Comprehensive Annual Financial Report - City of Santa Monica

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
Year ended June 30, 2008
Component units are included in the basic financial statements and consist of legally separate entities for
which the City is financially accountable and that have either the same governing board as the City or a
governing board appointed by the City of Santa Monica City Council. The blended component units
include the Redevelopment Agency of the City of Santa Monica, the Parking Authority of the City of
Santa Monica, and the Housing Authority of the City of Santa Monica.
Three related organizations, the Pier Restoration Corporation, the Bayside District Corporation, and the
Santa Monica Arts Foundation, are not included in the basic financial statements. While the City is
financially accountable and each have a governing board appointed by the City of Santa Monica City
Council, the economic resources held by these related organizations are not significant to the City. The
fund financial statements provide detailed information about the City’s most significant funds—not the
City as a whole.
The government-wide financial statements can be found on pages 15 and 16 of this report.
Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over
resources that have been segregated for specific activities or objectives. The City, like other state and
local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. All the funds of the City can be divided into three categories: governmental funds,
proprietary funds, and fiduciary funds.
Governmental funds. Governmental funds are used to account for essentially the same functions reported
as governmental activities in the government-wide financial statements. However, unlike the
governmental-wide financial statements, governmental fund financial statements focus on near-term
inflows and outflows of spendable resources, as well as on balances of spendable resources available at
the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing
requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By doing
so, readers may better understand the long-term impact of the City’s near-term financing decisions. Both
the governmental funds balance sheet and the governmental funds statements of revenues, expenditures,
and changes in fund balance provide reconciliation to the government-wide financial statements in order
to facilitate this comparison between governmental funds and governmental activities.
The City maintains 24 individual governmental funds for financial reporting purposes. Information is
presented separately in the governmental funds balance sheet and in the governmental funds statement of
revenues, expenditures, and changes in fund balances for the General, Special Revenue Source,
Downtown Redevelopment Project, and Earthquake Recovery Redevelopment Project funds, which are
considered to be major funds. Data for the other 20 governmental funds are combined into a single,
aggregated presentation. Individual fund data for each of these non-major governmental funds is
provided in the non-major funds supplementary section of this report.
The City adopts an annual appropriated budget for its General Fund, 13 of 14 special revenue funds (no
budget is adopted for Asset Seizure Fund), and 5 capital project funds. A budgetary comparison
statement has been provided for the General Fund, Special Revenue Source Fund, and Downtown
Redevelopment Project Fund in the basic financial statements.
The governmental funds financial statements can be found on pages 18 through 25 of this report.
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