It gives me pleasure to submit the City of Oakland's Comprehensive Annual Financial Report

(CAFR) (City). In order to provide the financial situation and shifts in the company's situation for
the fiscal year ending June 30, 2003, as well as the free cash flow of its customized fund types
for the year ended, the Finance and Management Agency has prepared this report. Section 809
of the City Charter, California Government Code Sections 25250 and 25253, as well as
generally accepted accounting principles (GAAP) for local governments as founded by the
Regulatory Accounting Standards Board, have all been complied with in the preparation of the
basic financial statements and accompanying schedules (GASB).

Two elements make up our Comprehensive Annual Financial Report:

The transmittal letter, details on the City's organizational structure, its profile, data that can be
used to evaluate the City's financial situation, and the Government Finance Officers
Association's (GFOA) Award of Excellence are all included in the Opening Section.

The Management's Discussion and Analysis (MD&A), the Basic Financial Statements with
Notes, and the Required Supplementary Information are all included in the Financial Section in
compliance with the GASB 34 criteria. The government-wide financial statements, which give a
general overview of the City's entire financial operations, and the fund financial statements,
which give the financial details of each of the City's major funds as well as non-major
governmental and fiduciary funds, are included in the Basic Financial Statements. The
Independent Auditors' Report on the fundamental financial accounts is also provided in this part.

Financial Condition Influencing Factors

The City adopts a yearly budget with allocated funds for its general fund. To show adherence to
this budget, a budgetary comparison schedule for the general fund has been included in the
necessary supplemental material.

Exclusive money. Private funds are typically used to account for services that the City provides
to paying clients, whether they be internal City departments or external clients. The information
provided by proprietary funds is similar to that in the government-wide declarations but is more
thorough. The City manages the next two kinds of exclusive funds:

The same functions reported in the government-wide financial accounts as business-type

operations are reported using enterprise funds. The Sewer Service System and Parks and
Recreation operations are accounted for by the City using enterprise money. One of the City's
most important funds is thought to be the Sewer Service Fund.

Activities that supply services and supplies for specific City programmes and activities are
reported using internal service monies. The City keeps track of its fleet of vehicles, radio and
communication equipment, facility management, printing and reproduction, and central stores
using internal service funds. These services have been classified under governmental activities
in the government's overall financial accounts since they primarily support governmental rather
than business-type functions.

fund fiduciaries. Resources held for the benefit of employees and parties outside the City are
recorded using fiduciary funds. Pension trust funds include the Police and Fire Retirement
System (PFRS), Private Purpose Trust Fund, and the Oakland Municipal Employees Retirement
System (OMERS) Fund. These funds are not included in the financial statements for the entire
government because they do not have the capacity to support the City's own initiatives.
Accounting for fiduciary funds is quite similar to accounting for proprietary money.

Government resources. Information on short-term inflows, outflows, and balances of spendable

resources is the main goal of the City's governmental funds. This data is helpful in determining
the City's finance needs. A good indicator of a government's net resources available for
spending at the conclusion of the fiscal year may be the unreserved fund balance in particular.

Exclusive money.
The City's proprietary funds offer more specific information similar to that seen in the
business-type column of the government-wide financial statements. As of June 30, 2003, the
fraction of net assets invested in capital assets, net of related debt, was $109.7 million, up from
$103.2 for the prior fiscal year. Net of depreciation, the City added about $6.5 million in capital
assets for the wastewater system during the fiscal year. The initiatives that were declared
finished and put into operation made up the majority of the $6.5 million invested in the sewer
system.

Conclusion

When analysing the facts surrounding this, it is clear that the money used by the Municipality
can be employed wisely to obtain the most benefits associated to this as well. Also noted are
the capital projections that are fairly divided to the various segments and that can be used to
promote the welfare of the state.