THIRD QUARTER FINANCIAL REPORT
FISCALYEAR 2025-2026
Public Safety, Finance and
Strategic Support Committee
Prepared by the Finance Department
June 18, 2026
Attachment A
Committee Agenda: June 18, 2026
Item: (c)1
1 THIRD QUARTER
DEBT MANAGEMENT REPORT
FISCAL YEAR 2025-2026
2 3
OUTSTANDING DEBT: $4.23 BILLION
(CITY AND ALL AGENCIES)
FY 2025-26 YTD Issuance: $491.85 Million
$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
City and Related Entity Debt Outstanding Conduit Debt Outstanding Annual Debt Issuance 4 DIRECT OUTSTANDING DEBT: $3.51 BILLION
(EXCLUDING MULTIFAMILY HOUSING REVENUE BONDS)
CSJ GO Bonds,
$668,715,000, 19.08%
CSJFA Bonds/ CP Notes,
$637,452,000, 18.18%
Airport Revenue Bonds/
CP, $981,108,202, 27.99%
Wastewater Revenue Bonds /
Notes, $345,982,862, 9.87%
Successor Agency Tax Allocation
Bonds, $872,160,000, 24.88%
DEBT ISSUANCE & MANAGEMENT UPDATE
5 • California Community Choice Financing Authority Clean Energy Project Revenue Bonds, Series 2026A (Green Bonds) closed January 27, 2026 – $1.25 billion conduit issuance for SJCE’s energy prepayment
• Successor Agency FY 2026-27 Recognized Obligation Payment Schedule approved by County Oversight Board in January 2026
THIRD 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 24, 2026
• 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 $2,721,537,480
Earned Interest Yield 4.197%
Weighted Average Maturity 749 days
Fiscal Year-to-Date Net Income Recognized $80,892,868
Exceptions to the City Investment Policy this Quarter None 9 T otal Investment Portfolio:
$2,721,537,480
10 PORTFOLIO INVESTMENTS
U.S. Treasury 508,528,354
18.7%
U.S. Agency
867,105,068 31.9%
Supranationals
38,168,000 1.4%
Corporate Notes
522,562,370 19.2%
Asset Backed Securities
15,103,156 0.6%
Muni Bonds
309,864,341 11.4%
Mortgage Backed
Securities
230,345,907 8.5%
JPAP
145,087,826
5.3%
LAIF 84,772,457
3.1%
The $398 million in the General Fund
presented includes $169,326,476 of
General Fund monies, as well as
$229,028,776 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
$22,015,195
Airport
$403,859,178 Capital Projects
$63,454,634
Debt Service
$72,102,419
Development Fees
$78,648,270
General Fund
$398,355,252
Muni Water
$58,646,578
Parking
$25,730,580
Housing
$251,750,677
Special Revenue Funds
$452,075,355
Wastewater
$478,170,763
Trust & Agency
$5,630,813
SJ Clean Energy
$392,157,654
GENERAL FUND BALANCE
• The General Fund balances increased by $73 million during the quarter and ended with a balance of $398 million as of March 31, 2026. This increase is attributed to the receipt of property taxes in January, offset by operational expenditures. 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
Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Dollars in millions
General Fund Wastewater Airport SJ Clean Energy 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 Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Yield (%)
City LAIF BAML
Yield WAM
BAML: 4.128% 675
CITY: 4.093% 749
LAIF: 3.826% 261
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 THIRD 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 Q4 TO FY 2025-26 Q3)
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
$-
$20
$40
$60
$80
$100
$120
22-23
Q4
23-24
Q1
23-24
Q2
23-24
Q3
23-24
Q4
24-25
Q1
24-25
Q2
24-25
Q3
24-25
Q4
25-26
Q1
25-26
Q2
25-26
Q3
Quarter to Quarter % Change
Millions
Revenue Management Aging
Total Receivables Delinquent (91+ days) Delinquency Percentage Change 21 FY 2025-26 Q3 DELINQUENT RECEIVABLES
DELINQUENT RECEIVABLES SUMMARY ($ IN MILLIONS*)
*Rounded
As of March 31, 2026
Liens (A/R Only)
$1.9M
377 Invoices
Restitution,
Payment Plan (A/R Only)
$1.1M
296 Invoices
Legal,
Bankruptcy
$5.6M
761 Invoices
Collection Agency
$22.7M
20,798 Invoices
Aged 91 Days - 1 Year (Active)
$6.9M
11,633 Invoices
Aged 1-2 Years (Active)
$10.9M
6,542 Invoices
Aged 2-3 Years (Active)
$2.6M
2,730 Invoices
Aged Over 3 Years (Out of Statute)
$5.4M
4,513 Invoices
Total Current
$26.1M
Total Delinquent
$57.1M
COLLECTIONS & RETURN ON INVESTMENT
REVENUE MANAGEMENT COLLECTIONS (FY 2023-24 Q4 TO FY 2025-26 Q3) Target ROI: 5.0
22 FY YTD 25-26 ROI: 5.22
3.9 4.0
7.8 4.5 4.7
5.1 4.5
6.0 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 Q4 24-25 Q1 24-25 Q2 24-25 Q3 24-25 Q4 25-26 Q1 25-26 Q2 25-26 Q3 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 Q3, ~$1.5M was recovered in delinquent collections and audits (cannabis business tax, hotel tax, telecommunications user tax, utility user tax, and sales and use tax).
23 BUSINESS TAX AMNESTY PROGRAM
• This Amnesty Program offers an opportunity to have accumulated penalties and interest waived in exchange for payment of the principal amount due • Amnesty Program Application Period: January 1 – December 31, 2026 24 Program Stats through March 31, 2026
Projected Revenue $2.9M
FY 25-26 Payments $1.11M
Program Expenses ($45K)
Net Revenue $1.07M
Amnesty Waivers to Date ($520K)
THIRD QUARTER
PURCHASING AND
RISK MANAGEMENT REPORT
FOR FISCAL YEAR 2025-2026
25 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.
26 PURCHASING TRANSACTIONS COMPLETED
THIRD QUARTER FY 2025-26
DESCRIPTION
THIRD QUARTER
TRANSACTIONS
FISCAL YEAR
TO DATE
PURCHASE ORDERS EXECUTED 292 1,070
PURCHASE ORDER ADJUSTMENTS EXECUTED 112 346
CONTRACTS NEGOTIATED & EXECUTED 10 17
CONTRACT AMENDMENTS, CHANGE ORDERS, SERVICE ORDERS, & OPTIONS EXECUTED 27 103 PURCHASE ORDER DOLLARS PROCURED $85,718,978 $321,737,345 CONTRACT DOLLARS PROCURED $4,626,408 $24,887,330
27 PURCHASING AUDIT STATUS
• In August 2025, the Office of the City Auditor completed an audit of Purchasing functions to “assess the efficiency of the City’s procurement process for goods and services, excluding public works projects.”
• Eight recommendations were provided as a result of this audit. • As of December 31, 2025, two recommendations have been fully implemented with another recommendation partly implemented. • The target implementation date for the remaining recommendations is June 30, 2026.
28 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.
29 30
RISK MANAGEMENT TRANSACTIONS COMPLETED
THIRD QUARTER FY 2025-26
Transaction T ype Third Quarter
Transactions
Fiscal Y ear to
Date
Request for Contract Insurance Specifications 257 794
Request for Insurance Compliance Review 147 545
Request for Letters of Self-Insurance 27 89
Subrogation Dollars Billed to Responsible Third Parties $94,334.99 $324,733.30 Council and Committee Memorandums Issued 0 2
RECOMMENDATION
(a) Accept the Third Quarter (period ended March 31, 2026) 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 Third Quarter Financial Reports for Fiscal Year 2025-2026 to the August 11, 2026, City Council meeting for full adoption.
31 APPENDIX
32 • 10-year history of higher
rated (“AA+”) General
Obligation debt (20-year
term) yield averaged 3.18%
and is currently at 4.84%
(as of 3/26/2026).
33 BOND BUYER GO BOND YIELD INDEX
3.18%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Mar-17
Mar-18
Mar-19
Mar-20
Mar-21
Mar-22
Mar-23
Mar-24
Mar-25
Mar-26
Interest Rate
Bond Buyer 11-Bond GO Index (AA+) avg. rating
Index Average 3/17 -3/26
• The Daily Secured
Overnight Financing Rate
(SOFR) interest rate is
3.65% (as of 3/31/26).
• The City uses SOFR as a
proxy for forecasting
interest rates for various
short-term debt
instruments.
34 SOFR RATES
3.6%
3.7%
3.8%
3.9%
4.0%
4.1%
4.2%
4.3%
4.4%
4.5%
Mar-25
Apr-25
May-25
Jun-25
Jul-25
Aug-25
Sep-25
Oct-25
Nov-25
Dec-25
Jan-26
Feb-26
Mar-26
Interest Rate
Daily SOFR
GENERAL OBLIGATION CREDIT RATINGS
AS OF MARCH 31, 2026
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:
35 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 MARCH 31, 2026
The City of San José continues to maintain very high credit ratings. 36 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 MARCH 31, 2026
37 T ype of Rating Moody’s S&P Fitch KBRA 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 has assigned a rating to the CSJFA Wastewater Revenue Bonds exclusively.