REPORT TO COUNCIL
SUBJECT
Title
Action on Monthly Financial Status and Investment Reports for July and August 2025 and Approve 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 reports and monthly investment reports for July 2025 and August 2025 are submitted for your information. The financial reviews, as of July 31 and August 31, 2025, 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 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, 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 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 summarizes the City’s financial performance as of July 31 and August 31, 2025 (Attachments 1 and 3). Financial analysis for these reports is provided 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 3.1% of the budget through July 2025, while Attachment 3 shows General Fund revenues at 7.4% in August. In both cases, the revenues in some categories received in July and August account for activity that occurred in FY 2024/25 and those revenues are accrued back to that year. In other cases, such as property tax, most payments are scheduled to occur later in the fiscal year. While it is very early in the fiscal year and limited data is available, General Fund revenues are currently tracking within estimated levels.
As shown in Attachments 1 and 3, General Fund expenditures (excluding transfers) were at 8.3% and 16.3% of budget through July and August 2025, respectively. 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 1.2% of the budget through July 31, 2025, while total expenses were at 6.8%. In Attachment 3, total revenues for these funds were at 8.5% of the budget and total expenses were at 15.2% through August 31, 2025. Overall, both revenue and expenditures are tracking below par. Activity through August also reflects accruals back to FY 2024/25 which has resulted in lower actuals, particularly for the revenues.
In the months of July and August, donations of $20,329 and $2,288 were received, respectively, bringing total donations to $22,617.
While the October 2025 UCLA Anderson Forecast assumes no recession, it continues to identify significant risks to the forecast during this period of unprecedented change and uncertainty. These include trade uncertainty, concerns about the credibility of our central bank and government statistical agencies, the continued feasibility of the AI boom, and the potential impacts of domestic political strife. The forecast assumes modestly elevated levels of inflation and unemployment and lower GDP growth that begins to recover in mid-2026.
On a national level, the unemployment rate changed little from 4.2% in July 2025 to 4.3% in August 2025. In August, the number of unemployed persons totaled 7.4 million, up 2% from July 2025. In the third estimate for the second quarter 2025, the Gross Domestic Product (GDP) increased at an annual rate of 3.8%, following a GDP decrease of 0.6% in the first quarter 2025.
The California unemployment rate was 5.5% for both July 2025 and August 2025. The unadjusted unemployment rate in the San José-Sunnyvale-Santa Clara Metropolitan Statistical Area (MSA) was 4.7% in August 2025, down slightly from a revised 4.9% in July 2025, but unchanged from the August 2024 estimate of 4.7%.
Staff will continue to closely monitor the General Fund revenues and the City’s overall financial performance.
Monthly Investment Report (Attachments 2 and 4)
All securities held by the City of Santa Clara as of July 31 and August 31, 2025, 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 July and August 2025 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 4.16% in both July and August.
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 adjustments are described in Attachment 5 and summarized below:
• General Fund - increases the Other Agencies Revenue estimate and the Police Department budget to reflect the allocation of SB 90 reimbursements. Actions are also included to increase the Department of Public Works budget for non-personnel costs related to the newly added Staff Analyst position in the Department as well as funding to operate and maintain the City Hall fountain; these will be offset by a decrease to the unrestricted ending fund balance. A transfer to the Public Buildings Capital Fund to restore function to the City Hall fountain is also included, offset by the Capital Projects Reserve;
• Electric Utility Fund - establishes a transfer to the Vehicle Replacement Fund for the purchase of a forklift and decreases the unrestricted ending fund balance;
• Fire Operating Grant Trust Fund - recognizes and appropriates funding for the State Homeland Security Grant program;
• Public Buildings Capital Fund - recognizes and appropriates a transfer from the General Fund to the Repairs - Modifications to City Buildings project for the City Hall fountain;
• Sewer Utility Fund - establishes a transfer to the Vehicle Replacement Fund for the purchase of a saw and trailer and decreases the unrestricted ending fund balance. This cost is split between the Sewer Utility Fund and Water Utility Fund;
• Vehicle Replacement Fund - recognizes transfers from the Electric, Water, and Sewer Utility Funds and increases the capital outlay appropriation for the purchase of a forklift (Electric Utility) and saw and trailer (Water and Sewer Utilities); and
• Water Utility Fund - establishes a transfer to the Vehicle Replacement Fund for the purchase of a saw and trailer and decreases the unrestricted ending fund balance. This cost is split between the Sewer Utility Fund and Water Utility Fund.
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 July and August 2025 as presented; and
2. Approve the FY 2025/26 budget amendments in the following funds (as detailed in the Fiscal Impact section of the staff report and Attachment 5 of the staff report):
a. General Fund: increases to the Other Agencies Revenue estimate and Police Department appropriation, an increase to the Department of Public Works appropriation, offset by a decrease to unrestricted ending fund balance, and an increase to the transfer to the Public Buildings Capital Fund, offset by the Capital Projects Reserve, with a net impact of $300,000;
b. Electric Utility Fund: establish a transfer to the Vehicle Replacement Fund and decrease to unrestricted ending fund balance, with a net impact of $0;
c. Fire Operating Grant Trust Fund: recognizes and appropriate the State Homeland Security Grant, with a net impact of $4,000;
d. Public Buildings Capital Fund: recognize and appropriate a transfer from the General Fund to the Repairs - Modifications to City Buildings project, with a net impact of $50,000;
e. Sewer Utility Fund: establish a transfer to the Vehicle Replacement Fund and decrease to unrestricted ending fund balance, with a net impact of $0;
f. Vehicle Replacement Fund: recognize transfers from the Electric, Water, and Sewer Utility Funds and increase the capital outlay appropriation, with a net impact of $188,902; and
g. Water Utility Fund: establish a transfer to the Vehicle Replacement Fund and decrease to unrestricted ending fund balance, with a net impact of $0.
(5 Votes required for items 2.a-g with further details provided in Attachment 5)
Staff
Reviewed by: Kenn Lee, Director of Finance
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Monthly Financial Status Report - July 2025
2. Monthly Investment Report - July 2025
3. Monthly Financial Status Report - August 2025
4. Monthly Investment Report - August 2025
5. FY 2025/26 Budget Amendments