SECOND QUARTER FINANCIAL REPORT
FISCALYEAR 2025-2026
Public Safety, Finance and
Strategic Support Committee
Prepared by the Finance Department
February 19, 2026
COMMITTEE AGENDA: FEBRUARY 19, 2026
ITEM: D.1
ATTACHMENT A
1 SECOND QUARTER
DEBT MANAGEMENT REPORT
FISCAL YEAR 2025-2026
2 3
OUTSTANDING DEBT: $4.25 BILLION
(CITY AND ALL AGENCIES)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
Annual Debt Issuance
($ million)
Outstanding Debt
($ million)
Fiscal Year Ended June 30
FY 2025-26 YTD Issuance: $491.85 million
City and Related Entity Debt Outstanding Conduit Debt Outstanding Annual Debt Issuance 4 DIRECT OUTSTANDING DEBT: $3.53 BILLION
(EXCLUDING MULTIFAMILY HOUSING REVENUE BONDS)
CSJ GO Bonds,
$668,715,000, 18.92%
CSJFA Bonds/ CP Notes,
$637,452,000, 18.03%
Airport Revenue Bonds/ CP,
$1,010,623,864, 28.59%
Wastewater Revenue Bonds/ RWF
Notes, $345,982,862, 9.79%
Successor Agency Tax Allocation
Bonds, $872,160,000, 24.67%
DEBT REFUNDING AND RATING UPDATE
5 • Debt Refunding
• On November 14, 2025, CSJFA used Series 2025A proceeds and Series 2013B reserve funds to refund all outstanding principal ($20,740,000) on Series 2013B. • On November 14, 2025, CSJFA used Series 2025A proceeds to pay down all outstanding principal ($20,700,000) of tax-exempt Muni Water Building Project Commercial Paper Notes • Rating Agency Update
• In November, KBRA affirmed the City’s Wastewater Revenue Bonds, Series 2022B ratings of AAA with stable outlook.
SECOND QUARTER
INVESTMENT MANAGEMENT REPORT
FOR FISCAL YEAR 2025-2026
6 INVESTMENT POLICY
(COUNCIL POLICY 1-12)
• Investments meet the requirements of the City’s Investment Policy and conform with California Government Code section 53601 • Authorized investments are only highly-rated fixed income securities • Investment Policy is reviewed annually and was last adopted by resolution of the City Council on March 11, 2025
• Investment Program is audited semi-annually for compliance purposes 7 INVESTMENT OBJECTIVES & REPORTING
• Manage investments to meet the City’s Investment Policy objectives:
▪ Safety
▪ Liquidity
▪ Yield
• Quarterly reports are available to the public
▪ On-line
▪ In PSFSS Committee agenda packets
▪ In City Council agenda packets (for acceptance)
8 PORTFOLIO PERFORMANCE SUMMARY
Size of Total Portfolio $2,493,932,545
Earned Interest Yield 4.018%
Weighted Average Maturity 713 days
Fiscal Year-to-Date Net Income Recognized $52,772,992
Exceptions to the City Investment Policy this Quarter None 9 T otal Investment Portfolio:
$2,493,932,545
10 PORTFOLIO INVESTMENTS
U.S. Treasury 360,272,250
14.4%
U.S. Agency
778,768,939 31.2%
Supranationals
77,444,976 3.1%
Corporate Notes
557,349,907 22.3%
Asset Backed Securities
10,560,963 0.4%
Muni Bonds
303,324,850 12.2%
Mortgage Backed
Securities
234,751,511 9.4%
JPAP
87,310,609 3.5%
LAIF 84,148,541 3.4%
The $326 million in the General Fund
presented includes $114,623,917 of
General Fund monies, as well as
$211,108,302 in other, separately
tracked general funds, such as the
Depositor Fund, Developer Fees and
other smaller funds and reserves.
11 INVESTMENTS BY FUND
Internal Services Fund
$24,363,979
Airport
$415,116,087
Capital Projects $47,240,325
Debt Service
$54,007,617
Development Fees
$71,715,887
General Fund
$325,732,219
Muni Water
$57,760,054
Parking
$28,441,158 Housing
$268,748,125
Special Revenue
Funds $386,906,483
Wastewater
$416,349,089
Trust & Agency
$6,815,146
SJ Clean Energy
$379,001,587
GENERAL FUND BALANCE
• The General Fund balances decreased by $40 million during the quarter and ended with a balance of $326 million as of December 31, 2025.
General Fund cash balances usually peak during the months of January and June, when the bulk of property taxes are received, and decline in the summer months due to retirement prefunding, debt service payments and operational expenditures.
• Projected investment maturities, cash and revenues are sufficient to cover anticipated expenditures for the next six months
12 13
COMPARISON OF CASH BALANCES
(BY SELECT FUNDS)
The following graph compares
monthly balances of the five largest
City funds as reported by FMS.
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1000
Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dec-25 Dollars in millions
General Fund Wastewater Airport Housing Special Revenue Fund • City refers to City's Portfolio, and
the yield data are month-end
weighted average yields.
• LAIF refers to the State of CA
Local Agency Investment Fund and
yield data are average monthly
effective yields.
• BAML refers to Bank of America
Merrill Lynch 1-3 Year AAA-A US
Corporate & Government Index
and yield data are rolling 2-year
effective yield.
14 BENCHMARK COMPARISONS
0.00 0.50
1.00 1.50
2.00 2.50
3.00 3.50
4.00 4.50
5.00 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dec-25 Yield (%)
City LAIF BAML
Yield WAM
BAML: 4.250% 679
LAIF: 4.025% 244
CITY: 4.000% 713
INVESTMENT STRATEGY
• Continue matching known expenditures with suitable investments within the 24-month horizon
• Extend a portion of the portfolio beyond two-year term, when appropriate, to provide income and structure to the portfolio • Maintain the diversification of the portfolio
• Focus on core objectives of safety, liquidity, and yield 15 SECOND QUARTER
REVENUE MANAGEMENT REPORT
FOR FISCAL YEAR 2025-2026
16 REVENUE MANAGEMENT PROGRAMS
• Finance Department Revenue Management focuses on collecting all outstanding receivables, with an emphasis on reducing delinquent accounts and enhancing revenue compliance, through four primary collection programs:
▪ Accounts Receivable
▪ Business Tax
▪ Compliance and Monitoring
▪ Utility Billing
• Efforts may span several reporting periods, and actual collections are reported as funds are received by the City.
17 T otal Revenue: $4.558B
Source: 2024-25 City Manager’s
Budget Office Annual Report
(Graph is updated annually)
18 REVENUE MANAGEMENT PORTFOLIO
FY 2024-25 REVENUE ($ IN MILLIONS)
Lodging Taxes and
Fees
$60.7M
4.2%
Franchise Fees
$58.5M
4.0%
Utility Users Tax
$139.9M
9.7%
Telephone Line Tax
$22.0M
1.5%
Real Property
Transfer Tax
$47.7M
3.3%
Sales Tax
$331.4M
22.9%
Misc.
Billing
$182.4M
12.6%
Business Taxes
$87.7M
6.1%
Utility Billings
$517.9M
35.8%
Revenue
Management
$1.4B
Citywide Revenue
(excluding Revenue
Management)
$3.1B
Includes invoices billed through the
Business Tax System, the centralized
Accounts Receivable system (RevQ),
and the Utility Billing System.
(Graph is updated annually)
19 INVOICING AND PAYMENTS
FIVE-YEAR HISTORY (FY 2020-21 TO FY 2024-25)
96.1% 96.2% 95.4% 94.0% 96.3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$-
$100
$200
$300
$400
$500
$600
$700
$800
FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25
In Millions
Payments Outstanding Percentage Collected
20 OUTSTANDING RECEIVABLES
THREE-YEAR HISTORY (FY 2022-23 Q3 TO FY 2025-26 Q2)
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
$-
$20
$40
$60
$80
$100
$120
22-23
Q3
22-23
Q4
23-24
Q1
23-24
Q2
23-24
Q3
23-24
Q4
24-25
Q1
24-25
Q2
24-25
Q3
24-25
Q4
25-26
Q1
25-26
Q2
Quarter to Quarter % Change
Millions
Revenue Management Aging
Total Receivables Delinquent (91+ days) Delinquency Percentage Change 21 FY 2025-26 Q2 DELINQUENT RECEIVABLES
COLLECTION STATUS SUMMARY ($ IN MILLIONS*)
*Rounded
As of December 31, 2025
Write-Off Pending (A/R Only)
$1.1M
622 Invoices
Liens (A/R Only)
$2.1M
439 Invoices
Restitution,
Payment Plan (A/R Only)
$1.2M
328 Invoices
Legal,
Bankruptcy
$5.5M
717 Invoices
Collection Agency
$22.1M
22,214 Invoices
Active
$22.1M
22,214 Invoices
Total Delinquent
$54.1M
Total Current
$30.9M
COLLECTIONS & RETURN ON INVESTMENT
REVENUE MANAGEMENT COLLECTIONS (FY 2023-24 Q3 TO FY 2025-26 Q2) Target ROI: 5.0
22 FY YTD 25-26 ROI: 4.85
5.7 3.9
4.0 7.8
4.5 4.7
5.1 4.5
0.00 1.00
2.00 3.00
4.00 5.00
6.00 7.00
8.00 9.00
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
23-24 Q3 23-24 Q4 24-25 Q1 24-25 Q2 24-25 Q3 24-25 Q4 25-26 Q1 25-26 Q2 Millions
Revenue Management Collections
Business Tax Accounts Receivable Actual ROI
REVENUE COMPLIANCE
REVENUE RECOVERY
• Revenue Compliance and Monitoring conducts cyclical tax and fee audits and revenue collections for a variety of programs (e.g., Sales and Use Tax, Hotel Taxes/Lodging Fees, Utilities, T elecommunications, and Cannabis).
• In Q2, ~$1M was recovered in delinquent collections and audits (cannabis business tax, hotel tax, telecommunications user tax, utility user tax, and sales and use tax).
23 SECOND QUARTER
PURCHASING AND
RISK MANAGEMENT REPORT
FOR FISCAL YEAR 2025-2026
24 PURCHASING PROGRAM
The Purchasing Division of the Finance Department is responsible for the centralized procurement of equipment, supplies, materials, Information T echnology (IT), and general services, pursuant to the City of San José Municipal Code Title 4, Chapter 4.12.
25 PURCHASING TRANSACTIONS COMPLETED
SECOND QUARTER FY 2025-26
DESCRIPTION
SECOND
QUARTER
TRANSACTIONS
FISCAL YEAR
TO DATE
PURCHASE ORDERS EXECUTED 266 778
PURCHASE ORDER ADJUSTMENTS EXECUTED 92 234
CONTRACTS NEGOTIATED & EXECUTED 3 7
CONTRACT AMENDMENTS, CHANGE ORDERS, SERVICE ORDERS, & OPTIONS EXECUTED 51 76 PURCHASE ORDER DOLLARS PROCURED $93,376,168 $236,018,367 CONTRACT DOLLARS PROCURED $499,631 $20,260,921.51
26 RISK MANAGEMENT PROGRAM
The Division is responsible for the procurement and oversight of the City’s property and casualty insurance programs and providing contractual risk management services, property subrogation claims reporting and other key services to City Departments.
27 28
RISK MANAGEMENT TRANSACTIONS COMPLETED
SECOND QUARTER FY 2025-26
Transaction T ype Second Quarter
Transactions
Fiscal Y ear to
Date
Request for Contract Insurance Specifications 183 520
Request for Insurance Compliance Review 130 344
Request for Letters of Self-Insurance 17 63
Subrogation Dollars Billed to Responsible Third Parties $8,079.55 $230,398.31 Council and Committee Memorandums Issued 0 2
RECOMMENDATION
(a) Accept the Second Quarter (period ended December 31, 2025) Financial Reports for Fiscal Year 2025-2026 for the following programs:
▪ (1) Debt Management;
▪ (2) Investment Management;
▪ (3) Revenue Management; and
▪ (4) Purchasing and Risk Management
(b) Refer and cross-reference the Second Quarter Financial Reports for Fiscal Year 2025-2026 to the March 10, 2026, City Council meeting for full adoption.
29 APPENDIX
30 • 10-year history of higher
rated (“AA+”) General
Obligation debt (20-year
term) yield averaged 3.14%
and is currently at 4.73%
(as of 12/31/2025).
31 BOND BUYER GO BOND YIELD INDEX
3.14%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Dec-21
Dec-22
Dec-23
Dec-24
Dec-25
Interest Rate
Bond Buyer 11-Bond GO Index (AA+) avg. rating
Index Average 12/16 - 12/25
• The Daily Secured
Overnight Financing Rate
(SOFR) interest rate is
3.79% (as of 12/31/25).
• The City uses SOFR as a
proxy for forecasting
interest rates for various
short-term debt
instruments.
32 SOFR RATES
3.6%
3.7%
3.8%
3.9%
4.0%
4.1%
4.2%
4.3%
4.4%
4.5%
4.6%
4.7%
Dec-24
Jan-25
Feb-25
Mar-25
Apr-25
May-25
Jun-25
Jul-25
Aug-25
Sep-25
Oct-25
Nov-25
Dec-25
Interest Rate
Daily SOFR
GENERAL OBLIGATION CREDIT RATINGS
AS OF DECEMBER 31, 2025
The City’s GO Ratings are higher than the State of California’s ratings and analogous to Santa Clara County’s ratings, which is to be expected given the extent of the tax base and other credit fundamentals that the City and the County share:
33 Entity Moody’s S&P Fitch
City of San José Aa1 AA+ AAA
State of California Aa2 AA- AA
Santa Clara County (1) N/A AAA AAA
(1) Moody’s does not currently rate Santa Clara County’s General Obligation Bonds but maintains an Issuer rating of Aa1.
GENERAL CITY CREDIT RATINGS
AS OF DECEMBER 31, 2025
The City of San José continues to maintain very high credit ratings. 34 T ype of Rating Moody’s S&P Fitch
Issuer Rating Aa1
(stable)
AA+
(stable)
AA+
(stable)
General Obligation Bonds Aa1
(stable)
AA+
(stable)
AAA
(stable)
Lease Revenue Bonds
(Essential Assets)
Aa2
(stable)
AA
(stable)
AA
(stable)
Lease Revenue Bonds
(Less Essential Assets)
Aa3(1)
(stable)
AA
(stable)
AA-(2)
(stable)
(1) Moody’s assigns a rating of Aa3 to CSJFA 2020B and 2022A bonds which the rating agency considers less essential assets. (2) Fitch assigns a rating of AA- to CSJFA 2020B bonds which the rating agency considers less essential assets.
OTHER CITY CREDIT RATINGS
AS OF DECEMBER 31, 2025
35 T ype of Rating Moody’s S&P Fitch KBRA (Kroll) 1
San José Airport
Bonds
A2
(stable)
A
(stable)
A
(stable) N/A
Wastewater
Revenue Bonds N/A AAA
(stable)
AAA
(stable)
AAA(1)
(stable)
SARA Senior T ax
Allocation Bonds N/A AA
(stable)
AA+
(stable) N/A
SARA Subordinate
T ax Allocation Bonds N/A AA-
(stable)
AA+
(stable) N/A
San José Clean
Energy (Issuer)
A2
(stable)
A
(stable) N/A N/A
(1) KBRA (Kroll) has assigned a rating to the CSJFA Wastewater Revenue Bonds exclusively.