REPORT TO COUNCIL
SUBJECT
Title
Action on Monthly Financial Status and Investment Reports for May 2026
Report
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 May 2026 are submitted for your information. The financial reviews, as of May 31, 2026, provide a year-to-date financial update to the City Council for fiscal year 2025/26. 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 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, Enterprise Funds and Internal Service Funds, as well as expenditure summaries for Capital Improvement Funds and Fund Reserve Balances. Any significant variances are explained in the reports.
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 has been including this information monthly along with 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 May 31, 2026 (Attachment 1). This report provided financial analysis for the General Fund, select Special Revenue Funds, Internal Service Funds, Enterprise Operating Funds, and Capital Improvement Funds.
Monthly Financial Status Report shows that General Fund revenues (excluding transfers) are at 91.1% of the budget through May 2026. Based on the prior year performance and collections through May, General Fund revenues are tracking to exceed the budget. Budget adjustments were brought forward as part of the April 2026 Monthly Financial Report to recognize the higher collection level. As shown in Monthly Financial Status Report, General Fund expenditures (excluding transfers) were at 85.8% through May 2026 and are projected to end the year with overall savings. Budget adjustments for specific departments that are tracking to potentially exceed their budgets were brought forward in the April 2026 Monthly Financial Report.
As shown in Monthly Financial Status Report, total revenues for Enterprise Funds (Electric, Water, Sewer, Cemetery, Solid Waste, and Water Recycling) were at 73.3% of the budget through May 31, 2026, while total expenses were at 84%.
In May, donations of $24,650 were received, bringing total donations to $73,708.
The UCLA Anderson Summer 2026 Economic Forecast discusses the economic implications of the conflict with the Iran on the U.S. economy as well as factors in the U.S. economy that will help manage the related energy shock, including lower interest rates, tax cuts and AI investments. The UCLA Forecast assumes real Gross Domestic Product (GDP) growth of 2.1% in 2026, consistent with the performance in 2025. The estimate for 2026 is down from the 3% growth estimated in the Spring 2026 UCLA Forecast; growth in no longer expected to accelerate in 2026 as higher energy prices are expected to diminish household spending capacity.
In the third estimate for the first quarter of 2026, the Gross Domestic Product (GDP) increased at an annual rate of 2.1%, following a GDP increase of 0.5% in the fourth quarter 2025. On a national level, the unemployment rate remained unchanged at 4.3% between April and May 2026. In May, the number of unemployed persons totaled 7.3 million, a decrease from 7.4 million in April. The California unemployment rate was 5.3% in May 2026, unchanged from the April 2026 rate. The unadjusted unemployment rate in the San José-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) was 3.5% in May 2026, down slightly from a revised 3.8% in April 2026, and below the May 2025 level of 4.0%.
Monthly Investment Report (Attachment 2)
All securities held by the City of Santa Clara as of May 31, 2026 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 are adequate cash flow and maturity of investments to meet the City’s needs for the next six months.
The City’s investment strategy for May 2026 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 from the date of purchase. This strategy ensures safety of the City’s funds and provides liquidity to meet the City’s cash needs. There was a reasonable portfolio return of 4.15% in May.
The Monthly Investment Report also 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 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 they are fiscal activities that do not involve any commitment to any specific project which may result in a potential significant physical impact on the environment.
FISCAL IMPACT
There is no fiscal impact associated with this report.
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
Note and file the Monthly Financial Status Report and Monthly Investment Report for May 2026 as presented.
Staff
Reviewed by: Linh Lam, Acting Director of Finance
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Monthly Financial Status Report - May 2026
2. Monthly Investment Report - May 2026