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Home My WebLink AboutCC 05-11-2026 Item No. 1 Initial Study Session on (FY) 2026-27 Proposed Budget_Staff PresentationCC 05-11-2026 #1 Initial Study Session on Fiscal Year (FY) 2026-27 Proposed Budget Presentation May 11, 2026 Fiscal Year 2026-27 Proposed Budget 2 Study Session Objectives Present City Manager’s Proposed Budget Receive comments and questions from Council and Public Gather feedback and return with updates for Final Budget Hearing on June 16th Roadmap to FY 2026-27 Budget Adoption and Balancing Last Updated 5.4.2026 •City Website cupertino.gov/budget •Interactive Financial Transparency Portal cupertino.gov/opengov •Budget Learning Library cupertino.gov/budgetlearnin glibrary Accessing the Budget 4 General Fund Forecast General Fund Overview All Funds Overview Proposed Budget Requests Issues and Challenges Next Steps Agenda 5 6 Financial Overview by Fund Fund Revenues Expenditures Change in Fund Balance/ Net Position1 General Fund 109,727,857 109,696,957 30,900 Special Revenue Funds 12,399,553 9,766,776 2,632,777 Debt Service Funds 2,675,100 2,675,100 0 Capital Projects Funds 9,330,000 14,235,000 (4,905,000) Enterprise Funds 6,679,600 8,514,580 (1,834,980) Internal Service Funds 9,775,989 10,639,732 (863,743) Total All Funds 150,588,099 155,528,145 (4,940,046) 1A negative change in fund balance/net position () is due to the use of fund balance General Fund Forecast Forecast Revenue Assumptions1 9 Account Assumption Description Sales Tax Moderate (2.58% AAGR) HdL’s forecast in FY 2025-26 Moderate trend after Property Tax Moderate (2.58% AAGR) HdL’s forecast in FY 2025-26 Moderate trend after Transient Occupancy Tax Moderate (0.89% AAGR) Based on historical trends Moderate trend after 1Forecasts assume recession (no growth) in FY 2027-28 for all revenue categories except Property Tax Forecast Expenditure Assumptions Account Assumption Description Compensation 3.38% AAGR Negotiated increases (5-3-3) 4% vacancy savings in out-years Benefits 3.17% AAGR Based on CalPERS projections Increases to health insurance contributions Materials 2.37% AAGR CPI Contracts 3.67% AAGR CPI Law enforcement contract = CPI + 2% Contingencies 0.0% AAGR 1.25% of Materials and Contracts Transfers -4.8% AAGR Facility debt paid off in FY 2029-30 10 11 12 Classification Year End Projection 2025-26 Proposed 2026-27 Projected 2035-36 Restricted 21,935,307 24,592,503 42,241,682 Committed 86,127,891 88,645,785 94,943,456 Economic Uncertainty Reserve 24,000,000 26,517,894 32,815,565 Reserve for Future Use 62,000,000 62,000,000 62,000,000 Sustainability Reserve 127,891 127,891 127,891 Unassigned 65,879,182 60,734,992 2,728,200 Other Classifications 4,037,435 4,037,435 4,037,435 Total Fund Balance 177,979,815 178,010,715 143,950,773 Fund Balance – General Fund General Fund Overview General Fund Revenues Category FY 2025-26 Adopted FY 2026-27 Proposed $ Change % Change Sales Tax 11,983,958 4,919,216 Property Tax 35,413,310 525,912 Transient Occupancy 7,500,000 176,155 Utility Tax 4,206,907 (104,476) Franchise Fees 4,394,563 80,718 Other Taxes 1,736,718 26,683 Licenses & Permits 4,261,859 2,266,552 Use of Money & Property 6,538,880 1,937,599 Intergovernmental 3,569,332 1,661,889 Charges for Services 15,162,032 454,392 Fines & Forfeitures 410,760 3,000 Miscellaneous 1,668,815 551,083 Transfers in 15,000 0 Other financing sources 367,000 0 Total Revenues 12,498,723 12.9 15 General Fund Expenditures Category FY 2025-26 Adopted FY 2026-27 Proposed $ Change % Change Employee Compensation 24,200,418 26,098,310 1,897,892 7.8 Employee Benefits 10,643,927 11,206,493 562,566 5.3 Total Personnel Costs 34,844,345 37,304,803 2,460,458 7.1 Materials 6,174,481 6,801,762 627,281 10.2 Contract Services 31,499,502 41,772,223 10,272,721 32.6 Cost Allocation 11,993,327 12,168,069 174,742 1.5 Capital Outlays & Special Projects 2,968,433 753,000 (2,215,433)(74.6) Contingencies 50,000 50,000 0 0 Transfers Out 10,594,653 9,005,100 (1,589,553)(15) Other Financing Uses 1,065,000 1,842,000 777,000 73 Total Expenditures 99,189,741 109,696,957 10,507,216 10.6 16 All Funds Overview All Funds Revenues 18 Category FY 2025-26 Adopted FY 2026-27 Proposed $ Change % Change Sales Tax 11,983,958 16,903,174 4,919,216 41.0 Property Tax 35,413,310 35,939,222 525,912 1.5 Transient Occupancy 7,500,000 7,676,155 176,155 2.3 Utility Tax 4,206,907 4,102,431 (104,476)(2.5) Franchise Fees 4,394,563 4,475,281 80,718 1.8 Other Taxes 6,374,421 6,296,327 (78,094)(1.2) Licenses & Permits 4,261,859 6,528,411 2,266,552 53.2 Use of Money & Property 7,919,861 9,855,823 1,935,962 24.4 Intergovernmental 8,935,865 10,184,080 1,248,215 14.0 Charges for Services 27,042,351 29,397,537 2,355,186 8.7 Fines & Forfeitures 420,760 416,760 (4,000)(1.0) Miscellaneous 1,670,334 2,225,531 555,197 33.2 Transfers in 12,609,653 15,750,100 3,140,447 24.9 Other financing sources 920,531 837,267 (83,264)(9.0) Total Revenues 133,654,373 150,588,099 16,933,726 12.7 All Funds Expenditures 19 Category FY 2025-26 Adopted FY 2026-27 Proposed $ Change % Change Employee Compensation 29,534,061 31,855,227 2,321,166 7.9 Employee Benefits 14,536,113 15,157,616 621,503 4.3 Total Personnel Costs 44,070,174 47,012,843 2,942,669 6.7 Materials 9,244,887 9,498,066 253,179 2.7 Contract Services 37,725,800 47,694,222 9,968,422 26.4 Cost Allocation 16,816,347 17,004,486 188,139 1.1 Capital Outlays & Special Projects 10,658,920 13,085,940 2,427,020 22.8 Contingencies 50,000 50,000 0 0 Debt Service 2,676,600 2,673,600 (3000)(0.1) Transfers Out 12,609,653 15,750,100 3,140,447 24.9 Other Financing Uses 2,214,020 2,758,888 544,868 24.6 Total Expenditures 136,066,401 155,528,145 19,461,744 14.3 Proposed Budget Requests •One-time cost – occur only once and are not included in ongoing base costs •Recurring costs – occur in the budget year in which they are requested and then added to department base budget. Lastly, they are incorporated into the 10- year forecast. One-Time versus Recurring Costs City Work Program 22 23 City Work Program 24 City Work Program 25 City Work Program #Project Title Project Description Council Goal Budget (Not including staff costs)Project Size Lead Department(s) Estimated Timeline 25 Memorial Park Study Session A study session on Memorial Park and the proposed design. Most people I've spoken to love Memorial Park the way it is now where it is mostly naturally space, rather than one jam packed with stuff in the proposed plan. I hope to consider a minimalist option with upgrade of existing features and only include some low impact features. And reduce the cost. Maybe we might refer it to Parks and Rec Commission to consider options. Quality of Life $0 N/A Public Works Year 1 26 Preserving Retail in the City Study session regarding potential ballot measure to protect frontage retail or consider rezoning of mixed-use sites to preserve retail Quality of Life $0 N/A Community Development Year 1 27 Protections for Parkland Consider establishing protections for parkland, similar to those adopted by the cities of Sunnyvale and Milpitas Environmental Sustainability $475,000 already allocated (includes both Parkland Rezoning and Tax Revenue Ballot Measures for 2026 Midterm Election) N/A Administrative Services Year 1 28 Red Light Cameras Explore Red Light Cameras in Cupertino Quality of Life $0 N/A Public Works Year 1 29 Housing Site Inventory Options for Expanding Housing Element Site Inventory to Address Potential Shortfall in Zoned Capacity Housing $660,000 already allocated for contract with PlaceWorks to address No Net Loss requirements. N/A Community Development Year 1 30 Public outreach and engagement strategy Establish citywide standards to embed meaningful engagement into every city project Public Engagement and Transparency $25,000 (Requesting as part of adopted budget for FY 2026-2027) N/A City Manager's Office Year 1 Start, Year 2 end New Projects - Added December 2025 Fund One-Time Request Ongoing Recurring Request Total Proposals General Funds 1,068,000 80,205 1,148,205 Special Revenue Funds 0 0 0 Debt Service Funds 0 0 0 Capital Project Funds 0 0 0 Enterprise Funds 0 8,404 8,404 Internal Service Funds 1,305,000 0 1,305,000 Total All Funds 2,373,000 88,609 2,461,609 Budget Requests by Fund 26 27 Budget Requests by Department Department One-Time Request Ongoing Recurring Request Total Proposals Council & Commissions 32,500 0 32,500 Administration 0 0 0 Law Enforcement 0 0 0 Innovation & Technology 565,000 0 565,000 Administrative Services 0 0 0 Parks & Recreation 15,500 0 15,500 Community Development 117,000 0 117,000 Public Works 1,643,000 88,609 1,731,609 Capital Projects 0 0 0 Total All Departments 2,373,000 88,609 2,461,609 All Other Department Request – City Council All Other Department Request – I&T All Other Department Request – Community Development1 All Other Department Request – Parks and Recreation All Other Department Request – Public Works1 33 Festival Costs This table was updated to include year-to-date actuals Community Funding 34 Non-Profit Organization FY 2025-26 Funding FY 2025-26 Program/Project/Event FY 2026-27 Funding FY 2026-27 Program/Project/Event Active Circle 2,000 All Inclusive Family Picnic 2,000 Neuro-Inclusive Picnic with Purpose AINAK 4,000 Eyecare and Eyeglasses 1,550 Eyecare and Eyeglasses Asian American Parents Association 3,000 AAPI Multicultural Festival Colorful Minds 0 1,500 Colorful Minds Cupertino Symphonic Band 3,000 Band Equipment 2,000 Music, Bank equipment, Rental Venue ElderAid 5,000 Background Verification Integration and Support 0 Fremont Union High Schools Foundation 0 8,500 Environmental Education Classroom for the Fremont Union High Schools District Friends of Deer Hollow Farm 2,000 The Tule House Shelter 0 iTalented 900 iSpark 0 Mind4Youth 2,500 HeartCare No Time to Waste 5,000 5/1000:Feed the Need 4,000 GRoW: Grocery Rescue Weekly Remember the ToothFairy 1,000 Dental Treatment Program 2,000 Dental Education Outreach Program Rotary Club of Cupertino 1,600 Thanksgiving Meal Sharing Program 3,000 Pollinator Garden and McClellan Ranch Park Special Olympics Northern California 5,000 2025 Cupertino Bowling Team Program 0 Teens Talk 0 450 Cuper-Teens Got Laughs! Via Rehabilitation Services 1,000 STEAM & Outdoor Education 0 West Valley Community Services 2,000 Gift of Gope 2025 5,000 Gifts of Hope 2026 Total 35,500 32,500 Community Funding Staffing 36 •No new full-time positions are requested in FY 2027 Capital Improvement Program (CIP) FY 2026-27 Proposed CIP Projects 38 Issues and Challenges •Structural deficit - Expenditures outpacing revenues •Sheriff’s Contract - Unknown growth Issues and Challenges 40 Next Steps 42 Next Steps1 May 11, 2026 Proposed Budget Study Session June 16, 2026 Final Budget Hearing and Adoption Nov 2026 1st Quarter Financial Report 1Additional meetings to be added if needed Questions?