REPORT TO COUNCIL
SUBJECT
Title
Action on Monthly Financial Status and Investment Reports for April 2026 and Approval of the Related Budget Amendments Including the Recognition of Additional Revenue in the General Fund Estimated for FY 2025/26
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 April 2026 are submitted for your information. The financial reviews, as of April 30, 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 April 30, 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) are at 80.7% of the budget through April 2026. Based on the prior year performance and collections through April, General Fund revenues are currently tracking to exceed the budget. As shown in Monthly Financial Status Report, General Fund expenditures (excluding transfers) were at 81.5% through April 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 66.4% of the budget through April 30, 2026, while total expenses were at 75.1%.
In April, donations of $1,635 were received, bringing total donations to $49,058.
The UCLA Anderson Summer 2026 Economic Forecast discusses the economic implications of the conflict with the Iran on the U.S. economy as well as factors in the U.S. economy that will help manage the related energy shock, including lower interest rates, tax cuts and AI investments. The UCLA Forecast assumes real Gross Domestic Product (GDP) growth of 2.1% in 2026, consistent with the performance in 2025. The estimate for 2026 is down from the 3% growth estimated in the Spring 2026 UCLA Forecast; growth in no longer expected to accelerate in 2026 as higher energy prices are expected to diminish household spending capacity.
In the second estimate for the first quarter of 2026, the Gross Domestic Product (GDP) increased at an annual rate of 1.6%, following a GDP increase of 0.5% in the fourth quarter 2025. On a national level, the unemployment rate remained unchanged at 4.3% between March and April 2026. In April, the number of unemployed persons totaled 7.4 million, an increase from 7.2 million in March. The California unemployment rate was 5.3% in April 2026, unchanged from the March 2026 rate. The unadjusted unemployment rate in the San José-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) was 3.7% in April 2026, down slightly from a revised 3.9% in March 2026, and below the April 2025 level of 4.0%.
Monthly Investment Report (Attachment 2)
All securities held by the City of Santa Clara as of April 30, 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 April 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 April.
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. Given the June Council date, the April MFR is the last opportunity to bring forward changes to the FY 2025/26 budget. Actions are recommended to ensure that appropriations across all funds remain within budget.
Based on the strong performance in the General Fund, budget actions are also recommended in this report to recognize the higher than budgeted revenues and set those funds aside in 1) the unrestricted ending fund balance, consistent with the assumed use programmed into the FY 2026/27 Adopted Budget, and 2) a new Reserve for Future Uses ($20.0 million) that would be allocated by the City Council as described in a separate Report to Council on the June 23, 2026 Agenda (RTC 26-663).
The recommended FY 2025/26 budget adjustments are described in Attachment 3 and summarized below:
• General Fund - increases the revenue estimates for sales tax, transient occupancy tax, interest earnings, fines and penalties, the SVP transfer, other fees for services, and other revenue. An increase to the property tax estimate, partially offset by an increase to the Property Tax ERAF Reserve and the property tax administration budget, as well as an increase to the pension trust interest earnings revenue estimate, offset by an increase to the Pension Stabilization Reserve, are also included.
Actions are also recommended to increase the budgets for the City Attorney’s Office, City Clerk’s Office, and the Finance, Fire, and Police Departments. Several actions are included for Non-Departmental, offset by increases to revenue estimates for Bay Area Host Committee reimbursements, Stadium reimbursements and sponsorship funding. Also recommended are transfers to the Fire Operating Grant Trust Fund and Vehicle Replacement Fund, offset with a decrease to the Parks and Recreation Department.
The majority of additional revenue is recommended to be allocated to a new Reserve for Future Uses and the unrestricted ending fund balance.
• Cemetery Fund/Endowment Care Fund/Perpetual Care Fund - recognizes interest earnings in the Endowment Care and Perpetual Care Funds and transfers those earnings to the Cemetery Fund. These transfers are offset by an increase to the unrestricted ending fund balance in the Cemetery Fund.
• Downtown Parking Maintenance District Fund - increases the capital outlay appropriation to cover start-up costs associated with the Franklin Square fountains, offset by a reduction to the unrestricted ending fund balance.
• Electric Utility Capital Fund - decreases the beginning and ending fund balance, and recognizes a transfer from the Electric Utility Fund and appropriates the funding to the Major Engine Overhaul and Repair Project.
• Electric Utility Fund - increases revenue estimates for other revenue, sale of land (Loyalton), and charges for services and increases appropriations for spare engine lease costs, contribution in-lieu and resource and production as well as the Rate Stabilization Reserve. Transfers of funding to the Electric Utility Capital Fund and Vehicle Replacement Fund are also included.
• Electric Utility Operating Grant Trust Fund - increases the charges for services revenue estimate, offset by increases to the contribution in-lieu budget and Public Benefits Charges ending fund balance.
• Expendable Trust Fund - increases the revenue estimates for other agencies and other fees for services and appropriates the funds to the Information Technology, Public Works, and Parks and Recreation Departments.
• Fire Operating Grant Trust - increases the other agencies revenue estimates and appropriates the funding for the Assistance to Firefighters and USAR Training Reimbursement grant programs. An action is also included recognizing a transfer from the General Fund for the SAFER grant program.
• Gas Tax Fund - increases the transfer from the Streets and Highways Capital Fund to return project savings from the LED Traffic Signal & Safety Light Replacements project and returns the funds to fund balance.
• Parks and Recreation Capital Fund - decreases the Mitigation Fee Act revenue estimate and its respective ending fund balance, and increases the Quimby Act Fee revenue estimate and its respective ending fund balance. Actions to decrease the Park Impact Fees Monitoring and Parkland Acquisitions projects are also included.
• Public Facilities Financing Corporation Fund - increases the administrative cost appropriation and decreases the unrestricted ending fund balance.
• Recycled Water Capital Fund - increases the Recycled Water System Mains and Services project and decreases the unrestricted ending fund balance.
• Sewer Utility Fund - transfers funding to the Vehicle Replacement Fund, increases the materials, services, supplies appropriation, offset with an increase to the charges for services estimate and decrease in unrestricted ending fund balance.
• Streets and Highways Capital Fund - increases the other agencies revenue estimate and the Cupertino-Santa Clara On-Demand Shuttle Project appropriation. A technical correction is also included to reduce the transfer to the Traffic Mitigation Fund, increase the transfer to the Gas Tax Fund and increase the vehicle registration fee fund balance to return project savings from the LED Traffic Signal & Safety Light Replacements to their original funding source.
• Traffic Mitigation Fund - a technical correction to reduce the transfer from the Streets and Highways Capital Fund and the ending fund balance to correct the return of project savings from the LED Traffic Signal & Safety Light Replacements project to the original funding sources.
• Unemployment Insurance Fund - increases the insurance claims appropriation and decreases the unrestricted ending fund balance.
• Vehicle Replacement Fund - recognizes transfers from the General Fund, Electric Utility and Sewer Utility Funds and increases the capital outlay budget.
There are also FY 2026/27 budget adjustments recommended as described in Attachment 4 and summarized below:
• General Fund - recognizes beginning fund balance to reflect the carryover of the Reserve for Future Uses and the unspent sponsorship funding for the “Where the Mission Meets the Moment” campaign.
• Electric Utility Capital Fund - recognizes developer contributions and establishes the Central Expressway and Walsh Ave Transmission Line Clearance Project.
• Parks and Recreation Capital Fund - recognizes and appropriates other revenue to the Earl Carmichael Park Snack Shack Rehabilitation Project.
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 April 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. General Fund: increases to revenue including sales tax, property tax, transient occupancy tax, interest earnings, fines and penalties, SVP transfer, other fees for services, other revenue, and reimbursements from Stadium and Bay Area Host Committee, adjustments to various departmental budgets including City Attorney’s Office, City Clerk’s Office, Finance Department, Fire Department, Police Department, Parks and Recreation Department, and Non-Departmental; a transfer to the Fire Operating Grant Trust Fund and Vehicle Replacement Fund; increases to the Property Tax ERAF Reserve, Pension Stabilization Reserve, unrestricted ending fund balance and the establishment of the Reserve for Future Uses, with a net impact of $41,054,024;
b. Cemetery Fund: increases to the transfers from the Endowment and Perpetual Care Funds and increase to ending fund balance, with a net impact of $84,000;
c. Downtown Parking Maintenance District Fund: increase to capital outlay and decrease to ending fund balance, with a net impact of $0;
d. Electric Utility Capital Fund: decreases to the beginning and ending unrestricted ending fund balance, recognizes a transfer from the Electric Utility Fund and increases the Major Engine Overhaul and Repair project, with a net impact of ($6,170,000);
e. Electric Utility Fund: increases to revenue including other revenue, sale of land and charges for services, increases to materials, services and supplies, contribution in lieu, and resource and production, increases to transfers to the Electric Utility Capital Fund and Vehicle Replacement Fund, and increase to the Rate Stabilization Reserve, with a net impact of $53,125,150;
f. Electric Utility Operating Grant Trust Fund: increase to charges for services, offset with increases to contribution-lieu and the Public Benefits Charges ending fund balance, with a net impact of $1,140,000;
g. Endowment Care Fund: transfer of interest earnings to the Cemetery Fund, with a net impact of $82,000;
h. Expendable Trust Fund: increases to other agencies revenue and other fees for services and increases to the Information Technology, Public Works and Parks and Recreation Departments, with a net impact of $76,500;
i. Fire Operating Grant Trust Fund: recognition and appropriation of grant revenue for the Fire Department and recognizes a transfer from the General Fund for the SAFER grant program, with a net impact of $142,054;
j. Gas Tax Fund: increases the transfer from the Streets and Highways Capital Fund and the ending fund balance, with a net impact of $764,019;
k. Parks and Recreation Capital Fund: adjustments to the Mitigation Fee Act and Quimby Act revenue and their corresponding ending fund balances and decreases to the Park Impact Fees Monitoring and Parkland Acquisitions projects, recognizes revenue and establishes the Earl Carmichael Park Snack Shack Rehabilitation Project, with a net impact of ($7,937,104);
l. Perpetual Care Fund: transfer of interest earnings to the Cemetery Fund, with a net impact of $2,000;
m. Public Facilities Financing Corporation Fund: increase to administrative cost budget and decrease to ending fund balance; with a net impact of $0;
n. Recycled Water Capital Fund: increase to the Recycled Water System Mains and Services project offset by ending fund balance, with a net impact of $0;
o. Sewer Utility Fund: increase to charges for services, materials, services, and supplies, transfer to the Vehicle Replacement Fund, offset by ending fund balance, with a net impact of $400,000;
p. Streets and Highways Capital Fund: increase to other agencies revenue and the Cupertino-Santa Clara On-Demand Shuttle Project, and reduce the transfer to the Traffic Mitigation Fund, increase the transfer to the Gas Tax Fund, and increase the vehicle registration fee ending fund balance, with a net impact of $210,000;
q. Traffic Mitigation Fund: reduces the transfer from the Streets and Highways Capital Fund and the ending fund balance, with a net impact of ($1,161,035);
r. Unemployment Insurance Fund: increase to insurance claims offset by ending fund balance, with a net impact of $0; and
s. Vehicle Replacement Fund: recognizes transfers from the General Fund, and the Electric Utility and Sewer Utility Funds, and increases the capital outlay appropriation, with a net impact of $329,833.
3. Approve the Fiscal Year 2026/27 budget amendments in the following funds (as detailed in the Fiscal Impact section of the staff report and Attachment 4 of the staff report):
a. General Fund: increases the beginning and ending fund balance for the Reserve for Future Uses, increases the unrestricted beginning fund balance and increases the Non-Departmental appropriation, with a net impact of $20,500,000;
b. Electric Utility Capital Fund: recognizes developer contributions and establishes the Central Expressway and Walsh Ave Transmission Line Clearance Project, with a net impact of $1,863,750; and
c. Parks and Recreation Capital Fund: increases the beginning fund balance and increases the Earl Carmichael Park Snack Shack Rehabilitation Project, with a net impact of $290,661.
Items 2a - 2s and 3a - 3c, 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 - April 2026
2. Monthly Investment Report - April 2026
3. FY 2025/26 Budget Amendments
4. FY 2026/27 Budget Amendments