Cotati City Council
Agenda Staff Report
Item type: CONSENT CALENDAR (ACTION)
To: City Council
Subject: FINANCIAL POLICIES UPDATE
Date: June 10, 2025
Written by: Angela Courter, Director of Administrative Services Recommendation
It is recommended that the City Council adopt a Resolution approving the updated comprehensive City of Cotati Financial Principles and Policies.
Background
Financial policies are essential and central to a strategic, long-term approach to the fiscal management of the City by the elected officials and staff. Financial policies also create and define a shared understanding of how the City will develop its financial practices and manage its resources to provide the best value to the community and provide structure, boundaries and limits on the actions City staff may take. The Financial Principles and Policies provide critical guidelines for the following critical financial activities:
• Financial Reporting and Budgeting Policies
• Fiscal Resiliency Policies
• Revenues Control and Management Policies
• Expenditure and Purchasing Policies
• Credit Card Management Policies
• Environmentally Preferable Purchasing Policies
• Capital Assets Policies
• Grant Management Policy
• Investment Management Policies
• Debt Management Policies
• Unfunded Pension Liability Policies
Analysis/Discussion
The policies are updated periodically but are designed with a long-term perspective and provide the basic framework and road map for addressing a wide variety of financial and economic conditions that the City will encounter, as well as support long-term planning and enhance the City’s effectiveness in implementing long-term strategies to deliver efficient services to the public.
The overall formatting of the document was updated for ease of review and future updating.
Additionally, to clarify the policy and ensure consistency with updated accounting standards or state law, the following sections are proposed for changes:
- Expenditure and Purchasing Policy
• Section 3.B.1 - Petty cash reimbursements for minor purchases are proposed to be increased from $50.00 per person per transaction to $100.00 due to the continued increases in costs and possible need to provide small one-time reimbursements more than $50.00.
• Section 4.A - Update the City Employee limit to $1,000 as the cost of goods, services, and travel continues to increase.
• Section 9.B - This section is proposed to be updated to clarify language to state the appropriate process for Professional Services Agreements over $25,000 which require an RFP or RFQ as best practice and three proposals at minimum. • Section 11.B - Added clarifying language as follows:
o Multi-Year Agreement periods typically shall not be longer than 5 years. o Updated language for multi-year agreements to align with the purchasing limits and removing the requirement for approval levels to be set based on the cumulative multi-year contract amount. This was replaced so each year of the agreement is looked at for compliance with the purchasing authority and budget availability within the first year.
o Added requirement for the standard termination of the contract language must be included in all multi-year agreements. This ensures that if appropriations are not approved for a subsequent year, the contract can be terminated by the City with no future costs incurred.
• Section 16 - Amended purchasing limits per current Uniform Public Construction Cost Accounting Act (UPCCAA) to be consistent with updated State limits as of adoption date.
-Captial Asset Policies
• Section A - Summary of Capitalization Thresholds are proposed to increase the Building Improvements, Equipment, Furniture & Vehicles, and Intangible Assets to $25,000.
Proposed increasing Capital Leases to $35,000 per best practice guidance from the predecessor auditor for new financial reporting thresholds for capital leases within the City’s annual financial report.
-Investment
• Section 7 – Added footnote language to provide guidance on proper calculation of the age of maturities of investments as provided through CIRA‘s investment policy review. o ”An investment term or remaining maturity is to be measured from the settlement forward date to final maturity. A security purchased pursuant to 53601 is prohibited from having a settlement date exceeding 45 days from the time of investment."
-Debt Management Policies
• Section A.1 - Minor corrections of spelling or grammar. -Unfunded Pension Liability Policy
• Section 4 - The last paragraph is amended listing the Pension Rate Stabilization Fund as one of the tools for our investment process to help increase the funded level of the pension liability.
• Section 4.G - Revise the number of days for reviewing the annual CalPERS valuation reports from 30 days to 90 days to allow more time for analysis and to bring items to council for regular reporting.
City Staff will continue to review City financial policies for updates on best practices.
Financial Considerations
There is no direct fiscal impact on the City resulting from the adoption of these policies. There maybe be additional staff time required in the development of related updating of procedures that support the policy.
Environmental Issues
The action of adopting Financial Principles and Policies does not constitute a project as defined by California Environmental Quality Act Guidelines Section 15378; therefore, no further environmental review is required.