Item 10 - Fiscal Year 2024-25 Third Quarter Budget Report and Proposed Appropriation Adjustments

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FY2024-25 Third Quarter Budget Update & Proposed Appropriation Adjustment June 3, 2025 Page 6 5 0 8 4 Litigation Costs Staff also recommends a one-time adjustment to increase appropriations in the Non- Departmental budget by $300,000 for higher than expected litigation expenses. To account for this trend, the FY 2025-26 Proposed Budget includes a one-time increase in litigation funding. Restricted Fund Adjustments Water Enterprise On June 4, 2024, the City Council approved the sale of Water Revenue Bonds to finance $40 million in high-priority improvements to the City’s water system. These proceeds from the Water Fund support the design, acquisition, and construction of capital improvements. In accordance with governmental fund accounting standards, capital expenditures are recorded in the Acquisition and Construction Fund. A housekeeping adjustment has been made to move $14,745,008 in revenue originally recorded in FY 2023–24 to the current fiscal year. This update ensures the Acquisition and Construction Fund’s Spendable Fund Balance accurately reflects reimbursements scheduled for this year and eliminates the current deficit. A second housekeeping adjustment is also required to increase the transfer from Fund 060, the Water Revenue Fund, to Fund 066, the Acquisition and Construction Fund, by $10,666,969 to ensure proper alignment of resources within the Water Enterprise. SoCal Gas Community Investment Fund The City’s Neighborhood Initiatives and Environmental Services (NIES) section of the Planning Division is requesting an appropriation adjustment to recognize $50,000 in advanced grant funds from the SoCal Gas Community Investment Fund and appropriate the same amount to Misc Operating Expense. Monies will be used to purchase purchasing air quality monitors, which monitors air quality on city-owned property and some residential properties, depending on eligibility criteria. This Fund is facilitated by the California Community Foundation, for the Air Pollution Monitors and Air Purifiers (APMAP) project. This initiative addresses significant pollution burdens in the city's most disadvantaged communities, identified by CalEnviroScreen 4.0 and California Healthy Places Index as ranking 90% or above in pollution burden. The grant will fund the project's initial phases focusing on: (1) Community empowerment through education (2) Installation of air quality monitors to improve data accessibility for residents. By bridging data gaps and promoting environmental awareness, this project aims to enhance climate resilience and air quality in vulnerable neighborhoods through December 2026.