Comprehensive Annual Financial Report - City of Santa Monica

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balance between pay-as-you-go financing and debt financing for capital projects.
When the City finances capital projects by issuing bonds, it will pay back the bonds within a period
not to exceed the expected useful life of the project.
When possible, the City will identify a source of repayment for General Fund supported bonds and
monitor the source of repayment in the future to ensure it is sufficient to meet debt repayment
requirements.
Reserve/Internal Service Fund Policies
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The City will maintain a General Fund operating contingency designation at a level that is equal to at
least 10% of the General Fund’s annual operating expenditure budget. Council approval will be
required before expending funds from this operating contingency designation.
In addition to the General Fund operating contingency designation, the City’s goal is to maintain an
economic uncertainty designation with the level to be established as needed, but not less than 3% of
the General Fund’s annual operating expenditure budget.
The City will maintain a designation in the General Fund for earned, but unused, vacation benefits of
General Fund employees. The assessment of this designation is made annually, on June 30. All
other compensated absences are recorded in the respective governmental or proprietary funds.
● The City will maintain a capital/maintenance designation to be determined as part of the annual
budget adoption. The capital/maintenance designation is to be made available by Council
appropriation to meet unanticipated, unscheduled, and/or unprogrammed capital and maintenance
needs of City infrastructure and facilities. This designation is intended to be used for major capital
repair where facility failure, unexpected hazards, or destruction of City property has occurred and
where repair or replacement is not planned within the established capital, operations, or other
replacement funds.
Capital Improvement Policies
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The City will coordinate preparation of the capital budget with preparation of the operating budget.
Future operating costs associated with new capital improvements will be projected and included in
the operating budget forecasts.
The City will identify estimated costs and potential funding sources for each proposed capital project
before it is submitted to Council for approval.
The City administration will identify, for Council consideration, the least costly financing method for
all new projects.
Accounting, Auditing & Financial Reporting Policies
● The City’s accounting and financial reporting systems will be maintained in conformance with
generally accepted accounting principles and standards of the Government Accounting Standards
Board.
● A Comprehensive Annual Financial Report will be prepared and audited by a qualified independent
public accounting firm.
Investment Policies
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An investment policy will be submitted annually to the City Council for review and adoption.
The City will invest public funds in a manner that will provide a market rate of return after ensuring
optimum safety and meeting the daily cash flow demands of the City.
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