Fy2007 Cafr

City of Santa Cruz, California
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Fiscal Year Ended June 30, 2007
Cover and Photo by Natalia Duarte

City of Santa Cruz
State of California
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2007
Prepared by
Sandra Benoit
Cheryl Fyfe
Tori Hannah Raymond Chin Kim Wigley

Kathryn Mintz Ray Galindo Shelley Horrow
Ralph Reader Natalia Duarte
City of Santa Cruz
For the year ended June 30, 2007
Table of Contents
Page
INTRODUCTORY SECTION
Transmittal Letter ................................................................................................................................................... i

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

Statement of Net Assets..........................................................................................................................22
Statement of Activities and Changes in Net Assets ...........................................................................24
Fund Financial Statements:

Government Fund Financial Statements:
Balance Sheet .....................................................................................................................................30
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Assets................................................................31
Statement of Revenues, Expenditures and Changes in Fund Balances ....................................32
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 ..............................................................33
Proprietary Fund Financial Statements:

Statement of Net Assets ...................................................................................................................36
Statement of Revenues, Expenses and Changes in Net Assets ..................................................40
Statement of Cash Flows..................................................................................................................42
Fiduciary Fund Financial Statements:

Statement of Fiduciary Net Assets .................................................................................................48
Statement of Changes in Fiduciary Net Assets.............................................................................49
Index to Notes to Basic Financial Statements ............................................................................................51
Notes to Basic Financial Statements ............................................................................................................53

City of Santa Cruz
Table of Contents, Continued
Page
FINANCIAL SECTION, Continued
Required Supplementary Information:
Budgetary Information....................................................................................................................................98
Budgetary Comparison Schedule – General Fund ...............................................................................102
Reconciliation of Net Changes in Fund Balances – Budgetary to GAAP Basis:
General Fund .......................................................................................................................................103
Budgetary Comparison Schedule – Redevelopment Agency ............................................................104
Redevelopment Agency .....................................................................................................................105
Defined Benefit Pension Plan .........................................................................................................................107
Supplementary Information:
Non-Major Governmental Funds:

Combining Balance Sheet.........................................................................................................................112
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................114
Schedule of Budget and Actual Revenues – General Fund .................................................................116
Schedule of Budget and Actual Expenditures and Other Financing Uses for
Legally Adopted Appropriations by Department – General Fund .............................................118
Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual:
Police Special Revenue Fund.............................................................................................................120
State Highway Special Revenue Fund .............................................................................................121
Traffic Impact Fee Fund .....................................................................................................................122
Parks and Recreation Fund................................................................................................................123
Housing and Community Development Fund...............................................................................124
Transportation Development Act.....................................................................................................125
General Obligation Bond Debt Service ............................................................................................126
General Capital Improvement Projects............................................................................................127
Non-Major Governmental Funds .....................................................................................................128
Internal Service Funds:

Combining Statement of Net Assets.......................................................................................................130
Combining Statement of Activities and Changes in Net Assets.........................................................131
Combining Statement of Cash Flows .....................................................................................................132
City of Santa Cruz
Table of Contents, Continued
Page
FINANCIAL SECTION, Continued
Private-Purpose Trust Funds:

Combining Statement of Fiduciary Net Assets .....................................................................................134
Combining Statement of Changes in Fiduciary ....................................................................................135
Agency Funds:
Combining Statement of Fiduciary Net Assets .....................................................................................138
Combining Statement of Changes in Assets and Liabilities................................................................139
STATISTICAL SECTION (Unaudited)
Net Assets by Component..................................................................................................................................... 143

Changes in Net Assets ........................................................................................................................................... 144
Fund Balances of Governmental Funds .............................................................................................................. 146
Changes in Fund Balances of Governmental Funds ......................................................................................... 149
General Governmental Tax Revenue by Source ................................................................................................ 150
General Fund Revenue by Source ........................................................................................................................ 152
Assessed Value of Taxable Property.................................................................................................................... 153
Direct and Overlapping Property Tax Rates ...................................................................................................... 154
Principal Property Tax Owners ............................................................................................................................ 155
Property Tax Levies and Collections ................................................................................................................... 157
Ratios of Outstanding Debt by Type .................................................................................................................. 158
Ratios of General Bonded Debt Outstanding ..................................................................................................... 160
Computation of Direct and Overlapping Debt .................................................................................................. 161
Legal Debt Margin Information ........................................................................................................................... 162
Pledged-Revenue Coverage.................................................................................................................................. 164
Demographics and Economic Statistics............................................................................................................... 166
Principal Employers............................................................................................................................................... 167
Number of City Employees by Department....................................................................................................... 168
Operating Indicators by Function ........................................................................................................................ 169
Capital Asset Statistics by Function..................................................................................................................... 170
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809 Center Street, Room 8, Santa Cruz, CA 95060 831 420-5052 Fax: 831 420-5051 www.ci.santa-cruz.ca.us
November 30, 2007
To the Honorable Mayor, Members of the City Council and Citizens of the
City of Santa Cruz, California:
In accordance with the City Charter, the Comprehensive Annual Financial Report of the City of Santa Cruz
for the fiscal year ended June 30, 2007, is submitted for your information and review. Various financing
covenants and regulations associated with restricted funding sources also require the City of Santa Cruz,
California (City) to publish a complete set of financial statements presented in conformance with generally
accepted accounting principles (GAAP) and audited by a firm of licensed certified public accountants.
Pursuant to the requirements noted above, we hereby issue the Comprehensive Annual Financial Report of
the City of Santa Cruz, California for the fiscal year ended June 30, 2007.
This report consists of management's representations concerning the finances of the City of Santa Cruz.
Consequently, management assumes full responsibility for the completeness and reliability of all the
information presented in this report. To provide a reasonable basis for making these representations,
management of the City of Santa Cruz has established a comprehensive internal control framework that is
designed both to protect the government's assets from loss, theft or misuse and to compile sufficient reliable
information for the preparation of the City of Santa Cruz's financial statements in conformity with GAAP.
Because the cost of internal controls should not outweigh their benefits, the City of Santa Cruz's
comprehensive framework of internal controls has been designed to provide reasonable, rather than
absolute, assurance that the financial statements will be free from material misstatement. As management,
we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all
material respects.
Caporicci & Larson, a firm of licensed certified public accountants, has audited the City of Santa Cruz's
financial statements. The goal of the independent audit was to provide reasonable assurance that the
financial statements of the City of Santa Cruz for the fiscal year ended June 30, 2007, are free of material
misstatement. The independent audit involved examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements; assessing the accounting principles used and
significant estimates made by management; and evaluating the overall financial presentation. The
independent auditor concluded, based on the audit, that there was a reasonable basis for rendering an
unqualified opinion that the City of Santa Cruz’s financial statements for the fiscal year ended June 30, 2007,
are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first
component of the financial section of this report.
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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 57,553 as of January 2007. 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 area’s major industries include agriculture, tourism,
manufacturing, food processing, and technology.
Like other cities in California, the City of Santa Cruz has limited ability to set tax rates. The State
Constitution (Prop 13) establishes a maximum rate for property tax and limits the growth of assessed value.
Prop 13 sets the limit for increases of the property tax rate to 2% per year, but upon sale, full value becomes
the 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 City receives 21% of the property tax
assessed against property within the City limits.
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
various departments. The Council is elected on a non-partisan basis. Council Members serve four-year
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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, Stormwater, and Refuse in addition to 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 Redevelopment Agency's board, and the Agency functions 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.
As required by the City Charter, 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 declined
significantly through FY 2004. Tax revenues have shown steady positive growth for the last 10 years. The
recent improvements in the local economy are being offset by significant labor cost increases and have
resulted in projecting minimal increases in fund balance for future years. The local economy is linked to a
large degree to the economy of the nearby Silicon Valley region, whose growth continues to improve.
Over the last four year period, ending with fiscal year 2007, there has been substantial growth in assessed
value of real property. The assessed value is approximately $6.2 billion which is an increase of $.5 billion or
8.7% increase over FY 2006. Property Tax revenues are up $2.1 million or 11.6% over the previous year.
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Property tax revenues have increased 7% or more every year for the past 10 years, the dollar increase in 10
years is $10.9 million or 116.1%. Property values are expected to hold steady over the next few years, and
taxes are expected to continue to increase due to the turnover of Prop 13 homes which will become fully
taxable.
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.
Another significant event that took place in recent years was the approval of a ¼ cent transactions and use
tax by the voters. 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%. City Council authorized
submitting Measure F, the ¼ cent sales tax measure, to the voters in March 2003. This is a five-year general
tax which was approved by a 69% majority and is effective July 1, 2007.
In November 2007, the voters approved Measure H, making the Measure F ¼ cent sales tax permanent and
approving an additional ¼ cent sales tax to become effective April 1, 2007. Measure H is a Transaction and
Use Tax and is not tied to site of the sale. The Measure H tax went into effect April 1, 2007, and the first
quarter returns were 10% above original estimates, due mostly to the improvements in the local economy.
The total Sales Tax (including the transaction tax) rate for Santa Cruz is 8.5%.
Historical Trend Information
Property Tax
The historical trend for property tax has been very positive showing substantial growth given the assessed
value of property is approximately $6.2 billion with growth in this year of 8.7%. Property Tax revenues are
up $2.1 million or 11.6% over the previous year.
CITY OF SANTA CRUZ

PROPERTY TAX
In $ Millions
25.0
20.0
15.0
10.0
5.0
-
FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07
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Sales & Use Tax, Local Transactions and Use Tax and Supplemental Property Tax In-Lieu of Sales Tax
Although sales tax revenues have consistently trended up over the past 10 years, beginning in FY06, there is
significant upward movement, due to improvements in the local economy and increases in tourism. FY 07
was the 100th anniversary of the Santa Cruz Boardwalk; the celebration brought large numbers of visitors to
the City.
Sales tax increased $1.1 million or 9.4% in FY 07 over FY 06.
CITY OF SANTA CRUZ

SALES TAX
In $ Millions
14.0
12.0
10.0
8.0
6.0
4.0
2.0
-
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Transient Occupancy Tax
Transient Occupancy Tax (TOT) declined after 2001, initial declines were related to September 11th and the
resulting lack of tourists. However, in Fiscal Year 02, The University of California acquired the Holiday Inn
on a 10 year lease to use as a dormitory. This reduced the rooms available to pay TOT by 170. There have
been no new hotels to make up for the reduction in rooms; however, rates have increased and TOT is again
trending up. The Coast Hotel, the City’s major upscale hotel is in process of a remodel which will
significantly upgrade the interior of the hotel. Their intention is to increase rates when the remodel is
complete.
CITY OF SANTA CRUZ

TRANSIENT OCCUPANY TAX
In $ Millions
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
-
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Utility Users Tax
The utility users tax is the third largest revenue source for the City, coming after property tax and sales tax.
The utility users tax is comprised of a tax on eight utilities; electric, wired telecom, wireless telecom, natural
gas, cable, water, wastewater, and refuse (the last three being municipal utilities). The rate for the tax is
7% and hasn’t changed since October 1991. Clarifications of how the tax is applied were implemented in
1993 and 1994.
Modest increases over the last three years can be attributed to a number of factors. There have been
declines in electric and wired telecom while wireless telecom, gas, and cable have increased. The most
significant factor for the rise in overall revenues point to the Water, Wastewater, and Refuse municipal
utilities and the increase tax revenues due to recent customer rate increases.
CITY OF SANTA CRUZ

UTILITY USERS TAX
In $ Millions
8.4
8.2
8.0
7.8
7.6
7.4
7.2
7.0
6.8
6.6
Risk management. The City of Santa Cruz uses a program of self-insurance 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, 2007, of $2.9 million, an improvement of $1.4 due to lower actual claims
reducing the actuarial liabilities.
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Health care costs. The City contracts with CalPERS for employee health care coverage. Under this
program, employer premiums increased:
• 15.2 % in FY 05
• 9.4% in FY 06
• 12.5% in FY 07
Expected increases for FY 08 are 8.4%. PERS manages rates to stay under the overall market due to their
size and therefore the ability to affect rates.
State budget. California faced budget deficits in previous years. This imbalance created a number of
noteworthy changes in state/local finance law.
• The “Triple Flip”
In FY 04, the State of California issued State Deficit Reduction bonds under Proposition 57. Wall
Street wanted a dedicated revenue stream. The State of California then devised a method to secure
the dedicated revenue stream called the “Triple Flip”.
1. The State would take 25% of the local government 1% sales tax (Cities and Counties). This is to
continue for nine (9) years, beginning in FY 05.
2. In January (6 months into the fiscal year), the State would require the Counties to take property
tax which was earmarked for schools and pay back the first 6 months of the sales tax takeaway
to the local governments. The State will then have the counties pay the estimated next 6 months
in May. The difference between the estimated and actual sales tax in one year will be corrected
in the next year payments.
3. Then the State, using State General Fund monies, would pay back the schools.
The Sales Tax taken by the State in FY 06 was $2.3 million and it was repaid by the County in the
form of “Property Tax in Lieu of Sales Tax”. Santa Cruz County pays the City in December and
April our estimated 6 months payments. Beginning in FY07, the County now charges the City an
administrative fee on this repayment of sales tax, The amount was 100 thousand dollars.
• VLF-Property Tax Swap for FY 07 was $3.8 million. 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 2005 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 05 Property Tax Shift. The FY 05 state budget package included a $1.3 billion shift of property
taxes (called ERAF III) 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 sunseted in FY 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 amounts for local agencies.
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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 Local Agency Investment Pool (LAIF). Maturities of the
investments range from one day to 3.5 years, with an average maturity of 219 days. The average yield on
investments not held by fiscal agents was 3.5%. The City has reduced the days to maturity by 123 days and
the yields have increased an average of 68 basis points. 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, Stormwater, and
Refuse. The Water Department had 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. The Bay Street Water Reservoir project began in FY 07 and
amounted to a $13.8 million increase in Capital Assets. 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 of
the sanctuary project began in FY 07.
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. The Parks and Recreation Department will continue to
seek grants and other funding to renovate and upgrade outdated facilities. The development of Depot Park
and the Multi Modal Station is an example of a successful partnership among 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 (CAFR) for the fiscal year ended June 30, 2006.
The Certificate of Achievement is the highest form of recognition in the area of government accounting and
financial reporting, and its attainment represents a significant accomplishment by a government and its
management.
In order to be awarded a Certificate of Achievement, the City publishes 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 (CAFR) meets the Certificate of
Achievement Program’s requirements.
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Acknowledgements
The Finance Department takes great pride in the preparation of this report. The professionalism,
commitment and effort of the entire staff of the Finance Department have made this presentation possible.
We would like to express our appreciation to all the members of the other 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. We wish to also express our sincere thanks to the City Manager, 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 financial operations.
Respectfully submitted,
Sandra Benoit
Director of Finance
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DIRECTORY OF CITY OFFICIALS
CITY OF SANTA CRUZ
Mayor Ryan Coonerty
Vice Mayor Cynthia Mathews Councilmember Mike Rotkin
Councilmember Ed Porter Councilmember Lynn Robinson
Councilmember Emily Reilly Councilmember Tony Madrigal
City Manager, Richard C. Wilson
Assistant City Manager .....................................................................Martín Bernal
Chief of Fire ......................................................................................Ron Oliver
Chief of Police...................................................................................Howard Skerry
City Attorney .....................................................................................John G. Barisone
City Clerk ..........................................................................................Lesile Cook
Director of Finance............................................................................Sandra Benoit
Director of Human Resources ...........................................................Lisa Sullivan
Director of Information Technology .................................................Sharon Caiocca
Director of Libraries ..........................................................................Anne M. Turner
Director of Parks and Recreation ......................................................Dannettee E. Shoemaker
Director of Planning and Community Development.........................Greg Larson
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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To the Honorable Mayor and Members of the City Council
of the City of Santa Cruz
Santa Cruz, California
Page 2
The accompanying Required Supplementary Information, such as Management’s Discussion

and Analysis, budgetary comparison information and other information as listed in the table of
contents, is not a required part of the basic financial statements but is supplementary
information required by the Governmental Accounting Standards Board. We have applied
certain limited procedures, which consisted principally of inquiries of management regarding
the methods of measurement and presentation of the Required Supplementary Information.
However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming an opinion on the financial statements that
collectively comprise the City’s basic financial statements. The accompanying Supplementary
Information is presented for purpose of additional analysis and is not a required part of the
basic financial statements. The Supplementary Information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements taken as a whole. The
Introductory and Statistical Sections have not been subjected to the auditing procedures applied
in the audit of the basic financial statements and, accordingly, we express no opinion on them.
Irvine, California
November 30, 2007
2
MANAGEMENT’S DISCUSSION AND ANALYSIS
3
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,
2007. 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 $436.1. Of total Net Assets, $106.0 or 24.3% was reported as unrestricted net assets and may be
used to meet the government’s ongoing obligations to citizens and creditors. Restricted net assets of
$13.6 may be used for the City’s ongoing obligations related to programs with external restrictions.
The remaining $316.5 represents the City’s investment in capital assets, less any related outstanding
debt used to acquire those assets.
Changes in Net Assets - The City’s total net assets increased by $19.9 or 2.7% in fiscal year 2007. The
increase in Net Assets represents the degree to which revenues exceed expenses.
The increase in net assets for governmental funds ($8.4) is a result of the reduction in expenses due
to staff vacancies and moderate increases in revenue, mostly sales tax. The sales tax increase relates
to the passage of a ballot measure which increased the tax rate by one-quarter percent.
Business type activities increased net assets ($11.5) due to rate increases, reduced expenses resulting
from grant funding and the delay of some programs.
• Fund Highlights:
Governmental Funds – Governmental funds include general, special revenue, debt service, and capital
projects funds. As of the close of fiscal year 2007, the City’s governmental funds, including the
Redevelopment Agency Fund, reported a combined ending fund balance of $49.2 which is an
increase of $2.3 or 4.9% from the prior year. Approximately 68.3% of this amount, or $33.6,
represents the unreserved fund balance available for appropriation. 58.3% of the unreserved fund
balance, or $19.6, has been designated for various purposes.
General Fund – Total fund balance of the General Fund on June 30, 2007 was $26.4, an increase of $3.6
or 15.8% from the prior year. 84.8% of the total fund balance, or $22.4, was unreserved. Of the
unreserved fund balance, $8.5, or approximately 32.2%, is designated for various purposes. The
designations include $6.4 for the City public trust, and varying amounts for other activities. The
remaining unreserved balance of $13.9, or 52.7% 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.
4
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
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,
parks and recreation, library, public works, transit, community and economic development and social
services. The business-type activities of the City include the four municipal utilities: water, wastewater,
refuse and stormwater; and also the 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 21 - 25 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 in the Supplemental Information section of this report on pages 111 through 115
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.
5
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 ten 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 –
the General Fund and the Redevelopment Agency Fund. Data from the other eight governmental funds are
combined into a single, aggregated presentation. The basic governmental fund financial statements can be
found on pages 27 through 33 of this report. Individual fund data for each of these non-major
governmental funds is provided in the form of combining statements on pages 111 through 115 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 also the 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 also the 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 129 - 132 of this report.
Prior-period adjustments made in the Proprietary Funds amount to $.6 reduction of Net Assets. Part of the
adjustments ($.3) in the Water Fund and ($.1) in the Wastewater Fund relates to projects capitalized in prior
years which should have been expensed. The other adjustment was in Parking ($.2) and relates to land
posted to Parking in error in FY 03.
The basic proprietary fund financial statements can be found on page 35 - 45 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. Fudiciary 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 and use the accrual basis of accounting.
Agency funds include activities of the Library Joint Powers Authority, Payroll Payables and Special
Assessments. Trust funds are used to account for resources legally held in trust for special purposes, such
as McCaskill Trust for Local History, McCaskill Trust for Visually Impaired and the Finkeldey Trust for
Musical Literature.
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 53 - 96 of this report.
6
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 97 - 107 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 in the section of this report titled Supplemental
Information. Combining and individual statements and schedules can be found on pages 116 - 128 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 $436.1 at the close of the fiscal year ending June 30, 2007.
By far the largest portion of the City’s net assets $316.5 or 72.6% 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 $13.5 or 3.1% represents resources that are subject to external
restrictions on how they may be used. The remaining $106.0 or 24.3% 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
2007 2006 2007 2006 2007 2006
Current assets $ 57.9 $ 53.3 $ 69.6 $ 56.4 $ 127.5 $ 109.7
Noncurrent assets 8.6 6.8 18.1 33.3 26.7 40.1
Capital assets 157.8 154.7 257.9 249.9 415.7 404.6
Total assets 224.3 214.8 345.6 339.6 569.9 554.4
Current liabilities 14.9 11.9 10.9 11.5 25.8 23.4

Noncurrent liabilities 27.1 29.1 81.0 85.3 108.1 114.4
Total liabilities 42.0 41.0 91.9 96.8 133.9 137.8
Net assets:
Invested in capital assets,
net of related debt 144.2 142.2 164.2 164.3 308.4 306.5
Restricted 13.4 12.1 - - 13.4 12.1
Unrestricted 24.6 19.4 78.0 78.5 102.6 97.9
Total net assets $ 182.3 $ 173.8 $ 242.2 $ 242.8 $ 424.5 $ 416.6
7
Changes in Net Assets. The City’s net assets increased by $20.0 or 4.8%, from the prior fiscal year. The
City’s expenses cover a range of services. Further analysis is provided within the governmental and
business-type activity sections.
City of Santa Cruz Changes in Net Assets

2007 2006 2007 2006 2007 2006
Revenues:
Program revenues:
Charges for services $ 25.0 $ 24.7 $ 56.9 $ 51.2 $ 81.9 $ 75.9
Operating grants and contributions 5.4 2.1 - - 5.4 2.1
Capital grants and contributions 5.7 2.5 1.7 2.5 7.4 5.0
Total program revenues 36.1 29.3 58.6 53.7 94.7 83.0
General revenues:
Property taxes 24.6 22.4 - - 24.6 22.4
Sales and use taxes 12.8 11.7 - - 12.8 11.7
Franchise taxes 2.6 2.1 - - 2.6 2.1
Transient occupancy taxes 3.8 3.4 - - 3.8 3.4
Utility users taxes 8.3 8.3 - - 8.3 8.3
Admissions taxes 1.9 1.7 - - 1.9 1.7
Other taxes 2.4 2.4 - - 2.4 2.4
Total taxes 56.4 52.0 - - 56.4 52.0
Unrestricted grants and contributions - 1.1 - - - 1.1
Unrestricted investment earnings 2.6 1.4 3.6 2.1 6.2 3.5
Gain (loss) on sale of assets 0.3 - 0.1 0.1 0.4 0.1
Miscellaneous 2.7 0.5 0.5 0.5 3.2 1.0
Total revenues 98.1 84.3 62.8 56.4 160.9 140.7
Expenses:
General government 12.5 9.8 - - 12.5 9.8
Public safety 29.6 27.2 - - 29.6 27.2
Parks and recreation 12.0 11.7 - - 12.0 11.7
Library 9.6 9.2 - - 9.6 9.2
Public works 11.5 9.0 - - 11.5 9.0
Transit 0.7 0.6 - - 0.7 0.6
Community and economic development 10.6 7.4 - - 10.6 7.4
Social services 1.8 2.6 - - 1.8 2.6
Interest and charges on long term debt 1.3 0.9 - - 1.3 0.9
Water - - 16.2 15.2 16.2 15.2
Wastewater - - 15.4 16.2 15.4 16.2
Refuse - - 13.0 12.7 13.0 12.7
Parking - - 2.6 3.0 2.6 3.0
Storm water - - 1.9 1.9 1.9 1.9
Golf course - - 2.2 2.3 2.2 2.3
Total expenses 89.6 78.4 51.3 51.3 140.9 129.7
Increase (decrease) in net assets before
transfers 8.5 5.9 11.5 5.1 20.0 11.0
Transfers - 0.1 - (0.1) - -
Change in net assets 8.5 6.0 11.5 5.0 20.0 11.0
Net assets, beginning of year 173.8 162.2 242.8 232.5 416.6 394.7
Prior period adjustment (Note 16) 0.1 - (0.6) (0.5) -
Net assets, beginning of year (as restated) 173.9 167.8 242.2 237.8 416.1 405.6
Net assets - end of year $ 182.4 $ 173.8 $ 253.7 $ 242.8 $ 436.1 $ 416.6
8
Governmental Activities. Governmental activities increased the City’s net assets by $8.5. 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
2007 2006
Expenses net of program revenues:
General government $ (5.9) $ (5.1)
Public safety (25.3) (23.7)
Parks and recreation (8.0) (8.2)
Library (0.8) (0.7)
Public works (5.4) (2.9)
Transit 3.2 0.9
Community and economic development (8.2) (5.9)
Social services (1.8) (2.6)
Interest and fiscal charges on long-term debt (1.3) (0.9)
Total expenses net of program revenues -
governmental activities (53.5) (49.1)
General revenues and transfers:

General revenues:
Property taxes 24.6 22.4
Sales and use taxes 12.8 11.7
Franchise taxes 2.6 2.1
Transient occupancy taxes 3.8 3.4
Utility users taxes 8.3 8.3
Admission taxes 1.9 1.7
Other taxes 2.4 2.4
Total taxes 56.4 52.0
Unrestricted grants and contributions - 1.1
Unrestricted investment earnings 2.6 1.4
Gain on sale of assets 0.3 0.0
Miscellaneous 2.7 0.5
Transfers - 0.1
Total general revenues and transfers 62.0 55.1
Change in governmental activities net assets $ 8.5 $ 6.0
9
Governmental Expenses. Total governmental activity expenses were $89.6 in fiscal year 2007. The largest
expenses were incurred for public safety, parks and recreation, public works and general government.
These expenses do not include capital outlays, which are now reflected in the City’s capital assets.
EXPENSES FOR
GOVERNMENTAL ACTIVITIES FY 2007
Interest on Debt
Social Services
1%
2%
General
Community Dev. Government
12% 14%
Transit
1%
Public Works
13%
Public Safety
33%
Library
11%
Parks & Recreation

13%
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 $29.3 in fiscal year 2007. 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
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.
10
General revenues are all other revenues not categorized as program revenues, and include all taxes,
unrestricted grants, contributions and investment earnings, gains on sales of capital assets, and other
miscellaneous revenues. Total general revenues from governmental activities were $62.8 in fiscal year 2007.
Taxes of $56.4 comprised 89.8% of the City’s general revenues for fiscal year 2007. The largest single source
of general revenues received during fiscal year 2007 was $24.6 of property taxes, or 39.1% of general
revenues, followed by $12.7 of sales and use taxes, or 20.2% of general revenues.
REVENUES BY SOURCE
GOVERNMENTAL ACTIVITIES FY 2007
Interest Earnings Miscellaneous

Capital Grants 3% Revenue
5% 4% Property Tax
25%
Operating Grants
5%
Sales Tax
13%
Charges for Service

26% Franchise Tax
3%
Other Taxes Utility User Tax

2% 8% Transient Occupancy
Adm ission Tax Tax
2% 4%
11
Business Type Activities. Net assets for business-type activities were $253.7, an increase of $11.5 from the
prior fiscal year. Total program revenues for business-type activities were $58.6. The largest program
revenues were charges for services of $56.9. Other program revenues included capital grants and
contributions of $1.7. Total expenses for the business-type activities were $51.3 during fiscal year 2007.
REVENUE AND EXPENSE

BUSINESS ACTIVITIES, FY 2007
30
25
20
Revenue
15
Expense
10
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12
REVENUES BY SOURCE BUSINESS
ACTIVITIES FY 2006
Operating
Grants Capital
0% Grants
3%
General
Revenue
7%
Charges for
Service
90%
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 $49.2 which is an increase of $2.3 or 4.9% over the previous year. Approximately $33.6 of the
fund balance is unreserved fund balance, which is available for spending at the government’s discretion.
Unreserved fund balance increased by $2.2 or 7.0% over the previous year. It should, however, be noted
that 58.3% of the unreserved fund balance, or $19.6, has been designated for various purposes, such as debt
service, capital projects, public art, police programs and the City Public Trust, leaving $14.0 unreserved and
undesignated. The remainder of fund balance $15.6 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, 2007 was $26.4, an increase of $3.6 or
15.8% over the prior year. Approximately 85% of this amount, or $22.4, was unreserved. Of the unreserved
fund balance, $8.5, or 32.2% has been designated for specific uses. The designations include $6.4 for the City
Public Trust, and $1.6 for Accrued Compensated Absences (i.e. vacations), and varying small amounts for
other activities, such as unemployment insurance, housing, parks and recreation programs, and equipment
and facilities maintenance. The remaining unreserved balance of $13.9, or 52.7% of unreserved fund
balance, is undesignated and represents an increase of $2.5 or 21.9% over the previous year.
13
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 the total fund balance to total fund expenditures.
Unreserved fund balance ($22.4) represents 33.2% of total General Fund expenditures ($67.5), including
transfers out. Unreserved and undesignated fund balance ($13.9) represents 20.6% of total expenditures,
and total fund balance ($26.4) represents 39% of total fund expenditures ($67.5). The 20.6% percent of total
expenditures that is represented by the undesignated, unreserved fund balance ($13.9) exceeds the City
Council’s targeted minimum reserve level of 10% of the operating budget for the General Fund.
Increase in fund balance is a result of savings realized in Police due to vacant positions $2.4; Parks and
Recreation of $1.4 mostly due to delays in hiring park rangers, other vacancies and hiring temporaries for
permanent positions; Public Works $.9 due to vacancies in positions; Planning $.9 due to savings for
professional services and from vacancies; Finance $.1 due to vacant positions; Redevelopment
Administration $.3 due to vacant positions; and other miscellaneous savings throughout the City.
Revenue collections in the General Fund met or exceeded expectations.
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 2007, the total fund balance of the Redevelopment Agency Fund was $15.9, a
decrease of $1.6 from the prior year, or 11.2%. Of that amount, $6.8 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 $ 9.1 is designated for either debt service or capital projects and represents an increase of
$1.1 or 13.8% over the previous year.
The Redevelopment Agency Fund had revenues of $12.3, including $11.0 of property tax increment
revenue. Expenditures in this fund amounted to $10.6 which is a decrease of $3.6 over the previous year
due to decreases in capital expenditures for the Salz Tannery Project.
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 $6.0 as a
result of operations in the enterprise funds.
Net assets ($2.0 negative) in the internal service funds represent a decreased deficit of $1.3 or 39.4% over
prior year ($3.3 negative). The decrease is due to decreases in expenditures in risk management due to
changes in the actuarial projections.
General Fund Budgetary Highlights.
The final amended General Fund budget, including transfers out and advances, totaled $76.5 and included
amendments to the original budget resulting in a $2.6 increase in operating expenditure appropriations.
The principal amendments can be summarized as follows:
14
Operating Appropriations Increases.
Significant Appropriations Increases:

• Group Health Internal Service fund was combined with the
General Fund, $1.2
• Legal expenses for UCSC Litigation, $.6
• Prior year project carryover, Hwy 1/17 Merge Lanes, $.1
• Parks Department salaries, equipment, park ranger program
funded by Measure H funds, $.1
• Police Department salaries, equipment, safety program
funded by Measure H funds, $ .1
• Fire Department equipment funded by OTS Grant, $.1
• Many other miscellaneous adjustments, $.4
These appropriations were offset by reduced expenditures in other areas of $8.2. Savings were realized in
Police due to vacant positions $2.4; Parks and Recreation of $1.4 mostly due to delays in hiring park
rangers, other vacancies and hiring temporaries for permanent positions; Public Works $.9 due to vacancies
in positions; Planning $.9 due to savings for professional services and from vacancies; Finance $.1 due to
vacant positions; Redevelopment Administration $.3 due to vacant positions; and other miscellaneous
savings throughout the City.
Revenue collections in the General Fund met or exceeded budget. Those revenues which were better than
budget are Sales and Use Tax ($.6), Transient Occupancy ($.1), Admissions ($.2), Property Transfer ($.4),
and Investment Earnings ($.4).
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, 2007, amounts to $415.7, net of accumulated depreciation of $270.0. 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 capital assets were $18.6 net of depreciation.
Additions included $6.5 moved from construction in progress to capital assets. Capital assets for the
current fiscal year, after restatements and deletions, were $11.1, net of accumulated depreciation.
Major capital asset additions during the current fiscal year included the following:
1. Bay Street Reservoir, $13.8

2. Recycling Facility Upgrades, $2.3
3. Vehicles, $ 2.5
4. Skate Park, $1.4
5. Beach Street Bike Path, $1.0
6. Sewer System Improvements, $.6
15
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 70 - 73 of this report.
Capital Assets
(net of depreciation)
Governmental Activities Business-Type Activities
June 30 June 30 Total
2007 2006 2007 2006 2007 2006
Land $ 50.6 $ 50.5 $ 11.6 $ 11.9 $ 62.2 $ 62.4
Construction in progress 10.8 5.1 23.3 10.4 34.1 15.5
Land improvements 7.0 4.0 4.0 3.3 11.0 7.3
Infrastructure 168.6 65.0 177.8 106.6 346.4 171.6
Buildings 35.4 26.5 160.2 107.9 195.6 134.4
Machinery and equipment 10.6 3.0 23.2 9.5 33.8 12.5
Lease improvements 0.7 0.4 0.1 0.1 0.8 0.5
Software 1.1 0.2 0.6 0.2 1.7 0.4
Totals $ 284.8 $ 154.7 $ 400.8 $ 249.9 $ 685.6 $ 404.6
Debt Administration (in millions)
Long Term Debt - At the end of the current fiscal year, the City had $121.3 in long term debt outstanding
compared to $127.7 last year, a decrease of $6.4 or 5.0%. Decreases to claims and judgments payable ($.6)
due to the settlement of a large claim, and normal retirements through annual debt service. The debt
associated with governmental activities increased by $2.2 or 6.1% from $36.0 to $33.8. Business-type activity
debt was decreased by $4.2 or 4.6% from $91.7 to $87.5. The major increase in debt during the year
included lease purchase of refuse trucks.
The City currently has $7.1 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 administration 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, 2007, the
outstanding balance on this note was $35.4. The chart below illustrates the changes in bonds, notes, loans
and leases payable for the year ending June 30, 2007.
Bonds, Notes, Loans and Leases Payable

Governmental Activities Business-Type Activities
June 30 June 30 Total
2007 2006 2007 2006 2007 2006
Certificates of participation $ 4.1 $ 4.2 $ 19.2 $ 20.9 $ 23.3 $ 25.1
Revenue bonds payable - - 22.6 23.3 22.6 23.3
General obligation bonds 7.1 7.1 - - 7.1 7.1
Notes payable 2.9 4.2 35.3 37.8 38.2 42.0
Tax allocation bonds payable 5.0 5.1 - - 5.0 5.1
Capital lease obligations 1.0 1.2 3.5 3.1 4.5 4.3
Other long-term liabilities 0.9 1.0 - - 0.9 1.0
Totals $ 21.0 $ 22.8 $ 80.6 $ 85.1 $ 101.6 $ 107.9
16
The City of Santa Cruz also has significant liabilities for claims and judgments, compensated absences
(accrued vacation pay), and landfill closure and post-closure costs. The amounts and changes of these
liabilities are shown below.
Claims and Judgments, Compensated Absences, and Landfill Closure Costs Payable
June 30 June 30, 2007
Increase Percent Due in less Due in more
2007 2006 (Decrease) Change than one year than one year
Claims and judgements $ 10.4 $ 11.0 $ (0.6) -5.5% $ 2.9 $ 7.5
Compensated absences 3.2 2.9 0.3 10.3% 2.2 1.0
Closure and post closure landfill costs 6.1 5.8 0.3 5.2% - 6.1
Totals $ 9.3 $ 8.7 $ 0.6 6.9% $ 2.2 $ 7.1
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 2007 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 2007 and the economy is expected to continue to improve during 2007, albeit modestly. However, the
bay area regional economic opportunities and challenges including continued job growth, housing prices,
and interest rates. The national economic problems will, of course, have an affect on the local economy as
well.
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.
17
18
BASIC FINANCIAL STATEMENTS
19
20
GOVERNMENT-WIDE FINANCIAL STATEMENTS
21
City of Santa Cruz
Statement of Net Assets
June 30, 2007
Primary Government
ASSETS
Current assets:
Cash and cash equivalents $ 42,640,326 $ 56,087,726 $ 98,728,052
Restricted cash and cash equivalents 3,026,030 2,803,575 5,829,605
Interest receivable 832,087 1,055,772 1,887,859
Taxes receivable 4,306,295 - 4,306,295
Accounts receivable - net 1,819,818 7,166,955 8,986,773
Due from other governments 2,725,206 1,085,238 3,810,444
Notes receivable - due within one year 209,215 - 209,215
Loans receivable - due within one year 69,600 - 69,600
Intergovernmental receivable - due within one year - 1,151,684 1,151,684
Prepaid items 475,776 209,784 685,560
Inventories 194,132 - 194,132
Deposits 1,630,012 30,000 1,660,012
Total current assets 57,928,497 69,590,734 127,519,231
Noncurrent assets:
Restricted investments 283,042 1,369,711 1,652,753
Notes receivable - due in more than one year 5,878,047 401,058 6,279,105
Loans receivable - due in more than one year 1,338,317 - 1,338,317
Intergovernmental receivable - due in more than one year - 15,008,579 15,008,579
Deferred charges 268,466 2,099,149 2,367,615
Long-term internal balances 805,249 (805,249) -
Capital assets:
Land 50,609,567 11,590,526 62,200,093
Land improvements 7,024,152 3,956,018 10,980,170
Infrastructure 168,644,770 177,843,083 346,487,853
Buildings 35,421,568 160,220,644 195,642,212
Machinery and equipment 10,602,374 23,223,969 33,826,343
Lease improvements 724,114 70,000 794,114
Software 1,102,389 555,257 1,657,646
Construction in progress 10,758,619 23,346,697 34,105,316
Total capital assets 284,887,553 400,806,194 685,693,747
Less accumulated depreciation (127,114,151) (142,893,351) (270,007,502)
Total capital assets, net 157,773,402 257,912,843 415,686,245
Total noncurrent assets 166,346,523 275,986,091 442,332,614
Total assets 224,275,020 345,576,825 569,851,845
See accompanying Notes to Basic Financial Statements.

22
City of Santa Cruz
Statement of Net Assets, Continued
June 30, 2007
Primary Government
LIABILITIES
Current liabilities:
Accounts payable and other current liabilities $ 6,689,918 $ 2,896,841 $ 9,586,759
Intergovernmental payable 2,438 - 2,438
Interest payable 210,494 1,355,408 1,565,902
Unearned revenue 883,491 67,024 950,515
Deposits payable 317,303 47,065 364,368
Claims and judgments payable - due within one year 2,943,930 - 2,943,930
Compensated absences payable - due within one year 1,612,688 555,243 2,167,931
Bonds, notes, loans and leases payable - due within one year 2,134,425 5,973,258 8,107,683
Total current liabilities 14,794,687 10,894,839 25,689,526
Noncurrent liabilities:
Claims and judgments payable - due in more than one year 7,498,625 - 7,498,625
Compensated absences payable - due in more than one year 806,344 277,621 1,083,965
Bonds, notes, loans and leases payable - due in more than one year 18,760,273 74,662,628 93,422,901
Landfill closure costs - 6,055,236 6,055,236
Total noncurrent liabilities 27,065,242 80,995,485 108,060,727
Total liabilities 41,859,929 91,890,324 133,750,253
NET ASSETS
Invested in capital assets, net of related debt 144,203,036 172,324,984 316,528,020

Restricted for:
Capital projects 4,285,115 - 4,285,115
Debt service 5,701,004 - 5,701,004
Public safety 148,312 - 148,312
Parks and recreation 92,338 - 92,338
Community and economic development 3,421,905 - 3,421,905
Unrestricted 24,563,381 81,361,517 105,924,898
Total net assets $ 182,415,091 $ 253,686,501 $ 436,101,592
Bal. Sheet Net Assets - IS Net Assets $ - $ - $ -

23
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 $ 12,494,563 $ 5,507,904 $ 1,033,655 $ - $ 6,541,559
Public safety 29,646,507 3,410,308 895,204 87,504 4,393,016
Parks and recreation 12,002,102 3,011,980 40,439 910,660 3,963,079
Library 9,644,172 8,894,858 - - 8,894,858
Public works 11,509,715 4,072,956 2,008,490 12,202 6,093,648
Transit 646,548 - - 3,794,755 3,794,755
Community and economic development 10,616,686 108,009 1,462,166 864,517 2,434,692
Social services 1,758,216 - - - -
Interest and fiscal charges
on long-term debt 1,304,447 - - - -
Total governmental activities 89,622,956 25,006,015 5,439,954 5,669,638 36,115,607
Business-type activities:
Water 16,203,872 22,442,267 - 1,112,837 23,555,104
Wastewater 15,377,903 13,978,613 - 206,207 14,184,820
Refuse 12,974,413 15,108,051 15,575 - 15,123,626
Parking 2,632,045 2,697,863 - 79,093 2,776,956
Storm water 1,938,275 875,730 - 264,112 1,139,842
Golf course 2,165,390 1,770,614 24,895 - 1,795,509
Total business-type activities 51,291,898 56,873,138 40,470 1,662,249 58,575,857
Total primary government $ 140,914,854 $ 81,879,153 $ 5,480,424 $ 7,331,887 $ 94,691,464
General Revenues:
Taxes:
Property taxes
Sales and use taxes
Franchise taxes
Transient occupancy taxes
Utility users taxes
Admission taxes
Other taxes
Total taxes
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)
Net assets - end of year
24
Net (Expense) Revenue
and Changes in Net Assets
$ (5,953,004) $ - $ (5,953,004)
(25,253,491) - (25,253,491)
(8,039,023) - (8,039,023)
(749,314) - (749,314)
(5,416,067) - (5,416,067)
3,148,207 - 3,148,207
(8,181,994) - (8,181,994)
(1,758,216) - (1,758,216)
(1,304,447) - (1,304,447)
(53,507,349) - (53,507,349)
- 7,351,232 7,351,232
- (1,193,083) (1,193,083)
- 2,149,213 2,149,213
- 144,911 144,911
- (798,433) (798,433)
- (369,881) (369,881)
- 7,283,959 7,283,959
(53,507,349) 7,283,959 (46,223,390)
24,593,312 - 24,593,312
12,770,015 - 12,770,015
2,607,388 - 2,607,388
3,750,509 - 3,750,509
8,288,655 - 8,288,655
1,909,012 - 1,909,012
2,466,711 - 2,466,711
56,385,602 - 56,385,602
2,628,122 3,637,989 6,266,111
322,288 51,527 373,815
2,648,223 530,158 3,178,381
3,367 (3,367) -
61,987,602 4,216,307 66,203,909
8,480,253 11,500,266 19,980,519
173,934,838 242,186,235 416,121,073
$ 182,415,091 $ 253,686,501 $ 436,101,592
25
26
FUND FINANCIAL STATEMENTS
27
28
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.
29
City of Santa Cruz
Balance Sheet
Governmental Funds
June 30, 2007
Major Funds Other Total

General Redevelopment Governmental Governmental
Fund Agency Funds Funds
ASSETS
Cash and cash equivalents $ 19,019,016 $ 8,417,311 $ 8,353,702 $ 35,790,029
Interest receivable 204,876 180,335 376,282 761,493
Taxes receivable 3,311,927 357,069 637,299 4,306,295
Accounts receivable - net 935,181 101,305 776,302 1,812,788
Due from other governments 325,222 - 2,399,984 2,725,206
Due from other funds 3,895,686 - - 3,895,686
Prepaid items 475,776 - - 475,776
Restricted assets:
Cash and cash equivalents - 3,016,345 9,685 3,026,030
Investments - - 283,042 283,042
Total restricted assets - 3,016,345 292,727 3,309,072
Deposits 237,553 - - 237,553
Notes receivable - net 266,964 4,874,571 945,727 6,087,262
Loans receivable - net - - 1,407,917 1,407,917
Advances to other funds 2,131,815 351,000 - 2,482,815
Inventory of land held for resale - net - 60,491 - 60,491
Total assets $ 30,804,016 $ 17,358,427 $ 15,189,940 $ 63,352,383
LIABILITIES AND FUND BALANCES

Liabilities:
Accounts payable and other current liabilities $ 3,358,803 $ 240,637 $ 2,854,696 $ 6,454,136
Due to other funds - - 3,330,360 3,330,360
Intergovernmental payable - - 2,438 2,438
Deferred revenue 125,728 - 700,742 826,470
Unearned revenue 617,556 - 265,935 883,491
Deposits payable 151,509 165,794 - 317,303
Advances from other funds - 1,005,400 1,229,332 2,234,732
Claims and judgments payable 131,000 - - 131,000
Total liabilities 4,384,596 1,411,831 8,383,503 14,179,930
Fund Balances:
Reserved 4,006,713 6,820,346 4,788,047 15,615,106
Unreserved, designated, reported in:
General fund 8,488,474 - - 8,488,474
Redevelopment Agency fund - 9,126,250 - 9,126,250
Special revenue funds - - 1,053,286 1,053,286
Debt service funds - - 909,576 909,576
Unreserved, undesignated, reported in:
General fund 13,924,233 - - 13,924,233
Special revenue funds - - 2,851,774 2,851,774
Capital projects funds - - (2,796,246) (2,796,246)
Total fund balances 26,419,420 15,946,596 6,806,437 49,172,453
Total liabilities and fund balances $ 30,804,016 $ 17,358,427 $ 15,189,940 $ 63,352,383

30
City of Santa Cruz
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Assets
June 30, 2007
Total Fund Balances - All Governmental Funds $ 49,172,453
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 internal Wide Statement Internal Service
service funds reported below, the capital assets are adjusted as follows: of Net Assets Funds
Non-depreciable $ 61,368,186 $ - 61,368,186
Depreciable, net 96,405,216 (195,360) 96,209,856
Total capital assets $ 157,773,402 $ (195,360) 157,578,042
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. (210,494)
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 713,332
Stores Services Fund -
Telecommunications Fund 209,420
Risk Management Fund (2,874,767)
Total internal service funds (1,952,015)
Other long-term assets are not available to pay for current-period expenditures and,
therefore, are deferred in the funds. 826,470
Noncurrent liabilities were not due and payable in the current period. Therefore, they Government-
are not reported in the governmental funds. Except for the internal service funds Wide Statement Internal Service
reported above, the long-term liabilities are adjusted as follows. of Net Assets Funds
Compensated absences payable - due within one year $ (1,612,688) $ 30,599 (1,582,089)
Compensated absences payable - due in more than one year (806,344) 15,300 (791,044)
Bonds, notes, loans and leases payable - due within one year (2,134,425) - (2,134,425)
Bonds, notes, loans and leases payable - due in more than one year (18,760,273) - (18,760,273)
Total long-term liabilities $ (23,313,730) $ 45,899 (23,267,831)
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. 268,466
Net Assets of Governmental Activities $ 182,415,091

31
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 $ 42,837,408 $ 11,022,799 $ 2,525,395 $ 56,385,602
Licenses and permits 824,258 - - 824,258
Intergovernmental 1,563,745 - 9,400,129 10,963,874
Charges for services 19,786,417 - 66,468 19,852,885
Fines and forfeitures 2,218,082 - 24,465 2,242,547
Use of money and property 3,061,718 844,921 468,706 4,375,345
Other revenues 187,732 384,865 1,891,666 2,464,263
Total revenues 70,479,360 12,252,585 14,376,829 97,108,774
EXPENDITURES:
General government 12,261,663 - - 12,261,663
Public safety 28,469,065 - 105,000 28,574,065
Parks and recreation 9,653,531 - - 9,653,531
Library 9,693,097 - - 9,693,097
Public works 4,233,034 - 707,017 4,940,051
Transit - - 646,548 646,548
Community and economic development 13,424 8,235,291 1,780,277 10,028,992
Social services 1,651,827 - 106,389 1,758,216
Capital outlay 1,338,184 156,159 13,373,594 14,867,937
Debt service:
Principal 178,385 1,649,689 375,794 2,203,868
Interest and fiscal charges 47,643 571,423 459,766 1,078,832
Total expenditures 67,539,853 10,612,562 17,554,385 95,706,800
REVENUES OVER (UNDER) EXPENDITURES 2,939,507 1,640,023 (3,177,556) 1,401,974
OTHER FINANCING SOURCES (USES):

Proceeds from asset disposition 62,804 - 285,737 348,541
Transfers in 615,094 8,288 637,132 1,260,514
Transfers out (677) - (708,812) (709,489)
Total other financing sources (uses) 677,221 8,288 214,057 899,566
Net change in fund balances 3,616,728 1,648,311 (2,963,499) 2,301,540
FUND BALANCES:
Beginning of year 22,802,692 14,298,285 9,769,936 46,870,913
End of year $ 26,419,420 $ 15,946,596 $ 6,806,437 $ 49,172,453

32
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 $ 2,301,540
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
capital outlays exceeded depreciation in the current period, excluding the internal service funds, which are reported
below. 2,984,924
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and capital
contributions) is to increase net assets. (26,253)
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. 145,718
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. (278,400)
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. (25,627)
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. (116,262)
Repayment of principal is an expenditure in governmental funds, but reduces noncurrent liabilities in the statement of net
assets. 2,203,868
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. (82,832)
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. 1,373,577
Change in Net Assets of Governmental Activities $ 8,480,253

33
34
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.
35
City of Santa Cruz
Statement of Net Assets
Proprietary Funds
June 30, 2007
Enterprise Funds
Water Wastewater Refuse Parking

ASSETS
Current assets:
Cash and cash equivalents $ 31,622,891 $ 8,846,168 $ 9,283,779 $ 3,675,928
Restricted cash and cash equivalents 103,261 671,680 1,239,032 513,577
Accounts receivable - net 3,740,192 1,717,406 1,551,135 35,026
Due from other governments - 581,999 - 41,431
Notes receivable - due within one year - - - -
Intergovernmental receivable - due within one year - 1,151,684 - -
Prepaid items 76,285 50,857 82,642 -
Inventories - - - -
Deposits - - - 30,000
Total current assets 35,927,304 13,513,909 12,264,862 4,338,146
Noncurrent assets:
Restricted investments - - 1,080,087 -
Notes receivable - due in more than one year 401,058 - - -
Intergovernmental receivable - due in more than one year - 15,008,579 - -
Advances to other funds 13,585 89,332 - -
Deferred charges 431,843 261,749 294,169 202,329
Capital assets:
Land 3,654,410 1,371,330 98,575 4,638,102
Land improvements 71,900 910,270 - 280,701
Infrastructure 54,474,851 51,627,684 19,746,219 805,464
Buildings 9,204,251 126,672,607 2,709,093 20,398,375
Machinery and equipment 6,038,540 3,717,114 12,589,999 196,242
Lease improvements - 70,000 - -
Software 249,431 196,557 99,336 9,933
Construction in progress 21,742,895 466,907 25,465 346,709
Less accumulated depreciation (36,453,960) (69,535,415) (18,700,885) (7,221,185)
Total capital assets (net of accumulated depreciation) 58,982,318 115,497,054 16,567,802 19,454,341
Total noncurrent assets 59,828,804 130,856,714 17,942,058 19,656,670
Total assets 95,756,108 144,370,623 30,206,920 23,994,816

36
Enterprise Funds Governmental
Activities
Internal
Storm Water Golf Course Total Service Funds
$ 2,658,907 $ 53 $ 56,087,726 $ 6,850,297

611 275,414 2,803,575 -
29,685 (3,161) 1,055,772 70,594
36,810 86,386 7,166,955 7,030
454,208 7,600 1,085,238 -
- - - -
- - 1,151,684 -
- - 209,784 -
- - - 133,641
- - 30,000 1,392,459
3,180,221 366,292 69,590,734 8,454,021
- 289,624 1,369,711 -
- - 401,058 -
- - 15,008,579 -
- - 102,917 -
775,912 133,147 2,099,149 -
8,822 1,819,287 11,590,526 -

242,277 2,450,870 3,956,018 -
50,954,503 234,362 177,843,083 -
- 1,236,318 160,220,644 -
6,421 675,653 23,223,969 1,157,143
- - 70,000 -
- - 555,257 336,296
764,721 - 23,346,697 -
(9,385,974) (1,595,932) (142,893,351) (1,298,079)
42,590,770 4,820,558 257,912,843 195,360
43,366,682 5,243,329 276,894,257 195,360
46,546,903 5,609,621 346,484,991 8,649,381
(Continued)
37
City of Santa Cruz
Statement of Net Assets, Continued
Proprietary Funds
June 30, 2007
Major Funds

LIABILITIES
Accounts payable and other current liabilities $ 1,252,702 $ 842,029 $ 575,325 $ 79,998
Due to other funds - - - -
Interest payable 185,000 911,273 118,362 50,121
Unearned revenue 622 - 48,013 -
Deposits payable 27,561 58 603 18,843
Claims and judgments payable - - - -
Compensated absences payable 240,141 122,562 162,452 8,735
Bonds, notes, loans and leases payable
due in less than one year 293,126 2,699,538 2,355,291 205,000
Total current liabilities 1,999,152 4,575,460 3,260,046 362,697
Advances from other funds - - - 351,000
Claims and judgments payable - - - -
Compensated absences payable 120,070 61,281 81,226 4,367
Bonds, notes, loans and leases payable
due in more than one year 12,553,584 36,412,158 10,217,696 5,940,000
Landfill closure costs - - 6,055,236 -
Total noncurrent liabilities 12,673,654 36,473,439 16,354,158 6,295,367
Total liabilities 14,672,806 41,048,899 19,614,204 6,658,064
NET ASSETS
Invested in capital assets, net of related debt 45,741,818 74,047,454 2,812,472 13,108,004
Unrestricted 35,341,484 29,274,270 7,780,244 4,228,748
Total net assets $ 81,083,302 $ 103,321,724 $ 10,592,716 $ 17,336,752
$ - $ - $ - $ -

38
Major Funds Governmental
Activities
Internal
$ 54,701 $ 92,086 $ 2,896,841 $ 235,782

- 557,166 557,166 8,160
58,031 32,621 1,355,408 -
- 18,389 67,024 -
- - 47,065 -
- - - 2,812,930
1,861 19,492 555,243 30,599
170,000 250,303 5,973,258 -

284,593 970,057 11,452,005 3,087,471
- - 351,000 -
- - - 7,498,625
931 9,746 277,621 15,300
5,770,000 3,769,190 74,662,628 -

- - 6,055,236 -
5,770,931 3,778,936 81,346,485 7,513,925
6,055,524 4,748,993 92,798,490 10,601,396
36,490,770 124,466 172,324,984 195,360

4,000,609 736,162 81,361,517 (2,147,375)
$ 40,491,379 $ 860,628 $ 253,686,501 $ (1,952,015)
$ - $ - $ -
(Concluded)
39
City of Santa Cruz
Statement of Revenues, Expenses and Changes in Net Assets
Proprietary Funds
Enterprise Funds
OPERATING REVENUES:
Charges for services $ 22,442,267 $ 13,978,613 $ 15,108,051 $ 2,697,863

Use of property 6,600 - - 139,548
Other revenues 246,898 1,304 49,863 44,920
Total operating revenues 22,695,765 13,979,917 15,157,914 2,882,331
OPERATING EXPENSES:
Personnel services 7,138,553 4,472,202 5,770,172 996,117

Services, supplies, and other charges 6,927,313 5,368,800 4,726,929 835,390
Depreciation and amortization 1,865,073 4,362,255 1,866,235 486,577
Total operating expenses 15,930,939 14,203,257 12,363,336 2,318,084
Operating income (loss) 6,764,826 (223,340) 2,794,578 564,247
NONOPERATING REVENUES (EXPENSES):
Intergovernmental - 206,207 15,575 79,093

Investment earnings 1,826,747 801,488 531,447 191,062
Interest expense and fiscal charges (258,573) (1,152,180) (574,272) (304,051)
Debt issuance costs (14,360) (22,466) (36,805) (9,910)
Gain (loss) on sale of capital assets 3,067 2,680 (4,726) 50,506
Total nonoperating revenues (expenses) 1,556,881 (164,271) (68,781) 6,700
Income (loss) before contributions and transfers 8,321,707 (387,611) 2,725,797 570,947
Capital contributions 1,112,837 - - -

Transfers in 7,644 - - -
Transfers out (777) (5,038) (5,196) -
Total contributions and transfers 1,119,704 (5,038) (5,196) -
Change in net assets 9,441,411 (392,649) 2,720,601 570,947
NET ASSETS:
Prior period adjustment (Note 16) (377,467) (114,885) - (157,000)
Beginning of year, as restated 71,641,891 103,714,373 7,872,115 16,765,805
End of year $ 81,083,302 $ 103,321,724 $ 10,592,716 $ 17,336,752

40
Enterprise funds Governmental
Activities
Internal
$ 875,730 $ 1,770,614 $ 56,873,138 $ 7,905,452

- 1,120 147,268 -
- 187,173 530,158 21,947
875,730 1,958,907 57,550,564 7,927,399
92,984 833,364 19,303,392 1,198,645

224,972 909,479 18,992,883 5,059,535
1,322,031 205,446 10,107,617 86,192
1,639,987 1,948,289 48,403,892 6,344,372
(764,257) 10,618 9,146,672 1,583,027
264,112 24,895 589,882 -

122,023 17,954 3,490,721 339,102
(241,333) (206,620) (2,737,029) (894)
(56,955) (10,481) (150,977) -
- - 51,527 -
87,847 (174,252) 1,244,124 338,208
(676,410) (163,634) 10,390,796 1,921,235
- - 1,112,837 -
- - 7,644 129,288
- - (11,011) (676,946)
- - 1,109,470 (547,658)
(676,410) (163,634) 11,500,266 1,373,577
41,167,789 1,024,262 242,835,587 (3,325,592)

- - (649,352) -
41,167,789 1,024,262 242,186,235 (3,325,592)
$ 40,491,379 $ 860,628 $ 253,686,501 $ (1,952,015)
41
City of Santa Cruz
Combining Statement of Cash Flows
Proprietary Funds
Major Funds

CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and users $ 21,570,235 $ 13,058,038 $ 14,218,492 $ 2,684,952
Cash received from interfund services provided 656,678 28,555 2,403 9,241
Cash payments to suppliers for goods and services (5,658,218) (3,981,135) (2,177,661) (958,507)
Cash payments to employees for services (7,106,775) (4,492,632) (5,786,226) (991,625)
Cash payments for interfund services used (2,061,278) (1,026,603) (2,276,388) (38,392)
Cash payments to other governments - (105,336) (70,383) 79,093
Cash received from (payments to) others 253,498 1,362 49,863 184,468
Net cash provided (used) by operating activities 7,654,140 3,482,249 3,960,100 969,230
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Transfers in 7,644 - - -
Transfers out (777) (5,038) (5,196) -
Advances from other funds - - - 254,499
Advances to other funds 8,045 10,669 - -
Receipts from other governments - 1,120,317 26,575 50,413
Net cash provided (used) by noncapital financing activities 14,912 1,125,948 21,379 304,912
CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES:
Capital contributions 1,112,837 - - -
Purchase and construction of capital assets (15,878,467) (882,626) (1,706,340) 138,675
Principal paid on capital debt (379,430) (2,314,975) (1,145,540) (191,427)
Interest paid on capital debt (215,509) (1,236,160) (626,807) (314,248)
Proceeds from sales of capital assets 3,067 2,680 (4,725) 50,506
Net cash provided (used) by capital and
related financing activities (15,357,502) (4,431,081) (3,483,412) (316,494)
CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sales and maturities of investments 12,000,000 - (21,987) 491,128
Interest receivables - - - -
Investment income received 1,762,026 815,871 497,027 175,807
Net cash provided (used) by investing activities 13,762,026 815,871 475,040 666,935
Net increase (decrease) in cash and cash equivalents 6,073,576 992,987 973,107 1,624,583
CASH AND CASH EQUIVALENTS:

End of year $ 31,726,152 $ 9,517,848 $ 10,522,811 $ 4,189,505
- - - -

42
Activities
Internal
$ 875,977 $ 1,747,596 $ 54,155,290 $ 166,159

- - 696,877 7,763,957
(346,777) (602,020) (13,724,318) (3,088,114)
(91,999) (829,557) (19,298,814) (1,188,787)
64,800 (322,744) (5,660,605) (3,093,352)
9,148 - (87,478) -
- 745,459 1,234,650 -
511,149 738,734 17,315,602 559,863
- - 7,644 -
- - (11,011) (547,658)
- (439,293) (184,794) -
439,293 - 458,007 -
579,563 24,895 1,801,763 -
1,018,856 (414,398) 2,071,609 (547,658)
- - 1,112,837 -
(433,894) (43,896) (18,806,548) (8,296)
(87,261) (226,825) (4,345,458) (21,060)
(300,219) (218,394) (2,911,337) (870)
- - 51,528 -
(821,374) (489,115) (24,898,978) (30,226)
- 145,628 12,614,769 -
- - - (12,438)
112,637 22,515 3,385,883 339,101
112,637 168,143 16,000,652 326,663
821,268 3,364 10,488,885 308,642
1,838,250 272,103 48,402,416 6,541,655

$ 2,659,518 $ 275,467 $ 58,891,301 $ 6,850,297
- - - -
(Continued)
43
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) $ 6,764,826 $ (223,340) $ 2,794,578 $ 564,247
Adjustments to reconcile operating income (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization 1,865,073 4,362,255 1,866,235 486,577
Estimated closure/postclosure costs - - 303,829 -
Changes in assets and liabilities:
Accounts receivable (222,466) (891,973) (898,079) (1,651)
Prepaid items (43,919) (33,238) (47,139) 3,495
Inventories - - - -
Notes and loans receivable - 25,962 - -
Accounts payable and other current liabilities (748,264) 229,764 (101,332) (82,416)
Due to other funds - - - -
Deferred revenue - - 10,573 -
Deposits payable 7,112 (47) 350 (2,019)
Claims and judgments payable - 58 - -
Compensated absences payable 31,778 12,808 31,085 997
Total adjustments 889,314 3,705,589 1,165,522 404,983
Net cash provided (used) by operating activities $ 7,654,140 $ 3,482,249 $ 3,960,100 $ 969,230

44
Activities
Internal
$ (764,257) $ 10,618 $ 9,146,672 $ 1,588,357
1,322,031 205,446 10,107,617 86,192

- - 303,829 -
247 (23,018) (2,036,940) 24,664

190 5,397 (115,214) 4,410
- - - (247,385)
- - 25,962 -
(47,857) (20,682) (770,787) (229,266)
- 557,166 557,166 (3,518)
- - 10,573 -
- - 5,396 (152)
- - 58 (668,531)
795 3,807 81,270 5,092
1,275,406 728,116 8,168,930 (1,028,494)
$ 511,149 $ 738,734 $ 17,315,602 $ 559,863
(Concluded)
45
46
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.
47
City of Santa Cruz
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2007
Private-
Purpose Agency
Trust Funds Funds
ASSETS
Cash and cash equivalents $ 537,000 $ 1,644,287

Restricted cash and cash equivalents - 75,985
Receivables:
Interest receivable 6,147 16,701
Taxes receivable - 651,199
Accounts receivable - 530,842
Due from other governments - 27,620
Prepaid items - -
Total assets $ 543,147 $ 2,946,634
LIABILITIES
Accounts payable and other current liabilities $ - $ 841,384

Due to other governments - 1,281,985
Deposits payable - 533,653
Payable to bondholders - 289,612
Total liabilities - $ 2,946,634
NET ASSETS
Held in trust for library programs $ 543,147

48
City of Santa Cruz
Statement of Changes in Fiduciary Net Assets
Fiduciary Funds
Private-
Purpose
Trust Funds
ADDITIONS:
Investment earnings $ 28,205
Total additions 28,205
DEDUCTIONS:
Library programs 9,027
Total deductions 9,027
Change in net assets 19,178
NET ASSETS:
Beginning of year 523,969
End of year $ 543,147

49
50
City of Santa Cruz
Index to Notes to the Basic Financial Statements
Page
Note 1 - Summary of Significant Accounting Policies..................................................................................53
A. Reporting Entity..............................................................................................................................53
B. Basis of Accounting and Measurement Focus............................................................................53
C. Use of Restricted/Unrestricted Net Assets.................................................................................56
D. Cash, Cash Equivalents and Investments ...................................................................................56
E. Restricted Cash and Investments with Fiscal Agents................................................................56
F. Prepaid Items ..................................................................................................................................57
G. Inventories .......................................................................................................................................57
H. Interfund Transactions...................................................................................................................57
I. Capital Assets..................................................................................................................................58
J. Interest Payable...............................................................................................................................58
K. Deferred Revenue ...........................................................................................................................59
L. Compensated Absences .................................................................................................................59
M. Bond Premiums, Discounts, and Issuance Costs .......................................................................59
N. Long-Term Debt..............................................................................................................................59
O. Net Assets ........................................................................................................................................60
P. Fund Balances – Reservations and Designations .......................................................................60
Q. Property Taxes ................................................................................................................................60
R. Use of Estimates..............................................................................................................................60
Note 2 - Cash Deposits and Investments .........................................................................................................60
A. Cash Deposits..................................................................................................................................61
B. Investments .....................................................................................................................................62
C. Risk Disclosures ..............................................................................................................................63
Note 3 – Receivables ............................................................................................................................................66
Note 4 – Interfund Balances and Transactions ...............................................................................................67
A. Government-Wide Financial Statements ....................................................................................67

B. Fund Financial Statements ............................................................................................................68
Note 5 – Capital Assets ........................................................................................................................................70

51
City of Santa Cruz
Index to Notes to the Basic Financial Statements, Continued
Page
Note 6 – Long-Term Debt....................................................................................................................................73
A. Governmental Activities Long-Term Debt .................................................................................73

B. Proprietary Fund Obligations .......................................................................................................79
Note 7 – Risk Management and Self Insurance..............................................................................................85
Note 8 – Landfill Closure and Postclosure Costs ...........................................................................................87
Note 9 – Retirement Plans...................................................................................................................................88
A. Pension Plan ....................................................................................................................................88
Note 10 – Post-Employment Retirement Benefits ..........................................................................................90
Note 11 – Commitments and Contingencies ...................................................................................................90
Note 12 – Operating Leases ................................................................................................................................92
Note 13 – Reserved and Designated Fund Balances ......................................................................................93
Note 14 – Deficit Net Assets ...............................................................................................................................94
Note 15 – Subsequent Events .............................................................................................................................94
Note 16 – Prior Period Adjustments..................................................................................................................95

52
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 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.
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.
53
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, Continued
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.
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.
54
City of Santa Cruz
Governmental Fund Financial Statements, Continued
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. Internal Service Funds may be used to report any activity that
provides goods or services to other funds, departments, or agencies of the primary government.
Examples are Equipment Operations, Stores Services, Telecommunications, and Risk Management
Funds.
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.
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.
55
City of Santa Cruz
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. Agency
funds include Library Joint Powers Authority, Payroll Payables, and Special Assessments. The private-
purpose trust funds are used to account for resources legally held in trust for special purposes, such as
McCaskill Trust for Local History, McCaskill Trust for Visually Impaired, and The Finkeldey Trust for
Musical Literature.
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
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.
The City’s cash and investments 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, 2007, by multiplying its account balance with LAIF times a fair value factor determined by
LAIF (.999545022). This fair value factor was determined by dividing the total aggregate fair value for
all LAIF participants by total aggregate amortized cost.
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.
56
City of Santa Cruz
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
All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not
available. Donated capital 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
57
City of Santa Cruz
I. Capital Assets, Continued
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.
GASB issued Statement No. 34 which requires the inclusion of infrastructure capital assets in local
governments’ Basic Financial Statements. In accordance with Statement No. 34, the City has included
the value of all infrastructure in the fiscal year 2003 Basic Financial Statements.
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.
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.
58
City of Santa Cruz
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 advances from other funds, the governmental fund
financial statements do not present long-term liabilities. However, the long term debt is shown as a
reconciling item in the Reconciliation of the Governmental Funds Balance Sheet to the Government-
Wide Statement of Net Assets.
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.”
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City of Santa Cruz
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.
2. CASH DEPOSITS AND INVESTMENTS
The following is a summary of cash, cash equivalents, and investments, including restricted cash and
investments with fiscal agents at June 30, 2007:
Government-Wide Statement of Net Assets Statement of

Governmental Business-Type Fiduciary
Activities Activities Total Net Assets Total
Unrestricted assets:
Cash and cash equivalents $ 42,640,326 $ 56,087,726 $ 98,728,052 $ 2,181,287 $ 100,909,339
Total unrestricted assets 42,640,326 56,087,726 98,728,052 2,181,287 100,909,339
Restricted assets:
Cash and cash equivalents 3,026,030 2,803,575 5,829,605 75,985 5,905,590
Investments with fiscal agents 283,042 1,369,711 1,652,753 - 1,652,753
Total restricted assets 3,309,072 4,173,286 7,482,358 75,985 7,558,343
Grand Total $ 45,949,398 $ 60,261,012 $ 106,210,410 $ 2,257,272 $ 108,467,682
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City of Santa Cruz
2. CASH DEPOSITS AND INVESTMENTS, Continued
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, cash equivalents, and investments consisted of the following at June 30, 2007:
Cash and cash equivalents:
Pooled cash deposits $ 1,784,555

Outstanding checks (3,868,492)
Other deposits and cash held by City 41,810
Certificates of deposit 596,000
Money market mutual funds available for debt service 7,462
Federal securities 64,656,826
State local agency investment fund 37,691,178
Total cash and cash equivalents 100,909,339
Restricted cash and cash equivalents:

Pooled cash deposits 521,474
Other cash deposits 78,785
Money market mutual funds held by fiscal agents 2,262,641
Investment contracts held by fiscal agents 9,758
State local agency investment fund 3,032,932
Total restricted cash and cash equivalents 5,905,590
Restricted Investments:
Federal securities held by fiscal agents 1,652,753
Total investments 1,652,753
Total cash, cash equivalents, and investments $ 108,467,682
A. Cash Deposits
At June 30, 2007, the carrying amounts of the City’s cash deposits were ($1,441,868), net of outstanding
checks in the amount of $3,868,492. Bank balances before reconciling items were $2,450,036. 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.
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City of Santa Cruz
A. Cash Deposits, Continued
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
The investments made by the City treasurer are limited to those allowable under State statutes as
incorporated into the City’s Investment Policy, dated May 31, 2007, 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 Money market accounts deposited with a nationally or state-chartered bank.

¾ Bonds issued by the City. Purchases of this type shall not exceed five years to maturity.
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 to exceed 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 Bankers’ acceptances with a term not to exceed 180 days’ maturity or 40% of the City’s portfolio.
¾ Nonnegotiable and nontransferable certificates of deposit issued by a nationally or state-
chartered bank, state or federal credit union, or by a state-licensed branch of a foreign bank.
Purchases may not exceed 30% of the City’s portfolio with no more than 5% of the portfolio
deposited with a single issuer.
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). Purchases shall not
exceed 20% of the City’s portfolio with no more than 10% of the portfolio in a single mutual
fund.
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 the value shall be adjusted
no less than quarterly. 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
92 days to maturity and 20% of the portfolio.
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City of Santa Cruz
B. Investments, Continued
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.
The City is a participant in LAIF, which is regulated by California Government Code Section 16429
under the oversight of the Treasurer of the State of California. The City’s investments with LAIF at June
30, 2007, included a portion of the pool funds invested in Structured Notes and Asset-Backed Securities:
Structured Notes: 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.
Asset-Backed Securities: generally mortgage-backed securities that 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 (for example, Collateralized Mortgage Obligations) or credit card receivables.
As of June 30, 2007, the City had $40,724,110 invested in LAIF accounts, which had invested 3.466% of
the pool investments in structured notes and asset-backed securities. The City’s share of structured
notes and asset-backed securities due to its holdings in LAIF amounted to approximately 1.284% of
investments at June 30, 2007.
C. Risk Disclosures
Interest Rate Risk - 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. At June
30, 2007, the City had the following investment maturities:
Investment Type Fair Value Maturity (Days)
U.S. Treasuries $ 2,993,830 96

U.S. Agencies 63,315,749 251
U.S. Treasury Money Market Mutual Funds 2,270,103 1
Certificates of Deposit 596,000 1,180
Local Agency Investment Fund 40,724,110 176
Guaranteed Investment Contract 9,758 275
Total Fair Value of Investments only* $ 109,909,550
Portfolio Weighted Average Maturity (Days) 219

Portfolio Weighted Average Maturity (Years) 0.60
*Does not include net amount of bank balances
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City of Santa Cruz
C. Risk Disclosures, Continued
Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations. Investments in callable bonds
are investments that, although having clearly defined maturities, allow for the issuer to redeem or call
such bonds earlier than their respective maturity dates. The investor must then replace the called
bonds with investments that may have lower yield than the original bonds. As a result, the fair value of
the callable bonds is highly sensitive to changes in interest rates. As of June 30, 2007, the City held
$18,954,880 in callable securities, which amounted to approximately 17.25% of investments at June 30,
2007. 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 compliance with
these provisions of the investment policy.
Credit Risk - State law limits investments in commercial paper and corporate bonds to the top two
ratings issued by nationally recognized statistical rating organizations. The City’s investments are
rated 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
Blackrock Provident - Treasury Fund Aaa AAAm
Goldman Sachs - Financial Square Treasury Obligations Aaa AAAm
Goldman Sachs - Treasury Instruments Portfolio Aaa AAAm-G
Guaranteed Investment Contract
Trinity Plus Funding Company Aaa AAA
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 Treasury Trust
Money Market Mutual Fund is rated by only one nationally recognized statistical rating organization;
however, it 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.
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City of Santa Cruz
C. Risk Disclosures, Continued
The following chart presents investments in any one issuer (other than U.S. Treasury securities and
external investment pools) that represent 5% or more of total investments at June 30, 2007:
Percentage of
Investment Type Amount Invested Investments
Federal Farm Credit Bank $ 10,458,484 9.52%

Federal Home Loan Bank 22,722,405 20.67%
Federal Home Loan Mortgage Corporation 11,916,540 10.84%
Federal National Mortgage Association 18,218,320 16.58%
Total $ 63,315,749 57.61%
The following chart presents the City’s investments in money market mutual funds by issuer at June 30,
2007:
U.S. Treasury Money Market Percentage of

Mutual Funds Amount Invested Investments
Blackrock Provident - Treasury Trust Fund $ 31,058 0.03%

Blackrock Provident - Treasury Fund 350 0.00%
Goldman Sachs - Treasury Instruments Portfolio 1,147,953 1.04%
Goldman Sachs - Financial Square Treasury Obligations 1,090,742 0.99%
Total $ 2,270,103 2.06%
Custodial Credit Risk - For deposits, custodial credit risk is the risk that, in the event of the failure of a
deposit financial institution, a government will not be able to recover its deposits or will not be able to
recover collateral securities that are in the possession of an outside party. For an investment, this is the
risk that, in the event of the failure of the counterparty, the government will not be able to recover the
value of its investments or collateral securities that are in the possession of an outside party. The City’s
investment policy does not contain legal or policy requirements that would limit the exposure to
custodial credit risk for deposits or investments, other than the provision for deposits stated in Note 2A.
$2,350,036 of the City’s deposits with financial institutions in excess of federal depository insurance
limits was held in uncollateralized accounts. Of the City’s total cash and investment balance at June 30,
2007, $3,932,614 is held by fiscal agents, not in the name of the City, and invested as follows: $9,758 in a
guaranteed investment contract; $1,652,753 in federal agency securities; and $2,270,103 in money
market mutual funds.
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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, 2007:
Government-Wide Statement of Net Assets Statement of

Governmental Business-Type Fiduciary
Activities Activities Total Net Assets Total
Interest receivable $ 832,087 $ 1,055,772 $ 1,887,859 $ 22,848 $ 1,910,707

Taxes receivable 4,306,295 - 4,306,295 651,199 4,957,494
Accounts receivable, net 1,819,818 7,166,955 8,986,773 530,842 9,517,615
Due from other governments 2,725,206 1,085,238 3,810,444 27,620 3,838,064
Notes receivable 6,087,262 401,058 6,488,320 - 6,488,320
Loans receivable 1,407,917 - 1,407,917 - 1,407,917
Intergovernmental receivable - 16,160,263 16,160,263 - 16,160,263
Total $ 17,178,585 $ 25,869,286 $ 43,047,871 $ 1,232,509 $ 44,280,380
Fund Financial Statements
At June 30, 2007, the Fund Financial Statements show the following notes, loans and intergovernmental
receivables:
Notes Receivable - in the General Fund $266,964 (net of an allowance for uncollectible amounts of $371,925)
consists 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 $82,879; a loan to the River Street
Shelter for repairs in the amount of $12,900; a loan to First Night Santa Cruz for $20,000; Harvey West
Assessment District notes in the amount of $95,500; employee computer loans in the amount of $5,683;
various notes for housing improvement activities in the Housing In-Lieu program of $273,127; and $70,000
in loans to two borrowers participating in the Accessory Dwelling Unit Loan Program. Some notes are
secured by a deed of trust.
The Redevelopment Agency Fund notes receivable balance of $4,874,571 (net of an allowance of $516,740)
represents 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.
The $18,501 note receivable in the Public Works special revenue fund pertains to traffic impact fees owed to
the City by an individual (“promissor”) who renovated residential property for commercial purposes. Any
default results in the forfeiture of building permits issued to the promissor.
Notes receivable in the Parks and Recreation special revenue fund of $245,896 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
In addition to a $75,000 interest-free loan made to the Homeless Services Center for local shelter operations
payable in February 2017, notes receivable in the Housing and Community Development special revenue
fund of $681,330 (net of an allowance of $1,369,408) 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 two notes totaling $401,058. Both are due from
Neary Lagoon Partners 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 $1,407,917 (net of an allowance of $5,335,072) consists 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 $16,160,263 ($1,151,684 due within one year and
$15,008,579 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 collectability
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.
4. INTERFUND BALANCES AND TRANSACTIONS
A. Government-Wide Financial Statements
Long-Term Internal Balances
At June 30, 2007, the City had the following long-term internal balances:
Internal Balances
Payable
Governmental
Activities
Internal Balances Receivable

Business-Type Activities $ 805,249
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City of Santa Cruz
4. INTERFUND BALANCES AND TRANSACTIONS, Continued
A. Government-Wide Financial Statements, Continued
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 due to fund various
projects.
Transfers
The City had the following transfers for the year ending June 30, 2007:
Transfers In
Governmental
Activities
Transfers Out
Business-Type Activities $ 3,367
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, 2007:
Due from Other Funds

Due to Other Funds
General
Fund Total
Non-Major Governmental Funds 3,330,360 3,330,360

Golf Course Funds 557,166 557,166
Internal Service Funds 8,160 8,160
Total $ 3,895,686 $ 3,895,686
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.
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City of Santa Cruz
4. INTERFUND BALANCES AND TRANSACTIONS, Continued
B. Funds Financial Statements, Continued
Long-Term Advances
The City had the following long-term advances as of June 30, 2007:
Advances to Other Funds

Advances from Other Funds
Redevelopment Water Wastewater

General Agency Enterprise Enterprise
Fund Fund Fund Fund Total
Redevelopment Agency Fund $ 902,483 $ - $ 13,585 $ 89,332 $ 1,005,400

Non-Major Governmental Funds 1,229,332 - - - 1,229,332
Parking Enterprise Fund - 351,000 - - 351,000
Total $ 2,131,815 $ 351,000 $ 13,585 $ 89,332 $ 2,585,732
Long-term advances were made 1) from the General Fund, the Water Enterprise Fund, and the
Wastewater 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 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, 2007:
Transfers In
Non-Major
General Redevelopment Governmental Enterprise Internal Service
Fund Fund Funds Funds Funds Total
General Fund $ - $ - $ 677 $ - $ - $ 677

Transfers Out
Non-Major Governmental Funds 66,220 8,288 634,304 - - 708,812

Enterprise Funds:
Water - - 777 - - 777
Wastewater 1,216 - - 3,822 - 5,038
Refuse - - 1,374 3,822 - 5,196
Internal Service Funds 547,658 - - - 129,288 676,946
Total $ 615,094 $ 8,288 $ 637,132 $ 7,644 $ 129,288 $ 1,397,446
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, 2007 the City’s capital assets consisted of the following:
Capital Assets:
Capital assets, not being depreciated:
Land $ 50,609,567 $ 11,590,526 $ 62,200,093
Construction in progress 10,758,619 23,346,697 34,105,316
Subtotal, capital assets, not being depreciated 61,368,186 34,937,223 96,305,409
Capital assets, being depreciated:

Land improvements 7,024,152 3,956,018 10,980,170
Infrastructure 168,644,770 177,843,083 346,487,853
Buildings 35,421,568 160,220,644 195,642,212
Machinery and equipment 10,602,374 23,223,969 33,826,343
Lease improvements 724,114 70,000 794,114
Software 1,102,389 555,257 1,657,646
Subtotal, capital assets, being depreciated 223,519,367 365,868,971 589,388,338
Total capital assets 284,887,553 400,806,194 685,693,747
Less accumulated depreciation:

Land improvements (1,740,472) (869,828) (2,610,300)
Infrastructure (106,789,432) (74,094,311) (180,883,743)
Buildings (9,718,039) (55,806,172) (65,524,211)
Machinery and equipment (7,539,275) (11,663,756) (19,203,031)
Lease improvements (370,457) (14,234) (384,691)
Software (956,476) (445,050) (1,401,526)
Total accumulated depreciation (127,114,151) (142,893,351) (270,007,502)

Total capital assets, net $ 157,773,402 $ 257,912,843 $ 415,686,245
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City of Santa Cruz
5. CAPITAL ASSETS, Continued
The following is a summary of capital assets for governmental activities:
Prior Period
Balance Adjustments Balance
July 1, 2006 (Note 15) Additions Deletions June 30, 2007
Governmental Activities:
Land $ 50,452,567 $ 157,000 $ - $ - $ 50,609,567
Construction in progress 5,108,592 - 8,708,354 (3,058,327) 10,758,619
Subtotal, capital assets, not being
depreciated 55,561,159 157,000 8,708,354 (3,058,327) 61,368,186
Land improvements 5,393,352 - 1,630,800 - 7,024,152
Infrastructure 167,322,095 - 1,322,675 - 168,644,770
Buildings 35,421,568 - 35,600 (35,600) 35,421,568
Machinery and equipment 10,279,605 - 744,437 (421,668) 10,602,374
Lease improvements 724,114 - - - 724,114
Software 1,056,070 - 46,319 - 1,102,389
Subtotal, capital assets, being
depreciated 220,196,804 - 3,779,831 (457,268) 223,519,367
Total capital assets 275,757,963 157,000 12,488,185 (3,515,595) 284,887,553

Land improvements (1,394,671) - (345,801) - (1,740,472)
Infrastructure (102,361,142) - (4,428,290) - (106,789,432)
Buildings (8,950,969) - (767,070) - (9,718,039)
Machinery and equipment (7,210,260) - (724,430) 395,415 (7,539,275)
Lease improvements (296,913) - (73,544) - (370,457)
Software (808,382) - (148,094) - (956,476)
Total accumulated depreciation (121,022,337) - (6,487,229) 395,415 (127,114,151)
Total capital assets, net $ 154,735,626 $ 157,000 $ 6,000,956 $ (3,120,180) $ 157,773,402
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City of Santa Cruz
Depreciation expense of the governmental activities for the year ended June 30, 2007 was $6,487,229 and
was distributed among City departments as follows:
General government:
City Council $ 6,781
City Clerk 5,529
Human Resources 23,758
Finance 190,420
Information Technology 7,977
Non-Departmental 157,877
Internal service funds 86,192
Total general government 478,534
Public safety:
Police 410,960
Fire 253,717
Total public safety 664,677
Parks and Recreation 2,082,144
Library 26,800
Public Works 3,152,972
Planning and Community Development 8,156
Redevelopment 73,946
Total depreciation expense $ 6,487,229
The following is a summary of capital assets for business-type activities:
Prior Period
Balance Adjustments Balance
July 1, 2006 (Note 15) Additions Deletions June 30, 2007
Business-type Activities:
Land $ 11,931,526 $ (157,000) $ - $ (184,000) $ 11,590,526
Construction in process 10,436,904 (492,352) 16,870,800 (3,468,655) 23,346,697
Subtotal, capital assets,
not being depreciated 22,368,430 (649,352) 16,870,800 (3,652,655) 34,937,223
Land improvements 3,956,018 - - - 3,956,018
Infrastructure 180,436,253 - 1,078,911 (3,672,081) 177,843,083
Buildings 160,134,334 - 86,310 - 160,220,644
Machinery and equipment 20,026,950 - 4,636,891 (1,439,872) 23,223,969
Lease improvements 70,000 - - - 70,000
Software 555,258 - - (1) 555,257
Subtotal, capital assets,
being depreciated 365,178,813 - 5,802,112 (5,111,954) 365,868,971
Total capital assets 387,547,243 (649,352) 22,672,912 (8,764,609) 400,806,194
Land improvements (675,258) - (194,570) - (869,828)
Infrastructure (73,818,113) - (3,945,598) 3,669,400 (74,094,311)
Buildings (52,271,065) - (3,535,107) - (55,806,172)
Machinery and equipment (10,573,668) - (2,318,933) 1,228,845 (11,663,756)
Lease improvements (11,434) - (2,800) - (14,234)
Software (334,441) - (110,609) - (445,050)
Total accumulated depreciation (137,683,979) - (10,107,617) 4,898,245 (142,893,351)
Total capital assets, net $ 249,863,264 $ (649,352) $ 12,565,295 $ (3,866,364) $ 257,912,843
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City of Santa Cruz
Business-type activities depreciation expense for the year ended June 30, 2007 is as follows:
Water $ 1,865,073
Wastewater 4,362,255
Refuse 1,866,235
Parking 486,577
Storm Water 1,322,031
Golf Course 205,446
Total depreciation expense $ 10,107,617
The funds financial statements do not present general government capital assets consequently, 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, 2006 Interest Additions Retirements June 30, 2007 One Year Than One Year
Compensated absences $ 2,108,335 $ - $ 2,300,562 $ (1,989,865) $ 2,419,032 $ 1,612,688 $ 806,344

Claims and judgments 11,007,290 - 141,369 (706,104) 10,442,555 2,943,930 7,498,625
Certificates of participation 4,239,123 - - (142,985) 4,096,138 150,848 3,945,290
General obligation bonds 7,126,075 115,367 - (185,577) 7,055,865 193,004 6,862,861
Notes payable 4,205,026 - 100,000 (1,384,539) 2,920,487 1,421,374 1,499,113
Tax allocation bonds payable 5,125,000 - - (120,000) 5,005,000 125,000 4,880,000
Capital lease obligations 1,247,913 - 27 (282,313) 965,627 146,019 819,608
Other long-term liabilities 944,836 - 16,235 (109,490) 851,581 98,180 753,401
Total $ 36,003,598 $ 115,367 $ 2,558,193 $ (4,920,873) $ 33,756,285 $ 6,691,043 $ 27,065,242
Compensated absences and Claims and judgments
As shown in the table above, the total amount outstanding at June 30, 2007 was $2,419,032 for
compensated absences and $10,442,555 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, 2007, 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, 2007, was $176,138. The Agency amount due within one year is $55,848 and amount due in
more than one year is $120,290. 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, 2007, was
$3,920,000. The amount due within one year is $95,000 and amount due in more than one year is
$3,825,000.
The annual debt service requirements on the certificates of participation at June 30, 2007, were as
follows:
For the Year
Ending
June 30, Principal Interest Total
2008 $ 150,848 $ 198,448 $ 349,296
2009 153,713 191,844 345,557
2010 161,577 185,052 346,629
2011 105,000 177,835 282,835
2012-2016 600,000 812,125 1,412,125
2017-2021 750,000 658,315 1,408,315
2022-2026 955,000 452,750 1,407,750
2027-2031 1,220,000 189,250 1,409,250
Total $ 4,096,138 $ 2,865,619 $ 6,961,757
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, 2007, $185,577 principal payments were made on
the bonds. The balance outstanding of Series A bonds at June 30, 2007 was $4,015,000. The carrying
value of the Series B bonds was increased to $3,040,865 in order to reflect the accreted interest due at
June 30, 2007. The total balance outstanding at June 30, 2007 was $7,055,865.
The annual debt service requirements on the general obligation bonds at June 30, 2007, were as follows:
For the Year

Ending
2008 $ 193,004 $ 233,546 $ 426,550
2009 199,781 237,617 437,398
2010 205,937 241,998 447,935
2011 208,582 244,570 453,152
2012 213,768 249,272 463,040
2013-2017 1,142,922 1,313,398 2,456,320
2018-2022 1,299,821 1,416,715 2,716,536
2023-2027 1,506,721 1,485,529 2,992,250
2028-2032 1,032,693 909,057 1,941,750
Sub-total 6,003,229 6,331,702 12,334,931
Accreted Interest 1,052,636 - 1,052,636

Total $ 7,055,865 $ 6,331,702 $ 13,387,567
Notes Payable
In July 2001, the Redevelopment Agency received Housing Enabled by Local Partnerships (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, 2007, was $812,487.
In March 2006, the Redevelopment Agency received loan funds, from Salz Leathers, Inc., to be used to
finance the acquisition of land. The proceeds of the note are to be repaid by March 2009 with an interest
rate of 5%. The balance outstanding at June 30, 2007, was $2,028,000.
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City of Santa Cruz
Notes Payable, Continued
In January 2007, the City received loan funds, from Greg Fyvie, to be used for renovation of Lawn
Bowling Park. The proceeds of the note are to be repaid by January 2011 with no annual interest. The
balance outstanding at June 30, 2007, was $80,000.
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, 2007
was $5,005,000.
The annual debt service requirements on the tax allocation bonds at June 30, 2007, were as follows:
For the Year

Ending
2008 $ 125,000 $ 202,954 $ 327,954
2009 130,000 199,766 329,766
2010 130,000 196,516 326,516
2011 135,000 192,866 327,866
2012 140,000 188,566 328,566
2013-2017 775,000 864,228 1,639,228
2018-2022 945,000 696,553 1,641,553
2023-2027 1,165,000 472,453 1,637,453
2028-2032 1,460,000 175,024 1,635,024
Total $ 5,005,000 $ 3,188,926 $ 8,193,926
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City of Santa Cruz
Lease Obligations
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 lease has been fully paid off as of June 30, 2007.
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, 2007 was
$612,086.
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, 2007 was $353,541.
The annual debt service requirements on the capital leases at June 30, 2007, were as follows:
For the Year

Ending
2008 $ 146,019 $ 40,199 $ 186,218
2009 151,302 34,914 186,216
2010 156,780 29,436 186,216
2011 36,681 22,903 59,584
2012 38,384 21,161 59,545
2013-2017 220,372 71,666 292,038
2018-2022 216,089 20,637 236,726
Total $ 965,627 $ 240,916 $ 1,206,543
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City of Santa Cruz
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 of the Redevelopment Agency owes $26,936 as of June 30, 2007. Under the second OPA, the
Redevelopment Agency owes $225,981.
Under the third OPA the Redevelopment Agency assumes responsibility for an additional 48.68% of the
Special Assessment Debt contingent upon the availability of tax increment. The Redevelopment Agency
is currently liable under this OPA for $598,664 and interest, currently estimated at $67,334. The debt is to
be paid from tax increment revenues derived from the project.
The annual debt service requirements for other long-term liabilities outstanding at June 30, 2007, are as
follows:
For the Year
Ending
2008 $ 98,180 $ 26,272 $ 124,452
2009 105,174 20,714 125,888
2010 111,859 14,705 126,564
2011 118,852 8,381 127,233
2012 129,272 1,607 130,879
2013-2017 288,244 - 288,244
Total $ 851,581 $ 71,679 $ 923,260
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, 2007 is $53,525,000. 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. The City is in no way obligated
to repay the debt in the event of default and the debt is not recorded in the accompanying financial
statements.
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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, 2007, is as follows:
Classification
Amount Amount
Balance Balance Due Within Due in More
July 1, 2006 Additions Retirements June 30, 2007 One Year then One Year
Compensated absences $ 751,594 $ 905,634 $ (824,364) $ 832,864 $ 555,243 $ 277,621

Landfill closure costs 5,751,407 303,829 - 6,055,236 - 6,055,236
Certificates of participation 20,915,877 - (1,732,015) 19,183,862 1,799,151 17,384,711
Revenue bonds payable 23,265,000 - (665,000) 22,600,000 590,000 22,010,000
Notes payable 37,822,337 - (2,485,068) 35,337,269 2,553,787 32,783,482
Lease obligations 3,145,352 1,574,043 (1,204,640) 3,514,755 1,030,320 2,484,435
Total $ 91,651,567 $ 2,783,506 $ (6,911,087) $ 87,523,986 $ 6,528,501 $ 80,995,485
Compensated absences
As shown in the table above, the total amount outstanding at June 30, 2007 was $832,864 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, 2007 was $6,055,236 for landfill
closure costs. Refer to Note 8 for landfill closure details.
Certificates of Participation
Certificates of Participation payable at June 30, 2007, 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, 2007, was $438,862.
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 2028. The balance outstanding at June 30, 2007, was $6,145,000.
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City of Santa Cruz
B. Proprietary Fund Obligations, Continued
Certificates of Participation, Continued
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 2024; interest ranges from 4.0% to 5.625%. The balance outstanding at June 30,
2007, was $3,585,000.
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, 2007, was $4,950,000.
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, 2007, was $545,000.
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, 2007 was $3,520,000.
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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, 2007, were as
follows:
For the Year

Ending
2008 $ 1,799,151 $ 904,066 $ 2,703,217
2009 1,306,288 830,538 2,136,826
2010 823,423 786,841 1,610,264
2011 670,000 751,332 1,421,332
2012 690,000 721,962 1,411,962
2013-2017 3,995,000 3,094,902 7,089,902
2018-2022 5,105,000 1,994,448 7,099,448
2023-2027 3,845,000 795,945 4,640,945
2028-2032 950,000 63,369 1,013,369
Total $ 19,183,862 $ 9,943,403 $ 29,127,265
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
2005 WasteWater Revenue Refunding Bonds, issued in November 2005, in the amount of $4,715,000 was
used to refinance the Series B Sewer Revenue Bonds issued in February 1994. Annual payments of
$200,000 to $350,000 will be made through November 2023; interest ranges from 3.0% to 4.50%. Annual
debt service is payable solely from and secured by a lien on net revenues of the City’s sewer system. The
balance outstanding at June 30, 2007, was $4,510,000.
2005 Storm Water Revenue Refunding Bonds, issued in September 2005, in the amount of $6,100,000
was used to refinance the Santa Cruz Storm Water Certificates issued in October 1999. Annual
payments of $160,000 to $385,000 will be made through October 2029; interest ranges from 3.0% to
4.375%. The bonds are special obligations of the City payable solely from the revenues received by the
City from the ownership and operation of the Storm Water Enterprise. All revenues are irrevocably
pledged to the payment of the bonds. The balance outstanding at June 30, 2007, was $5,940,000.
2006 Water Revenue Bonds issued in May 2006, in the amount of $12,450,000 was used to finance
construction of a new transmission main connecting the Graham Hill Water Treatment Plant to the Bay
Street Reservoir. Annual payments of $220,000 to $555,000 will be made through March 2036; interest
ranges from 4.0% to 4.625%. The bonds are special obligations of the City payable from the Net
Revenues received by the City from the ownership and operation of the City’s Water System. The
balance outstanding at June 30, 2007, was $12,150,000.
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City of Santa Cruz
Revenue Bonds Payable, Continued
The annual debt service requirements on the revenue bonds at June 30, 2007, were as follows:
Ending
2008 $ 590,000 $ 939,456 $ 1,529,456
2009 615,000 917,606 1,532,606
2010 635,000 895,831 1,530,831
2011 660,000 874,019 1,534,019
2012 680,000 851,150 1,531,150
2013-2017 3,780,000 3,860,073 7,640,073
2018-2022 4,565,000 3,031,466 7,596,466
2023-2027 4,475,000 2,024,243 6,499,243
2028-2032 3,885,000 1,106,428 4,991,428
2033-2037 2,715,000 327,207 3,042,207
Total $ 22,600,000 $ 14,827,479 $ 37,427,479
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.
Under conditions of the storm water revenue refunding bond covenant, the Storm Water Enterprise
Fund is required to maintain adequate revenues to cover future bond payments.
Under conditions of the water revenue bond covenant, the Water Enterprise Fund is required to
maintain adequate revenues to cover future bond payments.
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 October 2015. This debt is recorded in the Water Enterprise Fund. The
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, 2007, was $34,340,559.
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City of Santa Cruz
Notes Payable, Continued
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
The annual debt service requirements on the notes at June 30, 2007, were as follows:
For the Year

Ending
2008 $ 2,553,787 $ 981,752 $ 3,535,539
2009 2,624,582 910,958 3,535,540
2010 2,697,248 838,295 3,535,543
2011 2,771,987 763,553 3,535,540
2012 2,848,804 686,736 3,535,540
2013-2017 15,299,171 2,205,441 17,504,612
2018-2022 6,541,690 276,016 6,817,706
Total $ 35,337,269 $ 6,662,751 $ 42,000,020
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 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. 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. The combined Refuse, Water,
Wastewater, Parking, and Golf Course funds balance outstanding at June 30, 2007, was $164,139.
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, 2007, was $340,878.
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, 2007, was $482,124.
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City of Santa Cruz
Lease Obligations, Continued
In December 2005, the City entered into a capital lease agreement for lease rental of two fairway
mowers. The lease is payable in quarterly installments of $9,584 through December 2010 with an annual
interest rate of 3.90%. The lease has been allocated to the Golf Course Fund. The balance outstanding at
June 30, 2007 was $60,632.
In June 2, 2006, the City acquired one (1) front loader and five (5) side-loaders under a capital lease
agreement payable in semi-annual installments of $135,798 through June 2011 with an annual interest
rate of 4.16%. This lease has been allocated to the Refuse Fund. The balance outstanding at June 30,
2007, was $991,365
In December 2006, the City acquired three (3) trucks, one (1) street sweeper and (1) one sewer /storm
drain vactor truck under a capital lease agreement payable in semi-annual installments of $118,213
through December 2011 with an annual interest rate of 3.88%. This lease has been allocated to the
Refuse and Waste Water Funds. The balance outstanding at June 30, 2007 was $967,659
In May 2007, the City acquired one (1) Caterpillar D&T Waste Bulldozer under a capital lease
agreement payable in semi-annual installments of $56,519 through May 2012 with an annual interest
rate of 3.98%. This lease has been allocated to the Refuse Fund. The balance outstanding at June 30, 2007
was $507,958
The annual debt service requirements on the lease obligations at June 30, 2007, were as follows:
For the Year

Ending
2008 $ 1,030,320 $ 125,208 $ 1,155,528

2009 899,438 89,034 988,472
2010 755,677 55,830 811,507
2011 603,604 27,045 630,649
2012 225,716 5,536 231,252
Total $ 3,514,755 $ 302,653 $ 3,817,408
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City of Santa Cruz
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. For the period ending June 30, 2007, 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 is also completely self-insured for unemployment
insurance, vision, and dental insurance claims, and this self-insurance program is accounted for in the
General Fund. The City contracts with outside administrators to administer these 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). 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 twelve members. ACCEL operates a liability risk pooling 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 2006-2007 fiscal year, ACCEL charged its members $0.60 per one-hundred dollars of payroll for the
self-funded $4,000,000 excess of a $1,000,000 member self-insured retention. Members also purchased
commercial excess insurance limits of $30,000,000 excess of $5,000,000. In addition to the $35,000,000
program limits, eight members purchased optional limits of $10,000,000. Members were also charged
administrative costs in equal amounts. The City’s share of administrative costs was $29,716 during the
2006-2007 fiscal year.
ACCEL’s day-to-day operations are administered by Alliant Insurance Services, Inc. (Alliant) contracted by
ACCEL to provide accounting, risk consulting, insurance brokerage, and program administration services.
Alliant’s responsibility also includes the administration of policies and procedures as set forth by the
ACCEL Joint Powers Authority Agreement, By-laws, and by the Board of Directors.
ACCEL 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.
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City of Santa Cruz
7. RISK MANAGEMENT AND SELF-INSURANCE, Continued
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 $12,000,000 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 2007 Board of Directors meeting, a
retrospectively rated refund was made available for distribution to the members for program years 2
through 16 in the amount of $11,236,868. Members may elect to have returned all or a portion of their
refund, or choose to retain the funds in the respective program year in the name of the member city. The
City of Santa Cruz’ retrospective rated refund is $673,531.
Summary audited financial information for ACCEL as of and for the year ended June 30, 2007, is as follows:
Assets
Cash and investments $ 26,449,674

Other assets 1,268,205
Total assets $ 27,717,879
Liabilities and Net Assets
Unpaid claims liability $ 11,672,000

Retrospectively rated refunds liability 15,201,949
Other liabilities 747,392
Total liabilities 27,621,341
Net assets 96,538
Total liabilities and net assets $ 27,717,879
Revenues
Premiums earned $ 8,829,522

Investment income 1,294,694
Administrative fees 362,592
Total revenues 10,486,808
Expenses
Loss provision and premiums paid $ 10,124,218

General and administrative 362,590
Total expenses 10,486,808
Net income / (loss) -
Net assets, beginning of year 96,538
Net assets, end of year $ 96,538
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City of Santa Cruz
7. RISK MANAGEMENT AND SELF-INSURANCE, Continued
Complete financial statements for ACCEL can be obtained from Alliant Insurance Services, Inc., 600
Montgomery Street, 9th Floor, San Francisco, CA 94111.
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, 2005 through 2007 are as
follows:
CLAIMS PAYABLE
Beginning Claims Ending

Balance Incurred Payments Balance
June 30, 2005 $ 14,376,121 $ 3,350,942 $ (2,463,787) $ 15,263,276

June 30, 2006 10,719,455 2,686,917 (2,399,082) 11,007,290
June 30, 2007 11,007,290 2,988,351 (3,553,086) 10,442,555
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 $ 4,521,425

Total estimated postclosure costs 8,771,956
Total estimated closure and postclosure costs $ 13,293,381
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, 2007, the estimated landfill closure cost liabilities of $6,055,236 and estimated annual
landfill closure cost of $303,828 were calculated as follows:
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City of Santa Cruz
8. LANDFILL CLOSURE AND POSTCLOSURE COSTS, Continued
Total estimated closure and postclosure costs $ 13,293,381

Percent of used capacity to total capacity 45.55%
Estimate landfill closure and postclosure cost liability 6,055,135

Miscellaneous adjustments 101
Estimated total closure and postclosure costs liability 6,055,236

Previous closure costs accrued 5,751,408
Fiscal year 2007 expense for closure and postclosure costs $ 303,828
The landfill has an estimated remaining capacity of 5,708,635 cubic yards and has a projected closure date of
January 2038.
Based upon the requirements of the California Integrated Waste Management Board, the City set aside
$166,558 to fund future closure and post closure costs for the year ended June 30, 2007. All cash is invested.
The market value of the invested cash at June 30, 2007 was $3,369,908, and is available to provide for closure
and postclosure costs. Total funds accumulated as of June 30, 2007, are comprised as follows:
Closure $ 1,413,733
Postclosure 1,956,175
Total $ 3,369,908
The City has demonstrated acceptable financial assurance to the California Integrated Waste Management
Board through an agreement pledging revenue for corrective actions costs on September 26, 2006.
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. The Police and Fire Safety plans are required to
participate in a risk pool since there were less than 100 active members in at least one valuation since
June 30, 2003. 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.
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City of Santa Cruz
9. RETIREMENT PLANS, Continued
A. Pension Plan, Continued
Funding Policy
City employees are required to contribute 9% for safety employees and 11.163% for all other employees
of their annual covered salary. The City employer is required to contribute at an actuarially determined
rate; the fiscal year 2007 rate is 8.988% for miscellaneous employees, 35.164% for police safety
employees, and 38.825% 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.
In fiscal year 2007, the City amended its Miscellaneous Employees PERS contract to provide for Section
21548 Pre-Retirement Optional Settlement 2 Death Benefits. The additional cost to the City is 0.211% of
the annual payroll.
The contribution requirements of City employees and the City employer are established and may be
amended by PERS.
Annual Pension Cost
For fiscal year 2007, the City’s annual pension cost of $6,462,742 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 volatility in
the market value of investments over a fifteen-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, 2004 was 16 years for public safety police employees, 16 years for public
safety fire employees, and 30 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, 2005 6,175,176 100% -

June 30, 2006 6,330,030 100% -
June 30, 2007 6,462,742 100% -
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City of Santa Cruz
10. POST-EMPLOYMENT RETIREMENT BENEFITS
Retiree Medical Plan
The City contracts with CalPERS for retiree health care benefits. Covered employees who retire under the
provisions of the City’s contract with CalPERS are eligible to continue CalPERS medical coverage. The
City’s contribution rate for retiree enrollment is the minimum amount provided under Government Code
Section 22892 of the Public Employees Medical and Hospital Care Act. The minimum rates for the
following calendar years are listed below:
• 2006 - $64.60
• 2007 - $80.80
• 2008 - $97.00
• 2009 – CPI Adjustment
On June 30, 2007, 153 retired employees were eligible for the Retiree Medical Plan benefits. In fiscal year
2007, the City paid $135,096 towards the Retiree Medical Plan and recognized these expenditures as they
were paid.
Retiree Medical Incentive
All part-time and full-time regular employees that meet specified Memorandum of Understanding (MOU)
continuous service and minimum age requirements are also eligible to receive a retiree medical incentive.
Miscellaneous employees must have at least 10 years of continued service with the City and be at least 55
years of age; and Public Safety employees must have a minimum of 5 years of continued service with the
City and be at least 50 years of age. Retiree medical incentives will be provided until the retiree becomes
eligible for Medicare or discontinues CalPERS medical coverage.
On June 30, 2007, there were 70 participants in the retirement medical incentive program. In fiscal year
2007, the City paid $97,605 towards retiree medical incentives and recognized these expenditures as they
were paid.
11. COMMITMENTS AND CONTINGENCIES
The City participates in a number of Federally assisted grant programs, of which the principal grants are
the Disaster Assistance Program, Community Development Block Grant (CDBG), Home Investments
Partnership Program (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, 2007:
Major Commitments and Contracts for Professional Services:

Highway 1 Bike/Pedestrian Underpass $ 140,621
Tannery Arts Projects 185,446
Tait St. Diversion Study 144,850
GHWTP Electrical Improvelemts 361,166
Sanitary Sewer Flow Model 158,684
Geotech Services Newell Creek Dam 169,000
MBNMS Visitor Center 363,684
Bay St Reservoir Reconstruction SDC 114,963
Total major professional services 1,638,414
Major Commitments and Contracts for Capital Projects:

Loan from South County Housing Corp 216,669
North Coast Rehabilitation 808,943
Felton Booster Pump Station Upgrade 561,157
Bay St System Transmission Improvement Project 2,713,893
Santa Cruz County Kinsley St Improvement Project 3,319,953
Archaeological Service for Bay St Reservoir 459,952
Desal Pilot Study on Water Supply 287,163
Total major capital projects 8,367,730
Total Commitments and Contracts $ 10,006,144
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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, 2007 were
$225,213. 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, 2007 are as follows:
Year Ending June 30, Balance
2008 $ 86,752
2009 67,896
2010 23,078
Total future minimum lease payments $ 177,726
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, 2007 were $899,912.
The total cost of leased assets as of June 30, 2007 was $27,714,643, and the accumulated depreciation of those
assets that are depreciable amounted to $7,644,810. Future estimated revenues from these leases are as
follows:
Year Ending June 30, Amount
2008 $ 953,983
2009 859,114
2010 748,565
Future years 4,570,593
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City of Santa Cruz
13. RESERVED AND DESIGNATED FUND BALANCES
Fund balances at June 30, 2007, 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 $ 861,056 $ 432,752 $ 1,199,314 $ - $ 1,499,485 $ 3,992,607
Noncurrent receivables and advances 2,398,778 4,915,571 2,089,248 - - 9,403,597
Prepaid items 475,774 - - - - 475,774
Debt service - 64,063 - - - 64,063
General plan update 15,000 - - - - 15,000
Capital projects - - - - - -
Low and moderate income housing 256,105 1,407,960 - - - 1,664,065
Total reserved 4,006,713 6,820,346 3,288,562 - 1,499,485 15,615,106
Designated for:
Accrued compensated absences 1,582,089 - 4,488 - - 1,586,577
Capital projects - 6,285,781 - - - 6,285,781
City public trust 6,436,475 - - - - 6,436,475
Computer loan program 42,584 - - - - 42,584
CPVAW 3,245 - - - - 3,245
Debt service - 2,840,469 - 909,576 - 3,750,045
Equipment maintenance 49,536 - - - - 49,536
Housing - - 299,478 - - 299,478
Housing in-lieu program 206,013 - - - - 206,013
Kiosk maintenance 31,632 - - - - 31,632
Museum building 28,021 - - - - 28,021
Parks and recreation programs 22,048 - - - - 22,048
Planning/zoning programs 1,985 - - - - 1,985
Police programs - - 118,262 - - 118,262
Public works programs 8,143 - 631,058 - - 639,201
Street trees 33,157 - - - - 33,157
Unemployment insurance 16,944 - - - - 16,944
Youth/teen programs 26,602 - - - - 26,602
Total designated 8,488,474 9,126,250 1,053,286 909,576 - 19,577,586
Unreserved, Undesignated 13,924,233 - 2,851,774 - (2,796,246) 13,979,761
Total fund balances $ 26,419,420 $ 15,946,596 $ 7,193,622 $ 909,576 $ (1,296,761) $ 49,172,453
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City of Santa Cruz
14. DEFICIT NET ASSETS
The City had total net assets of $4,171,528 as of June 30, 2007, which was comprised of the General Capital
Improvement Fund deficit net assets of $1,296,761 and the Risk Management Internal Service Fund deficit
net assets of $2,874,767.
The General Capital Improvement Fund deficit will be cleared with additional utility contributions and
transfers from the General Fund once the undergrounding of utilities is complete.
The Risk Management Internal Service Fund’s deficit is due to estimated workers’ compensation claims
liabilities in excess of cash and other assets available in the fund, positively offset by the liability insurance
net assets. It is anticipated that this deficit will be made up in future years by increased contributions from
other City funds. The City has established an actuarially approved plan to fund the increased liability over
a number of years. A detail listing of deficit net assets by fund is shown below:
Net Assets
Capital Improvement Fund $ (1,296,761)
Risk Management Fund:

Workers' compensation insurance (3,300,551)
Liability insurance 425,784
Total (2,874,767)
Total net assets $ (4,171,528)
15. SUBSEQUENT EVENTS
On July 10, 2007, the City of Santa Cruz City Council approved a Resolution of Intention to issue debt to
provide financing for the purchase of the Union Locust Building, to provide space for Library
Administration and book processing, and for the Water Utility Administration offices. The City plans to
issue Lease Revenue Bonds in the principal amount of $6,880,000 on December 4, 2007.
The City of Santa Cruz Public Financing Authority will sell 2007 Lease Revenue bonds in the amount of
$6,880,000 on December 4, 2007. The bonds are for 30 years. The City, which has a AA credit rating, will
not provide insurance on the bonds, but will offer the bidder’s option allowing the winning bidder to
purchase insurance on the bonds. The average annual debt service on the bonds is $430,000, to be paid two
thirds by the Library and one third by the Water Utility. Payments are due December 31st and June 30th of
each year.
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City of Santa Cruz
16. PRIOR PERIOD ADJUSTMENTS
The City recorded the following prior period adjustments in the Government-Wide Financial
Statements. Adjustments to the Governmental Activities include an increase of $157,000 in Capital
assets – land, belonging to the Redevelopment fund and incorrectly recorded in the Parking Enterprise
Fund during the GASB 34 conversion. Adjustments to the Business-Type Activities include the
$157,000 reduction in Capital assets – land in the Parking Enterprise Fund, and corrections to the Water
and Wastewater Enterprise Funds in the total amount of $492,352 originally recorded in Capital assets -
Construction in Progress, and reclassified as prior-year expenditures. Accordingly, the net assets as of
July 1, 2006, have been restated as follows:
Prior Period
Net Assets,
Adjustments
as Previously Capital Net Assets,
Government-Wide Financial Statements Reported Assets As Restated
Net assets $ 173,777,838 $ 157,000 $ 173,934,838
Total governmental activities 173,777,838 157,000 173,934,838
Business-Type Activities:
Net assets 242,835,587 (649,352) 242,186,235
Total business-type activities 242,835,587 (649,352) 242,186,235
Total government-wide $ 416,613,425 $ (492,352) $ 416,121,073
The City recorded the following prior period adjustments in the fund financial statements.
Adjustments to the Water and Wastewater Enterprise Funds in the total amount of $492,352 originally
recorded in Capital assets - Construction in Progress, and reclassified as prior-year expenditures.
Adjustments in the Parking Enterprise Fund include $157,000 in Capital assets – Land, belonging to the
Redevelopment fund and incorrectly recorded in the Parking enterprise fund during the GASB 34
conversion. Accordingly, the net assets as of July 1, 2006, have been restated as follows:
Prior Period
Net Assets,
Adjustments
as Previously Capital Net Assets,
Major Enterprise Funds Reported Assets As Restated
Water $ 72,019,358 $ (377,467) $ 71,641,891

Wastewater 103,829,258 (114,885) $ 103,714,373
Parking 16,922,805 (157,000) 16,765,805
Total business-type activities $ 192,771,421 $ (649,352) $ 192,122,069
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REQUIRED SUPPLEMENTARY INFORMATION
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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, 2007.
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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.
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BUDGETARY SCHEDULES
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City of Santa Cruz
Budgetary Comparison Schedule, General Fund
Variance with
Budgeted Amounts Actual Amounts Positive Budget to GAAP Actual Amounts
Original Final (Budgetary Basis) (Negative) Differences (GAAP Basis)
REVENUES:
Taxes $ 40,598,617 $ 41,840,617 $ 42,837,408 $ 996,791 $ - $ 42,837,408

Licenses and permits 660,750 685,750 824,258 138,508 - 824,258
Intergovernmental 936,200 1,345,795 1,563,745 217,950 - 1,563,745
Charges for services: -
External 15,871,678 16,048,658 15,937,955 (110,703) - 15,937,955
Internal 2,987,930 4,192,003 3,848,462 (343,541) - 3,848,462
Interagency 1,008,124 1,008,124 797,529 (210,595) (797,529) -
Subtotal charges for services 19,867,732 21,248,785 20,583,946 (664,839) (797,529) 19,786,417
Fines and forfeitures 2,019,200 2,019,200 2,218,082 198,882 - 2,218,082

Use of money and property 2,499,537 2,556,994 2,900,491 343,497 161,227 3,061,718
Other revenues 144,690 880,977 187,732 (693,245) - 187,732
Total revenues 66,726,726 70,578,118 71,115,662 537,544 (636,302) 70,479,360
EXPENDITURES:
Current:
General government 11,915,487 14,249,508 12,261,663 1,987,845 12,261,663
Public safety 30,643,828 31,023,163 28,469,065 2,554,098 - 28,469,065
Parks and recreation 10,754,233 10,803,375 9,653,531 1,149,844 - 9,653,531
Library 10,099,964 10,099,964 9,693,097 406,867 - 9,693,097
Public works 4,698,421 4,896,756 4,233,034 663,722 - 4,233,034
Community and economic development 1,015,624 1,176,676 812,875 363,801 (799,451) 13,424
Social services 1,647,114 1,653,979 1,651,827 2,152 1,651,827
Capital outlay 1,424,769 1,787,146 1,338,184 448,962 - 1,338,184
Debt service: -
Principal 218,375 218,375 178,385 39,990 - 178,385
Interest and fiscal charges 47,690 47,690 47,643 47 - 47,643
Total expenditures 72,465,505 75,956,632 68,339,304 7,617,328 (799,451) 67,539,853
REVENUES OVER (UNDER) EXPENDITURES (5,738,779) (5,378,514) 2,776,358 8,154,872 163,149 2,939,507
Proceeds from asset disposition - 11,458 62,804 51,346 - 62,804

Proceeds from long-term debt issued - - - - - -
Loan principal receipts 72,178 617,178 82,208 (534,970) (82,208) -
Transfers in 1,078,000 428,000 615,094 187,094 - 615,094
Transfers out (2,381,875) (538,875) (677) 538,198 - (677)
Total other financing sources (uses) (1,231,697) 517,761 759,429 241,668 (82,208) 677,221
Net change in fund balance (6,970,476) (4,860,753) 3,535,787 8,396,540 80,941 3,616,728
FUND BALANCE:
Beginning of the year 17,983,761 18,287,187 18,287,187 - 3,893,153 22,802,692
End of year $ 11,013,285 $ 13,426,434 $ 21,822,974 $ 8,396,540 $ 3,974,094 $ 26,419,420
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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 $ 3,535,787
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 (797,529)
Changes in fund balances because the redevelopment agency is part of the reporting entity. 799,451
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. 161,227
On a budgetary basis, the City records loan principal receipts as revenue, but on a GAAP basis, the receipts
reduce receivables. (82,208)
Net Change in Fund Balances - Statement of Revenues, Expenditures and Changes in Fund Balances $ 3,616,728
Reconciliation of Fund Balances - Budgetary to GAAP Basis:

Fund Balances - Ending - Budgetary Basis $ 21,822,974
Cumulative effect of unrealized gains and losses on investments (8,262)

Cumulative effect of transfer of unrealized gains/losses on investments from Group Health to the General Fund (7,278)
Reserved and designated balances unavailable for appropriation 3,029,897
Designated for noncurrent component of compensated absences 1,582,089
Fund Balances - Ending - GAAP Basis $ 26,419,420
103
City of Santa Cruz
Budgetary Comparison Schedule, Redevelopment Agency
Final Budget -
Budgeted Amounts Actual Amounts Positive Budget to GAAP Actual Amounts
Original Final (Budgetary Basis) (Negative) Differences (GAAP Basis)
REVENUES:
Tax increment $ 9,845,831 $ 10,035,000 $ 11,022,799 $ 987,799 $ - $ 11,022,799

Use of money and property 542,861 537,442 788,641 251,199 56,280 844,921
Other revenues 162,000 502,000 384,865 (117,135) - 384,865
Total revenues 10,550,692 11,074,442 12,196,305 1,121,863 56,280 12,252,585
EXPENDITURES:
Current:
Community and economic development 10,420,262 11,733,731 9,367,291 2,366,440 (1,132,000) 8,235,291
Capital outlay 2,219,322 2,411,322 156,159 2,255,163 - 156,159
Debt service:
Principal 4,563,691 5,127,895 5,235,544 (107,649) (3,585,855) 1,649,689
Interest and fiscal charges 591,027 602,847 571,423 31,424 - 571,423
Bond issuance costs - - - - - -
Total expenditures 17,794,302 19,875,795 15,330,417 4,545,378 (4,717,855) 10,612,562
REVENUES OVER (UNDER) EXPENDITURES (7,243,610) (8,801,353) (3,134,112) 5,667,241 4,774,135 1,640,023
Loan proceeds 3,820,098 4,406,670 4,141,786 (264,884) (4,141,786) -

Long term advance proceeds - - -
Loan principal receipts 28,193 28,193 27,501 (692) (27,501) -
Proceeds from long-term debt issued 310,000 310,000 - (310,000) - -
Premiums on bonds sold - - -
Payment to refunded bond escrow agent - - -
Transfer in from City of Santa Cruz - - 8,288 8,288 - 8,288
Total other financing sources (uses) 4,158,291 4,744,863 4,177,575 (567,288) (4,169,287) 8,288
Net change in fund balance (3,085,319) (4,056,490) 1,043,463 5,099,953 604,848 1,648,311
(1,585,970) (7,653,137) (3,337,064) 1,546,064 (1,791,000)
FUND BALANCE:
Beginning of the year 10,836,098 10,836,098 10,836,098 - 3,462,187 14,298,285
End of year $ 7,750,779 $ 6,779,608 $ 11,879,561 $ 5,099,953 $ 4,067,035 $ 15,946,596
104
City of Santa Cruz
Redevelopment
Agency Fund

Net Change in Fund Balances - Budgetary Basis $ 1,043,463
The Agency 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. 1,132,000
On a budgetary basis, the Agency records loan principal receipts as revenue, but on a GAAP basis, they reduce
receivables. (27,501)
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. (4,141,786)
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. 3,585,855
Net Change in Fund Balances - Statement of Revenues, Expenditures and Changes in Fund Balances $ 1,648,311

Reconciling item for prior year reserve 47,622

Cumulative effect of unrealized gains and losses on investments (15,312)
Noncurrent advances from City (1,005,400)
Reserved balances unavailable for appropriation 5,040,125
All funds are reserved or designated for debt service, capital projects, or low and moderate income housing.
105
106
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, 2004 $ 139,133,604 $ 160,182,390 $ 21,048,786 86.9% $ 33,778,451 62.3%

June 30, 2005 150,956,645 170,106,283 19,149,638 88.7% 32,905,030 58.2%
June 30, 2006 164,898,761 183,410,717 18,511,956 89.9% 33,001,059 56.1%
Police Safety Employees

Unfunded
(Overfunded)
Unfunded Actuarial
CalPERS Risk Pool Information (see comment below):

June 30, 2004 $ 4,424,586,846 $ 5,383,921,942 $ 959,335,096 82.2% $ 575,296,434 166.8%
June 30, 2005 5,295,150,375 6,367,049,264 1,071,898,889 83.2% 664,147,796 161.4%
June 30, 2006 6,102,615,567 7,278,049,834 1,175,434,267 83.8% 754,730,438 155.7%
Fire Safety Employees

Unfunded
(Overfunded)
Unfunded Actuarial
CalPERS Risk Pool Information (see comment below):

June 30, 2004 $ 4,424,586,846 $ 5,383,921,942 $ 959,335,096 82.2% $ 575,296,434 166.8%
June 30, 2005 5,295,150,375 6,367,049,264 1,071,898,889 83.2% 664,147,796 161.4%
June 30, 2006 6,102,615,567 7,278,049,834 1,175,434,267 83.8% 754,730,438 155.7%
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.
107
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108
SUPPLEMENTARY INFORMATION
109
110
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.
Traffic Impact Fee Funds - This fund is used for capital improvements to mitigate traffic impacts
generated by land development. The fee provides financial resources for improvements to transit stops,
bike and pedestrian facilities, signal coordination, park and ride lots, and other alternative
transportation sources impacted by development, and is levied on all Citywide projects requiring a
building permit (residential remodels and limited expansions expected to generate less than five new
trips per day are exempt).
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.
111
City of Santa Cruz
Combining Balance Sheet
June 30, 2007
Special Revenue
Housing and
State Traffic Parks and Community
Police Highway Impact Fee Recreation Development
ASSETS
Cash and cash equivalents $ 279,254 $ 2,315,418 $ 622,364 $ 1,702,939 $ 2,323,554

Interest receivable 3,487 27,327 8,694 20,276 309,421
Taxes receivable - - - - -
Accounts receivable - net 3,358 10,010 145,479 - -
Due from other governments - 266,212 - - 65,209
Restricted assets:
Cash and cash equivalents - - - - -
Investments - - - - -
Total restricted assets - - - - -
Notes receivable - net - - 18,501 245,896 681,330

Loans receivable - net - - - - 1,407,917
Total assets $ 286,099 $ 2,618,967 $ 795,038 $ 1,969,111 $ 4,787,431
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable and other current liabilities $ - $ 1,141,574 $ - $ 1,921 $ 32,605
Due to other funds 350 - - 6,816 69,904
Intergovernmental payable - - - - 2,438
Deferred revenue - - 163,980 245,896 290,866
Unearned revenue 137,437 29,237 - - -
Advances from other funds - - - - 1,140,000
Total liabilities 137,787 1,170,811 163,980 254,633 1,535,813
Fund Balances:
Reserved - 336,422 - - 2,952,140
Unreserved, designated 118,262 4,488 631,058 - 299,478
Special revenue funds 30,050 1,107,246 - 1,714,478 -
Capital projects funds - - - - -
Total fund balances 148,312 1,448,156 631,058 1,714,478 3,251,618
Total liabilities and fund balances $ 286,099 $ 2,618,967 $ 795,038 $ 1,969,111 $ 4,787,431
112
Debt Service Capital Projects
Transportation General Total Other

Development General Capital Governmental
Act Obligation Bond Improvement Funds
$ - $ 870,494 $ 239,679 $ 8,353,702

- 8,978 (1,901) 376,282
- 30,104 607,195 637,299
- - 617,455 776,302
- - 2,068,563 2,399,984
- - 9,685 9,685
- - 283,042 283,042
- - 292,727 292,727
- - - 945,727
- - - 1,407,917
$ - $ 909,576 $ 3,823,718 $ 15,189,940
$ - $ - $ 1,678,596 $ 2,854,696
- - 3,253,290 3,330,360
- - - 2,438
- - - 700,742
- - 99,261 265,935
- - 89,332 1,229,332
- - 5,120,479 8,383,503
- - 1,499,485 4,788,047
- 909,576 - 1,962,862
- - - 2,851,774
- - (2,796,246) (2,796,246)
- 909,576 (1,296,761) 6,806,437
$ - $ 909,576 $ 3,823,718 $ 15,189,940
113
City of Santa Cruz
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Housing and
State Traffic Parks and Community
Police Highway Impact Fee Recreation Development
REVENUES:
Taxes $ - $ - $ - $ 442,783 $ -
Intergovernmental 102,097 3,103,117 - 105,840 1,721,938
Charges for services 35,330 470 - - -
Fines and forfeitures 24,465 - - - -
Use of money and property 12,884 117,729 29,107 95,252 94,323
Other revenues - 15,710 181,004 - 245,894
Total revenues 174,776 3,237,026 210,111 643,875 2,062,155
EXPENDITURES:
Current:
Public safety 105,000 - - - -
Public works - 707,017 - - -
Transit - - - - -
Community and economic development - - - - 1,780,277
Social services - - - - 106,389
Capital outlay 3,536 2,683,168 - 52,511 53,464
Debt service:
Principal - - - - -
Interest and fiscal charges - - - - 25,519
Total expenditures 108,536 3,390,185 - 52,511 1,965,649
REVENUES OVER
(UNDER) EXPENDITURES 66,240 (153,159) 210,111 591,364 96,506
Proceeds from asset disposition - - - - 285,737

Transfers in 677 148,416 - - -
Transfers out (1,253) - (148,416) (509,055) (8,288)
Total other financing sources (uses) (576) 148,416 (148,416) (509,055) 277,449
Net change in fund balances 65,664 (4,743) 61,695 82,309 373,955
FUND BALANCES:
Beginning of year 82,648 1,452,899 569,363 1,632,169 2,877,663
End of year $ 148,312 $ 1,448,156 $ 631,058 $ 1,714,478 $ 3,251,618
114
Debt Service Capital Projects
Transportation General Total Other

Development General Capital Governmental
Act Obligation Bond Improvement Funds
$ - $ 584,641 $ 1,497,971 $ 2,525,395

646,548 - 3,720,589 9,400,129
- - 30,668 66,468
- - - 24,465
- 33,243 86,168 468,706
- - 1,449,058 1,891,666
646,548 617,884 6,784,454 14,376,829
- - - 105,000
- - - 707,017
646,548 - - 646,548
- - - 1,780,277
- - - 106,389
- - 10,580,915 13,373,594
- 185,577 190,217 375,794

- 230,506 203,741 459,766
646,548 416,083 10,974,873 17,554,385
- 201,801 (4,190,419) (3,177,556)
- - - 285,737
- - 488,039 637,132
- - (41,800) (708,812)
- - 446,239 214,057
- 201,801 (3,744,180) (2,963,499)
- 707,775 2,447,419 9,769,936
$ - $ 909,576 $ (1,296,761) $ 6,806,437
115
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 $ 13,062,800 $ 13,062,800 $ 12,985,872 $ (76,928)
Sales and use 11,924,813 12,166,813 12,770,015 603,202
Business license 773,000 773,000 787,225 14,225
Franchise 2,628,000 2,628,000 2,607,389 (20,611)
Transient occupancy 1,119,800 2,119,800 2,252,538 132,738
Parking 230,000 230,000 264,510 34,510
Utility users 8,631,700 8,631,700 8,288,655 (343,045)
Admission 1,700,000 1,700,000 1,909,012 209,012
Property transfer 220,000 220,000 641,579 421,579
Business improvement 190,000 190,000 212,110 22,110
Other taxes 118,504 118,504 118,503 (1)
Total taxes 40,598,617 41,840,617 42,837,408 996,791

Licenses and permits:
Construction permits 619,500 644,500 761,541 117,041
Other licenses and permits 41,250 41,250 62,717 21,467
Total licenses and permits 660,750 685,750 824,258 138,508

Intergovernmental revenues:
Federal - 158,849 198,876 40,027
State 936,200 1,186,946 1,351,869 164,923
Local - - 13,000 13,000
Total intergovernmental revenues 936,200 1,345,795 1,563,745 217,950
Charges for services:

General government:
Legislative - - - -
Management and support - - 845 845
Planning and zoning 1,074,660 1,117,460 1,262,611 145,151
Other general government 7,000 7,000 10,940 3,940
Public safety:
Police 1,308,195 1,308,195 1,229,820 (78,375)
Fire 382,250 392,250 431,586 39,336
Protective inspection 355,200 435,200 634,768 199,568
Other public safety 25,000 25,000 35,634 10,634
Parks and recreation:
Parks 46,000 46,000 48,862 2,862
Recreation 1,488,250 1,488,250 1,451,614 (36,636)
Other parks and recreation 900,000 910,000 971,964 61,964
Subtotal of charges for services 5,586,555 5,729,355 6,078,644 349,289
116
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 $ 5,586,555 $ 5,729,355 $ 6,078,644 $ 349,289
Public works:
Engineering 90,000 90,000 80,521 (9,479)
Transportation 843,430 877,610 868,606 (9,004)
Community and economic development:
Other community and economic development 646,480 646,480 641,489 (4,991)
Internal charges for services provided 2,987,930 4,192,003 3,848,462 (343,541)
Interagency personnel services charges:
Library 8,705,213 8,705,213 8,268,695 (436,518)
Redevelopment Agency 1,008,124 1,008,124 797,529 (210,595)
Subtotal interagency charges 9,713,337 9,713,337 9,066,224 (647,113)
Total charges for services 19,867,732 21,248,785 20,583,946 (664,839)
Fines and forfeitures:

Court and traffic fines 1,738,000 1,738,000 1,846,688 108,688
Other fines and forfeitures 281,200 281,200 371,394 90,194
Total fines and forfeitures 2,019,200 2,019,200 2,218,082 198,882

Use of money and property:
Investment income 516,183 573,640 891,177 317,537

Rents and royalties 1,983,354 1,983,354 2,009,314 25,960
Total use of money and property 2,499,537 2,556,994 2,900,491 343,497
Other revenues:
Contributions and donations 45,040 77,036 84,200 7,164
Other miscellaneous revenues 99,650 803,941 103,532 (700,409)
Total other revenues 144,690 880,977 187,732 (693,245)
Total revenues 66,726,726 70,578,118 71,115,662 537,544
OTHER FINANCING SOURCES:
Proceeds from asset dispositions - 11,458 62,804 51,346

Proceeds from long-term debt issued - - - -
Repayment of loans and advances 72,178 617,178 82,208 (534,970)
Transfers in 1,078,000 428,000 615,094 187,094
Total other financing sources 1,150,178 1,056,636 760,106 (296,530)
Total revenues and other financing sources $ 67,876,904 $ 71,634,754 $ 71,875,768 $ 241,014
117
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 $ 170,290 $ 268,436 $ - $ - $ 438,726

City Clerk 494,449 116,634 - 75,692 686,775
City Manager 604,978 646,101 - - 1,251,079
City Attorney 15,007 627,639 - - 642,646
Human Resources 721,730 1,375,550 - 293 2,097,573
Finance 1,829,174 462,600 - 1,125 2,292,899
Information Technology 1,000,933 453,356 232,603 1,686,892
Police 14,038,998 3,519,430 - 520,065 18,078,493
Fire 8,670,024 835,759 164,712 140,514 9,811,009
Parks and Recreation 6,869,258 3,306,833 - 151,726 10,327,817
Library 8,296,617 1,396,480 - - 9,693,097
Public Works 3,150,025 1,069,663 - 206,765 4,426,453
Planning and Community Development 2,054,694 965,981 - 9,401 3,030,076
Redevelopment Administration 799,451 18,912 - - 818,363
Non-Departmental 13,405 2,982,685 - - 2,996,090
Debt service - - 61,316 - 61,316
Capital projects - - - - -
Total expenditures 48,729,033 18,046,059 226,028 1,338,184 68,339,304
Advances to other funds - - - - -

Transfers out - - - - 677
Total expenditures and other

financing uses $ 48,729,033 $ 18,046,059 $ 226,028 $ 1,338,184 $ 68,339,981
Budget to GAAP Differences:

See reconciliation in Required Supplementary Information Note 1.
118
Variance with
Final Budget -
Final Positive Budget to GAAP Actual Amounts
Budget (Negative) Differences (GAAP Basis)
$ 447,148 $ 8,422 $ - $ 438,726

759,092 72,317 - 686,775
1,365,030 113,951 - 1,251,079
647,263 4,617 - 642,646
2,365,546 267,973 - 2,097,573
2,436,852 143,953 - 2,292,899
1,878,919 192,027 - 1,686,892
20,543,774 2,465,281 - 18,078,493
9,891,048 80,039 - 9,811,009
11,715,946 1,388,129 - 10,327,817
10,099,964 406,867 - 9,693,097
5,302,573 876,120 - 4,426,453
3,904,091 874,015 - 3,030,076
1,123,592 305,229 (799,451) 18,912
3,414,431 418,341 - 2,996,090
61,363 47 - 61,316
- - - -
75,956,632 7,617,328 (799,451) 67,539,853
- - - -
538,875 538,198 - 677
$ 76,495,507 $ 8,155,526 $ (799,451) $ 67,540,530
119
City of Santa Cruz
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Police Special Revenue Fund
Budgeted Amounts Actual Amounts Budget to GAAP Actual Amounts

Original Final (Budgetary Basis) Differences (GAAP Basis)
REVENUES:
Intergovernmental $ 102,097 $ 102,097 $ 102,097 $ - $ 102,097

Charges for services 36,000 36,000 35,330 - 35,330
Fines and forfeitures - - 24,465 - 24,465
Total revenues 145,278 145,278 171,948 2,828 174,776
EXPENDITURES:
Current:
Public safety:
Police 105,664 105,664 105,000 - 105,000
Capital outlay 2,097 2,097 3,536 - 3,536
Total expenditures 107,761 107,761 108,536 - 108,536
REVENUES OVER
(UNDER) EXPENDITURES 37,517 37,517 63,412 2,828 66,240

Transfers in - - 677 - 677
Transfers out (500) (500) (1,253) - (1,253)
Total other financing sources (uses) (500) (500) (576) - (576)
Net change in fund balance 37,017 37,017 62,836 2,828 65,664
FUND BALANCE:
Beginning of the year 85,640 85,640 85,640 (2,992) 82,648

End of year $ 122,657 $ 122,657 $ 148,476 $ (164) $ 148,312
120
City of Santa Cruz
State Highway Special Revenue Fund

REVENUES:
Intergovernmental $ 8,787,909 $ 9,334,648 $ 3,103,117 $ - 3,103,117

Charges for services - - 470 - 470
Other revenues - - 15,710 - 15,710
Total revenues 8,820,855 9,367,594 3,223,440 13,586 3,237,026
EXPENDITURES:
Current:
Public works:
Transportation 739,818 761,418 707,017 - 707,017
Capital outlay 9,385,951 9,911,090 2,683,168 - 2,683,168
Debt service:
Principal - - - - -
Interest and fiscal charges - - - - -
Total expenditures 10,125,769 10,672,508 3,390,185 - 3,390,185
REVENUES OVER
(UNDER) EXPENDITURES (1,304,914) (1,304,914) (166,745) 13,586 (153,159)

Proceeds from asset disposition - 300,000 - - -
Transfers in 235,000 599,000 148,416 - 148,416
Total other financing sources (uses) 235,000 899,000 148,416 - 148,416
Net change in fund balance (1,069,914) (405,914) (18,329) 13,586 (4,743)
FUND BALANCE:
Beginning of the year 1,464,028 1,464,028 1,464,028 (11,129) 1,452,899
End of year $ 394,114 $ 1,058,114 $ 1,445,699 $ 2,457 $ 1,448,156
121
City of Santa Cruz
Traffic Impact Fee Fund

REVENUES:
Intergovernmental $ - $ - $ - $ - $ -
Charges for services - - - - -
Use of money and property - - 27,918 1,189 29,107
Other revenues 1,926 1,926 181,004 - 181,004
Total revenues 1,926 1,926 208,922 1,189 210,111
EXPENDITURES:
Current:
Public works:
Transportation - - - - -
Capital outlay - - - - -
Debt service:
Principal - - - - -
Interest and fiscal charges - - - - -
Total expenditures - - - - -
REVENUES OVER
(UNDER) EXPENDITURES 1,926 1,926 208,922 1,189 210,111

Transfers out (85,000) (149,000) (148,416) - (148,416)
Total other financing sources (uses) (85,000) (149,000) (148,416) - (148,416)
Net change in fund balance (83,074) (147,074) 60,506 1,189 61,695
FUND BALANCE:

End of year $ 488,366 $ 424,366 $ 631,946 $ (888) $ 631,058
122
City of Santa Cruz
Parks and Recreation Fund

REVENUES:
Taxes $ 523,000 $ 523,000 $ 442,783 $ - $ 442,783

Intergovernmental 595,000 595,000 105,840 - 105,840
Total revenues 1,163,586 1,163,586 621,879 21,996 643,875
EXPENDITURES:
Capital outlay - 52,600 52,511 - 52,511
Total expenditures - 52,600 52,511 - 52,511
REVENUES OVER
(UNDER) EXPENDITURES 1,163,586 1,110,986 569,368 21,996 591,364

Transfers out (667,000) (690,900) (509,055) - (509,055)
Total other financing sources (uses) (667,000) (690,900) (509,055) - (509,055)
Net change in fund balance 496,586 420,086 60,313 21,996 82,309
FUND BALANCE:
Beginning of the year 1,648,201 1,648,201 1,648,201 (16,032) 1,632,169

End of year $ 2,144,787 $ 2,068,287 $ 1,708,514 $ 5,964 $ 1,714,478
123
City of Santa Cruz
Housing and Community Development Fund

REVENUES:
Intergovernmental $ 4,282,550 $ 4,544,333 $ 1,721,938 $ - $ 1,721,938

Other revenues - - 245,894 - 245,894
Total revenues 4,332,679 4,594,462 2,049,140 13,015 2,062,155
EXPENDITURES:
Current:
Community and economic development:
Housing and community development 4,294,506 4,842,653 2,073,625 (293,348) 1,780,277
Social services:
CDBG social services 106,659 106,389 106,389 - 106,389
Capital outlay 599,785 614,785 53,464 - 53,464
Debt service: -
Principal - 545,000 - - -
Interest and fiscal charges 36,000 56,000 25,519 - 25,519
Total expenditures 5,036,950 6,164,827 2,258,997 (293,348) 1,965,649
REVENUES OVER
(UNDER) EXPENDITURES (704,271) (1,570,365) (209,857) 306,363 96,506

Proceeds from asset dispositions - 342,000 285,737 - 285,737
Loan principal receipts 87,376 87,376 138,124 (138,124) -
Proceeds from long-term debt 553,280 1,163,280 610,000 (610,000) -
Transfers in - 67,000 - - -
Transfers out (259,000) (259,000) (8,288) - (8,288)
Total other financing sources (uses) 381,656 1,400,656 1,025,573 (748,124) 277,449
Net change in fund balance (322,615) (169,709) 815,716 (441,761) 373,955
FUND BALANCE:
Beginning of the year 1,631,300 1,631,300 1,631,300 1,246,363 2,877,663

End of year $ 1,308,685 $ 1,461,591 $ 2,447,016 $ 804,602 $ 3,251,618
124
City of Santa Cruz
Transportation Development Act

REVENUES:
Intergovernmental $ 646,548 $ 646,548 $ 646,548 $ - $ 646,548
Total revenues 646,548 646,548 646,548 - 646,548
EXPENDITURES:
Current:
Transit 646,548 646,548 646,548 - 646,548
REVENUES OVER
(UNDER) EXPENDITURES - - - - -
FUND BALANCE:
Beginning of the year - - - - -
End of year $ - $ - $ - $ - $ -
125
City of Santa Cruz
General Obligation Bond

REVENUES:
Taxes $ 517,023 $ 517,023 $ 584,641 $ - $ 584,641

Use of money and property 12,904 12,904 33,243 - 33,243
Total revenues 529,927 529,927 617,884 - 617,884
EXPENDITURES:
Debt service:
Principal 185,577 185,577 185,577 - 185,577
REVENUES OVER
(UNDER) EXPENDITURES 113,677 113,677 201,801 - 201,801
FUND BALANCE:

End of year $ 824,820 $ 824,820 $ 912,944 $ (3,368) $ 909,576
126
City of Santa Cruz
General Capital Improvement Projects

REVENUES:
Taxes $ 2,300,700 $ 1,300,700 $ 1,497,971 $ - $ 1,497,971

Intergovernmental 3,818,780 5,719,090 3,720,589 - 3,720,589
Charges for services - - 30,668 - 30,668
Other revenues 3,443,592 3,550,263 1,449,058 - 1,449,058
Total revenues 9,613,072 10,620,053 6,750,537 33,917 6,784,454
EXPENDITURES:
Capital outlay 15,462,496 16,439,873 10,580,915 - 10,580,915

Debt service:
Principal 201,328 221,328 190,217 - 190,217
Total expenditures 15,868,546 16,865,923 10,974,873 - 10,974,873
REVENUES OVER
(UNDER) EXPENDITURES (6,255,474) (6,245,870) (4,224,336) 33,917 (4,190,419)
Proceeds from long-term debt 2,000,000 - - - -

Transfers in 2,708,971 2,650,307 488,039 - 488,039
Transfers out (1,056,750) (56,750) (41,800) - (41,800)
Total other financing sources (uses) 3,652,221 2,593,557 446,239 - 446,239
Net change in fund balance (2,603,253) (3,652,313) (3,778,097) 33,917 (3,744,180)
FUND BALANCE:
Beginning of the year 2,178,391 2,178,391 2,178,391 269,028 2,447,419

End of year $ (424,862) $ (1,473,922) $ (1,599,706) $ 302,945 $ (1,296,761)
127
City of Santa Cruz
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Other
Governmental
Funds
Net Change in Fund Balances - Budgetary Basis $ (2,595,254)
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. 293,348
On a budgetary basis, the City records loan principal receipts as revenue, but on a GAAP basis, these receipts
reduce receivables. (748,124)
Net Change in Fund Balances - Statement of Revenues, Expenditures and Changes in Fund Balances $ (2,963,499)

Cumulative effect of unrealized gains and losses on investments 14,730

Noncurrent advances payable (1,229,332)
Intergovernmental payable to be repaid from future appropriations (2,438)
Reserved balances unavailable for appropriation 2,328,588
128
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
129
City of Santa Cruz
Combining Statement of Net Assets
All Internal Service Funds
June 30, 2007
Equipment Stores Telecommun- Risk

Operations Services ications Management Total
ASSETS
Current assets:
Cash and cash equivalents $ 671,232 $ - $ 96,452 $ 6,082,613 $ 6,850,297
Interest receivable 7,630 - 469 62,495 70,594
Accounts receivable - net 7,030 - - - 7,030
Inventories 133,641 - - - 133,641
Deposits - - - 1,392,459 1,392,459
Total current assets 819,533 - 96,921 7,537,567 8,454,021
Noncurrent assets:
Capital assets:
Machinery and equipment 402,406 - 746,577 8,160 1,157,143
Software - - 336,296 - 336,296
Less accumulated depreciation (331,839) - (959,576) (6,664) (1,298,079)
Total capital assets
(net of accumulated depreciation) 70,567 - 123,297 1,496 195,360
Total noncurrent assets 70,567 - 123,297 1,496 195,360
Total assets 890,100 - 220,218 7,539,063 8,649,381
LIABILITIES
Accounts payable and other current liabilities 123,239 - 10,268 102,275 235,782
Due to other funds 7,630 - 530 - 8,160
Claims and judgments payable - - - 2,812,930 2,812,930
Compensated absences payable 30,599 - - - 30,599
Total current liabilities 161,468 - 10,798 2,915,205 3,087,471
Claims and judgments payable - - - 7,498,625 7,498,625
Total noncurrent liabilities 15,300 - - 7,498,625 7,513,925
Total liabilities 176,768 - 10,798 10,413,830 10,601,396
NET ASSETS
Invested in capital assets, net of related debt 70,567 - 123,297 1,496 195,360
Unrestricted 642,765 - 86,123 (2,876,263) (2,147,375)
Total net assets $ 713,332 $ - $ 209,420 $ (2,874,767) $ (1,952,015)
130
City of Santa Cruz
Combining Statement of Revenues, Expenses and Changes in Net Assets

OPERATING REVENUES:
Charges for services - internal $ 2,457,712 $ - $ 216,144 $ 5,090,101 $ 7,763,957

Charges for services - external 97,479 - 44,016 - 141,495
Other revenues 13,509 - - 8,438 21,947
Total operating revenues 2,568,700 - 260,160 5,098,539 7,927,399
OPERATING EXPENSES:
Personnel services 805,870 - 98,441 294,334 1,198,645

Services, supplies, and other charges 1,650,598 - 106,415 3,302,522 5,059,535
Depreciation and amortization 20,231 - 64,329 1,632 86,192
Total operating expenses 2,476,699 - 269,185 3,598,488 6,344,372
Operating income (loss) 92,001 - (9,025) 1,500,051 1,583,027
NONOPERATING REVENUES (EXPENSES):
Investment earnings 34,344 - 1,999 302,759 339,102

Interest expense and fiscal charges (894) - - - (894)
Total nonoperating revenues (expenses) 33,450 - 1,999 302,759 338,208
Income (loss) before transfers 125,451 - (7,026) 1,802,810 1,921,235
Transfers in 129,288 - - - 129,288

Transfers out (27,932) (226,658) (1,109) (421,247) (676,946)
101,356 (226,658) (1,109) (421,247) (547,658)
Change in net assets 226,807 (226,658) (8,135) 1,381,563 1,373,577
NET ASSETS:
Beginning of year 486,525 226,658 217,555 (4,256,330) (3,325,592)
End of year $ 713,332 $ - $ 209,420 $ (2,874,767) $ (1,952,015)
131
City of Santa Cruz
Combining Statement of Cash Flows

CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and users $ 121,455 $ - $ 44,016 $ 688 $ 166,159
Cash received from interfund services provided 2,457,712 - 216,144 5,090,101 7,763,957
Cash payments to suppliers for goods and services (1,790,799) 126,216 (160,997) (1,262,534) (3,088,114)
Cash payments to employees for services (797,384) - (98,222) (293,181) (1,188,787)
Cash received from (payments to) others 16,135 (953) (142) (3,108,392) (3,093,352)
Net cash provided (used) by operating activities 7,119 125,263 799 426,682 559,863
CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES:
Transfers in/out 101,356 (226,658) (1,109) (421,247) (547,658)
Net cash provided (used) by
noncapital financing activities 101,356 (226,658) (1,109) (421,247) (547,658)
CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES:
Purchase and construction of capital assets (8,296) - - - (8,296)
Principal paid on capital debt (21,060) - - - (21,060)
Interest paid on capital debt (870) - - - (870)
Net cash provided (used) by capital
and related financing activities (30,226) - - - (30,226)
CASH FLOWS FROM INVESTING ACTIVITIES:

Interests receivable (2,626) 954 143 (10,909) (12,438)
Investment income received 34,343 - 1,999 302,759 339,101
Net cash provided (used) by investing activities 31,717 954 2,142 291,850 326,663
Net increase (decrease) in cash and cash equivalents 109,966 (100,441) 1,832 297,285 308,642
CASH AND CASH EQUIVALENTS:

Beginning of year 561,266 100,441 94,620 5,785,328 6,541,655
End of year $ 671,232 $ - $ 96,452 $ 6,082,613 $ 6,850,297
RECONCILIATION OF OPERATING INCOME (LOSS) TO

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating income (loss) $ 95,720 $ - $ (8,806) $ 1,501,443 $ 1,588,357
Adjustments to reconcile operating income (loss) to net cash
provided (used) by operating activities:
Depreciation and amortization 20,231 - 64,329 1,632 86,192
Changes in current assets and liabilities:
Accounts receivable 23,976 - - 688 24,664
Prepaid items (324) 5,000 (27) (239) 4,410
Inventories (133,641) 129,288 - (243,032) (247,385)
Accounts payable and other current liabilities (6,561) (8,072) (54,555) (160,078) (229,266)
Due to other funds 2,626 (953) (142) (5,049) (3,518)
Deposits payable - - - (152) (152)
Claims and judgments payable - - - (668,531) (668,531)
Total adjustments (88,601) 125,263 9,605 (1,074,761) (1,028,494)
Net cash provided (used) by operating activities $ 7,119 $ 125,263 $ 799 $ 426,682 $ 559,863
132
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.
133
City of Santa Cruz
Combining Statement of Fiduciary Net Assets
June 30, 2007
McCaskill McCaskill Total

Trust - Local Trust - Visually Finkeldey Private-Purpose
History Impaired Trust Trust Funds
ASSETS
Cash and cash equivalents $ 269,107 $ 256,952 $ 10,941 $ 537,000

Receivables:
Interest receivable 3,094 2,927 126 6,147
Total assets 272,201 259,879 11,067 543,147
NET ASSETS
Held in trust for library programs $ 272,201 $ 259,879 $ 11,067 $ 543,147
134
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 $ 14,177 $ 13,441 $ 587 $ 28,205
Total additions 14,177 13,441 587 28,205
DEDUCTIONS:
Library programs 4,649 3,623 755 9,027
Total deductions 4,649 3,623 755 9,027
Change in net assets 9,528 9,818 (168) 19,178
NET ASSETS:
Beginning of year 262,673 250,061 11,235 523,969
End of year $ 272,201 $ 259,879 $ 11,067 $ 543,147
135
136
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.
137
City of Santa Cruz
Combining Statement of Fiduciary Net Assets
Agency Funds
June 30, 2007
Library Trust Total

Joint Powers Deposit Payroll Special Agency
Authority Holding Payables Assessments Funds
ASSETS
Cash and cash equivalents $ 665,882 $ 532,915 $ 244,315 $ 201,175 $ 1,644,287

Restricted Cash and cash equivalents - - - 75,985 75,985
Receivables:
Interest receivable 13,652 1,228 - 1,821 16,701
Taxes receivable 640,568 - - 10,631 651,199
Accounts receivable 530,842 - - - 530,842
Due from other governments 27,620 - - - 27,620
Total assets $ 1,878,564 $ 534,143 $ 244,315 $ 289,612 $ 2,946,634
LIABILITIES
Accounts payable and

other current liabilities $ 595,552 $ 1,517 $ 244,315 $ - $ 841,384
Due to other governments 1,281,985 - - - 1,281,985
Deposits payable 1,027 532,626 - - 533,653
Payable to bondholders - - - 289,612 289,612
Total liabilities $ 1,878,564 $ 534,143 $ 244,315 $ 289,612 $ 2,946,634
138
City of Santa Cruz
Combining Statement of Changes in Assets and Liabilities
Agency Funds
Balance Balance
July 1, 2006 Additions Deletions June 30, 2007
Library Joint Powers Authority

Assets:
Cash and cash equivalents $ 510,464 $ 12,958,192 $ 12,802,774 $ 665,882
Receivables:
Taxes receivable 553,799 640,568 553,799 640,568
Accounts receivable 527,368 527,384 523,910 530,842
Due from other governments 16,467 27,620 16,467 27,620
Total assets $ 1,618,911 $ 14,215,567 $ 13,955,914 $ 1,878,564

Liabilities:
Accounts payable and other current liabilities $ 507,536 $ 3,787,784 $ 3,699,768 $ 595,552
Due to other governments 1,110,680 171,305 - 1,281,985
Deposit payable 695 332 - 1,027
Total liabilities $ 1,618,911 $ 3,959,421 $ 3,699,768 $ 1,878,564
Trust Deposit Holding

Assets:
Total assets $ 522,597 $ 1,552,180 $ 1,540,634 $ 534,143

Liabilities:
Deposits payable 517,076 1,545,506 1,529,956 532,626
Total liabilities $ 522,597 $ 2,640,662 $ 2,629,116 $ 534,143
Payroll Payables
Assets:
Total assets $ 246,417 $ 70,052,566 $ 70,054,668 $ 244,315

Liabilities:
Total liabilities $ 246,417 $ 693,782,719 $ 693,784,821 $ 244,315
Special Assessments
Assets:
Cash and cash equivalents $ 178,624 $ 352,186 $ 329,635 $ 201,175
Investments 89,494 - 89,494 -
Restricted cash and cash equivalents - 89,985 14,000 75,985
Receivables:
Taxes receivable 9,885 10,630 9,884 10,631
Total assets $ 279,978 $ 459,575 $ 449,941 $ 289,612

Liabilities:
Payable to bondholders $ 279,978 $ 9,634 $ - $ 289,612
Total liabilities $ 279,978 $ 9,634 $ - $ 289,612
139
140
STATISTICAL SECTION
(Unaudited)
This part of the City of Santa Cruz's comprehensive annual financial report presents detailed information as a context for
understanding what the information in the financial statements, note disclosures, and required supplementary
information says about the city's overall financial health.
Contents Page
Financial Trends 143 - 149

These tables contain trend information to help the reader understand how the city's financial
performance and well-being have changed over time.
Revenue Capacity 150 - 157

These tables contain information to help the reader assess the city's most significant local
revenue source, the property tax.
Debt Capacity 158 - 164

These tables present information to help the reader assess the affordability of the city's current
levels of outstanding debt and the city's ability to issue additional debt in the future.
Demographic and Economic Information 166 - 167

These tables offer demographic and economic indicators to help the reader understand the
environment within which the city's financial activities take place.
Operating Information 168 - 170

These tables contain service and infrastructure data to help the reader understand how the
information in the city's financial report relates to the services the city provides and the
activities it performs.
Sources: Unless otherwise noted, the information in these tables is derived from the
comprehensive annual financial reports for the relevant year.
141
This page is intentionally left blank.
142
City of Santa Cruz TABLE 1
Net Assets By Component
Last Five Fiscal Years
Fiscal Year Ended June 30

2003 2004 2005 2006 2007
net of related debt $ 136,369,360 $ 136,556,019 $ 139,024,926 $ 142,216,967 $ 144,203,036
Restricted 10,441,164 11,411,611 10,105,142 12,132,237 13,648,674
Unrestricted 16,662,826 12,267,438 18,695,330 19,428,634 24,563,381
Total governmental activities net assets $ 163,473,350 $ 160,235,068 $ 167,825,398 $ 173,777,838 $ 182,415,091
Restricted - - 704,469 - -
Unrestricted 62,492,429 58,267,139 57,125,277 78,560,182 81,361,517
Total business-type activities net assets $ 231,368,853 $ 232,662,289 $ 237,818,315 $ 242,835,587 $ 253,686,501
Primary government:
Restricted 10,441,164 11,411,611 10,809,611 12,132,237 13,648,674
Unrestricted 79,155,255 70,534,577 75,820,607 97,988,816 105,924,898
Total primary government net assets $ 394,842,203 $ 392,897,357 $ 405,643,713 $ 416,613,425 $ 436,101,592
The City of Santa Cruz implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation
of GASB 34 is not available.
Source: City of Santa Cruz Finance Department
143
Changes in Net Assets

2003 2004 2005 2006 2007
Expenses
General government $ 10,382,020 $ 11,451,699 $ 9,889,427 $ 9,755,194 $ 12,494,563
Public safety 23,770,732 27,054,407 27,218,149 27,227,214 29,646,507
Parks and recreation 12,312,469 13,022,089 11,944,976 11,715,023 12,002,102
Library 8,441,896 8,697,195 8,934,173 9,179,637 9,644,172
Public works 9,790,984 9,618,748 7,801,586 9,047,430 11,509,715
Transit 569,247 588,183 586,896 624,214 646,548
Community and economic development 8,265,841 7,140,903 7,719,248 7,414,895 10,616,686
Social services 1,976,456 1,803,125 1,715,326 2,563,680 1,758,216
Interest and fiscal charges 979,508 1,126,311 1,066,994 883,866 1,304,447
Total governmental activities expenses 76,489,153 80,502,660 76,876,775 78,411,153 89,622,956
Water 13,994,913 13,707,644 14,643,440 15,204,565 16,203,872
Wastewater 14,824,444 15,456,161 15,524,855 16,192,904 15,377,903
Refuse 14,824,819 14,924,093 14,581,347 12,700,841 12,974,413
Parking 2,222,770 2,471,710 2,565,800 2,960,225 2,632,045
Storm Water 2,165,345 1,956,563 2,150,359 1,925,661 1,938,275
Golf course 1,745,322 1,811,128 1,781,330 2,325,920 2,165,390
Total business-type activities expenses 49,777,613 50,327,299 51,247,131 51,310,116 51,291,898
Total primary government expenses $ 126,266,766 $ 130,829,959 $ 128,123,906 $ 129,721,269 $ 140,914,854
Program Revenues
General government $ 3,945,684 $ 3,938,389 $ 3,814,053 $ 4,662,211 $ 5,507,904
Public safety 1,950,228 2,760,629 3,230,321 3,041,137 3,410,308
Library 7,005,781 7,672,089 8,152,865 8,478,112 8,894,858
Public works 3,459,306 3,083,205 4,008,187 4,253,232 4,072,956
Transit - - - 66,643 -
Community and economic development 432,651 110,889 115,183 996,327 108,009
Operating grants and contributions 3,979,717 3,165,361 2,829,078 2,125,537 5,439,954
Capital grants and contributions 5,823,628 4,864,757 5,141,507 2,499,565 5,669,638
Total governmental activities program revenues 30,395,708 29,551,576 30,154,809 29,313,957 36,115,607
Water 14,278,839 15,687,800 17,283,215 19,480,617 22,442,267
Wastewater 11,461,188 11,664,391 11,911,915 13,079,711 13,978,613
Refuse 13,341,636 14,583,240 14,562,560 13,525,848 15,108,051
Parking 2,209,631 2,478,911 2,635,129 2,654,549 2,697,863
Storm Water 892,378 862,150 872,569 869,490 875,730
Golf course 1,867,914 1,933,684 992,439 1,608,752 1,770,614
Operating grants and contributions 85,446 138,515 369,968 15,704 40,470
Capital grants and contributions 2,312,416 3,391,001 6,439,375 2,480,435 1,662,249
Total business-type activities program revenues 46,449,448 50,739,692 55,067,170 53,715,106 58,575,857
Total primary government program revenues 76,845,156 80,291,268 85,221,979 83,029,063 94,691,464
Net (expense)/revenue:
Governmental activities (46,093,445) (50,951,084) (46,721,966) (49,097,196) (53,507,349)
Business-type activities (3,328,165) 412,393 3,820,039 2,404,990 7,283,959
Total primary government net (expense)/revenue $ (49,421,610) $ (50,538,691) $ (42,901,927) $ (46,692,206) $ (46,223,390)
144
Changes in Net Assets

2003 2004 2005 2006 2007
General Revenues and Other Changes in Net Assets
Taxes
Property taxes $ 15,078,406 $ 15,792,225 $ 16,476,980 $ 22,384,981 $ 24,593,312
Sales and use taxes 8,291,244 9,084,026 11,383,231 11,738,917 12,770,015
Frachise taxes 3,132,743 3,329,454 3,478,971 2,136,686 2,607,388
Transient occupancy taxes 2,932,256 3,016,463 3,067,869 3,385,148 3,750,509
Utility users taxes 7,592,049 7,638,926 8,080,171 8,304,371 8,288,655
Admission taxes 1,664,150 1,724,330 1,629,164 1,715,133 1,909,012
Other taxes 2,000,338 2,480,973 2,107,273 2,303,363 2,466,711
Unrestricted grants and contributions 4,526,808 2,565,897 4,562,277 1,121,274 -
Investment earnings 1,095,006 437,672 846,634 1,380,087 2,628,122
Gain (loss) on sale of assets (4,963) 716,218 60,093 24,318 322,288
Extraordinary items 477,109 - - - -
Miscellaneous 673,184 679,168 577,892 487,841 2,648,223
Transfers 57,444 334,346 78,584 67,517 3,367
Total governmental activities 47,515,774 47,799,698 52,349,139 55,049,636 61,987,602
Unrestricted grants and contributions - 250 222 - -
Investment earnings 2,421,200 717,261 1,469,180 2,079,379 3,637,989
Gain (loss) on sale of assets 60,717 (11,712) - 91,920 51,527
Miscellaneous 545,733 108,532 97,529 508,500 530,158
Transfers (57,444) (334,346) (78,584) (67,517) (3,367)
Total business-type activities 2,970,206 479,985 1,488,347 2,612,282 4,216,307
Total primary government $ 50,485,980 $ 48,279,683 $ 53,837,486 $ 57,661,918 $ 66,203,909
Change in Net Assets
Governmental activities $ 1,422,329 $ (3,151,386) $ 5,627,173 $ 5,952,440 $ 8,480,253
Business-type activities (357,959) 892,378 5,308,386 5,017,272 11,500,266
Total primary government $ 1,064,370 $ (2,259,008) $ 10,935,559 $ 10,969,712 $ 19,980,519
The City of Santa Cruz implemented GASB 34 for the fiscal year ended June 30, 2003. Information prior to the implementation of GASB 34 is
not available.
145
City of Santa Cruz
Fund Balances of Governmental Funds
Last Ten Fiscal Years

1998 1999 2000 2001
General Fund
Reserved $ 9,540,038 $ 5,600,632 $ 6,215,738 $ 4,906,611
Unreserved, designated - - - 5,194,894
Unreserved, undesignated 9,939,971 11,351,018 12,011,261 9,170,827
Total General Fund $ 19,480,009 $ 16,951,650 $ 18,226,999 $ 19,272,332
All other governmental funds

Reserved $ 5,458,871 $ 10,138,359 $ 11,383,565 $ 13,204,616
Unreserved, designated, reported in:
Redevelopment Agency fund 1,416,538 1,236,971 1,210,456 1,351,077
Special revenue funds - - - -
Debt service funds - 1,502,558 890,922 1,092,974
Capital projects funds - - - -
Redevelopment Agency fund - - - -
Special revenue funds 1,467,435 1,418,246 (63,288) 861,078
Capital projects funds 1,839,601 2,158,532 1,508,205 671,223
Total all other governmental funds $ 10,182,445 $ 16,454,666 $ 14,929,860 $ 17,180,968
146
TABLE 3

2002 2003 2004 2005 2006 2007
$ 4,008,809 $ 5,237,443 $ 4,388,586 $ 3,870,996 $ 4,327,113 $ 4,006,713

6,392,382 5,922,853 7,638,171 7,435,828 7,120,993 8,488,474
6,974,625 4,806,652 5,964,197 8,729,971 11,354,586 13,924,233
$ 17,375,816 $ 15,966,948 $ 17,990,954 $ 20,036,795 $ 22,802,692 $ 26,419,420
$ 14,174,955 $ 12,311,339 $ 13,691,282 $ 10,721,195 $ 11,148,536 $ 11,608,393
994,997 4,014,256 3,987,557 6,497,637 7,958,925 9,126,250

- 589,008 509,404 476,904 536,451 1,053,286
2,591,507 - - 557,277 707,775 909,576
- 470,840 457,945 91,180 92,641 -
(948,602) (55,035) - - - -
660,747 1,747,678 2,207,906 3,185,320 3,341,962 2,851,774
1,558,754 446,564 (1,444,460) 2,196,529 281,931 (2,796,246)
$ 19,032,358 $ 19,524,650 $ 19,409,634 $ 23,726,042 $ 24,068,221 $ 22,753,033
147
148
Changes in Fund Balances of Governmental Funds

2003 2004 2005 2006 2007
Revenues
Taxes $ 40,691,186 $ 42,529,756 $ 46,268,500 $ 52,035,729 $ 56,385,602
Licenses and permits 614,012 529,649 603,344 615,448 824,258
Intergovernmental 14,011,928 10,258,114 11,479,068 5,696,237 10,963,874
Charges for services 16,952,167 17,191,373 17,968,817 19,347,463 19,852,885
Fines and forfeitures 1,587,698 1,805,734 2,032,817 1,965,235 2,242,547
Use of money and property 2,859,096 2,345,707 2,821,174 3,234,159 4,375,345
Other revenues 449,907 592,012 686,853 1,049,925 2,464,263
Total revenues 77,165,994 75,252,345 81,860,573 83,944,196 97,108,774
Expenditures
General government 9,673,413 8,967,025 9,390,901 9,666,858 12,261,663
Public safety 22,920,677 24,843,763 26,692,313 26,938,629 28,574,065
Library 8,412,201 8,528,577 8,980,823 9,250,499 9,693,097
Public works 5,592,617 4,539,192 4,248,358 4,158,916 4,940,051
Transit 569,247 588,183 586,896 624,214 646,548
Community and economic development 7,954,378 6,332,156 6,640,932 8,436,468 10,028,992
Social services 1,976,456 1,803,125 1,715,326 1,693,267 1,758,216
Capital outlay 11,340,680 9,553,173 7,846,456 11,921,789 14,867,937
Debt service:
Principal 1,116,090 1,718,937 2,231,549 1,149,776 2,203,868
Interest and fiscal charges 839,345 851,721 966,238 921,517 1,078,832
Bond issuance costs - - 276,569 - -
Total expenditures 80,168,450 77,447,081 79,170,343 84,164,462 95,706,800
Excess of revenues
over (under) expenditures (3,002,456) (2,194,736) 2,690,230 (220,266) 1,401,974
Other financing sourses (uses)

Proceeds from asset dispositions 777,750 756,823 139,104 25,256 348,541
Proceeds from long-term debt issued - - 5,825,000 3,200,000 -
Premiums on bonds sold - - 23,994 - -
Payment to refunded bond escrow agent - - (2,571,681) - -
Transfers in 1,565,684 3,244,346 1,928,681 861,257 1,260,514
Transfers out (1,357,286) (2,139,754) (1,793,079) (758,170) (709,489)
Total other financing sources (uses) 986,148 1,861,415 3,552,019 3,328,343 899,566
Net change in fund balances $ (2,016,308) $ (333,321) $ 6,242,249 $ 3,108,077 $ 2,301,540
Debt service as a percentage of noncapital

expenditures 2.8% 3.8% 4.9% 2.9% 4.1%
The City of Santa Cruz implemented GASB 34 for the fiscal year ended June 30, 2003. Prior to that implementation, expenditure amounts
were categorized differently in the fund statements. Information is not available now to reclassify those prior years' expenditures into
comparable categories for this table.

149
City of Santa Cruz
General Governmental Tax Revenues by Source1
Fiscal Year
Ended Sales Transient Utility
June 30 Property and Use Franchise Occupancy Users Admission
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
4
2005 16,501,921 11,383,231 3,478,971 3,067,869 8,080,171 1,629,164
5
2006 22,348,981 11,738,917 2,136,686 3,385,148 8,304,371 1,715,133
6
2007 24,593,312 12,770,015 2,607,388 3,750,509 8,288,655 1,909,012
Notes:
1 This table includes all governmental fund types.
2 Beginning with fiscal year 2003, business improvement taxes include the Co-op Retail Management Business Real
Property Improvement District.
3 Prior to fiscal year 2003, business license taxes were shown in Permits and Licenses.
4 A new quarter-cent sales tax override was implemented in fiscal year 2005. This temporary tax is scheduled to end
on June 30, 2009.
5 Beginning in fiscal year 2006, property taxes include amounts for Property Taxes In Lieu of Vehicle License Fees.
6 A new permanent quarter-cent sales tax override was implemented in fiscal year 2007. In addition, the temporary
quarter-cent sales tax override previously implemented in fiscal year 2005 was made permanent in fiscal year 2007.
150
TABLE 5
Parks and
Business Property Business Recreation
Parking Improvement2 Transfer License3 Facilities Total
$ 147,877 $ 175,114 $ 162,915 $ - $ - $ 30,011,008

192,352 167,500 186,624 - - 32,512,504
158,229 170,369 219,132 - - 36,627,613
178,373 183,711 200,041 - - 40,306,150
194,646 175,868 194,632 - - 40,004,600
199,371 273,965 191,042 784,446 551,514 41,242,700
221,133 296,536 276,466 792,893 357,305 42,529,757
221,790 292,422 325,305 777,308 510,348 46,268,500
229,629 316,742 562,723 777,068 417,202 51,932,600
264,510 330,614 641,579 787,225 442,783 56,385,602
151
General Fund Revenues by Source
Fiscal Year Licenses Charges Fines Use of Money

Ended and Inter- for and and Other
June 30 Taxes Permits Governmental Services Forfeitures Property Revenues Total
1998 $ 23,292,917 $ 1,366,948 $ 3,410,230 $ 6,290,188 $ 1,064,554 $ 3,623,968 $ 280,513 $ 39,329,318

1999 24,918,906 1,397,862 4,170,892 6,729,820 1,397,833 3,794,000 213,496 42,622,809
2000 27,646,368 1,595,964 4,732,311 6,566,033 1,347,496 3,574,121 324,802 45,787,095
2001 30,258,503 1,342,471 5,281,661 7,009,901 1,286,990 4,152,368 327,692 49,659,586
2002 29,238,472 1,267,939 5,339,612 7,151,012 1,282,697 3,577,774 397,896 48,255,402
2003 30,027,154 614,012 4,788,035 16,693,936 1,555,481 2,252,373 308,104 56,239,095
2004 31,696,322 529,649 3,745,601 16,865,754 1,799,557 2,086,163 418,764 57,141,810
2005 34,384,206 603,344 5,465,642 17,799,213 2,022,779 2,333,922 276,565 62,885,671
2006 39,495,863 615,448 1,073,997 19,062,464 1,962,697 2,541,909 216,721 64,969,099
2007 42,837,408 824,258 1,563,745 19,786,417 2,218,082 3,061,718 187,732 70,479,360
Notes:
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.
152
Assessed Value of Taxable Property
Fiscal Year Total Total

Ended Real Property Personal Assessed Direct Tax
June 30 Residential Commercial Other Total Property Value Rate
1998 $ 2,672,618,165 $ 398,841,413 $ 80,522,177 $ 3,151,981,755 $ 176,321,921 $ 3,328,303,676 0.000%

1999 2,760,380,015 449,610,460 87,470,143 3,297,460,618 186,050,833 3,483,511,451 0.000%
2000 2,980,522,986 510,282,517 92,665,671 3,583,471,174 198,830,667 3,782,301,841 0.009%
2001 3,193,569,036 537,141,067 113,773,535 3,844,483,638 207,913,809 4,052,397,447 0.009%
2002 3,494,071,877 611,373,783 111,624,535 4,217,070,195 237,668,331 4,454,738,526 0.009%
2003 3,657,553,824 663,946,747 122,103,592 4,443,604,163 237,898,436 4,681,502,599 0.009%
2004 3,882,699,208 700,948,081 123,781,647 4,707,428,936 225,168,674 4,932,597,610 0.009%
2005 4,150,085,545 755,991,976 126,848,221 5,032,925,742 217,439,195 5,250,364,937 0.009%
2006 4,563,844,105 788,484,799 110,751,935 5,463,080,839 216,627,737 5,679,708,576 0.009%
2007 5,032,785,543 841,223,841 112,527,378 5,986,536,762 219,805,452 6,206,342,214 0.009%
Notes:
Total Direct Tax Rate is from Table 8.
With the passage of a constitutional amendment (Proposition 13) and subsequently enacted State legislation, property is assessed
according to a base year rather than on a percentage of market value. Accordingly, a reliable estimate of actual value of taxable
property within the City is not possible.
Source: County of Santa Cruz Auditor-Controller's Office

County of Santa Cruz Assessor's Office
153
1
Direct and Overlapping Property Tax Rates
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Direct Rates:
Debt service $ - $ - $ 0.009 $ 0.009 $ 0.009 $ 0.009 $ 0.009 $ 0.009 $ 0.009 $ 0.009
Total Direct Rate - - 0.009 0.009 0.009 0.009 0.009 0.009 0.009 0.009
Overlapping Rates2:
County3 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000
School Districts:
Cabrillo College - 0.014 0.007 0.012 0.021 0.019 0.019 0.038 0.037 0.024
Santa Cruz Schools - 0.038 0.016 0.077 0.067 0.075 0.074 0.068 0.081 0.027
Bonny Doon Schools 0.056 0.056 0.019 0.021 0.035 0.036 0.034 0.033 0.029 0.023
Live Oak Schools 0.058 0.052 0.050 0.046 0.043 0.037 0.023 0.042 0.043 0.052
Scotts Valley Schools 0.087 0.087 0.077 0.073 0.052 0.084 0.055 0.054 0.050 0.044
Total Overlapping Rate 1.201 1.247 1.169 1.229 1.218 1.251 1.205 1.235 1.240 1.170
Total Direct and Overlapping Rate $ 1.201 $ 1.247 $ 1.178 $ 1.238 $ 1.227 $ 1.260 $ 1.214 $ 1.244 $ 1.249 $ 1.179
Notes:
1 Rates are per $100.00 of assessed value.
2 Overlapping rates are those of entities that apply to property owners within the City of Santa Cruz. Not all overlapping rates apply to
all property owners (e.g., the rates for school districts apply only to the proportion of the city's property owners whose property is
located within the geographic boundaries of the school district).
3 The passage of a constitutional amendment (Proposition 13) in June 1978 limits the property tax rate to a base of $1.00 per $100.00. The
$1.00 rate is levied by the County and apportioned to local agencies according to a formula perscribed by the California legislature.
Source: County of Santa Cruz Auditor - Controller's Office
154
Principal Property Tax Owners
Current Year and Nine Years Ago

2007 1998
Percentage Percentage
of Total of Total
Assessed Assessed Assessed Assessed
Tax Owner Valuation Rank Valuation Valuation Rank Valuation
Santa Cruz Seaside Company $ 44,807,943 1 0.722% $ 24,563,417 2 0.705%

Cypress Point RE Investors LLC 40,341,510 2 0.650% - -
S C Beach Hotel Partners LLC 36,750,000 3 0.592% - -
Santa Cruz Shaffer Road Investors 32,328,651 4 0.521% - -
1010 Pacific Investors 22,068,579 5 0.356% - -
CRRI/Seagate Ocean Street LLC 21,414,917 6 0.345% - -
222 Columbia Streeet LLC 20,525,460 7 0.331% - -
Cooper House LLC 20,223,262 8 0.326% - -
Harmony Partners LLC 18,358,801 9 0.296% - -
Wave Crest Development Inc 17,946,554 10 0.289% - -
Silicon Systems Inc - - 160,621,705 1 4.611%
Thomas J. Lipton, Inc. - - 18,375,960 3 0.528%
Fremont Central Investment - - 13,958,736 4 0.401%
The Price Company - - 13,774,455 5 0.395%
Outlook Apartments - - 13,180,866 6 0.378%
Frederick Electronics Corporation - - 13,016,156 7 0.374%
Pacific Square Ltd Partners - - 11,433,996 8 0.328%
Western Business Park - - 10,056,900 9 0.289%
Sequoia Equities III, LLC - - 8,887,340 10 0.255%
Totals $ 274,765,677 4.427% $ 287,869,531 8.264%
Total assessed value $ 6,206,342,214 $ 3,483,511,451
Notes:
Tax owners and values presented in this table reflect the County's Assessment Roll Reports.
Source: County of Santa Cruz Assessor's Office
155
156
1
Property Tax Levies and Collections
Outstanding
Fiscal Total Delinquent
Year Percent Delinquent Total Collections Outstanding Taxes as
Ended Total Tax Current Tax of Levy Tax Tax as Percent of Delinquent Percent of
June 30 2 2 3 3
Levy Collections Collected Collections Collections Current Levy Taxes Current Levy
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% - -
2006 18,191,952 18,191,952 100.0% - 18,191,952 100.0% - -
2007 20,310,069 20,310,069 100.0% - 20,310,069 100.0% - -
Notes:
1 This table includes levies and collections for the Redevelopment Agency.
2 Does not include amounts for Property Taxes in Lieu of Vehicle License Fees
3 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.

City of Santa Cruz Finance Department
157
City of Santa Cruz
Ratios of Outstanding Debt By Type

1998 1999 2000 2001 2002
General obligation bonds $ - $ 6,998,473 $ 7,176,298 $ 7,299,481 $ 7,286,115
Tax allocation bonds 3,690,000 3,540,000 3,385,000 3,225,000 3,055,000
Certificates of participation 569,946 555,921 518,392 4,890,431 4,769,607
Capital leases - 854,158 1,583,610 1,649,722 3,355,410
Notes - - - - 1,500,000
Other - - - 531,900 998,692
Total Governmental Activities 4,259,946 11,948,552 12,663,300 17,596,534 20,964,824
Business-type Activities:
Wastewater revenue bonds 20,570,000 19,745,000 5,210,000 5,085,000 4,955,000
Storm water revenue bonds - - - - -
Water revenue bonds - - - - -
Golf course revenue bonds 225,000 155,000 80,000 - -
Certificates of Participation 9,221,558 14,251,608 22,339,568 28,985,383 28,047,650
Leases 2,175,315 1,619,560 2,353,054 2,942,887 2,926,370
Notes 51,938,582 50,976,494 48,894,934 47,221,604 44,988,271
Total Business-type Activities 84,130,455 86,747,662 78,877,556 84,234,874 80,917,291
Total Primary Government $ 88,390,401 $ 98,696,214 $ 91,540,856 $ 101,831,408 $ 101,882,115
Personal income1 $ 1,570,062,816 $ 1,709,289,000 $ 1,890,711,810 $ 2,154,291,172 $ 2,096,039,335

Debt as percentage of personal income 5.63% 5.77% 4.84% 4.73% 4.86%
Population2 53,172 54,575 56,046 55,028 55,085
Debt per capita 1,662 1,808 1,633 1,851 1,850
Assessed value3 4,932,597,610 5,250,364,937 5,679,708,576 4,681,502,599 4,932,597,610
Debt as percentage of assessed value 1.79% 1.88% 1.61% 2.18% 2.07%
Notes:
1 Personal income is calculated based on data from the US Department of Commerce, Bureau of Economic Analysis (refer to Table 16).
2
Source: State Department of Finance
3
County of Santa Cruz Assessor's Office
158
TABLE 11

2003 2004 2005 2006 2007
$ 7,260,759 $ 7,228,152 $ 7,183,381 $ 7,126,075 $ 7,055,866

2,880,000 2,695,000 5,245,000 5,125,000 5,005,000
4,642,350 4,513,661 4,377,108 4,239,123 4,096,139
2,450,555 1,765,216 1,766,635 1,247,913 965,627
1,500,000 1,624,706 1,334,942 4,205,026 2,920,485
985,663 920,263 1,029,804 944,836 851,581
19,719,327 18,746,998 20,936,870 22,887,973 20,894,698
4,955,000 4,820,000 4,680,000 4,715,000 4,510,000

- - - 6,100,000 5,940,000
- - - 12,450,000 12,150,000
- - - - -
28,047,650 29,831,339 28,662,892 20,915,877 19,183,861
4,624,099 3,939,187 3,108,344 3,145,352 3,514,756
44,883,261 42,593,574 40,240,469 37,822,337 35,337,269
82,510,010 81,184,100 76,691,705 85,148,566 80,635,886
$ 102,229,337 $ 99,931,098 $ 97,628,575 $ 108,036,539 $ 101,530,584
$ 2,085,569,904 $ 2,109,542,853 $ 2,247,596,565 $ 2,365,518,375 $ 2,638,747,497

4.90% 4.74% 4.34% 4.57% 3.85%
55,633 56,289 56,451 56,925 57,553
1,838 1,775 1,729 1,898 1,764
4,681,502,599 4,932,597,610 5,250,364,937 5,679,708,576 6,206,342,214
2.18% 2.03% 1.86% 1.90% 1.64%
159
Ratios of General Bonded Debt Outstanding
Fiscal Less: Amount

Year General Available Percentage Debt
Ended Obligation in Debt of Assessed Per Assessed
June 30 Bonds Service Fund Total Value Capita Value1 Population2
1998 $ - $ - $ - - $ - $3,328,303,676 53,172

1999 6,998,473 12 6,998,461 0.20% 128 3,483,511,451 54,575
2000 7,176,298 125,218 7,051,080 0.19% 126 3,782,301,841 56,046
2001 7,299,481 277,763 7,021,718 0.17% 128 4,052,397,447 55,028
2002 7,286,115 324,117 6,961,998 0.16% 126 4,454,738,526 55,085
2003 7,260,759 389,184 6,871,575 0.15% 124 4,681,502,599 55,633
2004 7,228,153 457,945 6,770,208 0.14% 120 4,932,597,610 56,289
2005 7,183,381 557,277 6,626,104 0.13% 117 5,250,364,937 56,451
2006 7,126,075 707,777 6,418,298 0.11% 113 5,679,708,576 56,925
2007 7,055,866 909,576 6,146,290 0.10% 107 6,206,342,214 57,553
1
Source: County of Santa Cruz Assessor's Office
2
State Department of Finance
160
Computation of Direct and Overlapping Debt
June 30, 2007
2006-2007 Assessed Valuation $ 6,206,342,214

Redevelopment Incremental Valuation: 1,025,341,376
Adjusted Assessed Valuation: $ 5,181,000,838
Total Percentage Amount

Debt Applicable Applicable
Outstanding to City (1) to City
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
Cabrillo Joint Community College District $ 182,685,343 19.936% $ 36,420,150
Santa Cruz High School District 92,532,244 54.622% 50,542,962
Santa Cruz Elementary School District 23,975,466 94.275% 22,602,871
Live Oak School District 20,534,975 3.306% 678,886
Scotts Valley Unified School District 20,345,000 0.027% 5,493
City of Santa Cruz 6,003,228 100.000% 6,003,228 (2)
City of Santa Cruz 1915 Act Bonds 1,475,000 100.000% 1,475,000
Total Direct and Overlapping Tax and Assessment Debt $ 347,551,256 $ 117,728,590
DIRECT AND OVERLAPPING GENERAL FUND DEBT:

Santa Cruz County Certificates of Participation 73,135,799 20.224% 14,790,984
Santa Cruz County Office of Education Certificates of Participation 11,605,000 20.224% 2,346,995
Cabrillo Joint Community College District Certificates of Participation 2,845,000 19.936% 567,179
Scotts Valley Unified School District Certificates of Participation 4,190,000 0.027% 1,131
Santa Cruz City Schools Certificates of Participation 5,340,000 54.622% 2,916,815
Live Oak School District Certificates of Participation 3,920,000 3.306% 129,595
City of Santa Cruz General Fund Obligations 7,985,000 100.000% 7,985,000 (3)
Santa Cruz Consolidated Emergency Communication Center 894,969 100.000% 894,969
Monterey Bay Unified Air Pollution Control District Authority 3,265,000 7.074% 230,966
Total Direct and Overlapping General Fund Debt $ 113,180,768 $ 29,863,634 (4)
Combined Total Debt $ 460,732,024 $ 147,592,224
Notes:
(1) Percentage of overlapping agency's assessed valuation located within boundaries of the city.
(2) Excludes interest accretion amounts.
(3) Excludes issues self-supporting from enterprise revenues ($6,760,000).
(4) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and tax allocation bonds and non-
bonded capital lease obligations.
Ratios to 2006-2007 Assessed Valuation:

Direct Debt ($6,003,228) 0.10%
Total Direct and Overlapping Tax and Assessment Debt 1.90%
Ratios to Adjusted Assessed Valuation:

Combined Direct Debt ($14,883,197) 0.29%
Combined Total Debt 2.85%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/07: $0
Source: California Municipal Statistics, Inc.
161
City of Santa Cruz
Legal Debt Margin Information
1998 1999 2000 2001 2002
Debt limit $ 499,245,551 $ 522,526,718 $ 567,345,276 $ 607,859,617 $ 668,210,779
Total net debt applicable to limit - 6,998,461 7,051,080 7,021,718 6,961,998

Legal debt margin $ 499,245,551 $ 515,528,257 $ 560,294,196 $ 600,837,899 $ 661,248,781
Total net debt applicable to the limit

as a percentage of debt limit 0.00% 1.34% 1.24% 1.16% 1.04%
Notes:
Section 1418 of the Charter of the City of Santa Cruz limits general obligation bond indebtedness to
15% of the total assessed valuation of all real personal property within the City.

162
TABLE 14
2003 2004 2005 2006 2007
$ 702,225,390 $ 739,889,642 $ 787,554,741 $ 851,956,286 $ 930,951,332
6,871,575 6,770,208 6,626,104 6,418,298 6,146,290

$ 695,353,815 $ 733,119,434 $ 780,928,637 $ 845,537,988 $ 924,805,042
0.98% 0.92% 0.84% 0.75% 0.66%
Legal Debt Margin Calculation For Fiscal Year 2006-07:

Total assessed value $ 6,206,342,214
Debt limit (15% of total assessed value) 930,951,332

Debt applicable to limit:
General obligation bonds (reported at accreted value) 7,055,866
Less: Amount available in debt service fund
for repayment of bonds 909,576
Total net debt applicable to limit 6,146,290

Legal debt margin $ 924,805,042
163
City of Santa Cruz
Pledged-Revenue Coverage

1998 1999 2000 2001 2002
Wastewater Revenue Bonds:
Wastewater charges and other $ 10,730,501 $ 12,179,844 $ 12,846,315 $ 11,585,518 $ 12,146,047
Less: operating expenses 6,054,987 7,379,231 7,856,133 7,275,278 8,929,861
Net available revenue 4,675,514 4,800,613 4,990,182 4,310,240 3,216,186
Debt service:
Principal 725,000 765,000 115,000 120,000 125,000
Interest 1,234,454 1,227,031 296,608 290,733 284,608
Total 1,959,454 1,992,031 411,608 410,733 409,608
Coverage 2.39 2.41 12.12 10.49 7.85
Water Revenue Bonds:

Water charges and other $ 14,468,484 $ 14,425,845 $ - $ - $ -
Less: operating expenses 7,319,245 8,546,215 - - -
Net available revenue 7,149,239 5,879,630 - - -
Debt service:
Principal 380,000 380,000 - - -
Interest 19,850 9,925 - - -
Total 399,850 389,925 - - -
Coverage 17.88 15.08 - - -
Storm Water Revenue Bonds:

Storm Water charges and other $ - $ - $ - $ - $ -
Less: operating expenses - - - - -
Net available revenue - - - - -
Debt service:
Principal - - - - -
Interest - - - - -
Total - - - - -
Coverage - - - - -
Certificates of Participation:
Special assessments and other $ - $ - $ - $ 11,510,578 $ 12,080,193
Less: operating expenses - - - 8,519,131 9,747,000
Net available revenue - - - 2,991,447 2,333,193
Debt service:
Principal - - - 110,000 100,000
Interest - - - 223,868 537,580
Total - - - 333,868 637,580
Coverage - - - 8.96 3.66
Notes:
Details regarding the city's outstanding debt can be found in the notes to the financial statements. Operating expenses do not
include interest or depreciation.
164
TABLE 15

2003 2004 2005 2006 2007
$ 12,306,445 $ 12,230,219 $ 12,578,070 $ 12,394,292 $ 13,194,297

9,415,409 9,855,372 9,964,418 8,591,034 8,652,114
2,891,036 2,374,847 2,613,652 3,803,258 4,542,183
130,000 135,000 140,000 150,000 205,000

278,233 271,608 264,733 256,233 177,386
408,233 406,608 404,733 406,233 382,386
7.08 5.84 6.46 9.36 11.88
$ - $ - $ - $ 18,692,531 $ 21,116,648
- - - 11,775,892 12,478,247
- - - 6,916,639 8,638,401
- - - - 300,000
- - - 121,517 516,277
- - - 121,517 816,277
- - - 56.92 10.58
$ - $ - $ - $ - $ 838,920
- - - - 236,769
- - - - 602,151
- - - - 160,000
- - - - 235,985
- - - - 395,985
- - - - 1.52
$ 12,422,235 $ 13,577,644 $ 13,121,028 $ 13,218,521 $ 13,289,170

10,447,158 11,045,892 11,350,148 9,859,552 8,947,378
1,975,077 2,531,752 1,770,880 3,358,969 4,341,792
145,000 695,000 720,000 755,000 785,000

529,300 514,088 487,153 457,327 426,011
674,300 1,209,088 1,207,153 1,212,327 1,211,011
2.93 2.09 1.47 2.77 3.59
165
Demographic and Economic Statistics
Fiscal Year Total Per Capita Per Capita

Ended Unemployment Personal Personal Taxable Taxable
June 30 Population1 Rate2 Income Income3 Sales4 Sales
1998 53,172 7.9% $ 1,570,063 $ 29,528 $ 680,283 $ 12,794

1999 54,575 7.3% 1,709,289 31,320 634,138 11,620
2000 56,046 6.4% 1,890,712 33,735 725,287 12,941
2001 55,028 5.2% 2,154,291 39,149 828,500 15,056
2002 55,085 5.8% 2,096,039 38,051 809,628 14,698
2003 55,633 7.5% 2,085,570 37,488 761,208 13,683
2004 56,289 7.9% 2,109,543 37,477 761,986 13,537
2005 56,451 7.2% 2,247,597 39,815 795,060 14,084
2006 56,925 6.4% 2,365,518 41,555 813,834 14,297
2007 57,553 5.6% 2,638,747 45,849 828,447 14,395
Notes:
Total Personal Income and Taxable Sales amounts are in thousands.
1
Source: State Department of Finance
2
State Employment Development Department
3
U.S. Department of Commerce, Bureau of Economic Analysis
4
State Board of Equalization (based on most recent four quarters of data available)
166
Principal Employers
Current Year and One Year Ago
2007 2006
Percentage Percentage
Number of of Total Number of of Total
Employees Rank Employment Employees Rank Employment
Employer:
University of California at Santa Cruz 4,523 1 4.707% 4,250 1 4.570%

County of Santa Cruz 2,627 2 2.734% 2,358 2 2.535%
City of Santa Cruz 1,083 3 1.127% 1,066 3 1.146%
Plantronics 494 4 0.514% 476 4 0.512%
Santa Cruz Beach-Boardwalk 347 5 0.361% 347 5 0.373%
Costco 257 6 0.267% 257 6 0.276%
Community Bridges 212 7 0.221% 212 7 0.228%
Crow's Nest 195 8 0.203% 195 8 0.210%
Lightsurf Technology Inc. 168 9 0.175%
Santa Cruz Biotechnology Incorporated 158 10 0.164% 158 10 0.170%
Santa Cruz Sentinel 174 9 0.187%
Totals 10,064 10.472% 9,493 10.208%
Total employment1 96,100 93,000
This table shows the data for the current fiscal year and one year ago because earlier years' data is not available.
1
Source: U.S. Department of Labor - Bureau of Labor Statistics
City of Santa Cruz Business License database
167
1
Number of City Employees by Department

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Departments:
City Clerk 7 7 7 7 7 7 7 7 7 7
City Manager 5 5 5 5 5 5 5 5 4 5
Human Resources 12 12 12 13 13 13 12 12 13 14
Finance 34 34 36 38 38 38 36 35 38 27
Information Technology 2 - - - - - - - - - 16
Police 120 122 126 134 136 133 126 124 125 132
Fire 52 53 55 59 59 58 55 54 53 55
Parks and Recreation 113 114 118 126 127 125 118 116 111 105
Library 115 116 120 128 130 127 120 118 119 118
Public Works 209 212 219 235 239 232 219 216 216 232
Planning and Community Development 28 28 30 31 32 31 30 29 27 28
Redevelopment 8 8 8 9 9 9 8 8 9 10
Water 84 85 89 94 96 94 89 87 88 91
Total 768 787 796 825 879 891 872 825 722 749
Notes:
1 Personnel authorizations budgeted. Figures rounded to whole numbers.
2 Information Technology was part of the Finance Department previously, but it is now a separate department.
Source: City of Santa Cruz Budget Document
168
Operating Indicators By Function

2003 2004 2005 2006 2007
Function:
City Clerk
Hours for creating the agenda
for posting 326 305 291 ** 300
Advisory body hours ** ** 600 600 600
Election hours 450 280 180 400 100
Initiative/referendum petitions
processing hours 40 - 60 120 -
Human Resources
Number of recruitments ** ** ** ** 87
Number of applications ** ** ** ** 2,155
Workers compensation claim payments $ 1,537,964 $ 2,129,667 $ 1,872,387 $ 1,400,696 $ 2,850,283
Police
Calls for service ** 76,069 76,498 70,065 67,932
Cases ** 14,717 14,076 14,212 12,917
Fire
Emergency calls 4,606 4,623 4,631 5,006 5,231
Inspections 1,603 1,853 1,727 1,794 1,223
Parks and Recreation
Number of classes 275 306 305 294 236
Facility rentals:
Parks (Picnic Areas) 961 892 760 831 762
Louden Nelson ** 7,753 7,534 7,348 7,562
Civic Auditorium 181 146 183 193 190
Swimming pool ** 200 167 146 162
Special events produced 32 30 20 22 22
Library (all locations)
Items checked out 1,877,256 1,856,142 1,899,739 1,975,986 2,051,331
Queries handled 289,726 288,821 293,525 313,496 322,971
Open hours/week 470 432 432 438 430
Pubic Works
Overlay (square footage) - 524,963 - 251,106 351,239
Seal coat (square footage) - - - 320,879 342,000
Sewer
New connections 144 72 85 106 41
Average daily flow (MGD) 10.53 9.52 9.92 11.39 9.00
Annual total flow (MG) 3,843 3,475 3,621 4,157 3,283
Water
Active accounts 23,724 23,799 23,924 24,044 24,253
Averge daily consumption (MGD) 10 10 10 9 9
Annual consumption (MG) 3,603 3,660 3,448 3,340 3,369
Averge monthly residential bill $22 $25 $30 $34 $41
This table shows data for the last five fiscal years. Prior years' data is not available.
** Unavailable
Source: City of Santa Cruz Departments
169
Capital Asset Statistics By Function

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Function:
Public Safety
Police:
Stations 1 1 1 1 1 1 1 1 1 1
Vehicular patrol units 43 55 55 78 78 43 43 61 61 63
Fire stations 3 3 3 3 3 3 3 3 3 3
Public Parking
Lots 19 20 21 23 22 26 20 21 21 20
Spaces 1,916 1,369 4,939 5,094 5,235 5,397 5,124 5,149 5,149 5,132
Parking meters 2,014 1,953 1,945 1,741 1,764 1,695 1,714 1,764 1,764 1,888
Parks and Recreation
Parks 28 29 29 29 30 30 30 30 30 30
Parks acreage 1,350 1,450 1,450 1,457 1,970 1,970 1,970 1,970 1,970 1,970
Playgrounds 13 11 11 11 17 17 17 17 17 17
Swimming pools 1 1 1 1 1 1 1 1 1 1
Tennis courts 7 7 7 7 7 7 7 8 8 6
Golf course 1 1 1 1 1 1 1 1 1 1
Libraries
Central library 1 1 1 1 1 1 1 1 1 1
Branch libraries within city 2 2 2 2 2 2 2 2 2 2
Branch libraries in county 7 8 7 7 7 7 7 7 7 7
Bookmobile - - - 1 1 1 1 1 1 1
Streets
Miles of paved streets 145 145 136 136 136 136 136 136 136 136
Miles of alleys 9 9 13 13 13 13 13 13 13 13
Street lights 2,310 2,335 2,335 2,800 2,825 2,825 2,893 2,893 2,893 2,893
Sewer
Miles of sanitary sewers 200 200 208 62 148 148 151 151 151 151
Miles of storm drains 35 35 35 8 50 50 50 50 50 50
Water
Miles of water mains 300 300 300 300 300 300 300 290 291 291
Fire hydrants 1,850 1,890 1,890 1,904 1,913 1,997 2,019 2,089 2,060 2,060
Source: City of Santa Cruz Departments
170

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City of Santa Cruz, California

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Fiscal Year Ended June 30, 2007

Cover and Photo by Natalia Duarte

Comprehensive Annual Financial Report

For the Fiscal Year Ended June 30, 2007

Tori Hannah Raymond Chin Kim Wigley

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 ............................................................................................51

Notes to Basic Financial Statements ............................................................................................................53

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)

Net Assets by Component..................................................................................................................................... 143

November 30, 2007

Comprehensive Annual Financial Report

Profile of the Government

Factors Affecting Financial Condition

Economic Conditions and Outlook

Historical Trend Information

CITY OF SANTA CRUZ

Sales tax increased $1.1 million or 9.4% in FY 07 over FY 06.

CITY OF SANTA CRUZ

CITY OF SANTA CRUZ

CITY OF SANTA CRUZ

• The “Triple Flip”

Mayor Ryan Coonerty

Vice Mayor Cynthia Mathews Councilmember Mike Rotkin

Councilmember Ed Porter Councilmember Lynn Robinson

Councilmember Emily Reilly Councilmember Tony Madrigal

City Manager, Richard C. Wilson

Assistant City Manager .....................................................................Martín Bernal

Chief of Fire ......................................................................................Ron Oliver

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

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

City Clerk ..........................................................................................Lesile Cook

Director of Finance............................................................................Sandra Benoit

Director of Human Resources ...........................................................Lisa Sullivan

Director of Information Technology .................................................Sharon Caiocca

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

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

Director of Planning and Community Development.........................Greg Larson

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

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

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

The accompanying Required Supplementary Information, such as Management’s Discussion

Financial Highlights – Primary Government (in $ millions)

Overview of the Financial Statements

The government-wide financial statements can be found on pages 21 - 25 of this report.

Government-Wide Financial Analysis (in $ millions)

City of Santa Cruz's Net Assets

Current liabilities 14.9 11.9 10.9 11.5 25.8 23.4