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Council hears finance plan to split water and sewer funds to simplify accounting ahead of 2026 rate study and bond work
Summary
Finance director presented a recommendation to separate combined water-and-sewer accounting into distinct operating and capital funds for water and sewer, aiming to reduce manual allocations, avoid cross-subsidies, and streamline upcoming rate studies and bond issuance preparations.
The council heard a staff recommendation to split the city’s combined water-and-sewer fund into separate operating and capital funds for each utility to simplify accounting and better support upcoming rate studies and a planned bond issuance.
Finance director Charity Evans introduced the proposal, saying separate funds would make it easier to track revenues and expenditures by utility, reduce manual proration work and lower the risk of accidental cross-subsidization between water and sewer accounts. Evans said the change is primarily an internal accounting structure and would not change customer bills; staff said customers should not notice a difference in billing presentation.
Staff explained the timing as tied to a June 2026 water rate study and a July 2026 bond issuance: splitting funds now would reduce manual adjustments during those processes. Staff acknowledged shared costs such as billing and interest will still require prorations and described plans to create written justifications for shared-cost allocations when the funds are separated.
Council members asked whether customers would see any difference; staff said no, the change is for internal fund tracking and for cleaner state auditing. One council member noted that clearer fund separation could make rate studies easier and possibly affect future rate outcomes.
No formal final vote on the fund split was recorded in the transcript excerpt; staff requested council approval to create the pending funds at the beginning of the fiscal year so accounting changes can be implemented ahead of the rate-study timeline.
Next steps: staff requested approval to set up three pending funds at the beginning of the year, prepare cost-allocation documentation for shared expenses and incorporate the separated fund structure into the upcoming rate-study work and bond planning.
