REPORT TO COUNCIL
SUBJECT
Title
Action on Monthly Financial Status and Investment Reports for March 2026 and Approval of 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 report and monthly investment report for March 2026 are submitted for your information. The financial reviews, as of March 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 expenditure 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 March 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.
General Fund revenues (excluding transfers) were at 70% of the budget through March 2026. Based on the prior year performance and collections through March, General Fund revenues are currently tracking to exceed the budget. As shown in Monthly Financial Status Report, General Fund expenditures (excluding transfers) were at 70.1% through March 2026 and are projected to end the year with savings.
As shown in Monthly Financial Status Report, total revenues for Enterprise Funds (Electric, Water, Sewer, Cemetery, Solid Waste, and Water Recycling) were at 58.3% of the budget through March 31, 2026, while total expenses were at 67.3%.
In March, donations of $629 were received, bringing total donations to $47,423.
The Spring 2026 UCLA Anderson Forecast points to a shift in economic momentum since late 2025 with strong projected economic growth approaching 3% in 2026. This growth is expected to be driven by income tax cuts, expansion of fiscal stimulus, and artificial intelligence investment. The Iran war, however, has resulted in greater economic uncertainty, with economists pointing to the negative impacts on gas prices, inflation, consumer spending, and employment as well lower economic growth projections. The war has also led to significant financial market volatility.
In the advance estimate for the first quarter of 2026, the Gross Domestic Product (GDP) increased at an annual rate of 2.0%, following a GDP increase of 0.5% in the fourth quarter 2025. On a national level, the unemployment rate decreased slightly from 4.4% in February to 4.3% in March 2026. In March, the number of unemployed persons totaled 7.2 million, a decrease from 7.6 million in February 2026. The California unemployment rate was 5.3% in March 2026, down from 5.4% in February 2026. The unadjusted unemployment rate in the San José-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) was 3.9% in March 2026, down slightly from a revised 4.2% in February 2026, and below the March 2025 level of 4.2%.
Staff will continue to closely monitor the General Fund revenues and the City’s overall financial performance.
Monthly Investment Report (Attachment 2)
All securities held by the City of Santa Clara as of March 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 March 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 March.
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 adjustment is described in Attachment 3 and summarized below:
• General Fund - recognizes wildland reimbursements and appropriates the funds to the Fire Department and transfers funds to the Vehicle Replacement Fund for increased costs associated with vehicles for the Fire and Parks and Recreation Departments, offset by unrestricted fund balance and Parks and Recreation Department savings;
• Cemetery Capital Fund - establishes a new Memorial Park Roadway Rehabilitation project to repair the asphalt roadways at Mission City Memorial Park, offset by a transfer from the Cemetery Fund and the unrestricted ending fund balance;
• Cemetery Fund - transfers funds to the Cemetery Capital Fund for the new Memorial Park Roadway Rehabilitation project, offset by expenditure savings and unrestricted ending fund balance;
• Fire CUPA Fund - increases funding for as-needed staff to support CUPA-specific Public Records Act requests, offset by unrestricted ending fund balance;
• Streets and Highways Capital Fund - establishes the North Santa Clara Transit Station Access and Circulation Study project, offset by grant funding and matching funds from the Pedestrian and Bicycle Enhancement Facilities Project; and
• Vehicle Replacement Fund - recognizes a transfer from the General Fund and appropriates the funds to Capital Outlay to cover increased costs associated with vehicle replacements for the Fire Department and vehicle additions for the Parks and Recreation Department.
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 March 2026 as presented; and
2. Approve the Fiscal Year 2025/26 budget amendments in the following funds (as detailed in the Fiscal Impact section of the staff report and Attachment 3 of the staff report):
a. In the General Fund, recognizes wildland reimbursement revenue and appropriates the funds to the Fire Department, and transfers funds to the Vehicle Replacement Fund for Fire Department and Parks and Recreation Department vehicle costs, with a net impact of $42,303;
b. In the Cemetery Capital Fund, establishes a new Memorial Park Roadway Rehabilitation project, offset by a transfer from the Cemetery Fund and the unrestricted ending fund balance, with a net impact of $446,905;
c. In the Cemetery Fund, transfers funds to the Cemetery Capital Fund for the new Memorial Park Roadway Rehabilitation project, with a net impact of $0;
d. In the Fire CUPA Fund, increases funding for as-needed staff, offset by unrestricted ending fund balance, with a net impact of $0;
e. In the Streets and Highways Capital Fund, establishes the North Santa Clara Transit Station Access and Circulation Study project, offset by grant funding and the Pedestrian and Bicycle Enhancement Facilities Project, with a net impact of $145,000; and
f. In the Vehicle Replacement Fund, increases the Capital Outlay appropriation for Fire Department and Parks and Recreation Department vehicle costs, offset by a transfer from the General Fund, with a net impact of $187,170.
Items 2a - 2f, five affirmative Council votes required to appropriate additional revenue and 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 - March 2026
2. Monthly Investment Report - March 2026
3. FY 2025/26 Budget Amendments