Council staff "received direction" from councillors at a meeting last week but could not yet discuss the details, a spokesman said.
Better Off funding was brought in by the previous government to support water reform, and councils used it in various ways to assist community wellbeing.
The new government unpicked aspects of reform, and Minister of Local Government Simeon Brown was critical so little of the funding was being used by councils for Three Waters.
Dunedin Area Citizens Association chairman Lyndon Weggery made the same point during Dunedin City Council annual plan hearings in May, and he was back before the council last week in a public forum segment.
Mr Weggery was aware Better Off funding was to be discussed in the public-
excluded part of the council’s finance and council-controlled organisations committee and he encouraged councillors to ask hard questions.
His broad subject was financial management and accountability.
Mr Weggery said the council needed to curb expenditure, ask the right questions and use rates money in the best way possible, "unlike the Better Off funding debacle".
He also encouraged councillors to spend less energy on "sniping" and more on gelling together to face serious issues.
A city council agenda from March provided indications of where Better Off funding had been allocated.
The agenda referred to operating grant funding worth a little more than $2.5 million.
Better Off funding was deployed for 15 projects and Three Waters received a $240,000 share for a capital project and $635,000 for operating projects.
There were references to it funding two fixed-term positions in waste minimisation.
South Dunedin Future consultancy costs had increased by $643,000, funded through Better Off money.
The council said in a statement last week it was "considering" redirecting some Better Off funding in line with the direction from the government.
Regarding the move from councillors, the spokesman said staff were "progressing ongoing work based on that direction, but we’re not yet able to discuss the details".
Shortly before the committee went into its public-excluded part of the meeting, Cr Carmen Houlahan asked for the Better Off item to be raised as an item for consideration by the committee’s chairman, as it "should be discussed in public".
The committee then excluded the public from the meeting.
Protection of privacy was the reason cited.
