REPORT TO COUNCIL
SUBJECT
Title
Action on Monthly Financial Status and Investment Reports for July and August 2026 and Approve the Related Budget Amendments
Report
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 2026 and August 2026 are submitted for your information. The financial reviews, as of July 31 and August 31, 2026, provide a year-to-date financial update to the City Council for fiscal year 2026/27. 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 Reports provide 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 will include this information monthly in the financial status report.
DISCUSSION
Monthly Financial Status Report (Attachments 1 and 3)
The attached Monthly Financial Status Reports summarizes the City’s financial performance as of July 31 and August 31, 2026 (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 (excluding transfers) at 2.4% of the budget through July 2026, while Attachment 3 shows General Fund revenues at 6.5% in August. In both cases, the revenues in some categories received in July and August account for activity that occurred in FY 2025/26 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 expenditures (excluding transfers) were at 8.3% and 16.5% of budget through July and August 2026, 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 1.9% of the budget through July 31, 2026, while total expenses were at 6.6%. In Attachment 3, total revenues for these funds were at 10.2% of the budget and total expenses were at 13.2% through August 31, 2026. Overall, both revenue and expenditures are tracking below par. Activity through August also reflects accruals back to FY 2025/26 which has resulted in lower actuals, particularly for the revenues.
In the months of July and August, donations of $18,375 and $1,000 were received, respectively, bringing total donations to $19,375.
The Fall 2026 UCLA Anderson Forecast describes a resilient U.S. economy that has weathered a series of disruptions. The forecast assumes growth to remain above 2% for the remainder of 2026 and near 2% in 2027 and 2028, supported in part by continued investment in AI infrastructure. The Forecast also continues to identify significant negative and positive risks to the forecast. There are negative risks associated with potential changes in AI equity valuations, the conflict with Iran, and oil prices as well as positive risks associated with potential AI-driven productivity gains and a swifter resolution of the conflict with Iran.
On a national level, the unemployment rate was unchanged at 4.1% between July 2026 and August 2026. In August, the number of unemployed persons totaled 7.0 million, up slightly from 6.9 million in July 2026. In the second estimate for the second quarter of 2026, the Gross Domestic Product (GDP) increased at an annual rate of 1.5%, following a GDP increase of 2.1% in the first quarter 2026.
The California unemployment rate was 5.1% for both July 2026 and August 2026. The unadjusted unemployment rate in the San José-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) was 4.3% in August 2026, up slightly from a revised 4.1% in July 2026, but below the August 2025 estimate of 4.7%.
Staff will continue to closely monitor the General Fund revenues and the City’s overall financial performance.
Monthly Investment Report (Attachments 2 and 4)
All securities held by the City of Santa Clara as of July 31 and August 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 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 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, provides liquidity to meet the City’s cash needs, and with a reasonable portfolio return of 4.16% in July and 4.18% in August.
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
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 - increases the Stadium Other Fees for Services estimate and the Stadium Operations budget to reflect additional non-NFL events. Adjustments to recognize donations from the National Football League and from Sara Wilberger, a Santa Clara resident, and appropriate those funds to the Parks and Recreation Department are also included. An adjustment to the Community Development Department for the weed abatement program is recommended, as well as establishing a transfer to the Vehicle Replacement Fund, offset by a reduction to the unrestricted ending fund balance.
• Building Development Services Fund - establishes a transfer to the Vehicle Replacement Fund, offset by a reduction to the unrestricted ending fund balance.
• Cemetery Fund - recognizes a donation from Keypoint Credit Union for the purchase of a park bench and appropriates the funding to the Parks and Recreation Department.
• Fleet Operations Fund - recognizes transfers from the Recycled Water, Water Utility, and Sewer Utility Funds for the maintenance of a generator at the newly acquired Corvin Drive property.
• General Government Capital Fund - recognizes reimbursements from the State of California and appropriates the funding to the Police Department in the Measure I Bond Furniture, Fixtures, and Equipment Project.
• Police Operating Grant Trust Fund - recognizes grant funding and increases the Tobacco Grant Program appropriation.
• Prefunded Plan Review Fund - recognizes developer contributions from Sutter Bay Hospitals and establishes an appropriation for a development application for properties located on Mission College Boulevard.
• Public Buildings Capital Fund - increases the beginning fund balance and carries over unspent funds for the Citywide EV Charging Station Installation project.
• Public Donations Fund - recognizes and appropriates donations to the Parks and Recreation Department for the Wade Brummal Scholarship Program.
• Recycled Water Fund - establishes a transfer to the Fleet Operations Fund to cover a portion of the operation and maintenance costs for a generator at the Corvin Drive property, offset by a decrease to the unrestricted ending fund balance.
• Sewer Utility Fund - establishes a transfer to the Vehicle Replacement Fund to cover the costs of two trailers related to the health and safety program and an accelerated crane replacement and establishes a transfer to the Fleet Operations Fund for maintenance of a generator at the newly acquired Corvin Drive property; these actions are offset by a decrease to the unrestricted ending fund balance.
• Special Liability Insurance Fund - increases the Other Revenue estimate and increases the Claims Payments appropriation. This increase is partially offset by a reduction to the Reserve for Future Claims and unrestricted ending fund balance.
• Vehicle Replacement Fund - recognizes insurance reimbursements and transfers from the General Fund, Building Development Services Fund, Recycled Water, Sewer Utility and Water Utility Funds and increases the capital outlay budget for vehicle purchases and replacements. These actions are partially offset by a reduction to the unrestricted ending fund balance.
• Water Utility Fund - establishes a transfer to the Vehicle Replacement Fund to cover the costs of two trailers related to the health and safety program, a vehicle for the water main replacement program, and an accelerated crane replacement. Also establishes a transfer to the Fleet Operations Fund for maintenance of a generator at the newly acquired Corvin Drive property; these actions are offset by a decrease to the unrestricted ending fund balance.
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
1. Note and file the Monthly Financial Status Report and Monthly Investment Report for July and August 2026 as presented; and
2. Approve the FY 2026/27 budget amendments in the following funds (as detailed in the Fiscal Impact section of the staff report and Attachment 5 of the staff report):
a. General Fund: increases to the Stadium Other Fees for Services and donations estimates and Stadium Operations and Parks and Recreation Department appropriations, and an increase to the Community Development Department appropriation and transfer to the Vehicle Replacement Fund, offset by a decrease to unrestricted ending fund balance, with a net impact of $1,599,013;
b. Building Development Services Fund: establish a transfer to the Vehicle Replacement Fund and decrease to unrestricted ending fund balance, with a net impact of $0;
c. Cemetery Fund: recognize a donation and appropriate it to the Parks and Recreation Department, with a net impact of $6,132;
d. Fleet Operations Fund: recognize transfers from the Recycled Water, Water Utility, and Sewer Utility Funds for the maintenance of a generator at the newly acquired Corvin Drive property, with a net impact of $7,500;
e. General Government Capital Fund: recognize a State reimbursement and increase the Measure I Bond Furniture, Fixtures, and Equipment Project appropriation for the Police Department, with a net impact of $20,317;
f. Police Operating Grant Trust Fund: recognize State grant funding and appropriate it to the Tobacco Grant Program, with a net impact of $10,361;
g. Prefunded Plan Review: recognizes developer contributions and establishes an appropriation for a development review, with a net impact of $250,000;
h. Public Buildings Capital Fund: increase the beginning fund balance and increase the Citywide EV Charging Station Installation project, with a net impact of $1,484,595;
i. Public Donations Fund: recognize and appropriate donations to the Wade Brummal Scholarship Program, with a net impact of $18,974;
j. Recycled Water Fund: establish a transfer to the Fleet Operations Fund and decrease to unrestricted ending fund balance, with a net impact of $0;
k. Sewer Utility Fund: establish transfers to the Vehicle Replacement Fund and the Fleet Operations Fund and decrease to unrestricted ending fund balance, with a net impact of $0;
l. Special Liability Insurance Fund: recognize insurance reimbursements, increase the Claims Payments appropriation, and decrease the Reserve for Future Claims and unrestricted ending fund balance, with a net impact of $2,985,000;
m. Vehicle Replacement Fund: recognize insurance reimbursements and transfers from the General Fund, Building Development Services Fund, and Recycled Water, Water, and Sewer Utility Funds, increase the capital outlay appropriation, and decrease the unrestricted ending fund balance, with a net impact of $685,154; and
n. Water Utility Fund: establish transfers to the Vehicle Replacement Fund and the Fleet Operations Fund and decrease the unrestricted ending fund balance, with a net impact of $0.
Staff
Reviewed by: Linh Lam, Acting Director of Finance
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Monthly Financial Status Report - July 2026
2. Monthly Investment Report - July 2026
3. Monthly Financial Status Report - August 2026
4. Monthly Investment Report - August 2026
5. FY 2026/27 Budget Amendments