REPORT TO COUNCIL
SUBJECT
Title
Action on Monthly Financial Status and Investment Reports for November and December 2024 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 reports and monthly investment reports for November 2024 and December 2024 are submitted for your information. The financial reviews as of November 30 and December 31, 2024, provide a year-to-date financial update to the City Council for fiscal year 2024/25. 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 and Enterprise Operating 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, included in these reports are monthly activity and annual summary of donations received by 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 (Attachments 1 and 3)
The attached Monthly Financial Status Reports summarize the City’s financial performance as of November 30, 2024 (Attachment 1) and December 31, 2024 (Attachment 3). This reports provided financial analysis 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 30.7% of the budget through November 2024, while Attachment 3 shows General Fund revenues at 38.8% through December 2024. In both cases, revenues are tracking below par due to the timing of payments. In certain categories, such as property tax, most payments are scheduled to occur later in the fiscal year. General Fund revenues are currently tracking within estimated levels.
As shown in Attachments 1 and 3, General Fund expenditures (excluding transfers) were at 39.2% and 47% of budget through November and December 2024, respectively. Overall, 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 45.8% of the budget through November 30, 2024, while total expenses were at 34.6%. In Attachment 3, total revenues for these funds were at 54.4% of the budget and total expenses were at 42.2%, through December 31, 2024.
In the months of November and December donations of $933 and $200 were received, respectively, bringing total donations to $26,424.
The winter 2024 UCLA Anderson Forecast points to uncertainty regarding the U.S. economic outlook for 2025 and 2026 given the potential impacts of policies regarding tariffs and deportations. The UCLA Forecast for California assumes the state’s economy will grow at about the same rate as the U.S. in 2025 and 2026.
On a national level, the unemployment rate changed little from 4.2% in November to 4.1% in December 2024. The number of unemployed persons decreased slightly from 7.1 million in November 2024 to 6.9 million in December 2024. In the third estimate for the third quarter 2024, the Gross Domestic Product (GDP) increased at an annual rate of 3.1%, following a GDP increase of 3.0% in the second quarter.
The California unemployment rate increased slightly from 5.4% in November 2024 to 5.5% in December 2024. The unadjusted unemployment rate in the San José-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) was 3.9% in December 2024, down slightly from a revised 4.1% in November 2024, and below the December 2023 level of 4.0%.
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 (Attachments 2 and 4)
All securities held by the City of Santa Clara as of November 30 and December 31, 2024, 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 November and December 2024 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 3.78% in November and 3.93% in December.
The Monthly Investment Report also now 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 “projects” 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 the commitment to a specific project which may result in a potentially 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 - budget actions include recognizing and appropriating miscellaneous charges for services for a reimbursement agreement, recognizing and appropriating wildland reimbursements to the Fire Department, and a transfer to the Streets and Highways Capital Fund to return interest earned on a refunded developer fee;
• Fleet Management Fund - adds funding to repair a fire engine damaged in an accident, funded by a combination of insurance reimbursements and the use of unrestricted ending fund balance;
• Information Technology Services Fund - appropriates additional funding from available unrestricted fund balance for the network replacement project and computer replacement program;
• Prefunded Plan Review - increases the developer contribution estimate and appropriates funding for the Kylii/Democracy Way project to cover costs associated with an additional hearing and an economic consultant agreement;
• Public, Educational, and Governmental Fee Fund - increases the capital outlay appropriation to cover costs associated with the citywide upgrade of audio visual systems and related equipment to facilitate public meetings, offset by the use of unrestricted ending fund balance;
• Special Liability Insurance Fund - appropriates funding from the Reserve for Future Claims to the claims payments budget for a settlement agreement related to the Sewer Utility; and
• Streets and Highways Capital Fund - recognizes and appropriates Transportation Development Act funding to the Annual Curb Ramp Installation project, recognizes a transfer from the General Fund to the Developer Reimbursement project to return interest earned on a recently refunded developer contribution to the developer, and corrects errors in the budget.
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 Reports and Monthly Investment Reports for November and December 2024 as presented; and
2. Approve the FY 2024/25 Budget Amendments in the following funds (as detailed in the Fiscal Impact Section of the staff report and Attachment 5 to the staff report):
a. In the General Fund, with a net impact of $357,940;
b. In the Fleet Management Fund, with a net impact of $153,950;
c. In the Information Technology Services Fund, with a net impact of $0;
d. In the Prefunded Plan Review Fund, with a net impact of $135,600;
e. In the Public, Educational, and Governmental Fee Fund, with a net impact of $0;
f. In the Special Liability Insurance Fund, with a net impact of $0; and
g. In the Streets and Highways Capital Fund, with a net impact of $706,676.
Staff
Reviewed by: Kenn Lee, Director of Finance
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Monthly Financial Status Report - November 2024
2. Monthly Investment Report - November 2024
3. Monthly Financial Status Report - December 2024
4. Monthly Investment Report - December 2024
5. FY 2024/25 Budget Amendments