REPORT TO COUNCIL
SUBJECT
Title
Action on Monthly Financial Status and Investment Reports for November and December 2023 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 November and December 2023 are submitted for your information. The financial reviews as of November 30 and December 31, 2023 provide a year-to-date financial update to the City Council for fiscal year 2023/24. 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 actual revenue and expenditure summaries for the General Fund, Special Revenue Funds and Enterprise Operating Funds. The Report also includes an 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 each department. Although the requirement of the policy is to report quarterly, the City will provide 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 November 30 and December 31, 2023 (Attachments 1 and 3). These reports contain financial analysis for the General Fund, select Special Revenue Funds, Enterprise Operating Funds, and Capital Improvement Program Funds.
Attachment 1 shows that General Fund revenues (excluding transfers) are at 26.9% of the budget through November 2023, and Attachment 3 shows revenues at 36.3% through December 2023. While General Fund revenues appear to be below the year-to-date par level, this is primarily due to the timing of payments. Overall, revenues are tracking within estimated levels through December. As shown in Attachments 1 and 3, General Fund departmental expenditures are tracking within budget at 38.9% of budget through November 2023 and 46.6% of budget through December 2023. With the exception of the Fire Department, departments are tracking at or below the par level through December. The Fire Department is tracking slightly above budget due to higher overtime expenditures related to the backfill for absences as well as higher compensatory time off payments.
As shown in Attachments 1 and 3, total revenues for Enterprise Funds (Electric, Water, Sewer, Cemetery, Solid Waste, and Water Recycling) were at 28.3% and 34.6% of budget through November and December, respectively. Total expenses were at 33% in November and 39.9% in December, which are within budgeted levels.
In the month of November, donations of $2,162 were received, bringing total donations to $116,246. No additional donations were received in December.
Some U.S. economic forecasts are predicting weaker growth in 2024. The December 2023 UCLA Anderson Forecast assumes no recession. However, the higher interest rates are expected to restrain growth in 2024. In its December 2023 forecast, the Conference Board predicts a tepid start to 2024.
On a national level, the unemployment rate remained unchanged at 3.7% between November and December 2023. In December, the number of unemployed persons was unchanged at 6.3 million. In the fourth quarter 2023, the Gross Domestic Product (GDP) increased at an annual rate of 3.3% according to the “advance” estimate released by the Bureau of Economic Analysis. This follows a GDP increase of 4.9% in the third quarter 2023.
The California unemployment rate increased slightly from 4.9% in November 2023 to 5.1% in December 2023 and was up from 4.1% in December 2022. The unadjusted unemployment rate in the San José-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) was 4.0% in December 2023, up slightly from a revised 3.9% in November 2023, and above the December 2022 level of 2.4%.
Staff will continue to closely monitor the General Fund 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 November 30 and December 31, 2023 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 November and December 2023 was to invest funds not required to meet current obligations in securities listed in the prevailing Investment Policy Statement. 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 3.06% and 3.05% in November and December, respectively.
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
From time to time, budget adjustments are necessary to reflect new information, align budgets with actual revenues and expenses, and correct errors. The recommended budget adjustments are described in Attachment 5 and summarized below:
• City Affordable Housing Capital Fund/City Affordable Housing Fund - transfers $4.9 million from the City Affordable Housing Capital Fund to the City Affordable Housing Fund for the loan to the Charities Housing Development Corporation for the Civic Center housing project. Because this funding will be treated as a loan, it is recommended to transfer this funding to the City Affordable Housing Fund, to keep consistent with how other housing developer loans are treated.
• Convention Center Enterprise Fund/Convention Center Capital Fund - transfers $125,000 from the Convention Center Enterprise Fund to the Convention Center Capital Fund and appropriates the funding to the Santa Clara Convention Center Condition Assessment Repair project to complete electrical signage repairs at the Convention Center.
• Electric Utility Capital Fund - recognizes additional transfers from the Electric Utility Fund and Water Utility Capital Fund and increases in developer contribution estimates for higher costs associated with various capital projects including the Fiber Development, Design and Expansion Project ($1.6 million), New Business Estimate Work Project ($6.0 million), Transmission and Distribution Capital Maintenance and Betterments Project ($1.0 million), and the Storm Water Compliance Project ($150,000).
• Electric Utility Fund - transfers $6.0 million to the Electric Utility Capital Fund for higher costs in the New Business Estimate Work project.
• Water Utility Capital Fund - decreases the SCADA Improvement Project budget in the amount of $191,500 and transfers that funding to the Fiber Development, Design and Expansion Project in the Electric Utility Capital Fund.
• Fire Operating Grant Trust Fund - recognizes and appropriates grant funding for the 2022 Emergency Management Preparedness Grant ($2,600) and the 2023 County of Santa Clara Emergency Medical Services Grant ($51,446).
• Streets and Highways Capital Fund/Developer Traffic Payments Fund/Traffic Mitigation Fund - eliminates the Multimodal Improvement Plan Phase 1 ($740,000) and Multimodal Improvement Plan Phase 2 ($1,340,000) project budgets as these are both on hold with Related Santa Clara. Corresponding decreases to developer contributions in the Developer Traffic Payments Fund ($1,108,500), the Traffic Mitigation Fund ($221,500), and the Streets and Highways Capital Fund ($750,000) supporting these two projects are also eliminated.
The table below summarizes the net budget change in revenue and expenditure for each fund impacted by the recommended budget amendments.
|
FY 2023/24 Recommended Budget Amendments |
|
Fund Name |
Revenue |
Expenditure |
|
City Affordable Housing Capital |
$0 |
$0 |
|
Fund (net-zero adjustment of $4.9M |
|
|
|
to shift project budget) |
|
|
|
City Affordable Housing Fund |
$4,944,484 |
$4,944,484 |
|
Convention Center Capital Fund |
$125,000 |
$125,000 |
|
Convention Center Enterprise Fund |
$0 |
$0 |
|
(net-zero adjustment of $125K |
|
|
|
from fund balance) |
|
|
|
Developer Traffic Payment Fund |
($1,108,500) |
($1,108,500) |
|
Electric Utility Capital Fund |
$7,591,500 |
$7,591,500 |
|
Electric Utility Fund (net-zero |
$0 |
$0 |
|
adjustment of $6.0M |
|
|
|
from fund balance) |
|
|
|
Fire Operating Grant Trust Fund |
$54,046 |
$54,046 |
|
Streets and Highways Capital Fund |
($2,080,000) |
($2,080,000) |
|
Traffic Mitigation Fund |
($221,500) |
($221,500) |
|
Water Utility Capital Fund (net-zero |
$0 |
$0 |
|
adjustment of $191K) |
|
|
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 November and December 2023 as presented; and
2. Approve the following FY 2023/24 Budget Amendments as summarized below and detailed in Attachment 5:
a. Transfer $4,944,484 from City Affordable Housing Capital Fund to the City Affordable Housing Fund for the Civic Center Drive - Low Income Housing Project as a loan (majority affirmative Council votes required);
b. Transfer $125,000 from the Convention Center Enterprise Fund to the Convention Center Capital Fund for electrical signage repairs (five affirmative Council votes required for the use of unused balances);
c. Decrease the developer contributions revenue estimate by $2,080,000 in the Developer Traffic Payments Fund, Streets and Highways Capital Fund, and Traffic Mitigation Fund offset by a decrease in the Multimodal Improvement Plan Phase 1 and Phase 2 projects (majority affirmative Council votes required);
d. Recognize and appropriate grant funding in the Fire Operating Grant Trust Fund in the amount of $2,600 for the 2022 Emergency Management Preparedness Grant and $51,446 for the 2023 County of Santa Clara Emergency Medical Services Grant (five affirmative Council votes required to appropriate additional revenue);
e. Appropriate $1,591,500 in the Electric Utility Capital Fund for the Fiber Development, Design, and Expansion Project, offset by developer contributions and a decrease to the SCADA Improvements project in the amount of $191,500 in the Water and Utility Capital Fund (five affirmative Council votes required to appropriate additional revenue);
f. Transfer $6,000,000 from the Electric Utility Fund to the Electric Utility Capital Fund for the New Business Estimate Work Project (five affirmative Council votes required to appropriate additional revenue);
g. Appropriate $1,000,000 in the Electric Utility Capital Fund for the Transmission and Distribution Capital Maintenance and Betterments Project offset by unrestricted ending fund balance (five affirmative Council votes required for the use of unused balances); and,
h. Appropriate $150,000 in the Electric Utility Capital Fund for the Storm Water Compliance Project offset by unrestricted ending fund balance (five affirmative Council votes required for the use of unused balances).
Staff
Reviewed by: Kenn Lee, Director of Finance
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Monthly Financial Status Report - November 2023
2. Monthly Investment Report - November 2023
3. Monthly Financial Status Report - December 2023
4. Monthly Investment Report - December 2023
5. FY 2023/24 Budget Amendments