REPORT TO COUNCIL
SUBJECT
Title
Action on Monthly Financial Status and Investment Reports for October 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 October 2023 are submitted for your information. The financial reviews as of October 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, 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 each 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 reports summarize the City’s financial performance as of October 31, 2023 (Attachment 1). Financial analysis for these reports is provided 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 16.9% of the budget through October 2023. In some categories, a portion of the revenues received through October account for activity that occurred in FY 2022/23 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. General Fund departmental expenditures were at 31% of budget through October 2023, which are within budgeted levels.
As shown in Attachment 1, total revenues for Enterprise Funds (Electric, Water, Sewer, Cemetery, Solid Waste, and Water Recycling) were at 22.1% of the budget through October 31, 2023, while total expenses were at 26.2%.
In the month of October, donations of $10,600 were received, bringing total donations to $114,084.
Some U.S. economic forecasts are predicting weaker growth in 2024. After three quarters of presenting both recession and no recession scenarios in its Forecasts, the October 2023 UCLA Anderson Forecast presents a single no-recession scenario “with a weak economy in 2024 followed by a return to trend growth rates, albeit below trend GDP levels, in 2025”. In its November 2023 forecast, the Conference Board predicts a very short and shallow recession early next year.
On a national level, the unemployment rate increased from 3.8% in September 2023 to 3.9% in October 2023. In October, the number of unemployed persons increased slightly from 6.4 million to 6.5 million. In the second estimate for the third quarter 2023, the Gross Domestic Product (GDP) increased at an annual rate of 5.2%, compared with an increase of 2.1% in the second quarter 2023.
The California unemployment rate increased slightly from 4.7% in September 2023 to 4.8% in October 2023 and was up from 4.1% in October 2022. The unadjusted unemployment rate in the San José-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) was 3.8% in October 2023, up from a revised 3.7% in September 2023, and above the October 2022 level of 2.5%.
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 October 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 October 2023 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 3.04% in October.
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 3 and summarized below:
• Convention Center Enterprise Fund - eliminate the interfund services allocation for property insurance in the amount of $280,583, as this item is budgeted separately under OVG360’s indirect expense appropriation.
The table below summarizes the net budget change in revenue and expenditure for each fund impacted by the recommended budget amendments.
|
Fund Name |
Revenue |
Expenditure |
|
Convention Center Enterprise Fund (net-zero adjustment of $281K to fund balance) |
$0 |
$0 |
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 October 2023 as presented; and
2. Approve the FY 2023/24 Budget Amendment in the Convention Center Enterprise Fund, eliminating the interfund services appropriation and increasing the unrestricted ending fund balance in the amount of $280,583 (majority affirmative Council votes required).
Staff
Reviewed by: Kenn Lee, Director of Finance
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Monthly Financial Status Report - October 2023
2. Monthly Investment Report - October 2023
3. FY 2023/24 Budget Amendments