The Santa Monica City Council unanimously approved a major restructuring of its discretionary funding program Tuesday, moving $83,000 in recurring annual commitments to the city's operating budget while adding new accountability measures amid concerns about transparency and favoritism.
The changes address what City Manager Oliver Chi called a fundamental problem: the city's $137,000 "discretionary" fund wasn't truly discretionary. Staff analysis showed that approximately $95,000 was routinely pre-committed each year to the same recurring events over the past five years, leaving only $23,500 available for new community needs.
"Although it's called the discretionary fund, the overall account really isn't," Chi told the council during Tuesday's meeting. "Of the $137,000 that's allocated, approximately $100,000 every year was spoken for."
Under the approved changes, five recurring commitments will be permanently funded through the city's base operating budget: the Business Improvement District ($29,000), Fourth of July Parade ($15,000), Santa Monica High School Grad Night ($20,000), Santa Monica Pride ($10,000), and the Westside Coalition Martin Luther King Jr. Celebration ($9,000).
The discretionary fund will be reset at $140,000 and divided among the seven council members, giving each $20,000 to allocate during the fiscal year. However, all expenditures must still be submitted as agenda items requiring majority council approval.
"By giving each council member an allocation, it really forces us to prioritize," said Council Member Dan Hall, who supported the staff recommendation. "It's inherently self limiting in a way that is very good."
The restructuring comes as Santa Monica faces what Chi described as "a level of fiscal distress," making efficient resource allocation crucial. The city manager noted that staff has been developing a strategy to stabilize the organization's base operations over the next 24 months.
Council Member Caroline Torosis moved to approve the item but insisted on additional accountability measures that weren't in the original proposal. She demanded standardized application forms and impact reporting requirements.
"If we've given you $10,000 I want to know that people in Santa Monica were served," Torosis said. "I want to know that we've had an appreciable impact on the built environment, the visitor experience, or something in Santa Monica, not that it's going to subsidize salaries."
Torosis expressed concerns about potential misuse of the funds. "I'm very deeply concerned it's going to turn into some sort of, I don't want to use the term fund for friends, and that's absolutely not what we need to do here," she said.
The council added requirements for organizations to demonstrate they are also fundraising and that discretionary funds won't support entire events. Mayor Lana Negrete noted the city had previously requested standardized forms to track events year over year, saying applications currently vary from brief emails to comprehensive descriptions.
Not all community members supported the individual allocation approach. Kevin McKeown, writing to the council before the meeting, urged members to reject dividing funds by council member, arguing it could "exacerbate competition to be seen as favoring various constituencies."
"We are one community, with one City Council," McKeown wrote. "The community is better served by having discretionary funding advanced by the Council acting as a committee of the whole."
Council Member Natalya Zernitskaya raised similar concerns during the meeting, suggesting the fund remain as one pot with streamlined request processes. However, her alternative proposal didn't gain support from other members.
The new system includes safeguards against abuse. Council members who exhaust their $20,000 allocation during the fiscal year must coordinate with colleagues who have remaining funds. All expenditures still require majority council approval.
Staff will conduct biennial reviews to identify additional recurring programs that could transition to the base budget. The council also approved a one-year evaluation to determine if the new allocation method is working effectively.
The changes complement a separate "Signature Events" resolution the council adopted earlier in the meeting, which streamlined fee waivers for recurring community events. Together, the measures aim to reduce bureaucratic hurdles while providing greater certainty for event organizers and more flexibility for council priorities.
The budget amendment requires appropriating $83,000 for the transferred commitments, with future funding contingent on annual budget approval.