FOURTH QUARTER FINANCIAL REPORT
FISCALYEAR 2025-2026
Public Safety, Finance and
Strategic Support Committee
Prepared by the Finance Department
Presenter: Maria Öberg, Director, Finance
July 30, 2026
COMMITTEE AGENDA: AUGUST 20, 2026
ITEM: (D)1
ATTACHMENTA
1 FOURTH QUARTER
DEBT MANAGEMENT REPORT
FISCAL YEAR 2025-2026
2 3
OUTSTANDING DEBT: $4.21 BILLION
(CITY AND ALL AGENCIES)
FY 2025-26 YTD Issuance: $589.38 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: $3.49 BILLION
(EXCLUDING MULTIFAMILY HOUSING REVENUE BONDS)
CSJ GO Bonds,
$668,715,000, 19.18%
CSJFA Bonds/ CP Notes,
$625,862,000, 17.95%
Airport Revenue Bonds/
CP, $973,129,202, 27.92%
Wastewater Revenue Bonds /
Notes, $345,982,862, 9.93%
Successor Agency Tax Allocation
Bonds, $872,160,000, 25.02%
DEBT ISSUANCE & MANAGEMENT UPDATE
5 • On May 12, 2026, issued $82.6 million in multifamily housing revenue bonds for Berryessa TOD project.
• On June 25, 2026, issued $15 million in CSJFA commercial paper notes to fund the property acquisition of 447 S. Almaden Boulevard and the PRNS 2017 Floods project. • In June 2026, after releasing a Request for Proposals, selected a syndicate of underwriters to support the refunding of Airport Series 2017 bonds.
• Executed one-year extensions of various Municipal Advisor contracts.
FOURTH 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 • Awarded 2026 Investment Policy Certificate of Excellence by Association of Public Treasurers of the United States & Canada 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 $3,020,573,765
Earned Interest Yield 4.127%
Weighted Average Maturity 661 days
Fiscal Year-to-Date Net Income Recognized $109,160,369
Exceptions to the City Investment Policy this Quarter None 9 Total Investment Portfolio:
$3,020,573,765
10 PORTFOLIO INVESTMENTS
U.S. Treasury
484,162,778 16.0%
U.S. Agency
1,049,056,441 34.7%
Supranationals
13,313,000 0.4%
Corporate Notes
542,541,754 18.0%
Asset Backed
Securities
12,389,613 0.4% Muni Bonds
349,343,264 11.6%
Mortgage
Backed
Securities
228,314,512
7.6%
JPAP
269,110,950
8.9%
LAIF 72,341,454
2.4%
The $731 million in the General Fund
presented includes $306,131,649 of
General Fund monies, as well as
$424,431,018 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
$6,038,390
Airport
$425,952,615
Capital Projects
$72,591,367
Debt Service
$66,286,111
Development Fees
$81,528,479
General Fund
$730,562,667
Muni Water
$57,713,769
Parking
$23,257,944
Housing
$265,999,997
Special Revenue
Funds $379,273,744
Wastewater
$426,861,253
SJ Clean Energy
$378,922,605
12 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
Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-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.
13 BENCHMARK COMPARISONS
3.00 3.50
4.00 4.50
5.00 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26 Yield (%)
City LAIF BAML
Yield WAM
CITY: 4.061% 661
BAML: 4.010% 683
LAIF: 3.816% 269
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 14 FOURTH QUARTER
REVENUE MANAGEMENT REPORT
FOR FISCAL YEAR 2025-2026
15 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.
16 Total Revenue: $4.558B
Source: 2024-25 City Manager’s
Budget Office Annual Report
(Graph is updated annually)
17 REVENUE MANAGEMENT PORTFOLIO
FY 2024-25 REVENUE ($ 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)
18 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
19 OUTSTANDING RECEIVABLES
THREE-YEAR HISTORY (FY 2023-24 Q1 TO FY 2025-26 Q4)
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
$-
$20
$40
$60
$80
$100
$120
23-24
Q1
23-24
Q2
23-24
Q3
23-24
Q4
24-25
Q1
24-25
Q2
24-25
Q3
24-25
Q4
25-26
Q1
25-26
Q2
25-26
Q3
25-26
Q4
Quarter to Quarter % Change
Millions
Revenue Management Aging
Total Receivables Delinquent (91+ days) Delinquency Percentage Change 20 FY 2025-26 Q4 DELINQUENT RECEIVABLES
DELINQUENT RECEIVABLES SUMMARY ($ IN MILLIONS*)
*Rounded
As of June 30, 2026
Liens (A/R Only)
$1.6M
308 Invoices
Restitution,
Payment Plan (A/R Only)
$1.4M
361 Invoices
Legal,
Bankruptcy
$5.8M
767 Invoices
Collection Agency
$21.8M
14,590 Invoices
Aged 91 Days - 1 Year (Active)
$9.7M
14,590 Invoices
Aged 1-2 Years (Active)
$10.5M
8,401 Invoices
Aged 2-3 Years (Active)
$2.8M
2,661 Invoices
Aged Over 3 Years (Out of
Statute)
$5.7M
5,674 Invoices
Total Current
$23.8M
Total Delinquent
$59.3M
COLLECTIONS & RETURN ON INVESTMENT
REVENUE MANAGEMENT COLLECTIONS (FY 2024-25 Q1 TO FY 2025-26 Q4) Target ROI: 5.0
21 FY 25-26 ROI: 5.13
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, Telecommunications, and Cannabis).
• In Q4, ~$1.1M ($4.2M total in FY 25-26) was recovered in delinquent collections and audits (cannabis business tax, hotel tax, telecommunications user tax, utility user tax, and sales and use tax).
22 BUSINESSTAX 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 23 Program Stats through June 30, 2026
Projected Net Revenue $2.9M
FY 25-26 Payments $2.15M
Program Expenses ($0.1M)
Net Revenue $2.05M
Amnesty Waivers to Date ($1.1M)
FOURTH QUARTER
PURCHASING AND
RISK MANAGEMENT REPORT
FOR FISCALYEAR 2025-2026
24 PURCHASING PROGRAM
The Purchasing Division of the Finance Department is responsible for the centralized procurement of equipment, supplies, materials, Information Technology (IT), and general services, pursuant to the City of San José Municipal Code Title 4, Chapter 4.12.
25 PURCHASING TRANSACTIONS COMPLETED
FOURTH QUARTER FY 2025-26
DESCRIPTION
FOURTH
QUARTER
TRANSACTIONS
FISCALYEAR
TO DATE
PURCHASE ORDERS EXECUTED 253 1,323
PURCHASE ORDER ADJUSTMENTS EXECUTED 137 483
CONTRACTS NEGOTIATED & EXECUTED 6 23
CONTRACT AMENDMENTS, CHANGE ORDERS, SERVICE ORDERS, & OPTIONS EXECUTED 41 144 PURCHASE ORDER DOLLARS PROCURED $47,571,517 $369,308,862 CONTRACT DOLLARS PROCURED $12,095,112 $36,982,442
26 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 Finance Department intends to close out the remaining recommendations within the first quarter of FY 26-27.
27 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.
28 29
RISK MANAGEMENT TRANSACTIONS COMPLETED
FOURTH QUARTER FY 2025-26
Transaction Type Fourth Quarter
Transactions
Fiscal Year to
Date
Request for Contract Insurance Specifications 379 1173
Request for Insurance Compliance Review 245 790
Request for Letters of Self-Insurance 45 134
Subrogation Dollars Billed to Responsible Third Parties $232,320.60 $557,053.90 Council and Committee Memorandums Issued 2 4
RECOMMENDATION
(a) Accept the Fourth Quarter (period ended June 30, 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 Fourth Quarter Financial Reports for Fiscal Year 2025-2026 to the September 15, 2026 City Council meeting for full adoption.
30 APPENDIX
31 • 10-year history of higher
rated (“AA+”) General
Obligation debt (20-year
term) yield averaged 3.21%
and is currently at 4.53%
(as of 7/2/2026).
32 BOND BUYER GO BONDYIELD INDEX
3.21%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Jun-17Jun-18Jun-19Jun-20Jun-21Jun-22Jun-23Jun-24Jun-25Jun-26 Interest Rate
Bond Buyer 11-GO Index (AA+) avg. rating
Index Average 6/17 - 6/26
4.53%
• The Daily Secured
Overnight Financing Rate
(SOFR) interest rate is
3.63% (as of 6/30/26).
• The City uses SOFR as a
proxy for forecasting
interest rates for various
short-term debt
instruments.
33 SOFR RATES
3.5%
3.6%
3.7%
3.8%
3.9%
4.0%
4.1%
4.2%
4.3%
4.4%
4.5%
Jun-25
Jul-25
Aug-25Sep-25
Oct-25
Nov-25Dec-25
Jan-26
Feb-26
Mar-26
Apr-26
May-26
Jun-26
Interest Rate
Daily SOFR
3.63%
GENERAL OBLIGATION CREDIT RATINGS
AS OF JUNE 30, 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:
34 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 JUNE 30, 2026
The City of San José continues to maintain very high credit ratings. 35 Type 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 JUNE 30, 2026
36 Type 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 Tax
Allocation Bonds N/A AA(stable)
AA+
(stable) N/A
SARA Subordinate
Tax 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.