Comprehensive Annual Financial Report - City of Santa Monica

Cash Management Policies and Practices. The City’s Investment Policy (Policy) sets broad legal
guidelines which govern the investment of cash balances. The Policy, established in accordance with State
law, has been certified by the Association of Public Treasurers, United States and Canada. The Policy is
reviewed annually and approved by the City Council. The primary objectives of all City investments, in
priority order, are safety and preservation of principal, liquidity to meet cash flow needs, and a market rate of
return after the first two objectives have been met. Within this framework, the City has developed an
Investment Plan (Plan) which guides strategy and structure of the portfolio. The Plan sets targets for the
portfolio by investment type as well as benchmarks to measure return.
Debt Administration. At June 30, 2009, the City's general obligation bond rating was the highest possible
with an Aaa from Moody’s; AAA from Fitch; and AAA from Standard and Poor’s. All other City
indebtedness is considered to be at least investment grade. The City’s bonded debt applicable to its debt limit
consisted of: $18.5 million of Main Library Improvements Project General Obligation Bonds; $23.1 million
in Public Safety Facility Lease Revenue Bonds; $37.3 million in Civic Center Parking Structure Bonds; $72.9
million in Earthquake Recovery Redevelopment Project Tax Allocation Bonds and Ocean Park
Redevelopment Projects Tax Allocation Refunding Bonds; and $7.5 million in Parking Authority Lease
Revenue Bonds. A calculation of the City's debt limit is detailed in Table 14 of the Statistical Section of this
CAFR.
The City has other long-term payment obligations, which are not bonded debt, e.g., claims payable. These are
detailed in Note 9 in the notes to the basic financial statements.
Risk Management. The City established a Risk Management program in 1986 to minimize the exposure of
the City’s assets and resources (both human and financial) to accidental loss. The program is staffed by a
full-time Risk Manager and includes risk identification and evaluation, risk control, risk transfer, and risk
financing. Services include administration of claims filed by the public and employees and safety training
and loss prevention.
Additional information about the City’s risk management practices can be found in Note 15 of the notes to the
basic financial statements.
Pension and Other Postemployment Benefits (OPEB). The City contributes to the California Public
Employees’ Retirement System (CalPERS), an agent multiple-employer public employee defined benefit
pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments and
death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative
agent for participating public entities within the state of California. Benefit provision and all other
requirements are established by the State statute. The amount of the City’s required annual contribution is
determined actuarially. It is the policy of the City to fully fund the annual required contribution to ensure that
the plan will be able to fully meet its obligation to retired employees.
In addition, in accordance with agreements with various bargaining units, the City provides other
postemployment benefits to retirees. Funded on a pay-as-you-go-basis, a net OPEB obligation of $2.4 million
is reflected in the Statement of Net Assets as of June 30, 2009.
In addition to the CalPERS pension benefits and other postemployment benefits to retirees described above,
the City contributes to postemployment medical premium reimbursement plans for employees. These plans
were established by employees to mitigate the impacts of postemployment medical costs and are managed by
trustees from the various employee groups.
Additional information regarding the City's pension benefits and other postemployment benefits can be found
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