Menlo Park Fire Protection District

 

General Fund

The General Fund is the Menlo Park Fire Protection District's primary operating fund. It is used to budget and track day-to-day operations, as well as manage transfers to other funds when needed to support the District’s goals and projects.

 

For fiscal year 2024-25 (FY25), the adopted revenue budget for the General Fund totals $89.7 million. This includes:

  • $83.0 million from property taxes, which represents majority of the District's revenue.
  • $6.6 million from other operating revenues, which may include fees, permits, interest, and other income sources.

 

On the expenditure side, the adopted budget for the General Fund is $71.6 million, broken down as follows:

  • $59.7 million for salaries and benefits, which accounts for the District’s personnel costs, including wages, health benefits, and retirement contributions.
  • $11.9 million for other operational expenses, which include costs related to facilities maintenance, utilities, training, equipment, and supplies.

 

In addition, the General Fund budget includes a significant $18.0 million transfer to the Capital Improvement Projects Fund. This allocation is specifically earmarked to support long-term infrastructure needs, such as fire station rebuild projects and other critical capital improvements. This structure ensures the District can maintain daily operations, while also planning for future growth and facility upgrades, in line with its strategic goals.

The General Fund revenue budget outlines the inflow of resources that will support the Menlo Park Fire Protection District’s service delivery in alignment with its established priorities. It provides a structured framework for allocating funds to cover program costs, capital projects, and other operational expenses throughout the fiscal year.

 

For fiscal year 2024-25 (FY25), the General Fund revenue is projected to total $89.7 million. The primary source of this revenue is property taxes, which account for approximately 93% of the total budget. The District benefits from strong growth in assessed property values within its jurisdiction, driven by a robust local real estate market. This growth has remained resilient despite broader inflationary pressures, ensuring a stable revenue stream.

 

In addition to property taxes, the District generates revenue from several other sources, which collectively contribute to the remaining 7% of the General Fund revenue:

  • Cost Recovery: Fees collected for licenses, permits, and other services, such as fire inspections and code enforcement.
  • Service Contracts: Revenue from agreements with other agencies or entities for services provided by the District.
  • Investment Income: Earnings from interest and investments held by the District.
  • Intergovernmental Funds: Grants or other financial support from local, state, or federal agencies.
  • Miscellaneous Sources: Additional revenue streams, which may include donations, reimbursements, or other one-time income.

 

This diversified revenue structure helps ensure the District can maintain consistent service delivery while funding its core programs, capital improvements, and long-term operational needs. The strong reliance on property taxes, combined with prudent fiscal management of other revenue sources, provides the District with the resources necessary to meet its mission and priorities.

Historically, the District has demonstrated prudence in setting the revenue budget in response to the economic uncertainties. The District took a cautious approach to assessing the revenue growth. Due to this, the District has avoided negative impacts on its core services due to its conservative approach and financial discipline in forecasting the revenue budget. 

 

In forecasting the fiscal year General Fund revenue budget, staff took into consideration a number of factors and expectations in order to provide a balanced revenue budget with sufficient funding for the delivery of services. Examination of historical data and trends was factored in to determine the estimates. Staff has also considered the economic environment that the District is most likely to encounter in the upcoming fiscal year. Overall, staff took a more realistic and best estimate approach in projecting the revenue numbers for FY 2024-25.

Property Tax Overview and District Revenue Sources

Under California property tax law, all taxable real and personal property is subject to a 1% tax on assessed values. Proposition 13 limits annual increases in assessments to 2% or the rate of change in the Consumer Price Index (CPI), whichever is lower, unless there is a change in ownership or new construction. The exceptions to this 2% limitation were those properties that underwent a change in ownership or newly constructed properties, in which the value is reassessed at its current full market value.

 

The District's primary revenue source is property taxes, which are closely tied to real estate valuations. For FY 2023-24, property values are projected to grow by 5.9%, indicating stability despite economic challenges like inflation and market fluctuations. Long-term growth remains promising, driven by planned industrial and residential developments, although trends will depend on factors such as job recovery, housing demand, and interest rates. Over the past five years, property tax revenue has grown at an average annual rate of 7%, and property taxes are expected to account for approximately 90% of total revenue in FY 2024-25.

 

Property Tax Revenue Breakdown by Tax Type:

  1. Secured Tax
    Secured property tax is based on the assessed value of real property, including land and immovable personal property. For FY 2024-25, a 4.0% growth rate is projected, driven by a 1.02% inflation factor and reassessments from property sales and new developments. This growth is expected to yield an estimated secured property tax budget of $73.8 million for FY 2025, in line with the County of San Mateo's preliminary assessment roll.

  2. Unsecured Tax
    Unsecured property taxes are levied on movable personal property, such as business equipment, boats, and airplanes. These taxes are based on the previous year's secured property rate. Due to asset value fluctuations and local business conditions, the FY 2024-25 unsecured tax revenue budget is set at $2.5 million, consistent with the five-year average, amid ongoing economic uncertainties.

  3. Supplemental Senate Bill 813 (SB813)
    Supplemental SB813 taxes, established by the Hughes-Hart Educational Reform Act of 1983, address a gap in Proposition 13 by creating a "floating lien date" that prevents property owners from delaying taxes on higher assessed values after ownership changes or new construction. The District expects $1.8 million in SB813 revenue for FY 2025, based on the five-year average. Revenue fluctuations are influenced by property sales and new developments, although the current housing market slowdown, driven by high interest rates and layoffs, may limit growth.

  4. Redevelopment Property Tax Trust Fund (RPTTF)
    Before 2011, California allowed cities and counties to form Redevelopment Agencies (RDAs) for local economic development. Following the dissolution of RDAs under AB 26, Successor Agencies manage obligations and distribute funds through the RPTTF to local taxing agencies.

    The District's RPTTF distributions have fluctuated significantly over the past five years due to the residual nature of this revenue, which is passed through after fulfilling enforceable obligations. Factors such as asset sales, which also affect the distribution to agencies, contribute to this unpredictability. For the FY 2024-25 budget, the District will estimate revenue based on the five-year average of $5.9 million. This revenue stream is expected to continue, as there is no information suggesting the complete dissolution of the successor agency to the former RDA.

  5. Excess ERAF (Educational Revenue Augmentation Fund)
    Excess ERAF contributions are returned to local taxing agencies when property tax revenues exceed school funding requirements. The District has received these contributions since 2003, driven by local tax growth outpacing school funding limits. For FY 2024-25, the District projects $7.6 million in excess ERAF, reflecting a 4.0% growth in secured taxes and a 10% uncollectible estimate. This projection is cautious, considering potential changes in school funding formulas and the Governor’s proposal to include charter schools in ERAF eligibility.

  6. Unitary Tax
    Unitary taxes apply to companies like railroads, utilities, and telecommunications, with values assessed by the State Board of Equalization using a countywide tax rate system. This revenue has grown steadily over the past five years. For FY 2024-25, the proposed unitary tax budget is $497,000, reflecting a 12.5% growth rate based on the current year's estimate and the five-year average.

  7. Homeowner Property Tax Relief (HOPTR)
    HOPTR compensates for the loss in property tax revenue due to a $7,000 reduction in taxable value for qualifying owner-occupied homes. Over the past five years, this revenue has fluctuated between $189,000 and $207,000, with no consistent growth or decline. For FY 2024-25, staff recommends maintaining a flat budget of $205,000, the same as the previous fiscal year.

  8. ERAF Shift
    The ERAF shift refers to two tax reallocations—ERAF I (FY 1992-93) and ERAF II (FY 1993-94)—which redirected local property tax revenues from counties, cities, special districts, and redevelopment agencies to K-12 schools and community colleges. These funds support schools that lack sufficient property tax revenue to meet the minimum funding requirements of Proposition 98. The ERAF shift represents about 12% of the District's total property tax revenue, based on estimates from the County of San Mateo.

Other Revenue Sources for the District

In addition to property taxes, the District generates revenue from various other sources, including license and permit fees, service charges, intergovernmental funding, interest earnings, and miscellaneous revenues. These sources are influenced by factors such as property ownership changes, new development, state funding formulas, and economic conditions, and they help support the District’s operations and services.

 

  1. Licenses and Permits
    Revenue from licenses and permits is collected by the Fire Prevention Bureau for services such as fire code reviews, inspections, and licensing. While a new fee schedule implemented in March 2023 was expected to generate a 12.4% increase in revenue, a slowdown in inspection volumes and permit-related activities is expected to offset this growth. As a result, the proposed budget for FY 2024-25 is $1.1 million, reflecting the average annual revenue from these sources.

  2. Service Charges
    The District contracts with the SLAC National Accelerator Laboratory to provide enhanced fire and emergency services, with fixed monthly fees outlined in the contract. For FY 2024-25, the District expects to receive $455,000 from this agreement. In addition, $15,000 from weed abatement charges is also included in the budget.

  3. Use of Money and Property
    Revenue from interest earnings and rental income on District-leased properties falls under this category. For FY 2024-25, the District anticipates $4.9 million in investment earnings and $10,000 from training site rentals. With the introduction of a new investment program focused on high-yield fixed-income securities, interest revenue and mark-to-market earnings are expected to be significantly higher, driven by the current high-interest-rate environment.

  4. Intergovernmental Revenue
    This category includes funds from the Joint Power Authority (JPA) paramedic services agreement and deployment reimbursements from the California Office of Emergency Services (Cal-OES). For FY 2024-25, the District’s intergovernmental revenue is budgeted at $155,000.

  5. Miscellaneous Revenues
    Other sources of revenue include asset sales, insurance claim reimbursements, uniform patches, and donations. The proposed budget for these miscellaneous revenues for FY 2024-25 is $10,000.

General Fund Expenditure Overview

 

The General Fund expenditure budget for the Menlo Park Fire Protection District outlines the resources required to support emergency services, operational activities, and capital projects in alignment with the District's priorities. For FY 2024-25, the projected total expenditure is $71.6 million, with personnel and benefits costs making up approximately 83.3% of the total. The remaining 16.7% is allocated to materials, supplies, and contract services.

 

Key areas of expenditure include:

  • Salaries: The FY 2024-25 budget for normal compensation, which includes salaries, leave, workers' compensation, and other paid benefits, is set at $28.2 million, reflecting a 1.6% increase from the previous year's amended budget. The District has five work groups, each with different benefit terms. All negotiations for the units have been completed, and cost increases from approved agreements, such as wage and performance increases, have been incorporated into the budget. For positions with annual compensation reviews, staff made cost assumptions based on current contracts and historical data. Any additional costs arising from these reviews may be addressed in the mid-year budget update. Additionally, a new budgeting software was implemented to more accurately reflect personnel costs in the FY 2024-25 budget.

  • Stipends: Stipends comprise specialty and incentive pays included as part of the personnel compensation package. These consist of bilingual pay, advanced degree pay, paramedic pay, emergency medical technician (EMT) pay, uniform allowance, tool allowance, residency stipend, adjutant pay, notary pay, and out-of-grade pay. For FY 2024-25, the stipend budget is set at $3.1 million, reflecting a $70 thousand (2.3%) increase from the previous year. This increase is due to changes in the approved labor agreements.

  • Overtime: Overtime expenditures include project or program work and backfills for paid time off, workers’ compensation injuries, training, emergency operations, and emergency deployments. To accommodate operational demands, overtime expenditures are budgeted at $8.9 million, a 5.9% increase from the prior year. This rise is driven by wage rate adjustments and anticipated service needs.

  • Retirement: Retirement expenditures mainly include the District’s contributions to the California Public Employees’ Retirement System (CalPERS) and Medicare. The preliminary budget for FY 2024-25 is $13.2 million, a $2.3 million or 20.7% increase from last year’s budget. The change can be attributed to the following:a. Additional unfunded accrued liability due to CalPERS’s negative 6.1% return in the most recent valuation report for the year ended June 30, 2022;
    b. The proposed 10-year soft (“virtual”) fresh start approach in managing the unfunded accrued liability;
    c. Increase in pensionable salaries associated with the general wage increase; and 
    d. Slight increase in the District’s CalPERS contribution rates. 

  • Benefits: Benefit expenditures, which cover the cafeteria allowance, dental plan, life insurance, and post-employment health plan (PEHP), are projected at $6.2 million for FY 2024-25. This represents a $618 thousand (11.0%) increase from the previous fiscal year’s budget, primarily due to the rise in the cafeteria allowance for District employees.

  • Materials and Supplies: Materials and supplies expenditures cover tangible items like materials, equipment, and supplies needed for both operational and administrative purposes. This category also includes costs for conference and training registration, memberships, licenses, and travel. These purchases are essential to support the District’s daily operations in Fire Suppression, Fire Prevention, and Administrative Support services. The budget for FY 2024-25 is $4.0 million, reflecting a $501 thousand (14.4%) increase from the previous year. This rise is due to overall cost increases and anticipated higher needs associated with the expansion of District programs.

  • Contract Services: Contract services are vital operating expenditures covering a range of services provided through vendor agreements. These include insurance, workers’ compensation administration, legal and audit services, software, IT support, repairs and maintenance, training, consulting, and other general contract services. The budget for FY 2024-25 is $7.7 million, reflecting a $766 thousand (11.0%) increase from the previous year. This increase is due to rising service costs and the planned implementation of new program initiatives in the upcoming fiscal year.

  • Contingency Reserve: A contingency of $200,000 is maintained for unforeseen costs, which can be used at the discretion of the Fire Chief to address unexpected budgetary needs during the fiscal year.

 

The District’s budgeting approach for FY 2024-25 continues the use of zero-based budgeting, where each program's expenses are reviewed and justified from the ground up, ensuring fiscal responsibility and alignment with strategic goals. This method helps ensure that every expenditure is necessary and effectively supports the District’s mission to deliver high-quality services and meet both operational and personnel requirements. In summary, the General Fund expenditure budget for FY 2024-25 is designed to support the District’s ongoing operations, address rising personnel and benefit costs, and fund essential capital and service initiatives, all while maintaining a disciplined and transparent budgeting process.

General Fund - Transfer Out

 

These are general fund monies transferred to/from the District’s major funds. This is also utilized as a tool to balance the operating revenue and expenditure budget in a certain fiscal year. The preliminary transfer-out budget to the CIP fund for FY 2024-25 is $18.0 million. $5.6 million of the total transfer will cover the fixed assets and construction projects laid out in the CIP fund budget section. The remaining $12.4 million of the funds will be kept as a reserve for future capital projects.

General Fund Reserve

 

The General Fund Reserve does not represent an actual cash inflow or outflow to or from the General Fund during the fiscal year. Instead, it reflects the reserves accumulated from prior years, which are earmarked for specific purposes or contingencies. These reserves can serve as a financial buffer to supplement funding for the fiscal year if projected revenues fall short of budgeted expenditures. By utilizing reserve funds in such cases, the District can maintain a balanced operating budget without compromising its financial stability.

 

When reserve funds are budgeted for use, the corresponding amount is allocated to offset planned expenses in the fiscal year. However, it is important to note that this represents the liquidation of accumulated reserves rather than new revenue. For the FY2024-25 budget, the District does not plan to draw on its General Fund Reserve to fund operations. This reflects the District's commitment to aligning operational expenses with current-year revenues and preserving the reserves for future strategic needs or unforeseen circumstances.