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WATER ENERGY LIFE CITY OF RjVEIZSIDE PUBLIC lag UTILITIES RIVERSIDE PUBLIC UTILITIES Board Memorandum BOARD OF PUBLIC UTILITIES SUBJECT: COST ALLOCATION PLAN UPDATE ISSUE: Receive a report on the City of Riverside Cost Allocation Plan. RECOMMENDATION: DATE: FEBRUARY 26, 2024 That the Board of Public Utilities receive and file a report on the City of Riverside's Cost Allocation Plan. BACKGROUND: On June 21, 2022, the City Council adopted Resolution No. 23866 approving the Fiscal Year (FY) 2022-2024 Biennial Budget. Prior to the second year of the biennium, the City initiated a review and update of the FY 2023/24 adopted budget. An update to the second year of an adopted biennial budget is necessary to ensure the City is proactive and responsive to financial and operational changes. On June 27, 2023, the City Council adopted Resolution No. 24010 approving the amendments to the Fiscal Year 2023/24 Budget. On May 8, 2023, the Board of Public Utilities received proposed amendments to Riverside Public Utilities' (RPU) FY 2023/24 budget. During the discussion, the allocation of General Fund internal support costs to RPU funds was addressed. There are several categories and methods of cost allocation employed in City finances which impact RPU finances, including: • Citywide cost allocation plan: Charges from the City's General Fund internal service departments to recipient funds. • Direct charge of positions: Positions housed in other funds are dedicated, either in full or in part, to RPU support, and the proportional cost of each position is directly charged to RPU funds. • Utilization Charges: Utilization charges represent actual expenses incurred by departments, such as an engineer's time on capital projects. These charges are recorded as they occur. This report focuses on the Citywide cost allocation plan, its purpose, and its impact on RPU funds.