Finance Committee Meeting Summary

City of Upland Financial Update

Investments, Fiscal Policy, and Sales Tax Trends

At the January 28, 2026 Finance Committee meeting, the City received a detailed financial briefing covering the status of Upland’s investment portfolio, proposed updates to the City’s Investment Policy for FY 2026–27, and recent sales tax revenue trends. Taken together, these reports underscore not only where the City stands financially, but also the continued diligence of the City Council in protecting the General Fund and maintaining long-term fiscal stability.

Investment Portfolio Overview

As of December 31, 2025, the City of Upland held $141.7 million in total cash and investments. These funds are managed conservatively, with a strong emphasis on safety, liquidity, and compliance—priorities the City Council has consistently reinforced to ensure the General Fund is protected against market volatility and economic uncertainty.

The portfolio generated a blended book yield of 4.31% with an average maturity of just over three years, reflecting a disciplined approach that balances responsible earnings with risk management. Staff also implemented a best-practice improvement by shifting from reporting “current yield” to “book yield,” providing a clearer and more accurate picture of actual investment performance over time.

The City maintains sufficient liquidity to meet all projected obligations for at least the next six months, and all investments remain fully compliant with the City’s adopted Investment Policy. In addition, approximately $15 million in restricted trust funds are held separately to responsibly address long-term pension and retiree healthcare obligations—further reducing future pressure on the General Fund.

Investment Policy Updates for FY 2026–27

As part of the annual review required under state law, staff proposed several minor updates to the City’s Investment Policy. These changes reflect the City Council’s continued focus on fiscal discipline, conservatism, and alignment with state standards, while preserving the flexibility needed to manage public funds efficiently.

Key updates include reducing allowable exposure to callable agency securities, clarifying requirements for federally insured depositories, aligning certain investment categories with California Government Code, and making a technical adjustment to allow a maximum maturity of five years and one month to account for settlement timing. These refinements strengthen safeguards without increasing risk to the General Fund.

Sales Tax Revenue Trends

Sales tax reports from the City’s consultant, HdL Companies, continue to highlight a challenging economic environment marked by cautious consumer behavior. After adjusting for reporting anomalies, actual taxable sales declined year-over-year across three consecutive quarters:

• Q4 2024: -3.9%

• Q1 2025: -4.3%

• Q2 2025: -6.6%

The most significant declines occurred in the auto and transportation sector, driven by high interest rates and restrictive financing conditions. Brick-and-mortar retail and fuel sales also softened. One consistent bright spot has been the building and construction sector, which has performed better than regional averages and helped cushion overall revenue losses.

Protecting the General Fund in Uncertain Times

These trends reinforce why the City Council has remained cautious with spending, deliberate with policy decisions, and focused on preserving reserves. While Upland’s financial position remains stable, the broader economic outlook continues to carry uncertainty due to inflation, global trade pressures, and a softening job market.

Through careful investment management, conservative budgeting, and ongoing scrutiny of expenditures, the City Council has worked diligently to protect the General Fund, safeguard essential services, and ensure the City remains financially resilient—both today and in the years ahead.