City Council
Report
City Council Meeting: October 14, 2025
Agenda Item: 11.B
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To: Mayor and City Council
From: Oliver Chi, City Manager, City Manager's Office
Subject: Review and Approval of Council Discretionary Funding Policy Recommended Action
Staff recommends that the City Council:
1. Consider reforms to the allocation and distribution of its discretionary funds;
2. Authorize budget amendment as outlined in the Financial Impacts & Budget Actions section of this report (requires 5 votes).
Summary
The Santa Monica City Council maintains a modest discretionary budget each fiscal year to provide targeted financial support for community-based programs, business improvement initiatives, and local events that enhance civic life. Historically, these funds have supported neighborhood associations, school-related activities, cultural celebrations, and recurring events such as the Fourth of July Parade and Martin Luther King Jr. Celebration.
Over time, however, a growing number of recurring allocations have been precommitted at the start of each fiscal year, reducing the Council’s flexibility to respond to new or emerging community needs. For instance, in FY 2024–25, approximately $95,000 of the discretionary budget was pre-allocated to ongoing commitments, leaving only $23,500 available for truly discretionary allocation by the City Council for the year.
To restore flexibility and align funding practices with the original intent of the Council’s discretionary fund, staff recommends modernizing the program by:
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1. Shifting recurring allocations for long-standing community events and sponsorships into the City’s operating budget;
2. Establishing a clearer, more equitable framework for Councilmember participation by allocating a portion of discretionary funds to each member; and
3. Reviewing allocations every two years to identify additional programs that could be moved into the City’s base budget or designated as “Signature Events.” Under this approach, recurring allocations would be permanently funded through the City’s base operating budget, while the City Council’s discretionary fund would be increased from $137,398 to $140,000, to allow for $20,000 in available discretionary funding per Councilmember. This structure maintains Council oversight and voting authority over allocations while providing more transparency, equity, and responsiveness in future decision-making.
Discussion
The Council discretionary budget was originally designed to serve as a flexible resource for community partnerships, pilot projects, and sponsorships that arise during the fiscal year. However, in recent years, the number of recurring commitments charged to the discretionary account has grown substantially, and since 2020, the City Council has routinely funded cultural celebrations, business improvement districts, and school programs from this discretionary account – thereby reducing the funds available for new requests.
A five-year review indicates that approximately 80% of supposed “discretionary” allocations have supported the same recurring events and organizations. To address this imbalance and preserve the fund’s intended purpose, staff recommends migrating these ongoing commitments to the City’s operating budget or to the proposed “Signature Events” program that is being considered in a separate agenda item 3 of 4
concurrently with this matter.
To that end, outside of fee waivers being considered through the “Signature Events” program, staff is recommending that recurring allocations totaling $83,000 be moved into the City’s operating budget, and out of the discretionary funding program. These events have demonstrated consistent community benefit and longstanding Council support, and include:
• Business Improvement Districts – $29,000
• Fourth of July Parade – $15,000
• Westside Coalition Martin Luther King Jr. Celebration – $9,000 • Santa Monica Pride – $10,000
• Santa Monica High School Grad Night – $20,000
To further strengthen fairness and transparency, staff also recommends revising the discretionary program structure. Allocating discretionary funds evenly among councilmembers can help to ensure equitable access to sponsorship resources, while maintaining the requirement that all allocations receive approval by Council majority vote. Under this model, the Council’s total discretionary revised budget of $137,398 would be modestly adjusted to $140,000. Then, the funds would be divided to provide $20,000 per Councilmember, with allocations reviewed annually as part of the City’s regular budget process.
Moving forward, staff will conduct a biennial review of discretionary spending to recommend whether additional recurring programs should transition to the City’s base budget or be categorized as Signature Events, ensuring that the Council retains the flexibility to support emerging priorities.
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Fiscal Impacts and Budget Amendments
If Council opts to reform the allocation and distribution of its discretionary funds as summarized above, the following budget amendment would be required.
FY 2025-26 Budget Amendment
Additional Funds to be Appropriated
Account Number Amount
01200009. 555560 $83,000.00
01100001.532330 $2,602.00
Future year funding is contingent on Council budget approval.
Prepared By: Christopher Smith, Deputy City Manager
Approved Forwarded to Council
Attachments:
A. Council Discretionary Funding History
B. Written Comments
C. Powerpoint Presentation