Fy2005 Cafr

City of
Santa Cruz
Santa Cruz, California
Comprehensive Annual Financial Report
For the year ended June 30, 2005
PREPARED BY THE CITY OF SANTA CRUZ, CALIFORNIA
FINANCE DEPARTMENT
DAVID P. CULVER, FINANCE DIRECTOR

City of Santa Cruz
Table of Contents
Page
INTRODUCTORY SECTION
Transmittal Letter ................................................................................................................................................... i

Map of Santa Cruz...............................................................................................................................................vii
Certificate of Achievement for Excellence in Financial Report - GFOA.................................................... viii
Organization Chart .............................................................................................................................................. ix
Directory of City Officials of the City of Santa Cruz........................................................................................ x
FINANCIAL SECTION
Independent Auditors’ Report........................................................................................................................... 1
Management’s Discussion and Analysis ......................................................................................................... 3
Basic Financial Statements:
Government-Wide Financial Statements:

Statement of Net Assets..........................................................................................................................20
Statement of Activities and Changes in Net Assets ...........................................................................22
Fund Financial Statements:

Government Fund Financial Statements:
Balance Sheet .....................................................................................................................................28
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Assets................................................................29
Statement of Revenues, Expenditures and Changes in Fund Balances ....................................30
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balances to the Government-Wide
Statement of Activities and Changes in Net Assets ..............................................................31
Proprietary Fund Financial Statements:

Statement of Net Assets ...................................................................................................................34
Statement of Revenues, Expenses and Changes in Net Assets ..................................................38
Statement of Cash Flows..................................................................................................................40
Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Assets .................................................................................................46
Statement of Changes in Fiduciary Net Assets.............................................................................47
Index to Notes to Basic Financial Statements ............................................................................................49
Notes to Basic Financial Statements ............................................................................................................51

City of Santa Cruz
Table of Contents, Continued
Page
FINANCIAL SECTION, Continued
Required Supplementary Information:
Budgetary Information....................................................................................................................................94
Budgetary Comparison Schedule – General Fund ...............................................................................98
Reconciliation of Net Changes in Fund Balances – Budgetary to GAAP Basis:
General Fund .......................................................................................................................................99
Budgetary Comparison Schedule – Redevelopment Agency ............................................................100
Redevelopment Agency .....................................................................................................................101
Defined Benefit Pension Plan .........................................................................................................................103
Supplementary Information:
Non-Major Governmental Funds:

Combining Balance Sheet.........................................................................................................................108
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................110
Schedule of Budget and Actual Revenues – General Fund .................................................................112
Schedule of Budget and Actual Expenditures and Other Financing Uses for
Legally Adopted Appropriations by Department – General Fund .............................................114
Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual:
Police Special Revenue Fund.............................................................................................................116
State Highway Special Revenue Fund .............................................................................................117
Parks and Recreation Fund................................................................................................................118
Housing and Community Development Fund...............................................................................119
Transportation Development Act.....................................................................................................120
General Obligation Bond Debt Service ............................................................................................121
General Capital Improvement Projects............................................................................................122
Non-Major Governmental Funds .....................................................................................................123
Internal Service Funds:

Combining Statement of Net Assets.......................................................................................................126
Combining Statement of Activities and Changes in Net Assets.........................................................127
Combining Statement of Cash Flows .....................................................................................................128
City of Santa Cruz
Table of Contents, Continued
Page
FINANCIAL SECTION, Continued
Private-Purpose Trust Funds:

Combining Statement of Fiduciary Net Assets .....................................................................................130
Combining Statement of Changes in Fiduciary ....................................................................................131
Agency Funds:
Combining Statement of Fiduciary Net Assets .....................................................................................134
Combining Statement of Changes in Assets and Liabilities................................................................135
STATISTICAL SECTION (Unaudited)
General Governmental Expenditures by Function (Table 1) ...........................................................................138

General Governmental Revenues by Source (Table 2)......................................................................................140
Tax Revenues by Source (Table 3)........................................................................................................................142
Property Tax Levies and Collections (Table 4)...................................................................................................144
Assessed and Estimated Actual Values of Taxable Property (Table 5) ..........................................................145
Property Tax Rates – Direct and Overlapping Governments (Table 6) ..........................................................146
Ratio of Net General Bonded Debt to Assessed Value (Table 7) .....................................................................147
Computation of Legal Debt Margin (Table 8) ....................................................................................................148
Ratio of Annual Debt Service Expenditures to Current General Expenditures (Table 9)............................149
Computation of Direct and Overlapping Debt (Table 10) ................................................................................150
Revenue Bond Coverage (Table 11) .....................................................................................................................151
Demographic Statistics (Table 12) ........................................................................................................................152
Principal Taxpayers (Table 13) ............................................................................................................................153
Property Value and Construction (Table 14)......................................................................................................154
Miscellaneous Statistical Data (Table 15) ............................................................................................................155
Insurance in Force (Table 16) ................................................................................................................................156
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The Honorable Mayor and City Council
The independent audit of the financial statements of the City of Santa Cruz was part of a broader, federally
mandated "Single Audit" designed to meet the needs of federal grantor agencies. The standards governing
Single Audit engagements require the independent auditor to report not only on the fair presentation of the
financial statements, but also on the audited government's internal controls and compliance with legal
requirements, with special emphasis on internal controls and legal requirements involving the
administration of federal awards. These reports are available in the City of Santa Cruz’s separately issued
Single Audit Report.
GAAP require that management provide a narrative introduction, overview, and analysis to accompany the
basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of
transmittal is designed to complement MD&A and should be read in conjunction with it. The City of Santa
Cruz's MD&A can be found immediately following the report of the independent auditors.
Profile of the Government
The City of Santa Cruz, incorporated in 1866, is located on the northern part of the Monterey Bay
approximately 74 miles south of San Francisco and 30 miles from San Jose. The City of Santa Cruz was first
founded in 1769 by the Spanish explorer Don Gaspar de Portola, who, along with Father Junipero Serra,
began land based settlement in the area. Santa Cruz is the county seat for the County of Santa Cruz, and is
a charter city which operates under the provisions of a voter-approved charter. The City has an area of 12
square miles and an estimated population of 56,451 as of January 2005. Santa Cruz is the home to the
University of California, Santa Cruz (UCSC) which first opened in 1965 and has a current enrollment of
over 15,000 students. UCSC has received worldwide recognition in the past few years for its high quality
academic programs and sponsored research programs such as the California Institute for Quantitative
Biomedical Research (QB3), the Center for Information Technology Research in the Interest of Society
(CITRIS), and the Laboratory for Adaptive Optics. The major industries include agriculture, tourism,
manufacturing, food processing, and technology.
Like other charter cities in California, the City of Santa Cruz has limited ability to set tax rates. The State
Constitution establishes a maximum rate for property tax and limits the growth of assessed value. The
property tax collected is allocated among the jurisdictions in the City's tax rate areas based on criteria
established by the state legislature. The rates and tax base of two of the City's other major general revenues ,
sales and use tax and motor vehicle in lieu fees (VLF), are also controlled by the legislature.
Changes to existing local taxes and any new taxes require voter approval. Taxes used for general purposes
are subject to approval by a simple majority of voters while taxes levied for specific purposes require a two-
thirds majority of voters. Assessments must be approved by a two-thirds vote with voting rights
apportioned based on the amount of the assessment. In addition, fees for facilities and services are subject
to requirements that they not be set at levels that exceed the reasonable costs of providing services. As a
result, fund balances generated by differences between fee revenue and related expense are retained and
designated for services and facilities that benefit fee payers.
The City of Santa Cruz has operated under the council-manager form of government since its incorporation
in 1866. Policy-making and legislative authority are vested in a seven member governing council consisting
of the Mayor and six Council Members. The City Council is responsible, among other things, for passing
ordinances, adopting the budget, approving nominees to commissions, and hiring the City Manager, City
Clerk and City Attorney. The City Manager is responsible for carrying out the policies and ordinances of
the City Council, for overseeing the day-to-day operations of the city and for appointing the heads of the
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various departments. The council is elected on a non-partisan basis. Council Members serve four-year
staggered terms, with either three or four Council Members elected every two years. The Mayor is selected
by a majority of the City Council and serves a one year term. The Mayor and Council Members are elected
at large and all are subject to two term limits.
The City of Santa Cruz provides a broad range of services including police and fire protection, construction
and maintenance of streets, parks, flood control and other infrastructure, a wharf facility, recreational and
cultural activities including a performing arts center and human services programs. It also operates
municipal utilities for water, wastewater, storm water, refuse collection, recycling and landfill disposal in
addition to self supporting enterprise operations for parking facilities and a golf course. The water utility
provides water service beyond the municipal boundaries and has a total service population of
approximately 90,000. Certain infrastructure construction and community development activities are
provided through a legally separate redevelopment agency. The Council sits as the agency's board and it
functions, in essence, as a department of the City. Therefore, the City of Santa Cruz Redevelopment
Agency has been included as an integral part of the City of Santa Cruz’s financial statements. Many major
public services delivered within the City's boundaries, including education, and public transportation are
provided by other agencies. The City of Santa Cruz is not financially accountable for the operations of the
franchisees or these government agencies.
An annual budget is adopted by the City Council no later than the first regular meeting in July for the fiscal
year beginning July first. As part of the budget process, all City departments submit budget requests for the
next fiscal year. These requests are reviewed, and a final City Manager recommended budget showing
estimated revenues and expenditures of the City is prepared. This proposed budget is transmitted to the
City Council and made available to the public for review. Study sessions and a public hearing are
conducted before final adoption of the budget by the City Council.
The City Manager is authorized to approve appropriation transfers within any department up to a specified
amount; however, any new appropriation or appropriation transfer between departments requires approval
by the City Council. Several supplemental appropriations were necessary during the year and are reflected
in the budget amounts in the financial statements. Expenditures may not legally exceed appropriations at
the department level.
The Council reviews budget results at the mid-year review and at budget adoption. Redevelopment
budgets are adopted annually along with an annual report. The ongoing review and long range planning
focus for financial management provides numerous opportunities to identify and respond to changes in
revenues and expenditures and in community priorities.
Factors Affecting Financial Condition
We think that the information presented in the financial statements is best understood when it is considered
from the broader perspective of the context within which the City of Santa Cruz operates.
Economic Conditions and Outlook
The City of Santa Cruz’s economic growth began to slow during the FY 2002 fiscal year and has declined
significantly since that time. Although overall certain tax revenues have begun to show positive growth
through FY 2005, significant labor cost increases and a continued sluggish economy have resulted in
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projecting a continuing budget deficit for FY 2006. The local economy is linked to a large degree to the
economy of the nearby Silicon Valley region, whose growth continues to lag.
Over the last three year period, ending with fiscal year 2005, there has been substantial growth in assessed
value of real property. The assessed value is approximately $4.9 billion with annual growth since fiscal
year 2002 above 5%. After several years of declines, other tax revenues have stabilized and are showing
modest increases.
An important event affecting City revenues took place in August 2005. At a special election called by the
City Council, voters approved, by a 58% majority, continuation of a franchise tax on municipal utilities.
This tax was previously charged as a type of fee which had been deemed invalid in recent court cases
without voter approval.
Also, on October 8, 2003, the California Governor approved SB 566 which authorized cities to seek voter
approval to levy a transactions and use tax in multiples of 0.25%. In March, 2004, the voters approved
Measure F, a ¼ cent transactions and use tax. This is a five-year general tax which was approved by a 69%
majority and became effective July 1, 2004.
Risk management. The City of Santa Cruz uses a program of self-insurance to reduce costs for workers’
compensation and general liability claims, and employs a professional risk manager, supplemented by a
professional claim administration firm, to minimize losses. The City is self-insured for workers'
compensation up to $500,000 per occurrence. Santa Cruz participates in a multi-agency joint powers
authority to provide excess insurance coverage for liability coverage. The joint powers authority and the
City rely on estimates prepared by professional actuaries to set aside funds adequate to meet potential
future losses. Excess coverage purchased through the joint powers authority covers claims in excess of
$1,000,000 for general liability claims. As reflected in the financial statements, the Risk Management
internal service fund had deficit net assets as of June 30, 2005, due to accrued claims liabilities. A deficit
balance of $6.2 million related to workers’ compensation activities was offset by surplus balances of $0.4
million related to group health insurance activities and a deficit of 0.1 million related to liability insurance
activities, resulting in a total net asset deficit balance of $5.9 million.
Significant contributing factors to rising workers’ compensation costs and claims liabilities include both an
increased benefit structure resulting from recent State legislation, and cost increases in the excess insurance
market that are being passed along to public agencies. At the same time, the self-insured retention per
occurrence has increased from $250,000 to $500,000.
Health care costs. The City contracts with CalPERS for employee health care coverage. Under this
program, employer premiums increased 10% for fiscal year 2005. A similar or even greater increase is
projected for fiscal year 2006. In addition, public agencies have been told by CalPERS to expect additional
increases in future years.
State budget. California faces continuing budget gaps with a projection for 2006 of an $8 billion general
fund deficit. This imbalance persists in spite of a number of noteworthy changes in state/local finance law.
• Proposition 57 or “Triple Flip”. In 2004, state voters approved a deficit-financing bond, pledging as
repayment for the bond ¼ cent of the local Bradley-Burns sales tax. During the time this bond is
outstanding, city and county revenue losses are replaced on a dollar-for-dollar basis with property
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taxes shifted from school districts. School losses, in turn, are offset by increased state aid. These
revenue transfers commonly are referred to as the “triple flip”.
• VLF-Property Tax Swap. In 1999, the state began reducing the vehicle license fee (VLF) rate charged
to vehicle owners – and backfilling city and county revenue losses from this tax reduction with state
subventions. The FY 2004-05 state budget package permanently replaced the VLF backfill by
shifting an equal amount of K-14 property taxes to cities and counties. Increased state aid offsets K-
14 school district revenue losses.
• FY 2004-05 Property Tax Shift. The FY 2004-05 state budget package included a $1.3 billion shift of
property taxes from noneducational local agencies (cities, counties, special districts, and
redevelopment agencies) to K-14 school districts. Unlike the two permanent property tax shifts
enacted in the 1990’s, this tax shift sunsets in FY 2006-07.
• Proposition 1A. In 2004, state voters amended the State Constitution to prohibit the state from
permanently reallocating the property tax in any county noneducation local agencies to K-14 school
districts. Also, this measure generally requires a two-thirds vote of the Legislature to change the
distribution of property taxes amount noneducation local agencies.
Cash management and policies
Cash temporarily idle during the year was invested in obligations of the U.S. Treasury and agencies of the
federal government, and the State Treasurer's investment pool. Maturities of the investments range from
one day to five years, with an average maturity of 444 days. The average yield on investments not held by
fiscal agents was 3.25%. Investment income includes appreciation in the fair value of investments.
Increases in fair value during the current year, however, do not necessarily represent trends that will
continue; nor is it always possible to realize such amounts. It is the City’s policy to hold investments to
maturity; therefore, gains and losses due to temporary market value fluctuations are rarely realized.
Major Initiatives
The City of Santa Cruz operates four municipal utilities, including water, wastewater, storm water, and
refuse collection/landfill operations. The Water Department has not made any major capital improvements
for the past 10 to 15 years while a new water supply project was being developed. Now, in order to address
the pressing needs of an aging infrastructure and the need for a new water supply, the Water Department
has embarked upon an ambitious program of capital improvements that will span the next five years and
will cost approximately $53 million, to be financed partially through the issuance of new debt. Major
distribution and supply projects are planned, including a desalination plant.
The National Marine Sanctuary Program (NMSP), an agency of the National Oceanic and Atmospheric
Administration (NOAA), and the City of Santa Cruz are partnering to design and construct the Monterey
Bay National Marine Sanctuary Education Center. The Education Center in the City of Santa Cruz will
function as the Monterey Bay National Marine Sanctuary’s premier visitor center. The site was chosen after
the NMSP studied 23 locations along California’s Central Coast, settling on the City’s ¾-acre “Fun Spot”
property in the Santa Cruz beach area, visited by an estimated 3 million people per year. Formal design
will commence in early 2006.
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The City will continue to use Development Impact fees to enhance and upgrade park facilities. These fees
will also be used for improvements to the greenbelt. During these tough economic times the Parks and
Recreation Department will continue to seek grants and bond monies to renovate and upgrade outdated
facilities. The development of Depot Park and the Multi Modal Station is an example of a successful
partnership between numerous agencies.
Awards
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City of Santa Cruz for its
comprehensive annual financial report for the fiscal year ended June 30, 2004. This was the 23rd
consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of
Achievement, the City published an easily readable and efficiently organized financial report. This report
must satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for one year only. We believe that our current comprehensive annual
financial report continues to meet the Certificate of Achievement Program’s requirements. However, this
report was not completed prior to the submission deadline and therefore, cannot be submitted to GFOA.
Extension deadlines were granted in the prior three years by GFOA but they declined to extend the
deadline again.
Acknowledgements
The preparation of this report would not have been possible without the efficient and dedicated services of
the entire staff of the Finance Department. We would like to express our appreciation to all the members of
the departments who assisted and contributed to the preparation of this report. We also want to thank the
partners and staff of our auditors for their assistance and support. Credit must also be given to the Mayor
and the City Council Members for their unfailing support for maintaining the highest standards of
professionalism in the management of the City of Santa Cruz's finances.
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DIRECTORY OF CITY OFFICIALS
CITY OF SANTA CRUZ
Mayor Mike Rotkin
Vice Mayor Cynthia Mathews Councilmember Emily Reilly
Councilmember Ryan Coonerty Councilmember Tim Fitzmaurice
Councilmember Ed Porter Councilmember Tony Madrigal
City Manager, Richard C. Wilson
Assistant City Manager ........................................................................................ Martin Bernal
Chief of Fire............................................................................................................. Ron Prince
Chief of Police......................................................................................................... Howard Skerry
City Attorney .......................................................................................................... John G. Barisone
City Clerk ................................................................................................................ Leslie Cook
Director of Finance ................................................................................................ David P. Culver
Director of Libraries............................................................................................... Anne M. Turner
Director of Parks and Recreation ........................................................................ Dannette E. Shoemaker
Director of Human Resources ............................................................................. Erwin Young
Director of Planning and Community Development ..................................... Eugene O. Arner
Director of Public Works and City Engineer.................................................... Mark Dettle
Director of Redevelopment Agency................................................................... Ceil Cirillo
Director of Water Department ............................................................................ Bill Kocher
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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Management's Discussion and Analysis
As management of the City of Santa Cruz we offer readers of the City’s financial statements this narrative
overview and analysis of the financial activities of the City of Santa Cruz for the fiscal year ended June 30,
2005. We encourage readers to consider the information presented here in conjunction with additional
information that we have furnished in our letter of transmittal, which can be found on page i of this report.
Financial Highlights – Primary Government (in $ millions)
• Government-Wide Highlights:
Net Assets - The assets of the City of Santa Cruz exceeded its liabilities at the close of the fiscal year
by $405.6. Of this amount, $75.8 was reported as unrestricted net assets and may be used to meet the
government’s ongoing obligations to citizens and creditors.
Changes in Net Assets - The City’s total net assets increased by $10.9 in fiscal year 2005.
• Fund Highlights:
Governmental Funds – Governmental funds include general, special revenue, debt service, and capital
projects funds. As of the close of fiscal year 2005, the City’s governmental funds, including the
Redevelopment Agency Fund, reported a combined ending fund balance of $43.8, which is an
increase of $6.2 from the prior year. Approximately 66.7% of this amount, or $29.2, represents the
unreserved fund balance available for appropriation. 51.7% of the unreserved fund balance, or $15.1,
has been designated for various purposes.
General Fund – Total fund balance of the General Fund on June 30, 2005 was $20.0, an increase of $2.0
from the prior year. Approximately 81% of this amount, or $16.2, was unreserved. Of the
unreserved fund balance, $7.4, or approximately 45.7%, is designated for various purposes. These
include $5.3 for the city public trust, and varying amounts for other activities. The remaining
unreserved balance of $8.8, or 54.3% of unreserved fund balance, is undesignated.
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the City’s basic financial statements.
The City’s basic financial statements comprise three components: 1) government-wide financial statements,
2) fund financial statements, and 3) notes to the financial statements. This report also contains other
supplementary information in addition to the basic financial statements themselves.
Government-wide Financial Statements. The government-wide financial statements are designed to provide
readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. They
are comprised of the statement of net assets and statement of activities and changes in net assets.
The statement of net assets presents information on all of the City’s assets and liabilities, with the difference
between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful
indicator of whether the financial position of the City is improving or deteriorating.
The statement of activities and changes in net assets presents information showing how the City's net assets
changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying
event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and
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expenses are reported in this statement for some items that will only result in cash flows in future fiscal
periods (e.g., interest expense due but unpaid).
Both of the above government-wide financial statements distinguish functions of the City that are
principally supported by taxes and intergovernmental revenues (governmental activities) from other
functions that are intended to recover all or a significant portion of their costs through user fees and charges
(business-type activities). The governmental activities of the City include general government, public safety,
public works, parks and recreation, library, transit, social services and community and economic
development. The business-type activities of the City include the four municipal utilities: water,
wastewater, storm water, and refuse and landfill operation; and also the self-supporting golf course and
parking enterprises.
Blended Component Units – Component units are legally separate entities that meet certain criteria and
would be misleading if their data were not included in this report. This report includes two separate legal
entities in this category; The City of Santa Cruz Redevelopment Agency, and The Santa Cruz Public
Improvement Financing Corporation. In this report all component units are blended with the primary
government because the governing boards are substantively the same as the primary government, and the
component units serve the primary government exclusively.
The government-wide financial statements can be found on pages 19-23 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 of the funds of the City can be divided into three categories: governmental funds,
proprietary funds, and fiduciary funds.
The fund financial statements provide detail information about each of the City’s most significant funds,
called major funds. The concept of major funds, and the determination of which are major funds, was
established by GASB 34 and replaces the concept of combining like funds and presenting them in total.
Instead, each major fund is presented individually, with all nonmajor funds summarized and presented in a
single column. Individual fund data on the nonmajor funds is presented in the form of combining
statements and schedules on pages 107 through 111 of this report.
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 government-wide
financial statements, governmental fund 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 a government’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 government’s near-term financing decisions.
Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures,
and changes in fund balances provide a reconciliation to facilitate this comparison between governmental
funds and governmental activities.
The City has nine governmental funds, of which two are considered major funds for presentation purposes.
Each major fund is presented separately in the governmental fund balance sheet and in the governmental
fund statement of revenues, expenditures, and changes in fund balances for the City’s two major funds –
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the General Fund and the Redevelopment Agency Fund. Data from the other seven governmental funds
are combined into a single, aggregated presentation. The basic governmental fund financial statements can
be found on pages 27 through 31 of this report. Individual fund data for each of these non-major
governmental funds is provided in the form of combining statements on pages 107 through 111 of this
report.
Proprietary Funds – The City maintains two different types of proprietary funds – enterprise funds and
internal service funds. Enterprise funds are used to report the same functions presented as business-type
activities in the government-wide financial statements. The City uses enterprise funds to account for the
four municipal utilities; water, wastewater, storm water, and refuse and landfill operation; and also the self-
supporting golf and parking enterprises. Internal service funds are used to accumulate and allocate costs
internally among the City’s various functions. The City uses internal service funds to account for its
equipment operations and maintenance, stores inventory, telecommunications, and risk management
activities. Because these services predominantly benefit governmental rather than business-type functions,
they have been included within governmental activities in the governmental-wide financial statements.
Proprietary funds provide the same type of information as the government-wide financial statements, only
in more detail. The fund financial statements for the proprietary funds provide separate information for the
four municipal utilities; water, wastewater, storm water, and refuse and landfill operation; and also the self-
supporting golf course and parking enterprises. Conversely, the internal service funds are combined into a
single aggregated column in the proprietary fund statements. Individual fund data for the internal service
funds is provided in the form of combining statements on pages 125-128 of this report.
The basic proprietary fund financial statements can be found on page 33-43 of this report.
Fiduciary Funds – Fiduciary funds are used to account for resources held for the benefit of parties outside
the government. Fiduciary funds are not reflected in the government-wide financial statements because the
resources of those funds are not available to support the City’s own programs.
Notes to the Financial Statements. The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. The notes to
the financial statements can be found on pages 51-92 of this report.
Other Information. In addition to the basic financial statements and accompanying notes, this report also
presents certain required supplementary information concerning the City of Santa Cruz’s progress in funding
its obligation to provide pension benefits to its employees, as well as providing a budgetary comparison
schedule for the General Fund and the Redevelopment Agency Fund. Required supplementary
information can be found on pages 93-103 of this report.
Additional budgetary schedules for the General Fund and the combining statements referred to earlier in
connection with nonmajor governmental funds and internal service funds are presented immediately
following the required supplementary information. Combining and individual statements and schedules
can be found on pages 112-123 of this report.
Government-Wide Financial Analysis (in $ millions)
Net Assets. As noted earlier, net assets may serve over time as a useful indicator of a government’s
financial position. In the case of the City of Santa Cruz, combined net assets (governmental and business-
type activities) totaled $405.6 at the close of the fiscal year ending June 30, 2005.
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By far the largest portion of the City’s net assets (78.6%) reflects its investment in capital assets (e.g., land,
streets, bridges, water and sewer lines, buildings, machinery, and equipment), less any related debt used to
acquire those assets that is still outstanding. The City uses these capital assets to provide services to
citizens; consequently, these assets are not available for future spending. Although the City’s investment
in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this
debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate
these liabilities.
An additional portion of the City’s net assets (2.7%) represents resources that are subject to external
restrictions on how they may be used. The remaining 18.7% or $75.8 of the City’s net assets, are
“unrestricted,” and may be used to meet the government’s ongoing obligations to citizens and creditors.
City of Santa Cruz's Net Assets

(amounts expressed in $ millions)
Governmental Business-Type
Activities Activities Total
2005 2004 2005 2004 2005 2004
Current assets $ 45.7 $ 39.0 $ 55.7 $ 59.2 $ 101.4 $ 98.2
Noncurrent assets 8.6 8.8 21.6 20.5 30.2 29.3
Capital assets 151.8 151.3 248.3 245.0 400.1 396.3
Total assets 206.1 199.1 325.6 324.7 531.7 523.8
Current liabilities 9.0 11.2 10.3 10.8 19.3 22.0

Noncurrent liabilities 29.3 25.7 77.4 81.4 106.7 107.1
Total liabilities 38.3 36.9 87.7 92.2 126.0 129.1
Net assets:
Invested in capital assets,
net of related debt 139.0 138.5 180.0 174.2 319.0 312.7
Restricted 10.1 11.4 0.7 - 10.8 11.4
Unrestricted 18.7 12.3 57.1 58.3 75.8 70.6
Total net assets $ 167.8 $ 162.2 $ 237.8 $ 232.5 $ 405.6 $ 394.7
Changes in Net Assets. The City’s net assets increased by $10.9 or 2.8%, from the prior fiscal year (as
restated). The City’s expenses cover a range of services. Further analysis is provided within the
governmental and business-type activity sections.
7
City of Santa Cruz Changes in Net Assets
2005 2004 2005 2004 2005 2004
Revenues:
Program revenues:
Charges for services $ 22.2 $ 21.5 $ 48.3 $ 47.2 $ 70.5 $ 68.7
Operating grants and contributions 2.8 3.1 0.3 0.1 3.1 3.2
Capital grants and contributions 5.1 4.9 6.4 3.4 11.5 8.3
Total program revenues 30.1 29.5 55.0 50.7 85.1 80.2
General revenues:
Property taxes 16.5 15.8 - - 16.5 15.8
Sales and use taxes 11.4 9.1 - - 11.4 9.1
Franchise taxes 3.5 3.3 - - 3.5 3.3
Transient occupancy taxes 3.0 3.0 - - 3.0 3.0
Utility users taxes 8.1 7.7 - - 8.1 7.7
Admissions taxes 1.6 1.7 - - 1.6 1.7
Other taxes 2.1 2.5 - - 2.1 2.5
Total taxes 46.2 43.1 - - 46.2 43.1
Unrestricted grants and contributions 4.6 2.6 - - 4.6 2.6
Unrestricted investment earnings 0.8 0.4 1.5 0.7 2.3 1.1
Gain (loss) on sale of assets - 0.7 - - - 0.7
Miscellaneous 0.6 0.7 0.1 0.1 0.7 0.8
Total revenues 82.3 77.0 56.6 51.5 138.9 128.5
Expenses:
General government 9.8 11.5 - - 9.8 11.5
Public safety 27.2 27.1 - - 27.2 27.1
Parks and recreation 11.9 13.0 - - 11.9 13.0
Library 8.9 8.7 - - 8.9 8.7
Public works 7.8 9.6 - - 7.8 9.6
Transit 0.6 0.6 - - 0.6 0.6
Community and economic development 7.8 7.1 - - 7.8 7.1
Social services 1.7 1.8 - - 1.7 1.8
Interest and charges on long term debt 1.1 1.1 - - 1.1 1.1
Water - - 14.6 13.7 14.6 13.7
Wastewater - - 15.5 15.5 15.5 15.5
Refuse - - 14.6 14.9 14.6 14.9
Parking - - 2.6 2.5 2.6 2.5
Storm water - - 2.1 1.9 2.1 1.9
Golf course - - 1.8 1.8 1.8 1.8
Total expenses 76.8 80.5 51.2 50.3 128.0 130.8
Increase (decrease) in net assets before
transfers 5.5 (3.5) 5.4 1.2 10.9 (2.3)
Transfers 0.1 0.3 (0.1) (0.3) - -
Change in net assets 5.6 (3.2) 5.3 0.9 10.9 (2.3)
Net assets, beginning of year 160.2 163.5 232.7 231.3 392.9 394.8
Prior period adjustment (Note 15) 2.0 (0.1) (0.2) 0.5 1.8 0.4
Net assets, beginning of year (as restated) 162.2 163.4 232.5 231.8 394.7 395.2
Net assets - end of year $ 167.8 $ 160.2 $ 237.8 $ 232.7 $ 405.6 $ 392.9
8
Governmental Activities. Governmental activities increased the City’s net assets by $5.6. A comparison of
the cost of services by function for the City’s governmental activities is shown below, along with the
revenues used to cover the net expenses of the governmental activities.
Governmental Activities
2005 2004
Expenses net of program revenues:
General government $ (6.1) $ (7.2)
Public safety (23.1) (23.3)
Parks and recreation (8.7) (8.0)
Library (0.8) (1.0)
Public works 0.9 (2.9)
Transit - -
Community and economic development (6.2) (5.7)
Social services (1.7) (1.8)
Interest and fiscal charges on long-term debt (1.0) (1.1)
Total expenses net of program revenues -
governmental activities (46.7) (51.0)
General revenues and transfers:

General revenues:
Property taxes 16.5 15.8
Sales and use taxes 11.4 9.1
Franchise taxes 3.5 3.3
Transient occupancy taxes 3.0 3.0
Utility users taxes 8.1 7.7
Admission taxes 1.6 1.7
Other taxes 2.1 2.5
Total taxes 46.2 43.1
Unrestricted grants and contributions 4.6 2.6
Unrestricted investment earnings 0.8 0.4
Gain on sale of assets 0.0 0.7
Miscellaneous 0.6 0.7
Transfers 0.1 0.3
Total general revenues and transfers 52.3 47.8
Change in governmental activities net assets $ 5.6 $ (3.2)
Governmental Expenses. Total governmental activity expenses were $76.8 in fiscal year 2005. The largest
expenses were incurred for public safety, parks and recreation, and general government. These expenses
do not include capital outlays, which are now reflected in the City’s capital assets.
Governmental Revenues. Per GASB 34, program revenues are derived directly from the program itself or
from parties outside the reporting government’s taxpayers or citizenry. They reduce the net cost of the
function to be financed from the government’s general revenues. Total program revenues from
governmental activities were $30.1 in fiscal year 2005. Governmental program revenues derive primarily
from charges for services, which include licenses and permits, planning fees, developer fees, recreation
charges, traffic and other fines and forfeitures, charges to the Library Joint Powers Authority for personnel
services provided, and several other revenues. Program revenues under the operating grants and
9
contributions category include revenues restricted for specific purposes, such as gasoline tax and other
federal, state and local grants. Program revenues in the capital grants and contributions category also include
federal, state and local grants, but are restricted specifically to be used for capital projects or acquisitions.
General revenues are all other revenues not categorized as program revenues, and include all taxes,
unrestricted grants, contributions and investment earnings, material gains on sales of capital assets, and
other miscellaneous revenues. Total general revenues from governmental activities were $52.2 in fiscal year
2005. Taxes of $46.2 comprised 88.5% of the City’s general revenues for fiscal year 2005. The largest single
source of general revenues received during fiscal year 2005 was $16.5 of property taxes, or 31.6% of general
revenues, followed by $11.4 of sales and use taxes, or 21.8% of general revenues. The largest sources of
other taxes are franchise, transient occupancy, utility user’s taxes, and admissions taxes.
EXPENSES & PROGRAM REVENUES- GOVERNMENTAL ACTIVITIES FISCAL YEAR 2005

(in $ millions)
$30
Millions
$25
$20
Revenues
$15
Expenses
$10
$5
$0
General Public Safety Parks & Library Public Transit Community Social Interest on
Government Recreation Works Devel. Services Long Term
Debt
10
REVENUES BY SOURCE- GOVERNMENTAL ACTIVITIES FISCAL YEAR 2005
Other General Revenues,

2%
Unrestricted Grants and

Contributions, 6%
Other Taxes, 2% Charges for Service, 27%
Admission Tax, 2%
Utility Users Tax, 10%
Transient Occupancy Tax, Oper.Grants &

4% Contributions, 3%
Franchise Taxes, 4%
Capital Grants &

Contributions, 6%
Sales & Use Taxes, 14%
Property Taxes, 20%
Business Type Activities. Net assets for business-type activities were $237.8, an increase of $5.3 from the
prior fiscal year. Total program revenues for business-type activities were $55.0. The largest program
revenues were charges for services of $48.3. Other program revenues included operating grants and
contributions of $0.3, and capital grants and contributions of $6.4. Total expenses for the business-type
activities were $51.2 during fiscal year 2005.
EXPENSES & PROGRAM REVENUES - BUSINESS-TYPE ACTIVITIES FISCAL YEAR 2005

(in $ millions)
$20
Millions
$18
$16
$14
$12
Revenues
$10
Expenses
$8
$6
$4
$2
$-
Water Wastewater Refuse Parking Storm Water Golf Course
11
REVENUES BY SOURCE - BUSINESS-TYPE ACTIVITIES FISCAL YEAR 2005
General Revenues, 3%
Capital Grants &

Contributions, 11%
Operating Grants &

Contributions, 1%
Charges for Service, 85%
Financial Analysis of Individual Funds (in $ millions)
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements.
Governmental Funds - The focus of the City’s governmental funds is to provide information on near-term
inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s
financing requirements. In particular, unreserved fund balance may serve as a useful measure of a
government’s net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund
balances of $43.8. Approximately $29.2 of this amount constitutes unreserved fund balance, which is available
for spending at the government’s discretion. It should, however, be noted that 51.7% of the unreserved fund
balance, or $15.1, has been designated for various purposes, such as debt service, capital projects, public art,
police programs and the City Public Trust, leaving $14.1 unreserved and undesignated. The remainder of
fund balance ($14.6) is reserved to indicate that it is not available for spending because it has already been
legally committed.
General Fund – Total fund balance of the General Fund on June 30, 2005 was $20.0, an increase of $2.0 from
the prior year. Approximately 81% of this amount, or $16.2, was unreserved. $7.5, or 46% of the unreserved
fund balance has been designated for specific uses. These include $5.3 for the City Public Trust, and varying
amounts for other activities, such as unemployment insurance, housing, parks and recreation programs,
and equipment and facilities maintenance. The remaining unreserved balance of $8.7, or 54% of unreserved
fund balance, is undesignated.
As a measure of the general fund’s liquidity, it may be useful to compare unreserved fund balance, the
undesignated portion of the unreserved fund balance, and total fund balance to total fund expenditures.
Unreserved fund balance represents 26% of total general fund expenditures, including transfers out.
Unreserved and undesignated fund balance represents 14%, and total fund balance represents 33% of total fund
expenditures.
12
The 14% percent of total expenditures that is represented by the undesignated, unreserved fund balance
exceeds the City Council’s targeted minimum reserve level of 10% of the operating budget for the General
Fund.
Redevelopment Agency Fund – The City of Santa Cruz Redevelopment Agency is responsible for
redevelopment of areas identified under the Community Redevelopment Law as being blighted. The
Agency’s operations are funded primarily by the issuance of debt, which is expected to be repaid out of
property tax increment revenue generated by increases in property assessed values in the redevelopment
areas.
At the end of fiscal year 2005, the total fund balance of the Redevelopment Agency Fund was $14.4, an
increase of $3.3 from the prior year, or 29.7%. Of that amount, $7.9 is reserved to indicate that it is not
available for spending because it has already been legally committed. The remainder of the unreserved
fund balance of $ 6.5 is designated for either debt service or capital projects.
The Redevelopment Agency Fund had revenues of $9.2, including $8.8 of property tax increment revenue.
Expenditures in this fund amounted to $8.6.
Proprietary Funds. The City’s proprietary funds provide the same type of information found in the
government-wide financial statements, but in more detail. They include both enterprise funds and internal
service funds. For the government-wide financial statements, the internal service funds are consolidated
with governmental activities, and the enterprise funds comprise the business-type activities.
As discussed in the business-type activities section previously, the City’s net assets increased by $5.3 as a
result of operations in the enterprise funds. Net assets in the internal service funds increased by $0.9.
Increases in contributions to the Risk Management fund and decreases in the claims payable liability were
the primary causes of this increase.
General Fund Budgetary Highlights.
The final amended general fund budget, including transfers out and advances, totaled $67.4, and included
amendments to the original budget resulting in a $519K increase in operating expenditure appropriations.
The principal amendments can be summarized as follows:
Operating Appropriations Increases.

Appropriations Increases Offset by Grant and Donations Revenues.
• $14K for a Juvenile Accountability and Incentive Block Grant for community-based probation
services for juveniles on formal probation and for first-time offenders who qualify for diversion and
informal interventions.
• $46K for Edward Byrne Memorial Justice Assistance Grant to fund software acquisition to improve
evidentiary analysis and maintenance.
• $10K for a U.S. Department of Homeland Security Grant to fund police department training.
• $3K for an Economic Development Grant from Pacific Gas & Electric Company.
• $22K for expenditures related to a Comprehensive Traffic Safety Grant.
• $2K to fund a sign marker program.
• $12K to fund additional no-parking signs in the Westside area.
Grant and donation-related appropriations increases - $109K
13
Other Operating Appropriations Increases.
• $12K for funding of temporary staff for Public Arts Commission.
• $42K for implementation of an expansion of the Westside parking permit program.
• $10K for costs associated with the voter approved ¼ cent transaction and use tax.
• $5K for implementation of improved cash safekeeping at the Wharf gate.
• $40K City’s share of 2004 operating deficit of the joint Animal Services Authority.
• $19K to fund fees, activities and law enforcement for First Night Santa Cruz New Years Eve
celebration.
• $22K for purchase of new and replacement trees funded by fines and contributions for the street tree
program.
• $20K to fund professional services of a sales tax consultant.
• $14K general fund share of utility accounting system costs.
• $6K funding for homeless census.
• $25K funds for installation of parking meters on Center, Chestnut and Washington streets.
• $15K funding for safety improvement to Upper Park Road.
• $13K interim funding for mosquito control costs.
• $167K to fund cost overruns in the Fire Department.
Total other operating appropriations increases - $410K
Total operating appropriations increases - $519K
These appropriations were offset by additional estimated revenue and transfers in of $211K.
Capital Assets and Debt Administration (in $ millions)
Capital Assets. The City’s investment in capital assets for its governmental and business- type activities as
of June 30, 2005, amounts to $400.0, net of accumulated depreciation of $244.0. This investment in capital
assets includes land, land improvements, infrastructure, buildings, machinery and equipment, lease
improvements, software, and construction in progress. Infrastructure assets are items that are normally
immovable and of value only to the City such as roads, bridges, streets and sidewalks, drainage systems,
lighting systems and similar items. The total additions to the City’s investment in capital assets for the
current fiscal year, after restatements and deletions, were $3.6, net of accumulated depreciation.
Major capital asset additions during the current fiscal included the following:
• Market Street Bridge Retrofit for $1.2 million

• Depot Park / Soccer Fields / Multi-modal Station for $5.4 million
• City Hall Renovations & Fire Restoration for $1.6 million
• 75 ft Aerial Fire Pumper / Ladder for $580,000
• Bank Stabilization Wall for $5.3 million
• San Lorenzo River Levee Project Laurel/3rd Street Phase $6.5 million
Changes in capital assets from the prior year (as restated) are shown in the following table. Additional
information on the City’s capital assets can be found in Note 5 on pages 68-71 of this report.
14
Capital Assets
(net of depreciation)
Governmental Activities Business-Type Activities
June 30 June 30 Total
2005 2004 2005 2004 2005 2004
Land $ 44.2 $ 44.2 $ 11.9 $ 11.9 $ 56.1 $ 56.1
Construction in progress 2.5 8.6 13.4 9.0 15.9 17.6
Land improvements 4.2 1.3 1.0 0.8 5.2 2.1
Infrastructure 69.4 68.6 101.5 98.8 170.9 167.4
Buildings 27.2 24.5 110.7 114.2 137.9 138.7
Machinery and equipment 3.3 3.0 9.4 10.0 12.7 13.0
Lease improvements 0.5 0.6 0.1 0.1 0.6 0.7
Software 0.4 0.5 0.3 0.3 0.7 0.8
Totals $ 151.7 $ 151.3 $ 248.3 $ 245.1 $ 400.0 $ 396.4
Debt Administration (in $ millions)
Long Term Debt - At the end of the current fiscal year, the City had $116.6 in long term debt outstanding
compared to $117.9 last year, a 1.1% net decrease. Increases to claims and judgments payable, landfill
closure costs, lease obligations, and tax allocation bonds were offset by decreases in a variety of other
bonds, notes, loans, and leases payable. The debt associated with governmental activities increased by
9.7% from $30.7 to $33.7. Business-type activity debt was reduced by 4.9% from $87.2 to $82.9. Major
increase in debt during the year included the issuance of Redevelopment Tax Allocation Bonds.
The City currently has $7.2 in outstanding general obligation debt. This debt was approved by voters in
November 1998 and authorized an ad valorem tax override for acquisition of open space property,
improvements to fire stations, acquisition of a fire administrative headquarters building, and construction
of a community park. This tax override is currently assessed at $9 per $100,000 of assessed value. The
largest single debt obligation of the City is a note payable to the State of California for the construction of
secondary treatment improvements at the City's wastewater treatment plant. As of June 30, 2005 the
outstanding balance on this note was $39.0. The City has a corresponding note receivable from the County
of Santa Cruz for $18.4. This note receivable relates to the County’s obligation related to the construction of
the treatment plant improvements. The chart below illustrates the changes in bonds, notes, loans and leases
payable for the year ending June 30, 2005.
Bonds, Notes, Loans and Leases Payable

Governmental Activities Business-Type Activities
June 30 June 30 Total
2005 2004 2005 2004 2005 2004
Certificates of participation $ 4.4 $ 4.5 $ 28.7 $ 29.8 $ 33.1 $ 34.3
Revenue bonds payable - - 4.7 4.8 4.7 4.8
General obligation bonds 7.2 7.2 - - 7.2 7.2
Notes payable 1.3 1.5 40.2 42.6 41.5 44.1
Notes payable-County-RDA - 0.1 - - - 0.1
Tax allocation bonds payable 5.2 2.7 - - 5.2 2.7
Capital lease obligations 1.8 1.7 3.1 4.0 4.9 5.7
Other long-term liabilities 1.0 1.0 - - 1.0 1.0
Totals $ 20.9 $ 18.7 $ 76.7 $ 81.2 $ 97.6 $ 99.9
15
The City of Santa Cruz also has significant liabilities for claims and judgments, compensated absences
(accrued vacation pay), and landfill closure and postclosure costs. The amounts and changes of these
liabilities are shown below.
Claims and Judgments, Compensated Absences, and Landfill Closure Costs Payable
June 30, 2005
June 30 Increase Percent Due in less Due in more
2005 2004 (Decrease) Change than one year than one year
Workers compensation claims payable $ 8.4 $ 8.7 $ (0.3) -3.4% $ 2.2 $ 6.2
Liability claims payable 2.2 1.0 1.2 120.0% 0.8 1.4
Dental and vision insurance claims 0.1 0.1 - 0.0% 0.1 -
Total claims and judgments 10.7 9.8 0.9 9.2% 3.1 7.6
-
Compensated absences 2.9 2.9 - 0.0% - 2.9
Closure and post closure landfill costs 5.4 5.3 0.1 1.9% - 5.4
Totals $ 19.0 $ 18.0 $ 1.0 5.6% $ 3.1 $ 15.9
Additional information on the City of Santa Cruz’s long term debt can be found in Note 6 to the financial
statements.
Economic Climate
The City of Santa Cruz, and Santa Cruz County for that matter, is closely tied to the regional economy of
the nine-county San Francisco Bay Area and to Silicon Valley in particular. Fiscal Year 2005 showed signs
of recovery at the national level, along with the Bay Area and Silicon Valley. Local private employers
include a diverse array of manufacturing, business services, retail, hotel and food services, and
biotechnology companies. In addition to the local private employers, the local economy also benefits from
the University of California Santa Cruz. The University is a major employer, and has potential spin-off
benefits from federal and state funded scientific research ventures including biomedical research,
technology research, and adaptive optics.
The state, and the bay area in particular, experienced modest growth in jobs, personal income, and tourism
in 2005 and the economy is expected to continue to improve during 2006, albeit modestly. However, the
bay area regional economic opportunities and challenges including continued job growth, housing prices,
interest rates, state and national economic issues will, of course, moderate the rate of improvement.
Requests for Information
This financial report is designed to provide a general overview of the City’s finances for all of its citizens,
taxpayers, customers, investors and creditors. Questions concerning any of the information provided in
this report or requests for additional information should be addressed to the City of Santa Cruz, Finance
Department, 809 Center Street, Room 8, Santa Cruz, CA 95060.
16
BASIC FINANCIAL STATEMENTS
17
18
GOVERNMENT-WIDE FINANCIAL STATEMENTS
19
City of Santa Cruz
Statement of Net Assets
June 30, 2005
Primary Government
ASSETS
Current assets:
Cash and cash equivalents $ 32,998,297 $ 42,884,691 $ 75,882,988
Restricted cash and cash equivalents 2,917,805 4,741,834 7,659,639
Interest receivable 558,642 883,403 1,442,045
Taxes receivable 3,177,698 - 3,177,698
Accounts receivable - net 1,214,838 4,599,467 5,814,305
Due from other governments 2,683,619 127,448 2,811,067
Notes receivable - due within one year 270,275 35,226 305,501
Loans receivable - due within one year 86,670 - 86,670
Intergovernmental receivable - due within one year - 2,016,528 2,016,528
Prepaid items 174,890 86,905 261,795
Inventories 229,948 278,330 508,278
Deposits 1,432,676 - 1,432,676
Total current assets 45,745,358 55,653,832 101,399,190
Noncurrent assets:
Restricted assets:
Restricted cash and cash equivalents 11,282 - 11,282
Restricted investments 344,012 2,871,657 3,215,669
Notes receivable - due in more than one year 6,911,604 438,110 7,349,714
Loans receivable - due in more than one year 1,044,491 - 1,044,491
Intergovernmental receivable - due in more than one year - 17,280,579 17,280,579
Deferred charges 305,404 1,085,328 1,390,732
Long-term internal balances 17,178 (17,178) -
Capital assets:
Land 44,188,313 11,891,526 56,079,839
Land improvements 5,290,639 1,510,635 6,801,274
Infrastructure 167,207,541 171,294,779 338,502,320
Buildings 35,421,568 159,491,728 194,913,296
Machinery and equipment 10,156,196 19,382,706 29,538,902
Lease improvements 724,114 70,000 794,114
Software 1,056,070 555,258 1,611,328
Construction in progress 2,519,948 13,362,141 15,882,089
Total capital assets 266,564,389 377,558,773 644,123,162
Less accumulated depreciation (114,805,526) (129,276,140) (244,081,666)
Total capital assets, net 151,758,863 248,282,633 400,041,496
Total noncurrent assets 160,392,834 269,941,129 430,333,963
Total assets 206,138,192 325,594,961 531,733,153
See accompanying Notes to Basic Financial Statements.

20
City of Santa Cruz
Statement of Net Assets, Continued
June 30, 2005
Primary Government
LIABILITIES
Current liabilities:
Accounts payable and other current liabilities $ 3,460,169 $ 3,394,075 $ 6,854,244
Intergovernmental payable 90,789 - 90,789
Interest payable 259,335 1,373,939 1,633,274
Deferred revenue 645,883 22,678 668,561
Deposits payable 102,198 32,392 134,590
Claims and judgments payable - due within one year 3,138,855 - 3,138,855
Bonds, notes, loans and leases payable - due within one year 1,300,936 5,531,178 6,832,114
Total current liabilities 8,998,165 10,354,262 19,352,427
Noncurrent liabilities:
Claims and judgments payable - due in more than one year 7,580,600 - 7,580,600
Compensated absences payable - due in more than one year 2,098,095 810,883 2,908,978
Bonds, notes, loans and leases payable - due in more than one year 19,635,934 71,160,527 90,796,461
Landfill closure costs - 5,450,974 5,450,974
Total noncurrent liabilities 29,314,629 77,422,384 106,737,013
Total liabilities 38,312,794 87,776,646 126,089,440
NET ASSETS
Invested in capital assets, net of related debt 139,024,926 179,988,569 319,013,495

Restricted for:
Capital projects 3,516,887 650,424 4,167,311
Debt service 3,363,294 54,045 3,417,339
Public safety 117,101 - 117,101
Parks and recreation 90,846 - 90,846
Community and economic development 3,017,014 - 3,017,014
Unrestricted 18,695,330 57,125,277 75,820,607
Total net assets $ 167,825,398 $ 237,818,315 $ 405,643,713
Assets - Liab.& Net Assets $ - $ - $ -
Bal. Sheet Net Assets - IS Net Assets $ - $ - $ -

21
City of Santa Cruz
Statement of Activities and Changes in Net Assets
Program Revenues
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Total
Primary government:
Governmental activities:
General government $ 9,889,427 $ 3,814,053 $ 6,321 $ - $ 3,820,374
Public safety 27,218,149 3,230,321 842,156 45,177 4,117,654
Parks and recreation 11,944,976 2,863,615 200,836 211,422 3,275,873
Library 8,934,173 8,152,865 - - 8,152,865
Public works 7,801,586 4,008,187 3,000 4,674,505 8,685,692
Transit 586,896 - 586,896 - 586,896
Community and economic development 7,719,248 115,183 1,189,869 210,403 1,515,455
Social services 1,715,326 - - - -
Interest and fiscal charges
on long-term debt 1,066,994 - - - -
Total governmental activities 76,876,775 22,184,224 2,829,078 5,141,507 30,154,809
Business-type activities:
Water 14,643,440 17,283,215 205,093 1,203,662 18,691,970
Wastewater 15,524,855 11,911,915 119,166 244,257 12,275,338
Refuse 14,581,347 14,562,560 14,480 24,634 14,601,674
Parking 2,565,800 2,635,129 - 118,510 2,753,639
Storm water 2,150,359 872,569 - 4,792,942 5,665,511
Golf course 1,781,330 992,439 31,229 55,370 1,079,038
Total business-type activities 51,247,131 48,257,827 369,968 6,439,375 55,067,170
Total primary government $ 128,123,906 $ 70,442,051 $ 3,199,046 $ 11,580,882 $ 85,221,979
General Revenues:
Taxes:
Property taxes
Sales and use taxes
Franchise taxes
Transient occupancy taxes
Utility users taxes
Admission taxes
Other taxes
Total taxes
Unrestricted grants and contributions
Unrestricted investment earnings
Gain on sale of assets
Miscellaneous
Transfers
Total general revenues and transfers
Change in net assets
Net assets - beginning of year, as restated (Note 15)
Net assets - end of year
22
Net (Expense) Revenue
and Changes in Net Assets
$ (6,069,053) $ - $ (6,069,053)
(23,100,495) - (23,100,495)
(8,669,103) - (8,669,103)
(781,308) - (781,308)
884,106 - 884,106
- - -
(6,203,793) - (6,203,793)
(1,715,326) - (1,715,326)
(1,066,994) - (1,066,994)
(46,721,966) - (46,721,966)
- 4,048,530 4,048,530
- (3,249,517) (3,249,517)
- 20,327 20,327
- 187,839 187,839
- 3,515,152 3,515,152
- (702,292) (702,292)
- 3,820,039 3,820,039
(46,721,966) 3,820,039 (42,901,927)
16,476,980 - 16,476,980
11,383,231 - 11,383,231
3,478,971 - 3,478,971
3,067,869 - 3,067,869
8,080,171 - 8,080,171
1,629,164 - 1,629,164
2,107,273 - 2,107,273
46,223,659 - 46,223,659
4,562,277 222 4,562,499
846,634 1,469,180 2,315,814
60,093 - 60,093
577,892 97,529 675,421
78,584 (78,584) -
52,349,139 1,488,347 53,837,486
5,627,173 5,308,386 10,935,559
162,198,225 232,509,929 394,708,154
$ 167,825,398 $ 237,818,315 $ 405,643,713
23
24
FUND FINANCIAL STATEMENTS
25
26
Governmental Fund Financial Statements
General Fund - The General Fund is used to account for sources and uses of financial resources traditionally
associated with governments, and which are not required to be accounted for in another fund.
Redevelopment Agency Fund - The Redevelopment Agency fund is used to account for all the activities of the
City of Santa Cruz Redevelopment Agency. This includes the accumulation of resources for and the payment
of interest and principal on debt issued to finance redevelopment activities, and general redevelopment
operations.
Other Governmental Funds - Other Governmental funds is the aggregate of all the non-major governmental
funds.
27
City of Santa Cruz
Balance Sheet
Governmental Funds
June 30, 2005
Major Funds Other Total

General Redevelopment Governmental Governmental
Fund Agency Funds Funds
ASSETS
Cash and cash equivalents $ 15,717,420 $ 7,969,715 $ 5,139,525 $ 28,826,660
Interest receivable 120,209 111,956 294,134 526,299
Taxes receivable 2,385,102 260,431 532,165 3,177,698
Accounts receivable - net 899,601 45,156 218,001 1,162,758
Due from other governments 150,820 - 2,532,799 2,683,619
Due from other funds 36,626 - 8,097 44,723
Prepaid items 167,302 - 2,440 169,742
Restricted assets:
Cash and cash equivalents 7,991 2,873,991 34,849 2,916,831
Investments - 61,326 282,686 344,012
Total restricted assets 7,991 2,935,317 317,535 3,260,843
Deposits 201,468 - - 201,468
Notes receivable - net 2,317,885 3,714,571 1,149,423 7,181,879
Loans receivable - net - - 1,131,161 1,131,161
Advances to other funds 1,184,066 157,857 - 1,341,923
Inventory of land held for resale - net - 120,000 - 120,000
Total assets $ 23,188,490 $ 15,315,003 $ 11,325,280 $ 49,828,773
LIABILITIES AND FUND BALANCES

Liabilities:
Accounts payable and other current liabilities $ 2,790,319 $ 181,947 $ 195,249 $ 3,167,515
Due to other funds 8,097 - 28,146 36,243
Intergovernmental payable - - 90,789 90,789
Deferred revenue 259,540 - 1,084,906 1,344,446
Deposits payable 93,739 8,459 - 102,198
Advances from other funds - 683,623 641,122 1,324,745
Total liabilities 3,151,695 874,029 2,040,212 6,065,936
Fund Balances:
Reserved 3,870,996 7,943,337 2,777,858 14,592,191
Unreserved, designated, reported in:
General fund 7,435,828 - - 7,435,828
Redevelopment Agency fund - 6,497,637 - 6,497,637
Special revenue funds - - 476,904 476,904
Debt service funds - - 557,277 557,277
Capital projects funds - - 91,180 91,180
Unreserved, undesignated, reported in:
General fund 8,729,971 - - 8,729,971
Special revenue funds - - 3,185,320 3,185,320
Capital projects funds - - 2,196,529 2,196,529
Total fund balances 20,036,795 14,440,974 9,285,068 43,762,837
Total liabilities and fund balances $ 23,188,490 $ 15,315,003 $ 11,325,280 $ 49,828,773

28
City of Santa Cruz
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Assets
June 30, 2005
Total Fund Balances - All Governmental Funds $ 43,762,837
Amounts reported for Governmental Activities in the Statement of Net Assets were
different because:
Capital assets used in governmental activities are not current financial resources. Government-
Therefore, they are not reported in the governmental funds. Except for the Wide Statement Internal Service
internal service funds reported below, the capital assets are adjusted as follows: of Net Assets Funds
Non-depreciable $ 46,708,261 $ - 46,708,261
Depreciable, net 105,050,602 (358,856) 104,691,746
Total capital assets $ 151,758,863 $ (358,856) 151,400,007
Interest payable on long-term debt does not require current financial resources.
Therefore, interest payable is not reported as a liability in the governmental
funds. (259,335)
Internal Service Funds are used by management to charge the costs of certain
activities, such as insurance and equipment management, to individual funds.
The assets and liabilities of the Internal Service Funds are included in
governmental activities in the statement of net assets.
Equipment Operations Fund 257,962
Stores Services Fund 193,765
Telecommunications Fund 337,653
Risk Management Fund (5,959,914)
Total internal service funds (5,170,534)
Other long-term assets are not available to pay for current-period expenditures
and, therefore, are deferred in the funds. 698,563
Noncurrent liabilities were not due and payable in the current period. Therefore, Government-
they are not reported in the governmental funds. Except for the internal service Wide Statement Internal Service
funds reported above, the long-term liabilities are adjusted as follows. of Net Assets Funds
Compensated absences payable - due in more than one year $ (2,098,095) $ 48,378 (2,049,717)
Bonds, notes, loans and leases payable - due within one year (1,300,936) 54,006 (1,246,930)
Bonds, notes, loans and leases payable - due in more than one year (19,635,934) 21,037 (19,614,897)
Total long-term liabilities $ (23,034,965) $ 123,421 (22,911,544)
Certain transactions related to debt issuance and refunding are reported as

expenditures and other financing sources/uses in the governmental funds. For
the statement of net assets, the net amount of these transactions is capitalized as
deferred charges, and will be amortized as an adjustment to interest expense over
the remaining life of the debt. 305,404
Net Assets of Governmental Activities $ 167,825,398

29
City of Santa Cruz
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
Major Funds
Other Total
General Redevelopment Governmental Governmental
Fund Agency Funds Funds
REVENUES:
Taxes $ 34,384,206 $ 8,840,370 $ 3,043,924 $ 46,268,500
Licenses and permits 603,344 - - 603,344
Intergovernmental 5,465,642 - 6,013,426 11,479,068
Charges for services 17,799,213 - 169,604 17,968,817
Fines and forfeitures 2,022,779 - 10,038 2,032,817
Use of money and property 2,333,922 289,658 197,594 2,821,174
Other revenues 276,565 94,796 315,492 686,853
Total revenues 62,885,671 9,224,824 9,750,078 81,860,573
EXPENDITURES:
General government 9,390,901 - - 9,390,901
Public safety 26,540,438 - 151,875 26,692,313
Parks and recreation 9,593,982 - - 9,593,982
Library 8,980,823 - - 8,980,823
Public works 3,703,220 - 545,138 4,248,358
Transit - - 586,896 586,896
Community and economic development 89,776 5,816,303 734,853 6,640,932
Social services 1,583,700 - 131,626 1,715,326
Capital outlay 1,065,958 613,263 6,167,235 7,846,456
Debt service:
Principal 234,542 1,474,017 522,990 2,231,549
Interest and fiscal charges 59,492 431,835 474,911 966,238
Bond issuance costs - 276,569 - 276,569
Total expenditures 61,242,832 8,611,987 9,315,524 79,170,343
REVENUES OVER (UNDER) EXPENDITURES 1,642,839 612,837 434,554 2,690,230
OTHER FINANCING SOURCES (USES):

Proceeds from asset disposition 139,104 - - 139,104
Proceeds from long-term debt issued 580,000 5,245,000 - 5,825,000
Premiums on bonds sold - 23,994 - 23,994
Payment to refunded bond escrow agent - (2,571,681) - (2,571,681)
Transfers in 534,868 - 1,393,813 1,928,681
Transfers out (850,970) - (942,109) (1,793,079)
Total other financing sources (uses) 403,002 2,697,313 451,704 3,552,019
Net change in fund balances 2,045,841 3,310,150 886,258 6,242,249
FUND BALANCES:
Beginning of year 17,990,954 11,010,824 8,398,810 37,400,588
Prior period adjustment (Note 15) - 120,000 - 120,000
Beginning of the year, as restated 17,990,954 11,130,824 8,398,810 37,520,588
End of year $ 20,036,795 $ 14,440,974 $ 9,285,068 $ 43,762,837
30
City of Santa Cruz
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes
in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Assets
Net Change in Fund Balances - All Governmental Funds $ 6,242,249
Amounts reported for governmental activities in the Statement of Activities and Changes in Net Assets were different
because:
Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of
those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount
by which depreciation exceeded capital outlays in the current period, excluding the internal service funds, which
are reported below. (287,990)
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and capital
contributions) is to increase net assets. 855,669
Revenues considered "unavailable" at the end of the previous fiscal year were collected during the current year and
are reported as revenues in the governmental funds. These revenues were previously included in the statement of
activities. (245,878)
Some expenses reported in the statement of activities do not require the use of current financial resources and,
therefore, are not reported as expenditures in governmental funds. 41,416
Certain costs related to issuing new debt and refunding existing debt are reported as expenditures and financing
uses in the governmental funds, but are capitalized in the statement of net assets, and will be amortized over the
remaining life of the debt. 262,717
Proceeds of long-term debt and payments to refunding bond escrow agents are reported as financing sources/uses
in governmental funds. In the statement of net assets, however, issuing or refinancing debt affects noncurrent
liabilities. (3,277,313)
Repayment of principal is an expenditure in governmental funds, but reduces noncurrent liabilities in the
statement of net assets. 1,395,721
Certain payments on contractual obligations are classified as short-term principal repayments (debt service) in the
governmental funds, but are reclassified as "Community and economic development" expense in the statement of
activities. 835,828
Debt service principal payments are reclassified as "Community and economic development" expense in the
Government-Wide Statement of Activities. (835,828)
Accrued but unpaid and accreted interest on long-term debt is reported in the statement of activities, but does not
require the use of current financial resources. Therefore, it is not reported as an expenditure in the governmental
funds. (264,967)
Internal service funds are used by management to charge the costs of certain activities, such as insurance and
equipment management, to individual funds. The net revenue of the internal service funds is reported with
governmental activities. 905,549
Change in Net Assets of Governmental Activities $ 5,627,173

31
32
Proprietary Fund Financial Statements
Water - Accounts for the activities of the City's water utility, which provides water delivery services to the
residents of the City and some residents of the County.
Wastewater - Accounts for the activities of the City's wastewater utility, which provides wastewater
collection and treatment services to the residents of the City and some residents of the County.
Refuse - Accounts for the activities of the City's refuse utility, which provides refuse pick-up services,
recycling services, and a sanitary landfill for residents of the City.
Parking - Accounts for the activities of the Downtown Parking District, which provides parking facilities in
the downtown area.
Storm Water - Accounts for storm water utility fees on properties within the City limits. These fees provide
funding for flood control improvements associated with the U.S. Army Corps of Engineers San Lorenzo River
Flood Control project, storm water pollution prevention programs, and measures to comply with the U.S.
Environmental Protection Agency Non-Point Pollution Discharge Emissions Standards Program (NPDES).
Golf Course - Accounts for the activities of the Delaveaga Golf Course, which provides recreational facilities
to the public.
Internal Service Funds - These funds are used to provide goods and services by one department or agency to
other departments or agencies of the City on a cost reimbursement basis.
33
City of Santa Cruz
Statement of Net Assets
Proprietary Funds
June 30, 2005
Major Funds
Water Wastewater Refuse Parking

ASSETS
Current assets:
Cash and cash equivalents $ 22,500,779 $ 8,742,685 $ 7,239,491 $ 2,622,404
Restricted cash and cash equivalents 87,811 6,750 4,057,625 17,615
Accounts receivable - net 3,305,232 550,723 621,517 24,583
Due from other governments - 127,448 - -
Notes receivable - due within one year - 35,226 - -
Intergovernmental receivable - due within one year - 1,089,801 - 8,951
Prepaid items 28,427 19,455 30,591 2,818
Inventories 278,330 - - -
Deposits - - - -
Total current assets 26,413,771 11,108,165 12,033,221 2,702,133
Noncurrent assets:
Restricted investments - 404,491 1,077,764 493,955
Notes receivable - due in more than one year 401,058 37,052 - -
Intergovernmental receivable - due in more than one year - 17,280,579 - -
Advances to other funds 29,557 111,122 - -
Deferred charges - 92,592 367,780 222,149
Capital assets:
Land 3,654,410 1,331,330 98,575 4,979,102
Land improvements 71,900 808,396 - 280,701
Infrastructure 46,938,612 50,371,090 18,938,549 805,464
Buildings 8,914,349 126,672,607 2,506,636 20,398,375
Machinery and equipment 5,744,361 3,010,835 9,891,902 187,316
Lease improvements - 70,000 - -
Software 249,431 196,557 99,336 9,934
Construction in progress 9,559,530 240,807 255,484 303,222
Less accumulated depreciation (33,059,732) (61,000,154) (17,382,423) (6,268,529)
Total capital assets (net of accumulated depreciation) 42,072,861 121,701,468 14,408,059 20,695,585
Total noncurrent assets 42,503,476 139,627,304 15,853,603 21,411,689
Total assets 68,917,247 150,735,469 27,886,824 24,113,822

34
Major Funds Governmental
Activities
Internal
Storm Water Golf Course Total Service Funds
$ 1,779,332 $ - $ 42,884,691 $ 4,171,637

2,240 569,793 4,741,834 12,256
15,464 8,911 883,403 32,343
35,277 62,135 4,599,467 52,080
- - 127,448 -
- - 35,226 -
886,547 31,229 2,016,528 -
144 5,470 86,905 5,148
- - 278,330 109,948
- - - 1,231,208
2,719,004 677,538 55,653,832 5,614,620
454,671 440,776 2,871,657 -

- - 438,110 -
- - 17,280,579 -
- - 140,679 -
248,698 154,109 1,085,328 -
8,822 1,819,287 11,891,526 -

242,277 107,361 1,510,635 -
54,241,064 - 171,294,779 -
- 999,761 159,491,728 -
- 548,292 19,382,706 1,148,847
- - 70,000 -
- - 555,258 336,296
332,828 2,670,270 13,362,141 -
(10,346,882) (1,218,420) (129,276,140) (1,126,287)
44,478,109 4,926,551 248,282,633 358,856
45,181,478 5,521,436 270,098,986 358,856
47,900,482 6,198,974 325,752,818 5,973,476
(Continued)
35
City of Santa Cruz
Statement of Net Assets, Continued
Proprietary Funds
June 30, 2005
Major Funds

LIABILITIES
Accounts payable and other current liabilities $ 1,445,177 $ 923,636 $ 390,444 $ 381,666
Due to other funds - - - -
Interest payable 7,255 1,046,088 149,986 51,648
Deferred revenue 622 - 22,056 -
Deposits payable 11,640 - - 20,752
Claims and judgments payable - - - -
Bonds, notes, loans and leases payable
due in less than one year 128,665 2,494,328 2,367,664 187,890
Total current liabilities 1,593,359 4,464,052 2,930,150 641,956
Advances from other funds - - - 157,857
Compensated absences payable 317,893 202,971 227,564 27,542
due in more than one year 790,500 41,264,600 12,613,214 6,346,337
Landfill closure costs - - 5,450,974 -
Total noncurrent liabilities 1,108,393 41,467,571 18,291,752 6,531,736
Total liabilities 2,701,752 45,931,623 21,221,902 7,173,692
NET ASSETS
Invested in capital assets, net of related debt 41,241,507 78,446,373 4,660,871 14,895,077
Restricted for:
Capital projects - - 562,920 -
Debt service - - - -
Unrestricted 24,973,988 26,357,473 1,441,131 2,045,053
Total net assets $ 66,215,495 $ 104,803,846 $ 6,664,922 $ 16,940,130

36
Activities
Internal
$ 52,598 $ 200,554 $ 3,394,075 $ 292,654

- - - 8,480
83,590 35,372 1,373,939 -
- - 22,678 -
- - 32,392 -
- - - 3,138,855
125,123 227,508 5,531,178 54,006

261,311 463,434 10,354,262 3,493,995
- - 157,857 -
- - - 7,580,600
5,986 28,927 810,883 48,378
5,965,000 4,180,876 71,160,527 21,037

- - 5,450,974 -
5,970,986 4,209,803 77,580,241 7,650,015
6,232,297 4,673,237 87,934,503 11,144,010
39,093,335 1,651,406 179,988,569 295,779
260 87,244 650,424 -

- 54,045 54,045 290
2,574,590 (266,958) 57,125,277 (5,466,603)
$ 41,668,185 $ 1,525,737 $ 237,818,315 $ (5,170,534)
(Concluded)
37
City of Santa Cruz
Statement of Revenues, Expenses and Changes in Net Assets
Proprietary Funds
Major Funds
OPERATING REVENUES:
Charges for services $ 17,093,669 $ 11,911,269 $ 14,554,018 $ 2,449,202

Use of property 6,600 - - 142,256
Other revenues 220,997 646 66,479 45,171
Total operating revenues 17,321,266 11,911,915 14,620,497 2,636,629
OPERATING EXPENSES:
Personnel services 6,363,195 4,381,128 5,626,822 939,007

Services, supplies, and other charges 6,871,710 5,583,290 5,833,437 809,030
Depreciation and amortization 1,588,898 4,185,445 2,327,888 488,006
Total operating expenses 14,823,803 14,149,863 13,788,147 2,236,043
Operating income (loss) 2,497,463 (2,237,948) 832,350 400,586
NONOPERATING REVENUES (EXPENSES):
Intergovernmental 205,093 353,543 14,480 114,099

Investment earnings 544,449 666,155 201,434 58,992
Interest expense and fiscal charges (31,583) (1,369,942) (659,047) (319,847)
Debt issuance costs - (5,050) (36,806) (9,910)
Gain (loss) on sale of capital assets 211,946 - (97,347) -
Total nonoperating revenues (expenses) 929,905 (355,294) (577,286) (156,666)
Income (loss) before contributions and transfers 3,427,368 (2,593,242) 255,064 243,920
Capital contributions 1,203,658 - - -

Transfers out (41,251) (6,509) (16,441) (6,509)
Total contributions and transfers 1,162,407 (6,509) (16,441) (6,509)
Change in net assets 4,589,775 (2,599,751) 238,623 237,411
NET ASSETS:

Prior period adjustments (Note 15) 500,347 (493,778) - (115,086)
Beginning of the year, as restated 61,625,720 107,403,597 6,426,299 16,702,719
End of year $ 66,215,495 $ 104,803,846 $ 6,664,922 $ 16,940,130

38
Activities
Internal
$ 872,569 $ 839,763 $ 47,720,490 $ 8,617,515

- 450 149,306 -
- 152,267 485,560 184,461
872,569 992,480 48,355,356 8,801,976
92,791 775,394 18,178,337 1,379,168

482,536 790,507 20,370,510 6,457,684
1,225,931 47,797 9,863,965 86,808
1,801,258 1,613,698 48,412,812 7,923,660
(928,689) (621,218) (57,456) 878,316
151,476 31,229 869,920 -

30,403 61,713 1,563,146 90,696
(338,845) (157,151) (2,876,415) (6,445)
(10,256) (10,481) (72,503) -
- - 114,599 -
(167,222) (74,690) (401,253) 84,251
(1,095,911) (695,908) (458,709) 962,567
4,642,021 - 5,845,679 -
(6,384) (1,490) (78,584) (57,018)
4,635,637 (1,490) 5,767,095 (57,018)
3,539,726 (697,398) 5,308,386 905,549
38,128,459 2,266,978 232,662,289 (6,078,861)

- (43,843) (152,360) 2,778
38,128,459 2,223,135 232,509,929 (6,076,083)
$ 41,668,185 $ 1,525,737 $ 237,818,315 $ (5,170,534)
39
City of Santa Cruz
Combining Statement of Cash Flows
Proprietary Funds
Major Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and users $ 17,492,089 $ 12,214,099 $ 14,837,277 $ 2,421,976
Cash received from interfund services provided 464,905 34,102 3,788 24,061
Cash payments to suppliers for goods and services (4,880,947) (4,178,214) (1,552,309) (477,484)
Cash payments to employees for services (6,366,286) (4,375,438) (5,619,444) (944,573)
Cash payments for interfund services used (1,951,505) (1,568,505) (3,908,262) (39,224)
Cash payments to other governments (96,927) (93,441) (112,656) (24,858)
Cash received from (payments to) others 47,350 646 66,479 187,427
Net cash provided (used) by operating activities 4,708,679 2,033,249 3,714,873 1,147,325
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers out (41,251) (6,509) (16,441) (6,509)

Advances from other funds - - - (36,708)
Receipts from other governments 238,857 2,019,845 15,439 105,148
Net cash provided (used) by noncapital financing activities 197,606 2,013,336 (1,002) 61,931
CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES:
Proceeds from capital debt - - 775,308 -

Capital contributions 1,203,658 - - -
Purchase and construction of capital assets (4,616,994) (101,160) (972,786) (334,220)
Principal paid on capital debt (152,820) (2,476,751) (2,183,851) (178,058)
Interest paid on capital debt (32,986) (1,430,203) (675,596) (321,007)
Proceeds from sales of capital assets 270,794 - 73,433 -
Net cash provided (used) by capital and

related financing activities (3,328,348) (4,008,114) (2,983,492) (833,285)
CASH FLOWS FROM INVESTING ACTIVITIES:
Receipts from collections of loans - 258,736 - -

Receipts from collections of interfund advances and loans 7,923 - - -
Advances to other funds - 11,678 - -
Proceeds from sales and maturities of investments - - 347,295 519,452
Purchase of investments - (404,491) (1,077,764) (493,955)
Investment income received 497,068 686,021 181,702 62,055
Net cash provided (used) by investing activities 504,991 551,944 (548,767) 87,552
Net increase (decrease) in cash and cash equivalents 2,082,928 590,415 181,612 463,523
CASH AND CASH EQUIVALENTS:
End of year $ 22,588,590 $ 8,749,435 $ 11,297,116 $ 2,640,019
40
Activities
Internal
$ 874,513 $ 873,420 $ 48,713,374 $ 214,236

499 - 527,355 9,094,324
(418,753) (607,669) (12,115,376) (5,530,675)
(91,813) (775,182) (18,172,736) (1,359,862)
(66,715) (156,189) (7,690,400) (301,243)
(7,966) (2,480) (338,328) -
- 152,717 454,619 184,461
289,765 (515,383) 11,378,508 2,301,241
(6,384) (1,490) (78,584) (52,110)

- - (36,708) -
151,476 - 2,530,765 -
145,092 (1,490) 2,415,473 (52,110)
- - 775,308 -
1,370,575 - 2,574,233 -
(1,112,307) (2,415,691) (9,553,158) -
(120,238) (155,982) (5,267,700) (64,612)
(340,105) (144,971) (2,944,868) (6,445)
- 1,972 346,199 -
(202,075) (2,714,672) (14,069,986) (71,057)
- - 258,736 -
- - 7,923 175,000
- - 11,678 -
500,763 160,681 1,528,191 -
(454,671) (440,776) (2,871,657) -
40,109 63,757 1,530,712 87,913
86,201 (216,338) 465,583 262,913
318,983 (3,447,883) 189,578 2,440,987
1,462,589 4,017,676 47,436,947 1,742,906
$ 1,781,572 $ 569,793 $ 47,626,525 $ 4,183,893
(Continued)
41
City of Santa Cruz
Combining Statement of Cash Flows, Continued
Proprietary Funds
Major Funds
RECONCILIATION OF OPERATING INCOME TO NET

CASH PROVIDED BY OPERATING ACTIVITIES:
Operating income (loss) $ 2,497,463 $ (2,237,948) $ 832,350 $ 400,586

Adjustments to reconcile operating income (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization 1,588,898 4,185,445 2,327,888 488,006
Estimated closure/postclosure costs - - 220,830 -
Changes in assets and liabilities:
Accounts receivable 136,568 336,932 287,047 (3,165)
Prepaid items (7,481) (4,712) (7,764) 99
Inventories (49,941) - - -
Deposits - - - -
Notes and loans receivable 754,600 - - -
Accounts payable and other current liabilities (187,975) (256,870) 39,380 266,092
Due to other funds - - - -
Deferred revenue (28,878) - - -
Deposits payable 1,035 - - 1,372
Compensated absences payable 4,390 10,402 15,142 (5,665)
Total adjustments 2,211,216 4,271,197 2,882,523 746,739
Net cash provided (used) by operating activities $ 4,708,679 $ 2,033,249 $ 3,714,873 $ 1,147,325
NONCASH INVESTING, CAPITAL AND FINANCING

ACTIVITIES:
Decrease in fair value of investments $ (103,011) $ (41,638) $ (66,685) $ (22,066)

Contributions of capital assets from federal government - - - -
42
Activities
Internal
$ (928,689) $ (621,218) $ (57,456) $ 878,316
1,225,931 47,797 9,863,965 86,808

- - 220,830 -
2,443 33,657 793,482 736,092

40 (2,074) (21,892) (378)
- - (49,941) (10,485)
- - - (243,703)
- - 754,600 -
(10,898) 24,169 (126,102) (788)
- - - (44,678)
- - (28,878) -
- - 2,407 -
- - - 887,155
938 2,286 27,493 12,902
1,218,454 105,835 11,435,964 1,422,925
$ 289,765 $ (515,383) $ 11,378,508 $ 2,301,241
$ (24,993) $ (4,889) $ (263,282) $ (14,554)

3,760,283 - 3,760,283 -
(Concluded)
43
44
Fiduciary Fund Financial Statements
Private - Purpose Trust Funds:
Private-purpose trust funds are used to report the trust arrangements under which the principal and
income benefit the Library Joint Powers Authority.
Agency Funds:
Agency funds are used to account for resources held by the City in a custodial capacity. These funds
account for the receipt, temporary investment, and remittance of fiduciary resources to individuals,
private organizations, or other governments.
45
City of Santa Cruz
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2005
Private-
Purpose Agency
Trust Funds Funds
ASSETS
Cash and cash equivalents $ 515,971 $ 1,793,508

Investments - 91,632
Receivables:
Interest receivable 4,618 7,533
Taxes receivable - 515,922
Accounts receivable - 520,779
Due from other governments - 466
Prepaid items - 46,710
Total assets $ 520,589 $ 2,976,550
LIABILITIES
Accounts payable and other current liabilities $ - $ 1,648,507

Due to other governments - 640,532
Deferred revenue - 10,202
Deposits payable - 433,851
Payable to bondholders - 243,458
Total liabilities - $ 2,976,550
NET ASSETS
Held in trust for library programs $ 520,589

46
City of Santa Cruz
Statement of Changes in Fiduciary Net Assets
Fiduciary Funds
Private-
Purpose
Trust Funds
ADDITIONS:
Investment earnings $ 11,266
Total additions 11,266
DEDUCTIONS:
Library programs 12,055
Total deductions 12,055
Change in net assets (789)
NET ASSETS:
Beginning of year 521,378
End of year $ 520,589

47
48
City of Santa Cruz
Index to Notes to the Basic Financial Statements
Page
Note 1 - Summary of Significant Accounting Policies..................................................................................51
A. Reporting Entity..............................................................................................................................51
B. Basis of Accounting and Measurement Focus............................................................................51
C. Use of Restricted/Unrestricted Net Assets.................................................................................54
D. Cash, Cash Equivalents and Investments ...................................................................................54
E. Restricted Cash and Investments with Fiscal Agents................................................................56
F. Prepaid Items ..................................................................................................................................56
G. Inventories .......................................................................................................................................56
H. Interfund Transactions...................................................................................................................56
I. Capital Assets..................................................................................................................................56
J. Interest Payable...............................................................................................................................57
K. Deferred Revenue ...........................................................................................................................58
L. Compensated Absences .................................................................................................................58
M. Bond Premiums, Discounts, and Issuance Costs .......................................................................58
N. Long-Term Debt..............................................................................................................................58
O. Net Assets ........................................................................................................................................59
P. Fund Balances – Reservations and Designations .......................................................................59
Q. Property Taxes ................................................................................................................................59
R. Use of Estimates..............................................................................................................................59
Note 2 - Cash Deposits and Investments .........................................................................................................60
A. Cash Deposits..................................................................................................................................60
B. Investments .....................................................................................................................................60
C. Derivatives.......................................................................................................................................62
D. Reconciliation to Cash, Cash Equivalents, and Investments....................................................63
Note 3 – Receivables ............................................................................................................................................64
Note 4 – Interfund Balances and Transactions ...............................................................................................66
A. Government-Wide Financial Statements ....................................................................................66

B. Fund Financial Statements ............................................................................................................66
Note 5 – Capital Assets ........................................................................................................................................68
A. Government-Wide Financial Statements ....................................................................................68

B. Fund Financial Statements ............................................................................................................71
49
City of Santa Cruz
Index to Notes to the Basic Financial Statements, Continued
Page
Note 6 – Long-Term Debt....................................................................................................................................71
A. Governmental Activities Long-Term Debt .................................................................................71

B. Proprietary Fund Obligations .......................................................................................................77
C. Defeased Debt .................................................................................................................................82
Note 7 – Risk Management and Self Insurance..............................................................................................82
Note 8 – Landfill Closure and Postclosure Costs ...........................................................................................85
Note 9 – Retirement Plans...................................................................................................................................86
A. Pension Plan ....................................................................................................................................86
Note 10 – Post-Employment Retirement Benefits ..........................................................................................87
Note 11 – Commitments and Contingencies ...................................................................................................87
Note 12 – Operating Leases ................................................................................................................................89
Note 13 – Reserved and Designated Fund Balances ......................................................................................90
Note 14 – Deficit Net Assets ...............................................................................................................................91
Note 15 – Prior Period Adjustments..................................................................................................................91
A. Government-Wide Financial Statements...................................................................................91

B. Fund Financial Statements...........................................................................................................92
Note 16 – Subsequent Events .............................................................................................................................92
50
City of Santa Cruz
Notes to Basic Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Santa Cruz, California (City) have been prepared in conformity
with generally accepted accounting principles (GAAP) as applied to governmental agencies. The
Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing
governmental accounting and financial reporting principles. The more significant of the City’s accounting
policies are described below.
A. Reporting Entity
The City was incorporated as a town in 1866 under the laws of the State of California. It became a City in
1876. The City is a charter city administered under a council/manager form of government.
The financial statements present the City and its component units (legally separate entities for which the
City is considered to be financially accountable). Component units include those entities for which the
City may have governing authority or is in a relationship of financial benefit or burden. Component
units also include entities that are fiscally dependent upon the City. The financial activities of these
entities are integrally related to those of the City and, therefore, blended with those of the City. Blending
involves aggregating/merging component unit data and data from the City at the combined financial
statement level.
Based on the above criteria, the accompanying financial statements include the financial activities of the
following entities as blended component units. Separate financial statements of these entities alone can
be obtained from the Finance Department of the City.
City of Santa Cruz Redevelopment Agency - The City of Santa Cruz Redevelopment Agency (Agency) was
formed in 1956 to improve social, physical and economic conditions of the City by constructing a series
of commercial, residential and public buildings in the downtown area. The City's Council members are
the Agency's Directors and have full accountability for the Agency's fiscal matters.
Santa Cruz Public Improvement Financing Corporation - The Santa Cruz Public Improvement Financing
Corporation (Corporation) is a non-profit benefit corporation organized and operated under the laws of
the State of California. The primary purpose of the Corporation is to serve as a financing vehicle for the
City. The City Council has final responsibility for the operations of the Corporation.
B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate
accounting entity. The operations of each fund are accounted for with a separate set of self-balancing
accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as
appropriate. Governmental resources are allocated to and accounted for in individual funds based
upon the purposes for which they are to be spent and the means by which spending activities are
controlled.
51
City of Santa Cruz
Notes to Basic Financial Statements, Continued
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Government - Wide Financial Statements
The City’s Government-Wide Financial Statements include a Statement of Net Assets and a Statement of
Activities and Changes in Net Assets. These statements present summaries of governmental and
business-type activities for the City accompanied by a total column. Fiduciary activities of the City are
not included in these statements.
These basic financial statements are presented on an “economic resources” measurement focus and the
accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets,
as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of
Net Assets. The Statement of Activities presents changes in net assets. Under the accrual basis of
accounting, revenues are recognized in the period in which they are earned while expenses are
recognized in the period in which the liability is incurred.
Certain types of transactions are reported as program revenues for the City in three categories:
¾ Charges for services

¾ Operating grants and contributions
¾ Capital grants and contributions
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund
activities, payables and receivables. All internal balances in the Statement of Net Assets have been
eliminated except those representing balances between the governmental activities and the business-
type activities, which are presented as internal balances and eliminated in the total primary
government column. In the Statement of Activities and Changes in Net Assets, internal service fund
transactions have been eliminated; however, those transactions between governmental and business-
type activities have not been eliminated. The following interfund activities have been eliminated:
¾ Due to/from other funds

¾ Advances to/from other funds
¾ Transfers in/out
For its business type activities, the City applies all applicable GASB pronouncements currently in effect,
as well as Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting
Principles Board (APB) Opinions, and Accounting Research Bulletins (ARB) of the Committee on
Accounting Procedure that do not conflict with or contradict GASB pronouncements.
Governmental Fund Financial Statements
Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues,
Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds
aggregated. An accompanying schedule is presented to reconcile and explain the differences in net
assets as presented in these statements to the net assets presented in the Government-Wide Financial
Statements. The City has presented all major funds that met the applicable criteria.
52
City of Santa Cruz
Governmental Fund Financial Statements, Continued
All governmental funds are accounted for on a spending or "current financial resources" measurement
focus and the modified accrual basis of accounting. Accordingly, only current assets and current
liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in
Fund Balances presents increases (revenues and other financing sources) and decreases (expenditures
and other financing uses) in net current assets. Under the modified accrual basis of accounting,
revenues are recognized in the accounting period in which they become both measurable and available
to finance expenditures of the current period.
Revenues are recorded when received in cash, except for that revenues subject to accrual (generally 60
days after year-end) are recognized when due. The primary revenue sources, which have been treated as
susceptible to accrual by the City, are property tax, sales tax, intergovernmental revenues and other
taxes. Expenditures are recorded in the accounting period in which the related fund liability is incurred.
Deferred revenues arise when potential revenues do not meet both the “measurable” and “available”
criteria for recognition in the current period. Deferred revenues also arise when the government receives
resources before it has a legal claim to them, as when grant monies are received prior to incurring
qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met or when
the government has a legal claim to the resources, the deferred revenue is removed from the Balance
Sheet and revenue is recognized.
The Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is
provided to explain the differences created by the integrated approach of GASB Statement No. 34.
Proprietary Fund Financial Statements
Proprietary Fund Financial Statements include a Statement of Net Assets, a Statement of Revenues,
Expenses and Changes in Net Assets, and a Statement of Cash Flows for each major proprietary fund.
A separate column representing internal service funds is also presented in these statements. However,
internal service balances and activities have been combined with the governmental activities in the
Government-Wide Financial Statements.
Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual
basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included
on the Statement of Net Assets. The Statement of Revenues, Expenses and Changes in Net Assets
presents increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of
accounting, revenues are recognized in the period in which they are earned while expenses are
recognized in the period in which the liability is incurred. In these funds, receivables have been
recorded as revenue and provisions have been made for uncollectible amounts. In accordance with
GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Government
Entities that Use Proprietary Fund Accounting, the City applies all GASB pronouncements currently in
effect as well as FASB Statements and Interpretations, APB Opinions and ARB of the Committee on
Accounting Procedure that do not conflict with or contradict GASB pronouncements.
53
City of Santa Cruz
Proprietary Fund Financial Statements, Continued
Operating revenues in the proprietary funds are those revenues that are generated from the primary
operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses
are those expenses that are essential to the primary operations of the fund. All other expenses are
reported as nonoperating expenses.
Fiduciary Fund Financial Statements
Fiduciary Fund Financial Statements include a Statement of Net Assets and a Statement of Changes in
Fiduciary Net Assets. The City's fiduciary funds represent agency funds and private-purpose trust
funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of
results of operations. The agency funds are accounted for using the accrual basis of accounting. The
private-purpose trust funds are used to account for resources legally held in trust for special purposes.
C. Use of Restricted/Unrestricted Net Assets
When an expense is incurred for purposes for which both restricted and unrestricted net assets are
available, the City’s policy is to apply restricted net assets first.
D. Cash, Cash Equivalents and Investments
The City pools its available cash for investment purposes. Investment income from this pool is allocated
to each fund based on its proportionate share of the pool. Cash and investments not pooled include
bond proceeds held by fiscal agents, and other amounts required to be segregated by bond indentures
or other regulations. Investment income from cash and investments with fiscal agents is credited
directly to the related fund.
Cash and cash equivalents are considered to be amounts in demand deposits, and short-term
investments with original maturity of three months or less from the date of acquisition. For purposes of
both the balance sheet and statements of cash flows, cash and cash equivalents includes not only
currency on hand, but deposits in the City’s cash and investment pool. These deposits have the same
characteristics for the participating funds as demand deposit accounts, in that the funds may deposit
additional cash at any time and also effectively withdraw cash at any time without prior notice or
penalty. Cash and cash equivalents also include restricted cash and money market funds held by fiscal
agents.
54
City of Santa Cruz
D. Cash, Cash Equivalents and Investments, Continued
Investments include unpooled investments in securities having original maturities greater than three
months. In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain
Investments and for External Investment Pools, both these investments and investments included in the
City’s cash and investment pool are stated at fair value, which is based on a quoted market price. This
includes all investments except the City’s investment in the California Local Agency Investment Fund
(LAIF). LAIF determines fair value on its investment portfolio based on market quotations for those
securities where market quotations are readily available and based on amortized cost or best estimate
for those securities where market value is not readily available. The City valued its investments in LAIF
as of June 30, 2005, by multiplying its account balance with LAIF times a fair value factor determined by
LAIF (.997747553). This fair value factor was determined by dividing all LAIF participants’ total
aggregate amortized cost by total aggregate fair value.
The investments made by the City treasurer are limited to those allowable under State statutes as
incorporated into the City’s Investment Policy, dated June 14, 2005, which is more conservative than
that allowed by State statute.
The scope of the investment policy includes all activities of the City and the following reporting entities:
¾ City of Santa Cruz

¾ City of Santa Cruz Redevelopment Agency
¾ Santa Cruz Public Improvement Financing Corporation
Under provisions of this policy, the City is authorized to invest in the following types of investments:
¾ Bonds issued by the City. Purchases of this type shall not exceed five years to maturity, and 15%
of the cost value of the portfolio.
¾ U.S. Treasury bills, notes, bonds, or certificates of indebtedness, or those securities backed by the
full faith and credit of the U.S. Government with maturities not exceeding five years.
¾ Obligations, participations, or other instruments of, or issued by, a Federal Agency or a United
States Government-Sponsored Enterprise with maturities not to exceed five years.
¾ Money Market accounts deposited with a nationally or state-chartered bank.
¾ Bankers’ acceptances with a term not to exceed 180 days maturity and 40 percent of the City’s
portfolio.
¾ Nonnegotiable and nontransferable certificates of deposit issued by a nationally or state-
chartered bank, state or federal association, or by a state-licensed branch of a foreign bank.
Purchases of these certificates of deposit may not exceed 30% of the City’s portfolio, and
purchases in a single issuer in this category shall not exceed 5% of the fair value of the portfolio.
¾ State of California Local Agency Investment Fund as long as the total amount of City and
Agency combined funds invested does not exceed the limit set by LAIF.
¾ Shares of beneficial interest issued by diversified management companies investing in
authorized securities and obligations (e.g., money market mutual funds).
55
City of Santa Cruz
D. Cash, Cash Equivalents and Investments, Continued
¾ Repurchase agreements with primary dealers of the Federal Reserve with specific terms and
conditions. The market value of securities that underlie a repurchase agreement shall be valued
at 102% or greater of the funds borrowed against those securities and shall be valued daily by
the third party custodial agent. Securities that can be pledged for collateral consist only of
investments permitted within this policy with a maximum maturity of five years. Purchases
shall not exceed 90 days to maturity and 15% of the fair value of the portfolio.
Bond proceeds held by fiscal agents to be used only for specific capital outlay, payments of certain long-
term debt and maintaining required reserves are invested in accordance with the requirements and
restrictions of the City’s investment policy and as permitted by specific State statutes, applicable City
ordinance or resolution, and bond indenture requirements.
E. Restricted Cash and Investments with Fiscal Agents
Certain restricted cash and investments are held by fiscal agents for the redemption of bonded debt and
for acquisition and construction of capital projects.
F. Prepaid Items
Certain payments applicable to future accounting periods are recorded as prepaid items. Prepaid items
do not reflect current appropriable resources and, thus, an equivalent portion of fund balance is
reserved.
G. Inventories
Inventories consist of material and supplies which are stated at cost using the first-in, first-out method.
Inventories are recognized as expenditures when consumed rather than when purchased.
H. Interfund Transactions
Activity between funds that is representative of lending/borrowing arrangements outstanding at the

end of the fiscal year is referred to as either “due to/from other funds” (i.e., the current portion of
interfund loans) or “advances to/from other funds” (i.e., the long-term portion of interfund loans).
Any residual balances outstanding between the governmental activities and business-type activities are
reported in the Government-Wide Financial Statements as “internal balances.”
I. Capital Assets
Capital assets are defined by the City as assets having an estimated useful life in excess of one year, and
an initial, individual cost in excess of the capitalization thresholds described below:
Infrastructure $ 25,000
Land improvements 10,000
Buildings and lease improvements 10,000
Machinery and equipment 5,000
Software (if qualified) 5,000
56
City of Santa Cruz
I. Capital Assets, Continued
All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not
available. Donated fixed assets are valued at their estimated fair market value on the date donated.
Assets acquired under capital leases are capitalized in accordance with generally accepted accounting
principles. Major outlays for capital assets and improvements are capitalized as projects are
constructed. Interest accrued during capital assets construction, if any, is capitalized for the business-
type activities and proprietary funds as part of the asset cost. The costs of normal maintenance and
repairs that do not add to the value of the asset or materially extend the asset’s useful life are not
capitalized. Capital assets are reported in the applicable governmental or business-type activities in the
Government-Wide Financial Statements.
Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows:
Land improvements 20 years

Buildings and lease improvements 15-50 years
Water tanks and water mains 30-50 years
Underground sewer lines 50 years
Other infrastructure 5-100 years
Machinery and equipment 5-20 years
Software ( if qualified) 5 years
Assets are grouped by asset type into one of the following accounts – land, land improvements,
infrastructure assets (e.g. roads, bridges, sidewalks, and similar items), buildings (and improvements),
machinery and equipment, lease improvements, software, and construction in progress.
For all infrastructure systems, the City elected to use the Basic Approach as defined by GASB Statement
No. 34 for infrastructure reporting. Estimated historical costs were developed in one of three ways: (1)
historical records; (2) standard unit costs appropriate for the construction/acquisition date; or (3)
present cost indexed by a reciprocal factor of the price increase from the construction/acquisition date
to the current date. The accumulated depreciation, defined as the total depreciation from the date of
construction/acquisition to the current date on a straight line, unrecovered cost method was computed
using industry accepted life expectancies for each infrastructure subsystem. The book value was then
computed by deducting the accumulated depreciation from the estimated historical cost.
J. Interest Payable
In the Government-Wide Financial Statements, interest payable on long-term debt is recognized as the
liability is incurred for governmental fund types and proprietary fund types.
In the Fund Financial Statements, propriety fund types recognize the interest payable when the liability
is incurred.
57
City of Santa Cruz
K. Deferred Revenue
In the Government-Wide Financial Statements, deferred revenue is recognized for transactions for
which revenue has not yet been earned. Typical transactions recorded as deferred revenues in the
Government-Wide Financial Statements are long-term assessments, long-term loans receivable, and
prepaid charges for services.
In the Fund Financial Statements, deferred revenue is recorded when transactions have not yet met the
revenue recognition criteria based on the modified accrual basis of accounting. The City records
deferred revenue for transactions for which revenues have not been earned, or for which funds are not
available to meet current financial obligations. Typical transactions for which deferred revenue is
recorded are grants received but not yet earned or available, interest on interfund advances receivable,
long-term assessments and loans receivable.
L. Compensated Absences
The City has accumulated unpaid regular vacation leave (for all departments) which is accounted for in
accordance with GAAP. The maximum accumulation of vacation leave is limited to the total number of
hours accruable during two years. Employees are paid 100% of their accumulated vacation pay when
they terminate their employment for any reason. Employees are allowed a partial payoff of accumulated
sick leave up to a certain maximum amount.
M. Bond Premiums, Discounts, and Issuance Costs
For governmental type activities, bond premiums and discounts, as well as issuance costs, are
recognized during the current period. Bond proceeds are reported as other financing sources net of the
applicable premium or discount. Issuance costs, whether or not withheld from the actual net proceeds
received, are reported as debt service expenditures.
For business type activities, bond premiums and discounts, as well as issuance costs, are deferred and
amortized over the life of the bonds using a straight-line method. Bonds payable are reported net of the
applicable bond premium or discount. Issuance costs and costs in excess of net assets acquired are
reported as other assets in the accompanying financial statements.
N. Long-Term Debt
Government-Wide Financial Statements - Long-term debt and other long-term obligations are reported as
liabilities in the appropriate activities.
Fund Financial Statements - With the exception of compensated absences and advances from other funds, the
governmental fund financial statements do not present long-term liabilities. However, the long term debt is
shown in the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement
of Net Assets.
58
City of Santa Cruz
O. Net Assets
In the Government-Wide Financial Statements, net assets are classified in the following categories:
Invested in Capital Assets, net of Related Debt – This amount consists of capital assets net of accumulated
depreciation and reduced by outstanding debt that attributed to the acquisition, construction, or
improvement of the assets.
Restricted Net Assets – This amount is restricted by external creditors, grantors, contributors, laws or
regulations of other governments.
Unrestricted Net Assets – This amount is all net assets that do not meet the definition of “invested in
capital assets, net of related debt” or “restricted net assets.”
P. Fund Balances - Reservations and Designations
In the Fund Financial Statements, governmental funds report reservations of fund balances for amounts
that are not available for appropriation or are legally restricted by outside parties for use for a specific
purpose. Designations of fund balances represent tentative management plans that are subject to
change.
Q. Property Taxes
Assessed property values are determined annually by the County Assessor as of March 1, and become a
lien on real property at July 1. Taxes are due November 1 and February 1 and are delinquent if not paid
by December 10 and April 10, respectively. The County bills and collects property taxes and remits them
to the City under the State authorized method of apportioning taxes whereby all local agencies, including
cities, receive from the county their respective shares of the amount of ad valorem taxes collected.
Property tax revenues are recognized when levied provided the measurement and availability criteria
have been met.
R. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions. These estimates and assumptions affect the
reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In
addition, estimates affect the reported amount of expenses. Actual results could differ from these
estimates and assumptions.
59
City of Santa Cruz
2. CASH DEPOSITS AND INVESTMENTS
A. Cash Deposits
The carrying amounts of the City’s time and demand deposits were $1,641,700 at June 30, 2005. Bank
balances before reconciling items were $1,707,418. The total bank balance was collateralized or insured
with securities held by the pledging financial institutions in the City’s name as discussed below.
The California Government Code requires California banks and savings and loan associations to secure
the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in
this manner shall have the effect of perfecting a security interest in such collateral superior to those of a
general creditor. Thus, collateral for cash deposits is considered to be held in the City's name.
The market value of pledged securities must equal at least 110% of the City's cash deposits. California
law also allows institutions to secure city deposits by pledging first trust deed mortgage notes having a
value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash
deposits, which are fully insured up to $100,000 by the Federal Deposit Insurance Corporation.
B. Investments
As of June 30, 2005, the City had the following investments:
Investment Type Fair Value Maturity (Days)
U.S. Treasuries $ 5,018,940 604

U.S. Agencies 45,144,232 660
U.S. Treasury Money Market Mutual Funds 971,833 1
Local Agency Investment Fund 36,393,228 165
Total Fair Value $ 87,528,233
Portfolio Weighted Average Maturity (Days) 444

Portfolio Weighted Average Maturity (Years) 1.22
Interest Rate Risk. The City assumes that callable U.S. Agencies will be called. As of June 30, 2005, the
portfolio contained $9,907,136 of callable U.S. Agencies, representing 11.32% of investments at June 30,
2005. The investment policy limits the purchase of callable U.S. Agency instruments to discreet calls
and those that pay 100% of the principal at the redemption date. In addition, purchases of callable U.S.
Agency instruments are not to exceed 30% of the value of the portfolio. The City is in 100% compliance
with these provisions of the investment policy.
In accordance with its investment policy, the City manages its exposure to declines in fair values by
limiting the weighted average maturity of its investment portfolio to two and-one half (2 ½) years or
less. The City is in 100% compliance with this provision of the investment policy.
60
City of Santa Cruz
2. CASH DEPOSITS AND INVESTMENTS, Continued
B. Investments, Continued
Credit Risk. The City’s investments are rated by the nationally recognized statistical rating
organizations as follows:
Standard
Moody's & Poor's
U.S. Agencies
Federal Farm Credit Bank Aaa AAA
Federal Home Loan Bank Aaa AAA
Federal Home Loan Mortgage Corporation Aaa AAA
Federal National Mortgage Association Aaa AAA
U.S. Treasury Money Market Mutual Funds
Blackrock Provident - Treasury Trust Fund Not Rated AAAm
Fidelity - Treasury Portfolio Aaa AAA
Goldman Sachs - Treasury Only Aaa AAAm
Wells Fargo Advantage - Treasury Plus Aaa AAAm
External Pool
State of California - Local Agency Investment Fund Not Rated Not Rated
The City’s investment policy requires that the management company of mutual funds must have
attained the highest ranking or the highest letter and numerical rating provided by not less than two
nationally recognized statistical rating organizations. The investment in Blackrock Provident U.S.
Treasury Money Market Mutual Fund is rated by only one nationally recognized statistical rating
organization. Blackrock Provident U.S. Treasury Money Market Mutual Fund is approved by the
National Association of Investors Corporation.
Concentration of Credit Risk. The City’s investment policy states that not more than 25% of the portfolio
shall be invested in any one entity or any one instrument to protect the City from concentration of
credit risk, with the following exceptions: U.S. Treasury Obligations and the external investment pool
(State of California – Local Agency Investment Fund). In addition, purchases of mutual funds must not
exceed 20% of the value of the portfolio. Purchases in a single mutual fund may not exceed 10% of the
value of the portfolio. The City is in 100% compliance with these provisions of the investment policy.
The following is a chart of investments that represent five (5) percent or more of total investments:
Percentage of
U.S. Treasuries and Agencies Amount Invested Investments
U.S. Treasury Notes $ 5,018,940 5.73%

Federal Farm Credit Bank 6,521,221 7.45%
Federal Home Loan Bank 12,864,441 14.70%
Federal Home Loan Mortgage Corporation 9,621,745 10.99%
Federal National Mortgage Association 16,136,825 18.44%
Total $ 50,163,172 57.31%
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City of Santa Cruz
B. Investments, Continued
The following is a chart of investments in money market mutual funds:
U.S. Treasury Money Market Percentage of

Mutual Funds Amount Invested Investments
Blackrock Provident - Treasury Trust Fund $ 33,769 0.04%

Fidelity - Treasury Portfolio 777,887 0.89%
Goldman Sachs - Treasury Only 50,825 0.06%
Wells Fargo Advantage - Treasury Plus 109,352 0.12%
Total $ 971,833 1.11%
C. Derivatives
During the year, the City held structured notes. Structured notes are debt securities (other than asset-
backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated
maturity) depend upon one or more indices and/or that have embedded forwards or options. They are
issued by corporations and by government-sponsored enterprises such as the Federal National
Mortgage Association (FNMA) and the Federal Home Loan Bank (FHLB). These securities could be
called prior to maturity, depending on changes in interest rates. As of June 30, 2005, the City held
$9,907,136 in callable securities, which amounted to approximately 11.32% of investments at June 30,
2005.
As of June 30, 2005, the City had $36,393,228 (estimated fair value) invested in LAIF accounts, which
had invested 2.406% of the pool investments in structured notes and asset-backed securities. Asset-
backed securities entitle their purchasers to receive a share of the cash flows from a pool of assets such
as principal and interest repayments from a pool of mortgages or credit card receivables. The City’s
share of structured notes and asset-backed securities due to its holdings in LAIF amounted to
approximately 1.000% of investments at June 30, 2005.
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City of Santa Cruz
D. Reconciliation to Cash, Cash Equivalents, and Investments
Deposits and investments at June 30, 2005 consisted of the following:

Current assets:
Cash and cash equivalents:
Pooled cash deposits $ 1,740,136
Other deposits and cash held by city 37,299
Money market mutual funds available for debt service 5,078
Federal securities 46,855,872
State local agency investment fund 29,554,082
Total cash and cash equivalents 78,192,467
Restricted cash and cash equivalents:

Pooled cash deposits (208,466)
Other cash deposits 73,486
Money market mutual funds held by fiscal agents 966,755
State local agency investment fund 6,839,146
Total restricted cash and cash equivalents 7,670,921
Investments:
Federal securities 91,632
Federal securities held by fiscal agents 3,215,669
Total investments 3,307,301
Total cash, cash equivalents, and investments $ 89,170,689
The following is a summary of cash, cash equivalents, and investments, including restricted cash and
investments with fiscal agents at June 30, 2005:
Government-Wide Statement of Net Assets Statement of

Governmental Business-Type Fiduciary
Activities Activities Total Net Assets Total
Current Assets
Unrestricted assets:
Cash and cash equivalents $ 32,998,297 $ 42,884,691 $ 75,882,988 $ 2,309,479 $ 78,192,467
Investments - - - 91,632 91,632
Total unrestricted assets 32,998,297 42,884,691 75,882,988 2,401,111 78,284,099
Restricted assets:
Cash and cash equivalents 2,929,087 4,741,834 7,670,921 - 7,670,921
Investments with fiscal agents 344,012 2,871,657 3,215,669 - 3,215,669
Total restricted assets 3,273,099 7,613,491 10,886,590 - 10,886,590
Grand Total $ 36,271,396 $ 50,498,182 $ 86,769,578 $ 2,401,111 $ 89,170,689
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City of Santa Cruz
3. RECEIVABLES
Government-Wide Statements
The following is a summary of receivables net of allowances for uncollectible amounts at June 30, 2005:
Government-Wide Statement of Net Assets Statement of

Governmental Business-Type Fiduciary
Activities Activities Total Net Assets Total
Interest receivable $ 558,642 $ 883,403 $ 1,442,045 $ 12,151 $ 1,454,196

Taxes receivable 3,177,698 - 3,177,698 515,922 3,693,620
Accounts receivable, net 1,214,838 4,599,467 5,814,305 520,779 6,335,084
Due from other governments 2,683,619 127,448 2,811,067 466 2,811,533
Notes receivable 7,181,879 473,336 7,655,215 - 7,655,215
Loans receivable 1,131,161 - 1,131,161 - 1,131,161
Intergovernmental receivable - 19,297,107 19,297,107 - 19,297,107
Total $ 15,947,837 $ 25,380,761 $ 41,328,598 $ 1,049,318 $ 42,377,916
Fund Financial Statements
At June 30, 2005, the Fund Financial Statements show the following notes, loans and intergovernmental
receivables:
Notes Receivable in the General Fund of $2,317,885 (net of an allowance for uncollectible amounts of
$365,871) consist of a note from Neary Lagoon Partners in the amount of $78,800; a promissory note from
Santa Cruz Shaffer Road Investors for housing developments in the amount of $206,763; a loan to the River
Street Shelter for repairs in the amount of $20,100; a loan to First Night Santa Cruz for $20,000; Harvey West
Assessment District notes in the amount of $88,330; employee computer loans in the amount of $62,033;
various notes for housing improvement activities in the Housing In-Lieu program of $267,072; and a note for
the sale of land to the Redevelopment Agency of the City of Scotts Valley in the amount of $1,940,658. The
repayment of the Redevelopment Agency of the City of Scotts Valley note receivable consists of annual
principal and interest payments of $206,594 through June 1, 2018. The employee computer loan program
provides two-year loans to employees with a simple interest rate of 5%, payable through payroll deductions.
Some notes are secured by a deed of trust.
The Redevelopment Agency Fund notes receivables of $3,714,571 (net of an allowance of $483,740) are loans
for low/moderate income housing projects. There are two types of loan repayment for these notes: due upon
sale or transfer and lump sum payment at maturity. Interest rates range from 0% to 7%. The notes are all
secured by a deed of trust.
Notes receivable in the Parks and Recreation special revenue fund of $491,800 pertain to a promissory note
for housing developments – development impact fees. There is no interest on this promissory note. Loan
repayment is deferred to a future date when monthly repayment will begin. The note is secured by a
personal guarantee from Santa Cruz Shaffer Road Investors, LP, a California limited partnership.
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City of Santa Cruz
3. RECEIVABLES, Continued
Fund Financial Statements, Continued
The notes receivable in the Housing and Community Development special revenue fund of $657,623 (net of
an allowance of $1,319,627) consist of loans for buildings damaged in the 1989 earthquake. There are two
types of loan repayments: monthly repayment and deferred to a future date when monthly repayment will
begin. The interest rate on these notes is 3%. The notes are all secured by a deed of trust.
Notes receivable in the enterprise funds are made up of four notes totaling $473,336. $46,316 is due from the
City of Scotts Valley for water and sewer connection fees with annual payments scheduled through the year
2009 at an interest rate of 5%. $25,962 is due from the County of Santa Cruz for its share of improvements to
the City's wastewater treatment plant with annual payments scheduled through the year 2006 at an interest
rate of 6.3%. These two notes are unsecured. The remaining two notes, both due from Neary Lagoon
Partners, total $401,058 for water system connection fees pertaining to a low-moderate income housing
project. These notes do not bear interest, and repayment is deferred until 2019.
Loans Receivable in other governmental funds of $1,131,161 (net of an allowance of $5,200,318) consist of
loans for rehabilitation of low/moderate income housing. The loans are made with Federal funds from the
Department of Housing and Urban Development (HUD). The City administers these funds for HUD. There
are four types of loan repayment schedules: monthly installments, due upon sale or transfer, deferred to a
future date when monthly repayment will begin, and no repayment if the property remains in use for
low/moderate income housing for a specified time period. Interest rates range from 0% to 7%. The loans are
all secured by a deed of trust on the property being rehabilitated.
Intergovernmental Receivables in the enterprise funds total $19,297,107 and are comprised of various
amounts due from local, state, and federal governmental agencies. $926,727 of the total pertains to
reimbursements resulting from various construction and improvement projects. The remaining $18,370,380
($1,089,801 due within one year and $17,280,579 due in more than one year) is owed by the County of Santa
Cruz for its share of a State Water Resources Board loan for wastewater treatment plant upgrades.
Payments of interest and principal from the County of Santa Cruz are due in annual installments of
$1,604,172, at an interest rate of 2.8%, with the final payment due August 1, 2018.
Allowance for uncollectible notes and loans - When considerable uncertainty exists as to the collectibility of
a note (as determined by management) due to the terms of the loan or other factors, it is offset by an
allowance for uncollectible notes.
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City of Santa Cruz
4. INTERFUND BALANCES AND TRANSACTIONS
A. Government-Wide Financial Statements
Long-Term Internal Balances
At June 30, 2005, the City had the following long-term internal balances:
Internal Balances
Payable
Business-Type
Activities
Internal Balances Receivable
Governmental Activities $ 17,178
This balance consists of the net amount of long-term advances between the Redevelopment Agency
Fund and the Water, Wastewater and Parking enterprise funds. The advances are to fund various
projects.
Transfers
The City had the following transfers for the year ending June 30, 2005:
Transfers In
Governmental
Activities
Transfers Out
Business-Type Activities $ 78,584
Transfers are made from the enterprise funds to the General Capital Improvement capital projects fund
to finance a share of project expenses or debt service costs for projects from which those funds receive
benefit.
B. Funds Financial Statements
The City had the following due to/from other funds as of June 30, 2005:
Due from Other Funds

Non-Major
Due to Other Funds
General Governmental
Fund Funds Total
General Fund $ - $ 8,097 $ 8,097

Non-Major Governmental Funds 28,146 - 28,146
Internal Service Funds 8,480 - 8,480
Total $ 36,626 $ 8,097 $ 44,723
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City of Santa Cruz
4. INTERFUND BALANCES AND TRANSACTIONS, Continued
B. Funds Financial Statements, Continued
The outstanding balances between funds result mainly from a timing difference between when interest
revenues are earned and when they are received for amounts which are transferred from the earning
fund to the General Fund.
Long-Term Advances
The City had the following long-term advances as of June 30, 2005:
Advances to Other Funds

Advances from Other
Redevelopment Water Wastewater

General Agency Enterprise Enterprise
Fund Fund Fund Fund Total
Funds
Redevelopment Agency Fund $ 654,066 $ - $ 29,557 $ - $ 683,623

Non-Major Governmental Funds 530,000 - - 111,122 641,122
Parking Enterprise Fund - 157,857 - - 157,857
Total $ 1,184,066 $ 157,857 $ 29,557 $ 111,122 $ 1,482,602
Long-term advances were made 1) from the General Fund and the Water enterprise fund to the
Redevelopment Agency Fund to finance redevelopment projects, 2) from the General Fund to the
Housing and Community Development special revenue fund as a deposit for matching grant funds, 3)
from the Wastewater enterprise fund to the General Capital Improvement capital projects fund to
finance a project at the City’s corporation yard, and 4) from the Redevelopment Agency Fund to the
Parking enterprise fund to finance two parking capital improvements projects.
Transfers In/Out
The City had the following transfers for the year ending June 30, 2005:
Transfers In
Non-Major
General Governmental
Fund Funds Total
General Fund $ - $ 850,970 $ 850,970
Non-Major Governmental Funds 500,718 441,391 942,109
Transfers Out
Enterprise Funds:
Water 2,943 38,308 41,251
Wastewater - 6,509 6,509
Refuse - 16,441 16,441
Parking - 6,509 6,509
Storm Water - 6,384 6,384
Golf Course - 1,490 1,490
Internal Service Funds 31,207 25,811 57,018
Total $ 534,868 $ 1,393,813 $ 1,928,681
Transfers are used to 1) move interest revenues from the earning fund to the General Fund, 2) move
revenues from the General Fund and other funds to the General Capital Improvement capital projects
fund for financing various capital projects, and 3) to move unrestricted tax revenues from the General
Capital Improvement capital projects fund to the General Fund as an operating subsidy.
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City of Santa Cruz
5. CAPITAL ASSETS
At June 30, 2005 the City’s capital assets consisted of the following:
Capital Assets:
Capital assets, not being depreciated:
Land $ 44,188,313 $ 11,891,526 $ 56,079,839
Construction in progress 2,519,948 13,362,141 15,882,089
Subtotal, capital assets, not being depreciated 46,708,261 25,253,667 71,961,928
Capital assets, being depreciated:

Land improvements 5,290,639 1,510,635 6,801,274
Infrastructure 167,207,541 171,294,779 338,502,320
Buildings 35,421,568 159,491,728 194,913,296
Machinery and equipment 10,156,196 19,382,706 29,538,902
Lease improvements 724,114 70,000 794,114
Software 1,056,070 555,258 1,611,328
Subtotal, capital assets, being depreciated 219,856,128 352,305,106 572,161,234
Total capital assets 266,564,389 377,558,773 644,123,162
Less accumulated depreciation:

Land improvements (1,110,161) (502,764) (1,612,925)
Infrastructure (97,782,746) (69,781,306) (167,564,052)
Buildings (8,183,899) (48,757,886) (56,941,785)
Machinery and equipment (6,841,294) (10,002,160) (16,843,454)
Lease improvements (222,999) (8,634) (231,633)
Software (664,427) (223,390) (887,817)
Total accumulated depreciation (114,805,526) (129,276,140) (244,081,666)

Total capital assets, net $ 151,758,863 $ 248,282,633 $ 400,041,496
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City of Santa Cruz
5. CAPITAL ASSETS, Continued
A. Government-Wide Financial Statements, Continued
The following is a summary of capital assets for governmental activities:
Prior Period
Balance Adjustments Balance
July 1, 2004 Additions Deletions (Note 15) June 30, 2005
Governmental Activities:

Land $ 43,391,660 $ - $ (1,870) $ 798,523 $ 44,188,313
Construction in progress 8,582,123 866,672 (6,928,847) - 2,519,948
Subtotal, capital assets,

not being depreciated 51,973,783 866,672 (6,930,717) 798,523 46,708,261

Land improvements 2,322,108 3,001,531 (33,000) - 5,290,639
Infrastructure 160,705,554 5,441,336 (195,583) 1,256,234 167,207,541
Buildings 31,843,990 3,510,308 - 67,270 35,421,568
Machinery and equipment 9,225,617 1,056,069 (125,490) - 10,156,196
Lease improvements 724,114 - - - 724,114
Software 1,021,592 34,478 - - 1,056,070
Subtotal, capital assets,

being depreciated 205,842,975 13,043,722 (354,073) 1,323,504 219,856,128
Total capital assets 257,816,758 13,910,394 (7,284,790) 2,122,027 266,564,389

Land improvements (993,164) (136,960) 19,963 - (1,110,161)
Infrastructure (92,937,238) (4,626,773) 137,854 (356,589) (97,782,746)
Buildings (7,517,899) (743,719) - 77,719 (8,183,899)
Machinery and equipment (6,257,745) (702,664) 119,115 - (6,841,294)
Lease improvements (149,085) (73,914) - - (222,999)
Software (526,792) (137,635) - - (664,427)
Total accumulated depreciation (108,381,923) (6,421,665) 276,932 (278,870) (114,805,526)
Total capital assets, net $ 149,434,835 $ 7,488,729 $ (7,007,858) $ 1,843,157 $ 151,758,863
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City of Santa Cruz

A. Government-Wide Financial Statements, Continued
Depreciation expense of the governmental activities for the year ended June 30, 2005 was $6,421,665 and
was distributed among City departments as follows:
General government:
City Council $ 6,781
City Clerk 17,370
Human Resources 23,758
Finance 218,192
Non-Departmental 136,060
Internal service funds 86,808
Total general government 488,969
Public safety:
Police 379,135
Fire 214,348
Total public safety 593,483
Parks and Recreation 1,997,615

Library 26,800
Public Works 3,222,325
Planning and Community Development 17,759
Redevelopment 74,714
Total depreciation expense $ 6,421,665
The following is a summary of capital assets for business-type activities:

Prior Period
Balance Adjustments Balance
July 1, 2004 Additions Deletions (Note 15) June 30, 2005
Business-type Activities:
Land $ 11,939,799 $ - $ (11,000) $ (37,273) $ 11,891,526
Construction in process 9,027,793 7,198,945 (2,864,597) - 13,362,141
Subtotal, capital assets, not being depreciated 20,967,592 7,198,945 (2,875,597) (37,273) 25,253,667
Land improvements 1,236,496 274,139 - - 1,510,635
Infrastructure 164,722,864 7,111,925 (155,507) (384,503) 171,294,779
Buildings 159,392,371 99,357 - - 159,491,728
Machinery and equipment 18,667,397 1,366,412 (651,103) - 19,382,706
Lease improvements 70,000 - - - 70,000
Software 418,237 137,021 - - 555,258
Subtotal, capital assets, being depreciated 344,507,365 8,988,854 (806,610) (384,503) 352,305,106
Total capital assets 365,474,957 16,187,799 (3,682,207) (421,776) 377,558,773
Land improvements (439,457) (63,307) - - (502,764)
Infrastructure (65,769,464) (4,388,916) 107,657 269,416 (69,781,307)
Buildings (45,247,608) (3,510,278) - - (48,757,886)
Machinery and equipment (8,676,030) (1,795,240) 469,110 - (10,002,160)
Lease improvements (5,834) (2,800) - - (8,634)
Software (119,965) (103,424) - - (223,389)
Total accumulated depreciation (120,258,358) (9,863,965) 576,767 269,416 (129,276,140)
Total capital assets, net $ 245,216,599 $ 6,323,834 $ (3,105,440) $ (152,360) $ 248,282,633
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City of Santa Cruz
Business-type activities depreciation expense for the year ended June 30, 2005 is as follows:
Water $ 1,588,898
Wastewater 4,185,445
Refuse 2,327,888
Parking 488,006
Storm Water 1,225,931
Golf Course 47,797
Total depreciation expense $ 9,863,965
The funds financial statements do not present general government capital assets but they are shown in
the Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net
Assets.
6. LONG-TERM DEBT
A. Governmental Activities Long-Term Debt
Classification
Amount Amount
Balance Accreted Balance Due Within Due in More
July 1, 2004 Interest Additions Retirements June 30, 2005 One Year Than One Year
Compensated absences $ 2,126,609 $ - $ 1,424,534 $ (1,453,048) $ 2,098,095 $ - $ 2,098,095

Claims and judgments 9,832,300 - 1,711,455 (824,300) 10,719,455 3,138,855 7,580,600
Certificates of participation 4,513,661 - - (136,553) 4,377,108 137,985 4,239,123
General obligation bonds 7,228,152 124,027 - (168,798) 7,183,381 177,616 7,005,765
Notes payable 1,500,000 - 68,302 (233,360) 1,334,942 259,986 1,074,956
Notes payable-County-RDA 124,706 - - (124,706) - - -
Tax allocation bonds payable 2,695,000 - 5,245,000 (2,695,000) 5,245,000 120,000 5,125,000
Capital lease obligations 1,765,216 - 680,691 (679,272) 1,766,635 518,722 1,247,913
Other long-term liabilities 920,263 - 206,180 (96,639) 1,029,804 86,627 943,177
Total $ 30,705,907 $ 124,027 $ 7,937,432 $ (6,411,676) $ 33,754,420 $ 4,439,791 $ 29,314,629
Compensated absences and Claims and judgments
As shown in the table above, the total amount outstanding at June 30, 2005 was $2,098,095 for
compensated absences and $10,719,455 for claims and judgments. In prior years, compensated absences
have been liquidated by the general fund. Claims and judgments are paid by the separate internal
service funds for each liability.
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City of Santa Cruz
6. LONG-TERM DEBT, Continued
A. Governmental Activities Long-Term Debt, Continued
Certificates of Participation
Certificates of Participation payable at June 30, 2005, are comprised of the following individual issues:
Redevelopment Agency certificates of participation are part of the $2,080,000 Golf and Redevelopment
Agency Certificates described under enterprise debt. The outstanding balance relating to the Agency at
June 30, 2005 was $282,108. The Agency amount due within one year is $52,985 and amount due in more
than one year is $229,123. For more information refer to the City of Santa Cruz Redevelopment Agency
Basic Financial Statements.
The City issued certificates in April 2001, in the amount of $4,415,000, to be used for the Civic Center
Improvement Project. The certificates provide funds to finance the acquisition, construction and
improvement of the project. The obligation of the City to make the lease payments does not constitute a
debt of the City or the State of California or of any political subdivision thereof within the meaning of
any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which
the City or the State or any political subdivision thereof is obligated to levy or pledge any form of
taxation. Annual payments are $75,000 - $270,000. The certificates bear interest at 4.6% - 5% and are
payable semi-annually on April 1 and October 1 of each year, commencing October 1, 2001. Principal is
payable annually on April 1 through the year 2031. The balance outstanding at June 30, 2005 was
$4,095,000. The amount due within one year is $85,000 and amount due in more than one year is
$4,010,000.
The annual debt service requirements on the certificates of participation at June 30, 2005, were as
follows:
For the Year
Ending
June 30, Principal Interest Total
2006 $ 137,985 $ 210,684 $ 348,669
2007 142,984 204,707 347,691
2008 150,849 198,448 349,297
2009 153,713 191,844 345,557
2010 161,577 185,052 346,629
2011-2015 575,000 838,575 1,413,575
2016-2020 715,000 692,700 1,407,700
2021-2025 910,000 498,250 1,408,250
2026-2030 1,160,000 247,250 1,407,250
2031 270,000 13,500 283,500
Total $ 4,377,108 $ 3,281,010 $ 7,658,118
General Obligation Bonds
In March 1999, the City issued $6,998,473 in general obligation bonds. The proceeds were used to
upgrade fire stations, acquire open space property, and construct a community park and a fire
administration facility. Annual payments ranging from $142,625 to $354,010 began September 1, 2000,
and continue through September 1, 2029; interest ranges from 3.5% to 8.0%. The bonds are subject to
early redemption at the option of the City beginning in 2008.
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City of Santa Cruz
General Obligation Bonds, Continued
The bonds are secured by and will be paid with annual ad valorem tax levies on all property subject to
taxation within the City. The bonds were issued in two series. Series A consisted of $4,500,000 of
general obligation bonds, and Series B consisted of $2,498,473 of general obligation bonds - capital
appreciation bonds. During fiscal year ended June 30, 2005, $168,798 principal payments were made on
the bonds. The balance outstanding of Series A bonds at June 30, 2005 was $4,200,000. The carrying
value of the Series B bonds was increased to $2,983,381 in order to reflect the accreted interest due at
June 30, 2005. The total balance outstanding at June 30, 2005 was $7,183,381.
The annual debt service requirements on the general obligation bonds at June 30, 2005, were as follows:
For the Year

Ending
2006 $ 177,616 $ 227,434 $ 405,050
2007 185,577 229,873 415,450
2008 193,004 233,546 426,550
2009 199,781 237,617 437,398
2010 205,937 241,998 447,935
2011-2015 1,091,891 1,269,296 2,361,187
2016-2020 1,232,605 1,374,506 2,607,111
2021-2025 1,413,797 1,468,703 2,882,500
2026-2030 1,666,214 1,506,036 3,172,250
Sub-total 6,366,422 6,789,009 13,155,431
Accreted Interest 816,959 - 816,959

Total $ 7,183,381 $ 6,789,009 $ 13,972,390
Notes Payable
In July 2001, the Redevelopment Agency received HELP Loan funds, from the State of California, to be
used to finance the acquisition, development, demolition of existing structures, and the construction of a
multifamily rental apartment complex in the Beach Target Area. The proceeds for the note are to be
repaid by July 2011 with an interest rate of 3%. The balance outstanding at June 30, 2005, was
$1,334,942.
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City of Santa Cruz
Tax Allocation Bonds
In October 2004, The Redevelopment Agency issued $5,245,000 in tax allocation bonds. The proceeds
were used, together with other funds, to redeem, on December 1, 2004, all of the Agency’s outstanding
1996 Merged Earthquake Recovery and Reconstruction Project Area Tax Allocation Refunding Bonds, in
the amount of $2,505,000, and to raise additional funds for programs, projects and activities related to the
Redevelopment Project. Annual principal payments of $120,000 - $305,000 will be made through October,
2031; interest ranges from 2.50% to 4.625%. The 2004 Tax Allocation Bonds will be secured by a pledge of
and first lien of the tax increment revenues derived from the Redevelopment Project, net of certain
amounts which are payable to other taxing agencies. The balance outstanding at June 30, 2005 was
$5,245,000.
The annual debt service requirements on the tax allocation bonds at June 30, 2005, were as follows:
For the Year

Ending
2006 $ 120,000 $ 209,016 $ 329,016
2007 120,000 206,016 326,016
2008 125,000 202,954 327,954
2009 130,000 199,766 329,766
2010 130,000 196,516 326,516
2011-2015 725,000 917,290 1,642,290
2016-2020 870,000 769,475 1,639,475
2021-2025 1,065,000 570,259 1,635,259
2026-2030 1,335,000 303,413 1,638,413
2031-2032 625,000 29,253 654,253
Total $ 5,245,000 $ 3,603,958 $ 8,848,958
Lease Obligations
In December 1998, the City acquired a new telecommunications system under a capital lease agreement
payable in semi-annual installments of $87,706 through December 2005. The interest rate is 4.85%. This
lease has been allocated to the General Fund, all enterprise funds, the Equipment Services Internal
Service Fund, and the Agency. The balance outstanding at June 30, 2005 was $85,532.
In August 1999, the City acquired a new information technology system under a capital lease agreement
payable in semi-annual installments of $138,444 through August 2005 with an interest rate of 5%. The
lease has been allocated to the General Fund, the Water, Wastewater, and Refuse enterprise funds, and
the Agency. The balance outstanding at June 30, 2005 was $13,755.
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City of Santa Cruz
Lease Obligations, Continued
In August 2001, the City acquired miscellaneous vehicles, equipment and computer software under a
capital lease agreement payable in semi-annual installments of $331,597 though August 2006, with an
interest rate of 4.46%. This lease has been allocated to the General Fund, the Water, Wastewater, Refuse
and Parking enterprise funds, and the Agency. The balance outstanding at June 30, 2005 was $416,604.
In June 2002, the City acquired land under a capital lease agreement with Zion’s First National Bank in
the amount of $765,000. The agreement is payable in semi-annual installments of $61,362 through 2021,
with a 4.88% interest rate through January 2007 and a variable interest rate thereafter. From January
2007 through January 2021, the interest is to be recomputed, for each interest period, based on 90% of the
current Index Rate. The balance outstanding at June 30, 2005 was $670,744.
In July 2004, the City entered into a five year capital lease agreement to obtain financing in the amount of
$580,000 for the purchase of a seventy-five foot aerial fire truck to replace a 1979 Crown Telesquirt unit.
The first interest payment of $9,657 is due in February, 2005, with annual installment payments of
$125,781 beginning in August 2005 and ending in August 2009. Interest is at the rate of 3.33% and the
payments will be made from the General Fund. The balance outstanding at June 30, 2005 was $580,000.
The annual debt service requirements on the capital leases at June 30, 2005, were as follows:
For the Year

Ending
2006 $ 518,722 $ 61,211 $ 579,933
2007 282,285 50,340 332,625
2008 145,500 41,643 187,143
2009 150,834 36,309 187,143
2010 156,368 30,775 187,143
2011-2015 200,272 106,538 306,810
2016-2020 254,147 52,663 306,810
2021-2025 58,507 2,855 61,362
Total $ 1,766,635 $ 382,334 $ 2,148,969
Other Long-Term Liabilities
The Redevelopment Agency is obligated under three separate Owner Participation Agreements (OPA),
for various portions of the $1,250,000 Chestnut Street Special Assessment District Debt. Under the first
OPA the Agency owes $301,941 as of June 30, 2005. Under the second OPA, the Agency owes $35,991.
Under a third OPA the Agency assumed responsibility for an additional 48.68% of the Special
Assessment Debt contingent upon the availability of tax increment. The Agency is liable for principal in
the amount of $691,872 and interest, currently estimated at $80,624. The total of $1,029,804 will be paid
with annual installments through 2011, as follows:
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City of Santa Cruz
Other Long-Term Liabilities, Continued
For the Year

Ending
2006 $ 42,315 $ 19,083 $ 61,398
2007 46,313 16,220 62,533
2008 50,487 13,358 63,845
2009 54,825 10,359 65,184
2010 59,460 7,088 66,548
2011-2015 350,506 3,680 354,186
2016-2020 87,966 - 87,966
Total $ 691,872 $ 69,788 $ 761,660
Conduit Debt
During the fiscal year 2003, the Agency issued variable rate demand multifamily housing revenue
bonds to provide funding for loans made to Santa Cruz Shaffer Road Investors L.P., and 1010 Pacific
Investors L.P. (both California limited partnerships). The revenue bonds were used to finance a portion
of the costs of building a 206-unit multifamily residential development and for the rehabilitation and
equipping of a 113-unit multifamily residential development within the city limits. The housing
facilities are to be occupied by persons of low and very low income, to the extent required by federal tax
law.
The bonds were issued under a Trust Indenture, dated July 1, 2002 between the Agency, and Wells
Fargo Bank, National Association, as trustee. For the Shaffer Road Apartments, the Agency issued 2002
Series A bonds and 2002 Series A-T in the amounts of $29,925,000 and $2,750,000 respectively. For the
1010 Pacific Avenue Apartments, 2002 Series B bonds in the amount of $21,650,000 were issued. The
amount outstanding as of June 30, 2005 is $54,325,000. The bonds mature on August 15, 2035.
The bonds and interest are limited obligations of the Agency, payable solely from the “trust estate”
which is specifically assigned and pledged to such purposes to the extent provided in the Official
Statements. The trust estate includes the Agency’s interest in the loans made to the developer, including
rights to receive payments on the loans, and rights to certain bond proceeds and related revenues. The
Official Statements contain more information regarding the trust estate.
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City of Santa Cruz
B. Proprietary Fund Obligations
A summary of long-term debt transactions of the City for the enterprise funds for the year ended June 30,
2005, is as follows:
Classification
Amount Amount
Balance Balance Due Within Due in More
July 1, 2004 Additions Retirements June 30, 2005 One Year then One Year
Compensated absences $ 783,390 $ 573,746 $ (546,254) $ 810,883 $ - $ 810,883
Landfill closure costs 5,230,144 220,830 - 5,450,974 - 5,450,974
Certificates of participation 29,831,339 - (1,168,447) 28,662,892 1,782,015 26,880,877
Revenue bonds payable 4,820,000 - (140,000) 4,680,000 150,000 4,530,000
Notes payable 42,593,574 - (2,353,105) 40,240,469 2,418,133 37,822,336
Lease obligations 3,939,187 775,308 (1,606,151) 3,108,344 1,181,030 1,927,314
Total $ 87,197,634 $ 1,569,884 $ (5,273,366) $ 82,953,562 $ 5,531,178 $ 77,422,384
Compensated absences
As shown in the table above, the total amount outstanding at June 30, 2005 was $810,883 for
compensated absences. In prior years, compensated absences have been liquidated primarily by
enterprise funds.
Landfill closure costs
As shown in the table above, the total amount outstanding at June 30, 2005 was $5,450,974 for landfill
closure costs. Refer to Note 8 for landfill closure details.
Certificates of Participation
Certificates of Participation payable at June 30, 2005, are comprised of the following individual issues:
Santa Cruz Golf and Redevelopment Agency Certificates, issued in November, 1998, in the amount of
$2,080,000, was used to refinance an issue used for improvements to the City's golf course and projects
within the City's redevelopment plan areas. Annual payments of $125,000 to $215,000 will be made
through May 2010; interest ranges from 3.5% to 4.25%. Annual debt service is covered by lease
payments made by the City and secured by covenants made by the City in a lease with the Corporation.
The balance outstanding relating to the Golf Course fund at June 30, 2005, was $702,892.
Santa Cruz Parking Certificates issued in November 1998, in the amount of $7,955,000, were used for the
construction of a second parking structure in the downtown area. The certificates are a liability of the
Parking Enterprise Fund. Annual payments are $155,000 - $445,000. The certificates bear interest at 3.5%
to 4.9%. Interest is payable semi-annually on May 1 and November 1 and principal is payable annually
on May 1 through the year 2019. The balance outstanding at June 30, 2005, was $6,530,000.
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City of Santa Cruz
B. Proprietary Fund Obligations, Continued
Certificates of Participation, Continued
Santa Cruz Storm Water Certificates, issued in October 1999, in the amount of $6,665,000, was issued to
finance the City’s share of the San Lorenzo River Flood Control and Beautification Project and to repay
the Wastewater Enterprise Fund for earlier loans to rehabilitate and retrofit bridges across the San
Lorenzo River. Annual payments of $105,000 to $250,000 will be made through October 2019; interest
ranges from 4.0% to 5.6%. The balance outstanding at June 30, 2005, was $6,090,000.
Santa Cruz Refuse Certificates, issued in October 1999, in amount of $4,345,000, were issued to repay the
Wastewater Enterprise Fund for earlier loans to construct a tunnel at the City’s landfill and a leachate line
from the landfill to the City’s sewer treatment plant. Annual payments of $100,000 to $245,000 will be
made through October 2020; interest ranges from 4.0% to 5.625%. The balance outstanding at June 30,
2005, was $3,820,000.
Santa Cruz Refuse Certificates issued in March 2001, in the amount of $7,500,000, were used in the
purchase of certain property and improvements, and to finance the acquisition, construction and
improvement of the project. The installment payments are payable solely from and secured by a first
pledge of certain revenues of the City’s Refuse Enterprise Fund. Annual payments are $45,000 to
$720,000. The certificates bear interest at 3.5% to 4.875%. Interest represented by the certificates will be
payable semi-annually on April 1 and October 1 of each year, commencing October 1, 2001. Principal is
payable annually on October 1 through the year 2021. The certificates are subject to optional and
mandatory prepayment. The balance outstanding at June 30, 2005, was $6,255,000.
Santa Cruz Refuse Certificates, issued in May 2004, in the amount of $1,590,000 was used to refinance the
Santa Cruz Landfill Certificates issued in 1993. Annual payments of $495,000 to $545,000 will be made
through 2008: Interest ranges from 4.0 % to 5.375%. The City is obligated, subject to abatement, under the
Agreement to pay the certificate payments from any source of legally available funds. The City is
currently liable and may become liable on other obligations payable from general revenues, some of
which may have priority over the lease payments. The balance outstanding relating to the Refuse Fund
at June 30, 2005, was $1,565,000.
Santa Cruz Golf Agency Certificates issued in May 2004, in the amount of $3,700,000 was used to finance
the acquisition and construction of improvements to the DeLaveaga Golf Course. Annual payments of $
90,000 to $ 260,000 will be made through 2029; interest ranges from 4.0% to 5.375%. The City is obligated,
subject to abatement, under the Agreement to pay the certificate payments from any source of legally
available funds. The City is currently liable and may become liable on other obligations payable from
general revenues, some of which may have priority over the lease payments. The balance outstanding
relating to the Golf Course Fund at June 30, 2005 was $3,700,000.
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City of Santa Cruz
Certificates of Participation, Continued
The annual debt service requirements on the certificates of participation at June 30, 2005, were as follows:
For the Year

Ending
2006 $ 1,782,015 $ 1,359,028 $ 3,141,043
2007 1,862,015 1,285,517 3,147,532
2008 1,934,151 1,208,295 3,142,446
2009 1,446,287 1,131,327 2,577,614
2010 973,424 1,085,307 2,058,731
2011-2015 4,505,000 4,804,895 9,309,895
2016-2020 5,740,000 3,556,565 9,296,565
2021-2025 6,245,000 1,947,665 8,192,665
2026-2030 4,175,000 506,847 4,681,847
Total $ 28,662,892 $ 16,885,446 $ 45,548,338
Annual principal and interest requirements for the certificates of participation are apportioned to the
various funds based on the percentage share of certificate proceeds.
Revenue Bonds Payable
Revenue Bonds payable at June 30, 2005, is comprised of a $5,660,000 1994 Series B Sewer Revenue Bond
payable in annual installments of $105,000 to $380,000 through November 2023; interest ranges from 5.0%
to 5.7%. Annual debt service is payable solely from and secured by a lien on net revenues of the City's
sewer system. The City has formally agreed to raise sufficient net revenues to provide at least a 125%
coverage of the annual debt service of this issue. The balance outstanding at June 30, 2005, was
$4,680,000.
The annual debt service requirements on the revenue bonds at June 30, 2005, were as follows:
For the Year

Ending
2006 $ 150,000 $ 257,483 $ 407,483
2007 155,000 249,780 404,780
2008 165,000 241,537 406,537
2009 175,000 232,610 407,610
2010 180,000 223,112 403,112
2011-2015 1,060,000 949,244 2,009,244
2016-2020 1,385,000 605,795 1,990,795
2021-2024 1,410,000 165,870 1,575,870
Total $ 4,680,000 $ 2,925,431 $ 7,605,431
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City of Santa Cruz
Revenue Bonds Payable, Continued
Under conditions of the various revenue bond covenants, the Wastewater Enterprise Fund is required to
provide adequate cash and maintain adequate revenues to cover future bond payments. Cash and
investments set aside for this purpose is shown in the financial statements as restricted cash and
investments.
Notes Payable
State of California loans for the construction of a water main line north of the City. Proceeds for the note
were received in September 1995, to be repaid in semi-annual installments of $46,679, including interest
at 2.973%, through April 2016. This debt is recorded in the Water Enterprise Fund. The balance
outstanding at June 30, 2005, was $836,745.
State of California loans for the construction of secondary treatment improvements at the City's
wastewater treatment plant. Loan proceeds were received as the City incurred project expenditures.
Repayment began August 1999. Annual payments of $3,417,099, including interest at 2.8%, will be made
through August 2018. This debt is recorded in the Wastewater Enterprise Fund. The balance
outstanding at June 30, 2005, was $39,037,058.
State of California loans for the construction of certain solid waste facilities to assist them to achieve or
improve compliance with state minimum standards. Proceeds were received in March 2001, and the
loan is to be repaid in $33,333 annual payments of principal through 2016. No interest is due on the
principal balance of the loan outstanding. This debt is recorded in the Refuse Enterprise Fund. The
balance outstanding at June 30, 2005, was $366,666.
The annual debt service requirements on the notes at June 30, 2005, were as follows:
For the Year

Ending
2006 $ 2,418,133 $ 1,117,407 $ 3,535,540
2007 2,485,044 1,050,498 3,535,542
2008 2,553,788 981,752 3,535,540
2009 2,624,582 910,958 3,535,540
2010 2,697,248 838,295 3,535,543
2011-2015 14,650,182 3,027,520 17,677,702
2016-2020 12,811,492 904,226 13,715,718
Total $ 40,240,469 $ 8,830,656 $ 49,071,125
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City of Santa Cruz
Lease Obligations
The City leases equipment in the Refuse, Water, Wastewater, Parking, and Golf Course funds under
various capital lease agreements payable in semi-annual and annual installments through August 2006
with interest rates ranging from 4.5% to 5.9%. In December 2003, the City entered into an equipment
lease agreement in the amount of $656,182 payable in sixty months. The payments are due in ten
consecutive semi-annual payments, and each payment includes 3.13% interest per year on the unpaid
principal. In November 2002, the City entered into another equipment lease in the amount of $1,038,840
payable in sixty months. The payments are due in ten consecutive semi-annual payments, and each
payment includes 3.26% interest per year on the unpaid balance. The combined Refuse, Water,
Wastewater, Parking, and Golf Course funds balance outstanding at June 30, 2005, was $1,648,505.
In December 1998, the City acquired a new telecommunications system under a capital lease agreement
payable in semi-annual installments of $87,706 through December 2005 with an interest rate of 4.85%.
This lease has been allocated to the General Fund, all enterprise funds, the Equipment Operations internal
service fund, and the Agency. The balance outstanding at June 30, 2005, was $18,626.
In August 1999, the City acquired a new information technology system under a capital lease agreement
payable in semi-annual installments of $114,770 through August 2005 with an interest rate of 5%. The
lease has been allocated to the General Fund, the Water, Wastewater, and Refuse enterprise funds, and
the Agency. The balance outstanding at June 30, 2005, was $4,109.
In January 2005, The City acquired four refuse trucks under a capital lease agreement payable in semi-
annual installments of $88,482 through February 2009 with an annual interest rate of 3.04%. This lease has
been allocated to the Refuse fund. The balance outstanding at June 30, 2005, was $661,796.
In April 2005, the City acquired twenty-five receptacles, three recycling trucks and a truck retrofit under a
capital lease agreement payable in semi-annual installments of $85,636 through May 2010 with an annual
interest rate of 3.70%. This lease has been allocated to the Refuse Fund. The balance outstanding at June
30, 2005, was $775,308.
The annual debt service requirements on the lease obligations at June 30, 2005, were as follows:
For the Year

Ending
2006 $ 1,181,030 $ 85,869 $ $ 1,266,899
2007 847,087 56,874 903,961
2008 501,811 31,248 533,059
2009 330,729 17,509 348,238
2010 247,687 9,221 256,908
Total $ 3,108,344 $ 200,721 $ 3,309,065
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City of Santa Cruz
C. Defeased Debt
On October 13, 2004, the Redevelopment Agency issued $5,245,000 in tax allocation bonds. $2,395,000
(par value) of these bonds, with an average interest rate of 3.415%, were used to advance refund
$2,505,000 of outstanding tax allocation bonds with an average interest rate of 5.187% Net proceeds of
$2,420,329, together with $272,170 or reserve funds from the refunded debt, were used to pay $120,818 of
underwriting fees and other issuance costs. The remainder of $2,571,681 was deposited in an irrevocable
trust with an agent and invested in Federal treasury securities to provide for debt service payments on
the 1996 bonds, which were redeemed on December 1, 2004. As a result, the 1996 tax allocation bonds are
considered to be defeased and the liability for those bonds has been removed from the Agency’s
statement of net assets.
The transaction resulted in an economic gain (difference between present values of the old and new debt
service payments) of $12,744. The final maturity date of the refunded bonds was October 1, 2014. The
final maturity date of the refunding portion of the 2004 bonds is October 1, 2020. This extension in the
maturity dates resulted in increased total future debt service payments of $247, 217.
7. RISK MANAGEMENT AND SELF-INSURANCE
The City has an established Risk Management Fund (an internal service fund) to account for a self-insurance
program. Under this program, the City is completely self-insured for unemployment insurance, vision, and
dental insurance claims. For the period ending June 30, 2005, the City was self-insured for workers'
compensation up to $500,000 per occurrence and for general liability up to $1,000,000 per occurrence. Claims
in excess of these amounts are insured. The City has contracted with outside administrators to administer the
programs. There were no significant reductions in insurance coverage. Settlements have not exceeded
insurance coverage in any of the past three fiscal years.
In January 1997, the City joined the Authority for California Cities Excess Liability (ACCEL). The Authority
for California Cities Excess Liability (ACCEL) is a joint powers authority organized under the provisions of
Section 6500 et. seq. of the California Government code. ACCEL was founded in 1986 to provide medium-
sized California cities self-funding for catastrophic losses. There are currently 12 members. ACCEL operates
a liability program which is subject to an annual independent financial audit and biennial actuarial study.
ACCEL is governed by a twelve member Board of Directors. Each member agency appoints a representative
to the Board of Directors. Each member of the Board of Directors has a single vote for policy and charter
changes. ACCEL is funded by its member participants and, at the discretion of its Board of Directors, may
assess the members for additional premiums (in an unlimited amount) in the event ACCEL assets at any time
are insufficient to discharge its liabilities.
For the fiscal year 2004-2005, the deposit rate was $0.60 per one-hundred dollars of payroll. ACCEL self-
funded $2,000,000 excess of a $1,000,000 member self-insured retention, and purchased a $20,000,000
commercial excess insurance policy, providing a total limit of $23,000,000 per occurrence. In addition to the
$23,000,000 program limits, six members purchased optional limits of $10,000,000, and two members
purchased another optional $10,000,000. Members were also charged administrative costs in equal amounts.
The City of Santa Cruz elected to pay the $30,000 administrative fee from pooled deposits.
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City of Santa Cruz
7. RISK MANAGEMENT AND SELF-INSURANCE, Continued
ACCEL’s day-to-day operations are administered by Driver Alliant Insurance Services contracted by ACCEL
to provide accounting, risk consulting, insurance brokerage, and program administration services. Driver’s
responsibility also includes the administration of policies as set forth by the ACCEL Joint Powers Authority
Agreement, By-laws, and by the Board of Directors.
The authority provides coverage above each member’s self-insured retention (SIR), subject to aggregate limit.
Historically, nine members have $500,000 SIRS and two members have $1,000,000 SIRS.
ACCEL provided an optional coverage of $500,000 excess of $500,000 per occurrence through 1989-90,
however this coverage is no longer available.
Prior to July 1, 1990, ACCEL pooled losses incurred by its members up to $10,000,000. Effective July 1, 1990,
ACCEL created a reinsurance pool within the $9,000,000 excess of $1,000,000 layer by purchasing $5,000,000
excess of $5,000,000 coverage. On July 1, 1997, ACCEL further reduced its exposure and purchased coverage
of $17,000,000 excess of $3,000,000 coverage. Due to favorable market conditions, ACCEL purchased
coverage of $19,000,000 excess of $1,000,000 effective July 1, 1998. Six members with SIR of $500,000
purchased additional coverage of $500,000 excess of $500,000 (including the City of Santa Cruz). As of July 1,
2000, nine members purchased insurance of $19,500,000 excess of $1,000,000. ACCEL was fully insured
through June 30, 2003.
As of July 1, 2003, the Authority purchased a reinsurance covering $20,000,000 excess of $2,000,000 and
pooled losses in the layer $1,000,000 excess of $1,000,000. All members have SIR of $1,000,000.
ACCEL members may participate in the purchase of other insurance, such as excess worker’s compensation
and excess liability over $12 million per occurrence where risk is not transferred to the pool. Effective
September 1, 2003, ACCEL purchased excess insurance for all losses in excess of $2,000,000 per occurrence.
ACCEL does not administer claims for these programs; therefore, no revenue or expense is reflected in
ACCEL’s financial statements.
ACCEL has a retrospective rating plan whereby all premiums collected, together with related investment
income earned, in excess of pooled losses and loss expenses for each program year will be returned to
members beginning five years after the end of the program year. Losses and loss expenses are allocated to
each member based on a weighted actual loss formula. At the June 2005 Board of Directors meeting, a
retrospectively rated refund was made available for distribution to the members for program years 2 through
14 in the amount of $8,053,340. Members could elect to have all or a portion of their refund, or choose retain
the funds in the respective program year in the member city. The City of Santa Cruz’ retrospective rated
refund is $434,825.
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City of Santa Cruz
Summary audited financial information for ACCEL as of and for the year ended June 30, 2005, is as follows:
Assets
Cash and investments $ 20,833,919

Other assets 386,545
Total assets $ 21,220,464
Liabilities and Net Assets
Unpaid claims liability $ 3,109,000

retrospectively rated refunds liability 17,964,495
Other liabilities 80,338
Total liabilities 21,153,833
Net assets 66,631
Total liabilities and net assets $ 21,220,464
Revenues
Premiums earned $ 5,628,608

Investment income 603,778
Administrative fees 352,415
Retro Assessment 444,066
Total revenues 7,028,867
Expenses
Loss provision and premiums paid $ 6,747,057

General and administrative 331,050
Total expenses 7,078,107
Net income/ (loss) (49,240)
Net assets, beginning of year 115,871
Net assets, end of year $ 66,631
Complete financial statements for ACCEL can be obtained from Driver Alliant Insurance Services, 600
Montgomery Street, 9th Floor, San Francisco, CA 94111.
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City of Santa Cruz
Risk Management Fund revenues are primarily premium charges received from other funds and are planned
to match expenses of insurance premiums for coverage in excess of self-insured amounts, estimated
payments resulting from self-insurance programs, and operating expenses. Department charges are based
on historical experience. Claims known to be payable and the estimated liability for the balance, based on a
case-by-case review of all claims is recorded as claims payable. An additional estimate of the amount to be
paid for claims incurred, but not reported, is also recorded as claims payable. Changes in the Risk
Management Fund's claims liability amount for the years ended June 30, 2003 through 2005 are as follows:
CLAIMS PAYABLE
Beginning Claims Ending

Balance Incurred Payments Balance
June 30, 2003 $ 6,385,021 $ 2,672,607 $ (2,594,159) $ 6,463,469

June 30, 2004 6,463,469 7,217,089 (3,848,258) 9,832,300
June 30, 2005 9,832,300 3,350,942 (2,463,787) 10,719,455
The General Fund and Redevelopment Agency Fund typically have been used in prior years to liquidate the
liability for claims and judgments.
8. LANDFILL CLOSURE AND POSTCLOSURE COSTS
In accordance with requirements established by the California Integrated Waste Management Board, the
City has recognized a portion of the landfill's closure and postclosure care (closure) costs. These cost
estimates are based on the amount of landfill used to date. The total estimated costs are as follows:
Total estimated closure costs $ 4,274,318

Total estimated postclosure costs 8,292,547
Total estimated closure and postclosure costs $ 12,566,865
The City has increased the landfill’s capacity through excavations and plans to continue excavating in
future years to increase capacity. This effort has also increased the estimates of the closure and postclosure
costs. At June 30, 2005, the estimated landfill closure cost liabilities of $5,451,506 and estimated annual
landfill closure cost of $220,830 were calculated as follows:
Total estimated closure and postclosure costs $ 12,566,865

Percent of used capacity to total capacity 43.38%
5,451,506
Miscellaneous adjustments (532)
Estimated total closure and postclosure costs liability 5,450,974
Previous closure costs accrued 5,230,144
Fiscal year 2005 expense for closure and postclosure costs $ 220,830
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City of Santa Cruz
8. LANDFILL CLOSURE AND POSTCLOSURE COSTS, Continued
The landfill has an estimated remaining capacity of 5,936,669 cubic yards and has a current projected closure
date of January 2038.
Based upon the requirements of the California Integrated Waste Management Board, the City set aside
$166,000 to fund future closure and post closure costs for the year ended June 30, 2005. All cash is invested.
The market value of the invested cash at June 30, 2005 was $2,900,729, and is available to provide for closure
and postclosure costs. Total funds accumulated as of June 30, 2005, are comprised as follows:
Closure $ 1,258,569
Postclosure 1,642,159
Total $ 2,900,729
The City has also estimated corrective action costs of $351,425 for a reasonable foreseeable landfill release.
This amount is based on a March 1995 Hydrogeologic Summary for Support of Financial Assurance
Mechanism report which is adjusted annually for inflation. Sufficient funds to cover these potential costs are
available in the Refuse Fund’s unrestricted cash account.
The estimated closure and corrective action costs are current estimates based on data provided by an
independent consultant and are subject to changes in inflation, technological advancements, or regulatory
changes.
9. RETIREMENT PLANS
A. Pension Plan
Plan Description
The City contributes to the California Public Employees' Retirement System (PERS); an agent
multiple-employer defined benefit pension plan. PERS provides retirement and disability benefits,
annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a
common investment and administrative agent for participating public entities within the State of
California. Benefit provisions and all other requirements are established by state statute and city
ordinance. Copies of PERS’ annual financial report may be obtained from their Executive Office located
at 400 P Street, Sacramento, CA 95814.
Funding Policy
City employees are required to contribute 9% for safety employees and 7% for all other employees of
their annual covered salary. The City employer is required to contribute at an actuarially determined
rate; the fiscal year 2005 rate is 10.537% for miscellaneous employees, 32.772% for police safety
employees, and 39.302% for fire safety employees of annual covered payroll. There is a cost sharing
agreement with miscellaneous employees whereby the employee is required to pay the employer share
above 6.354%, a portion on a pre-tax basis and a portion on a post-tax basis. The contribution
requirements of City employees and the City employer are established and may be amended by PERS.
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City of Santa Cruz
9. RETIREMENT PLANS, Continued
A. Pension Plan, Continued
Annual Pension Cost
For fiscal year 2005, the City’s annual pension cost of $6,175,176 for PERS was equal to the City’s
required and actual contributions. The required contribution was determined as part of the June 30,
2004, actuarial valuation using the entry age normal actuarial cost method. The actuarial assumption
included (a) 7.75% investment rate of return (net of administrative expenses); (b) projected salary
increases ranging from 3.25% to 14.45% depending on age, service, and type of employment, and (c) 2%
per year cost-of-living adjustments. Both (a) and (b) included an inflation component of 3.0%. The
actuarial value of PERS assets was determined using techniques that smooth the effects of short-term
volatility in the market value of investments over a three-year period. PERS unfunded actuarial accrued
liability (or surplus) is being amortized as a level percentage of projected payroll on a closed basis. The
amortization period at June 30, 2002 was 14 years for public safety police employees, 14 years for public
safety fire employees, and 26 years for miscellaneous employees for prior and current service unfunded
liability.
Fiscal Annual Percentage Net

Year Pension of APC Pension
Ended Cost (APC) Contributed Obligation
June 30, 2003 $ 1,774,677 100% $ -
June 30, 2004 4,729,159 100% -
June 30, 2005 6,175,176 100% -
10. POST-EMPLOYMENT RETIREMENT BENEFITS
The City pays a portion of its retiree’s health insurance premium. All part-time and full-time regular
employees that meet certain requirements (continuous service with the City and minimum age) are eligible.
As of June 30, 2005, there were 132 employees eligible. The benefit will be provided until the retiree becomes
eligible for Medicare. The benefit is provided through the memorandum of understanding (MOU) the City
has entered into with each bargaining unit. The retirees are paid monthly by the City per the amount
specified in each MOU. The City paid $102,442 in post-employment retirement benefits to 71 participants for
the year ended June 30, 2005.
11. COMMITMENTS AND CONTINGENCIES
The City participates in a number of Federal assisted grant programs, of which the principal grants are the
Disaster Assistance Program, Community Development Block Grant, HOME grant program, various
Department of Justice and Department of Transportation grant programs. These programs are subject to
program compliance audits by the grantors or their representatives. The amount, if any, of expenditures,
which may be disallowed by the granting agencies upon audit, cannot be determined at this time although
the City expects such amounts to be immaterial.
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City of Santa Cruz
11. COMMITMENTS AND CONTINGENCIES, Continued
The California Legislature granted tidal and submerged lands in trust to the City to be used for a number of
statewide purposes in furtherance of navigation, commerce and fisheries. In accordance with this legislation,
revenues derived from the Wharf are required to be used for purposes permitted under the grant statute.
There are a number of lawsuits presently against the City. While the ultimate outcome of these lawsuits is
not determinable, in the opinion of the City Attorney and City management, recovery from the City, if any,
would not have a material effect on the accompanying financial statements.
The following schedule summarizes the major contractual commitments of the City as of June 30, 2005:
Major Commitments and Contracts for Professional Services:

Bay Street Reservoir Transmission Main $ 202,052
Broadway/Brommer Bike/Pedestrian Connect 200,576
Emergency rent/mortgage assistance program 100,000
Habitat conservation plan & Endangered Species Act Permit 109,413
Highway 1/9 Intersection and River Street Improvement 131,861
Job Training for Persons with Developmental Disabilities 110,000
Legal Services on behalf of City 488,526
Total major professional services 1,342,428
Major Commitments and Contracts for Capital Projects:

City initiated water main replacements 566,535
Construction recycling center 2,315,103
Excavator for landfill 244,815
Felton booster pump station rehabilitation 1,868,900
Golf course renovation 236,690
North Coast System Rehabilitiation 661,826
Recycling trucks 736,084
Repairs to parking lot 3 @ Cedar and Church 326,376
Transmission System Improvements 400,989
Total major capital projects 7,357,318
Total Other Commitments 3,478,424
Total Commitments and Contracts $ 12,178,170
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City of Santa Cruz
12. OPERATING LEASES
The City is obligated under various operating leases for the use of land, buildings, office space and
equipment. Lease expenditures, primarily for governmental funds, for the year ended June 30, 2005 were
$93,966. Future minimum lease payments required by lease agreements that have initial or remaining non-
cancelable lease terms in excess of one year as of June 30, 2005 are as follows:
Year Ending June 30, Balance
2006 $ 60,246
2007 44,256
2008 44,256
2009 44,256
2010-2014 5,348
Total future minimum lease payments $ 198,362
The City leases (as lessor) office facilities, buildings, and wharf facilities under operating leases to various
entities and individuals. Total revenues from these leases for the year ending June 30, 2005 were $906,407.
The total cost of leased assets as of June 30, 2005 was $11,812,312, and the accumulated depreciation of those
assets that are depreciable amounted to $1,349,420. Future estimated revenues from these leases are as
follows:
Year Ending June 30, Amount
2006 $ 897,137
2007 828,129
2008 617,022
2009 448,607
Future years 3,864,875
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City of Santa Cruz
13. RESERVED AND DESIGNATED FUND BALANCES
Fund balances at June 30, 2005, have been reserved and designated for the following purposes:
Redevelopment Special Debt Capital

General Agency Revenue Service Projects
Fund Fund Funds Fund Funds Total
Reserved for:
Encumbrances $ 444,112 $ 659,210 $ 368,337 $ - $ 315,549 $ 1,787,208
Noncurrent receivables and advances 3,259,582 3,872,428 1,788,784 - - 8,920,794
Prepaid items 167,302 120,000 2,440 - - 289,742
Debt service - 63,700 - - 297,332 361,032
Capital projects - - - - 5,416 5,416
Low and moderate income housing - 3,227,999 - - - 3,227,999
Total reserved 3,870,996 7,943,337 2,159,561 - 618,297 14,592,191
Designated for:
Accrued compensated absences 1,361,990 - 4,488 - - 1,366,478
Debt service - 2,576,518 - 557,277 - 3,133,795
Capital projects - 3,921,119 - - - 3,921,119
City public trust 5,332,947 - - - - 5,332,947
Unemployment insurance 49,040 - - - - 49,040
Housing in-lieu program 461,421 - - - - 461,421
Parks and recreation programs 22,049 - - - - 22,049
Kiosk maintenance 22,152 - - - - 22,152
Museum building 28,022 - - - - 28,022
Public art programs - - - - 69,613 69,613
Street trees 30,395 - - - - 30,395
Equipment maintenance 40,866 - - - - 40,866
Youth/teen programs 26,602 - - - - 26,602
CPVAW 3,245 - - - - 3,245
Police programs - - 6,814 - - 6,814
Housing - - 457,715 - - 457,715
General plan update 15,000 - - - - 15,000
Planning/Zoning Programs 1,985 - - - - 1,985
Computer Loan Program 31,971 - - - - 31,971
Public works programs 8,143 - - - 21,567 29,710
Rental maintenance - - 7,887 - - 7,887
Total designated 7,435,828 6,497,637 476,904 557,277 91,180 15,058,826
Unreserved, Undesignated 8,729,971 - 3,185,320 - 2,196,529 14,111,820
Total fund balances $ 20,036,795 $ 14,440,974 $ 5,821,785 $ 557,277 $ 2,906,006 $ 43,762,837
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City of Santa Cruz
14. DEFICIT NET ASSETS
The Risk Management internal service fund had deficit net assets of $5,959,914 as of June 30, 2005. This
deficit is due to estimated liability insurance claims and workers’ compensation claims liabilities in excess
of cash and other assets available in the fund. It is anticipated that this deficit will be made up in future
years by increased contributions from other City funds. The City is working to establish an actuarially
approved plan to fund the increased liability over a number of years. Net assets in the fund are designated
for the following insurance activities:
Net Assets
Workers' compensation insurance $ (6,174,603)

Liability insurance (139,280)
Group health insurance 353,969
Total net assets $ (5,959,914)
15. PRIOR PERIOD ADJUSTMENTS
The City recorded the following prior period adjustments in the Government-Wide Financial Statements.
Adjustments to the Governmental Activities include corrections to capital assets and accumulated
depreciation, and land held for resale. The adjustment to the Business-Type Activities is for an
adjustment to capital assets and accumulated depreciation. Accordingly, the net assets as of July 1, 2005,
have been restated as follows:
Net Assets, Prior Period Adjustments

as Previously Capital Accumulated Land Held Net Assets,
Government-Wide Financial Statements Reported Assets Depreciation For Resale As Restated
Governmental Activities:
Net assets $ 160,235,068 $ 2,122,027 $ (278,870) $ 120,000 $ 162,198,225
Total governmental activities 160,235,068 2,122,027 (278,870) 120,000 162,198,225
Business-Type Activities:
Net assets 232,662,289 (421,776) 269,416 - 232,509,929
Total business-type activities 232,662,289 (421,776) 269,416 - 232,509,929
Total government-wide $ 392,897,357 $ 1,700,251 $ (9,454) $ 120,000 $ 394,708,154
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City of Santa Cruz
15. PRIOR PERIOD ADJUSTMENTS, Continued
The City recorded the following prior period adjustments in the fund financial statements. Adjustments
to the enterprise funds and internal service funds include corrections to capital assets and accumulated
depreciation. In addition, a prior period adjustment was made to the fund financial statements to
recognize the reclassification of land as inventory of land held for resale. The $120,000 adjustment to the
Redevelopment Agency Fund reflects the net appraised value of the property. Accordingly, the net
assets as of July 1, 2005, have been restated as follows:
Net Assets, Prior Period Adjustments

as Previously Net Fixed Land Held Net Assets,
Reported Assets For Resale As Restated
Major Enterprise Funds:
Water $ 61,125,373 $ 500,347 $ - $ 61,625,720
Wastewater 107,897,375 (493,778) - 107,403,597
Parking 16,817,805 (115,086) - 16,702,719
Golf Course 2,266,978 (43,843) - 2,223,135
Internal Service Funds:

Equipment Operations $ 251,201 $ 2,778 $ - $ 253,979
Major Governmental Funds:

Redevelopment Agency $ 11,010,824 $ - $ 120,000 $ 11,130,824
16. SUBSEQUENT EVENTS
The City of Santa Cruz issued 2005 Storm Water Revenue Refunding Certificates of Participation after fiscal
year end. On September 29, 2005, certificates of participation in the amount of $6,100,000 were issued. The
certificates were issued to refund 1999 Storm Water Enterprise Certificates of Participation in the amount of
$6,256,796. Sources for the refunding also included the 1999 Certificates Reserve Fund. The refunding is
expected to produce net present value savings of $462,476.
The City of Santa Cruz issued 2005 Wastewater Revenue Refunding Bonds after fiscal year end. On
November 22, 2005, bonds in the amount of $4,715,000 were issued. The bonds were issued to refund
Sewer Revenue Bonds, Series B (1994 Secondary Wastewater Treatment Plant Project) in the amount of
$4,551,878. Sources for the refunding also included the 1994 Bonds Reserve Fund. The refunding is
expected to produce net present value savings of $403,263.
92
REQUIRED SUPPLEMENTARY INFORMATION
93
City of Santa Cruz
Required Supplementary Information
1. BUDGETARY INFORMATION
An annual budget is adopted by the City Council no later than the first regular meeting in July for the fiscal
year beginning July first. As part of the budget process, all City departments submit budget requests for the
next fiscal year. These requests are reviewed, and a final City Manager recommended budget showing
estimated revenues and expenditures of the City is prepared. This proposed budget is transmitted to the
City Council and made available to the public for review. Study sessions and a public hearing are
conducted before final adoption of the budget by the City Council.
The City Manager is authorized to approve appropriation transfers within any department up to a specified
amount; however, any new appropriation or appropriation transfer between departments requires approval
by the City Council. Several supplemental appropriations were necessary during the year and are reflected
in the budget amounts in the financial statements. Expenditures may not legally exceed appropriations at
the department level.
Under the City Charter, all unexpended appropriations shall lapse at the end of the fiscal year unless they
are lawfully committed, or are required by law to be continuously appropriated from year to year.
Lawfully committed amounts include amounts legally encumbered at year end. Encumbrance accounting,
under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded
in order to reserve that portion of the applicable appropriation, is employed as an extension of formal
budgetary integration in the governmental fund types. Encumbrances outstanding at year-end are reported
as reservation of fund balances since they do not constitute expenditures or liabilities, and re-appropriations
in the subsequent year provide authority to complete these transactions as expenditures.
In addition, project-length (or non-lapsing) budgets are adopted for capital improvement and other projects,
and grant-funded projects or programs that may not be completed within the fiscal year during which the
budget appropriation for the project or program originates. Under these circumstances, the appropriation
continues until project or program completion, or unless the appropriation is subsequently amended or
rescinded by the City Council.
In the Budgetary Comparison Schedules, the “Original Budget” column includes the final adopted budget
amounts, re-appropriations for prior year encumbrances, and continuing appropriations for project-length
budgets automatically carried over from prior years.
The City Charter requires the City Council, upon recommendation of the City Manager and after providing
sufficient funds to meet debt service and operating needs, to annually set aside in the enterprise funds an
amount to be used for the acquisition and betterment of plant facilities. Such amounts, if any, would be
shown in the financial statements as cash and investments held for betterment of plant facilities. No such
funds were set aside during the year ended June 30, 2005.
94
City of Santa Cruz
Required Supplementary Information, Continued
1. BUDGETARY INFORMATION, Continued
Budgets are adopted each year for all general, special revenue, debt service, and capital projects funds.
These governmental fund budgets are prepared on a basis consistent with generally accepted accounting
principles (GAAP), except in the following areas:
¾ Budgetary basis revenues include repayments of loan principal. Budgetary basis expenditures
include loans made. On a GAAP basis both of these are considered as reclassifications of fund
balance (between reserved and unreserved fund balance).
¾ GAAP basis revenues include the fair value adjustment to investment earnings. GAAP basis
expenditures include compensated absences expense. Neither of these are included in the
budgetary basis.
A reconciliation of differences between budgetary and GAAP revenues and expenditures follows the budget
comparison schedules.
95
96
BUDGETARY SCHEDULES
97
City of Santa Cruz
Budgetary Comparison Schedule, General Fund
Budgeted Amounts Actual Amounts Budget to GAAP Actual Amounts

Original Final (Budgetary Basis) Differences (GAAP Basis)
REVENUES:
Taxes $ 36,242,544 $ 36,262,544 $ 34,384,206 $ - $ 34,384,206

Licenses and permits 625,950 625,950 603,344 - 603,344
Intergovernmental 1,071,564 1,276,448 5,465,642 - 5,465,642
Charges for services:
External 7,279,792 7,287,792 7,298,248 - 7,298,248
Internal 3,050,802 3,050,802 2,914,893 - 2,914,893
Interagency 8,420,744 8,420,744 8,303,450 (717,378) 7,586,072
Subtotal charges for services 18,751,338 18,759,338 18,516,591 (717,378) 17,799,213
Fines and forfeitures 1,631,040 1,631,040 2,022,779 - 2,022,779
Use of money and property 2,382,601 2,419,701 2,402,184 (68,262) 2,333,922
Other revenues 163,500 201,013 244,329 32,236 276,565
Total revenues 60,868,537 61,176,034 63,639,075 (753,404) 62,885,671
EXPENDITURES:
Current:
General government 10,301,228 10,364,601 9,390,888 13 9,390,901
Public safety 27,389,424 27,607,911 26,540,438 - 26,540,438
Parks and recreation 10,605,969 10,638,032 9,593,982 - 9,593,982
Library 9,041,387 9,041,387 8,980,823 - 8,980,823
Public works 4,097,528 4,176,532 3,703,220 - 3,703,220
Community and economic development 1,017,639 1,017,639 807,154 (717,378) 89,776
Social services 1,586,101 1,586,101 1,583,700 - 1,583,700
Capital outlay 1,017,340 1,133,369 1,019,672 46,286 1,065,958
Debt service:
Principal 234,543 234,543 234,542 - 234,542
Interest and fiscal charges 47,661 57,318 59,492 - 59,492
Total expenditures 65,338,820 65,857,433 61,913,911 (671,079) 61,242,832
REVENUES OVER
(UNDER) EXPENDITURES (4,470,283) (4,681,399) 1,725,164 (82,325) 1,642,839

Proceeds from asset disposition 40,000 40,000 171,340 (32,236) 139,104
Proceeds from long-term debt issued 580,000 580,000 580,000 - 580,000
Loan principal receipts 515,167 515,167 491,039 (491,039) -
Advances to other funds (400,000) (400,000) - - -
Transfers in 560,834 573,334 537,624 (2,756) 534,868
Transfers out (1,155,265) (1,155,265) (850,970) - (850,970)
Total other financing sources (uses) 140,736 153,236 929,033 (526,031) 403,002
Net change in fund balances (4,329,547) (4,528,163) 2,654,197 (608,356) 2,045,841
FUND BALANCES:
Beginning of the year 12,509,651 12,509,752 12,509,752 5,481,202 17,990,954
End of year $ 8,180,104 $ 7,981,589 $ 15,163,949 $ 4,872,846 $ 20,036,795
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City of Santa Cruz
General Fund
Reconciliation of Net Changes in Fund Balances - Budgetary to GAAP Basis:

Net Change in Fund Balances - Budgetary Basis $ 2,654,197
The amount reported in the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances
was different because:
Interagency charges for personnel services provided to the redevelopment agency are a revenue and expenditure on
a budgetary basis, but are eliminated in the Statement of Revenues, Expenditures and Changes in Fund Balances (717,378)
because the redevelopment agency is part of the reporting entity. 717,378
Unrealized gains and losses on investments, which are considered a component of investment income in the
Statement of Revenues, Expenditures and Changes in Fund Balances, are not included as revenue on a budgetary
basis. (68,262)
Costs for a City Hall fire restoration project recorded on the fund statements were recorded in another fund for
budgetary purposes. (46,299)
The City budgets for loans and advance disbursements which will not be repaid within the current year. Although
these amounts are recorded as long-term receivables on the Governmental Funds Balance Sheet, they are not
available for appropriation.
Insurance proceeds considered "unavailable" at the end of the previous fiscal year on a budgetary basis were
collected during the current year. (2,756)
On a budgetary basis, the City records loan principal receipts as revenue, but on a GAAP basis, the receipts reduce
receivables. (491,039)
Net Change in Fund Balances - Statement of Revenues, Expenditures and Changes in Fund Balances $ 2,045,841
Reconciliation of Fund Balances - Budgetary to GAAP Basis:

Fund Balances - Ending - Budgetary Basis $ 15,163,949
Cumulative effect of unrealized gains and losses on investments (117,496)

Reserved and designated balances unavailable for appropriation 3,628,352
Designated for noncurrent component of compensated absences 1,361,990
Fund Balances - Ending - GAAP Basis $ 20,036,795
Ending budgetary fund balance includes the following amounts:

Committed for re-appropriation in the following year $ 610,608
Restricted or designated for special purposes 5,738,038
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City of Santa Cruz
Budgetary Comparison Schedule, Redevelopment Agency

REVENUES:
Tax increment $ 7,849,700 $ 8,041,697 $ 8,840,370 $ - $ 8,840,370

Use of money and property 148,015 148,015 355,959 (66,301) 289,658
Other revenues 40,844 40,844 94,796 - 94,796
Total revenues 8,038,559 8,230,556 9,291,125 (66,301) 9,224,824
EXPENDITURES:
Current:
Community and economic development 6,085,327 7,988,324 5,816,303 - 5,816,303
Capital outlay 3,681,264 3,878,806 613,263 - 613,263
Debt service:
Principal 4,316,773 5,359,542 4,139,556 (2,665,539) 1,474,017
Bond issuance costs - 277,313 276,569 - 276,569
Total expenditures 14,467,981 17,967,548 11,277,526 (2,665,539) 8,611,987
REVENUES OVER (UNDER) EXPENDITURES (6,429,422) (9,736,992) (1,986,401) 2,599,238 612,837
Loan proceeds 1,610,000 2,321,000 2,302,553 (2,302,553) -

Long term advance proceeds 400,000 400,000 - - -
Proceeds from long-term debt issued - 5,245,000 5,245,000 - 5,245,000
Premiums on bonds sold - 23,994 23,994 - 23,994
Payment to refunded bond escrow agent - (2,571,681) (2,571,681) - (2,571,681)
Total other financing sources (uses) 2,391,002 5,799,315 5,361,574 (2,664,261) 2,697,313
Net change in fund balances (4,038,420) (3,937,677) 3,375,173 (65,023) 3,310,150
FUND BALANCES:
Beginning of the year, as restated 7,796,939 7,796,939 7,796,939 3,333,885 11,130,824

End of year $ 3,758,519 $ 3,859,262 $ 11,172,112 $ 3,268,862 $ 14,440,974
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City of Santa Cruz
Redevelopment
Agency Fund

Net Change in Fund Balances - Budgetary Basis $ 3,375,173
The amount reported in the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances
was different because:
Statement of Revenues, Expenditures and Changes in Fund Balances, are not included as revenue on a budgetary
basis. (66,301)
On a budgetary basis, the Agency records loan principal receipts as revenue, but on a GAAP basis, these receipts
reduce receivables. (361,708)
Proceeds of both short term loans and long term advances from the City are considered budgetary resources, but are
not revenues on a GAAP basis. (2,302,553)
The Agency budgets for both short term and long term loan and advance principal repayments to the City, but these
payments are not considered expenditures on a GAAP basis. 2,665,539
Net Change in Fund Balances - Statement of Revenues, Expenditures and Changes in Fund Balances $ 3,310,150


Reserved balances unavailable for appropriation 3,372,504
All funds are reserved or designated for debt service, capital projects, or low and moderate income housing.
101
102
City of Santa Cruz
PUBLIC EMPLOYEE RETIREMENT SYSTEM (PERS)

SCHEDULE OF FUNDING PROGRESS
Miscellaneous Employees
Unfunded
(Overfunded)
Unfunded Actuarial
Entry Age (Overfunded) Liability as
Actuarial Actuarial Actuarial Actuarial Percentage of
Valuation Value of Accrued Accrued Funded Covered Covered
Date Assets Liability Liability Ratio Payroll Payroll
June 30, 2002 $ 126,284,083 $ 132,266,944 $ 5,982,861 95.5% $ 36,176,758 16.5%

June 30, 2003 129,704,897 150,709,327 21,004,430 86.1% 35,526,589 59.1%
June 30, 2004 139,133,604 160,182,390 21,048,786 86.9% 33,778,451 62.3%
Police Safety Employees

Unfunded
(Overfunded)
Unfunded Actuarial
June 30, 2002 $ 36,269,237 $ 47,708,054 $ 11,438,817 76.0% $ 5,989,547 191.0%

CalPERS Risk Pool Information (see comment below):
June 30, 2003 3,577,742,166 4,270,573,982 692,831,816 83.8% 476,089,674 145.5%
June 30, 2004 4,424,586,846 5,383,921,942 959,335,096 82.2% 575,296,434 166.8%
Fire Safety Employees

Unfunded
(Overfunded)
Unfunded Actuarial
June 30, 2002 $ 23,762,235 $ 33,592,121 $ 9,829,886 70.7% $ 3,904,140 251.8%
CalPERS Risk Pool Information (see comment below):

June 30, 2003 3,577,742,166 4,270,573,982 692,831,816 83.8% 476,089,674 145.5%
June 30, 2004 4,424,586,846 5,383,921,942 959,335,096 82.2% 575,296,434 166.8%
Since the City has less than 100 active members in Fire and Police plans in at least one valuation since
June 30, 2004, the City is required to participate in a risk pool. An actuarial valuation was performed with
other participants within the same risk pool. Therefore, standalone information of the schedule of the
funding progress for the City was not disclosed.
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104
SUPPLEMENTARY INFORMATION
105
106
Non-Major Governmental Funds
Special Revenue Funds:

Police - Accounts for state and federal grants and other revenues restricted to be used for police
programs.
State Highway Funds - This fund is used to account for the City's apportionment of the State excise tax
on gasoline and other related grants or receipts that are restricted for the planning, construction and
maintenance of streets and roads. It is also used to account for a subvention of the State sales tax on
gasoline (Traffic Congestion Relief Funds) that are restricted for street and highway maintenance, and
rehabilitation and reconstruction of necessary associated facilities such as drainage and traffic control
devices.
Parks and Recreation - Accounts for tax and fee revenues restricted for parks and recreation use.
Housing and Community Development - Accounts for receipts and expenditures under the Housing and
Community Development Act, which includes Community Development Block Grant funds and HOME
program funds. It also is used to account for Red Cross housing reconstruction loan repayments and
income and related expenditures for a City-owned rental property.
Transportation Development Act Fund - This fund is used to account for receipts of State Transportation
Development Act (TDA) funds restricted to be used for specialized or unmet transit needs. Acting as the
public agency sponsor, the City contracts with non-profit agencies to meet these obligations.
Debt Service Fund:
General Obligation Bonds - This fund accounts for the debt service for a $7 million general obligation
bond issue approved by voters in November 1998. Funds for payment of principal and interest on the
bonds are generated by a property tax override assessment of $9.00 per $100,000 of assessed value.
Capital Projects Fund:
General Capital Improvement - This fund is used to account for capital improvements for which special
projects funds have not been established. A portion of the City's transient occupancy tax receipts,
combined with other funding sources, such as grants, provides funding for capital projects of general
benefit, such as storm drain improvements, or improvements to public buildings.
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City of Santa Cruz
Combining Balance Sheet
June 30, 2005
Housing and Transportation

State Parks and Community Development
Police Highway Recreation Development Act
ASSETS
Cash and cash equivalents $ 246,644 $ 666,497 $ 1,583,595 $ 1,313,746 $ -

Interest receivable 2,392 5,106 14,948 267,579 -
Taxes receivable - - - - -
Accounts receivable - net 1,863 98,268 - 238 -
Due from other governments - 856,911 - 121,470 -
Due from other funds - - - - -
Prepaid items 158 947 - 1,335 -
Restricted assets:
Cash and cash equivalents - - - - -
Investments - - - - -
Total restricted assets - - - - -
Notes receivable - net - - 491,800 657,623 -

Loans receivable - net - - - 1,131,161 -
Total assets $ 251,057 $ 1,627,729 $ 2,090,343 $ 3,493,152 $ -
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable and other current liabilities $ 1,620 $ 81,614 $ 1,531 $ 27,143 $ -
Due to other funds 145 - 1,922 26,079 -
Intergovernmental payable - - - 90,789 -
Deferred revenue 132,191 - 491,800 255,661 -
Advances from other funds - - - 530,000 -
Total liabilities 133,956 81,614 495,253 929,672 -
Fund Balances:
Reserved 96,869 239,843 - 1,822,850 -
Unreserved, designated 6,814 4,488 - 465,602 -
Unreserved, undesignated, reported in:
Special revenue funds 13,418 1,301,784 1,595,090 275,028 -
Capital projects funds - - - - -
Total fund balances 117,101 1,546,115 1,595,090 2,563,480 -
Total liabilities and fund balances $ 251,057 $ 1,627,729 $ 2,090,343 $ 3,493,152 $ -
108
Debt Service Capital Projects
General Total Other

General Capital Governmental
Obligation Bond Improvement Funds
$ 537,170 $ 791,873 $ 5,139,525

4,109 - 294,134
15,998 516,167 532,165
- 117,632 218,001
- 1,554,418 2,532,799
- 8,097 8,097
- - 2,440
- 34,849 34,849
- 282,686 282,686
- 317,535 317,535
- - 1,149,423
- - 1,131,161
$ 557,277 $ 3,305,722 $ 11,325,280
$ - $ 83,341 $ 195,249
- - 28,146
- - 90,789
- 205,254 1,084,906
- 111,122 641,122
- 399,717 2,040,212
- 618,296 2,777,858
557,277 91,180 1,125,361
- - 3,185,320
- 2,196,529 2,196,529
557,277 2,906,005 9,285,068
$ 557,277 $ 3,305,722 $ 11,325,280
109
City of Santa Cruz
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Housing and Transportation

State Parks and Community Development
Police Highway Recreation Development Act
REVENUES:
Taxes $ - $ - $ 510,348 $ - $ -
Intergovernmental 142,217 1,290,533 - 1,023,994 586,896
Charges for services 46,436 - - - -
Fines and forfeitures 10,038 - - - -
Use of money and property 6,151 33,733 34,449 106,664 -
Other revenues - 10,349 211,422 - -
Total revenues 204,842 1,334,615 756,219 1,130,658 586,896
EXPENDITURES:
Current:
Public safety 151,875 - - - -
Public works - 545,138 - - -
Transit - - - - 586,896
Community and economic development - - - 734,853 -
Social services - - - 131,626 -
Capital outlay 44,136 417,994 - 111,800 -
Debt service:
Principal - 17,478 - - -
Interest and fiscal charges - 718 - 18,071 -
Total expenditures 196,011 981,328 - 996,350 586,896
REVENUES OVER
(UNDER) EXPENDITURES 8,831 353,287 756,219 134,308 -
Transfers in - - - - -
Transfers out (565) - (445,904) - -
Total other financing sources (uses) (565) - (445,904) - -
Net change in fund balances 8,266 353,287 310,315 134,308 -
FUND BALANCES:
Beginning of year 108,835 1,192,828 1,284,775 2,429,172 -
End of year $ 117,101 $ 1,546,115 $ 1,595,090 $ 2,563,480 $ -
110
Debt Service Capital Projects
General Total Other

General Capital Governmental
Obligation Bond Improvement Funds
$ 488,330 $ 2,045,246 $ 3,043,924

- 2,969,786 6,013,426
- 123,168 169,604
- - 10,038
7,788 8,809 197,594
- 93,721 315,492
496,118 5,240,730 9,750,078
- - 151,875
- - 545,138
- - 586,896
- - 734,853
- - 131,626
- 5,593,305 6,167,235
168,798 336,714 522,990

227,988 228,134 474,911
396,786 6,158,153 9,315,524
99,332 (917,423) 434,554
- 1,393,813 1,393,813
- (495,640) (942,109)
- 898,173 451,704
99,332 (19,250) 886,258
457,945 2,925,255 8,398,810
$ 557,277 $ 2,906,005 $ 9,285,068
111
City of Santa Cruz
Schedule of Budget and Actual Revenues
General Fund
Variance with
Final Budget
Budgeted Amounts Actual Amounts Positive
Original Final (Budgetary Basis) (Negative)
REVENUES:
Taxes:
Property $ 9,941,172 $ 9,941,172 $ 7,173,221 $ (2,767,951)
Sales and use 10,925,000 10,945,000 11,383,231 438,231
Business license 835,000 835,000 777,308 (57,692)
Franchise 3,394,000 3,394,000 3,478,971 84,971
Transient occupancy 1,000,000 1,000,000 1,022,623 22,623
Parking 200,000 200,000 221,790 21,790
Utility users 7,800,000 7,800,000 8,080,171 280,171
Admission 1,650,000 1,650,000 1,629,164 (20,836)
Property transfer 200,000 200,000 325,305 125,305
Business improvement 180,000 180,000 176,388 (3,612)
Other taxes 117,372 117,372 116,034 (1,338)
Total taxes 36,242,544 36,262,544 34,384,206 (1,878,338)

Licenses and permits:
Construction permits 602,900 602,900 572,553 (30,347)
Other licenses and permits 23,050 23,050 30,791 7,741
Total licenses and permits 625,950 625,950 603,344 (22,606)

Intergovernmental revenues:
Federal 166,403 302,287 189,663 (112,624)
State 892,161 961,161 5,262,979 4,301,818
Local 13,000 13,000 13,000 -
Total intergovernmental revenues 1,071,564 1,276,448 5,465,642 4,189,194
Charges for services:

General government:
Legislative 1,100 1,100 300 (800)
Management and support 556,911 556,911 566,794 9,883
Planning and zoning 1,220,799 1,220,799 1,340,492 119,693
Other general government 7,500 7,500 10,778 3,278
Public safety:
Police 1,400,825 1,400,825 1,401,663 838
Fire 362,450 362,450 405,990 43,540
Protective inspection 327,100 327,100 298,267 (28,833)
Parks and recreation:
Parks 42,000 42,000 44,572 2,572
Recreation 1,559,207 1,559,207 1,397,810 (161,397)
Subtotal of charges for services 5,477,892 5,477,892 5,466,666 (11,226)
112
City of Santa Cruz
Schedule of Budget and Actual Revenues, Continued
General Fund
Variance with
Final Budget
Budgeted Amounts Actual Amounts Positive
Original Final (Budgetary Basis) (Negative)
Charges for services, Continued:
Subtotal from previous page $ 5,477,892 $ 5,477,892 $ 5,466,666 $ (11,226)
Public works:
Engineering 55,000 55,000 132,873 77,873
Transportation 1,739,000 1,747,000 1,685,826 (61,174)
Community and economic development:
Other community and economic development 7,900 7,900 12,883 4,983
Internal charges for services provided 3,050,802 3,050,802 2,914,893 (135,909)
Interagency personnel services charges:
Library 7,646,636 7,646,636 7,586,072 (60,564)
Redevelopment Agency 774,108 774,108 717,378 (56,730)
Subtotal interagency charges 8,420,744 8,420,744 8,303,450 (117,294)
Total charges for services 18,751,338 18,759,338 18,516,591 (242,747)
Fines and forfeitures:

Court and traffic fines 1,470,840 1,470,840 1,729,129 258,289
Other fines and forfeitures 160,200 160,200 293,650 133,450
Total fines and forfeitures 1,631,040 1,631,040 2,022,779 391,739

Use of money and property:
Investment income 559,601 581,701 535,220 (46,481)

Rents and royalties 1,823,000 1,838,000 1,866,964 28,964
Total use of money and property 2,382,601 2,419,701 2,402,184 (17,517)
Other revenues:
Contributions and donations 73,500 96,013 105,062 9,049
Other miscellaneous revenues 90,000 105,000 139,267 34,267
Total other revenues 163,500 201,013 244,329 43,316
Total revenues 60,868,537 61,176,034 63,639,075 2,463,041
OTHER FINANCING SOURCES:
Proceeds from asset dispositions 40,000 40,000 171,340 131,340

Proceeds from long-term debt issued 580,000 580,000 580,000 -
Loan and advance principal receipts 515,167 515,167 491,039 (24,128)
Transfers in 560,834 573,334 537,624 (35,710)
Total other financing sources 1,696,001 1,708,501 1,780,003 71,502
Total revenues and other financing sources $ 62,564,538 $ 62,884,535 $ 65,419,078 $ 2,534,543
113
City of Santa Cruz
Schedule of Budget and Actual Expenditures and Other Financing Uses For Legally Adopted
Appropriations by Department - General Fund
Services, Supplies
Personnel and Other Debt Capital Actual Amounts
Services Charges Service Outlay (Budgetary Basis)
City Council $ 161,650 $ 109,344 $ - $ - $ 270,994

City Clerk 410,745 127,964 - 3,200 541,909
City Manager 551,407 96,973 - 516 648,896
City Attorney 13,954 512,078 - - 526,032
Human Resources 544,736 337,835 - - 882,571
Finance 2,461,680 914,700 - 36,893 3,413,273
Police 13,362,709 3,471,839 - 133,029 16,967,577
Fire 7,855,196 709,148 87,399 644,886 9,296,629
Parks and Recreation 7,128,626 2,953,613 - 37,630 10,119,869
Library 7,586,072 1,394,751 - - 8,980,823
Public Works 2,902,292 792,200 - 21,589 3,716,081
Planning and Community Development 2,121,615 399,413 - 7,329 2,528,357
Redevelopment Administration 717,378 9,960 - - 727,338
Non-Departmental 8,729 2,943,598 - - 2,952,327
Debt service - - 206,635 - 206,635
Capital projects - - - 134,600 134,600
Total expenditures 45,826,789 14,773,416 294,034 1,019,672 61,913,911
Advances to other funds - - - - -

Transfers out - - - - 850,970
Total expenditures and other

financing uses $ 45,826,789 $ 14,773,416 $ 294,034 $ 1,019,672 $ 62,764,881
Budget to GAAP Differences:

See reconciliation in Required Supplementary Information Note 1.
114
Variance with
Final Budget -
Final Positive Budget to GAAP Actual Amounts
Budget (Negative) Differences (GAAP Basis)
$ 345,486 $ 74,492 $ - $ 270,994

615,175 73,266 - 541,909
761,364 112,468 - 648,896
533,394 7,362 - 526,032
950,116 67,545 13 882,584
3,516,310 103,037 - 3,413,273
18,008,640 1,041,063 - 16,967,577
9,296,667 38 - 9,296,629
11,220,164 1,100,295 - 10,119,869
9,041,387 60,564 - 8,980,823
4,170,602 454,521 - 3,716,081
2,990,125 461,768 - 2,528,357
779,108 51,770 (717,378) 9,960
3,260,143 307,816 - 2,952,327
206,644 9 - 206,635
162,108 27,508 46,286 180,886
65,857,433 3,943,522 (671,079) 61,242,832
400,000 400,000 - -
1,155,265 304,295 - 850,970
$ 67,412,698 $ 4,647,817 $ (671,079) $ 62,093,802
115
City of Santa Cruz
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Police Special Revenue Fund

REVENUES:
Intergovernmental $ 108,909 $ 147,021 $ 142,217 $ - $ 142,217

Charges for services 60,000 60,000 46,436 - 46,436
Fines and forfeitures - - 10,038 - 10,038
Total revenues 172,609 210,721 206,347 (1,505) 204,842
EXPENDITURES:
Current:
Public safety:
Police 155,230 155,230 151,875 - 151,875
Capital outlay 10,829 142,941 44,136 - 44,136
Total expenditures 166,059 298,171 196,011 - 196,011
REVENUES OVER
(UNDER) EXPENDITURES 6,550 (87,450) 10,336 (1,505) 8,831

Transfers out (500) (500) (565) - (565)
Total other financing sources (uses) (500) (500) (565) - (565)
Net change in fund balances 6,050 (87,950) 9,771 (1,505) 8,266
FUND BALANCES:
Beginning of the year 110,160 110,001 110,001 (1,166) 108,835
End of year $ 116,210 $ 22,051 $ 119,772 $ (2,671) $ 117,101
Ending budgetary fund balance committed for re-appropriation in the following year $ 94,000
116
City of Santa Cruz
State Highway Special Revenue Fund

REVENUES:
Intergovernmental $ 4,541,674 $ 4,855,674 $ 1,290,533 $ - $ 1,290,533

Charges for services 1,500 1,500 - - -
Other revenues 330,000 330,000 10,349 - 10,349
Total revenues 4,897,174 5,211,174 1,338,541 (3,926) 1,334,615
EXPENDITURES:
Current:
Public works:
Transportation 614,135 613,735 545,138 - 545,138
Capital outlay 5,047,441 5,366,841 417,994 - 417,994
Debt service:
Principal 17,478 17,478 17,478 - 17,478
Interest and fiscal charges 718 718 718 - 718
Total expenditures 5,679,772 5,998,772 981,328 - 981,328
REVENUES OVER
(UNDER) EXPENDITURES (782,598) (787,598) 357,213 (3,926) 353,287

Proceeds from asset disposition 300,000 300,000 - - -
Total other financing sources (uses) 300,000 300,000 - - -
Net change in fund balances (482,598) (487,598) 357,213 (3,926) 353,287
FUND BALANCES:
Beginning of the year 1,190,322 1,188,570 1,188,570 4,258 1,192,828
End of year $ 707,724 $ 700,972 $ 1,545,783 $ 332 $ 1,546,115
117
City of Santa Cruz
Parks and Recreation Fund

REVENUES:
Taxes $ 400,000 $ 400,000 $ 510,348 $ - $ 510,348

Other revenues - - 211,422 - 211,422
Total revenues 415,000 415,000 764,446 (8,227) 756,219

Transfers out (1,188,146) (1,188,146) (445,904) - (445,904)
Total other financing sources (uses) (1,188,146) (1,188,146) (445,904) - (445,904)
Net change in fund balances (773,146) (773,146) 318,542 (8,227) 310,315
FUND BALANCES:
Beginning of the year 1,292,580 1,292,580 1,292,580 (7,805) 1,284,775
End of year $ 519,434 $ 519,434 $ 1,611,122 $ (16,032) $ 1,595,090
118
City of Santa Cruz
Housing and Community Development Fund

REVENUES:
Intergovernmental $ 2,073,189 $ 3,574,061 $ 1,023,994 $ - $ 1,023,994

Total revenues 2,139,907 3,640,779 1,139,999 (9,341) 1,130,658
EXPENDITURES:
Current:
Community and economic development:
Housing and community development 1,887,388 3,187,388 825,384 (90,531) 734,853
Social services:
CDBG social services 136,961 131,961 131,626 - 131,626
Capital outlay 892,425 888,297 111,800 - 111,800
Debt service:
Principal 200,000 200,000 200,000 (200,000) -
Total expenditures 3,121,774 4,412,646 1,286,881 (290,531) 996,350
REVENUES OVER
(UNDER) EXPENDITURES (981,867) (771,867) (146,882) 281,190 134,308

Proceeds from long-term debt 714,128 509,128 - - -
Transfers out (14,592) (14,592) - - -
Total other financing sources (uses) 817,996 632,707 138,171 (138,171) -
Net change in fund balances (163,871) (139,160) (8,711) 143,019 134,308
FUND BALANCES:
Beginning of the year 1,417,576 1,415,828 1,415,828 1,013,344 2,429,172
End of year $ 1,253,705 $ 1,276,668 $ 1,407,117 $ 1,156,363 $ 2,563,480
119
City of Santa Cruz
Transportation Development Act

REVENUES:
Intergovernmental $ 586,896 $ 586,896 $ 586,896 $ - $ 586,896
Total revenues 586,896 586,896 586,896 - 586,896
EXPENDITURES:
Current:
Transit 586,896 586,896 586,896 - 586,896
REVENUES OVER
(UNDER) EXPENDITURES - - - - -
FUND BALANCES:
Beginning of the year - - - - -
End of year $ - $ - $ - $ - $ -
120
City of Santa Cruz
General Obligation Bond

REVENUES:
Taxes $ 444,008 $ 444,008 $ 488,330 $ - $ 488,330

Total revenues 450,124 450,124 498,271 (2,153) 496,118
EXPENDITURES:
Debt service:
Principal 168,798 168,798 168,798 - 168,798
REVENUES OVER
(UNDER) EXPENDITURES 50,474 50,474 101,485 (2,153) 99,332
FUND BALANCES:
Beginning of the year 459,160 459,160 459,160 (1,215) 457,945
End of year $ 509,634 $ 509,634 $ 560,645 $ (3,368) $ 557,277
121
City of Santa Cruz
General Capital Improvement Projects

REVENUES:
Taxes $ 2,000,000 $ 2,000,000 $ 2,045,246 $ - $ 2,045,246

Intergovernmental 6,788,818 6,864,818 2,969,786 - 2,969,786
Charges for services 220,000 220,000 123,168 - 123,168
Use of money and property 7,100 9,496 7,301 1,508 8,809
Other revenues 86,600 116,043 93,721 - 93,721
Total revenues 9,102,518 9,210,357 5,239,222 1,508 5,240,730
EXPENDITURES:
Capital outlay 12,646,330 12,801,669 5,593,305 - 5,593,305

Debt service:
Principal 347,122 347,122 348,392 (11,678) 336,714
Total expenditures 13,227,336 13,382,675 6,169,831 (11,678) 6,158,153
REVENUES OVER
(UNDER) EXPENDITURES (4,124,818) (4,172,318) (930,609) 13,186 (917,423)
Transfers in 2,477,213 2,477,213 1,393,813 - 1,393,813

Transfers out (505,000) (517,500) (495,640) - (495,640)
Total other financing sources (uses) 1,972,213 1,959,713 898,173 - 898,173
Net change in fund balances (2,152,605) (2,212,605) (32,436) 13,186 (19,250)
FUND BALANCES:
Beginning of the year 2,765,680 2,758,827 2,758,827 166,428 2,925,255
End of year $ 613,075 $ 546,222 $ 2,726,391 $ 179,614 $ 2,906,005
Ending budgetary fund balance committed for re-appropriation in the following year $ 2,113,600
122
City of Santa Cruz
Other
Governmental
Funds
Net Change in Fund Balances - Budgetary Basis $ 745,864
The amount reported in the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund
Balances was different because:
Statement of Revenues, Expenditures and Changes in Fund Balances, are not included as revenue on a
budgetary basis. (23,644)
The City budgets for loan disbursements which will not be repaid within the current year. Although these
amounts are recorded as long-term receivables on the Governmental Funds Balance Sheet, they are not
available for appropriation. 90,531
Payments on a short term loan and advance principal repayments are considered expenditures on a
budgetary basis, but on a GAAP basis, these payments reduce liabilities. 211,678
On a budgetary basis, the City records loan principal receipts as revenue, but on a GAAP basis, these receipts
reduce receivables. (138,171)
Net Change in Fund Balances - Statement of Revenues, Expenditures and Changes in Fund Balances $ 886,258


Noncurrent advances payable (641,122)
Intergovernmental payable to be repaid from future appropriations (90,789)
Reserved balances unavailable for appropriation 2,088,482
Designated for noncurrent component of compensated absences 4,488
123
124
INTERNAL SERVICE FUNDS
Equipment Operations - This fund is used to account for the expenses related to city-wide fleet operations
and maintenance activities, including vehicles, communications equipment, and other pooled equipment.
Internal contributions to support this fund are based on cost recovery through charges to user departments
and funds. These charges do not include the cost of equipment replacement.
Stores Services - Accounts for the costs of operating a centralized warehouse used by the City.
Telecommunications - This fund is used to account for the expenses related to the acquisition of
communications equipment and ongoing maintenance of the telephone network including the main
telephone switch, voice mail system, pagers, cell phones, and fax machines. Internal contributions to support
this fund are based on cost recovery through user departments and funds. These charges do not include the
cost of equipment replacement.
Risk Management - Accounts for the expenses of the City's insurance program, including costs related to
claims, administration, legal defense, and insurance premiums. Internal contributions to support this fund are
based on cost recovery through charges to departments and funds. The following insurance activities are
provided for in this fund:
Workers' Compensation Insurance
Liability Insurance
Group Health Insurance
125
City of Santa Cruz
Combining Statement of Net Assets
All Internal Service Funds
June 30, 2005
Equipment Stores Telecommun- Risk

Services ications Management Total
ASSETS
Current assets:
Cash and cash equivalents $ 386,069 $ 101,892 $ 105,970 $ 3,577,706 $ 4,171,637
Restricted cash and cash equivalents - - 12,256 - 12,256
Interest receivable 3,478 828 799 27,238 32,343
Accounts receivable - net 21,310 - 30,770 52,080
Due from other funds 10,116 - - - 10,116
Prepaid items 3,310 - 182 1,656 5,148
Inventories - 109,948 - - 109,948
Deposits - - - 1,231,208 1,231,208
Total current assets 424,283 212,668 119,207 4,868,578 5,624,736
Noncurrent assets:
Capital assets:
Machinery and equipment 394,110 - 746,577 8,160 1,148,847
Software - - 336,296 - 336,296
Less accumulated depreciation (291,970) - (830,917) (3,400) (1,126,287)
Total capital assets
(net of accumulated depreciation) 102,140 - 251,956 4,760 358,856
Total noncurrent assets 102,140 - 251,956 4,760 358,856
Total assets $ 526,423 $ 212,668 $ 371,163 $ 4,873,338 $ 5,983,592
LIABILITIES
Accounts payable and other current liabilities $ 153,528 $ 7,959 $ 21,070 $ 110,097 $ 292,654
Due to other funds 3,478 10,944 474 3,700 18,596
Claims and judgments payable - - - 3,138,855 3,138,855
due in less than one year 42,040 - 11,966 - 54,006
Total current liabilities 199,046 18,903 33,510 3,252,652 3,504,111
Claims and judgments payable - - - 7,580,600 7,580,600
Compensated absences payable 48,378 - - - 48,378
due in more than one year 21,037 - - 21,037
Total noncurrent liabilities 69,415 - - 7,580,600 7,650,015
Total liabilities 268,461 18,903 33,510 10,833,252 11,154,126
NET ASSETS
Invested in capital assets, net of related debt 39,063 - 251,956 4,760 295,779
Restricted for:
Debt service - - 290 - 290
Unrestricted 218,899 193,765 85,407 (5,964,674) (5,466,603)
Total net assets $ 257,962 $ 193,765 $ 337,653 $ (5,959,914) $ (5,170,534)
126
City of Santa Cruz
Combining Statement of Revenues, Expenses and Changes in Net Assets
Stores Telecommun- Risk

Operations Services ications Management Total
OPERATING REVENUES:
Charges for services - internal $ 2,196,688 $ 187,646 $ 190,416 $ 5,864,568 $ 8,439,318

Charges for services - external 115,133 - 42,864 20,200 178,197
Other revenues 7,652 - - 176,809 184,461
Total operating revenues 2,319,473 187,646 233,280 6,061,577 8,801,976
OPERATING EXPENSES:
Personnel services 773,866 - 89,144 516,158 1,379,168

Services, supplies, and other charges 1,484,529 168,595 154,992 4,649,568 6,457,684
Depreciation and amortization 20,847 - 64,329 1,632 86,808
Total operating expenses 2,279,242 168,595 308,465 5,167,358 7,923,660
Operating income (loss) 40,231 19,051 (75,185) 894,219 878,316
NONOPERATING REVENUES (EXPENSES):
Investment earnings 9,139 1,761 2,094 77,702 90,696

Interest expense and fiscal charges (5,021) - (1,424) - (6,445)
Total nonoperating revenues (expenses) 4,118 1,761 670 77,702 84,251
Income (loss) before transfers 44,349 20,812 (74,515) 971,921 962,567
Transfers out (40,366) (2,729) (1,863) (12,060) (57,018)
Change in net assets 3,983 18,083 (76,378) 959,861 905,549
NET ASSETS:
Beginning of year 251,201 175,682 414,031 (6,919,775) (6,078,861)

Prior period adjustment (Note 15) 2,778 - - - 2,778
Beginning of the year, as restated 253,979 175,682 414,031 (6,919,775) (6,076,083)
End of year $ 257,962 $ 193,765 $ 337,653 $ (5,959,914) $ (5,170,534)
127
City of Santa Cruz
Combining Statement of Cash Flows
Equipment Stores Telecommun- Risk

Operations Services ications Management Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and users $ 151,172 $ - $ 42,864 $ 20,200 $ 214,236
Cash received from interfund services provided 2,196,688 187,955 190,416 6,519,265 9,094,324
Cash payments to suppliers for goods and services (1,142,610) (168,025) (146,697) (4,073,343) (5,530,675)
Cash payments to employees for services (759,668) - (88,117) (512,077) (1,359,862)
Cash payments for interfund services used (301,227) - (2) (14) (301,243)
Cash received from (payments to) others 7,652 - - 176,809 184,461
Net cash provided (used) by operating activities 152,007 19,930 (1,536) 2,130,840 2,301,241
CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES:
Transfers out (36,256) (2,729) (1,065) (12,060) (52,110)
Net cash provided (used) by
noncapital financing activities (36,256) (2,729) (1,065) (12,060) (52,110)
CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES:
Principal paid on capital debt (41,524) - (23,088) - (64,612)
Interest paid on capital debt (5,021) - (1,424) - (6,445)
Net cash provided (used) by capital
and related financing activities (46,545) - (24,512) - (71,057)
CASH FLOWS FROM INVESTING ACTIVITIES:

Receipts from collections of interfund loans - - - 175,000 175,000
Investment income received 8,472 1,430 2,117 75,894 87,913
Net cash provided (used) by investing activities 8,472 1,430 2,117 250,894 262,913
Net increase (decrease) in cash and cash equivalents 77,678 18,631 (24,996) 2,369,674 2,440,987
CASH AND CASH EQUIVALENTS:

Beginning of year 308,391 83,261 143,222 1,208,032 1,742,906
End of year $ 386,069 $ 101,892 $ 118,226 $ 3,577,706 $ 4,183,893
RECONCILIATION OF OPERATING INCOME (LOSS) TO

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating income (loss) $ 40,231 $ 19,051 $ (75,185) $ 894,219 $ 878,316
Adjustments to reconcile operating income (loss) to net cash
provided (used) by operating activities:
Depreciation and amortization 20,847 - 64,329 1,632 86,808
Changes in current assets and liabilities:
Accounts receivable 36,039 - - 700,053 736,092
Due from other funds (10,116) - - - (10,116)
Prepaid items (431) - (46) 99 (378)
Inventories - (10,485) - - (10,485)
Deposits - - - (243,703) (243,703)
Accounts payable and other current liabilities 52,535 570 9,366 (63,259) (788)
Due to other funds - 10,794 - (45,356) (34,562)
Claims and judgments payable - - - 887,155 887,155
Compensated absences payable 12,902 - - - 12,902
Total adjustments 111,776 879 73,649 1,236,621 1,422,925
Net cash provided (used) by operating activities $ 152,007 $ 19,930 $ (1,536) $ 2,130,840 $ 2,301,241
NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES:

Decrease in fair value of investments $ (1,972) $ (620) $ (471) $ (11,491) $ (14,554)
128
Private-Purpose Trust Funds
McCaskill Trust - Local History - is restricted in purpose to promulgate local history. The principal and
income benefit the Library Joint Powers Authority,
McCaskill Trust - Visually Impaired - is restricted in purpose to providing library materials for the visually
impaired. The principal and income benefit the Library Joint Powers Authority.
The Finkeldey Trust - is restricted in purpose for the acquisition of musical literature. The principal and
income benefit the Library Joint Powers Authority.
129
City of Santa Cruz
Combining Statement of Fiduciary Net Assets
June 30, 2005
McCaskill McCaskill Total

Trust - Local Trust - Visually Finkeldey Private-Purpose
History Impaired Trust Trust Funds
ASSETS
Cash and cash equivalents $ 257,651 $ 246,784 $ 11,536 $ 515,971

Receivables:
Interest receivable 2,304 2,206 108 4,618
Total assets 259,955 248,990 11,644 520,589
NET ASSETS
Held in trust for library programs $ 259,955 $ 248,990 $ 11,644 $ 520,589
130
City of Santa Cruz
Combining Statement of Changes in Fiduciary Net Assets
McCaskill McCaskill Total

Trust - Local Trust - Visually Finkeldey Private-Purpose
History Impaired Trust Trust Funds
ADDITIONS:
Investment earnings $ 5,611 $ 5,386 $ 269 $ 11,266
Total additions 5,611 5,386 269 11,266
DEDUCTIONS:
Library programs 5,000 6,300 755 12,055
Total deductions 5,000 6,300 755 12,055
Change in net assets 611 (914) (486) (789)
NET ASSETS:
Beginning of year 259,344 249,904 12,130 521,378
End of year $ 259,955 $ 248,990 $ 11,644 $ 520,589
131
132
Agency Funds
Library Joint Powers Authority - Used to account for funds held by the City in an agency capacity
for the Library Joint Powers Authority, which was established to finance the operations of the former
City/County library system.
Trust Deposit Holding - This fund is used to hold cash deposits received from outside parties on a
temporary basis.
Payroll Payables - Used to account for cash transferred from various funds to pay for payroll
liabilities, which are paid out of this fund.
Special Assessments - Accounts for assets held by the City in an agency capacity for special
assessment districts. The City acts as agent for collection of principal and interest payments from the
property owners and remits these monies to the bondholders. If funds are not available, the City is
under no obligation to make bond payments from its own funds.
133
City of Santa Cruz
Combining Statement of Fiduciary Net Assets
Agency Funds
June 30, 2005
Library Trust Total

Joint Powers Deposit Payroll Special Agency
Authority Holding Payables Assessments Funds
ASSETS
Cash and cash equivalents $ 123,394 $ 446,306 $ 1,079,595 $ 144,213 $ 1,793,508

Investments - - - 91,632 91,632
Receivables:
Interest receivable 5,229 847 - 1,457 7,533
Taxes receivable 508,031 - - 7,891 515,922
Accounts receivable 520,779 - - - 520,779
Due from other governments 466 - - - 466
Prepaid Items 46,710 - - - 46,710
Total assets $ 1,204,609 $ 447,153 $ 1,079,595 $ 245,193 $ 2,976,550
LIABILITIES
Accounts payable and

other current liabilities $ 553,875 $ 13,302 $ 1,079,595 $ 1,735 $ 1,648,507
Due to other governments 640,532 - - - 640,532
Deferred revenue 10,202 - - - 10,202
Deposits payable - 433,851 - - 433,851
Payable to bondholders - - - 243,458 243,458
Total liabilities $ 1,204,609 $ 447,153 $ 1,079,595 $ 245,193 $ 2,976,550
134
City of Santa Cruz
Combining Statement of Changes in Assets and Liabilities
Agency Funds
Balance Balance
July 1, 2004 Additions Deletions June 30, 2005
Library Joint Powers Authority

Assets:
Cash and cash equivalents $ - $ 11,207,848 $ 11,084,454 $ 123,394
Receivables:
Interest receivable 846 16,457 12,074 5,229
Taxes receivable 523,613 508,031 523,613 508,031
Accounts receivable 611,522 520,899 611,642 520,779
Due from other governments 1,999 466 1,999 466
Prepaid Items 136 46,710 136 46,710
Total assets $ 1,138,116 $ 12,300,411 $ 12,233,918 $ 1,204,609

Liabilities:
Accounts payable and other current liabilities $ 421,392 $ 2,979,789 $ 2,847,306 $ 553,875
Due to other governments 679,339 - 38,807 640,532
Deferred revenue 37,385 245,028 272,211 10,202
Total liabilities $ 1,138,116 $ 3,224,817 $ 3,158,324 $ 1,204,609
Trust Deposit Holding

Assets:
Cash and cash equivalents $ 359,668 $ 2,129,129 $ 2,042,491 $ 446,306
Interest receivable 724 3,170 3,047 847
Total assets $ 360,392 $ 2,132,299 $ 2,045,538 $ 447,153

Liabilities:
Accounts payable and other current liabilities $ 4,545 $ 649,847 $ 641,090 $ 13,302
Deferred revenue 1,441 764 2,205 -
Deposits payable 354,406 2,129,159 2,049,714 433,851
Total liabilities $ 360,392 $ 2,779,770 $ 2,693,009 $ 447,153
Payroll Payables
Assets:
Cash and cash equivalents $ 517,714 $ 65,236,041 $ 64,674,160 $ 1,079,595
Total assets $ 517,714 $ 65,236,041 $ 64,674,160 $ 1,079,595

Liabilities:
Accounts payable and other current liabilities $ 517,714 $ 82,905,291 $ 82,343,410 $ 1,079,595
Total liabilities $ 517,714 $ 82,905,291 $ 82,343,410 $ 1,079,595
Special Assessments
Assets:
Cash and cash equivalents $ 148,845 $ 299,243 $ 303,875 $ 144,213
Investments 100,000 93,425 101,793 91,632
Receivables:
Taxes receivable 10,170 7,891 10,170 7,891
Total assets $ 263,903 $ 403,107 $ 421,817 $ 245,193

Liabilities:
Accounts payable and other current liabilities $ - $ 4,331 $ 2,596 $ 1,735
Payable to bondholders 263,903 124,555 145,000 243,458
Total liabilities $ 263,903 $ 128,886 $ 147,596 $ 245,193
135
136
STATISTICAL SECTION
(Unaudited)
137
City of Santa Cruz
General Government Expenditures by Function
Last Ten Fiscal Years
Community &
Fiscal General Public Parks and Public Economic Social
Year Government* Safety Recreation Library Works Development Services
1996 $ 6,451,398 $ 13,263,127 $ 6,884,301 $ 4,352,862 $ 3,641,572 $ - $ 1,130,750

1997 6,801,244 15,178,609 7,082,558 4,615,242 3,748,918 - 1,164,564
1998 7,243,351 16,537,380 7,466,564 1,508,087 3,735,292 - 1,301,223
1999 8,307,129 17,583,619 7,680,937 1,435,457 4,449,857 - 1,355,280
2000 8,658,374 18,175,374 7,998,743 1,404,622 4,893,280 - 1,568,533
2001 9,453,886 19,590,258 8,649,498 1,423,006 4,930,360 107,797 1,797,776
2002 10,015,075 21,316,301 9,816,703 1,410,148 5,047,532 90,532 2,147,331
2003 9,673,413 22,599,713 9,773,346 8,412,201 5,016,269 450,594 1,826,306
2004 8,967,025 24,647,937 9,721,229 8,528,577 3,989,048 71,949 1,656,875
2005 9,390,901 26,540,438 9,593,982 8,980,823 3,703,220 89,776 1,583,700
Notes:
This table includes expenditures of the General Fund.
Beginning in fiscal year 2003, the cost of personnel services provided to the Library Joint Powers Authority was
included in General Fund expenditures, as well as the cost of interfund personnel services provided.
Source: City of Santa Cruz Finance Department
138
Table 1
Earthquake Capital Debt

Damage Outlay Service Total
$ 391,281 $ 881,480 $ - $ 36,996,771

2,606,019 1,680,249 - 42,877,403
5,019,412 842,588 - 43,653,897
- 2,118,540 - 42,930,819
- 1,999,097 134,935 44,832,958
- 2,427,838 152,364 48,532,783
- 2,916,470 300,520 53,060,612
- 957,058 320,598 59,029,498
- 1,251,162 364,410 59,198,212
- 1,065,958 294,034 61,242,832
139
City of Santa Cruz
General Government Revenues by Source
Charges Fines Use of Money

Fiscal Licenses and Inter- for and and Other
Year Taxes Permits Governmental Services Forfeitures Property Revenues
1996 $ 24,378,881 $ 1,197,717 $ 2,580,270 $ 8,190,361 $ 1,288,803 $ 3,821,101 $ 172,287

1997 25,857,144 1,335,623 3,296,590 8,450,778 1,169,823 4,057,707 219,250
1998 23,292,917 1,366,948 3,410,230 6,290,188 1,064,554 3,623,968 280,513
1999 24,918,906 1,397,862 4,170,892 6,729,820 1,397,833 3,794,000 213,496
2000 27,646,368 1,595,964 4,732,311 6,566,033 1,347,496 3,574,121 324,802
2001 30,258,503 1,342,471 5,281,661 7,009,901 1,286,990 4,152,368 327,692
2002 29,238,472 1,267,939 5,339,612 7,151,012 1,282,697 3,577,774 397,896
2003 30,027,154 614,012 4,788,035 16,693,936 1,555,481 2,252,373 308,104
2004 31,696,322 529,649 3,745,601 16,865,754 1,799,557 2,086,163 418,764
2005 34,384,206 603,344 5,465,642 17,799,213 2,022,779 2,333,922 276,565
Notes:
This table includes revenue of the General Fund.
Beginning in fiscal year 2003, charges for personnel services provided to the Library Joint Powers Authority were
included in General Fund charges for services, as well as charges for interfund personnel services provided.Also, prior to
fiscal year 2003, business license taxes were shown in licenses and permits.
140
Table 2
Earthquake
Relief Total
$ 75,524 $ 41,704,944
654,926 45,041,841
- 39,329,318
- 42,622,809
- 45,787,095
- 49,659,586
- 48,255,402
- 56,239,095
- 57,141,810
- 62,885,671
141
City of Santa Cruz
Tax Revenues by Source
Fiscal Sales Transient Utility

Year Property and Use Franchise Occupancy Users Admission
1996 $ 8,434,673 $ 9,672,987 $ 1,660,067 $ 2,570,636 $ 6,022,023 $ 1,528,661

1997 9,192,280 10,314,425 1,695,707 2,710,994 6,338,533 1,511,605
1998 9,784,131 7,191,934 1,736,039 2,716,397 6,557,490 1,539,111
1999 10,484,409 7,415,341 2,476,604 3,174,694 6,912,440 1,502,540
2000 12,176,209 8,857,748 2,771,014 3,541,396 7,149,619 1,583,897
2001 13,342,450 9,790,693 2,851,830 3,900,905 8,246,829 1,611,318
2002 14,944,971 9,126,341 2,996,907 3,131,378 7,627,331 1,612,526
2003 15,629,920 8,291,244 3,132,743 2,932,256 7,592,049 1,664,150
2004 15,792,225 9,084,026 3,329,454 3,016,463 7,638,926 1,724,330
2005 16,501,921 11,383,231 3,478,971 3,067,869 8,080,171 1,629,164
Notes:
This table includes all governmental fund types.
Fiscal years 1996 through 1997 include half-cent sales tax override (Measure E) for earthquake repairs. The half-cent
override ended March 31, 1997.
Prior to fiscal year 2003, business license taxes were shown in permits and licenses.
Beginning with fiscal year 2003, business improvement taxes include the Co-op Retail Management Business Real
Property Improvement District.
142
Table 3
Park and
Business Property Business Recreation
Parking Improvement Transfer License Facilities
$ 146,426 $ 140,859 $ 115,843 $ - $ -

158,576 168,736 136,174 - -
147,877 175,114 162,915 - -
192,352 167,500 186,624 - -
158,229 170,369 219,132 - -
178,373 183,711 200,041 - -
194,646 175,868 194,632 - -
199,371 273,965 191,042 784,446 551,514
221,133 296,536 276,466 792,893 357,305
221,790 292,422 325,305 777,308 510,348
143
City of Santa Cruz Table 4
Property Tax Levies and Collections
Outstanding
Total Delinquent
Percent Delinquent Total Collections as Outstanding Taxes as
Total Tax Current Tax of Levy Tax Tax as Percent of Delinquent Percent of
Fiscal Year Levy Collections Collected Collections Collections Current Levy Taxes Current Levy
1996 $ 8,130,382 $ 8,130,382 100.0% ** $ 8,130,382 100.0% ** **

1997 8,800,364 8,800,364 100.0% ** 8,800,364 100.0% ** **
1998 9,396,855 9,396,855 100.0% ** 9,396,855 100.0% ** **
1999 10,104,672 10,104,672 100.0% ** 10,104,672 100.0% ** **
2000 11,732,295 11,732,295 100.0% ** 11,732,295 100.0% ** **
2001 12,516,202 12,516,202 100.0% ** 12,516,202 100.0% ** **
2002 14,190,378 14,190,378 100.0% ** 14,190,378 100.0% ** **
2003 14,639,056 14,639,056 100.0% ** 14,639,056 100.0% ** **
2004 15,335,693 15,335,693 100.0% ** 15,335,693 100.0% ** **
2005 16,013,591 16,013,591 100.0% ** 16,013,591 100.0% ** **
Notes:
This table includes levies and collections for the Redevelopment Agency.
** Because it adopted a new method of distributing property taxes (commonly referred to as the "Teeter Plan"), the
County is now responsible for all delinquent secured property taxes.
Source: County of Santa Cruz Auditor-Controller's Office
144
Assessed and Estimated Actual Value of Taxable Property
Secured Roll Unsecured Roll Total

Fiscal Year Assessed Value Assessed Value Assessed Value
1996 $ 2,902,071,132 $ 185,926,518 $ 3,087,997,650

1997 3,027,381,953 176,491,197 3,203,873,150
1998 3,151,981,755 176,321,921 3,328,303,676
1999 3,297,460,618 186,050,833 3,483,511,451
2000 3,583,471,174 198,830,667 3,782,301,841
2001 3,844,483,638 207,913,809 4,052,397,447
2002 4,217,070,195 237,668,331 4,454,738,526
2003 4,443,604,163 237,898,436 4,681,502,599
2004 4,707,428,936 225,168,674 4,932,597,610
2005 5,032,925,742 217,439,195 5,250,364,937
Notes:
This table has been adjusted to reflect fiscal year assessed values.
With the passage of a constitutional amendment (Proposition 13) and subsequently enacted State legislation,
property is assessed according to base year rather than on a percentage of market value. Accordingly, a reliable
estimate of actual value a taxable property within the City is not possible.
145
Property Tax Rates and Tax Levies - Direct and Overlapping Governments
Fiscal Year City School District County Totals
Tax Rates
1996 0.000 0.000 1.000 1.000
1997 0.000 0.000 1.000 1.000
1998 0.000 0.000 1.000 1.000
1999 0.000 0.000 1.000 1.000
2000 0.009 0.039 1.000 1.048
2001 0.009 0.034 1.000 1.043
2002 0.009 0.034 1.000 1.043
2003 0.009 0.038 1.000 1.047
2004 0.009 0.037 1.000 1.046
2005 0.009 0.035 1.000 1.044
Tax Levies
1995 $ - $ - $ 26,939,307 $ 26,939,307

1996 - - 28,350,522 28,350,522
1997 - - 29,362,800 29,362,800
1998 - - 30,864,164 30,864,164
1999 - 1,264,689 33,281,294 34,545,983
2000 291,566 1,263,453 32,396,229 33,951,248
2001 309,453 1,340,963 34,383,654 36,034,070
2002 333,401 1,444,739 37,044,583 38,822,723
2003 352,611 1,527,983 39,179,039 41,059,633
2004 374,721 1,540,518 41,635,632 43,550,871
2005 396,383 1,541,488 44,042,520 45,980,391
Notes:
The passage of a constitutional amendment (Proposition 13) in June 1978 limits the property rate to a base of $1.00 per
$100.00 plus the rates necessary to fund voter approved general obligation bonds. The $1.00 rate is levied by the County
and apportioned to local agencies according to a formula perscribed by the California legislature.
Source: Santa Cruz County Auditor - Controller
146
Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita
Gross Debt Ratio of Net Net Bonded

Assessed Bonded Service Monies Net Bonded Bonded Debt to Debt per
Fiscal Year Population Value Debt Available Debt Assessed Value Capita
1996 52,731 $ 3,087,997,650 $ - $ - $ - $ - $ -

1997 53,172 3,203,873,150 - - - - -
1998 53,172 3,328,303,676 - - - - -
1999 54,575 3,483,511,451 6,998,473 12 6,998,461 0.00201 128.24
2000 56,046 3,782,301,841 7,176,298 125,218 7,051,080 0.00186 125.81
2001 55,028 4,052,397,447 7,299,481 277,763 7,021,718 0.00173 127.60
2002 55,085 4,454,738,526 7,286,115 324,117 6,961,998 0.00156 126.39
2003 55,633 4,681,502,599 7,260,759 389,184 6,871,575 0.00147 123.52
2004 56,289 4,932,597,610 7,228,153 457,945 6,770,208 0.00137 120.28
2005 56,451 5,250,364,937 7,183,381 557,277 6,626,104 0.00126 117.38
Notes:
This table has been adjusted to reflect fiscal year assessed values.

City of Santa Cruz Finance Department
147
Computation of Legal Debt Margin
June 30, 2005
Total assessed value $ 5,250,364,937
Legal debt limit - 15% of total assessed valuation 787,554,741
Amount of debt applicable to debt limit:
Total bonded debt, general obligation $ 7,183,381
Less:
Assets in debt service fund 557,277
Total amount of debt applicable to debt limit 6,626,104
Legal debt margin $ 780,928,637
Notes:
Section 1418 of the Charter of the City of Santa Cruz limits general obligation bonds indebtedness to 15% of the total
assessed valuation of all real personal property within the City.
148
Ratio of Annual Debt Service Expenditures for General Bonded Debt to Current General Expenditures
Ratio of
Total Debt Service
Total Current to General
Fiscal Year Principal Interest Debt Service Expenditures Expenditures
1996 $ - $ - $ - $ 40,103,360 0.00%

1997 - - - 45,714,494 0.00%
1998 - - - 45,367,901 0.00%
1999 - - - 45,668,003 0.00%
2000 - 207,854 207,854 42,698,926 0.49%
2001 10,000 226,350 236,350 45,952,581 0.51%
2002 142,624 230,726 373,350 49,843,622 0.75%
2003 152,834 230,116 382,950 57,751,842 0.66%
2004 157,796 229,554 387,350 57,582,640 0.67%
2005 168,798 227,352 396,150 59,882,840 0.66%
Notes:
This table includes the General Fund.
General Obligation bonds were issued in fiscal year 1999, however no debt service payments were made. Debt service
payments began in fiscal year 2000.
Beginning in fiscal year 2003, the cost of personnel services provided to the Library Joint Powers Authority was
included in General Fund expenditures, as well as the cost of interfund personnel services provided.
149
Computation of Direct and Overlapping Debt
June 30, 2005
2004-2005 Assessed Valuation $ 5,250,364,937

Redevelopment Incremental Valuation: 846,112,954
Adjusted Assessed Valuation: $ 4,404,251,983
Net General Percentage Amount

Obligation Debt Applicable Applicable
Outstanding to City to City
DIRECT:
City of Santa Cruz $ 7,183,381 100.000% $ 7,183,381
Total direct $ 7,183,381 $ 7,183,381 (1)
OVERLAPPING:
Cabrillo Joint Community College District $ 26,695,806 20.087% $ 5,362,387
Santa Cruz High School District 28,343,540 53.931% 15,285,955
Santa Cruz Elementary School District 24,207,496 94.925% 22,978,966
Live Oak School District 527,746 4.099% 21,632
Scott's Valley Unified School District 2,616 1.200% 31
City of Santa Cruz 1915 Act Bonds 1,810,000 100.000% 1,810,000
Santa Cruz County Certificates of Participation 14,430,109 20.361% 2,938,114
Cabrillo Joint Community College District Certificates of Participation 647,806 20.087% 130,125
Scotts Valley Unified School District Certificates of Participation 491 1.200% 6
Santa Cruz City Schools Certificates of Participation 3,095,639 53.931% 1,669,509
Live Oak School District Certificates of Participation 163,960 4.099% 6,721
City of Santa Cruz General Fund Obligations 9,360,000 100.000% 9,360,000 (2)
Santa Cruz Consolidated Emergency Communication Center 1,005,840 100.000% 1,005,840
Monterey Bay Unified Air Pollution Control District Authority 265,241 7.159% 18,989
Total overlapping $ 110,556,290 $ 60,588,275 (3)
Combined Total Debt $ 117,739,671 $ 67,771,656
(1) Direct debt is reported at the accreted value

(2) Excludes issues self-supporting from enterprise revenues ($7,515,000)
(2) Includes $5,265,000 for Certificates of Participation that are primarily supported by enterprise revenue. Under the
lease agreement, however, the City is obligated to pay the lease payments from any source of legally available funds.
(3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and tax allocation bonds and
non-bonded capital lease obligations
Ratios to 2004-2005 Assessed Valuation:

Direct Debt ($7,183,381) 0.14%
Total Overlapping Tax and Assessment Debt 1.69%
Ratios to Adjusted Assessed Valuation:

Combined Direct Debt ($17,549,221) 0.40%
Combined Total Overlapping Tax and Assessment Debt 2.67%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/05: $0
Source: California Municipal Statistics, Inc.
150
Revenue Bond Coverage
Net Revenue Debt Service Requirements

Available
Gross for
Fiscal Year Revenue Expenses* Debt Service Principal Interest Total Coverage
1996 $ 10,129,068 $ 5,599,960 $ 4,529,108 $ 380,000 $ 1,332,735 $ 1,712,735 2.6

1997 10,579,889 5,984,051 4,595,838 405,000 1,309,565 1,714,565 2.7
1998 10,730,501 6,054,987 4,675,514 725,000 1,274,454 1,999,454 2.3
1999 12,179,844 7,379,231 4,800,613 765,000 1,227,031 1,992,031 2.4
2000 12,846,315 7,856,133 4,990,182 115,000 296,608 411,608 12.1
2001 11,585,518 7,275,278 4,310,240 120,000 290,733 410,733 10.5
2002 12,146,047 8,929,861 3,216,186 125,000 284,608 409,608 7.9
2003 12,306,445 9,415,409 2,891,036 130,000 278,233 408,233 7.1
2004 12,230,219 9,855,372 2,374,847 135,000 271,608 406,608 5.8
2005 12,578,070 9,964,418 2,613,652 140,000 264,733 404,733 6.5
* Total expenses exclusive of depreciation and bond interest.
151
Demographic Statistics
Per Capita
Fiscal Year Population Taxable Sales* Taxable Sales
1996 52,731 $ 499,232,000 $ 9,468

1997 53,172 550,962,000 10,362
1998 53,172 680,283,000 12,794
1999 54,575 634,138,000 11,620
2000 56,046 725,287,000 12,941
2001 55,028 828,500,000 15,056
2002 55,085 809,628,000 14,698
2003 55,633 761,208,000 13,683
2004 56,289 761,986,000 13,537
2005 56,451 795,060,000 14,084
* Calendar year ended during the fiscal year.
Source: State Board of Equalization
152
Principal Taxpayers
June 30, 2005
Percentage
2005 of Total
Assessed Assessed
Taxpayer Type of Business Valuation Valuation
Santa Cruz Seaside Co Entertainment $ 41,169,539 0.784%

Sequoia Equities-Cyress Point Etal Apartments 34,253,646 0.652%
Santa Cruz Shaffer Road Investors Apartments 26,944,133 0.513%
Canfield Laurel & Pacific Ltd Partn Commercial Rentals 23,173,241 0.441%
Santa Cruz Hotel LLC Hotel 22,183,650 0.423%
Frederick Electronics Corp. Electronics 19,062,409 0.363%
Cooper House LLC Commercial Rentals 18,410,406 0.351%
Silicon Systems Inc Electronics 18,271,785 0.348%
Harmony Partners LLC Food Manufacturing 17,963,202 0.342%
The Price Company Commercial Rentals 15,469,720 0.295%
Totals $ 236,901,731 4.512%
Total assessed value $ 5,250,364,937
Notes:
Taxpayers and values presented in this table reflect the County's 2004-2005 Assessment Roll Reports.
The denominator is from Table 5, Total Assessed Value.
Source: County of Santa Cruz Assessor's Office
153
Property Value and Construction
Commercial Residential
Construction (1) Construction (1) Property Value (2)
Number Number Total Assessed

Fiscal Year of Units Value of Units Value Value
1996 5 $ 3,332,000 93 $ 13,428,000 $ 3,087,997,650

1997 12 2,509,000 286 24,265,000 3,203,873,150
1998 27 26,685,000 85 12,183,000 3,328,303,676
1999 17 32,368,157 99 11,521,642 3,483,511,451
2000 12 2,916,634 46 9,168,875 3,782,301,841
2001 18 1,482,082 107 12,434,980 4,052,397,447
2002 7 4,299,498 79 12,376,653 4,454,738,526
2003 10 1,598,069 622 60,192,772 4,681,502,599
2004 11 3,348,691 94 13,046,637 4,932,597,610
2005 11 984,188 159 18,649,125 5,250,364,937
Source: (1) City of Santa Cruz Building Inspector

(2) County of Santa Cruz Assessor's Office
154
Miscellaneous Statistical Data
June 30, 2005
Form of Government: Parks and Recreation: (continued)
Council/City Manager Special Facilities:

Archery Range
City incorporated March 31, 1866 Beach Flats Community Center
Present charter adopted March 12, 1948 Civic Auditorium
Depot Park Freight Building
Harvey West Clubhouse and Scout House
Number of Budgeted City Employees: Harvey West Kids Kottage and Wagner Cottage
(Regular funded positions only) Louden Nelson Community Center
Classified service 696 Municipal Wharf
Exempt 121 Museum of Natural History
Total Full Time Equivalent Positions 817 Neary Lagoon Wildlife Habitat
Senior Center (SCO)
Fire: Stroke Center
Number of budgeted positions 54 Surfing Museum
Number of stations 3 Teen Center
Police: Libraries - (City-County):

Number of budgeted positions 124 Number of budgeted positions 118
Vehicular patrol units 61 Number of libraries:
Central Library 1
Public Parking: Branch libraries within city 2
Number of lots 21 Branch libraries in county 7
Number of spaces 5,149 Bookmobile 1
Number of parking meters* 1,764
Streets:
Parks and Recreation: Miles of paved streets 136
Number of budgeted positions 101 Miles of alleys 13
Number of parks 30 Street lights 2,893
Total acreage 1,970
Playgrounds in city parks 17 Sewers:
Skate parks in city parks 1 Miles of sanitary sewers 151
Public swimming pool 1 Miles of storm drains 50
Tennis courts 8
Golf course 1 Water:
Ball fields 8 Meters in service 23,799
Frisbee golf course 1 Gallons - Average daily consumption (MGD) 10
Lawn bowling facility 1 Miles of water mains* 290
River levee bike path (miles) 4 Fire hydrants 2,089
155
Insurance in Force
June 30 2005
Amount of
Type Insurer Property Covered Coverage
Liability (1) ACCEL Risk Pool, the All City operations $ 22,000,000
Insurance Company of the State (per occurrence)
of Pennsylvania, and Lexington
Insurance Company
Property (2) Various Insurance Companies Real Property and 750,000,000

Equipment
Loss of Income Various Insurance Companies City Hall and other 5,000,000
named locations
Boiler and Machinery Various Insurance Companies Machinery 100,000,000
Excess Workers' Compensation (3) California Public Entity N/A 159

Insurance Authority
Crime and Employee Hartford Fire Insurance Cash and Valuables 500,000
Dishonesty (2)
Notary Errors and Omissions Western Surety Company N/A 10,000

(per notary)
Notes: (1) Self-insured retention of $1,000,000 per occurrence

(2) Subject to various sub-limits and deductibles
(3) Self-insured retention of $500,000 per occurrence
Source: City of Santa Cruz Risk Manager
156

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City of

Comprehensive Annual Financial Report

For the year ended June 30, 2005

PREPARED BY THE CITY OF SANTA CRUZ, CALIFORNIA

DAVID P. CULVER, FINANCE DIRECTOR

Transmittal Letter ................................................................................................................................................... i

Independent Auditors’ Report........................................................................................................................... 1

Management’s Discussion and Analysis ......................................................................................................... 3

Basic Financial Statements:

Government-Wide Financial Statements:

Fund Financial Statements:

Proprietary Fund Financial Statements:

Fiduciary Fund Financial Statements:

Index to Notes to Basic Financial Statements ............................................................................................49

Notes to Basic Financial Statements ............................................................................................................51

Table of Contents, Continued

Required Supplementary Information:

Non-Major Governmental Funds:

Internal Service Funds:

Table of Contents, Continued

Private-Purpose Trust Funds:

STATISTICAL SECTION (Unaudited)

General Governmental Expenditures by Function (Table 1) ...........................................................................138

Profile of the Government

Factors Affecting Financial Condition

Economic Conditions and Outlook

Cash management and policies

Mayor Mike Rotkin

Vice Mayor Cynthia Mathews Councilmember Emily Reilly

Councilmember Ryan Coonerty Councilmember Tim Fitzmaurice

Councilmember Ed Porter Councilmember Tony Madrigal

City Manager, Richard C. Wilson

Assistant City Manager ........................................................................................ Martin Bernal

Chief of Fire............................................................................................................. Ron Prince

Chief of Police......................................................................................................... Howard Skerry

City Attorney .......................................................................................................... John G. Barisone

City Clerk ................................................................................................................ Leslie Cook

Director of Finance ................................................................................................ David P. Culver

Director of Libraries............................................................................................... Anne M. Turner

Director of Parks and Recreation ........................................................................ Dannette E. Shoemaker

Director of Human Resources ............................................................................. Erwin Young

Director of Planning and Community Development ..................................... Eugene O. Arner

Director of Public Works and City Engineer.................................................... Mark Dettle

Director of Redevelopment Agency................................................................... Ceil Cirillo

Director of Water Department ............................................................................ Bill Kocher

Financial Highlights – Primary Government (in $ millions)

Overview of the Financial Statements

Government-Wide Financial Analysis (in $ millions)

City of Santa Cruz's Net Assets

Total assets 206.1 199.1 325.6 324.7 531.7 523.8

Current liabilities 9.0 11.2 10.3 10.8 19.3 22.0

Total liabilities 38.3 36.9 87.7 92.2 126.0 129.1

Total net assets $ 167.8 $ 162.2 $ 237.8 $ 232.5 $ 405.6 $ 394.7

General revenues and transfers:

Change in governmental activities net assets $ 5.6 $ (3.2)

EXPENSES & PROGRAM REVENUES- GOVERNMENTAL ACTIVITIES FISCAL YEAR 2005

Other General Revenues,

Unrestricted Grants and

Transient Occupancy Tax, Oper.Grants &

Capital Grants &

EXPENSES & PROGRAM REVENUES - BUSINESS-TYPE ACTIVITIES FISCAL YEAR 2005

Capital Grants &

Operating Grants &