REPORT TO COUNCIL
SUBJECT
Title
Action on Monthly Financial Status and Investment Reports for February 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 February 2026 are submitted for your information. The financial reviews, as of February 28, 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 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 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 February 28, 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.
Monthly Financial Status Report shows that General Fund revenues (excluding transfers) at 60% of the budget through February 2026. In some cases, such as property tax, most payments are scheduled to occur later in the fiscal year. Based on the prior year performance and collections through February, General Fund revenues are currently tracking to exceed the budget. As shown in Monthly Financial Status Report, General Fund expenditures (excluding transfers) were at 62.5% through February 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 51.5% of the budget through February 28, 2026, while total expenses were at 59.8%.
In February, donations of $100 were received, bringing total donations to $46,794.
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 second estimate for the fourth quarter of 2025, the Gross Domestic Product (GDP) increased at an annual rate of 0.7%, following a GDP increase of 4.4% in the third quarter 2025. On a national level, the unemployment rate changed little from 4.3% in January to 4.4% in February 2026. In February, the number of unemployed persons totaled 7.6 million, an increase from 7.4 million in January. The California unemployment rate changed little from 5.6% to 5.5% between November and December 2025. The unadjusted unemployment rate in the San José-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) was 4.0% in December 2025, down slightly from a revised 4.3% in November 2025, and unchanged from the December 2024 level of 4.0%.
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 February 28, 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 February 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 4.11% in February.
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;
• Building Development Services Fund - increases the materials, services, supplies budget, offset by a reduction to the unrestricted ending fund balance;
• Fire Certified Unified Program Agency (CUPA) Fund - recognizes CUPA enforcement fines and appropriates a portion of the funding to the Fire Department. An action is also included to establish a restricted CUPA Enforcement Fines Reserve, allocating the remaining revenue to this restricted balance; and
• Library Operating Grant Trust Fund - recognizes grant funding and establishes a new Pacific Library Partnership California Library Services Act grant appropriation.
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 February 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, with a net impact of $227,315;
b. In the Building Development Services Fund, increases the Materials, Services, Supplies budget and decreases the unrestricted ending fund balance, with a net impact of $0;
c. In the Fire Certified Unified Program Agency (CUPA) Fund, recognizes enforcement fine revenue and appropriates a portion of the funding to the Fire Department, establishes a restricted CUPA Enforcement Fines Reserve, allocating the remaining revenue to this reserve, with a net impact of $119,200; and
d. In the Library Operating Grant Trust Fund, recognizes grant funding and establishes a Pacific Library Partnership California Library Services Act grant appropriation, with a net impact of $3,711.
Items 2a - 2d, 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 - February 2026
2. Monthly Investment Report - February 2026
3. FY 2025/26 Budget Amendments