CITY OF SEBASTOPOL CITY COUNCIL
AGENDA ITEM REPORT FOR MEETING OF: November 4, 2025
=========================================================================================== To: Honorable Mayor and City Councilmembers
From: Ana Kwong – Administrative Services Director
Erik Billing – Acting Public Works Director/Operations Supervisor Toni Bertolero – Public Works Engineer
Subject: FY25-26 Quarter 1 (July – September 2025) Financial Update – Enterprise Fund =========================================================================================== RECOMMENDATION:
Staff recommends the Sebastopol City Council receive year-to-date financial information for the Enterprise Fund.
EXECUTIVE SUMMARY:
Based on the best available information as of September 30, 2025, the city's water fund has billed 20.7% of budgeted revenue for the full fiscal year. Expenses are at 23% of full fiscal year. Wastewater has billed 16.1% of budgeted revenue of full year. Expenses are 18.7% for full year.
BACKGROUND:
The Enterprise Fund is used to account for operations that are financed and operated in a manner similar to private business enterprises, where the costs of providing services are primarily recovered through user fees. This includes essential services such as water and wastewater. Activities supported by the Enterprise Fund encompass operations, maintenance, billing and collections, administration, financing, and related debt service. The principal sources of revenue are charges to customers for water consumption, wastewater collection, and fees associated with newservice connections. The City has experienced an increase in revenue this and last fiscal year due to recent adjustments in water and wastewater rates. On the expenditure side, spending patterns are not linear, and this is reflected in the first quarter data. Both water and wastewater expenses are trending below the 25% benchmark.
These variations are typical and largely driven by the timing of operational activities and capital investments.
Overall, the Enterprise Fund continues to function as a self-supporting mechanism, ensuring that utility services are sustainably managed and financially accountable..
.
DISCUSSION:
This report provides an overview of the City’s Enterprise Fund performance for the first quarter of FY25-26, using the most current financial data available as of September 30, 2025. It presents a detailed accounting of revenues and expenditures recorded during this period, offering a snapshot of the enterprise financial position as the fiscal year gets underway. It’s important to note that first-quarter data can be inherently limited. Revenue billings are reflecting 2 months of activities.
STAFF ANALYSIS:
Water:
The quarterly report for the Water Fund reflects billing activity for the months of July and August as compared to the previous same quarter, the billing activity reflected 3 months. Based on the adopted annual revenue budget of $1.76 million, a proportional estimate for the first two months would be approximately $294,000 or 16%— assuming revenue is evenly distributed throughout the year. However, actual revenue has exceeded the 16% mark for the quarter, which can be attributed to two key factors. First, the planned water rate increase. Second, July and Agenda Item Number 7
Agenda Item Number 7
City Council Meeting Packet of November 4, 2025
August are peak summer months, during which water consumption typically rises due to seasonal demand. As we transition into the fall and winter months, consumption is expected to decline,resulting in a more balanced revenue pattern over the remainder of the fiscal year.
Operating expenditures—which include salaries and wages, employee benefits, contracted services, debt service payments, cost allocation plan charges, and transfers out—are currently tracking at 23% of the annual budget.
While this is slightly below the 25% benchmark typically expected at this point in the fiscal year, it remains consistent with anticipated spending patterns and indicates that expenditures are on track.
Wastewater:
The quarterly report for the Wastewater Fund covers the same billing period as the Water Fund—July through September—representing the first quarter of the fiscal year as compared to the previous same quarter, the billing activity reflected 3 months. Revenue collection for this period stands at 16.1% of the annual budget. While the Water Fund exceeded the 16% mark, the Wastewater Fund is trending right at that level, largely due to the winter average adjustment applied during this billing cycle. The City calculates winter averages using water consumption data from the prior December through April, selecting the two lowest months to determine wastewater charges.
Because water usage tends to be lower during those months, the resulting wastewater revenue reflects this seasonal adjustment and is performing as expected.
On the expenditure side, the Wastewater Fund is currently tracking at 18.7%, which is below the 25% benchmark typically anticipated at this point in the fiscal year. Thislower figure is primarily due to the timing of payments under the Subregional contract, which only includes two months of service for the first quarter rather than three. As the fiscal year progresses, the full contractual costs will be incurred, and expenditures are expected to align with budgeted projections. Overall, the fund is operating within expected parameters, and no budgetary adjustments are recommended at this time.
Water Rate Model:
The Enterprise Fund’s financial performance for the first quarter is consistent with the projections outlined in the current Water Rate Model. As part of the quarterly review process, staff conducts a detailed comparison between actual revenues and expenditures and the model’s estimates. The alignment confirms the reliability of the rate structure implemented on July 1, 2024, and reinforces its effectiveness in supporting the fund’s financial stability and operational needs.
BUDGET COMMITTEE REVIEW
This item was reviewed by the Budget Committee at its meeting on October 14, 2025.
CITY COUNCIL GOALS/PRIORITIES/AND OR GENERAL PLAN CONSISTENCY:
Goal 5 – Long Term Financial Sustainability
Achieving Greater Fiscal Resilience and Long Term Fiscal Sustainability Action Plan 2 – Quarterly Financial Report
Enterprise Fund: A quarterly update is an essential tool for monitoring and managing the financial health of an organization. It provides a snapshot of the financial performance over the past three months, allowing City Council to assess progress, identify trends, and make informed decisions.
FISCAL IMPACT:
Agenda Item Number 7
Agenda Item Number 7
City Council Meeting Packet of November 4, 2025
There is no fiscal impact in receiving this informational financial update.
PUBLIC COMMENT:
As of the writing of this staff report, the City has not received any public comment on this item. However, if staff receives public comment from interested parties following the publication and distribution of this staff report,such comments will be provided to the City Council as supplemental materials before or at the meeting.
COMMUNITY OUTREACH:
This item has been noticed in accordance with the Ralph M. Brown Act and was available for public viewing and review at least 72 hours prior to the scheduled meeting date.
RESTATED RECOMMENDATION:
That the City Council receive year-to-date financial information.
CITY COUNCIL OPTION(S):
There are no options to consider.
ATTACHMENTS:
First Quarter Financial Reports
APPROVALS:
Department Head Approval: Approval Date: __10/8/2025____ CEQA Determination (Planning): Approval Date: ___N/A_______ The proposed action is / is not exempt from the requirements of the California Environmental Quality Act (CEQA) Administrative Services/Financial Approval: Approval Date: ___10/8/2025___ Costs authorized in City Approved Budget: ☐ Yes ☐ No N/A Account Code (f applicable) ___________________________ City Attorney Approval: Approval Date: __ ________
City Manager Approval: Approval Date: ___________
Agenda Item Number 7
Agenda Item Number 7
City Council Meeting Packet of November 4, 2025
Description
2023-24
Actual
2024-25
Preliminary
Actual
2025-26
Adopted
Budget
Y-T-D
Actual
9/30/24
Y-T-D
Actual
9/30/25
% of
Adopted
Budget
OPERATING REVENUE
Usage Charges - Residential 1,343,048 1,782,411 1,764,321 550,392 384,451 21.8% Usage Charges - Commerical 895,366 1,429,003 1,510,087 471,163 310,912 20.6% Usage Charges - Water Tower -0 45,047 54,500 16,721 16,232 29.8% Interest Income 82,780 50,702 75,000 -0 -740 -1.0%
Construction Hydrant 500 -0 -0 -0 -0 0.0%
New Service Fee 8,700 10,200 10,000 3,450 2,600 26.0%
Water Meter Sales 190 -0 -0 -0 -0 0.0%
Penalties 21,591 22,067 20,000 6,042 7,587 37.9%
Other Charges 279 -0 -0 -0 -0 0.0%
Insurance Claims 515 -0 -0 -0 -0 0.0%
Miscellaneous Income 155,392 45,965 44,000 874 600 1.4% TOTAL REVENUE 2,508,362 3,385,395 3,477,908 1,048,642 721,643 20.7%
OPERATING EXPENDITURE
Salaries & Wages 319,666 350,341 370,268 83,040 96,727 26.1% Benefits 158,712 206,787 244,830 57,329 120,864 49.4%
Contracted Services 338,990 159,241 328,800 54,259 149,023 45.3% Services & Supplies 161,691 195,954 222,490 29,051 29,156 13.1% Conference & Training Expense 2,865 4,439 5,000 3,438 851 17.0% Utilities 203,566 235,947 317,350 35,630 43,558 13.7%
Allocated Insurance 90,730 81,510 104,755 19,882 26,189 25.0% Capital Outlay - - 160,500 - 1,101 0.7%
Debt Service Payments 380,175 461,365 252,657 168,592 - 0.0% Cost Allocation Plan 1,261,494 852,863 845,358 213,216 211,340 25.0% Transfers Out 940,341 50,230 115,000 567 2,168 1.9%
TOTAL EXPENDITURES 3,858,230 2,598,677 2,967,008 665,004 680,978 23.0% Net Surplus/(Deficit) (1,349,868) 786,717 510,900 383,638 40,665
WATER OPERATING FUND
JULY - SEPTEMBER 2025
QUARTER 1 REPORTING
Agenda Item Number 7 Agenda Item Number 7
City Council Meeting Packet of November 4, 2025
Description
2023-24
Actual
2024-25
Preliminary
Actual
2025-26
Adopted
Budget
Y-T-D
Actual
9/30/24
Y-T-D
Actual
9/30/25
% of
Adopted
Budget
Salaries & Wages
4010 - Salaries - Full Time 280,059 309,945 345,813 75,389 87,324 25.3% 4012 - Overtime 21,691 21,733 24,500 4,434 6,264 25.6%
4013 - Standby 11,165 14,914 14,200 3,217 3,140 22.1%
4090 - Vacancy Savings - - (14,245) - - 0.0%
4023 - One Time Payment 6,750 7,650 - - - 0.0%
4990 - PW/Staff Time Project Reimb - (3,900) - - - 0.0% Total Salaries & Wages 319,666 350,341 370,268 83,040 96,727 26.1% Benefits
4101 - Health in Lieu 1,588 - - - - 0.0%
4102 - Uniform Allowance 2,750 2,550 - 2,550 3,203 0.0% 4105 - Medicare & Fica 4,724 5,318 5,014 1,245 1,454 29.0% 4110 - CalPERS Employer Rate 62,681 30,679 33,983 7,206 8,609 25.3% 4111 - CalPERS UAL Cost - 60,746 73,475 15,545 71,021 96.7% 4130 - Health Insurance 75,118 94,970 115,634 27,151 32,515 28.1% 4150 - Dental Insurance 9,258 9,740 11,067 2,797 3,110 28.1% 4151 - Vision Insurance 980 1,026 1,088 296 307 28.2%
4181 - Long Term Disability Insurance 918 999 2,982 324 346 11.6% 4182 - Short Term Disability Insurance 364 414 497 115 194 39.1% 4183 - EAP (Employee Asst Prog) 98 103 280 29 36 12.9%
4184 - Life Insurance 233 242 810 70 71 8.7%
Total Benefits 158,712 206,787 244,830 57,329 120,864 49.4% Contracted Services
4210 - Professional Contract Services 326,001 140,875 310,800 54,259 143,845 46.3% 4211 - Banking Fees 12,989 18,366 18,000 - 5,178 28.8%
Total Contracted Services 338,990 159,241 328,800 54,259 149,023 45.3% Services & Supplies
4301 - Bad Debt Expense 13,205 2,110 5,000 227 391 7.8% 4310 - Office Supplies - - 1,500 - - 0.0%
4330 - Misc Supplies & Services 135,827 171,106 182,090 27,501 23,677 13.0% 4332 - Janitorial & Safety Supplies 15 - 1,200 - - 0.0% 4361 - Meter Replacement Program 2,516 5,992 7,500 1,324 210 2.8% 4365 - Fire Hydrant Replacement Program 9,445 13,203 10,000 - - 0.0% 4366 - Backflow Prevention Program 634 222 5,200 - 4,879 93.8% 4380 - Vehicle Maintenance 48 3,321 10,000 - - 0.0%
Total Services & Supplies 161,691 195,954 222,490 29,051 29,156 13.1% Conference & Training Expense
4510 - Conference & Training 1,327 3,051 3,000 2,237 851 28.4% 4515 - Meetings & Travel 1,538 1,388 2,000 1,202 - 0.0% Total Conference & Training Expense 2,865 4,439 5,000 3,438 851 17.0% Utilities
4710 - Utilities - Gas & Electric 197,837 230,402 310,000 34,317 42,434 13.7% 4750 - Telecommunications 5,729 5,544 7,350 1,312 1,125 15.3% Total Utilities 203,566 235,947 317,350 35,630 43,558 13.7% Detail - Water Operation Fund - 500
July - September 2025
Quarter 1 Expenditures
Agenda Item Number 7
Agenda Item Number 7
City Council Meeting Packet of November 4, 2025
Description
2023-24
Actual
2024-25
Preliminary
Actual
2025-26
Adopted
Budget
Y-T-D
Actual
9/30/24
Y-T-D
Actual
9/30/25
% of
Adopted
Budget
Detail - Water Operation Fund - 500
July - September 2025
Quarter 1 Expenditures
Allocated Insurance | Others
4996 - Allocated Liability Insurance 59,559 53,266 71,485 12,956 17,871 25.0% 4997 - Allocated Wrkrs Comp Insurance 31,171 28,244 33,270 6,926 8,318 25.0% 4998 - Cost Allocation Plan (CAP) 1,261,493 852,863 845,358 213,216 211,340 25.0% 4999 - Transfers Out 940,341 50,230 115,000 567 2,168 1.9% 5100 - Capital Outlay - 160,500 - 1,101 0.7%
Total Allocated Insurance | Others 2,292,564 984,603 1,225,613 233,665 240,797 19.6% Debt Service
6100 - Principal 323,576 409,137 198,633 134,209 - 0.0% 6200 - Interest 56,599 52,229 54,024 34,384 - 0.0%
Total Debt Service 380,175 461,365 252,657 168,592 - 0.0% TOTAL 3,858,228 2,598,677 2,967,008 665,004 680,978 23.0% Agenda Item Number 7
Agenda Item Number 7
City Council Meeting Packet of November 4, 2025
Description
2023-24
Actual
2024-25
Preliminary
Actual
2025-26
Adopted
Budget
Y-T-D
Actual
9/30/24
Y-T-D
Actual
9/30/25
% of
Adopted
Budget
OPERATING REVENUE
Service Charge - Residential 2,813,939 2,378,207 2,535,849 589,505 427,087 16.8% Service Charge - Commercial -0 2,295,499 2,639,354 606,096 406,533 15.4% Interest Income 20,194 12,682 20,000 -0 -237 -1.2%
Penalties 15,153 20,310 20,000 5,331 6,816 34.1%
Insurance Claims -0 -0 -0 -0 -0 0.0%
Miscellaneous Income 32,552 -0 -0 -0 -0 0.0%
Transfers In -0 -0 -0 -0 -0 0.0%
TOTAL REVENUE 2,881,838 4,706,698 5,215,203 1,200,932 840,200 16.1%
OPERATING EXPENDITURE
Salaries & Wages 282,963 296,793 325,142 68,817 83,879 25.8% Benefits 139,103 178,758 219,286 48,896 105,391 48.1%
Contracted Services 84,665 31,195 129,550 3,486 10,505 8.1% Subregional Cost 1,952,842 2,118,436 1,953,889 353,073 325,648 16.7% Services & Supplies 60,825 79,268 107,000 4,340 9,286 8.7% Conference & Training Expense 8,458 3,175 8,000 1,267 1,313 16.4% Utilities 63,567 68,698 65,198 9,273 11,433 17.5%
Allocated Insurance 68,625 57,065 68,905 13,934 17,226 25.0% Debt Service Payments 181,237 240,038 119,888 119,888 - 0.0% Cost Allocation Plan 1,041,462 908,934 950,965 227,234 237,741 25.0% Capital Outlay - - 148,000 - - 0.0%
Transfers Out 800,532 32,551 187,000 - - 0.0%
TOTAL EXPENDITURES 4,684,278 4,014,911 4,282,823 850,207 802,422 18.7% Net Surplus/(Deficit) (1,802,440) 691,786 932,380 350,725 37,778
WASTEWATER OPERATING FUND
JULY - SEPTEMBER 2025
QUARTER 1 REPORTING
Agenda Item Number 7
Agenda Item Number 7
City Council Meeting Packet of November 4, 2025
Description
2023-24
Actual
2024-25
Preliminary
Actual
2025-26
Adopted
Budget
Y-T-D
Actual
9/30/24
Y-T-D
Actual
9/30/25
% of
Adopted
Budget
OPERATING EXPENDITURE
Salaries & Wages
4010 - Salaries - Full Time 253,366 258,159 306,282 64,089 77,382 25.3% 4012 - Overtime 15,476 19,884 19,600 2,270 3,710 18.9%
4013 - Standby 8,871 11,850 11,500 2,458 2,788 24.2%
4090 - Vacancy Savings - - (12,240) - - 0.0%
4023 - One Time Payment 5,250 6,900 - - - 0.0%
Total Salaries & Wages 282,963 296,793 325,142 68,817 83,879 25.8% Benefits
4101 - Health in Lieu 2,276 - - - - 0.0%
4102 - Uniform Allowance 2,280 2,300 2,300 2,300 2,993 130.1% 4105 - Medicare & Fica 4,180 4,544 4,441 1,035 1,264 28.5% 4110 - CalPERS Employer Rate 61,670 26,831 30,519 6,276 7,739 25.4% 4111 - CalPERS Employer Rate-Unfunded - 53,360 63,200 13,654 60,971 96.5% 4130 - Health Insurance 58,703 81,089 103,436 22,617 28,835 27.9% 4150 - Dental Insurance 7,772 8,315 9,934 2,330 2,767 27.9% 4151 - Vision Insurance 823 875 977 246 273 27.9%
4181 - Long Term Disability Insurance 800 810 2,982 263 291 9.8% 4182 - Short Term Disability Insurance 318 340 407 92 166 40.8% 4183 - EAP (Employee Asst Prog) 83 88 280 25 32 11.3%
4184 - Life Insurance 197 207 810 58 62 7.7%
Total Benefits 139,103 178,758 219,286 48,896 105,391 48.1% Contracted Services
4210 - Professional Contract Services 71,676 12,829 110,250 901 5,326 4.8% 4210 - Subregional O&M 1,952,842 2,118,436 1,953,889 353,073 325,648 16.7% 4211 - Banking Fees 12,989 18,366 19,300 2,585 5,178 26.8% Total Contracted Services 2,037,507 2,149,631 2,083,439 356,559 336,153 16.1% Bad Debt Expense
4301 - Bad Debt Expense 19,020 2,486 5,000 359 522 10.4% Total Bad Debt Expense 19,020 2,486 5,000 359 522 10.4% Services & Supplies
4330 - Misc Supplies & Services 29,942 71,961 89,500 3,958 7,903 8.8% 4332 - Janitorial & Safety Supplies 29 - 1,500 - - 0.0% Total Services & Supplies 29,971 71,961 91,000 3,958 7,903 8.7% Special Programs
4360 - Conservation Rebate Program - - 1,000 - - 0.0%
Total Special Programs - - 1,000 - - 0.0%
Vehicle Expense
4380 - Vehicle Maintenance 11,834 4,822 10,000 23 861 8.6% Total Vehicle Expense 11,834 4,822 10,000 23 861 8.6%
Conference & Training Expense
4510 - Conference & Training 5,628 915 5,000 328 1,194 23.9% 4515 - Meetings & Travel 2,830 2,260 3,000 939 119 4.0% Total Conference & Training Expense 8,458 3,175 8,000 1,267 1,313 16.4% Utilities
4710 - Utilities - Gas & Electric 56,498 64,505 60,000 8,577 10,627 17.7% Detail - Wastewater Operation Fund - 510
July - September 2025
Quarter 1 Expenditures
Agenda Item Number 7
Agenda Item Number 7
City Council Meeting Packet of November 4, 2025
Description
2023-24
Actual
2024-25
Preliminary
Actual
2025-26
Adopted
Budget
Y-T-D
Actual
9/30/24
Y-T-D
Actual
9/30/25
% of
Adopted
Budget
Detail - Wastewater Operation Fund - 510
July - September 2025
Quarter 1 Expenditures
4711 - Utilities - City Bill 5,377 3,080 3,198 427 498 15.6% Total Utilities 61,875 67,585 63,198 9,005 11,124 17.6% Telecommunications
4750 - Telecommunications 1,692 1,113 2,000 268 308 15.4% Total Telecommunications 1,692 1,113 2,000 268 308 15.4% Allocated Insurance
4996 - Allocated Liability Insurance 41,232 30,012 40,285 7,300 10,071 25.0% 4997 - Allocated Wrkrs Comp Insurance 27,393 27,053 28,620 6,634 7,155 25.0% Total Allocated Insurance 68,625 57,065 68,905 13,934 17,226 25.0% G & A Allocation
4998 - Cost Allocation Plan (CAP) 1,041,462 908,934 950,965 227,234 237,741 25.0% Total G & A Allocation 1,041,462 908,934 950,965 227,234 237,741 25.0% Transfers Out
4999 - Transfers Out 800,532 32,551 187,000 - - 0.0%
Total Transfers Out 800,532 32,551 187,000 - - 0.0%
Capital Outlay
5100 - Capital Outlay - - 148,000 - 0.0%
Total Capital Outlay - - 148,000 - - 0.0%
Debt Service Payments
6100 - Principal 153,305 214,370 97,127 95,437 - 0.0%
6200 - Interest 27,932 25,668 22,761 24,451 - 0.0%
Total Debt Service Payments 181,237 240,038 119,888 119,888 - 0.0% TOTAL 4,684,280 4,014,911 4,282,823 850,207 802,422 18.7% Agenda Item Number 7
Agenda Item Number 7
City Council Meeting Packet of November 4, 2025