REPORT TO COUNCIL
SUBJECT
Title
Action on Monthly Financial Status and Investment Reports for February 2025 and Approve the Related Budget Amendments
Report
COUNCIL PILLAR
Enhance Community Engagement and Transparency
BACKGROUND
In compliance with the Charter of the City of Santa Clara and the adopted Investment Policy, the monthly financial report and monthly investment report for February 2025 are submitted for your information. The financial reviews, as of February 28, 2025, provide a year-to-date financial update to the City Council for fiscal year 2024/25. The analysis of the revenues collected and all expenditures measures the level of adherence to the established resource allocation plan and allows the City to monitor and project revenues and expenditures throughout the year.
The Adopted Budget incorporates the estimated revenues and planned expenditures for all funds. The attached Financial Status Report provide the budget to actual revenue and expenditure summaries for the General Fund, Special Revenue Funds and Enterprise Operating Funds, as well as expenditure summaries for Capital Improvement Funds and Fund Reserve Balances. Any significant variances are explained in the report.
In accordance with City Council Policy 051 - Donations to the City, a monthly activity and annual summary of donations received by department is included in these reports. Although the requirement of the policy is to report quarterly, the City will include this information monthly in the financial status report.
DISCUSSION
Monthly Financial Status Report (Attachment 1)
The attached Monthly Financial Status Report summarizes the City’s financial performance as of February 28, 2025 (Attachment 1). This report provides financial analysis for the General Fund, select Special Revenue Funds, Enterprise Operating Funds, and Capital Improvement Funds.
Attachment 1 shows that General Fund revenues (excluding transfers) at 62.5% of the budget through February 2025. Revenues appear to be tracking slightly below par due to the timing of payments. However, General Fund revenues are currently tracking to exceed budgeted levels.
As shown in Attachment 1, General Fund expenditures (excluding transfers) were at 62.3% of budget through February 2025. Overall, expenditures are tracking within budgeted levels.
As shown in Attachment 1, total revenues for Enterprise Funds (Electric, Water, Sewer, Cemetery, Solid Waste, and Water Recycling) were at 70.1% of the budget through February 28, 2025, while total expenses were at 55.6%.
In the month of February, donations of $30 were received, bringing total donations to $27,954.
The Spring 2025 UCLA Anderson Forecast points to significant uncertainty related to trade, fiscal policy, and geopolitical risk with the new administration. The Spring 2025 UCLA Anderson Forecast for California assumes the state’s economy will grow at about the same rate as the U.S. in 2025 and 2026 and slightly faster in 2027.
On a national level, the unemployment rate changed little from 4.1% in February 2025 to 4.2% in March 2025. The number of unemployed persons totaled 7.1 million, consistent with February numbers. In the third estimate for the fourth quarter 2024, the Gross Domestic Product (GDP) increased at an annual rate of 2.4%, following a GDP increase of 3.1% in the third quarter.
The California unemployment rate remained unchanged at 5.4% between January and February 2025. The unadjusted unemployment rate in the San José-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) was 4.2% in February 2025, down slightly from a revised 4.3% in January 2025, and below the February 2024 level of 4.3%.
Staff will continue to closely monitor the General Fund revenues and the City’s overall financial performance as the fiscal year progresses.
Monthly Investment Report (Attachment 2)
All securities held by the City of Santa Clara as of February 28, 2025, were in compliance with the City’s Investment Policy Statement regarding current market strategy and long-term goals and objectives. All securities held are rated “A” or higher by two nationally recognized rating agencies. There is adequate cash flow and maturity of investments to meet the City’s needs for the next six months.
The City’s investment strategy for February 2025 was to invest funds not required to meet current obligations in securities listed in the prevailing Investment Policy Statement, with maturities not to exceed five years form the date of purchase. This strategy ensures safety of the City’s funds, provides liquidity to meet the City’s cash needs, and with a reasonable portfolio return of 4.03% in February.
The Monthly Investment Report also now includes a Statement of Transactions, following the Investment Inventory, in accordance with California Municipal Treasurers Association investment policy guidelines.
ENVIRONMENTAL REVIEW
The actions being considered do not constitute “projects” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to section 15378(b)(4) of Title 14 of the California Code of Regulations in that they are fiscal activities that do not involve the commitment to a specific project which may result in a potentially significant physical impact on the environment.
FISCAL IMPACT
From time to time, adjustments to the budget are required to reflect new information, align budgets with actual revenues and expenses, and correct for inadvertent errors. The recommended budget adjustments are described in Attachment 3 and summarized below:
• General Fund - a technical correction to reallocate funds to account for misallocated encumbrances. An action is also included to recognize and appropriate wildland deployment reimbursements to the Fire Department;
• Building Development Services Fund - transfers funding to the Vehicle Replacement Fund to account for higher than budgeted vehicle replacement costs;
• Convention Center Enterprise Fund - a technical correction that shifts funding from the Operations and Maintenance Reserve to the Unrestricted Ending Fund Balance;
• Electric Utility Capital Fund - reallocates funding from the Generation Capital Maintenance and Betterments project and from unrestricted ending fund balance to the Major Engine Overhaul project to address unanticipated, emergency repairs;
• Sewer Utility Fund - transfers funding to the Special Liability Insurance Fund as an initial reimbursement for a settlement agreement related to the utility;
• Special Liability Insurance Fund - recognizes a transfer from the Sewer Utility Fund and replenishes the Reserve for Future Claims and recognizes and appropriates revenue to the claims payments appropriation; and
• Vehicle Replacement Fund - recognizes a transfer from the Building Development Services Fund and appropriates the funding for the replacement of two Building-assigned vehicles.
COORDINATION
This report has been coordinated with the City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Note and file the Monthly Financial Status Report and Monthly Investment Report for February 2025 as presented; and
2. Approve the FY 2024/25 Budget Amendments in the following funds (as detailed in the Fiscal Impact Section of the staff report and Attachment 3 to the staff report):
a. In the General Fund, with a net impact of $80,184;
b. In the Building Development Services Fund, with a net impact of $0;
c. In the Convention Center Enterprise Fund, with a net impact of $0;
d. In the Electric Utility Capital Fund, with a net impact of $0;
e. In the Sewer Utility Fund, with a net impact of $0;
f. In the Special Liability Insurance Fund, with a net impact of $2,180,608; and
g. In the Vehicle Replacement Fund, with a net impact of $83,636.
Staff
Reviewed by: Kenn Lee, Director of Finance
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Monthly Financial Status Report - February 2025
2. Monthly Investment Report - February 2025
3. FY 2024/25 Budget Amendments