City taxpayers can be assured that their money is in good hands, as Standard & Poor's Corporation announced Friday that it has raised its rating of Cambridge's finances to the AAA-level, the highest evaluation a city can receive.

The award will have a substantial effect on the city's finances, saving millions of dollars in reduced interest costs over the next 10 years because of the top-grade credit rating, said James D. Maloney, the city's finance director.

"This rating increase will be applicable right off the bat to $20 million in debt issued today," he said.

Continued economic diversification, tax base expansion, strong financial operations, a modest debt burden and a strong management team played important roles in the rating upgrade, according to a Standard & Poor's CreditWire report.

Cambridge has been awarded AAA status by the two other major U.S. financial rating agencies this year, Moody's Investor Services and Fitch IBCA. It now joins cities such as Indianapolis, Minneapolis and Winston-Salem, N.C., in the top tier of six municipalities in the U.S. that have received AAA ratings from the three major agencies.

On Friday, Standard & Poor's assigned both Cambridge's $27.94 general obligation (GO) bonds and its $105.6 million outstanding GO debt its AAA rating, an upgrade from the city's previous AA+ GO debt rating.

Maloney said the AAA rating is the result of the City Council and the city manager working together.

"The city manager has recommended some very sound financial positions, and the City Council has followed those," Maloney said.

Maloney said that the city has been working for several years to get the AAA rating from Standard & Poor's.

"We're quite pleased with the upgrade," he said.

The city was first awarded the AAA designation by Moody's in the early 1990s and by Fitch last month, Maloney said.

In a press release, City Manager Robert W. Healy called the ratings "truly gratifying."

Healy stressed that this newest AAA rating will allow the City Council to focus on policy issues in the near future.

"The AAA rating ensures that the priorities of the City Council, such as affordable housing, open space acquisition and a new main library and police headquarters can be achieved," he said.

Healy has come under fire this year, as three city councillors--Kenneth E. Reeves '72, Timothy J. Toomey Jr. and Katherine Triantafillou--voted to not give the city manager a new contract Sept. 13.

Thomas S. Rafferty, a host on the political talk show "Cambridge Inside Out," said he doesn't think the Standard & Poor's rating award will persuade any of those three to change their minds, however.

"I don't think it will have a difference amongst the three who have declared their position already," Rafferty said.

He said Reeves appeared on "Inside Out" and gave credit to Healy for his "financial acumen" but said he wanted a new city manager anyway.