REPORT TO COUNCIL
SUBJECT
Title
Action on Monthly Financial Status and Investment Reports for May 2024
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 May 2024 are submitted for your information. The financial review as of May 31, 2024 provides a year-to-date financial update to the City Council for fiscal year 2023/24. The revenue/expenditure analysis measures the level of adherence to the established budget and allows the City to monitor and project revenues and expenditures throughout the year.
The FY 2023/24 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 reports.
In accordance with City Council Policy 051 (Donations to the City), this report includes 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 (Attachment 1)
The attached report summarizes the City’s financial performance as of May 31, 2024 (Attachment 1). This report contains 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 87.8% of the budget through May 2024. Overall, revenues are tracking within estimated levels through May. As shown in Attachment 1, General Fund expenditures, excluding transfers, were at 86.4% of budget through May 2024. With the exception of the Fire Department, City departments are tracking at or below the par level through both months. The Fire Department is tracking above budget due to higher overtime expenditures related to the backfill for absences as well as higher compensatory time off payments. On June 25, 2024, the City Council approved the Monthly Financial Reports for March and April 2024, which included budget adjustments totaling $1.75 million to address the Fire Department’s projected overage.
As shown in Attachment 1, total revenues for Enterprise Funds (Electric, Water, Sewer, Cemetery, Solid Waste, and Water Recycling) were at 67.2% of budget through May, while total expenses were at 74.5% in May, which are within budgeted levels.
In the month of May, donations of $12,632 were received, bringing total donations to $134,198.
While there are varying forecasts, economic growth continues but is expected to be constrained in 2024. The June 2024 UCLA Anderson Forecast assumes no recession but does expect slower growth in 2024. In its June 2024 update to its forecast, The Conference Board also predicts no recession, but it expects consumer spending growth to cool and for overall GDP growth to slow to under 1% in the second and third quarters of 2024.
On a national level, the unemployment rate increased slightly from 4.0 in May 2024 to 4.1% in June 2024. In June, the number of unemployed persons totaled 6.8 million, a slight increase from 6.6 million in May. In the first quarter 2024, the Gross Domestic Product (GDP) increased at an annual rate of 1.4% according to the “third” estimate released by the Bureau of Economic Analysis. This follows a GDP increase of 3.4% in the fourth quarter 2023.
The California unemployment rate slightly decreased from 5.3% in April to 5.2% in May 2024 but was up from 4.5% in April 2023. The unadjusted unemployment rate in the San José-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) decreased slightly from 3.9% in April to 3.5% in May 2024 but remains above the May 2023 level of 3.2%.
Monthly Investment Report (Attachment 2)
All securities held by the City of Santa Clara as of May 31, 2024 were in compliance with the City’s Investment Policy Statement in terms of 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 May 2024 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 has a reasonable portfolio return of 3.29% in May.
ENVIRONMENTAL REVIEW
This item is not subject to the California Environmental Quality Act (“CEQA”) as it does not involve the exercise of discretionary action (Section 15060(c)(1) of Title 14 of the California Code of Regulations).
FISCAL IMPACT
There is no fiscal impact associated with this report.
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
Note and file the Monthly Financial Status and Monthly Investment Reports for May 2024 as presented.
Staff
Reviewed by: Kenn Lee, Director of Finance
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Monthly Financial Status Report - May 2024
2. Monthly Investment Report - May 2024