Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: FINANCIAL POLICIES UPDATE
Date: June 23, 2026
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
Additionally on January 27, 2026 City Council reviewed the draft Cyber Security and Data Protection Policy. The presented policy has been incorporated within these financial policies and updated based on comments received during the meeting as well as additional information received following the meeting.
Furthermore, on January 28, 2020, the City Council adopted the Discontinuation of Residential Water Service Policy which was intended to implement requirements set forth by SB 998 (Dodd): Urban and Community Water Systems. This policy is required to be translated into four additional languages beyond English and Spanish including Chinese (Mandarin), Korean, Tagalog, and Vietnamese plus any language spoken by at least 10 percent (10%) of people within the City. As this policy has not been updated, staff have reviewed the policy and identified items for clarification and consistency.
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 to simplify language as well as implement a fully digitized document that permits direct translation to over 100 languages via google translate. Additionally, to clarify the policy and ensure consistency with updated accounting best practices or state law, the following sections are proposed for changes:
Expenditure and Purchasing Policy Purchasing Limits (page 29) • Update the City Employee limit to $2,000 from $1,000 as the cost of goods, services, and travel continues to increase.
• Updated Department Head limit to $8,000 from $5,000 as this the cost of goods and services continue to increase, and this amount has not been revised to date. • Purchase of Inventory, Materials. Supplies, Equipment, & Non-Professional Services (page 30)
• Reclassify Minor Purchases as purchases of less than $10,000, Other than Minor to Purchases as amounts between $10,000 and $50,000, and Significant Purchases as greater than $50,000. Costs of goods and materials have continued to increase, and additional formal quotes are not always available or are cost prohibitive to obtain.
Capital Asset Policies General Information (page 59)
Revised to add additional best practices from GFOA as follows:
• Establish minimum cost and useful-life based thresholds to avoid the cost of capitalizing immaterial items
• Performing the recommended periodic review of capitalization thresholds Grants Management Policy Pass-Through Grants (page 76)
• Move section under general information on page 72 to be more consistent with the purpose and steps of proceeding with a grant.
Investment
• Authorized and Suitable Investments and Summary of Maximum Percentage Limits, by Instrument.
• Update language on Time Deposits or Placement Service Deposits based on updated state law that extended the 50% maximum to January 1, 2031.
• Added two new investment options available under state law that were previously excluded, Medium-Term Corporate Notes and Municipal Bonds.
Cyber Security and Data Protection Policy (pages 118-124) • Fully incorporated into financial policies and procedures for the first year.
Discontinuation of Residential Water Service for Nonpayment Policy (Pages 125-133) • Overall update to language to make consistent and clear throughout to make policy and procedures clearer for utility customers going forward.
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 or updating of related procedures that support the policy. This year there was additional time required to move the policy document from a grouping of word documents to a single document that was available for translation within the website and for print using existing software used by the city for our budget and the capital project plans.
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.