CITY COUNCIL MEETING AGENDA PACKET

Page 10 of 17 reserve level is an improvement on FY 2023/24 reserve level of 20.8 percent, but the reserve level remains below the recommended target. With the recent rate increase approved by the City Council, the reserve is expected to be rebuilt over time. Water revenues were approximately $1.7 million, or 4.2 percent more than the estimate included in the amended budget. While water revenues increased by $2.0 million, recycled water revenues decreased by $300,000 compared to the budget. On the expenditure side, water purchase costs from Zone 7 were approximately $1.4 million more than budgeted in FY 2024/25. Other operating expenses were also higher by about $140,000 than the budget. As shown in Table 15 below, staff recommends adjusting the expenditure budget to cover the increased costs. Table 7. Water/Recycled Water O&M Funds – Amended Budget vs. Actual Sewer O&M Funds. As shown in Table 8 below, the Sewer Operating Fund ended FY 2024/25 with an operating fund balance of approximately $9.3 million, which equals 48.1 percent of the Sewer O&M Fund’s FY 2025/26 expenditure budget. The operating reserve policy adopted by the City Council on June 6, 2023, requires reserves equal to between 30.0 and 40.0 percent of operating expenses, with a target of 35.0 percent. However, the excess reserve is being utilized to fund capital projects in the 2025-27 budget cycle. Sewer revenues were approximately $370,000, or 2.0 percent lower than the estimate included in the amended budget. On the expenditure side, actual expenditures were approximately $1.1 million less than the amended budget, primarily due to a decrease of about $1.5 million in expenditures for Repair and Replacement activities. These savings were offset with higher sewer treatment fees paid to Dublin San Ramon Service District (DSRSD) by approximately $490,000 due to higher-than-estimated utilization of sewer treatment services. Page 356 of 399