REPORT TO COUNCIL
SUBJECT
Title
Action on Monthly Financial Status and Investment Reports for September 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 report and monthly investment report for September 2024 are submitted for your information. The financial review as of September 30, 2024 provides 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 (Attachment 1)
The attached Monthly Financial Status Report summarizes the City’s financial performance as of September 30, 2024 (Attachment 1). This report provided financial analysis for the General Fund, select Special Revenue Funds, Enterprise Operating Funds, and Capital Improvement Funds.
Monthly Financial Status Report shows that General Fund revenues (excluding transfers) at 11.6% of the budget through September 2024. The revenue in some categories received through September 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 Monthly Financial Status Report, General Fund departmental expenditures were at 24.2% through September 2024 and are tracking within budgeted levels.
As shown in Monthly Financial Status Report, total revenues for Enterprise Funds (Electric, Water, Sewer, Cemetery, Solid Waste, and Water Recycling) were at 17.6% of the budget through September 30, 2024, while total expenses were at 20%.
In September, donations of $2,782 were received, bringing total donations to $8,890.
Economic news remains positive. The UCLA Anderson Forecast predicts strong GDP growth in the third quarter 2024, followed by lower growth in the fourth quarter 2024. Strong growth is then predicted for 2025 and 2026. The Conference Board points to ongoing resilience in the US economy despite looming uncertainties and persistent shocks.
On a national level, the unemployment rate changed little from 4.2% in August 2024 to 4.1% in September 2024. The number of unemployed persons also decreased from 7.1 million in August 2024 to 6.8 million in September 2024. In the advance estimate for the third quarter 2024, the Gross Domestic Product (GDP) increased at an annual rate of 2.8%, following a GDP increase of 3.0% in the second quarter.
The California unemployment rate remained unchanged at 5.3% between August and September 2024, but was up from 5.0% in September 2023. The unadjusted unemployment rate in the San José-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) was 4.1% in September 2024, down from a revised 4.6% in August 2024, but above the September 2023 level of 3.9%.
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 September 30, 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 September 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 from 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 3.53% in September.
The Monthly Investment Report also now reflects a Statement of Transactions, following the Investment Inventory, in accordance with California Municipal Treasurers Association investment policy guidelines.
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 3 and summarized below:
• General Fund - allocates funding from the Technology Fee Reserve to the Non-Departmental budget to provide funding to migrate parcel data and documents from the City’s legacy permit information system to Laserfiche. An action is also included to recognize and appropriate wildland reimbursements for the Fire Department.
• Fire Operating Grant Trust Fund - recognizes and appropriates County of Santa Clara Emergency Medical Services grant funding to the Fire Department.
• Public Donations Fund - recognizes and appropriates donations for Senior Center wellness programs and the Reed & Grant Sports Park under the Parks and Recreation Department.
• Storm Drain Capital Fund - allocates funding from available fund balance to the Storm Drain System Improvements project to address storm drain system capacity deficiencies.
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 September 2024 as presented; and
2. Approve the FY 2024/25 Budget Amendments in the following funds (as detailed in the Fiscal Section of the staff report and Attachment 3 to the staff report):
a. In the General Fund, with a net impact of $148,785;
b. In the Fire Operating Grant Trust Fund, with a net impact of $31,125;
c. In the Public Donations Fund, with a net impact of $3,132; and
d. In the Storm Drain Capital Fund, with a net impact of $0.
Staff
Reviewed by: Kenn Lee, Director of Finance
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Monthly Financial Status Report - September 2024
2. Monthly Investment Report - September 2024
3. FY 2024/25 Budget Amendments