REPORT TO COUNCIL
SUBJECT
Title
Action on Monthly Financial Status and Investment Reports for October 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 report and monthly investment report for October 2024 are submitted for your information. The financial review as of October 31, 2024, provides 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 Report provides the budget to actual revenue and expenditure summaries for the General Fund, Special Revenue Funds and Enterprise Operating Funds, as well as expenditure summary for Capital Improvement Funds and Fund Reserve Balances. Any significant variances are explained in the report.
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 (Attachment 1)
The attached Monthly Financial Status Report summarizes the City’s financial performance as of October 31, 2024 (Attachment 1). This report provided financial analysis for the General Fund, select Special Revenue Funds, Enterprise Operating Funds, and Capital Improvement Funds.
Monthly Financial Status Report shows that General Fund revenues (excluding transfers) at 18.7% of the budget through October 2024. Collections are tracking below par due to the timing of payments. In some categories, a portion of the revenues received through October were accrued to the prior fiscal year because they accounted for activity in FY 2023/24. In other cases, such as property tax, most payments are scheduled to occur later in the fiscal year. While it is early in the fiscal year, General Fund revenues are currently tracking within estimated levels. As shown in Monthly Financial Status Report, General Fund expenditures (excluding transfers) were at 32.4% through October 2024 and are tracking at budgeted levels.
As shown in Monthly Financial Status Report, total revenues for Enterprise Funds (Electric, Water, Sewer, Cemetery, Solid Waste, and Water Recycling) were at 37.8% of the budget through October 31, 2024, while total expenses were at 28.0%.
In October, donations of $16,425 were received, bringing total donations to $25,290.
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 remained unchanged at 4.1% between September and October 2024. The number of unemployed persons rose slightly from 6.8 million in September 2024 to 7.0 million in October 2024. In the second estimate for the third quarter 2024, the Gross Domestic Product (GDP) increased at an annual rate of 2.8%, following a GDP increase of 3.0% in the second quarter.
The California unemployment rate changed little from 5.3% in September 2024 to 5.4% in October 2024, but was up from 5.1% in October 2023. The unadjusted unemployment rate in the San José-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) was 4.2% in October 2024, up slightly from a revised 4.1% in September 2024, and above the October 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 (Attachment 2)
All securities held by the City of Santa Clara as of October 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 October 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 3.52% in October.
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 3 and summarized below:
• General Fund - budget actions include a transfer of the Historical Preservation Reserve balance to the Expendable Trust Fund in order to separately track items used for this program, the allocation of Fire wildland deployment reimbursements and paramedic transports revenues to the Fire Department to support these programs, and the transfer of funds from the Capital Projects Reserve to the Fire Department Capital Fund for the Emergency Operations Center Capital Refurbishment project;
• Expendable Trust Fund - recognizes the transfer of the Historical Preservation Reserve from the General Fund to establish the Historical Preservation Program in the Expendable Trust Fund;
• Electric Utility Capital Fund - reallocates funding from the Generation Capital Maintenance and Betterments project to the Major Engine Overhaul and Repair project to complete a maintenance repair and rotor swap for an engine at Gianera Generation facility and decreases a revenue carryforward as a technical adjustment; and
• Fire Department Capital Fund - adds funding to the Emergency Operations Center Capital Refurbishment project for the replacement of the water heater that no longer functions properly.
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
1. Note and file the Monthly Financial Status Reports and Monthly Investment Reports for October 2024 as presented; and
2. Approve the FY 2024/25 Budget Amendments in the following funds (as detailed in the Fiscal Section of the staff report and Attachment 3 to the staff report):
a. In the General Fund, with a net impact of $836,332
b. In the Expendable Trust Fund, with a net impact of $96,105
c. In the Electric Utility Capital Fund, with a net impact of -$17,396
d. In the Fire Department Capital Fund, with a net impact of $33,000
Staff
Reviewed by: Kenn Lee, Director of Finance
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Monthly Financial Status Report - October 2024
2. Monthly Investment Report - October 2024
3. FY 2024/25 Budget Amendments