULE OF PERFORMANCE
MAXIMUM COMPENSATION AMOUNT AND RATE SCHEDULE (as applicable)
REIMBURSABLE EXPENSES, if any (with “not to exceed” amount)
8. ATTACHMENTS: A: Task Order Scope of Services B (if any): N/A
I hereby authorize the performance of the work
described in this Task Order.
APPROVED:
CITY OF PALO ALTO
BY:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________
I hereby acknowledge receipt and acceptance of
this Task Order and warrant that I have authority
to sign on behalf of Consultant.
APPROVED:
COMPANY NAME: Baker Tilly Advisory Group,
LP
BY:____________________________________
Name __________________________________
Title___________________________________
Date ___________________________________
Docusign Envelope ID: F60E09CC-400F-404E-8132-93318BE5ADE6
Kate Murdock
Manager/ City Auditor12/23/2024
Council Member
12/25/2024
Council Member Lydia Kou
Item 3
Attachment A - Task Orders
4.25, 4.28 & 4.34
Item 3: Staff Report Pg. 13 Packet Pg. 73 of 117
23
Attachment A
DESCRIPTION OF SCOPE OF SERVICES
Introduction
Attachment A, the Description of Scope of Services, contains the following four (4) elements:
Services and Deliverables To Be Provided
Schedule of Performance
Maximum Compensation Amount and Rate Schedule (As Applicable)
Reimbursable Expenses, if any (With “Not To Exceed” Amount)
Services & Deliverables
Baker Tilly will provide the following services in conducting Follow-Up Audit Activities::
Track and monitor progress on all audit recommendations
Obtain sufficient evidence to support conclusions regarding the status of audit recommendations
Annually report on the status of recommendations
Deliverables:
The following deliverables will be prepared as part of this engagement:
Annual Status of Audit Recommendations Report
Policy & Services Committee Report Presentation
Schedule of Performance
Anticipated Start Date: January 1, 2025
Anticipated End Date: June 30, 2025
Maximum Compensation Amount and Rate Schedule
The not-to-exceed maximum, inclusive of reimbursable expenses (as summarized below) for this Task is $59,390.
The not-to-exceed budget is based on an estimate of 500 total project hours, of which a minimum of 40 are
estimated to be completed by the City Auditor.
Docusign Envelope ID: F60E09CC-400F-404E-8132-93318BE5ADE6
Item 3
Attachment A - Task Orders
4.25, 4.28 & 4.34
Item 3: Staff Report Pg. 14 Packet Pg. 74 of 117
Policy & Services Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: City Manager
Meeting Date: August 12, 2025
Report #:2410-3700
TITLE
Wellness and Belonging Update Report to the Policy and Services Committee; CEQA Status –
Not a Project
RECOMMENDATION
Staff recommends that the Policy and Services Committee accept this update on the City’s
recent wellness and belonging work as well as to hear an update regarding the draft CEDAW
(Convention on the Elimination of All Forms of Discrimination Against Women) ordinance.
BACKGROUND
In 2020, the City’s equity efforts began and later that year, the City Council adopted a list of
assignments in November 2020. Those assignments were summarized in the previous update to
the Committee and have been reported on since 2021 through quarterly reports to the Policy
and Services Committee. The most recent report was in August 20241. Also in 2024, the City
advanced an Action Plan with specific projects to advance findings identified in an assessment
conducted by Ivy Planning Group. The Action Plan takes the City’s efforts into the next phase
beyond the initial work organized in 2020.
In early 2025, the City Council adopted four priorities and included “belonging” as part of one of
the priorities2. That priority is Public Safety, Wellness, and Belonging. As such, the update
reports will reference “wellness and belonging” to align with stated City Council priorities and
continue to advance this important work in the workforce and community. Staff will also
rename the Action Plan to the Wellness and Belonging Action Plan and make those updates to
the document and online.
Additionally, the City Council previously directed staff to prepare an ordinance specific to Palo
Alto on the Convention on the Elimination of All Forms of Discrimination Against Women
2 August 13, 2024 Action Minutes:
https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=4399823e-88aa-4251-9868-8d5a82492e9b
2 January 25, 2025 Action Minutes: https://www.paloalto.gov/Departments/City-Clerk/City-Council/City-Council-
Priorities
Item 4
Item 4 Staff Report
Item 4: Staff Report Pg. 1 Packet Pg. 75 of 117
(CEDAW). Staff included this task in the Action Plan as “Finalize CEDAW Ordinance and present
it to the City Council for adoption.” Staff has begun drafting the ordinance and it will be brought
back for review later in 2025.
ANALYSIS
This report provides updates on recent efforts of multiple departments in the City. It will also
provide an update on the status of the Action Plan items. There are 26 projects in total in the
Action Plan. With the Action Plan starting in Q3 2024, the projects are progressing along with 5
projects (23%) completed thus far and many more started and on track for completion. The
diagram below and in Attachment A (to be released in late packet) summarizes progress on the
action items.
Within the body of this staff report, staff has highlighted a few action item updates from the
Action Plan as well as some upcoming events related to ongoing City programming. Attachment
A contains the Wellness and Belonging Action Plan Updates as a reference.
-Action Item 1.3: Create a process that includes HRC for annual calendar setting related
to holidays and heritage months (related to the City Council calendar). The first iteration
of this was done in late 2024 with discussions at City Council and the Human Relations
Commission (HRC). The City Council adopted the 2025 calendar through this process.
-Action Item 2.1: Share DEI&B values with New Employees at New Employee Orientation
in context of workplace culture. Through a special project team, staff has created a
welcome overview for new employees to see the City’s wellness and belonging efforts
during the New Employee Orientation.
Not Yet Started
19%
Started
23%
On Track
35%
Behind
0%
Completed
23%
Status - Action Plan
Item 4
Item 4 Staff Report
Item 4: Staff Report Pg. 2 Packet Pg. 76 of 117
-Action Item 2.2: Conduct Quarterly Interactive DEIB workshop trainings for all employees
– trainings have been offered throughout 2024 and 2025 on various topics including
exploring diversity and gender, cultural competency, and resources for managers.
-Action Item 2.5: Finalize process for annual City staff demographic data reporting;
release the first report online. The demographic data has been finalized and is available
online for the 2023 data (which is a data snapshot every October). Staff is working on
getting the 2024 data compiled and also working on a more modern data display. Link to
demographics webpage: www.paloalto.gov/Departments/Human-Resources/Diversity-
Equity-Inclusion-City-Demographics
-Action Item 3.4: Finalize CEDAW Ordinance and Present it to the City Council for
Adoption. The draft ordinance is forthcoming and will include information on Palo Alto’s
principles on this topic including the City’s commitment to support policies and
programs that understand the unique needs of women in areas such as economic
development, housing/homelessness, and community library and transportation. Staff
will bring the full ordinance to Policy and Services for review and discussion, then
onward for full City Council adoption.
-Action Item 3.8: Work with an external firm to begin analysis and present analytical
summary of the RIPA (Racial Identity Profiling Act) Police data. Staff is working with the
National Policing Institute to help the City explore the best ways to review the data and
the types of questions that can be addressed with the data. The recent changes in
Washington DC have extended their timeline as the City’s agreement with NPI is
through a federal government agency. It is anticipated that the draft report will come to
City Council in some form later in the year (approximately September). In the meantime,
the annual RIPA data for 2024 was recently published online.
Other Updates Relevant to This Work:
-Religious intolerance training: The HRC presented to City Council in 2024 and
recommended a training related to religious intolerance. Staff researched providers
with the help of community suggestions and the HRC Chair and immediate past chair.
On July 105, the HRC discussed the proposed trainers (ING and Project Shema) and the
training scope for staff, board/committee/commission members, and City Council. Staff
is working on the contracts for both groups as a next step.
-Federal grant related to mental health: The City received a $2 million grant in
September 2022 to support TRUST, an alternative response program in Palo Alto,
Mountain View, and Los Altos. The funding was used for a pilot program to augment
TRUST with outreach, case management, and Mental Health First Aid training. An
5 July 10, 2025 Human Relations Commission Meeting:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=15832
Item 4
Item 4 Staff Report
Item 4: Staff Report Pg. 3 Packet Pg. 77 of 117
evaluation by RDA Consulting7 found that the augmentation improved community
awareness of mental health crisis response, increased TRUST utilization, and led to
positive client outcomes. The pilot program ran from July 2023 to August 2024 and with
a final informational report to City Council in January 20258.
Updates on other City-Wide Wellness and Belonging efforts
Human Relations Commission
Vice Chair Kraus, seconded by Commissioner Stimmler, moved to support a resolution affirming
the Human Relations Commission‘s unequivocal condemnation of all hate crimes and hate
incidents. This resolution reinforces the City of Palo Alto’s commitment to standing united
against all acts of hate, harassment, and intimidation.
Art Center
The Art Center presented the exhibition GROW in the Fall of 2024, which included numerous
BIPOC artists exploring the connections between gardens, plants and community. The
exhibition and related programs drew approximately 9,000 visitors. Notably, the exhibition
included the results of a residency between Oakland-based, African American artist Kija Lucas—
a site specific installation entitled The Enchanted Garden that drew upon Lucas’ experience
growing up in Palo Alto’s first intentionally racially integrated neighborhood, the Lawrence
Tract. Conversations with visitors throughout the exhibition touched on historical red lining in
the City.
In Winter 2025, the Art Center presented Cut from the Same Cloth, an exhibition that explores
the intersection of textile and technology, featuring a diverse range of artists including those
that identify as LatinX, Palestinian, and LGBTQ+.
Public Art
Artist in residence Aleo Landeta presented to the Public Art commission on January 16, sharing
insights from their previous six months of work with the LGBTQ+ community. Their full report
can be found here9. In addition, Aleo designed a temporary art installation, which was exhibited
at King’s Plaza in June. The Public Art Commission discussed the next artist residency during
their February 20th regular meeting.
7 RDA Consulting, TRUST Augmentation Report 2024;
https://www.cityofpaloalto.org/files/assets/public/v/1/intergovernmental-affairs/trust-augmentation-
evaluation_final-report.pdf
8 City Council, January 21, 2025 Agenda Item#10;
https://www.cityofpaloalto.org/files/assets/public/v/1/intergovernmental-affairs/trust-augmentation-
evaluation_final-report.pdf
9 Aleo Landeta, King Artist-in-Residence 2025; https://www.cityofpaloalto.org/files/assets/public/v/1/community-
services/public-art-program/king-air-report-alma-landeta.pdf
Item 4
Item 4 Staff Report
Item 4: Staff Report Pg. 4 Packet Pg. 78 of 117
Library
There are many activities at the library including the following:
Adults:
o Weekly Online ESL Conversation Group
o Weekly ESL Conversation: Talking About the News
o Quarterly ESL: Beyond the Basics Series
o Information Sessions with USCIS
o Weekly Tai Chi Program
o Zumba for All Ages (November, December)
o November:
UNAFF Film Series of Brazilian films and documentary series
Documentary Screening of OYATE for NAHM
o February: Know Your Rights event with the Human Relations Commission on
February 27
Teens:
o November: Day of the Dead Skull Decorating
Kids:
o Weekly Hora de Cuentos (all-Spanish Storytime)
o November:
Native American Heritage Month Storytimes
Family Craft: Navajo (Diné) Weaving
o January:
Lunar New Year Storytimes
Italian Family Storytime (w/ local language school)
o February:
Black History Month Storytimes
Kalimba King musical performance for BHM
STEAM Lab workshop on artist, Alma Woodsey for BHM
Author event with Deepa Iyer
Celebrating Cultures: Includes creating online book lists and blogposts, as well as in-
house displays at all locations:
o Festival of Lights: A Diwali Celebration (11/10): Over 350 people came to
celebrate Diwali at Mitchell Park Library & Community Center. The event
featured several dance performances, henna application and crafts.
o Chinese Calligraphy Class (1/7/25)
o Lunar New Year Celebration (1/11/25): Over 650 people came out to celebrate
the Lunar New Year with various performances and crafts at Mitchell Park
Library & Community Center.
Item 4
Item 4 Staff Report
Item 4: Staff Report Pg. 5 Packet Pg. 79 of 117
Silicon Valley Reads13: This community engagement program participated (January-
March 2025) in annual community reads initiative led by Santa Clara County Library
District. This year’s theme on “Empowering Humanity: Technology for a Better World,”
provided access to various authors, titles and events throughout various libraries in the
region, including discussions on access and impacts of tech on our communities.
For Collections (Print & Digital Resources):
Added new vendor resources for the City’s World Languages collections
Developing some focused standards for creating booklists and displays
Theatre
Student Matinees – Transportation Grants
In Winter 2025, the Children’s Theatre presented THE VERY HUNGRY CATERPILLAR featuring a
cast of professional actors in 52 performances, including 40 Student Matinees, for an estimated
9,000+ audience members. The Friends of Palo Alto Children’s Theatre have already awarded
nearly $8,000 in transportation grants that brought more than 1,000 students from Title-1
schools to see the production.
Magical Series
Classes & Camps: The Magical Series was developed by the Children’s Theatre in partnership
with the Magical Bridge Foundation, with the support of the Friends of Palo Alto Children’s
Theatre. Magical Series offerings are mindful of developmental rather than chronological age
groups, adjusted sensory environments, and smaller class and audience participation. In
Summer and Fall 2024, the Children’s Theatre offered Magical Story Acting and Dance Classes,
as well as Music Therapy classes, serving more than 60 participants with various developmental
disabilities. In August 2024, the theatre collaborated with the Magical Bridge Foundation to
provide theatre and music classes as part of a camp for older students with special needs, who
have aged out of most local programs.
Productions: The Summer Hot Dog Productions included Magical Series performances with
smaller audiences and modified sound cues for our sensory-sensitive friends.
ASL – Interpreted Performances
The Children’s Theatre offers ASL-interpreted performances at Summer Hot Dog Series
productions. ASL interpreters are engaged through the support of the Friends of Palo Alto
Children’s Theatre. Summer Hot Dog Series performances also offer a “Read-Along” option,
designed for mobile devices and tablets. Captioned activities provide support for the hearing-
13 Silicon Valley Reads January 2025-March 2025; https://www.siliconvalleyreads.org/
Item 4
Item 4 Staff Report
Item 4: Staff Report Pg. 6 Packet Pg. 80 of 117
impaired community, as well as neurodivergent participants who derive a greater depth of
understanding and context from a second input stream.
Outreach
Theatre – Serving PAUSD Grades 3-5: The Children’s Theatre did its annual theatre series of on-
site theatre productions in Palo Alto elementary schools with a production at El Carmelo
Elementary School. This year’s series will also include productions at Lucille Nixon, Duveneck,
Hoover, Ohlone and Barron Park Elementary School. (Serving all 12 PAUSD elementary schools
in a two-year cycle.) Participation is free for participants, and every child who auditions is cast.
Dance – Serving PAUSD Grades K-2: The Children’s Theatre Dance in Schools Program serves all
K-2 students in PAUSD Elementary Schools, and encourages children to creatively express
themselves through movement, while achieving fitness and wellness benefits.
Community Collaborations
The Breath Project: In August 2024, the Children’s Theatre continued its participation in The
Breath Project, a national theatre movement started by Children’s Theatre staff in 2020 to
support anti-racism efforts and equity in the arts. Through private funding by a Bay Area
Foundation, The Breath Project co-produced the Black Experience Festival at The Pear Theatre
August 9-25, 2024, in Mountain View. The festival featured the world premiere production of
CRAWFISH: We the Invisible, the story of an unhoused man living in the Bay Area, and The
Reparations Project, a mock-trial of a civil case for slavery reparations. The materials generated
through The Reparations Project are intended for use as a hybrid theatrical/political science
tool in high school and college classrooms, to encourage students to critically analyze the
historic and present-day inequalities that have resulted from slavery and systemic racism. By
acknowledging the case for reparations, classrooms become spaces for transformative learning
and the promotion of social equity. The festival included internship opportunities for local
teens.
New Play Commissions: In November 2024, the Children’s Theatre produced the World
Premiere of a Playhouse Series Production written by 3 teen program participants that
celebrates the Chinese Mid-Autumn Festival, Chang’e and the Moon, running November 16-17.
The theatre also prepared for its bi-annual production of One Grain of Rice which was in March
2025, as an adaptation of the Indian folktale by Demi. It included a Holi Color Festival
celebration produced in collaboration with South Asian community members, and is one of the
only Bay Area Holi celebrations designed for very young participants.
FISCAL/RESOURCE IMPACT
Funding for the work described within this report was appropriated, and contracts were
encumbered in previous fiscal years (FY 2022 through FY 2025). Where appropriate, the
contracts have continued into FY 2026. Staff requested the remaining funding to be
Item 4
Item 4 Staff Report
Item 4: Staff Report Pg. 7 Packet Pg. 81 of 117
reappropriated into FY 2026 as part of the annual reappropriation recommendation to the City
Council, estimated for October 2025. Funding in subsequent years is subject to City Council
approval as part of the annual budget process.
Stakeholder Engagement
Community Engagement and outreach are key pillars of Palo Alto’s ongoing wellness and
belonging work. The City has prioritized engagement (internally and externally) by actively
seeking input to help shape its strategy. Through a series of conversations, the City continues to
foster dialogue and build understanding across diverse community groups. Efforts are now
expanding to include training initiatives that promote religious tolerance and unconscious bias
trainings for Boards and Commissioners. Four Unconscious Bias training sessions have been
scheduled for September and will be facilitated by CircleUp Education15. Updates on these
initiatives, along with any blogs highlighting this work will be shared on the City’s Wellness and
Belonging webpage.
ENVIRONMENTAL REVIEW
Not a project.
ATTACHMENTS
Attachment A: Status of Wellness and Belonging Action Plan Items (To be released late packet
on August 7, 2025)
APPROVED BY:
Ed Shikada, City Manager
15CircleUp Education- https://www.circleuped.com
Item 4
Item 4 Staff Report
Item 4: Staff Report Pg. 8 Packet Pg. 82 of 117
Item No. 2. Page 1 of 1
7
9
4
2
Policy & Services Committee
Supplemental Report
From: Kate Murdock, City Auditor
Meeting Date: August 12, 2025
Item Number: 2
Report #:2508-5043
TITLE
Supplemental Report - Office of the City Auditor Presentation of the Purchasing Card Audit
Report
RECOMMENDATION
The Office of the City Auditor (OCA) recommends City Council accept the revised Purchasing
Card Report with corrections to the information provided in the report’s Additional
Observation.
BACKGROUND
The OCA was made aware of incorrect information provided in the Additional Observation of
the report and is issuing this supplemental report and a revised Purchasing Card Audit Report
for City Council’s review.
Specifically, the Report’s Additional Observation assesses the number of staff hours that could
be saved by increasing the purchasing card spending limit and reducing the number of purchase
orders processed by staff. OCA incorrectly included some warehouse orders that cannot be
shifted to purchasing cards. Overall, this reduced the number of estimated staff hours that
might be saved.
ATTACHMENTS
Attachment A: Purchasing Card Audit Report - Corrected
APPROVED BY:
Kate Murdock, City Auditor
Item 2
Item 2 Supplemental Report
Item 2: Staff Report Pg. 1 Packet Pg. 83 of 117
1
+
July 29, 2025
City of Palo Alto
Office of the City Auditor
Purchasing Card Program Audit
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 2 Packet Pg. 84 of 117
Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structure and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are
not licensed CPA firms.
Contents
Executive Summary ............................................................................................................................ 1
Purpose of the Audit ........................................................................................................................... 1
Report Highlights ................................................................................................................................ 1
Introduction ........................................................................................................................................ 4
Detailed Analysis ................................................................................................................................. 6
Audit Results ....................................................................................................................................... 9
Appendix A: ....................................................................................................................................... 22
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 3 Packet Pg. 85 of 117
1
Executive Summary
Purpose of the Audit
Baker Tilly Advisory Group, LP (Baker Tilly), in its capacity serving as the Office of the City Auditor
(OCA) for the City of Palo Alto (the City), conducted a Purchasing Card (P-Card) Program Audit
based on approved Task Order 4.29 as part of the City’s FY25 Audit Plan. The objective of this audit
was to:
• Determine whether P-Cards are used appropriately in compliance with the City’s policies and
pertinent laws and regulations.
• Evaluate the administration of the P-Card Program for adequate internal controls to safeguard
the City from fraud, waste, and abuse.
Report Highlights
Finding 1: (Page 9) Overall, the City's P-Card program demonstrates strong internal controls and adherence to procurement policies, however, user compliance with policy requirements could be improved. The OCA confirmed that all P-Card expenses analyzed complied with the "General
Guidance for Use" section of the P-Card Guidebook (Guidebook), ensuring purchases were not personal and directly supported City operations. However, OCA noted that some P-Card purchases were not documented as required by City
policy and could not confirm timeliness of approver review in the system due to system reporting limitations. The OCA noted that while the City does have a Guidebook and training videos, the City does not have an established, ongoing training program for P-Card users. However, prior to 2020 and staffing reductions due to the COVID pandemic, staff stated that in-person trainings were held monthly. Administrative staff and department leaders agree that regular, recurring formal training is important and will help improve compliance with program requirements and are currently working to formalize training. Key Recommendations
To further strengthen compliance with P-Card program guidelines, we recommend that management enhance cardholder and approver training on specific documentation requirements.
We also recommend exploring system enhancements for approval timestamps by collaborating with the City’s P-Card system vendor, to explore adding timestamp
functionality to the system for approver actions and automating system notifications of non-compliance to users.
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 4 Packet Pg. 86 of 117
2
EXECUTIVE SUMMARY
Management should consider the merits of implementing clearly defined, tiered consequences for P-Card policy non-adherence vs. the cost of implementing such measures.
Finding 2: (Page 14)
Some P-Card Program oversight and administrative functions are not consistently completed and documented; more efficient review processes could save staff time.
The OCA noted three areas for improvement in program oversight and
administration: the post-audit process, tracking and documenting P-Card misuse, and documenting approved exceptions to P-Card spending limits.
The OCA noted that the post-audit process is not always completed due to staffing shortages, and the process can be overly time-consuming. In addition, Accounts Payable's (AP) post-audit of P-Card transactions focuses on all software/hardware
purchases and transactions over $1,000. Approximately 88% of transactions are not reviewed which may limit the effectiveness of the post-audit activity to identify areas of concern. A statistically significant sampling process, encompassing all transaction sizes, may provide a more accurate and complete picture of compliance while also taking less staff time. AP notifies relevant departments and P-Card administrators of discrepancies like missing documentation or policy violations, with common infractions including
purchase splitting and unauthorized acquisitions. However, the current manual tracking system for P-Card misuse is inconsistent and incomplete, lacking specific dates, categorized infraction types, and documented resolutions, which hinders
effective policy enforcement and the identification of misuse trends. Finally, the City's process for documenting P-Card spending limit increases, which
relies on a "P-Card Credit Limit Request Form," lacks formal documentation for different types of exceptions to purchase limits and the OCA found some instances where evidence of approvals could not be located.
Key Recommendations
To strengthen the P-Card internal control environment and potentially realize cost savings through a more efficient post-audit process, we recommend that AP
consider adopting a multi-faceted strategy centered on consistent operations and statistically valid sampling. This means shifting from the current review methods to a statistically random sampling methodology, with the precise sample size
calculated monthly to ensure findings accurately represent all transactions. We recommend that the P-Card Administrator ensure all instances of misuse are formally and comprehensively tracked including the type of infraction, infraction date, and resulting resolution. We recommend formalizing and standardizing the P-Card limit exception process. The "P-Card Program Credit Limit Request Form" should be revised to include
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 5 Packet Pg. 87 of 117
3
EXECUTIVE SUMMARY
fields for all types of card limit exceptions, ensuring consistent documentation of the rationale and approver concurrence.
Additional Observation: (Page 18)
As part of our assessment, we also looked at the overall objectives of the P-Card Program to assess its effectiveness and efficiency in aiding departmental staff to procure items. We identified potential cost savings the City could achieve by raising
the P-Card transaction limits versus continuing to use purchase orders to procure items with certain dollar thresholds.
The City's current procurement procedures, particularly for lower-value transactions exceeding the micro-purchase threshold, create significant administrative burdens and consume substantial staff time due to council approval and solicitation
requirements. This inefficiency is exacerbated by an unchanged P-Card limit since 2016, despite inflation. Raising the P-Card limit, potentially aligning with the anticipated federal micro-purchase threshold increase to $15,000, could save hundreds of staff hours currently spent processing purchase orders within the $10,000 to $15,000 range. Such a change could potentially streamline operations, reduce incentives for purchase splitting, and prevent delays in acquiring essential goods and services, reallocating resources to more strategic initiatives.
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 6 Packet Pg. 88 of 117
4
Introduction
Objective Determine whether P-Cards are used appropriately in compliance with the City’s policies, pertinent laws, regulations and evaluate the administration of the P-
Card Program for adequate internal controls to safeguard the City from fraud, waste, and abuse. Background The City’s P-Card Program is intended to streamline and simplify the Purchasing and AP functions by eliminating steps for low dollar purchases below $10,000. The P-Card is a tool
that reduces transaction costs, facilitates timely acquisition of materials and supplies, automates data flow for accounting purposes and offers flexible controls to help ensure proper usage. Managed by a designated Agency
Program Administrator in the Purchasing Department, the program provides designated employees with City-issued credit cards to facilitate timely and cost-effective purchases, reducing the administrative burden associated with traditional purchase orders. Each cardholder is assigned a monthly credit limit of $15,000 and is required to follow established purchasing policies and procedures, including documentation, reconciliation, and supervisory approval of transactions. The program aims to
improve operational efficiency while maintaining strong internal controls to ensure responsible spending of public funds.
The P-Card program is governed by the City’s Procurement Card Guidebook. This document outlines roles and responsibilities, allowable and restricted purchases, and monitoring requirements. Regular oversight and audits are key to
ensuring the program’s integrity and alignment with the City’s financial and ethical standards.
Scope The OCA obtained purchase card transactions from FY 2023 to FY 2024 and assessed P-Card transaction approvals and internal controls for managing the P-Card Program across all applicable departments.
Methodology To achieve the audit objectives, the OCA performed the following procedures:
• Interviewed the appropriate individuals to gain an understanding of the organizational structure, processes, and controls related to the P-Card Program.
• Analyzed policies and procedures as well as legislative and regulatory requirements to identify criteria to evaluate control design and effectiveness.
• Judgmentally selected a sample of P-Card users, transactions, and misuse log from FY2023, FY2024, and the first half of FY2025 to determine if P-Card use is in compliance with pertinent laws and
regulations, City policies, and procedures, if the P-Card Program is
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 7 Packet Pg. 89 of 117
5
INTRODUCTION
1 Government auditing standards require an external peer review at least once every three (3) years. The last peer review of the Palo Alto
Office of the City Auditor was conducted in 2017. The Palo Alto City Council approved a contract with Baker Tilly U.S, LLP for internal audit services for October 2020 through June 2022 with an extension through June 2025. City Council appointed Kate Murdock, Audit Manager in Baker Tilly’s Risk Advisory practice, as City Auditor in May 2024. As a result of transitions in the Audit Office and peer review delays due to the COVID pandemic, an external peer review is targeted for 2025. It should be noted that Baker Tilly’s most recent firmwide peer review was completed in November 2024 with a rating of “Pass”. The scope of that peer review includes projects completed under government auditing standards.
effectively administered to users, and if P-Card activity is adequately audited and reviewed by the Administrative Services Department (ASD).
• Completed audit report of findings, conclusions, and recommendations based on the supporting evidence gathered.
Compliance Statement
This audit activity was conducted from January 2025 to June 2025 in accordance with generally accepted government auditing standards, except for the
requirement of an external peer review1. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings, observations, and conclusions based on our
audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings, observations, and conclusions based on our audit objectives.
Organizational Strengths
During this audit activity, we observed a strong spirit of collaboration and a clear dedication to continuous improvement among the ASD leadership – particularly within the P-Card Program and AP teams. Their efforts reflect a shared commitment to providing the City with accurate, reliable information to support informed decision-making. The OCA appreciates the support of the ASD in conducting this audit activity. Thank you!
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 8 Packet Pg. 90 of 117
6
Detailed Analysis
P-Card Program Management Criteria and
City Code
Procurement Card Guidebook The City’s Procurement Card Guidebook, version 15, updated November 2024,
governs the Program and serves as a comprehensive resource for the City's P-Card users. The P-Card itself is a MasterCard issued by JPMorgan/Chase, designed to streamline purchasing and AP by eliminating steps and reducing transaction costs for
purchases $10,000 and under. The program operates under guiding principles of transparency, accountability, integrity, consistency, efficiency, and manageability, and is intended to complement existing procurement processes rather than bypass them. The Guidebook outlines processes for using P-Cards, details permissible and prohibited purchases, and specifies the record-keeping and reconciliation requirements for each billing cycle. It emphasizes that cardholders are committing City funds and are responsible for all charges made to their card, with misuse
potentially leading to disciplinary action. The Guidebook also defines the responsibilities of various participants in the P-Card
Program, including Cardholders, Account Group Managers, Approvers/Level Managers, AP staff, the Agency Program Administrator (APA), and the system vendor. It details card limits, such as a $10,000 maximum for a single purchase, no
more than 10 daily transactions, and a $15,000 maximum in a 30-day cycle, which can be temporarily increased via departmental request and approval from the APA. Palo Alto Municipal Code The current P-Card purchasing authority and maximum for single purchases is based
on established purchasing limits detailed in Palo Alto’s Municipal Code. “Chapter 2.30 Contracts and Purchasing Procedures” of the Palo Alto Municipal Code states the following: 2.30.230 Designated employee purchases of $10,000.00 or less.
Employees authorized, in writing, by their department heads may award and sign
contracts for the purchase of goods and the procurement of general services,
where the contract price does not exceed $10,000.00 and the contract term does
not exceed one year. All purchases and procurements shall be made in
accordance with the contracting procedures and requirements contained in this
chapter and in the purchasing manual. The written authorizations of department
heads shall be kept on file by the Procurement Officer.
2.30.240 Designated employees’ use of petty cash, P-card or other credit
card.
Employees designated in writing by their department heads, including by
completed P-card authorization request form, may make purchases by using petty
cash or make payments by using a city P-card or other credit card. All purchases
shall be made in accordance with the contracting procedures and requirements
contained in this chapter and in the purchasing manual. The written authorizations
of department heads shall be kept on file by the Procurement Officer.
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 9 Packet Pg. 91 of 117
7
Program Environment
The OCA conducted a comprehensive analysis of P-Card transaction data spanning
from July 1, 2022, to December 31, 2024, alongside cardholder data from July 1, 2023, to January 29, 2025. Our analysis identified a total of 42 unique departmental divisions participating in the P-Card Program. The transaction amount totaled
$9,033,155.92 in FY2023, $9,515,758.87 in FY2024, and $ 4,604,414.13 in the first half of FY2025 revealing a total transaction amount of $23,153,328.92 across 44,705 purchase line items. Over the two-and-a-half-year period the OCA examined, the
departments with the highest P-Card usage in terms of transaction amount were PWD Public Services – FAC, which led with $3,927,234.77, followed by PWD Env. Services - WQCP ($2,201,246.41) and IT ($1,636,975.63). Table 1: Top 10 Departments by Transaction Amount
Department Total Amount
PWD Public Services - FAC $3,927,234.77
PWD Env. Services - WQCP $2,201,246.41
IT $1,636,975.63
CSD Open Space, Parks, & Golf $1,323,946.17
Utilities Electric Operations $1,295,651.97
Police Department $1,190,825.79
Utilities WGW $1,134,320.06
PWD Public Services $1,061,659.67
Fire Administration $979,260.20
CSD JMZ & Interpretive $797,260.14
Note: Dataset 07/01/2022 - 12/31/24 Regarding the number of transactions, PWD Public Services - FAC was the most active with 5,659 purchase line items, with Utilities WGW closely behind at 5,022.
CSD JMZ & Interpretive (3,350 line items), Police Department (2,764 purchase line items), and CSD Recreation (2,299 line items) also demonstrated high transaction volumes. Table 2: Top 10 Departments by Number of Transactions
Department Number of Purchase Line Items
PWD Public Services - FAC 5,658
Utilities WGW 5,022
CSD JMZ & Interpretive 3,350
Police Department 2,764
CSD Recreation 2,299
PWD Env. Services - WQCP 2,275
Utilities Electric Operations 1,969
CSD Open Space, Parks, & Golf 1,898
CSD Children's & Community Theatre 1592
IT 1559
Note: Dataset 07/01/2022 - 12/31/24
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 10 Packet Pg. 92 of 117
8
The OCA’s analysis of cardholders’ data revealed there were 254 current active cardholders across 42 unique departmental divisions as of the end of January 2025. The Police Department had the most cardholders (34), followed by Fire
Administration (20) and PWD Env. Services - WQCP (16). Table 3: Top 10 Departments by Current Active Cardholders
Department Number of Active Cardholders
Police Department 34
Fire Administration 20
PWD Env. Services - WQCP 16
PWD Public Services - FAC 15
CSD Open Space, Parks, & Golf 12
CSD JMZ & Interpretive 10
CSD Recreation 10
PWD Env. Services - WP 10
Utilities Electric Operations 10
Utilities WGW 10
Note: Data as of 1/29/25 Currently, AP conducts comprehensive post-audits of P-Card transactions to ensure
adherence to established P-Card guidelines, focusing on those valued at $1,000 or more. To better understand the coverage of post-audit review, the OCA performed a distribution analysis across all transactions in the scope period. After removing all
$0.00 and negative dollar amount transactions from the data set which represented returns or voided transactions, the purchase line item population for the distribution analysis went from 44,705 line items to 43,588. The distribution analysis shows that
77.66% (33,852 line items) were less than $500.00 and 9.92% (4,325 line items) were between $500.00 and $999.99, indicating that most transactions from the scope period would not be subject to comprehensive post-audits. Table 4: Purchase Line Item Distribution by Dollar Amount
Distribution Subgroup Number of Purchase Line Items Percentage of Purchase Line Items
$0-499.99 33,851 77.66%
$500-999.99 4,325 9.92%
$1,000-4,999.99 4,520 10.37%
$5,000-9,999.99 881 2.02%
$10,000+ 10 0.02%
Note: Dataset 07/01/2022 - 12/31/24
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 11 Packet Pg. 93 of 117
9
Audit Results
Finding 1:
Overall, the City's P-Card Program demonstrates strong
internal controls and adherence to procurement policies, however, user compliance
with policy requirements could be improved.
The City’s P-Card program, utilizing a MasterCard credit card issued by JPMorgan/Chase, serves as a streamlined procurement and payment tool. The purpose of the program is to reduce transaction
costs, facilitate the timely acquisition of materials and supplies, and automate data flow for enhanced accounting efficiency, all while providing flexible controls to ensure proper usage. Designed as an
alternative to traditional methods such as petty cash, check requests, and low-dollar purchase orders, the P-Card Program is intended to complement, not bypass, established procurement and payment
procedures. Program requirements include adherence to spending limits and policy guidelines, diligent record-keeping and reconciliation, thorough review and approval, and consistent program administration and oversight. There are several key roles involved in the P-Card process:
• Cardholder
• Approver
• AP
• Agency Program Administrator (APA)
• JPMorgan/Chase
The City has a Procurement Card Guidebook that establishes the purpose, policies, procedures, and responsibilities for cardholders and approvers. This policy requires that:
• Cardholders upload receipts to SmartData daily and/or weekly.
• Cardholders assign their purchases, on a daily or weekly basis, to the correct cost centers/GL accounts,
• Approvers review and authorize cardholder purchases, ensuring compliance and correct accounting by the 5th of every month.
The OCA tested a sample of 39 transactions made between July 7, 2022, and December 31, 2024, for adherence to the City’s Guidebook. The OCA selected a representative sample of transactions.
Cardholder purchases consistently align with the Guidebook, demonstrating that expenditures are directly supportive of City operations and are not personal in nature. The OCA examined expense descriptions and receipts to ensure
purchases were not personal in nature and directly support City operations, in compliance with allowable card uses cited in the "General Guidance for Use" section of the Guidebook, and there were
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 12 Packet Pg. 94 of 117
10
2 City of Palo Alto, Procurement Card Guidebook: Travel upgrades and business travel meals are not allowed. The card cannot be used for certain event-related food (e.g., retirement parties, holiday events), alcoholic beverages, or consultant meals. Prohibited items also extend to bottled drinking water, pesticides (with limited exceptions), foam foodware, and specific antibacterial soaps. Furthermore, using the P-Card for purchases with existing City contracts, gift cards for employees, safety shoes for certain staff, or Amazon Prime memberships is not permitted. Small appliances for employee-only spaces are generally restricted without an Assistant City Manager's approval. IT software and hardware purchases are allowed but require approval before purchase.
no exceptions. This section explicitly prohibits personal purchases, cash advances, and unauthorized travel/entertainment expenses. Specific restrictions include the purchase of safety products (i.e. glasses, hard-hats, earplugs, insect repellent), personal items, fuel for personal vehicles, and payments to the City itself.2
It is important to note that the ultimate determination of whether purchases are authorized, appropriate, and correctly allocated rests
with cardholders and designated approvers, and department leadership. Some P-Card purchases were not documented as required by City policy.
Based on our P-Card transaction testing, we found strong internal controls and compliance with P-Card policies with respect to documenting purchases. For all transactions tested, the OCA noted that receipts were uploaded documenting transactions and GL cost centers were assigned for each purchase. However, some required documentation was missing.
Out of 39 transactions reviewed, 35 were fully compliant, demonstrating that most purchases were properly documented, assigned to general ledger cost centers, and reviewed by designated
approvers. This reflects positively on the overall management of the P-Card Program.
However, there were three transactions (10%) that did not have the Guidebook-specified documentation required.
The Guidebook states food purchases must have a separate sheet of paper uploaded, along with the receipt, which specifies the business purpose of the meal and a list of participants. OCA found two
instances where a separate sheet of paper detailing the business purpose and list of participants was not provided, however, most of this information was provided in the vendor p-card system. The Guidebook states when making IT software or hardware purchases, an email must be sent to the City’s Help Desk stating the specific request to purchase the IT related item. If IT Management approves (via email) the purchase, the P-card user is
required to attach a copy of the approving email along with the purchase receipt when submitting supporting documentation for
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 13 Packet Pg. 95 of 117
11
processing. OCA found two instances of IT purchases that where the email documenting IT Management approval was not provided. However, AP staff noted that approvals documented in the JP Morgan
Chase were performed by IT Management. The City may want to revisit the Guidebook and determine if the
existing requirements are still relevant or if less labor-intensive documentation is sufficient, such as leaving comments in JP Morgan Chase as opposed to submitting separate paperwork. These
exceptions, while few, pose a risk of non-compliance with policies and make it difficult for reviewers to timely confirm purchases. Such policies are in place to prevent any potential fraud, waste and abuse, which was not found. These exceptions also highlight the need for continued training to ensure users understand the importance of documentation and adherence to policy. All tested P-Card transactions showed system-generated
evidence of approver review, however, the timeliness of review could not be verified.
Per the Guidebook, in addition to reviewing a cardholder’s transactions, ensuring the cardholder has uploaded sales receipts and any supporting documentation for each purchase, and that each
transaction has a cost center account assignment, approvers must also ensure all cardholder transactions are approved in the system by the 5th of the month.
For all transactions tested, the OCA noted that every transaction had
system-generated evidence of review by an approver confirming required review. However, the system does not provide timestamps, making it impossible to verify whether approvals occurred within the
required timeframe. Program administration staff stated that they have to routinely send
reminders to p-card approvers when approvals have not been submitted timely. This, in turn, creates process delays with monthly review responsibilities potentially resulting in lost time and may limit staff time for other Accounts Payable activities. The City does not have an established, ongoing training program for P-Card Program users. The Guidebook states that the APA is responsible for facilitating training for the P-Card Program. When a department submits an application for a new cardholder, the potential cardholder is required
to complete mandatory training. Once training is completed, the cardholder can self-register for a system login. As part of the new account process, the City also requires each user to sign the P-Card
Cardholder User Agreement via the system.
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 14 Packet Pg. 96 of 117
12
Program administration stated that while users are provided with the Guidebook and have to sign a user agreement via the vendor system website in order to initiate use of their card, they frequently have to
explain the program parameters to users suggesting that actual review of the Guidebook may be limited. While the City has training materials and user agreements in place, evidence that activities were completed
could not be provided by the APA or the system vendor. The Guidebook also notes that training may be required because of
improper or flagrant violation of P-Card authorized use, loss of receipts, or failure to complete monthly transaction processing by designated deadlines. This mandatory refresher course would involve both the cardholder and the approving official. However, program administrators indicated this training does not typically happen. While all program stakeholders, including cardholders, approvers, and AP, can access a step-by-step guide and training video on the
Purchasing Resource Library to assist with uploading receipts, cost center coding, reviewing, and approving P-Card transactions, it is not clear how often this resource is accessed. Administrative staff stated
the need for regular, recurring training to eliminate confusion and to reduce time spent responding to individual inquiries. P-Card Program
leaders of departments with high P-Card utilization corroborated this
need, expressing a desire to develop a formal, recurring training program. In addition, our analysis of AP’s monthly reconciliation process and the APA’s P-Card misuse tracker showed instances of
non-compliance with the P-Card policy. According to the APA, apart from the initial training provided when a
card is issued, some ad hoc departmental training, and the recently created training videos, there is no structured training program for P-Card users. The APA stated that this lack of training has led to frequent policy-related questions and potential misuse of cards. The primary source of guidance for program stakeholders is the lengthy Guidebook, which administrators said does not appear to be read thoroughly. A lack of adequate P-Card training may result in incomplete receipt uploading, incorrect cost center coding, and hinder
the effective review and approval of transactions. This can lead to operational inefficiencies, increased errors, and heightened financial and compliance risks for the City.
Departmental personnel also reported concerns regarding recurring instances of inadequate purchase review, budget overruns, and the
use of P-Cards as a matter of convenience rather than adhering to established procurement channels. While staff expressed a desire for a regular, formalized P-Card training program to mitigate these issues,
staff also said that since there are no consequences for violating the policy, there is little to deter repeat offences. This absence of corrective measures could impact effective policy enforcement and compliance.
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 15 Packet Pg. 97 of 117
13
The APA did note that in the past, some limited training sessions have been conducted for new employees, but a more comprehensive approach is needed. There are plans to develop computer-based
training modules to educate employees on P-Card policies and procedures. Additionally, annual refresher courses are planned to ensure ongoing compliance and to keep users updated on any policy
changes. These planned initiatives aim to improve user understanding and reduce instances of misuse, which are currently a concern due to the lack of formal repercussions for policy violations.
Recommendation Strengthen Compliance: To further strengthen compliance with P-Card program guidelines, we recommend that management enhance cardholder and approver training on specific documentation requirements which may include providing targeted training and quick reference guides or checklists.
In addition, management may want to consider a form(s) for
documenting purchases such as food, fuel reimbursement, and IT purchases to simplify documentation procedures for users and approvers. However, management will need to determine if this will
create efficiencies and enhance compliance or add unneeded steps. We also recommend exploring system enhancements for approval
timestamps by collaborating with City’s P-Card system vendor, to explore adding timestamp functionality to the system for approver actions and automating system notifications of non-compliance to
users. Finally, management should consider the merits of implementing
clearly defined consequences for non-adherence against the time and resources necessary to do so. Such a system could range from written warnings and remedial training for minor first offenses to temporary suspension of cardholder or approval privileges for repeat issues, and potentially permanent expulsion from the P-Card Program. If the City were to adopt a system of disciplinary action for non-adherence, management would need to formalize this tiered policy in the Guidebook, communicate it clearly to all approvers, apply
consequences consistently, and document all violations in collaboration with Human Resources. Training: We recommend that the City continue working to establish and implement a formal, structured, and ongoing P-Card training program for all stakeholders, including cardholders, approvers, and
AP personnel. This program should continue to mandate initial training for all new P-
Card applicants, requiring completion of the JP Morgan-administered training as outlined in the Guidebook, and ensure that all completed training is documented and tracked. A comprehensive curriculum should be developed, expanding beyond current guides to explicitly cover appropriate use, prohibited purchases, spending limits, limit
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 16 Packet Pg. 98 of 117
14
increase procedures, consequences for misuse, and detailed documentation. Finally, regular, periodic refresher training for all active P-Card users and approving officials should be required to ensure
ongoing compliance and policy awareness. Management Response
Responsible Department(s): Administrative Services Department Concurrence: Agree Target Date: November 2025 Action Plan: ASD will resume in person and hybrid training while continuing to pursue technology-based training solutions such as automated classes, videos, and tests. This will include disseminating reference guides and checklists. The in-person training will focus on allowable transactions, non-
permissible transactions, approval process, required supporting documents for transactions, and due dates. The training will be
required for all new P-Card holders and approvers. Technology solutions will be explored for refresher trainings.
ASD will evaluate adding a form for documenting purchases such as food, fuel reimbursement, and IT purchases. This evaluation will determine if the form creates efficiencies or adds unneeded steps. If
the former, then a form will be added to the process. Adding timestamp information will be explored with the P-Card system vendor along with notifications to users for non-
compliance.
ASD will implement a system of consequences for non-compliance. Such a system might include an escalation of consequences after a certain number of infractions. The ultimate
consequence would be removing P-Cards from users. This will
include mandatory training for repeat infractions. Additional resources will be provided to those with infractions to ensure their understanding of the rules.
Finding 2:
Some P-Card Program oversight and administrative functions are not consistently
completed and documented; more efficient review
AP and the APA are tasked with the oversight and administration of the P-Card Program. AP staff is responsible for ensuring that cardholder activity is documented, supported, and authorized, and verifying that cardholders and approvers adhere to program policies.
To maintain compliance with P-Card policies and procedures, AP staff conducts post-audits and actively monitors P-Card activity.
The APA holds comprehensive authority and responsibility for the P-Card Program's operation, including closely monitoring it and acting as the primary liaison between the City and JPMorgan/Chase. The
APA is also responsible for managing procurement card
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 17 Packet Pg. 99 of 117
15
processes could save staff time.
administration, including card activation, issuance, assisting in developing citywide policies and procedures, overseeing program activity, and maintaining and tracking credit limits for cardholders’
authorized limits. We found that AP's mandated monthly post-audits may be hampered
by staffing shortages and high transaction volume, which undermines the effectiveness of these reviews. Additionally, current methods for tracking and documenting P-Card misuse are inconsistent, hindering
management's ability to identify patterns and enforce policy effectively. Furthermore, our analysis revealed a lack of adequate documentation for approved exceptions to P-Card spending limits. This indicates a need for more formal and transparent procedures in this area. Overall, these findings highlight opportunities to enhance the P-Card Program's controls and administrative efficiency.
The post audit process is not always completed due to staffing shortages and is overly time-consuming. More efficient review
processes could save staff time. AP is responsible for conducting comprehensive post-audits of P-Card
transactions to ensure adherence to established P-Card guidelines. Their current review protocol mandates a monthly examination of all P-Card transactions valued at $1,000 or more, as well as all software
and hardware acquisitions. Additionally, AP performs ad-hoc spot checks on transactions that may indicate potential cost-splitting or appear unusual. Through interviews with AP and ASD leadership, the
OCA learned that timely review is often a challenge for staff due to staffing capacity and the volume of transactions eligible for review. The OCA selected three months from the scope period and requested the post audit reviews conducted to assess the process. AP was able to provide evidence for 2 of the 3 selected months, stating that review for the third month was not completed due to staffing shortages. This indicates that while the post-audit review process is established, it is not always completed which may compromise the purpose of the review.
The OCA also performed a deeper analysis of the most recent month within the scope period, December 2024. During that post audit review, AP reviewed 203 of the 1,310 purchase line items made. This
represented approximately 15% of the total number of purchases made that month and 73% of the total dollar amount. Of the 203 transactions, 164 (approximately 12% of the total number) exceeded
the $1,000 threshold for required review. The post audit review documentation indicated that of 61 transactions, approximately 30 reviewed required additional follow-up with cardholders, approvers, or department leadership. Of those 61, 10 transactions were identified as cost-splitting violations. While this represents less than 1% of the total transactions for the time period, it still represents a policy violation.
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 18 Packet Pg. 100 of 117
16
According to AP staff, post audit can take anywhere from 3 minutes to an hour per transaction, depending on the level of review needed.
This highlights the labor-intensive nature of the process. This time commitment, especially when coupled with staffing shortages, directly contributes to the inability to achieve comprehensive review coverage
directly impacts control effectiveness and efficiency. Further, the high follow-up rate, combined with the limited review
coverage, could mean there are issues present within the unreviewed 88% of transactions and a new approach to post audit review may be needed. It is often assumed that only large-value transactions present a significant risk of misuse or error. However, this assumption may be misleading. In practice, individuals may be more inclined to commit smaller, seemingly insignificant infractions, under the perception that such transactions are less likely to be selected for review and therefore less likely to be detected. This is another instance where
staff could incorporate the use of Excel data analytics tools to identify spending trends over time that may require further investigation. For instance, PivotTables and COUNTIF functions can be effectively
utilized to quantify transaction volumes per employee or per vendor. A high frequency of small-value transactions by a single employee, or a notable volume of transactions consistently falling just below the
$1,000 review threshold, could indicate a need for more in-depth scrutiny. (See Appendix A)
A statistically significant sampling, encompassing all transaction sizes, may provide a more accurate and complete picture of compliance. While formal internal guidance for transaction sampling may not be
established, our analysis suggests that a comprehensive approach to sampling would involve examining all transactions, rather than a select subset. This would promote a more complete and robust review. For example, if AP were to conduct a random sample and applied a 95% confidence level with a +/- 10% margin of error rate to the 1,310 purchase line item population, this confidence level would require a testing sample of 90. In addition, there are other data analytic procedures AP may be able to administer to identify trends
and issues such as split transactions. There is potential for use of these analytics to further save staff time and increase the rigor or AP’s review. (See Appendix A) The current process for tracking and documenting P-Card misuse is inadequate and lacks comprehensive and consistent record-keeping. Upon identifying discrepancies such as missing documentation or
policy violations, AP initiates communication with the relevant department and formally notifies Purchasing and the AP Administrator, who are responsible for overseeing instances of P-Card misuse. Common infractions include purchase splitting and the acquisition of unauthorized appliances. The current tracking process for these issues is manual, relying on a log.
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 19 Packet Pg. 101 of 117
17
The OCA assessed the P-Card Misuse tracker to identify recurring themes and evaluate the resolution process. Our analysis revealed
that instances of misuse are not consistently or comprehensively documented. While the tracker dates back to 2022, the tracking system frequently lacks specific dates for when misuse occurred and
does not categorize the types of infractions, such as cost splitting or unauthorized purchases. Additionally, the types of program misuse (e.g., cost splitting, professional services, safety equipment) are not
categorized, hindering clear tracking of infraction types. Furthermore, the outcomes of investigations and their resolutions are not formally documented within the tracker.
The existing P-Card misuse tracking process has several significant
limitations. Since all instances of misuse are not formally and completely documented, management could be left with an incomplete understanding of policy violations. Without the outcomes
of investigations and their resolutions being consistently recorded, it may hinder management’s ability to identify common themes in P-Card misuse, effectively analyze the resolution process, and pinpoint trends related to specific departments or staff. This may in turn undermine effective policy enforcement and the deterrence of repeat offenses. There is a lack of adequate documentation to evidence approved exceptions to P-Card spending limitations. Currently, the City utilizes the “P-Card Credit Limit Request Form” to
document the request, review, and approval of card spending limitation increases. In order to gain an understanding of processes for approved exceptions to card spending limitations, the OCA
examined three transactions that exceeded the $10,000 card limit. The sample documentation provided for these transactions did not
include evidence of a completed request form or an email from the cardholder’s approver to the P-Card administrator documenting the approver’s concurrence with the exception rationale and/or
justification, as required by the Guidebook. The APA provided support for one of these transactions showing that
an exception to exceed the single purchase limit was granted, however the approval lacked formal documentation. No documentation was readily available for the other two selected transactions. It should also be noted that while the "P-Card Program Credit Limit Request Form" includes a comments section that could detail other types of card limit exceptions (single purchase transaction limits,
number of daily transactions limits, daily spending limits), the language of the form only explicitly documents the request and approval of exceptions to the monthly spending limit of $15,000.
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 20 Packet Pg. 102 of 117
18
Recommendation Post Audit: To strengthen the P-Card internal control environment,
enhance compliance assurance, and mitigate associated risks, we recommend that AP should implement a multi-faceted approach focusing on operational consistency and statistically valid sampling.
AP should transition from the current review approach and volume to a statistically random sampling methodology, implementing a
sampling strategy designed to achieve a desired confidence level, thereby providing a high degree of assurance that the sample findings are representative of the entire population. The precise sample size should be dynamically calculated each month based on the actual transaction volume. Misuse Tracking: The OCA recommends that the P-Card Administrator ensure all instances of misuse are formally and
comprehensively tracked including a categorization of infraction types, infraction dates, and the resolution of each instance of misuse. By maintaining a complete misuse tracker, the P-Card Administrator will
be better equipped to identify repeat offenders and allow make informed decisions regarding appropriate repercussions, such as mandatory training or, if warranted, the suspension or revocation of P-
Card user access. In cases where repeat offenses are observed within a specific department, management should consider implementing department-wide training to reinforce awareness of City
policies and procedures. Oversight of Card Limit Exceptions: We recommend formalizing
and standardizing the P-Card limit exception process. The existing "P-Card Program Credit Limit Request Form" should be revised to explicitly include fields for requesting and documenting approval for all types of card limit exceptions, not just monthly spending limits. The revised form, or an equally formal documented process, should be consistently used for all exceptions, clearly stating the rationale and evidence of the approver’s agreement. The APA and other relevant stakeholders must consistently follow this formalized process to document and retain all limit exception approvals. Management Response
Responsible Department(s): Concurrence: Agree Target Date: November 2025 Action Plan: Post Audit AP will implement a new, multi-faceted review criteria to capture a
more statistically random sampling of P-card transactions. Misuse Tracking ASD will add to the current misuse tracker to include infraction types, infraction dates, and resolution. This information will be used to focus additional training where repeat offenses are identified.
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 21 Packet Pg. 103 of 117
19
Oversight of Card Limit Exceptions ASD will standardize the P-Card limit exception process with a revised
form that includes fields for requesting and documenting. The form will include a section for the rationale for the increase. It should be noted that P-Card exception increases are currently very limited and only 10
out of 254 cards are in place currently. These exceptions have been documented on the existing form. The existing form will be evaluated for use as a single form with all exceptions or possibly a separate
form for single limit exceptions approvals will be created based on what incorporates best into workflow.
Additional
Observation:
The City may be able to increase operational efficiencies and save
staff time by increasing P-Card spending limits
The City's current procurement procedures impose a significant administrative burden, especially for lower-value transactions exceeding the micro-purchase threshold. Requirements for council
approval and solicitation for each purchase order consume considerable staff time, driving up processing costs and diverting resources from more strategic procurement initiatives. This highlights an opportunity to streamline these processes. By optimizing procedures for these transactions, the City can achieve substantial efficiency gains and reallocate valuable staff resources to essential responsibilities.
According to ASD management, the current procedure for obtaining approvals and completing solicitations for each purchase order (PO) requires, on average, approximately 10 hours of staff time. This
represents a significant investment of staff and managements’ time. The City’s P-Card limit has not been increased since 2016. Since
that time, inflation has continued to increase the costs of goods. If the City were to raise the purchasing limit, there could be substantial time saved in preparing POs.
The OCA performed an analysis of recent fiscal years and found that in FY2023, the City processed 59 POs ranging from $10,000 to $12,000. At an estimated 10 hours per PO of staff time, raising the threshold to $12,000 and reducing the number of POs by 49 would save an estimated 490 hours of staff time. An additional 29 POs between $12,000 and $15,000 were processed which if eliminated could save an estimated 290 hours. FY 2024 projections showed 45 POs in the $10,000 to $12,000 range, equating to 450 hours, and 49 POs in the $12,000 to $15,000 range, totaling 490 hours. The overall increase in the number of POs at these dollar thresholds
year over year is also an indicator that more goods that used to be procured through a simple P-Card transaction may be shifting to the PO process due to inflation.
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 22 Packet Pg. 104 of 117
20
These figures highlight a recurring and considerable investment of time in the procurement process for these specific PO value ranges. By reviewing and potentially streamlining the approval and
solicitation procedures for these categories of purchases, the City could realize substantial cumulative time savings, allowing staff to reallocate their efforts to other critical municipal functions.
Concurrently, a prevalent issue associated with lower limits is the incentive for cardholders to split legitimate purchases into multiple,
smaller transactions to circumvent established single transaction limits. This behavior undermines internal controls and complicates effective monitoring and reconciliation. Furthermore, essential goods and services exceeding the lower limits may experience procurement delays as employees await approvals through more formal channels, potentially impacting mission-critical activities or operational responsiveness.
The OCA reviewed a proposed amendment to the Federal Acquisition Regulation (FAR) concerning the inflation adjustment of
acquisition-related thresholds. This amendment indicates that the micro-purchase threshold, as defined in FAR 2.101, is projected to increase from $10,000 to $15,000. Given the anticipated increase of
the federal micro-purchase limit to $15,000 in October 2025, the City should also evaluate its current P-Card purchase limit and consider adjusting it to align with this inflationary change.
Consideration: With consideration given to the official increase of the federal micro-purchase limit to $15,000 in October 2025, the
City should consider increasing the single purchase card limit from $10,000 to $15,000 and the monthly purchase power from $15,000 to $20,000. Increasing these card limits may enable the City to realize significant time savings. Based on historical data, this change could save the City approximately 1,000 to 12,000 staff hours on average per fiscal year when processing transactions within the $10,000-$15,000 range. Further, increased card limits may also potentially discourage cost splitting and reduce administrative processing.
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 23 Packet Pg. 105 of 117
21
Appendices
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 24 Packet Pg. 106 of 117
22
Appendix A:
Basic Excel Analytics for P-Card Transaction Review
The following basic analytics can be performed in Excel by the AP team to enhance oversight of P-Card
transactions. These techniques rely on standard Excel functions and features such as Pivot Tables,
Conditional Formatting, and built-in formulas:
• Transaction Volume and Spend by Cardholder
Use Pivot Tables to group transactions by cardholder and calculate the total number of transactions
and total spend. This helps identify high-use individuals and potential misuse.
• Vendor Spend Analysis
Group transactions by vendor using a Pivot Table to determine total spend per vendor. This can help
evaluate vendor concentration and opportunities for negotiated pricing or consolidated purchasing.
• Weekend and Holiday Transactions
Use the WEEKDAY() function to identify transactions occurring on weekends. Flag transactions that fall
on known holidays for further review.
• Duplicate Transactions Check
Use COUNTIFS() or Conditional Formatting to flag potential duplicates based on identical transaction
dates, amounts, vendors, and cardholders.
• Split Purchases
Sort by cardholder, vendor, and date to identify multiple transactions that may have been used to
circumvent single-transaction thresholds.
• Threshold Breach Detection
Apply Conditional Formatting to highlight transactions exceeding predefined dollar thresholds (e.g.,
$2,500), which may require additional documentation or approval.
• Inactive or Terminated Cardholder Usage
Use VLOOKUP() or XLOOKUP() to compare cardholder names against a current employee roster and
identify activity associated with terminated employees.
• High-Risk Keyword Search
Use the SEARCH() function to flag keywords in the transaction description that may indicate
unallowable purchases (e.g., “gift card,” “alcohol,” “Amazon,” “electronics,” etc.).
• Self-Approval Detection
Compare cardholder and approver names using an IF() statement to detect instances where
cardholders may be approving their own transactions.
• Trend Analysis Over Time
Use Pivot Tables and line charts to analyze monthly or quarterly spend trends. This can help detect
unusual spikes or seasonal patterns in card usage.
Item 2
Supplemental Attachment
A - Purchasing Card Audit
Report - Corrected
Item 2: Staff Report Pg. 25 Packet Pg. 107 of 117
Item No. 4. Page 1 of 1
Policy & Services Committee
Supplemental Report
From: Chantal Cotton Gaines, Deputy City Manager
Meeting Date: August 12, 2025
Item Number: 4
Report #:2508-5042
TITLE
Supplemental Report - Wellness and Belonging Update Report to the Policy and Services
Committee
As indicated in Staff Report #2410-3700, Item #4 on the August 12, 2025 Policy & Services
Committee Agenda, Attachment A was expected to be distributed as a late packet on August 7,
2025. This supplemental report provides Attachment A.
ATTACHMENTS
Attachment A: Status of Wellness and Belonging Action Plan Items
APPROVED BY:
Chantal Cotton Gaines, Deputy City Manager
Item 4
Item 4 Supplemental Report
Item 4: Staff Report Pg. 1 Packet Pg. 108 of 117
Page 1
Wellness and Belonging Action Plan Update
Updates as of July 2025
Action Plan Item 1.1: Share information about specific cultural and heritage months and holidays
Lead Dept. CMO, W&B, Comms
Status: On-track Estimated Completion: 2025 Q4
Project Description:
Develop and implement a strategy to share information that highlights specific cultural/heritage
months and holidays. This initiative aims to foster awareness and belonging by uplifting the histories,
traditions, and contributions of diverse communities through internal and external communications.
Update: Staff set the scope as a collaborative city-wide effort to celebrate, educate, and engage its
communities. Staff is currently developing criteria for sharing information surrounding cultural
events, months, and holidays. The next steps are to develop a process for finalizing the list of dates of
significance that can be used as a guide.
Action Plan Item 1.2: Review citywide events through an inclusion and equity lens; identify gaps
Lead Dept. CSD
Status: Started Estimated Completion: 2025 Q4
Project Description:
Conduct a comprehensive review of citywide events through an inclusion lens to assess
representation, accessibility, and cultural responsiveness. Identify gaps and opportunities to ensure
events are inclusive and welcoming of all cultures and identities.
Update: Staff define the scope as ensuring City events are inclusive and accessible to people of
different backgrounds, cultures, and identities. A list of citywide events has been compiled with the
intended next step to review events and identify any gaps in programming with the project
progressing towards the Q4 deadline.
Not Yet Started
19%
Started
23%
On Track
35%
Behind0%
Completed
23%
Status -Action Plan
Item 4
Supplemental Attachment
A - Status of Wellness and
Belonging Action Plan Items
Item 4: Staff Report Pg. 2 Packet Pg. 109 of 117
Page 2
Action Plan Item 1.3: Create a process that includes HRC for annual calendar setting related to
holidays and heritage months
Lead Dept. CMO, W&B
Status: Completed Estimated Completion: 2025 Q1
Project Description:
Establish a collaborative process that includes the Human Relations Commission in the development
of the annual calendar, recognizing holidays and heritage months. The process will ensure input,
representation, and alignment with the city’s values of belonging.
Update: Staff coordinated and collaborated with HRC for annual calendar setting related to holiday
and heritage months. Annually, a list of holidays will be reviewed in collaboration with City Clerk’s
office in Spring/Summer and shared Human Relations Commission. Staff will present list to Council
for approval in the fall.
Action Plan Item 1.4: Annually report progress on Wellness and Belonging goals, accomplishments,
activities especially giving recognition to departments or teams advancing Wellness and Belonging
strategies (can be combined with other reports)
Lead Dept. CMO, W&B
Status: Not Yet Started Estimated Completion: 2025 Q4
Project Description:
Develop and deliver an annual report highlighting progress on Wellness and Belonging goals, key
accomplishments, and citywide activities.
Update: Staff will report progress on Wellness and Belonging goals across the City of Palo Alto
annually. The next step will be meeting with the department liaisons to compile and report on the
Wellness and Belonging efforts for the past two Fiscal years. Staff seeks to do the first report by the
end of calendar year 2025.
Action Plan Item 1.5: Establish resources for difficult interactions between City staff and the public.
The resources should highlight the importance of de-escalation as well as employee safety and
support.
Lead Dept. CSD
Status: On track Estimated Completion: 2025 Q3
Project Description:
Develop and implement resources to support city staff in navigating difficult interactions with the
public. These resources will emphasize the importance of de-escalation techniques, while prioritizing
employee safety, well-being, and access to support systems during and after challenging encounters.
Update: Staff have established resources to support staff with difficult interactions with the staff and
the public through a combined effort of a special projects team project completed in FY 2025. Staff
will review the draft materials as a next step with the intention of rolling out resources citywide.
Item 4
Supplemental Attachment
A - Status of Wellness and
Belonging Action Plan Items
Item 4: Staff Report Pg. 3 Packet Pg. 110 of 117
Page 3
Action Plan Item 1.6: Understand existing language barriers with the public. Assess which
departments need translation services the most to better serve the public.
Lead Dept. CMO, W&B
Status: Started Estimated Completion: 2025 Q4
Project Description:
Assess existing language barriers between city staff and the public to identify gaps in communication
and service delivery. Conduct a department needs assessment to determine which department has
the highest demand.
Update: Staff is collaborating with City departments to review current gaps in communication and
services delivery related to language. The next step is researching common languages most spoken in
Palo Alto, with the project still progressing towards the Q3 deadline though efforts are expected to
continue beyond this completion timeline.
Action Plan Item 1.7: Allow all residents to provide feedback to the city in their language of choice
Lead Dept. CMO, W&B
Status: On track Estimated Completion: 2025 Q4
Project Description:
Establish mechanisms that allow residents to provide feedback to the City in the language of their
choice. This initiative aims to enhance community engagement.
Update: Staff are researching options and resource needs for residents to provide feedback to the city
in their language of choice. The next step is meeting with the project team and assessing options,
resource needs, and phasing for this work while balancing resource constraints in the current fiscal
environment.
Action Plan Item 2.1: Share Wellness and Belonging values with employees at New Employee
Orientation in the context of work culture
Lead Dept. CMO
Status: On track Estimated Completion: 2025 Q3
Project Description:
Integrate Wellness and Belonging values into new employee orientation to foster a supportive and
inclusive workplace culture from day one. This initiative will introduce employees to the City’s
commitment to wellness, psychological safety, and community care, setting the foundation for a
positive and engaged work environment.
Update: Staff are working towards coordinating sharing Wellness and Belonging values with
employees at New Employee Orientation in the context of work culture. The next step is for materials
to be reviewed by the City Manager’s Office.
Item 4
Supplemental Attachment
A - Status of Wellness and
Belonging Action Plan Items
Item 4: Staff Report Pg. 4 Packet Pg. 111 of 117
Page 4
Action Plan Item 2.2: Conduct Quarterly Interactive Wellness & Belonging workshop trainings for all
employees.
Lead Dept. CMO
Status: Completed Estimated Completion: 2025 Q1
Project Description:
Design and facilitate quarterly interactive Wellness and Belonging workshops for all employees. These
sessions will support employee well-being through engaging, hands-on learning experiences that
strengthen a sense of connection and belonging across the organization.
Update: Project has been completed by staff. Wellness and Belonging trainings for staff are offered
bi-monthly on an on-going basis. Trainings are both in-person and virtual.
Action Plan Item 2.3: Establish a staff Wellness & Belonging committee
Lead Dept. CMO
Status: Not yet started Estimated Completion: 2025 Q4
Project Description:
Establish a Staff Wellness and Belonging Committee to promote a culture of belonging, support, and
well-being across the organization. The committee will serve as a collaborative space for employees
to share ideas, provide feedback, and help guide initiatives that foster connection, equity, and a
healthy workplace environment.
Update: Not yet started
Action Plan Item 2.4: Explore options related to affordable housing for City staff to live in the city of
Palo Alto
Lead Dept. CMO
Status: On-track Estimated Completion: 2025 Q3
Project Description:
Explore and evaluate options to increase access to affordable housing for City of Palo Alto staff. This
initiative aims to identify strategies that support workforce retention.
Update: The first step of the project has been completed by the Special Project team with the next
steps to be evaluation of options. The project of assessing options is still progressing towards Q3
2025.
Action Plan Item 2.5: Finalize process for annual City staff demographic data reporting; release the
first report online
Lead Dept. CMO
Status: Completed Estimated Completion: 2025 Q2
Project Description: Collect city staff demographics and share the report online
Update: The Wellness and Belonging team, in partnership with Human Resources, finalized and
published the 2023 employee demographic data, which was released online on December 19, 2024.
Item 4
Supplemental Attachment
A - Status of Wellness and
Belonging Action Plan Items
Item 4: Staff Report Pg. 5 Packet Pg. 112 of 117
Page 5
Action Plan Item 2.6: Finalize process for annual City Board, Committee, and Commission members
demographic data reporting; release the report online
Lead Dept. CMO
Status: Completed Estimated Completion: 2024 Q4
Project Description:
Design and develop a finalized process for the annual collection, analysis, and reporting of
demographic data for city board, committee, and commission members. Ensure the finalized report is
published online each year. Finalize the process for annual City Board, Committee, and Commission
members demographic data reporting; release the report online
Update: Staff have finalized the process for City Board, Committee, and commission members'
demographic reporting data collection. The next step is to collaborate with the City Clerk’s office to
release the 2025 survey.
Action Plan Item 2.7: Break apart employee survey data by demographic(s) and identify any
differences; work with department directors to address differences identified
Lead Dept. CMO
Status: Completed Estimated Completion: 2025 Q2
Project Description:
Ivy Planning to analyze employee survey data disaggregated by demographic categories to identify
trends, disparities, or gaps. Data was provided to Ivy planning through POLCO employee survey.
Collaborate with department directors to review the findings and develop targeted strategies to
address any identified differences.
Update: Staff completed this project. Department Directors reviewed the employee survey data as
available online. Further discussions on the employee survey data will align with the next employee
survey.
Action Plan Item 2.8: Create more diverse interview panels (tools and policies)
Lead Dept. HR
Status: Completed Estimated Completion: 2025 Q3
Project Description:
Establish tools and policies to support the creation of more diverse interview panels across
departments.
Update: Staff completed this action item. The hiring manager toolkit has been updated and includes
information about ensuring representation on the panel, increasing cultural competency, and tools to
reduce implicit bias.
Action Plan Item 2.9: Expand demographic data collection related to candidates
Lead Dept. HR
Status: Started Estimated Completion: 2025 Q4
Project Description: Collaborate with HR to expand demographic collection related to candidates
Update: This project is to collect aggregate demographic data about job candidates. As part of the
City's RFP process for the Applicant Tracking System, the ability to track candidate demographic data
was included in the requests and questions. The selected vendor, NEOGOV, included a feature that
the City could choose to enable for demographic data collection as part of the implementation if
Item 4
Supplemental Attachment
A - Status of Wellness and
Belonging Action Plan Items
Item 4: Staff Report Pg. 6 Packet Pg. 113 of 117
Page 6
other details are worked through (such as ensuring application raters do not have access to the data
and other concerns). The project is progressing towards the Q4 goal.
Action Plan Item 2.10: Expand recruitment efforts to attract diverse talent
Lead Dept. HR
Status: Started Estimated Completion: 2025 Q3
Project Description:
Enhance recruitment strategies to attract a more diverse pool of candidates by expanding outreach
efforts, building partnerships with community organizations, and utilizing job postings and platforms.
Update: HR has launched job post reviews and recruiter training focused on inclusive, engaging
language and visuals to attract diverse candidates. Staff are also piloting Large Language Models to
reduce bias and enhance job posting content. Outreach has expanded to job fairs at community
colleges, CSUs, UCs, private colleges, and apprenticeship programs, with plans to engage high schools
to build entry-level talent pipelines. An upcoming upgrade to our applicant tracking system will
enable real-time candidate pool creation at events, improving engagement and analytics. Our
partnership with Careers In Government will continue to extend our reach through automatic posting
to top diversity-focused job boards, connecting with over one million job seekers monthly. City staff
have thoughtfully and diligently found synergies between these two plans to ensure no duplication of
work while maximizing outcomes.
Action Plan Item 2.11: Further define and communicate employee career paths by
function/department, encourage all employees to have individual development plans to make sure
employees are fairly developed
Lead Dept. HR
Status: Started Estimated Completion: 2025 Q3
Project Description:
Clarify and communicate defined career paths with each department to ensure transparency and
support employee growth. Encourage all staff to develop and maintain individual development plans
to promote equitable access to professional development opportunities.
Update: Staff have coordinated and set the scope as supporting employees in developing their career
paths. HR launched Workforce Career Advancement and Continuity Planning to accelerate the
development of interested employees to critical positions in the organization, with the project
progressing towards the Q3 goal.
Item 4
Supplemental Attachment
A - Status of Wellness and
Belonging Action Plan Items
Item 4: Staff Report Pg. 7 Packet Pg. 114 of 117
Page 7
Action Plan Item 3.1: Create a space/process for employees to share input and suggestions in areas
where they see current barriers related to the inclusion needs of specific groups (e.g., gender-
neutral bathrooms, accessibility, etc.)
Lead Dept. CMO,W&B
Status: On-track Estimated Completion: 2025 Q3
Project Description:
Establish a structured process and safe space for employees to share input and suggestions on
barriers to inclusion that impact specific groups (e.g., gender-neutral restrooms, accessibility
challenges). This initiative aims to elevate employee voices, identify areas for improvement, and
inform actionable changes that foster a more inclusive and responsive workplace environment.
This action item was included in the Special Projects (2024) initiative
Update: Staff have coordinated and set the scope as creating a safe space for employees to share
input and suggestions related to the inclusion needs of specific groups. Staff completed a
presentation on vendors that have developed systems capable of delivering this service. The next step
is to meet with the IT Department to explore whether the City can implement an in-house version of
one of these systems.
Action Plan Item 3.2: Begin exploration and understanding of pronoun usage for the City of Palo
Alto organization
Lead Dept. CMO W&B
Status: Not Yet Started Estimated Completion: 2025 Q4
Project Description:
Begin exploration and understanding of pronoun usage for the City of Palo Alto
Update: Not Yet Started
Action Plan Item 3.3: Begin to partner with the HRC to work with other commissions to apply an
equity lens to their work (will further define with the HRC)
Lead Dept. CMO W&B
Status: On track Estimated Completion: 2025 Q4
Project Description:
Initiate a partnership with the Human Relations Commission to collaborate with other City
commissions in applying an equity lens to their policies, programs, and decision-making processes.
Update: Staff have coordinated and set the scope as partnering with the HRC to help other
commissions integrate an equity lens into their work. No further progress on this item at this time
however, staff has planned unconscious bias trainings for BCC members in the month of September.
Staff would seek to align further progress on this action plan item with BCC Workplan timeframes.
Item 4
Supplemental Attachment
A - Status of Wellness and
Belonging Action Plan Items
Item 4: Staff Report Pg. 8 Packet Pg. 115 of 117
Page 8
Action Plan Item 3.4: Finalize CEDAW Ordinance and present to the City Council for Adoption
Lead Dept. CMO
Status: On-track Estimated Completion: 2025 Q2
Project Description:
Collaborate with the City Attorney’s office to finalize CEDAW ordinance and prepare it for
presentation to the city council for review and adoption.
Update: Staff have partnered with the City Attorney’s office to support creating a CEDAW ordinance
draft. The next step is to bring the draft CEDAW ordinance to the Policy and Services Committee in
Q3.
Action Plan Item 3.5: Develop a best practices protocol for writing policies in alignment with the
City’s inclusive language standards and equity lens. These best practices protocols will be
incorporated into Policy 1-01 MGR which establishes guidelines for any city department writing or
revising policies. Once developed the HR team in conjunction with the City Departments, will plan a
five-year review cycle to bring all policies into alignment with these best practices
Lead Dept. HR
Status: Not Yet Started Estimated Completion: 2025 Q4
Project Description:
Develop a best practices protocol for drafting and revising polices in alignment with the city’s
inclusive language standards and equity lens.
Update: Not Yet Started
Action Plan Item 3.6: If identified, then begin to implement solutions that address the inclusion
needs of specific groups (e.g., gender-neutral bathrooms, accessibility, etc.)
Lead Dept. CMO W&B
Status: Not yet started Estimated Completion: 2025 Q4
Project Description:
Begin implementing solutions that address the unique needs of specific groups if identified.
Update: This project has not yet started. Completion of this action Item is dependent on the
completion of Item 3.1.
Action Plan Item 3.7: Coordinate with City departments to learn how they are supporting citywide
Wellness and Belonging efforts
Lead Dept. CMO W&B
Status: Not yet started Estimated Completion: 2025 Q4
Project Description:
Coordinate with city departments to gather insights on how each is contributing to citywide wellness
and belonging initiatives. Identify current efforts, share best practices, and support alignment with
the City’s overall Wellness.
Update: This project has not yet started.
Item 4
Supplemental Attachment
A - Status of Wellness and
Belonging Action Plan Items
Item 4: Staff Report Pg. 9 Packet Pg. 116 of 117
Page 9
Action Plan Item 3.8: Work with an external firm to begin analysis and present an analytical summary
of the RIPA (Racial Identity Profiling Act) Police data
Lead Dept. CMO
Status: On track Estimated Completion: 2025 Q4
Project Description:
Collaborate with an external firm to conduct an initial analysis of RIPA data and prepare analytical
summary highlighting key findings, trends, and areas for further exploration.
Update: Staff have collaborated with the National Policing Institute (NPI) to analyze RIPA data from
the Palo Alto police department; NPI has analyzed the 2023 and 2024 data. Staff is coordinating
scheduling for the report to be brought to the City Council when finalized.
Item 4
Supplemental Attachment
A - Status of Wellness and
Belonging Action Plan Items
Item 4: Staff Report Pg. 10 Packet Pg. 117 of 117