REPORT TO COUNCIL
SUBJECT
Title
Action on Monthly Financial Status and Investment Reports for July and August 2024 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 reports and monthly investment reports for July 2024 and August 2024 are submitted for your information. The financial reviews as of July 31 and August 31, 2024 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 provides the budget to actual revenue and expenditure summaries for the General Fund, Special Revenue Funds and Enterprise Operating Funds, as well as expenditure summary 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, included in these reports are monthly activity and annual summary of donations received by department. 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 (Attachments 1 and 3)
The attached reports summarize the City’s financial performance as of July 31 and August 31, 2024 (Attachments 1 and 3). Financial analysis for these reports is provided for the General Fund, select Special Revenue Funds, Enterprise Operating Funds, and Capital Improvement Funds.
Attachment 1 shows that General Fund revenues at 6.1% of the budget through July 2024, while Attachment 3 shows General Fund revenues at 11.7% through August. In both cases, the revenues in some categories received in July and August account for activity that occurred in FY 2023/24 and those revenues are accrued back to that year. In other cases, such as property tax, most payments are scheduled to occur later in the fiscal year. While it is very early in the fiscal year and limited data is available, General Fund revenues are currently tracking within estimated levels.
As shown in Attachments 1 and 3, General Fund departmental expenditures were at 8% and 16.7% of budget through July and August 2024, respectively. 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 1.6% of the budget through July 31, 2024, while total expenses were at 6.2%. In Attachment 3, total revenues for these funds were at 9.9% of the budget and total expenses were at 12.5%, through August 31, 2024.
In the months of July and August, donations of $2,703 and $3,405 were received, respectively, bringing total donations to $6,108.
The June 2024 UCLA Anderson Forecast assumes no recession. The Conference Board Economic Forecast for the US Economy assumes GDP growth will slow, but not plunge, in 2024.
On a national level, the unemployment rate changed little from 4.3% in July 2024 to 4.2% in August 2024. In August, the number of unemployed persons slightly decreased by 48,000, bringing the unemployment total to 7.1 million. In the third estimate for the second quarter 2024, the Gross Domestic Product (GDP) increased at an annual rate of 3.0%, following a GDP increase of 1.6% in the first quarter.
The California unemployment rate increased slightly from 5.2% in July to 5.3% in August 2024, and was up from 4.8% in August 2023. The unadjusted unemployment rate in the San José-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) was 4.5% in August 2024, unchanged from July 2024, and above the August 2023 level of 4.1%.
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 (Attachments 2 and 4)
All securities held by the City of Santa Clara as of July 31st and August 31, 2024 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 July and August 2024 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 3.44% in July and 3.45% in August.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” 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 it is a fiscal activity that does 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 5 and summarized below:
• General Fund - shifts funding from the Finance Department to the Human Resources Department for annual VEBA custody fees.
• City Affordable Housing Fund - shifts funding for the Belovida Santa Clara Senior Apartments from the Permanent Local Housing Allocation (PLHA) funds, administered by the County, to available City Affordable Housing funds. The PLHA funds will be used for other eligible housing projects.
• Electric Utility Capital Fund - increases the developer contributions estimate and the Juliette Substation Expansion and Transformer Rerate project to fund a generation interconnection study to determine interconnection, operating, and metering requirements for the project. An action is also included to increase the developer contributions estimate and the San Tomas Junction project to cover costs associated with a design change of the transmission line extension and unanticipated expenses.
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 mailto: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 Reports and Monthly Investment Reports for July 2024 and August 2024 as presented; and
2. Approve the FY 2024/25 Budget Amendments in the following funds (as detailed in Attachment 5): (a) In the General Fund, with a net impact of $0; (b) In the City Affordable Housing Fund, with a net impact of $0; and (c) In the Electric Utility Capital Fund, with a net impact of $3,640,629.
Staff
Reviewed by: Kenn Lee, Director of Finance
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Monthly Financial Status Report - July 2024
2. Monthly Investment Report - July 2024
3. Monthly Financial Status Report - August 2024
4. Monthly Investment Report - August 2024
5. FY 2024/25 Budget Amendments