— State of California: Financial Report Year Ended June 30, 2024

State of California Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2024 Malia M. Cohen California State Controller MALIA M. COHEN CALIFORNIA STATE CONTROLLER Cover designed by Sacramento Artist Matteo Borges MALIA M. COHEN CALIFORNIA STATE CONTROLLER September 12, 2025 To the Citizens, Governor, and Members of the Legislature of the State of California: I am pleased to submit the State of California’s Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2024. This report contains useful information designed and presented to assist readers in understanding California’s primary government and discretely presented component unit revenue, totaling $549.5 billion, expenses totaling $537.6 billion, and fiduciary fund assets of over $1.09 trillion. It meets the requirements of Government Code section 12460 for an annual report prepared in accordance with generally accepted accounting principles and contains information to help readers gain a reasonable understanding of California’s financial activities and condition. As fiscal stewards with the responsibility to ensure the accurate accounting of California’s finances, my office has worked diligently over the past three years to restore ACFR publication to its target date in March, which was last achieved in 2018. The production of California’s ACFR is a sizable undertaking that involves highly specialized and detailed accounting of over 1,000 total funds used throughout more than 200 state departments for critical budget programs, as well as more than three dozen component financial statements and independent audits that feed into this publication. Upon becoming State Controller in 2023, I challenged my office to engage and collaborate with all state entities involved in this enormous operation to restore the ACFR publication timeline. With this statewide “Team California” collaboration, including the Governor and his administration, and the Legislature, the ultimate goal of restoring the ACFR publication timeline is not only realistic, but it is attainable. The State Controller’s Office’s (SCO) ability to produce this report is dependent upon several factors, including a partnership with the California Department of Finance and the State’s numerous agencies, departments, boards, and commissions, as well as the ability of the State to meet the requirements of an audit performed in accordance with Government Auditing Standards, administered by the California State Auditor’s Office. While there is no statutory deadline for publishing the ACFR, its completion satisfies several compliance requirements for the State, and the delivery of this ACFR positions California to return to the timely publication of the fiscal year 2024-25 ACFR. 300 Capitol Mall, Suite 1850, Sacramento, CA 95814 | P.O. Box 942850, Sacramento, CA 94250 | Fax: 916.322.4404 sco.ca.gov i California’s economic climate for the fiscal year ended June 30, 2024, included various high and low points. At the onset of the fiscal year, California projected a budget deficit exacerbated by slow revenue growth. Ultimately, due to the Governor’s and Legislature’s actions to reduce spending levels, the deficit was eased by the taxes paid by the highest income earners. California also experienced higher jobless rates compared to those in other states and global instability – all while poised to become the world’s fourth-largest economy in 2024. As noted in the ACFR, for the fiscal year ended June 30, 2024, California’s revenues exceeded expenses by $5.0 billion for the primary government. The General Fund ended the fiscal year in a strong financial position with total revenues of $195.3 billion—an increase of 1.5% over the prior fiscal year—and a cash balance of $67.9 billion at June 30, 2024. Given California’s outsized stature as a global-leading economy, it remains critical for the State to engage in timely and transparent financial reporting reflective of our strong and sustainable systems of fiscal management in light of ongoing geopolitical uncertainty. Team California’s ongoing, multiyear effort has developed a governance structure and operating model, standardized reporting tasks, harnessed technology for greater efficiencies, and provided substantive engagement, technical assistance, and training to departments and agencies on financial reporting. I offer my continued thanks and appreciation to our Team California partners for recognizing that the transparent accounting of the State’s finances upholds California’s fiscal integrity, and more importantly for taking the appropriate action to make financial reporting a priority. I also want to recognize my office’s State Accounting and Reporting Division. In producing this complex financial report and meeting our publication goals, these SCO team members continue to uphold our T.R.U.S.T.E.D. values by delivering excellence and fulfilling our purpose to move California forward so that everyone thrives. Sincerely, Original signed by Malia M. Cohen NOTE: Please see Report Overview beginning on Page v for additional transmittal components. STATE OF CALIFORNIA Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2024 Prepared by the office of M M C . ALIA OHEN California State Controller . Table of Contents California State Controller’s Transmittal Letter........................................................................ i INTRODUCTORY SECTION Report Overview........................................................................................................................ v Principal Officials of the State of California ............................................................................. ix Organization Chart of the State of California............................................................................ x FINANCIAL SECTION Independent Auditor’s Report .................................................................................................. 2 Management’s Discussion and Analysis.................................................................................. 9 BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS Statement of Net Position................................................................................................... 36 Statement of Activities ....................................................................................................... 40 FUND FINANCIAL STATEMENTS Balance Sheet – Governmental Funds................................................................................ 44 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position.................................................................................... 46 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ................................................................................................. 48 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities..................... 50 Statement of Net Position – Proprietary Funds.................................................................. 52 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds ...................................................................................................... 56 Statement of Cash Flows – Proprietary Funds ................................................................... 58 Statement of Fiduciary Net Position – Fiduciary Funds and Similar Component Units.......................................................................................... 62 Statement of Changes in Fiduciary Net Position – Fiduciary Funds and Similar Component Units.......................................................................................... 63 DISCRETELY PRESENTED COMPONENT UNITS FINANCIAL STATEMENTS Statement of Net Position – Discretely Presented Component Units – Enterprise Activity .................................................................................................... 66 Statement of Activities – Discretely Presented Component Units – Enterprise Activity .................................................................................................... 68 NOTES TO THE FINANCIAL STATEMENTS Notes to the Financial Statements – Index ......................................................................... 69 Notes to the Financial Statements ...................................................................................... 73 State of California Annual Comprehensive Financial Report REQUIRED SUPPLEMENTARY INFORMATION Schedule of Changes in Net Pension Liability and Related Ratios – PERF and Single-Employer Plans.............................................................................................. 194 Schedule of State Pension Contributions – PERF and Single-Employer Plans................. 210 Schedule of the State’s Proportionate Share of Net Pension Liability and Schedule of the State’s Contributions – CalSTRS ....................................................................... 216 Schedule of Changes in Net OPEB Liability and Related Ratios – Retiree Health Benefits Program...................................................................................................... 218 Schedule of OPEB Contributions – Retiree Health Benefits Program............................... 232 Infrastructure Assets Using the Modified Approach.......................................................... 237 Budgetary Comparison Schedule – General Fund and Major Special Revenue Funds .......................................................................................................... 242 Reconciliation of Budgetary Basis Fund Balances of the General Fund and Major Special Revenue Funds to GAAP Basis Fund Balances ................................ 244 Notes to the Required Supplementary Information............................................................ 244 COMBINING FINANCIAL STATEMENTS AND SCHEDULES – NONMAJOR AND OTHER FUNDS Nonmajor Governmental Funds ..................................................................................... 249 Combining Balance Sheet .................................................................................................. 252 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances.......... 256 Budgetary Comparison Schedule – Nonmajor Governmental Funds ................................ 260 Internal Service Funds..................................................................................................... 261 Combining Statement of Net Position................................................................................ 262 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position .......... 266 Combining Statement of Cash Flows................................................................................. 268 Nonmajor Enterprise Funds............................................................................................ 273 Combining Statement of Net Position................................................................................ 274 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position .......... 278 Combining Statement of Cash Flows................................................................................. 280 Fiduciary Funds and Similar Component Units – Pension and Other Employee Benefit Trust Funds............................................................................... 285 Combining Statement of Fiduciary Net Position ............................................................... 288 Combining Statement of Changes in Fiduciary Net Position............................................. 290 Private Purpose Trust Funds .......................................................................................... 293 Combining Statement of Fiduciary Net Position ............................................................... 294 Combining Statement of Changes in Fiduciary Net Position............................................. 295 Investment Trust Funds................................................................................................... 297 Combining Statement of Fiduciary Net Position ............................................................... 298 Combining Statement of Changes in Fiduciary Net Position............................................. 299 vi Contents Nonmajor Component Units ........................................................................................... 301 Combining Statement of Net Position................................................................................ 302 Combining Statement of Activities .................................................................................... 306 STATISTICAL SECTION Financial Trends............................................................................................................. 311 Schedule of Net Position by Component ......................................................................... 312 Schedule of Changes in Net Position............................................................................... 314 Schedule of Fund Balances – Governmental Funds ........................................................ 318 Schedule of Changes in Fund Balances – Governmental Funds...................................... 320 Revenue Capacity........................................................................................................... 323 Schedule of Revenue Base............................................................................................... 324 Schedule of Revenue Payers by Income Level/Industry.................................................. 328 Schedule of Personal Income Tax Rates.......................................................................... 330 Debt Capacity ................................................................................................................. 333 Schedule of Ratios of Outstanding Debt by Type............................................................ 334 Schedule of Ratios of General Bonded Debt Outstanding............................................... 336 Schedule of General Obligation Bonds Outstanding ....................................................... 338 Schedule of Pledged Revenue Coverage.......................................................................... 340 Demographic and Economic Information ................................................................... 343 Schedule of Demographic and Economic Indicators....................................................... 344 Schedule of Employment by Industry.............................................................................. 346 Operating Information .................................................................................................. 347 Schedule of Full-time Equivalent State Employees by Function..................................... 348 Schedule of Operating Indicators by Function................................................................. 350 Schedule of Capital Asset Statistics by Function............................................................. 354 Acknowledgments.......................................................................................................................... 358 State of California Annual Comprehensive Financial Report This page intentionally left blank Introductory Section Report Overview General Overview The State’s management assumes responsibility for the accuracy, completeness, and fairness of information presented in the ACFR, including all disclosures, based on a comprehensive framework of internal controls established for this purpose. The internal control structure is designed to provide reasonable, but not absolute, assurance that the financial statements are free of material misstatements. The objective of these controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the Legislature and Governor. The California State Auditor has issued a modified opinion on certain components of the State’s basic financial statements for the year ended June 30, 2024, in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards issued by the Comptroller General of the United States, which warrants additional description: • An unmodified opinion has been issued for the General Fund, Federal Fund, Environmental and Natural Resources Fund, Water Resources Fund, State Lottery Fund, California State University Fund, aggregate remaining fund information, governmental activities within the government- wide Statement of Net Position and Statement of Activities, and aggregate discretely presented component units. • A modified opinion, consisting of a disclaimer of opinion, has been issued for the Statement of Net Position; Statement of Revenues, Expenses, and Changes in Fund Net Position; and Statement of Cash Flows of the Unemployment Programs Fund. • A modified opinion, consisting of a qualified opinion, has been issued for business-type activities within the government-wide Statement of Net Position and Statement of Activities. The two modified opinions are the result of the State’s inability to provide the California State Auditor with sufficient appropriate audit evidence to conclude that certain accounts in the aforementioned financial statements are free from material misstatement. The modified opinions are the result of ongoing financial accounting and reporting challenges experienced by one state department in administering California’s unemployment insurance programs. The State of California is also required to undergo an annual Single Audit in conformity with the provisions of the United States Code of Federal Regulations, Title 2, Part 200, Subpart F, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. This report is issued separately. The Management’s Discussion and Analysis (MD&A) immediately follows the independent auditor’s report and contains an introduction, overview, and analysis of the financial statements. The MD&A also contains information regarding California’s economy for the year ended June 30, 2024, and its economic performance as of and for the year ended June 30, 2025, and beyond. The MD&A complements this report overview and should be read in conjunction with it. Profile of the State of California The State of California was admitted to the Union on September 9, 1850. The State’s population, as of 2024, is estimated to be approximately 40 million residents. The State’s government is divided into three branches: Executive, Legislative, and Judicial. Executive power is vested in the Governor. Other members of the Executive branch include the Lieutenant Governor, Attorney General, Secretary of v State, State Treasurer, State Controller, Insurance Commissioner, and the State Superintendent of Public Instruction. All officers of the Executive branch are elected to a four-year term. The Legislative branch of government is the State’s law-making authority and is made up of two houses: the Senate and the Assembly. The Judicial branch is charged with interpreting the laws of the State. It provides settlement of disputes between parties in controversy, determines the guilt or innocence of those accused of violating laws, and protects the rights of Californians. California’s government includes control agencies that help to regulate internal governmental operations. The State Controller’s Office, the State’s independent fiscal watchdog, ensures that the State’s budget is spent properly, offers fiscal guidance to local governments, reports on the State’s financial position, and uncovers fraud and abuse of taxpayer dollars. The Department of Finance, part of the Executive branch of government, establishes fiscal policies to carry out the State’s programs and serves as the Governor’s chief fiscal policy advisor. The California State Auditor promotes the efficient and effective management of public funds through independent evaluations of state and local governments. The State of California provides a wide range of services to its citizens, including social, health, and human services; transitional kindergarten through 12th grade (TK-12) and higher education; transportation; business, consumer services, and housing; corrections and rehabilitation programs; and other general government services. The State is also financially accountable for legally separate entities (component units) that provide and support post-secondary education programs; provide financing for low and moderate income housing and other public needs; promote agricultural activities; and provide financial assistance to public agencies and small businesses. The State, through its related organizations (organizations for which the primary government is not financially accountable), provides services such as the operation of the statewide energy transmission grid; earthquake insurance for homeowners and renters; workers’ compensation insurance; health insurance for individuals, families, and employees of small businesses; financing for pollution control facilities, and for acquiring, constructing, and equipping health facilities; and loans to students attending public and private nonprofit colleges and universities. The financial information of the related organizations is not included in the State’s financial statements. The State Legislature approves an annual budget that contains estimates of revenues and expenditures for the ensuing fiscal year. This budget is the result of negotiations between the Governor and the Legislature. The State Controller’s Office is statutorily responsible for controlling revenues due the primary government and for expenditures of each appropriation contained in the budget. The State’s annual budget is submitted by the Governor no later than January 10 preceding the beginning of the fiscal year on July 1, and must be approved by the Legislature by June 15 each year. This annual budget serves as the foundation for the State’s financial planning and control. Additional information on the budgetary basis of accounting can be found in Note 3, Budgetary and Legal Compliance, in the Budgetary Comparison Schedule at the end of the nonmajor governmental funds combining statements, and in the Required Supplementary Information section of the ACFR that follows the Notes to the Financial Statements. Overview of the State’s Economy California’s economy, the largest among the 50 states, accounted for 14.0% of the U.S. Gross Domestic Product (GDP) in 2024 and grew to rank fourth largest in the world (in terms of GDP) at the end of the year. Sectors of California’s diverse economy include technology, trade, entertainment, manufacturing, government, tourism, construction, and services. California’s GDP totaled $4.1 trillion at fiscal year-end and, as the nation’s leader in agricultural production, the state’s farming operations generated approximately $59.4 billion in cash receipts for the 2023 crop year. In 2024, California exported $183.3 billion in products; its three largest export markets are Mexico ($33.5 billion), Canada ($18.4 billion), and China ($15.1 billion). California’s six largest exports are computer and electronic products, machinery (except electrical), chemicals, transportation equipment, agricultural products, and miscellaneous manufactured commodities. California enjoys one of the finest and most diverse vi collections of natural, cultural, and recreational resources in the nation. In 2024, California’s travel and tourism industry generated revenues of $157.3 billion, a 3.0% increase over the previous year, and travel-generated state and local tax revenues of $12.6 billion, a 3.1% increase over the previous year. Budget Outlook Fiscal Year 2024-25 The State’s enacted fiscal year 2024-25 Budget took steps to set California on a fiscally responsible long-term path, after the State experienced troublesome delays in General Fund cash receipts during fiscal year 2023-24. The 2023-24 delays were caused by an emergency postponement of tax filing and payment deadlines by the Franchise Tax Board in response to statewide flooding in early 2023, which affected 99% of California taxpayers. The enacted Budget projected General Fund revenues of $212.1 billion after a $4.9 billion transfer from the Budget Stabilization Account (BSA), California’s “rainy day” fund. The 2024-25 Budget authorized the withdrawal of $12.2 billion in funds from the BSA over two years to address structural budget issues and allow for greater budget resiliency. Fiscal Year 2025-26 California enacted the 2025-26 Budget Act on June 27, 2025, during a time of economic uncertainty resulting from federal policy changes imposed by the new administration, including sweeping tariffs and presumed significant funding cuts to states. In addition, significant growth in Medi-Cal and other core state programs resulted in a General Fund shortfall of $11.8 billion. The Budget aims to close this gap by leveraging reserves and reducing expenditure growth of critical state programs while maintaining funding for multiple initiatives that continue to improve the lives of Californians. By the end of the fiscal year 2025-26, the Budget estimates a decrease in total reserves by $6.5 billion, to $15.7 billion, consisting of $11.2 billion in the BSA and $4.5 billion in the Special Fund for Economic Uncertainties. The 2025-26 Budget projects General Fund revenue of $215.7 billion ($250.9 billion after transfers) and expenditures of $228.4 billion. The Budget anticipates increased revenues from sales and use taxes, and decreased revenues from personal income taxes and corporation taxes. The Budget estimates that personal income taxes will contribute to the majority of General Fund revenue, at 60.4% ($126.0 billion); corporation taxes are estimated to contribute 17.1% ($35.6 billion); and sales and use taxes are estimated to contribute 16.7% ($34.9 billion). Long-term Financial Planning Long-term financial planning issues and initiatives that will affect the State’s long-term financial goals include the following: • California’s economy has maintained a steady growth pattern in spite of the uncertainty surrounding the impact of federal policy changes from the new administration. The 2025-26 Budget reflects an overall decrease in expected General Fund revenues of 6.0% from the prior year. The State’s “Big Three” General Fund revenue sources—personal income taxes, sales taxes, and corporation taxes—are projected to decrease by 2.6% from the prior year. The Budget anticipates that fiscal year 2025-26 personal income tax revenues will decrease from $126.3 billion in the previous fiscal year to $126.0 billion, sales and use tax revenues will increase from $33.7 billion to $34.9 billion, and corporation tax revenues will decrease from $41.7 billion to $35.6 billion. • The Consumer Price Index increased 2.7% during the year ended June 30, 2025. The food index increased 3.0%, and the shelter index increased 3.8%. The energy index decreased by 0.8%. These indices have normalized in comparison to the high inflation in the aftermath of the pandemic. vii • Between March 17, 2022, and July 27, 2024, the Federal Reserve Board increased interest rates by 525 basis points. Since July 27, 2024, the Federal Reserve Board has decreased interest rates by 100 basis points, with the last decrease on December 19, 2024. In addition to economic impacts, the net increase in interest rates of 425 basis points will continue to impact the State’s future cost of borrowing. • The 2025-26 Budget Act reflects the State’s commitment to addressing the unfunded pension liabilities over the long term. The Budget includes $584 million in one-time Proposition 2 debt repayment funding to further reduce the unfunded liabilities of the State’s pension plans. Depending on the availability of Proposition 2 funding, an additional $2.1 billion is projected to be paid to CalPERS over the next two fiscal years to fund the State’s pension liabilities. • The State’s employee bargaining units and excluded and exempt employees prefund retiree health benefits. To pay future retiree health benefits, the State has accumulated more than $9.0 billion in a prefunding trust as of June 30, 2024, and $11.6 billion as of June 30, 2025. Due to budget shortfalls, the State has temporarily suspended prefunding contributions to the trust for fiscal year 2025-26 for most employee collective bargaining units; however, the State remains committed to fully fund the trust in the long term. • The 2024 fire season saw a substantial increase in the number and magnitude of wildfires in the state, with approximately one million acres burned. The 2025 fire season total acreage burned was lower, with approximately 517,341 acres burned. The 2025-26 Budget Act includes a $10.0 billion Climate Bond (Proposition 4) which includes $1.5 billion reserved to reduce the risk of severe and destructive wildfires. The Budget Act also includes adjustments of $3.3 billion from the General Fund to the Greenhouse Gas Reduction Fund over four years to support the State’s fire protection activities. • California continues to face serious climate challenges, including heat waves, droughts, floods, and wildfires, which have caused widespread damage and displacement. In response, the State is investing heavily in climate initiatives. The 2025-26 Budget Act includes a $10.0 billion Climate Bond (Proposition 4), to reduce pollution, support clean energy, and achieve the State’s climate goals. viii California State Controller’s Transmittal Letter Principal Officials of the State of California Executive Branch Gavin Newsom Governor Eleni Kounalakis Lieutenant Governor Malia M. Cohen State Controller Rob Bonta Attorney General Fiona Ma, CPA State Treasurer Dr. Shirley N. Weber Secretary of State Tony Thurmond Superintendent of Public Instruction Ricardo Lara Insurance Commissioner Board of Equalization Ted Gaines, Member, First District Sally J. Lieber, Member, Second District Antonio Vazquez, Member, Third District Mike Schaefer, Member, Fourth District Legislative Branch Mike McGuire President pro Tempore, Senate Robert Rivas Speaker of the Assembly Judicial Branch Patricia Guerrero Chief Justice, State Supreme Court ix State of California Annual Comprehensive Financial Report Organization Chart of the State of California Citizens of the State j Legislative Executive Judicial I I I I I I I State ... Lieutenant State Judicial Senate Assembly Governor Supreme Controller Governor Council Court State Commission State Board of _ Superintendent Courts of - on Judicial Equalization of Public Appeal Performance Instruction Habeas Insurance ~ I'< State Superior ... Corpus Commissioner Courts Resource Center T<N'"'"' l Commission Secretary of State Bar of State ... ~ !~;r:y California ... on Judicial ~ I Appointments ~ ' I 'I I I '1- I I "---- Business Board of Consumer Office of Officeo~~ Office of Government Governors State Board of Student Aid Business and Use and Services and ency Operations C C om ol m leg u e n s it y Education\ Commission Housing De E v c e o l n o o p m m i e c n t In C n l o im va a t t i e o n ~ ces Agency Agency ' I I ' I I I I ' I ' University of Trustees of Fair Political Department of ~tal California Transportation Corrections State State Lottery Practices Board of Agency and n Universities Commission Regents Rehabilitation Y " I I I I I I I Labor and Health and Board of State Office of Delta Department of ~orkforce Department of Human and Inspector Stewardship Arts Council Food and Deve1op11,.,m:--ts Finance Services Community General Council Agriculture Agency r---[\.__ Agency Corrections L-.=aa...__1.----' I I I I I I I I Commission Natural De,2=arntt Office of on Peace Public Utilities Military State Public State Office of,\ Resources of Veteran Service and Tax Officer Commission Department Defender Library Agency Affairs \ommunity Appeals Standards L- x Financial Section Grant Parks StateAuditor Mike Tilden Chief Deputy Independent Auditor’s Report THE GOVERNOR AND THE LEGISLATURE OF THE STATE OF CALIFORNIA Qualified, Unmodified, and Disclaimer of Opinions We have audited the accompanying financial statements of the governmental activities, the business- type activities, the aggregate discretely presented component units, each major fund except for the Unemployment Programs Fund, and the aggregate remaining fund information; and we were engaged to audit the Unemployment Programs Fund of the State of California, as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the State of California’s basic financial statements as listed in the table of contents. Summary of Opinions OPINION UNIT TYPE OF OPINION Governmental Activities………………………………………… ………Unmodified Business-Type Activities………………………………………... …...….Qualified Aggregate Discretely Presented Component Units……………… ……....Unmodified General Fund…………………………………………………….. ……....Unmodified Federal Fund…………………………………………………….. ………Unmodified Environmental and Natural Resources Fund……………………. ......…..Unmodified Water Resources Fund…………………………………………... …...….Unmodified State Lottery Fund………………………………………………. ……....Unmodified Unemployment Programs Fund…………………………………. ………Disclaimer California State University Fund………………………………... …...….Unmodified Aggregate Remaining Fund Information………………………... ……....Unmodified Disclaimer of Opinion on the Unemployment Programs Fund We do not express an opinion on the financial statements of the Unemployment Programs Fund. Because of the significance of the matter described in the Basis for Disclaimer of Opinion on the Unemployment Programs Fund section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements of the Unemployment Programs Fund. Qualified Opinion on Business-Type Activities In our opinion, based on our audit and the reports of other auditors, except for the effects of the matter described in the Basis for Qualified and Unmodified Opinions section of our report, the financial statements referred to above present fairly, in all material respects, the financial position of the Business-Type Activities of the State of California, as of June 30, 2024, and the changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. 621 Capitol Mall, Suite 1200 Sacramento, CA 95814 I 916.445.0255 916.323.0913 fax I www.auditor.ca.gov Unmodified Opinions on Each of the Other Opinion Units In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, aggregate discretely presented component units, each major fund except for the Unemployment Programs Fund, and the aggregate remaining fund information of the State of California, as of June 30, 2024, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. We did not audit the financial statements of the following: Government-wide Financial Statements • Certain governmental funds that, in the aggregate, represent 1 percent of the assets and deferred outflows, and less than 1 percent of the revenues of the governmental activities. • Certain enterprise funds that, in the aggregate, represent 86 percent of the assets and deferred outflows, and 58 percent of the revenues of the business-type activities. • The University of California and the California Housing Finance Agency that represent 92 percent of the assets and deferred outflows, and 95 percent of the revenues of the discretely presented component units. Fund Financial Statements • The following major enterprise funds: Water Resources, State Lottery, and California State University. • The Golden State Tobacco Securitization Corporation, the Public Buildings Construction, the Public Employees’ Retirement, the State Teachers’ Retirement, the State Water Pollution Control Revolving, the Safe Drinking Water State Revolving, and the 1943 Veterans Farm and Home Building funds, that represent 86 percent of the assets and deferred outflows, and 48 percent of the additions, revenues, and other financing sources of the aggregate remaining fund information. • The discretely presented component units noted above. The related financial statements were audited by other auditors whose reports have been furnished to us, and our opinions, insofar as they relate to the amounts included for those funds and entities, are based solely on the reports of the other auditors. Basis for Disclaimer of Opinion on the Unemployment Programs Fund The Employment Development Department had inadequate internal control over its financial reporting for unemployment benefits. As a result, the department was unable to provide complete and accurate accounting information supporting the financial activity of the State’s unemployment program. The condition of the department’s records did not permit us, nor was it practicable to extend other auditing procedures, to obtain sufficient appropriate evidence to conclude that Cash and Pooled Investments, Amount on Deposit with U.S. Treasury, Due to Other Governments, Unemployment and Disability Insurance, and Distributions to Beneficiaries, within the Unemployment Programs Fund are free of material misstatement. In addition, the lack of sufficient appropriate evidence precluded us from determining whether the omission of a material amount of $768 million should be reported as Non-Operating Revenues or as a Special Item. As a result of this matter, we were unable to determine whether further audit adjustments to these accounts were necessary. The issues described above also caused material misstatements of $768 million in Distributions to Beneficiaries and $580 million in Due to Other Governments. Basis for Qualified and Unmodified Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States of America. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. The financial statements of the Golden State Tobacco Securitization Corporation, the Public Buildings Construction fund, the State Lottery fund, and the Campus Foundations of the University of California, which represent 14 percent of the university’s total assets and deferred outflows, and 2 percent of its revenues, were not audited in accordance with Government Auditing Standards. We are required to be independent of the State of California, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified and unmodified audit opinions. Matter Giving Rise to the Qualified Opinion on Business-Type Activities The issues we discuss in the Basis for Disclaimer of Opinion on the Unemployment Programs Fund section of our report also affect the Business-Type Activities. Therefore, we were unable to obtain sufficient appropriate evidence about the Unemployment Programs Fund balances that represent 37 percent of Cash and Pooled Investments, 98 percent of Due to Other Governments, 100 percent of Unemployment Programs Expenses, and 100 percent of Unemployment Programs Revenues, within Business-Type Activities. Emphasis of Matter As described in Note 2 to the financial statements, in 2024, the State of California restated the beginning fund balance of the Federal Fund and beginning net position of Governmental Activities to correct prior year errors, primarily related to the unemployment program. Our opinions are not modified with respect to this matter. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the State of California’s ability to continue as a going concern for 12 months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the State of California’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the State of California’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control- related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, and other required supplementary information as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We and other auditors have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the State of California’s basic financial statements. The combining financial statements and schedules of nonmajor and other funds are presented for the purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures by us and other auditors, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures, in accordance with auditing standards generally accepted in the United States of America. In our opinion, based on our audit and the reports of the other auditors, the combining financial statements and schedules of nonmajor and other funds are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 5, 2025, on our consideration of the State of California’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the State of California’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the State of California’s internal control over financial reporting and compliance. CALIFORNIA STATE AUDITOR LINUS LI, CPA Deputy State Auditor Sacramento, California September 5, 2025 This page intentionally left blank Management’s Discussion and Analysis The following Management’s Discussion and Analysis is required supplementary information to the State of California’s financial statements. It describes and analyzes the financial position of the State, providing an overview of the State’s activities for the fiscal year ended June 30, 2024. We encourage readers to consider the information that we present here in conjunction with the information presented in the Controller’s transmittal letter at the front of this report and in the State’s financial statements and notes, which follow this section. Financial Highlights – Primary Government Government-wide Highlights Despite softness in the state’s labor market and inflation driving consumer spending into decline, California bounded into a year of overall revenue growth for the primary government in fiscal year 2023-24. General revenues, comprised primarily of taxes, increased by $10.9 billion (4.8%), compared to a decrease of $6.9 billion (2.9%) recorded for fiscal year 2022-23. This revenue increase was attributable in part to an increase in state tax collections from high income earning Californians, who saw an increase in bonuses and stock-based compensation driven by an active stock market inspired by advances in artificial intelligence. The State’s managed care organization (MCO) enrollment tax, intended to generate funding to offset Medi-Cal programs, increased by $7.0 billion, which also contributed largely to the increase in general revenues. As of June 30, 2024, the Budget Stabilization Account, California’s “Rainy Day Fund,” held reserves of $22.6 billion, and accounted for a significant portion of the State’s $37.8 billion in total budgetary reserves. Expenses and transfers for the State’s governmental activities increased by $31.0 billion (7.6%), and were less than total revenues received, resulting in a $7.1 billion increase in the governmental activities’ net position, as restated. Total expenses for the State’s business-type activities exceeded total revenues and transfers, resulting in a $2.1 billion decrease in the business-type activities’ net position, as restated, for fiscal year 2023-24. For fiscal year 2023-24, the State implemented GASB Statement No. 100, Accounting Changes and Error Corrections – An Amendment of GASB Statement No. 62, which is intended to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, consistent, and relevant information for decision-making and assessing accountability. As a result of the implementation, the primary government’s beginning net position increased by $47.5 billion due to the correction of errors that affected loan receivables, capital assets, deferred receivables, pollution remediation obligations, and other liabilities. The largest component of the error corrections was a restatement related to the State’s unemployment programs, which increased the beginning net position of governmental activities by $46.2 billion. See Note 2 for additional details related to accounting changes and error corrections. Net Position – The primary government ended fiscal year 2023-24 with a net position of $14.6 billion, an increase of $5.0 billion (52.5%) from the previous year, as restated. The total net position is reduced by $138.0 billion for net investment in capital assets and by $77.1 billion for restricted net position, yielding a negative unrestricted net position of $200.5 billion. Restricted net position is dedicated for specified uses and is not available to fund current activities. Approximately 90.8%, or $182.1 billion, of the negative $200.5 billion unrestricted net position consists of unfunded, employee-related, long-term liabilities (net pension liability, net other post employment benefits liability, and compensated absences) that are recognized as soon as an obligation occurs, even though payment will occur over many future periods. In addition, the State’s outstanding bonded debt consists of $66.2 billion to build capital assets 9 State of California Annual Comprehensive Financial Report of school districts and other local governmental entities. Bonded debt reduces the State’s unrestricted net position; however, local governments, not the State, own the capital assets that would normally offset this reduction. Fund Highlights Governmental Funds – As of June 30, 2024, the primary government’s governmental funds reported a combined ending fund balance of $123.4 billion, an increase of $1.0 billion over the prior fiscal year fund balance, as restated. The unrestricted fund balance, comprised of committed, assigned, and unassigned balances, was $51.4 billion, an increase of $46.4 billion over the prior year unrestricted fund balance of $5.0 billion. The prior year unrestricted fund balance did not reflect the $46.2 billion prior-period adjustment to the Federal Fund resulting from error corrections related to the State’s unemployment programs. The nonspendable and restricted fund balances were $3.6 billion and $68.4 billion, respectively. Proprietary Funds – As of June 30, 2024, the primary government’s proprietary funds reported a combined ending deficit net position of $21.0 billion, a decrease of $2.1 billion from the prior fiscal year, as restated. The total net position is reduced by $4.5 billion for net investment in capital assets, expendable restrictions of $8.7 billion, and nonexpendable restrictions of $2 million, yielding a negative unrestricted net position of $34.2 billion. Noncurrent Assets and Liabilities As of June 30, 2024, the primary government’s noncurrent assets totaled $200.2 billion, of which $177.8 billion is related to capital assets. State highway infrastructure assets of $85.2 billion represent the largest portion of the State’s capital assets, while buildings and other depreciable property are the second largest portion at $63.6 billion. The primary government’s noncurrent liabilities totaled $305.6 billion, consisting of $182.1 billion in unfunded employee-related future obligations, $76.1 billion in general obligation bonds, $30.3 billion in revenue bonds, and $17.1 billion in other noncurrent liabilities. During fiscal year 2023-24, the primary government’s noncurrent liabilities increased by $7.0 billion (2.3%) from the previously reported noncurrent liabilities. The net increase in noncurrent liabilities is driven by an increase of $2.6 billion in net pension liability and an increase of $2.3 billion in net other post-employment benefits (OPEB) liability. Overview of the Financial Statements This discussion and analysis is an introduction to the section presenting the State’s basic financial statements, which include four components: (1) government-wide financial statements, (2) fund financial statements, (3) discretely presented component units financial statements, and (4) notes to the financial statements. This report also contains required supplementary information, and combining financial statements and schedules intended to furnish additional detail that supports the basic financial statements. Government-wide Financial Statements Government-wide financial statements are designed to provide readers with a broad overview of the State’s finances. The government-wide financial statements do not include fiduciary programs and 10 Management’s Discussion and Analysis activities of the primary government and component units because fiduciary resources are not available to support state programs. The statements provide both short-term and long-term information about the State’s financial position to help readers assess the State’s economic condition at the end of the fiscal year. These statements are prepared using the economic resources measurement focus and the accrual basis of accounting, similar to methods used by most businesses. These statements take into account all revenues and expenses connected with the fiscal year, regardless of when the State received or paid the cash. The government-wide financial statements include two statements: the Statement of Net Position and the Statement of Activities. • The Statement of Net Position presents all of the State’s financial and capital resources in a format in which assets and deferred outflows of resources equal liabilities and deferred inflows of resources, plus net position. Over time, increases or decreases in net position indicate whether the financial position of the State is improving or deteriorating. • The Statement of Activities presents information showing how the State’s net position changed during the most recent fiscal year. The State reports changes in net position as soon as the event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, this statement reports revenues and expenses for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). This statement also presents a comparison between direct expenses and program revenues for each function of the State. The government-wide financial statements separate into different columns the three types of state programs and activities—governmental activities, business-type activities, and component units. • Governmental activities are mostly supported by taxes, such as personal income and sales and use taxes, and intergovernmental revenues, primarily federal grants. Most services and expenses normally associated with state government fall into this activity category, including general government; education (public TK–12 schools and institutions of higher education); health and human services; natural resources and environmental protection; business, consumer services, and housing; transportation; corrections and rehabilitation; and interest on long-term debt. • Business-type activities typically recover all or a significant portion of their costs through user fees and charges to external users of goods and services. The business-type activities of the State of California include providing unemployment insurance programs, providing housing loans to California veterans, providing water to local water districts, providing services to California State University students, selling California State Lottery tickets, selling electric power, and providing wildfire prevention programs. These activities are conducted with minimal financial assistance from the governmental activities or general revenues of the State. • Component units are organizations that are legally separate from the State, but for which the State is financially accountable, or whose relationship with the State is so significant that their exclusion would cause the State’s financial statements to be misleading or incomplete. Various types of component units are presented; all are legally separate. However, blended component units function as part of the State’s operations. Fiduciary component units are primarily the resources and 11 State of California Annual Comprehensive Financial Report operations of the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System. Discretely presented component units contain some form of accountability either from or to the State. Most component units prepare their own separately issued financial statements. For information regarding obtaining the financial statements of the individual component units, refer to Note 1A, Reporting Entity. Fund Financial Statements The State of California, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal and contractual requirements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. All of the funds of the State may be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. • Governmental funds are used to account for essentially the same functions that are reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on short-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s short-term financing requirements. This approach is known as the flow of current financial resources measurement focus and the modified accrual basis of accounting. These governmental fund statements provide a detailed short-term view of the State’s finances, enabling readers to determine whether adequate financial resources exist to meet the State’s current needs. Because governmental fund financial statements provide a narrower focus than do government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s short-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate comparison between governmental funds and governmental activities. Primary differences between the government-wide and fund-based statements relate to noncurrent assets, such as land and buildings, and noncurrent liabilities, such as bonded debt and amounts owed for net pension liability, compensated absences, and lease obligations. These amounts are reported in the government-wide statements but not in the fund-based statements. • Proprietary funds show activities that operate more like those found in the private sector. The State of California has two proprietary fund types—enterprise funds and internal service funds. ◦ Enterprise funds record activities for which a fee is charged to external users; they are presented as business-type activities in the government-wide financial statements. ◦ Internal service funds accumulate and allocate costs internally among the State’s various functions. For example, internal service funds provide public buildings construction, information 12 Management’s Discussion and Analysis technology, printing, fleet management, and architectural services primarily for state departments. As a result, their activity is considered governmental. • Fiduciary funds account for resources held for the benefit of parties outside the State. Fiduciary funds and the activities of fiduciary component units are not reflected in the government-wide financial statements because the resources of these funds are not available to support state programs. The accounting used for fiduciary funds and similar component units is similar to that used for trusts. Discretely Presented Component Units Financial Statements The State has financial accountability for discretely presented component units, which have certain independent qualities and operate in a similar manner to private sector businesses. The activities of the discretely presented component units are classified as enterprise activities. Notes to the Financial Statements The notes to the financial statements in this publication provide additional information that is essential for a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements, which describe particular accounts in more detail, immediately follow the discretely presented component units’ financial statements. Required Supplementary Information A section of required supplementary information follows the notes to the basic financial statements in this publication. This section includes several schedules of information for the State’s pension and OPEB plans and the State’s contributions to those plans; information on infrastructure assets based on the modified approach; a budgetary comparison schedule; and a reconciliation of the budgetary basis and the GAAP basis fund balances for the major governmental funds presented in the governmental fund financial statements. Combining Financial Statements and Schedules The Combining Financial Statements and Schedules–Nonmajor and Other Funds section presents combining statements that provide separate financial statements for nonmajor governmental funds, nonmajor proprietary funds, fiduciary funds, and nonmajor component units as supplementary information. The basic financial statements present only summary information for these activities. Government-wide Financial Analysis Net Position The primary government’s combined net position (governmental and business-type activities) improved by $5.0 billion (52.5%), from $9.6 billion, as restated, to $14.6 billion at June 30, 2024. The fiscal year 2023-24 beginning balance restatements were mainly due to error corrections of $46.2 billion to the Federal Fund in estimating the State’s liability to the federal government for pandemic unemployment programs that began in fiscal year 2019-20. The primary government’s $138.0 billion net investment in capital assets, such as land, buildings, equipment, and infrastructure (roads, bridges, and other immovable assets), comprise a significant 13 State of California Annual Comprehensive Financial Report portion of its net position. This component of net position consists of capital assets net of any outstanding debt used to acquire those assets. The State uses capital assets when providing services to citizens; consequently, these assets are not available for future spending. Although the State’s investment in capital assets is reported net of related debt, the resources needed to repay this debt must come from other sources because the State cannot use the capital assets to pay off the liabilities. The primary government’s net position includes another $77.1 billion, which represents resources that are externally restricted as to how they may be used, such as resources pledged to debt service. The internally imposed earmarking of resources is not presented in this publication as restricted net position. As of June 30, 2024, the primary government’s combined unrestricted deficit net position was $200.5 billion—$168.2 billion for governmental activities and $32.3 billion for business-type activities. Table 1 presents condensed financial information derived from the Statement of Net Position for the primary government. Table 1 Net Position – Primary Government – Two-year Comparison June 30, 2024 and 2023 (amounts in millions) Governmental Activities Business-type Activities Total 2024 2023 2024 2023 2024 2023 ASSETS Current and other assets ............................. $ 245,935 $ 247,267 $ 30,446 $ 31,112 $ 276,381 $ 278,379 Capital assets.............................................. 159,526 154,278 18,270 17,302 177,796 171,580 Total assets ............................................ 405,461 401,545 48,716 48,414 454,177 449,959 DEFERRED OUTFLOWS OF RESOURCES 41,663 42,404 6,281 6,236 47,944 48,640 Total assets and deferred outflows of resources....................... $ 447,124 $ 443,949 $ 54,997 $ 54,650 $ 502,121 $ 498,599 LIABILITIES Noncurrent liabilities.................................. $ 262,718 $ 257,664 $ 42,869 $ 40,931 $ 305,587 $ 298,595 Other liabilities........................................... 124,821 175,453 24,578 22,766 149,399 198,219 Total liabilities....................................... 387,539 433,117 67,447 63,697 454,986 496,814 DEFERRED INFLOWS OF RESOURCES 25,150 31,108 7,341 8,621 32,491 39,729 Total liabilities and deferred inflows of resources......................... 412,689 464,225 74,788 72,318 487,477 536,543 NET POSITION Net investment in capital assets ................. 134,089 131,322 3,867 3,538 137,956 134,860 Restricted.................................................... 68,518 66,645 8,631 9,902 77,149 76,547 Unrestricted ................................................ (168,171) (218,243) (32,289) (31,108) (200,460) (249,351) Total net position (deficit).................... 34,436 (20,276) (19,791) (17,668) 14,645 (37,944) Total liabilities, deferred inflows of resources, and net position......... $ 447,125 $ 443,949 $ 54,997 $ 54,650 $ 502,122 $ 498,599 Note: Prior-year adjustments recorded in the current year have not been reflected in the prior-year column due to the complexity and quantity of adjustments to various accounts. Refer to Note 2 Accounting Changes and Error Corrections for details of current-year adjustments. A significant factor contributing to the unrestricted net position is that governments recognize a liability on the government-wide Statement of Net Position as soon as an obligation occurs, while financing and budgeting functions focus on when a liability will be paid. As of June 30, 2024, the primary government recognized $182.1 billion (90.8% of the $200.5 billion unrestricted net position) in unfunded 14 Management’s Discussion and Analysis employee-related obligations—net pension liability, net OPEB liability and compensated absences. In addition, the primary government recognized $66.2 billion in outstanding bonded debt issued to build capital assets for school districts and other local governmental entities, a common state practice nationwide. As the State does not own these capital assets, neither the assets nor the related bonded debt is included in the portion of net position reported as net investment in capital assets. Instead, the bonded debt is reported as a noncurrent liability that increases the State’s unrestricted deficit net position. The State can expect continued deficits in the unrestricted net position of governmental activities as long as it has significant unfunded employee-related obligations and outstanding obligations for school districts and other local governmental entities. Chart 1 presents a two-year comparison of the State’s net position. Chart 1 Net Position – Primary Government – Two-year Comparison June 30, 2024 and 2023 (amounts in billions) Net Investment in 138.0 Capital Assets 134.9 77.2 Restricted 76.5 -200.5 Unrestricted -249.4 $-300 $-250 $-200 $-150 $-100 $-50 $0 $50 $100 $150 ■ 2024 □ 2023 Changes in Net Position The expenses of the primary government totaled $478.6 billion for the fiscal year ended June 30, 2024. Of this amount, $245.0 billion (51.2%) was funded with program revenues (charges for services or program-specific grants and contributions), leaving $233.6 billion to be funded with general revenues (mainly taxes). The primary government’s general revenues of $238.6 billion were greater than the unfunded expenses. As a result, the total net position, as restated, increased by $5.0 billion. 15 State of California Annual Comprehensive Financial Report Table 2 presents condensed financial information derived from the Statement of Activities for the primary government. Table 2 Changes in Net Position – Primary Government – Two-year Comparison Years ended June 30, 2024 and 2023 (amounts in millions) Governmental Activities Business-type Activities Total 2024 2023 2024 2023 2024 2023 REVENUES Program Revenues: Charges for services ...................................... $ 45,618 $ 39,707 $ 31,625 $ 30,367 $ 77,243 $ 70,074 Operating grants and contributions ............... 161,736 147,292 3,326 2,797 165,062 150,089 Capital grants and contributions.................... 2,699 1,847 — — 2,699 1,847 General Revenues: Taxes ............................................................. 234,505 224,274 — — 234,505 224,274 Investment and interest.................................. 3,286 2,597 — — 3,286 2,597 Miscellaneous................................................ 848 876 — — 848 876 Total revenues.......................................... 448,692 416,593 34,951 33,164 483,643 449,757 EXPENSES Program Expenses: General government ...................................... 30,365 24,946 — — 30,365 24,946 Education....................................................... 104,989 100,497 — — 104,989 100,497 Health and human services............................ 239,312 219,032 — — 239,312 219,032 Natural resources and environmental protection................................................... 15,844 13,315 — — 15,844 13,315 Business, consumer services, and housing ...................................................... 4,588 5,642 — — 4,588 5,642 Transportation ............................................... 22,097 19,100 — — 22,097 19,100 Corrections and rehabilitation ....................... 16,282 18,205 — — 16,282 18,205 Interest on long-term debt ............................. 3,780 3,705 — — 3,780 3,705 Water Resources............................................ — — 1,624 1,460 1,624 1,460 State Lottery .................................................. — — 9,362 9,291 9,362 9,291 Unemployment Programs.............................. — — 18,212 15,534 18,212 15,534 California State University............................ — — 11,868 10,878 11,868 10,878 Other enterprise programs............................. — — 273 279 273 279 Total expenses .......................................... 437,257 404,442 41,339 37,442 478,596 441,884 Excess (deficiency) before transfers ..... 11,435 12,151 (6,388) (4,278) 5,047 7,873 Gain/loss on early extinguishment of debt.... (3) 23 — — (3) 23 Transfers........................................................ (4,265) (6,047) 4,265 6,047 — — Change in net position................................... 7,167 6,127 (2,123) 1,769 5,044 7,896 Net position (deficit), beginning, as previously reported......................................... (20,276) (26,403) (17,668) (19,437) (37,944) (45,840) Error corrections............................................ 47,544 — — — 47,544 — Net position (deficit), beginning, as restated 27,268 (26,403) (17,668) (19,437) 9,600 (45,840) Net position (deficit), ending .......................... $ 34,435 $ (20,276) $ (19,791) $ (17,668) $ 14,644 $ (37,944) Note: Prior-year adjustments recorded in the current year have not been reflected in the prior-year column. Refer to Note 2 Accounting Changes and Error Corrections for details of current year adjustments. 16 Management’s Discussion and Analysis Governmental Activities During fiscal year 2023-24, governmental activities’ expenses and transfers totaled $441.5 billion. Program revenues totaling $210.1 billion, including $164.4 billion in federal grants and contributions, funded 47.6% of expenses and transfers, leaving $231.5 billion to be funded with general revenues (mainly taxes). General revenues for governmental activities of $238.6 billion exceeded net unfunded expenses and transfers by $7.1 billion, resulting in the governmental activities’ net position of $34.5 billion after restatement, as of June 30, 2024, an increase from the prior year’s restated net position of $27.3 billion. Chart 2 presents a comparison of governmental activities’ expenses to related revenue by program. Chart 2 Program Revenues and Expenses – Governmental Activities Year ended June 30, 2024 (amounts in billions) 13.5 General government 30.4 17.8 Education 105.0 148.7 Health and human services 239.3 15.6 Transportation 22.1 0.1 Corrections and rehabilitation 16.3 14.3 Other programs 24.2 $0 $40 $80 $120 $160 $200 $240 ■ Program Revenues □ Expenses For the fiscal year ended June 30, 2024, total governmental activities’ revenue was $448.7 billion, an increase of 7.7% from the prior year. General revenues increased by $10.9 billion (4.8%), to $238.6 billion, and program revenues increased by $21.2 billion (11.2%), to $210.1 billion. Personal income taxes increased by $1.7 billion (1.5%) from the prior year in fiscal year 2023-24, primarily due to an increase in collections from high-income-earning Californians, who saw an increase in bonuses and stock-based compensation. Corporation taxes rose marginally, by $780 million (2.1%) over the prior year, due to growth in retail sales earnings fueled by inflation. Sales and use taxes decreased by $232 million (0.4%) from the prior year due to a decline in consumer spending on services fueled by inflation. Additionally, the State’s MCO tax contributed a $7.0 billion increase to general revenues, and is expected to be a continuous revenue source due to voter approval of Proposition 35 in November 2024. 17 State of California Annual Comprehensive Financial Report Chart 3 presents the percentage of total revenues by source for each governmental activities program. Chart 3 Revenues by Source Year ended June 30, 2024 (as a percent) Personal income tax 25.9% Sales and use tax 11.9% Corporation tax 8.4% Charges for services 10.2% Other revenue 7.0% Grants and contributions 36.6% Overall, expenses for governmental activities increased by $32.8 billion (8.1%) from the prior year, to $437.3 billion. The largest increase in expenditures, $20.3 billion (9.3%), occurred in health and human services due to expansion of the Medi-Cal program. Other increases in expenditures include an increase of $5.4 billion (21.7%) in general government and an increase of $4.5 billion (4.5%) in education expenditures. Chart 4 presents the percentage of total expenses for each governmental activities program. Chart 4 Expenses by Program Year ended June 30, 2024 (as a percent) Education 24.0% I General government 6.9% Corrections and rehabilitation 3.7% Transportation 5.1% Other 5.5% Health and human services 54.8% Business-type Activities As of June 30, 2024, business-type activities’ expenses totaled $41.4 billion. Program revenues of $35.0 billion, primarily generated from charges for services, and $4.3 billion in transfers, were not sufficient to cover these expenses. As a result, the restated business-type activities’ net position decreased from a deficit of $17.7 billion, to a deficit of $19.8 billion at June 30, 2024, a decrease of $2.1 billion. 18 Management’s Discussion and Analysis Chart 5 presents a two-year comparison of the expenses of the State’s business-type activities. Chart 5 Expenses – Business-type Activities – Two-year Comparison Years ended June 30, 2024 and 2023 (amounts in billions) 1.6 Water Resources 1.5 9.4 State Lottery 9.3 18.1 Unemployment Programs 15.4 11.9 California State University 10.9 0.3 Other enterprise programs 0.3 $0 $5 $10 $15 $20 ■ 2024 □ 2023 Fund Financial Analysis The financial position of the State’s governmental funds improved in fiscal year 2023-24, with a combined fund balance increase of $1.0 billion from the prior year’s restated ending fund balance. Governmental funds rely heavily on taxes to support the majority of the State’s services and programs. The State’s “Big Three” tax revenues (personal income, sales and use, and corporation) had a combined net increase during the fiscal year, primarily due to an increase in personal income taxes from high-income-earning Californians, as a result of increased bonuses and stock compensation. The governmental funds also received a boost in revenue during fiscal year 2023-24 due to an increase of $7.0 billion in managed care organization enrollment taxes, which were implemented in the previous fiscal year to offset increasing costs related to the Medi-Cal program. The proprietary funds’ total net position decreased by $2.1 billion during fiscal year 2023-24—comprised of a $2.1 billion net position decrease for enterprise funds, as well as a $23 million decrease for internal service funds. The decrease in the enterprise funds’ net position includes a net position decrease of $384 million in the California State University Fund to a deficit balance of $14.3 billion, and a net position decrease of $2.5 billion in the Unemployment Programs Fund to a deficit balance of $14.6 billion. The deficit net position in Unemployment Programs reflects excessive borrowings from the federal government during the pandemic to sustain unemployment insurance benefits; the borrowing of federal funds was necessary, 19 State of California Annual Comprehensive Financial Report due to the State’s outdated tax system, ever-growing unemployment costs, and failure to build adequate unemployment program reserves during periods of economic growth. Governmental Funds As of June 30, 2024, the governmental funds’ balance sheet reported $267.7 billion in assets, $144.3 billion in liabilities and deferred inflows of resources, and fund balances totaling $123.4 billion. Total assets of governmental funds increased by 2.9%, while total liabilities and deferred inflows of resources decreased by 21.8%, which yielded a net fund balance increase of $1.0 billion. Within the governmental funds’ total fund balance, $3.6 billion is classified as nonspendable, as this amount consists of long-term interfund receivables, loans receivable, and legal or contractual requirements. Another $68.4 billion is classified as restricted for specific programs by external constraints such as debt covenants and contractual obligations, or by constitutional provisions or enabling legislation. Furthermore, $21.0 billion of the total fund balance is classified as committed for specific purposes and $27.8 billion is classified as assigned for specific purposes. The remaining unassigned balance of the governmental funds is $2.6 billion — $38.7 billion more than the unassigned balance from the prior fiscal year. The Statement of Revenues, Expenditures, and Changes in Fund Balances of the governmental funds reported $448.8 billion in revenues, $454.3 billion in expenditures, and $6.5 billion in net proceeds from other financing sources. The ending fund balance of the governmental funds for the fiscal year ended June 30, 2024, was $123.4 billion, a $1.0 billion increase from the prior year’s restated ending fund balance of $122.4 billion. Governmental funds’ revenue consists primarily of taxes (52.3%) and intergovernmental revenue (37.3%). Personal income taxes accounted for 49.7% of tax revenues and increased by $2.1 billion over the prior fiscal year. Sales and use taxes accounted for 22.7% of tax revenues and decreased by $226 million from the prior fiscal year. Corporation taxes accounted for 15.9% of tax revenues and increased by $635 million over the prior fiscal year. Intergovernmental revenue, primarily from the federal government, increased by $15.8 billion (10.4%) over the prior fiscal year. Governmental funds’ expenditures increased by $31.2 billion (7.4%) from the prior fiscal year. The increase is mainly due to the growth in health and human services expenditures of $20.3 billion (9.3%), consisting primarily of spending on Medi-Cal. The overall increase in governmental funds’ expenditures also consists of an increase in education expenditures of $4.0 billion (4.0%) from the prior fiscal year. While the original Budget did not increase the Proposition 98 calculation for fiscal year 2023-24, higher-than-anticipated General Fund revenues allowed for a large true-up investment in education. Proposition 98 outlines the constitutional requirement that provides a minimum funding guarantee to support California’s TK-12 schools and community colleges. Other notable increases in governmental funds’expenditures over the prior year include $3.5 billion (16.0%) for transportation, and $2.5 billion (19.0%) for natural resources and environmental protection. 20 Management’s Discussion and Analysis Chart 6 presents a two-year comparison of governmental funds’ tax revenues. Chart 6 Governmental Funds Tax Revenue – Two-year Comparison Years ended June 30, 2024 and 2023 (amounts in billions) 116.5 Personal income taxes 114.4 53.2 Sales and use taxes 53.5 37.3 Corporation taxes 36.7 9.3 Motor vehicle excise taxes 8.6 4.0 Insurance taxes 3.7 Managed care organization enrollment 10.5 tax 3.5 3.8 Other taxes 3.7 $0 $20 $40 $60 $80 $100 $120 ■ 2024 □ 2023 The State’s major governmental funds are the General Fund, the Federal Fund, and the Environmental and Natural Resources Fund. The Transportation Fund and Health Care Related Programs Fund were previously reported as major governmental funds. These funds were reclassified to nonmajor and are now reported with other nonmajor governmental special revenue funds. Refer to Note 2, Accounting Changes and Error Corrections for further details. The General Fund ended the fiscal year with a fund balance of $63.4 billion, a decrease of $1.0 billion from the prior year’s fund balance, as restated. The Federal Fund ended the year with a fund balance of $357 million, while the Environmental and Natural Resources Fund ended the fiscal year with a fund balance of $23.9 billion. The nonmajor governmental funds ended the fiscal year with a combined fund balance of $35.8 billion. General Fund: As shown on the Balance Sheet, the General Fund (the State’s main operating fund) ended fiscal year 2023-24 with assets of $129.9 billion; liabilities and deferred inflows of resources of $66.5 billion; and nonspendable, restricted, committed, and assigned fund balances of $3.6 billion, $26.0 billion, $2.3 billion, and $27.7 billion, respectively. This left the General Fund with an unassigned fund balance of $3.8 billion, a decrease of $6.5 billion from the prior year. Total assets of the General Fund decreased by $3.7 billion (2.8%) from the prior fiscal year, and total liabilities and deferred inflows of resources decreased by $3.1 million (4.4%) from the prior year. 21 State of California Annual Comprehensive Financial Report Chart 7 presents a two-year comparison of the components of the governmental funds’ balance. Chart 7 Governmental Funds – Components of Fund Balance – Two-year Comparison Years ended June 30, 2024 and 2023 (amounts in billions) 3.6 Nonspendable 4.0 68.4 Restricted 66.4 21.0 Committed 20.4 27.8 Assigned 20.8 2.6 Unassigned -36.1 $-50 $-40 $-30 $-20 $-10 $0 $10 $20 $30 $40 $50 $60 $70 ■ 2024 □ 2023 As shown on the Statement of Revenue, Expenditures, and Changes in Fund Balances, General Fund revenues exceeded expenditures by $5.0 billion ($195.3 billion in revenues and $190.3 billion in expenditures). Approximately $184.8 billion (94.6%) of General Fund revenue is derived from the State’s largest three taxes—personal income taxes ($114.3 billion), corporation taxes ($37.3 billion), and sales and use taxes ($33.2 billion). A total of $826 million in revenue is included in the General Fund as a result of fund classifications made to comply with generally accepted governmental accounting principles. These revenues are not considered General Fund revenues for any budgetary purposes or for the State’s Budgetary/Legal Basis Annual Report. During fiscal year 2023-24, total General Fund revenue increased by $2.9 billion (1.5%), mainly due to an increase in personal income taxes. Meanwhile, General Fund expenditures decreased by $692 million. The General Fund ended the fiscal year with a fund balance of $63.4 billion after transfers, a decrease of $1.0 billion from the prior year’s restated ending fund balance of $64.4 billion. The General Fund’s ending fund balance includes $22.6 billion restricted for budget stabilization if the Governor must declare a budget emergency during an economic crisis, such as the COVID-19 pandemic, floods, or wildfires. Federal Fund: The Federal Fund reports federal grant revenues and the related expenditures to support grant programs. The largest of these programs is for health and human services, including Medi-Cal and unemployment programs, which accounted for $132.4 billion (81.4%) of the total $162.7 billion in fund expenditures. Education, transportation, and general government programs also constituted $18.0 billion (11.1%), $5.3 billion (3.2%) and $4.4 billion (2.7%) of the fund’s expenditures, respectively. The Federal Fund’s revenues increased by $15.3 billion from the prior year, while expenditures and transfers had a combined increase of $16.3 billion, resulting in a $667 million decrease from the prior year’s restated ending fund balance of $1.0 billion, to $357 million. 22 Management’s Discussion and Analysis Environmental and Natural Resources Fund: The Environmental and Natural Resources Fund accounts for fees, bond proceeds, and other revenues that are used for maintaining the State’s natural resources and improving the environmental quality of its air, land, and water. The Environmental and Natural Resources Fund’s revenues increased by $2.0 billion (21.9%) over the prior year, due to the spending requirements related to the Parks and Water Bond Act of 2018 (Proposition 68), passed by voters in June 2018. Expenditures increased by $1.8 billion (20.9%). Other financing sources provided net receipts of $2.4 billion, mainly from bond proceeds, including those sold under Proposition 68. The Environmental and Natural Resources Fund ended the fiscal year with a $23.9 billion fund balance, an increase of $3.2 billion (15.3%) over the prior year. Proprietary Funds Enterprise Funds: The total deficit net position of the enterprise funds at June 30, 2024, was $19.8 billion—a $2.1 billion decline from the prior year’s restated deficit net position of $17.7 billion. The largest portion of this decline in net position was attributable to the Unemployment Programs Fund, with a $2.5 billion decrease to net position, ending the fiscal year with a deficit net position of $14.6 billion. The decline was offset by the increase in the net position of nonmajor enterprise funds of $754 million. The net position of the California State University Fund decreased by $384 million and the net position of the State Lottery Fund decreased by $17 million. As shown on the proprietary funds’ Statement of Net Position, total assets and deferred outflows of resources for the enterprise funds were $55.7 billion as of June 30, 2024. Of this amount, current assets totaled $16.0 billion, noncurrent assets totaled $33.4 billion, and deferred outflows of resources totaled $6.3 billion. Total liabilities and deferred inflows of resources for the enterprise funds was $75.5 billion. One of the largest liabilities of the enterprise funds is $19.5 billion due to other governments, $19.1 billion of which represents borrowings from the U.S. Department of Labor for the Unemployment Programs Fund, primarily associated with federal pandemic relief programs. As of June 30, 2024, the Unemployment Programs Fund also reported a balance on deposit with the U.S. Treasury of $474 million, funds also used to pay unemployment claims during the pandemic. Other noteworthy cumulative liabilities of the enterprise funds include a net OPEB liability of $15.4 billion, $15.1 billion in revenue bonds payable including the current portion, and $10.1 billion in net pension liability. Total net position for enterprise funds consisted of four segments: net investment in capital assets of $3.9 billion, nonexpendable restricted net position of $2 million, restricted expendable net position of $8.6 billion, and unrestricted net deficit of $32.3 billion. As shown on the Statement of Revenues, Expenses, and Changes in Fund Net Position of proprietary funds, the enterprise funds ended the year with operating revenues of $30.4 billion, operating expenses of $38.4 billion, and net revenues from other transactions and transfers of $5.8 billion. The largest sources of operating revenues were unemployment and disability insurance receipts of $15.6 billion in the Unemployment Programs Fund, and lottery ticket sales of $9.3 billion collected by the State Lottery Fund. Unemployment and disability insurance receipts in the Unemployment Programs Fund were $397 million (2.6%) greater than the prior fiscal year. The largest operating expenses were distributions to beneficiaries of $17.8 billion reported in the Unemployment Programs Fund, personal services expenses of $6.9 billion reported in the California State University Fund, and lottery prizes of $6.0 billion distributed by the State Lottery Fund. 23 State of California Annual Comprehensive Financial Report Internal Service Funds: The total net position of the internal service funds was $1.2 billion as of June 30, 2024. The net position consists of three segments: net investment in capital assets of $622 million, restricted expendable net position of $137 million, and unrestricted deficit net position of $2.0 billion. Fiduciary Funds The State of California has four types of fiduciary funds: pension and other employee benefit trust funds, private purpose trust funds, investment trust funds, and custodial funds. The pension and other employee benefit trust funds ended the fiscal year with a net position of $899.7 billion. The private purpose trust funds ended the fiscal year with a net position of $16.7 billion. The investment trust funds ended the fiscal year with a net position of $22.2 billion. The custodial fund ended the fiscal year with a net position of $684 million. For the fiscal year ended June 30, 2024, the fiduciary funds’ combined net position was $939.3 billion, a $72.3 billion increase from the prior year’s net position. Although the net position of the investment trust funds decreased by 13.9% compared to the prior year, the overall net position of the fiduciary funds increased primarily because contributions received and investment income in pension and other employee benefit trust funds exceeded payments made to participants. General Fund Budget Highlights The original General Fund budget of $154.7 billion was increased by $68.0 billion during fiscal year 2023-24. This increase is primarily attributable to additional funding for education, health and human services, and other general government expenditures. Education increased due to an increase in guaranteed minimum funding levels for TK-12 schools and community colleges under Proposition 98. Health and Human Services increased because of investments made by the State to expand Medi-Cal eligibility to all income-eligible adults, address homelessness, and strengthen the public health infrastructure. Other general government increased due to a rise in funding for retirement health benefits and the accelerated payment of state retirement liabilities. 24 Management’s Discussion and Analysis Table 3 presents a summary of the General Fund original and final budgets. Table 3 General Fund Original and Final Budgets Year ended June 30, 2024 (amounts in millions) Increase/ Original Final (Decrease) Budgeted amounts Business, consumer services, and housing .................................................. $ 2,963 $ 2,432 $ (531) Transportation.............................................................................................. 4,659 6,709 2,050 Natural resources and environmental protection ......................................... 12,310 12,055 (255) Health and human services .......................................................................... 71,181 76,567 5,386 Corrections and rehabilitation...................................................................... 14,116 15,395 1,279 Education ..................................................................................................... 41,059 98,484 57,425 General government: Tax relief ................................................................................................... 382 415 33 Debt service............................................................................................... 6,893 5,348 (1,545) Other general government......................................................................... 1,185 5,356 4,171 Total ....................................................................................................... $ 154,748 $ 222,761 $ 68,013 Capital Assets and Debt Administration Capital Assets As of June 30, 2024, the State’s investment in capital assets for its governmental and business-type activities amounted to $177.8 billion (net of accumulated depreciation/amortization). The State’s capital assets include land, state highway infrastructure, collections, buildings and other depreciable property, intangible assets, and construction/development in progress. The buildings and other depreciable property account includes buildings, improvements other than buildings, equipment, certain infrastructure assets, certain books, and other capitalized and depreciable property. Intangible assets include computer software, land use rights, patents, copyrights, and trademarks. Infrastructure assets are items that normally are immovable, such as roads and bridges, and can be preserved for a greater number of years than can most capital assets. As of June 30, 2024, the State’s capital assets increased by $5.8 billion, or 3.4% over the prior fiscal year. The majority of the increase is attributed to net additions to buildings and other depreciable property of $3.5 billion, construction/development in progress of $2.1 billion, and state highway infrastructure of $2.1 billion. Additional information on the State’s capital assets can be found in Note 7. 25 State of California Annual Comprehensive Financial Report Table 4 presents a summary of the primary government’s capital assets for governmental and business-type activities. Table 4 Capital Assets – Primary Government – Two-year Comparison June 30, 2024 and 2023 (amounts in millions) Governmental Activities Business-type Activities Total 2024 2023 2024 2023 2024 2023 Land................................................................ $ 21,985 $ 22,496 $ 489 $ 466 $ 22,474 $ 22,962 State highway infrastructure........................... 85,170 83,022 — — 85,170 83,022 Collections – nondepreciable ......................... 22 22 40 37 62 59 Buildings and other depreciable property ................................... 40,655 38,228 22,907 21,882 63,562 60,110 Intangible assets – amortizable ...................... 3,892 3,752 548 475 4,440 4,227 Right to use leased assets ............................... 4,463 3,638 833 587 5,296 4,225 Less: accumulated depreciation/amortization ........................... (22,410) (20,452) (9,642) (8,880) (32,052) (29,332) Construction/development in progress........... 24,431 22,741 2,958 2,598 27,389 25,339 Intangible assets – nonamortizable ................ 1,318 1,254 137 137 1,455 1,391 Total ....................................................... $ 159,526 $ 154,701 $ 18,270 $ 17,302 $ 177,796 $ 172,003 Note: Prior-year adjustments recorded in the current year have not been reflected in the prior-year column. Modified Approach for Infrastructure Assets The State has elected to use the modified approach for capitalizing infrastructure assets of the state highway system (state bridges and roadways). Under the modified approach, the State does not report depreciation expense for its bridges and roads but capitalizes all costs that add to their capacity and efficiency. All maintenance and preservation costs are expensed. Under the modified approach, the State maintains an asset management system to demonstrate that the infrastructure is preserved at or above established condition levels. During fiscal year 2023-24, the actual amount spent on preservation was 48.0% of the estimated budgeted amount needed to maintain the infrastructure assets at established condition levels. Although the amount spent fell short of the budgeted amount, the assessed condition of the State’s bridges and roadways is better than the established condition baselines, with 94.0% of bridge deck area judged to be of fair or better quality and 85.3% of lane miles judged to be of fair or better quality in the last completed pavement-condition survey. The State is responsible for maintaining 12,681 bridges and tunnels and 50,607 lane miles. The Required Supplementary Information includes additional information on how the State uses the modified approach for infrastructure assets; it also presents the established condition standards, condition assessments, and preservation costs. Debt Administration At June 30, 2024, the State had total bonded debt outstanding of $111.9 billion. Of this amount, $80.1 billion (71.6%) represents general obligation bonds, which are backed by the full faith and credit of the State. The current portion of general obligation bonds outstanding is $4.0 billion and the 26 Management’s Discussion and Analysis long-term portion is $76.1 billion. The remaining $31.8 billion (28.4%) of bonded debt outstanding represents revenue bonds, which are secured solely by specified revenue sources. The current portion of revenue bonds outstanding is $1.5 billion and the long-term portion is $30.3 billion. During the fiscal year, the State issued a total of $8.3 billion in new general obligation bonds to fund various capital projects and other voter-approved costs related to TK-12 schools and higher education facilities, transportation improvements and high-speed rail, water quality and environmental protection, and other public purposes. Table 5 presents a summary of all the primary government’s long-term obligations for governmental and business-type activities. Table 5 Long-term Obligations – Primary Government – Two-year Comparison Years ended June 30, 2024 and 2023 (amounts in millions) Governmental Activities Business-type Activities Total 2024 2023 2024 2023 2024 2023 Government-wide noncurrent liabilities General obligation bonds.................................. $ 75,458 $ 74,713 $ 636 $ 671 $ 76,094 $ 75,384 Revenue bonds payable .................................... 15,717 15,278 14,540 14,008 30,257 29,286 Total bonded debt ......................................... 91,175 89,991 15,176 14,679 106,351 104,670 Net pension liability.......................................... 82,383 80,146 10,079 9,686 92,462 89,832 Net other postemployment benefits liability ............................................ 68,707 67,360 15,403 14,454 84,110 81,814 Mandated cost claims payable.......................... 1,887 1,810 — — 1,887 1,810 Loans payable................................................... 20 31 — — 20 31 Compensated absences payable........................ 5,304 5,312 293 297 5,597 5,609 Workers’ compensation benefits payable .......................................................... 5,689 5,390 15 13 5,704 5,403 Lease liability ................................................... 2,349 2,062 327 319 2,676 2,381 Subscription liability......................................... 37 53 25 31 62 84 Commercial paper............................................. 1,031 1,327 636 381 1,667 1,708 Other noncurrent liabilities............................... 4,136 4,183 915 1,071 5,051 5,254 Total noncurrent liabilities...................... 262,718 257,665 42,869 40,931 305,587 298,596 Current portion of long-term obligations............. 6,405 6,421 2,018 1,841 8,423 8,262 Total long-term obligations..................... $ 269,123 $ 264,086 $ 44,887 $ 42,772 $ 314,010 $ 306,858 Note: Prior-year adjustments recorded in the current year have not been reflected in the prior-year column. During the fiscal year ended June 30, 2024, the primary government’s total long-term obligations increased by $6.9 billion from the prior year’s balance. The largest increase in long-term obligations during the fiscal year was a $2.6 billion increase in net pension liability resulting from a decrease in pension plan net investment income. Other significant increases included a $2.3 billion increase in net other postemployment benefit liability. Note 10, Long-term Obligations, and Notes 11 through 18 include additional information on the State’s long-term obligations. 27 State of California Annual Comprehensive Financial Report During the year ended June 30, 2024, the State’s general obligation bonds rating from Fitch Ratings, Standard and Poor’s Rating Services, and Moody’s Investors Service remained unchanged at “AA”, “AA-”, and “Aa2”, respectively. Economic Condition and Future Budgets The Economy for the Fiscal Year Ending June 30, 2024 California’s economy was in an extended slowdown during the 2023-24 fiscal year, characterized by a soft labor market and weak consumer spending, primarily driven by the Federal Reserve’s efforts to tamp down inflation by raising interest rates and shrinking how much money was available for lending and investment. While this slowdown has been gradual and the severity milder than a recession, outside of government and healthcare, the state experienced minimal job growth over an 18-month period and the number of unemployed workers in California rose by nearly 160,000 during the 2023-24 fiscal year, resulting in a 0.7% increase to the state’s unemployment rate. Despite the economic slowdown, a bright spot emerged: strong growth in total pay to California workers. Total pay grew at an above-average rate of 17% annualized in the first half of 2024, as optimism surrounding artificial intelligence led to a surge in the stock market. Total pay aims to capture the full economic value of a job, and includes components beyond base salary and wages, such as incentive pay, employee benefits, and stock options. California’s real gross domestic product (GDP) reached $4.1 trillion at June 30, 2024, an increase of 6.3% during fiscal year 2023-24, compared to real GDP of $3.8 trillion at June 30, 2023, growth of 6.1% during the 2022-23 fiscal year. California’s economic growth was faster than that of the United States GDP, which increased by 5.7% during fiscal year 2023-24. During the 2023-24 fiscal year, the California real estate market continued to experience challenges posed by elevated mortgage rates, high home prices, and a low supply of homes available for sale. The median price of homes in California was $900,720 as of June 2024, an increase of 7.5% from the prior year and a nominal increase of 5.0% over a two-year span. By comparison, the national median home price increased by 2.7% from the prior year to $421,400 in June 2024. The housing market saw 30-year fixed mortgage rates rise to an average of 6.9% in June 2024, compared to 6.7% in June 2023. The rate increase impacted sales of existing single-family homes; in June 2024, sales were down 2.7% from the prior year. New active listings increased by 37% from June 2023 to June 2024. However, the number of new privately owned residential units in California decreased during fiscal year 2023-24 by approximately 1,659 units. A more favorable interest rate may loosen up the “lock-in effect”—the reluctance of homeowners to sell their homes with lower-interest mortgages and improve housing inventory; this in turn could encourage buyers and sellers to return to the market and boost both home sales and prices. The real estate market was not the only segment of the state’s economy that was adjusting during the 2023-24 fiscal year. New light vehicle registrations decreased by 0.7% in the first six months of 2024 compared to the prior year, as monthly finance and lease costs remain elevated due to higher interest rates. Unemployment insurance claims per week, which had increased to 385,000 at the end of the 2022-23 fiscal year, decreased marginally as California issued approximately 381,000 claims per week to unemployed workers by June 30, 2024. Conversely, the unemployment rate rose to 5.3% by the end of fiscal year 2023-24, compared to 4.6% at the end of the prior period. During fiscal year 2023-24, the increase of approximately 78,000 new non-farm jobs was an alarming deceleration compared to 28 Management’s Discussion and Analysis approximately 157,000 jobs gained in the prior fiscal year. Only four of California’s 11 major industry sectors experienced job growth. The private education and health services sectors saw growth for a fourth consecutive year, with a 5.8% gain in jobs during fiscal year 2022-23 and another 181,000 jobs added in fiscal year 2023-24, an increase of 5.8%. The private education and health services sectors include jobs in private educational institutions and services as well as health care and social assistance. Californians’ personal income increased 7.5% during the period, which was in line with the national increase of 7.5%. Since 2014, personal income of Californians has grown an average of 5.6% annually, due largely to the low unemployment rate sustained during the majority of this period. Comparatively, personal income in the United States grew an average of 5.2% during the same period. Effective January 1, 2024, California’s minimum wage increased to $16.00 per hour. The minimum wage continued to increase to $16.50 per hour on January 1, 2025; fast food restaurant employees’ minimum wage increased to $20.00 per hour on April 1, 2024; and certain health care workers received $20.00 per hour minimum wage on October 16, 2024. Despite the long-term growth trend of personal earnings for Californians and other positive economic growth factors, ongoing inflationary pressures and elevated Federal Reserve interest rates will continued to pose a risk to the state’s economy. Economic Conditions for the 2024-25 Fiscal Year and Future Outlook In the 2024-25 fiscal year, California’s economy experienced the slow but relatively stable growth characteristic of a mature economic expansion, overtaking Japan to become the fourth-largest economy in the world. However, with the change in U.S. presidential administrations, risks to California’s economy began to emerge in early 2025 from various federal policies including broad and elevated tariffs and strict immigration policies. California is the nation’s largest importer and second-largest exporter, and tariffs are expected to have a wide-ranging impact on the economy, potentially leading to slower job and income growth and higher inflation. California also faces threats in federal funding cuts that could put the state’s healthcare, safety net, and education programs at risk. In addition, in January 2025, California experienced devastating wildfires in the Los Angeles region that burned an estimated 16,000 homes, businesses, and other structures. The fires caused an unprecedented economic loss of more than $250.0 billion, leading to a state tax filing postponement for affected individuals and businesses until October 15, 2025. Because of these challenges, California’s economy continued in an incremental growth pattern amid vigilant oversight. At the end of 2024, the state’s GDP climbed to $4.2 trillion, an increase of 4.2% over the previous year, which was less than the United States GDP increase of 4.7% over the same period. Personal income growth for Californians was robust, increasing by 5.0% during 2024. Statewide personal income growth outpaced both the increase in Consumer Price Index of 2.7% during the period and the U.S. national personal income increase of 4.5%. California’s unemployment rate for the 2024-25 fiscal year was relatively stable throughout the year, ending at 5.3% in April 2025. The California housing market entered a period of uncertainty during the latter half of fiscal year 2024-25, as consumers remained worried about their financial outlook for the year ahead, and the Federal Reserve has held interest rates steady until the impact of federal policy changes and global events becomes more clear. Existing home sales totaled 265,000 units in May 2025, a 4.0% decrease from May 2024. The 30-year fixed mortgage interest rate decreased slightly, from an average of 7.1% in May 2024, to a 6.8% average in May 2025. As demand for homes continued to outpace supply, the statewide median home price rose to $900,170 in May 2025, a decrease of 0.9% from May 2024. While 29 State of California Annual Comprehensive Financial Report higher levels of active home listings not seen in the prior two years should help to moderate price growth, elevated mortgage rates will continue to pose a challenge to homebuyers in the months ahead. New vehicle registrations increased by 8.3% in the first quarter of 2025 compared to the same period last year. This increase in new registrations is mainly attributable to purchases made in anticipation of the implementation of new auto tariffs. Although pent-up demand and increased affordability due to lower interest rates were expected to propel the market in 2025, the outlook remains uncertain due to the volatile nature of current trade policy. In the first half of 2025, the federal administration enacted a series of sweeping tariff measures, including a global 10% tariff on nearly all imports, and elevated reciprocal tariffs on specific countries including China, the European Union, and Japan. It also enacted, targeted increases of 50% on steel and aluminum, and 25% on automobiles. As California serves as a gateway for goods imported from Asia, and the state’s three largest trading partners are Canada, Mexico and China, the state is expected to be especially vulnerable to the tariffs. Job growth in the leisure and hospitality, professional and business services, manufacturing, trade, transportation, and utilities sectors is projected to be impacted most severely. Additionally, the state could see an uptick in inflation across all major consumer price index categories. If tariffs are scaled back substantially, the state’s economy will likely remain on a lower trajectory in the near-term, as businesses and consumers are expected to remain cautious in the face of ongoing uncertainty. California’s 2024-25 Budget California’s 2024-25 Budget Act was enacted on June 26, 2024. The Budget Act appropriated $297.9 billion: $211.5 billion from the General Fund, $84.0 billion from special funds, and $2.4 billion from bond funds. Budgeted expenditures for the General Fund decreased by $11.6 billion (5.2%) from last year’s budget, to $211.5 billion, and General Fund revenues were projected to be $212.1 billion. General Fund revenue comes predominantly from taxes, with personal income taxes expected to provide 56.2% of total revenue in fiscal year 2024-25. California’s major taxes, including personal income taxes, sales and use taxes, and corporation taxes, were projected to supply approximately 93.2% of the General Fund’s resources in the 2024-25 fiscal year. The General Fund was projected to end the 2024-2025 fiscal year with $22.2 billion in total reserves, including $17.6 billion in the Budget Stabilization Account (BSA) for fiscal emergencies, $1.1 billion in the Public School System Stabilization Account (PSSSA), and $3.5 billion in the State’s operating reserve. The 2024-25 Budget Act decreased total state expenditures by $12.4 billion from the 2023-24 budgeted level. Notable General Fund spending changes included decreases of $6.9 billion for General Government operations and $2.5 billion for Health and Human Services, and an increase of $2.2 billion for K-12 Education. The General Fund’s share of the Proposition 98 guaranteed minimum funding level for K-12 schools and community colleges increased by $15.5 billion from the revised 2023-24 fiscal year level, to $82.6 billion. The Budget included total funding of $133.8 billion for all K-12 education programs, reflecting significant Proposition 98 funding to enable increased support for core programs such as the Local Control Funding Formula, special education, transitional kindergarten, nutrition, and preschool. The Budget included $1.0 billion in one-time funding for the Homeless Housing Assistance and Prevention Program; maintained Medi-Cal funding for the expansion of health care and In-Home Support Services benefit levels to all income-eligible Californians regardless of immigration status; preserved $7.1 billion 30 Management’s Discussion and Analysis in funding for Behavioral Health; preserved $250 million for the Middle Mile Broadband Initiative; and preserved $2.0 billion for Last Mile projects over fiscal years 2024-25, 2025-26, and 2026-27. In the aftermath of the COVID-19 pandemic, the State experienced significant revenue volatility, seeing unprecedented revenue growth that was quickly followed by a sharp correction back toward historical trends. Additionally, the unprecedented Internal Revenue Service tax filing and payment postponement in 2023, affecting 99% of state taxpayers, significantly clouded the State’s revenue forecast. Over the past decade, the State has accumulated reserves to better prepare for economic downturns and to mitigate against the volatility in the state’s revenue structure. The Budget took steps to put California on sound financial footing by pursuing a fiscally responsible long-term path that would protect vital programs and solve a $46.8 billion deficit for the fiscal year through a mix of broad-based solutions. Included in the Budget were $16.0 billion in reductions, including ongoing reductions to state operations and a vacant position sweep, a $500 million reduction in the California Student Housing Revolving Loan Program, a $1.1 billion reduction to various affordable housing programs, and a $746 million reduction for various healthcare workforce programs. The Budget included $13.6 billion in additional revenue sources and borrowed internally from special funds, leveraging creative solutions such as a suspension on the use of net operating losses, a limit on credits for business taxes, and an increase in the Managed Care Organization Tax to support the Medi-Cal program. The Budget also enacted a $6.0 billion draw down from reserves, including $5.1 billion from the BSA and $900 million from the Safety Net Reserve in fiscal year 2024-25. Moreover, the Budget shifted $6.0 billion in certain expenditures from the General Fund to other funds, minimized the use of $3.1 billion in delays to avoid both increased future obligations and potential shortfalls, and deferred $2.1 billion in certain payments to future years. In June 2025, the 2025-26 Budget Act was enacted; it provided updated estimates of fiscal year 2024-25 General Fund revenues, expenditures, and reserves. The 2025-26 Budget Act projected fiscal year 2024-25 General Fund revenue of $226.7 billion after transfers—$14.6 billion (6.9%) more than projected in the 2024-25 Budget Act—and expenditures of $233.6 billion. Total year-end reserves were estimated at $35.9 billion—$18.3 billion in the BSA, $17.1 billion in the State’s operating reserve, and $455 million in the PSSSA—which was $13.7 billion (61.7%) more than projected in the 2024-25 Budget Act. California’s 2025-26 Budget California’s fiscal year 2025-26 Budget Act was enacted on June 27, 2025; it includes projections of fiscal year 2025-26 General Fund revenues, expenditures, and reserves. General Fund revenues are anticipated to be $215.7 billion, a decrease of $11.0 billion (4.9%) from revised fiscal year 2024-25 revenue estimates. The decrease is primarily due to projected decreases of $8.2 billion in other revenue sources and $6.1 billion in corporation taxes, partially offset by projected increases of $1.2 billion in sales and use taxes and $2.2 billion in transfers from the BSA. General Fund expenditures for fiscal year 2025-26 are budgeted at $228.4 billion, a decrease of $5.2 billion (2.2%) compared to the revised fiscal year 2024-25 estimates. The Budget maintains fiscal discipline by preserving a total of $15.7 billion in budgetary reserves—$11.2 billion in the BSA for fiscal emergencies and $4.5 billion in the State’s operating reserve. The 2025-26 Budget Act maintains the State’s commitment to increase funding for education and preserves its investment in the Los Angeles fire recovery efforts. The Budget allocates total funding of $137.6 billion for all TK-12 education programs, and $45.1 billion for all higher education entities. The 31 State of California Annual Comprehensive Financial Report Budget also continues authority to spend from the previously approved $2.5 billion for the Los Angeles fire recovery efforts. In January 2025, the 2025-26 Governor’s Budget projected modest but slow economic growth, with a slight surplus in the budget window. This was followed by continued positive signs early in the year, as revenues came in substantially higher than projected, reflecting strong performance in California’s economy and the stock market in 2024 and early 2025. However, the subsequent imposition of federal policy changes significantly slowed growth in the California economy. Most notably, broad-based tariffs blunted this growth and prompted a downgrade to California’s economic and revenue forecasts at the 2025-26 May Revision. At the same time, California also experienced substantial cost and caseload growth in several core state programs, most notably in Medi-Cal, which combined to create a General Fund shortfall of $11.8 billion. The 2025-26 Budget Act closes this gap through a range of solutions, including difficult but necessary actions that reduce ongoing expenditure growth to maintain budget resilience and provide long-term stability for critical state programs, while also maintaining significant reserves. The Budget Act also incorporates a comprehensive regulatory streamlining package that will advance more affordable housing and infrastructure. Because the Budget Act was approved in late June 2025, it does not reflect the impact of the substantial cuts in federal spending included in the federal omnibus tax and spending bill signed in early July 2025. The Governor’s administration continues to evaluate the impacts of this measure and will work with the state legislature if any changes to the 2025-26 Budget are necessary. Requests for Information The State Controller’s Office designed this financial report to provide interested parties with a general overview of the State of California’s finances. Address questions concerning the information provided in this report or requests for additional information via email to the State Controller’s Office, State Accounting and Reporting Division at StateGovReports@sco.ca.gov. This report is also available on the State Controller’s Office website at www.sco.ca.gov. 32 Basic Financial Statements This page intentionally left blank Government-wide Financial Statements State of California Annual Comprehensive Financial Report Statement of Net Position June 30, 2024 (amounts in thousands) Primary Government Governmental Business-type Component Activities Activities Total Units ASSETS Current assets: Cash and pooled investments ....................................... $ 136,464,084 $ 7,152,913 $ 143,616,997 $ 4,454,153 Amount on deposit with U.S. Treasury........................ — 474,121 474,121 — Investments................................................................... 1,815,136 4,083,930 5,899,066 9,967,962 Restricted assets: Cash and pooled investments .................................... 996,378 779,743 1,776,121 908,178 Investments................................................................ — — — 103,851 Due from other governments..................................... — 238,058 238,058 — Contracts and installments receivable.......................... 10,931 — 10,931 — Receivables (net).......................................................... 52,639,489 2,766,538 55,406,027 9,017,051 Internal balances........................................................... (36,970) 36,970 — — Due from primary government..................................... — — — 561,726 Due from other governments........................................ 45,796,791 220,142 46,016,933 222,359 Prepaid items................................................................ 192,008 81,845 273,853 2,669 Inventories.................................................................... 96,244 34,384 130,628 438,656 Other current assets ...................................................... 137,913 7,241 145,154 733,009 Total current assets.................................................... 238,112,004 15,875,885 253,987,889 26,409,614 Noncurrent assets: Restricted assets: Cash and pooled investments .................................... 106,788 177,644 284,432 27,390 Investments................................................................ — 50,655 50,655 251,908 Loans receivable........................................................ — 5,508,401 5,508,401 — Investments................................................................... — 3,036,670 3,036,670 53,375,414 Contracts and installments receivable.......................... 172,397 — 172,397 — Receivables (net).......................................................... 2,600,318 1,616,631 4,216,949 4,371,461 Loans receivable........................................................... 4,943,400 3,451,013 8,394,413 3,064,552 Long-term prepaid charges........................................... 110 697,257 697,367 96 Capital assets: Land........................................................................... 21,984,954 489,278 22,474,232 2,311,410 State highway infrastructure...................................... 85,170,476 — 85,170,476 — Collections – nondepreciable .................................... 21,691 39,774 61,465 671,247 Buildings and other depreciable property ................. 40,655,476 22,907,839 63,563,315 72,691,678 Intangible assets – amortizable ................................. 8,354,780 1,380,449 9,735,229 6,183,650 Less: accumulated depreciation/amortization ........... (22,410,093) (9,641,930) (32,052,023) (39,691,173) Construction/development in progress...................... 24,430,761 2,957,608 27,388,369 8,287,234 Intangible assets – nonamortizable ........................... 1,318,261 136,840 1,455,101 305 Other noncurrent assets ................................................ — 32,260 32,260 869,127 Total noncurrent assets.............................................. 167,349,319 32,840,389 200,189,708 112,414,299 Total assets........................................................... 405,461,323 48,716,274 454,177,597 138,823,913 DEFERRED OUTFLOWS OF RESOURCES........... 41,662,963 6,280,628 47,943,591 6,738,594 Total assets and deferred outflows of resources .................................................... $ 447,124,286 $ 54,996,902 $ 502,121,188 $ 145,562,507 36 The notes to the financial statements are an integral part of this statement. Government-wide Financial Statements Primary Government Governmental Business-type Component Activities Activities Total Units LIABILITIES Current liabilities: Accounts payable.......................................................... $ 54,286,689 $ 994,644 $ 55,281,333 $ 4,498,089 Due to component units ................................................ 561,726 — 561,726 — Due to other governments............................................. 36,685,415 19,544,696 56,230,111 — Revenues received in advance ...................................... 2,481,712 420,397 2,902,109 2,397,105 Tax overpayments......................................................... 19,946,046 — 19,946,046 — Deposits......................................................................... 531,216 — 531,216 235,599 Contracts and notes payable.......................................... 894 — 894 38,890 Unclaimed property liability......................................... 1,397,848 — 1,397,848 — Interest payable ............................................................. 1,090,074 54,459 1,144,533 6,298 Securities lending obligations....................................... — — — 2,299,343 Benefits payable............................................................ 22,943 413,117 436,060 — Current portion of long-term obligations...................... 6,405,488 2,018,062 8,423,550 7,850,402 Other current liabilities ................................................. 1,410,878 1,133,043 2,543,921 3,996,253 Total current liabilities .............................................. 124,820,929 24,578,418 149,399,347 21,321,979 Noncurrent liabilities: Loans payable ............................................................... 19,810 — 19,810 11,772 Lottery prizes and annuities.......................................... — 559,346 559,346 — Compensated absences payable .................................... 5,304,138 292,999 5,597,137 518,300 Workers’ compensation benefits payable ..................... 5,688,903 14,601 5,703,504 1,340,754 Commercial paper and other borrowings...................... 1,031,170 636,199 1,667,369 76,599 Lease liability................................................................ 2,348,912 326,928 2,675,840 2,479,799 Subscription liability..................................................... 37,456 25,014 62,470 148,536 General obligation bonds payable................................. 75,457,496 635,759 76,093,255 — Revenue bonds payable................................................. 15,717,175 14,540,351 30,257,526 31,153,064 Mandated cost claims payable ...................................... 1,887,272 — 1,887,272 — Net other postemployment benefits liability................. 68,707,301 15,402,777 84,110,078 21,119,912 Net pension liability...................................................... 82,382,466 10,078,529 92,460,995 17,816,122 Revenues received in advance ...................................... — 20,449 20,449 29,384 Other noncurrent liabilities ........................................... 4,136,198 335,318 4,471,516 3,071,695 Total noncurrent liabilities ........................................ 262,718,297 42,868,270 305,586,567 77,765,937 Total liabilities ..................................................... 387,539,226 67,446,688 454,985,914 99,087,916 DEFERRED INFLOWS OF RESOURCES................ 25,149,854 7,340,984 32,490,838 13,475,678 Total liabilities and deferred inflows of resources .................................................... $ 412,689,080 $ 74,787,672 $ 487,476,752 $ 112,563,594 (continued) The notes to the financial statements are an integral part of this statement. 37 State of California Annual Comprehensive Financial Report Statement of Net Position (continued) June 30, 2024 (amounts in thousands) Primary Government Governmental Business-type Component Activities Activities Total Units NET POSITION Net investment in capital assets ................................... $ 134,088,866 $ 3,867,059 $ 137,955,925 $ 19,408,901 Restricted: Nonexpendable – endowments.................................. — 1,612 1,612 10,801,323 Expendable: Endowments and gifts ........................................... — — — 20,751,374 General government .............................................. 9,612,588 122,987 9,735,575 — Education............................................................... 1,250,322 146,540 1,396,862 2,468,519 Health and human services.................................... 8,515,657 2,571,069 11,086,726 — Natural resources and environmental protection............................................................. 7,914,894 3,777,280 11,692,174 — Business, consumer services, and housing............ 7,509,436 95 7,509,531 — Transportation ....................................................... 10,571,860 313 10,572,173 — Corrections and rehabilitation ............................... 583,414 20,145 603,559 — Unemployment programs...................................... — 1,991,190 1,991,190 — Indenture................................................................ — — — 790,624 Statute.................................................................... — — — 4,306,692 Budget stabilization............................................... 22,559,422 — 22,559,422 — Other purposes....................................................... — — — 48,703 Total expendable ............................................... 68,517,593 8,629,619 77,147,212 28,365,912 Unrestricted .................................................................. (168,171,253) (32,289,060) (200,460,313) (25,577,223) Total net position (deficit)................................... 34,435,206 (19,790,770) 14,644,436 32,998,913 Total liabilities, deferred inflows of resources, and net position ........................... $ 447,124,286 $ 54,996,902 $ 502,121,188 $ 145,562,507 (concluded) 38 The notes to the financial statements are an integral part of this statement. Government-wide Financial Statements This page intentionally left blank The notes to the financial statements are an integral part of this statement. 39 State of California Annual Comprehensive Financial Report Statement of Activities Year Ended June 30, 2024 (amounts in thousands) Program Revenues Operating Capital Charges Grants and Grants and FUNCTIONS/PROGRAMS Expenses for Services Contributions Contributions Primary government Governmental activities: General government ................................................... $ 30,364,857 $ 7,657,849 $ 5,849,794 $ — Education.................................................................... 104,989,072 77,886 17,680,283 — Health and human services......................................... 239,312,614 16,884,897 131,849,456 — Natural resources and environmental protection........ 15,843,903 10,428,203 1,227,827 — Business, consumer services, and housing ................. 4,587,805 1,589,280 1,089,499 — Transportation............................................................. 22,096,992 8,975,999 3,947,453 2,698,882 Corrections and rehabilitation .................................... 16,282,066 3,415 92,094 — Interest on long-term debt........................................... 3,780,126 — — — Total governmental activities................................... 437,257,435 45,617,529 161,736,406 2,698,882 Business-type activities: Water Resources......................................................... 1,623,577 1,657,882 — — State Lottery ............................................................... 9,361,888 9,345,359 — — Unemployment Programs........................................... 18,212,170 15,701,364 — — California State University ......................................... 11,867,582 4,569,374 2,651,438 — State Water Pollution Control Revolving................... 62,530 106,134 475,509 — Safe Drinking Water State Revolving ....................... 34,364 36,017 198,672 — Housing Loan ............................................................. 52,440 66,925 — — Other enterprise programs .......................................... 124,407 142,389 — — Total business-type activities................................... 41,338,958 31,625,444 3,325,619 — Total primary government ................................. $ 478,596,393 $ 77,242,973 $ 165,062,025 $ 2,698,882 Component Units University of California ................................................ 55,976,093 37,110,230 14,114,027 186,020 California Housing Finance Agency............................. 128,610 46,316 — — Nonmajor component units ........................................... 2,904,499 901,634 1,113,197 31,680 Total component units ........................................ $ 59,009,202 $ 38,058,180 $ 15,227,224 $ 217,700 General revenues: Personal income taxes ...................................................................................... Sales and use taxes ........................................................................................... Corporation taxes ............................................................................................. Motor vehicle excise tax .................................................................................. Insurance taxes ................................................................................................. Managed care organization enrollment tax ...................................................... Other taxes........................................................................................................ Investment and interest income (loss).............................................................. Escheat ............................................................................................................. Other................................................................................................................. Gain/loss on early extinguishment of debt .......................................................... Transfers .............................................................................................................. Total general revenues and transfers ........................................................... Change in net position.................................................................................... Net position (deficit) – beginning, as previously reported.............................. Error corrections............................................................................................... Change within financial reporting entity.......................................................... Net position (deficit) – beginning, as restated ................................................. Net position (deficit) – ending ........................................................................... 40 The notes to the financial statements are an integral part of this statement. Government-wide Financial Statements Net (Expenses) Revenues and Changes in Net Position Primary Government Governmental Business-type Component Activities Activities Total Units $ (16,857,214) $ (16,857,214) (87,230,903) (87,230,903) (90,578,261) (90,578,261) (4,187,873) (4,187,873) (1,909,026) (1,909,026) (6,474,658) (6,474,658) (16,186,557) (16,186,557) (3,780,126) (3,780,126) (227,204,618) (227,204,618) 34,305 34,305 (16,529) (16,529) (2,510,806) (2,510,806) (4,646,770) (4,646,770) 519,113 519,113 200,325 200,325 14,485 14,485 17,982 17,982 (6,387,895) (6,387,895) $ (227,204,618) $ (6,387,895) $ (233,592,513) $ (4,565,816) (82,294) (857,988) $ (5,506,098) $ 116,314,391 $ — $ 116,314,391 $ — 53,239,701 — 53,239,701 — 37,466,478 — 37,466,478 — 9,266,839 — 9,266,839 — 3,964,555 — 3,964,555 — 10,451,644 — 10,451,644 — 3,802,735 — 3,802,735 — 3,286,074 — 3,286,074 7,229,224 848,305 — 848,305 — — — — 5,104,229 (3,911) — (3,911) — (4,265,059) 4,265,059 — — 234,371,752 4,265,059 238,636,811 12,333,453 7,167,134 (2,122,836) 5,044,298 6,827,355 (20,276,419) (17,667,577) (37,943,996) 26,186,230 47,544,491 (357) 47,544,134 (3,391) — — — (11,281) 27,268,072 (17,667,934) 9,600,138 26,171,558 $ 34,435,206 $ (19,790,770) $ 14,644,436 $ 32,998,913 The notes to the financial statements are an integral part of this statement. 41 State of California Annual Comprehensive Financial Report This page intentionally left blank 42 The notes to the financial statements are an integral part of this statement. Fund Financial Statements State of California Annual Comprehensive Financial Report Balance Sheet Governmental Funds June 30, 2024 (amounts in thousands) General Federal ASSETS Cash and pooled investments............................................................................................... $ 67,911,388 $ 5,513,513 Investments .......................................................................................................................... — — Receivables (net).................................................................................................................. 36,524,775 3,189,084 Due from other funds........................................................................................................... 15,723,982 228,129 Due from other governments ............................................................................................... 6,060,340 38,907,651 Interfund receivables............................................................................................................ 3,472,783 — Loans receivable .................................................................................................................. 106,452 437,264 Other assets .......................................................................................................................... 77,597 — Total assets....................................................................................................................... $ 129,877,317 $ 48,275,641 LIABILITIES Accounts payable................................................................................................................. $ 16,296,044 $ 26,610,927 Due to other funds................................................................................................................ 3,211,892 10,180,309 Due to component units ....................................................................................................... 521,281 — Due to other governments.................................................................................................... 16,574,635 10,637,530 Interfund payables................................................................................................................ 3,998,270 — Benefits payable................................................................................................................... — 22,943 Revenues received in advance ............................................................................................. 52,091 179,487 Tax overpayments................................................................................................................ 19,946,046 — Deposits................................................................................................................................ 4,861 — Unclaimed property liability................................................................................................ 1,397,848 — Other liabilities..................................................................................................................... 519,308 267,704 Total liabilities ................................................................................................................. 62,522,276 47,898,900 DEFERRED INFLOWS OF RESOURCES ....................................................................... 3,962,276 19,530 Total liabilities and deferred inflows of resources..................................................... 66,484,552 47,918,430 FUND BALANCES Nonspendable....................................................................................................................... 3,574,494 — Restricted ............................................................................................................................. 26,028,140 717,843 Committed............................................................................................................................ 2,239,352 — Assigned............................................................................................................................... 27,722,047 — Unassigned........................................................................................................................... 3,828,732 (360,632) Total fund balances (deficit)........................................................................................... 63,392,765 357,211 Total liabilities, deferred inflows of resources, and fund balances.......................... $ 129,877,317 $ 48,275,641 44 The notes to the financial statements are an integral part of this statement. Fund Financial Statements Environmental and Natural Nonmajor Resources Governmental Total $ 23,699,006 $ 35,592,844 $ 132,716,751 — 1,815,136 1,815,136 596,880 14,847,478 55,158,217 382,345 3,761,739 20,096,195 12,829 792,718 45,773,538 1,328,899 2,237,763 7,039,445 950,069 3,445,474 4,939,259 — 60,316 137,913 $ 26,970,028 $ 62,553,468 $ 267,676,454 $ 830,835 $ 8,637,212 $ 52,375,018 131,314 7,202,900 20,726,415 3,027 37,418 561,726 1,275,005 8,261,007 36,748,177 576,338 21,746 4,596,354 — — 22,943 241,254 302,436 775,268 — — 19,946,046 235 524,971 530,067 — — 1,397,848 28,354 1,295,285 2,110,651 3,086,362 26,282,975 139,790,513 16,044 490,243 4,488,093 3,102,406 26,773,218 144,278,606 — 41,829 3,616,323 7,509,037 34,125,254 68,380,274 16,358,585 2,426,394 21,024,331 — 82,390 27,804,437 — (895,617) 2,572,483 23,867,622 35,780,250 123,397,848 $ 26,970,028 $ 62,553,468 $ 267,676,454 The notes to the financial statements are an integral part of this statement. 45 State of California Annual Comprehensive Financial Report Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position (amounts in thousands) Total fund balances – governmental funds $ 123,397,848 Amounts reported for governmental activities in the Statement of Net Position are different from those in the Governmental Funds Balance Sheet because: • The following capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds: Land 21,982,874 State highway infrastructure 85,170,476 Collections – nondepreciable 21,691 Buildings and other depreciable property 39,974,335 Intangible assets – amortizable 7,572,121 Less: accumulated depreciation/amortization (21,651,766) Construction/development in progress 22,358,982 Intangible assets – nonamortizable 1,318,261 156,746,974 • State revenues that are earned and measurable, but not available within 12 months of the end of 2,440,437 the reporting period, are reported as deferred inflows of resources in the funds. • Internal service funds are used by management to charge the costs of certain activities, such as (9,922,238) building construction and architectural, procurement, and technology services, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Position, excluding amounts for activity between the internal service funds and governmental funds. • Bond premiums/discounts and prepaid insurance charges are amortized over the life of the bonds (7,752,599) and are included in the governmental activities in the Statement of Net Position. • Deferred inflows and outflows of resources related to pension and OPEB transactions are not 18,525,483 reported in the funds. • Deferred inflows and outflows of resources resulting from bond refunding gains and losses, (335,402) respectively, are amortized over the life of the bonds and are not reported in the funds. • General obligation bonds and related accrued interest totaling $72,710,417, revenue bonds totaling (80,997,150) $7,255,563, and commercial paper totaling $1,031,170 are not due and payable in the current period and are not reported in the funds. • The following liabilities are not due and payable in the current period and are not reported in the funds: Compensated absences (5,124,584) Lease, subscription, and financed purchase liability (2,722,199) Net pension liability (81,035,003) Net other postemployment benefits liability (67,076,038) Mandated cost claims (1,887,272) Workers’ compensation (5,640,542) Pollution remediation obligations (1,686,308) Other noncurrent liabilities (2,496,201) (167,668,147) Net position of governmental activities $ 34,435,206 46 The notes to the financial statements are an integral part of this statement. Fund Financial Statements This page intentionally left blank The notes to the financial statements are an integral part of this statement. 47 State of California Annual Comprehensive Financial Report Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2024 (amounts in thousands) General Federal REVENUES Personal income taxes ........................................................................................................................... $ 114,316,015 $ — Sales and use taxes ................................................................................................................................ 33,179,166 — Corporation taxes................................................................................................................................... 37,298,102 — Motor vehicle excise taxes..................................................................................................................... 169,780 — Insurance taxes ...................................................................................................................................... 3,964,555 — Managed care organization enrollment tax............................................................................................ — — Other taxes............................................................................................................................................. 642,873 — Intergovernmental.................................................................................................................................. 17,841 164,426,438 Licenses and permits ............................................................................................................................. 5,961 — Charges for services............................................................................................................................... 372,133 — Fees........................................................................................................................................................ 19,225 — Penalties................................................................................................................................................. 549,560 29 Investment and interest.......................................................................................................................... 3,028,301 169,108 Escheat................................................................................................................................................... 848,242 — Other ...................................................................................................................................................... 931,942 — Total revenues ................................................................................................................................... 195,343,696 164,595,575 EXPENDITURES Current: General government ........................................................................................................................... 10,385,441 4,389,060 Education ............................................................................................................................................ 86,391,760 18,033,380 Health and human services ................................................................................................................. 64,139,315 132,437,521 Natural resources and environmental protection ................................................................................ 6,443,790 1,293,996 Business, consumer services, and housing ......................................................................................... 1,088,342 1,112,615 Transportation..................................................................................................................................... 1,036,187 5,264,522 Corrections and rehabilitation............................................................................................................. 14,527,777 98,973 Capital outlay......................................................................................................................................... 254,506 9,544 Debt service: Bond, commercial paper, and lease principal retirement ................................................................... 3,016,679 11,615 Interest and fiscal charges................................................................................................................... 3,034,841 352 Total expenditures ............................................................................................................................ 190,318,638 162,651,578 Excess (deficiency) of revenues over (under) expenditures............................................................ 5,025,058 1,943,997 OTHER FINANCING SOURCES (USES) General obligation bonds and commercial paper issued ....................................................................... — — Refunding debt issued .......................................................................................................................... — — Premium on bonds issued ...................................................................................................................... 257,193 — Long-term capital financing issued ....................................................................................................... 250,963 9,543 Transfers in ............................................................................................................................................ 3,107,558 — Transfers out .......................................................................................................................................... (9,656,450) (2,620,069) Total other financing sources (uses)................................................................................................ (6,040,736) (2,610,526) Net change in fund balances............................................................................................................ (1,015,678) (666,529) Fund balances – beginning, as previously reported.............................................................................. 64,003,688 (45,220,048) Error corrections .................................................................................................................................... 404,755 46,243,788 Change to or within the financial reporting entity................................................................................. — — Fund balances – beginning, as restated ................................................................................................. 64,408,443 1,023,740 Fund balances (deficits) – ending ........................................................................................................... $ 63,392,765 $ 357,211 48 The notes to the financial statements are an integral part of this statement. Fund Financial Statements Environmental Health Care Transportation and Natural Related Programs Nonmajor (formerly major) Resources (formerly major) Governmental Total $ $ — $ $ 2,169,875 $ 116,485,890 — 20,064,664 53,243,830 — — 37,298,102 103,355 8,993,704 9,266,839 — — 3,964,555 — 10,451,644 10,451,644 253,546 2,933,966 3,830,385 — 2,863,560 167,307,839 490,343 10,606,597 11,102,901 143,914 617,852 1,133,899 3,154,759 12,781,257 15,955,241 455,568 987,828 1,992,985 807,887 1,134,802 5,140,098 — 50,365 898,607 5,793,652 3,993,103 10,718,697 11,203,024 77,649,217 448,791,512 545,731 16,534,331 31,854,563 3,110 1,192,815 105,621,065 54,513 42,660,005 239,291,354 7,295,340 580,309 15,613,435 334,292 2,043,485 4,578,734 1,063,658 18,289,428 25,653,795 — 2,305,385 16,932,135 101,216 644,047 1,009,313 1,046,574 5,665,104 9,739,972 9,555 983,981 4,028,729 10,453,989 90,898,890 454,323,095 749,035 (13,249,673) (5,531,583) 2,110,710 3,923,050 6,033,760 285,920 3,225,860 3,511,780 83,343 322,209 662,745 8,937 298,387 567,830 58,494 6,945,964 10,112,016 (131,343) (1,971,203) (14,379,065) 2,416,061 12,744,267 6,509,066 3,165,096 (505,406) 977,483 10,776,722 20,702,620 2,035,150 23,244,227 75,542,359 (94) 229,557 46,878,006 (10,776,722) — (2,035,150) 12,811,872 — 20,702,526 36,285,656 122,420,365 $ $ 23,867,622 $ $ 35,780,250 $ 123,397,848 The notes to the financial statements are an integral part of this statement. 49 State of California Annual Comprehensive Financial Report Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities (amounts in thousands) Net change in fund balances – total governmental funds $ 977,483 Amounts reported for governmental activities in the Statement of Activities are different from those in the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds because: • Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. In the current year, these amounts are: Purchase of assets 5,613,431 Disposal of assets (240,908) Depreciation expense, net of asset disposal (1,311,376) 4,061,147 • Some revenues in the Statement of Activities do not provide current financial resources and, (162,270) therefore, are unavailable in governmental funds. • Internal service funds are used by management to charge the costs of certain activities, such as (23,487) building construction and architectural services, procurement, and technology services, to individual funds. The net revenue (expense) of the internal service funds is reported with governmental activities. • The issuance of long-term debt instruments provides current financial resources to governmental funds, while the repayment of the principal of long-term debt is an expenditure of governmental funds. Neither transaction, however, has any effect on the Statement of Activities. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities. The following shows the effect of these differences in the treatment of long-term debt and related items: General Obligation Revenue Commercial Bonds Bonds Paper Total Debt issued (8,300,640) — (1,244,900) (9,545,540) Premium on debt issued (662,745) — — (662,745) Accreted interest — (69,643) — (69,643) Principal repayments 7,224,520 334,601 1,540,840 9,099,961 Related expenses not reported in governmental funds: Premium/discount amortization 696,866 140 — 697,006 Deferred gain/loss on refunding 31,680 (30,694) — 986 Accrued interest (41,089) 569 — (40,520) (1,051,408) 234,973 295,940 (520,495) (continued) 50 The notes to the financial statements are an integral part of this statement. Fund Financial Statements • The following expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not recognized as expenditures in governmental funds. Once the use of current financial resources is required, expenditures are recognized in governmental funds but are eliminated from the Statement of Activities. In the current period, the net adjustment consists of: Compensated absences (1,618) Lease, subscription, and financed purchase liability (10,702) Net pension liability 23,647 Net other postemployment benefits liability 3,117,401 Mandated cost claims (77,393) Workers’ compensation (301,111) Pollution remediation obligations 53,932 Other noncurrent liabilities 30,600 2,834,756 Change in net position of governmental activities $ 7,167,134 (concluded) The notes to the financial statements are an integral part of this statement. 51 State of California Annual Comprehensive Financial Report Statement of Net Position Proprietary Funds June 30, 2024 (amounts in thousands) Water State Resources Lottery ASSETS Current assets: Cash and pooled investments ............................................................................................... $ 1,083,810 $ 593,968 Amount on deposit with U.S. Treasury ................................................................................ — — Investments........................................................................................................................... — 84,014 Restricted assets: Cash and pooled investments............................................................................................ — — Due from other governments ............................................................................................ — — Contracts and installments receivable .................................................................................. — — Receivables (net) .................................................................................................................. 91,684 743,050 Due from other funds............................................................................................................ — 10,519 Due from other governments................................................................................................ 94,353 — Prepaid items ........................................................................................................................ — — Inventories ............................................................................................................................ 5,402 19,701 Other current assets .............................................................................................................. — 7,241 Total current assets ........................................................................................................... 1,275,249 1,458,493 Noncurrent assets: Restricted assets: Cash and pooled investments............................................................................................ 177,644 — Investments ....................................................................................................................... 50,655 — Loans receivable ............................................................................................................... — — Investments........................................................................................................................... — 484,691 Contracts and installments receivable .................................................................................. — — Receivables (net) .................................................................................................................. — — Interfund receivables ............................................................................................................ 180,894 — Loans receivable................................................................................................................... 6,140 — Long-term prepaid charges................................................................................................... 691,644 5,613 Capital assets: Land .................................................................................................................................. 223,730 18,798 Collections – nondepreciable............................................................................................ — — Buildings and other depreciable property......................................................................... 7,515,387 311,353 Intangible assets – amortizable ......................................................................................... 108,055 26,310 Less: accumulated depreciation/amortization................................................................... (2,921,481) (179,579) Construction/development in progress ............................................................................. 1,683,090 — Intangible assets – nonamortizable ................................................................................... 124,996 — Other noncurrent assets ........................................................................................................ — — Total noncurrent assets ..................................................................................................... 7,840,754 667,186 Total assets................................................................................................................... 9,116,003 2,125,679 DEFERRED OUTFLOWS OF RESOURCES ................................................................... 412,747 164,348 Total assets and deferred outflows of resources................................................... $ 9,528,750 $ 2,290,027 52 The notes to the financial statements are an integral part of this statement. Fund Financial Statements Governmental Business-type Activities – Enterprise Funds Activities Unemployment California State Nonmajor Internal Programs University Enterprise Total Service Funds $ 2,666,348 $ 1,820,398 $ 988,389 $ 7,152,913 $ 3,747,333 474,121 — — 474,121 — — 3,999,916 — 4,083,930 — — — 779,743 779,743 996,378 — — 238,058 238,058 — — — — — 613,688 1,364,035 427,764 140,005 2,766,538 74,669 93,111 2,833 30,706 137,169 810,773 26,051 — 99,738 220,142 23,253 — 81,833 12 81,845 192,008 — — 9,281 34,384 96,244 — — — 7,241 — 4,623,666 6,332,744 2,285,932 15,976,084 6,554,346 — — — 177,644 106,788 — — — 50,655 — — — 5,508,401 5,508,401 — — 2,537,880 14,099 3,036,670 — — — — — 8,309,069 937,470 679,161 — 1,616,631 6,921 418,658 — 3,064 602,616 40,709 2,170 29,262 3,413,441 3,451,013 4,141 — — — 697,257 110 — 245,477 1,273 489,278 2,080 — 39,774 — 39,774 — 30,535 15,023,794 26,770 22,907,839 681,141 244,118 974,602 27,364 1,380,449 782,659 (109,148) (6,398,420) (33,302) (9,641,930) (758,327) — 1,274,407 111 2,957,608 2,071,779 — 11,844 — 136,840 — — 24,394 7,866 32,260 — 1,523,803 14,442,175 8,969,087 33,443,005 11,247,070 6,147,469 20,774,919 11,255,019 49,419,089 17,801,416 224,454 5,446,331 32,748 6,280,628 857,634 $ 6,371,923 $ 26,221,250 $ 11,287,767 $ 55,699,717 $ 18,659,050 (continued) The notes to the financial statements are an integral part of this statement. 53 State of California Annual Comprehensive Financial Report Statement of Net Position (continued) Proprietary Funds June 30, 2024 (amounts in thousands) Water State Resources Lottery LIABILITIES Current liabilities: Accounts payable.................................................................................................................. $ 138,810 $ 55,265 Due to other funds ................................................................................................................ 120,528 526,890 Due to other governments..................................................................................................... 397,865 — Revenues received in advance.............................................................................................. — 2,533 Deposits ................................................................................................................................ — — Contracts and notes payable ................................................................................................. — — Interest payable..................................................................................................................... 9,034 — Benefits payable ................................................................................................................... — — Current portion of long-term obligations.............................................................................. 274,684 925,793 Other current liabilities......................................................................................................... — 190 Total current liabilities...................................................................................................... 940,921 1,510,671 Noncurrent liabilities: Interfund payables ................................................................................................................ 3,921 842 Lottery prizes and annuities.................................................................................................. — 559,346 Compensated absences payable............................................................................................ 45,688 — Workers’ compensation benefits payable............................................................................. — 10,173 Commercial paper and other borrowings ............................................................................. 484,850 — Lease liability ....................................................................................................................... 30,349 2,532 Subscription liability............................................................................................................. 226 — General obligation bonds payable ........................................................................................ — — Revenue bonds payable ........................................................................................................ 2,885,688 — Net other postemployment benefits liability ........................................................................ 703,809 236,760 Net pension liability.............................................................................................................. 620,797 172,964 Revenues received in advance.............................................................................................. — — Other noncurrent liabilities................................................................................................... 88,780 — Total noncurrent liabilities................................................................................................ 4,864,108 982,617 Total liabilities............................................................................................................. 5,805,029 2,493,288 DEFERRED INFLOWS OF RESOURCES........................................................................ 2,451,067 92,339 Total liabilities and deferred inflows of resources............................................... 8,256,096 2,585,627 NET POSITION Net investment in capital assets............................................................................................ 1,238,081 171,073 Restricted: Nonexpendable – endowments ......................................................................................... — — Expendable: Construction.................................................................................................................. — — Debt service .................................................................................................................. 34,573 — Security for revenue bonds ........................................................................................... — — Unemployment programs.............................................................................................. — — Other purposes .............................................................................................................. — — Total expendable....................................................................................................... 34,573 — Unrestricted .......................................................................................................................... — (466,673) Total net position (deficit) .......................................................................................... 1,272,654 (295,600) Total liabilities, deferred inflows of resources, and net position ........................ $ 9,528,750 $ 2,290,027 54 The notes to the financial statements are an integral part of this statement. Fund Financial Statements Governmental Business-Type Activities – Enterprise Funds Activities Unemployment California State Nonmajor Internal Programs University Enterprise Total Service Funds $ 300,874 $ 473,857 $ 25,825 $ 994,631 $ 720,362 — — 12,814 660,232 848,812 19,146,476 — 355 19,544,696 25,764 — 417,838 26 420,397 1,706,444 — — — — 1,149 — — — — 28,813 — — 45,425 54,459 105,690 413,117 — — 413,117 — — 659,835 157,750 2,018,062 696,653 69,575 1,063,278 — 1,133,043 27,091 19,930,042 2,614,808 242,195 25,238,637 4,160,778 — 10,032 27,801 42,596 3,063,630 — — — 559,346 — 81,116 156,001 10,194 292,999 191,819 — — 4,428 14,601 48,361 — 151,349 — 636,199 — — 276,484 17,563 326,928 207,539 — 24,786 2 25,014 1,541 — — 635,759 635,759 — — 9,546,697 2,107,966 14,540,351 8,690,370 461,003 13,964,336 36,869 15,402,777 1,631,263 380,166 8,856,579 48,023 10,078,529 1,347,463 — 20,449 — 20,449 — — 242,994 3,544 335,318 12,145 922,285 33,249,707 2,892,149 42,910,866 15,194,131 20,852,327 35,864,515 3,134,344 68,149,503 19,354,909 122,350 4,636,704 38,524 7,340,984 486,950 20,974,677 40,501,219 3,172,868 75,490,487 19,841,859 274,647 2,181,881 1,377 3,867,059 621,858 — 1,612 — 1,612 — — 45,317 — 45,317 137,319 — 5,067 399,410 439,050 — — — 3,218,553 3,218,553 — 1,991,190 — — 1,991,190 — — 96,156 2,839,353 2,935,509 — 1,991,190 146,540 6,457,316 8,629,619 137,319 (16,868,591) (16,610,002) 1,656,206 (32,289,060) (1,941,986) (14,602,754) (14,279,969) 8,114,899 (19,790,770) (1,182,809) $ 6,371,923 $ 26,221,250 $ 11,287,767 $ 55,699,717 $ 18,659,050 (concluded) The notes to the financial statements are an integral part of this statement. 55 State of California Annual Comprehensive Financial Report Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds Year Ended June 30, 2024 (amounts in thousands) Water State Resources Lottery OPERATING REVENUES Unemployment and disability insurance.............................................................................. $ — $ — Lottery ticket sales ............................................................................................................... — 9,275,114 Power sales........................................................................................................................... 149,166 — Student tuition and fees........................................................................................................ — — Services and sales ................................................................................................................ 1,454,989 — Investment and interest ........................................................................................................ — — Rent...................................................................................................................................... — — Grants and contracts............................................................................................................. — — Other .................................................................................................................................... — — Total operating revenues................................................................................................. 1,604,155 9,275,114 OPERATING EXPENSES Lottery prizes ....................................................................................................................... — 6,031,572 Power purchases (net of recoverable power costs).............................................................. 377,146 — Personal services.................................................................................................................. 506,850 123,281 Supplies................................................................................................................................ — 25,055 Services and charges............................................................................................................ 49,405 920,862 Depreciation......................................................................................................................... 155,162 16,175 Scholarships and fellowships............................................................................................... — — Distributions to beneficiaries ............................................................................................... — — Interest expense.................................................................................................................... — — Amortization of long-term prepaid charges......................................................................... — — Other .................................................................................................................................... 204,320 — Total operating expenses................................................................................................. 1,292,883 7,116,945 Operating income (loss) .................................................................................................. 311,272 2,158,169 NONOPERATING REVENUES (EXPENSES) Donations and grants............................................................................................................ — — Private gifts .......................................................................................................................... — — Investment and interest income (loss).................................................................................. 53,727 70,051 Interest expense and fiscal charges...................................................................................... (88,266) (24,138) Lottery payments for education ........................................................................................... — (2,220,805) Other .................................................................................................................................... (242,428) 194 Total nonoperating revenues (expenses)........................................................................ (276,967) (2,174,698) Income (loss) before capital contributions and transfers ................................................ 34,305 (16,529) Loss on early extinguishment of debt .................................................................................. — — Transfers in .......................................................................................................................... — — Transfers out ........................................................................................................................ — — Change in net position..................................................................................................... 34,305 (16,529) Total net position (deficit) – beginning, as previously reported ....................................... 1,238,349 (279,071) Error corrections .................................................................................................................. — — Total net position (deficit) – beginning, as restated........................................................... 1,238,349 (279,071) Total net position (deficit) – ending..................................................................................... $ 1,272,654 $ (295,600) 56 The notes to the financial statements are an integral part of this statement. Fund Financial Statements Governmental Business-type Activities – Enterprise Funds Activities Unemployment California State Nonmajor Internal Programs University Enterprise Total Service Funds $ 15,603,912 $ — $ — $ 15,603,912 $ — — — — 9,275,114 — — — — 149,166 — — 2,335,398 — 2,335,398 — — 862,562 138,615 2,456,166 5,163,786 — — 154,274 154,274 54,641 — — — — 320,526 — 99,774 — 99,774 — — 368,084 5,052 373,136 — 15,603,912 3,665,818 297,941 30,446,940 5,538,953 — — — 6,031,572 — — — — 377,146 — 319,891 6,945,782 66,414 7,962,218 963,082 — 2,476,903 69,307 2,571,265 27,591 100,673 — 33,607 1,104,547 4,023,961 11,829 636,480 4,985 824,631 133,507 — 1,451,230 — 1,451,230 — 17,779,387 — — 17,779,387 — — — 34,306 34,306 332,572 — — — — 33 — — 12,437 216,757 — 18,211,780 11,510,395 221,056 38,353,059 5,480,746 (2,607,868) (7,844,577) 76,885 (7,906,119) 58,207 — 2,651,438 674,181 3,325,619 — — 117,070 — 117,070 — 97,452 618,043 51,821 891,094 8,230 (390) (357,187) (52,685) (522,666) (15,779) — — — (2,220,805) — — 168,443 1,703 (72,088) (72,224) 97,062 3,197,807 675,020 1,518,224 (79,773) (2,510,806) (4,646,770) 751,905 (6,387,895) (21,566) — — — — (3,911) — 4,263,059 2,000 4,265,059 58,336 — — — — (56,346) (2,510,806) (383,711) 753,905 (2,122,836) (23,487) (12,091,948) (13,895,901) 7,360,994 (17,667,577) (1,156,896) — (357) — (357) (2,426) (12,091,948) (13,896,258) 7,360,994 (17,667,934) (1,159,322) $ (14,602,754) $ (14,279,969) $ 8,114,899 $ (19,790,770) $ (1,182,809) The notes to the financial statements are an integral part of this statement. 57 State of California Annual Comprehensive Financial Report Statement of Cash Flows Proprietary Funds Year Ended June 30, 2024 (amounts in thousands) Water State Resources Lottery CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers/employers.............................................................................. $ 1,777,924 $ 9,331,500 Receipts from interfund services provided .................................................................... — — Payments to suppliers .................................................................................................... (516,651) (321,209) Payments to employees.................................................................................................. (506,850) (123,567) Payments for interfund services used ............................................................................ — (15,746) Payments for lottery prizes ............................................................................................ — (7,410,327) Claims paid to other than employees............................................................................. — (632,667) Receipts from other states.............................................................................................. — 1,325,801 Other receipts (payments).............................................................................................. (8,554) 216 Net cash provided by (used in) operating activities ............................................... 745,869 2,154,001 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Receipts from / (payment on) notes receivable and leases receivable........................... — — Proceeds from / (payment on) loans and interfund borrowings.................................... — — Retirement of general obligation bonds......................................................................... — — Proceeds from revenue bonds ........................................................................................ — — Retirement of revenue bonds ......................................................................................... — — Interest received............................................................................................................. — — Interest paid.................................................................................................................... — — Transfers in .................................................................................................................... — — Transfers out .................................................................................................................. — — Grants received .............................................................................................................. — — Lottery payments for education ..................................................................................... — (2,357,879) Net cash provided by (used in) noncapital financing activities............................. — (2,357,879) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets........................................................................................... (413,340) (2,021) Proceeds from sale of capital assets............................................................................... — 146 Proceeds from notes payable and commercial paper..................................................... 284,631 — Principal paid on notes payable and commercial paper................................................. (55,171) — Proceeds from long-term capital financing.................................................................... — — Payment on long-term capital financing........................................................................ — (5,945) Retirement of general obligation bonds......................................................................... (85) — Proceeds from revenue bonds ........................................................................................ — — Retirement of revenue bonds ......................................................................................... (222,140) — Interest paid.................................................................................................................... (121,756) — Grants received .............................................................................................................. 22,536 — Net cash used in capital and related financing activities ....................................... (505,325) (7,820) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments................................................................................................. (151,327) (5,767) Proceeds from maturity and sale of investments ........................................................... 151,780 85,436 Proceeds from / (issuance of) loans receivable.............................................................. 776 — Earnings on investments ................................................................................................ 46,662 64,301 Net cash provided by (used in) investing activities................................................. 47,891 143,970 Net increase (decrease) in cash and pooled investments.......................................... 288,435 (67,728) Cash and pooled investments – beginning..................................................................... 973,019 661,696 Cash and pooled investments – ending.......................................................................... $ 1,261,454 $ 593,968 58 The notes to the financial statements are an integral part of this statement. Fund Financial Statements Governmental Business-type Activities -Enterprise Funds Activities Unemployment California State Nonmajor Internal Programs University Enterprise Total Service Funds $ 15,594,237 $ 3,128,439 $ 244,488 $ 30,076,588 $ 11,177 22,359 — 105,888 128,247 6,481,108 (74,886) (2,374,158) (150,277) (3,437,181) (3,864,771) (190,809) (6,772,497) (39,232) (7,632,955) (986,196) — — (1,146) (16,892) — — — — (7,410,327) — (17,744,646) — — (18,377,313) — — — — 1,325,801 — 1,448,878 (1,011,323) (985,658) (556,441) (372,812) (944,867) (7,029,539) (825,937) (5,900,473) 1,268,506 — 170 — 170 9,210 123,730 3,997 9,794 137,521 (520,013) — — (28,220) (28,220) — — 47,245 301,544 348,789 — — (23,855) (132,170) (156,025) — — 18,081 — 18,081 — — (18,298) (71,714) (90,012) (99) — 3,848,629 2,000 3,850,629 73,133 — — — — (57,318) — 2,895,253 687,758 3,583,011 — — — — (2,357,879) — 123,730 6,771,222 768,992 5,306,065 (495,087) (865) (1,113,761) (2,456) (1,532,443) (1,231,262) 146 29,075 18 29,385 8,792 — — — 284,631 — — — — (55,171) — — — — — 7,296 — (353,987) (752) (360,684) (27,756) — — — (85) — — 875,675 — 875,675 2,066,784 — — — (222,140) (1,186,620) (390) (352,219) (80) (474,445) (15,680) — 62,402 — 84,938 — (1,109) (852,815) (3,270) (1,370,339) (378,446) — (12,754,011) (2,807) (12,913,912) — 954 13,936,355 — 14,174,525 — (301,557) — — (300,781) — 97,452 291,575 46,578 546,568 7,922 (203,151) 1,473,919 43,771 1,506,400 7,922 (1,025,397) 362,787 (16,444) (458,347) 402,895 3,691,745 1,457,611 1,784,576 8,568,647 4,447,604 $ 2,666,348 $ 1,820,398 $ 1,768,132 $ 8,110,300 $ 4,850,499 (continued) The notes to the financial statements are an integral part of this statement. 59 State of California Annual Comprehensive Financial Report Statement of Cash Flows (continued) Proprietary Funds Year Ended June 30, 2024 (amounts in thousands) Water State Resources Lottery RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Operating income (loss).................................................................................................. $ 311,272 $ 2,158,169 Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation................................................................................................................ 155,162 16,175 Provisions and allowances .......................................................................................... — (7,401) Amortization of premiums and discounts................................................................... — — Amortization of long-term prepaid charges and credits ............................................. 32,352 — Other ........................................................................................................................... (8,554) 74 Change in account balances: Receivables................................................................................................................ 132,285 42,028 Due from other funds ................................................................................................ — 478 Due from other governments..................................................................................... 2,680 — Prepaid items............................................................................................................. — 3,613 Inventories................................................................................................................. (457) (3,125) Contracts and installments receivable....................................................................... — — Leases receivable....................................................................................................... — — Other current assets ................................................................................................... — (92) Loans receivable........................................................................................................ — — Deferred outflow of resources................................................................................... — — Accounts payable ...................................................................................................... 101,101 (807) Due to other funds..................................................................................................... (12,696) (55,117) Due to other governments ......................................................................................... 43,314 — Deposits..................................................................................................................... — — Contracts and notes payable...................................................................................... — — Interest payable ......................................................................................................... — — Revenues received in advance................................................................................... — (206) Other current liabilities.............................................................................................. — 2,782 Benefits payable ........................................................................................................ — — Lottery prizes and annuities ...................................................................................... — (52,955) Compensated absences payable ................................................................................ — — Other noncurrent liabilities........................................................................................ (10,590) 50,385 Deferred inflow of resources..................................................................................... — — Total adjustments..................................................................................................... 434,597 (4,168) Net cash provided by (used in) operating activities................................................... $ 745,869 $ 2,154,001 Noncash investing, capital, and financing activities: Unclaimed lottery prizes directly allocated to another entity ..................................... $ — $ 67,128 Amortization/defeasance of bond premium and discount .......................................... 44,532 — Unrealized gain/loss on investments........................................................................... — 15,444 Amortization of deferred loss on refundings .............................................................. 11,767 — State’s contribution for pension and OPEB................................................................ — — Gifts in kind ................................................................................................................ — — Change in capital assets .............................................................................................. — — Other miscellaneous noncash transactions.................................................................. — 42,027 60 The notes to the financial statements are an integral part of this statement. Fund Financial Statements Governmental Business-type Activities – Enterprise Funds Activities Unemployment California State Nonmajor Internal Programs University Enterprise Total Service Funds $ (2,607,868) $ (7,844,577) $ 76,885 $ (7,906,119) $ 58,207 11,829 636,480 4,985 824,631 133,507 — — (128) (7,529) — — — (1,663) (1,663) (122,430) — — — 32,352 33 — (6,845) (3,041) (18,366) 6,951 51,328 (7,969) 6,564 224,236 69,330 (26,917) (7,321) 805 (32,955) (24,009) 70,564 — (9,389) 63,855 15,811 — 16,450 18 20,081 (1,805) — — (2,949) (6,531) 7,426 — — — — 632,309 — — (1,000) (1,000) 2,779 — — 2,199 2,107 — — — (710,373) (710,373) — (27,266) 465,514 (172,051) 266,197 18,903 (8,692) 24,828 (9,972) 106,458 173,688 13,736 — (969) (55,046) 242,961 1,450,714 — (21) 1,494,007 (2,996) — — — — 3,356 — — — — (5,555) — — 10,534 10,534 7,933 (61,003) (27,719) (6) (88,934) 97,930 (36,860) (20,414) 351 (54,141) 11,571 69,220 84,916 — 154,136 — — — — (52,955) — (13,884) 19,827 (2,809) 3,134 (9,284) 163,445 969,372 (14,428) 1,158,184 73,382 6,787 (1,332,081) 521 (1,324,773) (121,492) 1,663,001 815,038 (902,822) 2,005,646 1,210,299 $ (944,867) $ (7,029,539) $ (825,937) $ (5,900,473) $ 1,268,506 (concluded) $ — $ — $ — $ 67,128 $ — — 29,502 — 74,034 — — 258,999 — 274,443 — — 7,504 — 19,271 — — 414,430 — 414,430 — — 115,159 — 115,159 — — 300,916 — 300,916 — — — 3,299 45,326 84,308 The notes to the financial statements are an integral part of this statement. 61 State of California Annual Comprehensive Financial Report Statement of Fiduciary Net Position Fiduciary Funds and Similar Component Units June 30, 2024 (amounts in thousands) Pension and Other Employee Private Benefit Purpose Investment Trust Trust Trust Custodial ASSETS Cash and pooled investments.................................... $ 4,814,325 $ 87,957 $ 21,974,329 $ 2,288,806 Investments, at fair value: Short-term............................................................... 31,995,167 281,038 594 — Equity securities ..................................................... 376,660,509 9,285,330 122,033 — Debt securities........................................................ 227,550,731 3,282,801 139,606 — Real estate .............................................................. 109,168,849 336,049 — — Securities lending collateral ................................... 41,468,241 — — — Other....................................................................... 200,349,054 3,485,726 — — Total investments................................................. 987,192,551 16,670,944 262,233 — Receivables (net)....................................................... 40,702,138 6,418 245,163 3,486,642 Due from other funds................................................ 1,141,532 — — 49,790 Due from other governments .................................... 13 — — 984 Interfund receivable .................................................. — — — 19,810 Loans receivable ....................................................... 6,264,528 — — 367 Other assets ............................................................... 1,018,975 287,714 — 15 Total assets............................................................ 1,041,134,062 17,053,033 22,481,725 5,846,414 DEFERRED OUTFLOWS OF RESOURCES ....... 394,010 — 38 259 Total assets and deferred outflows of resources....................................................... 1,041,528,072 17,053,033 22,481,763 5,846,673 LIABILITIES Accounts payable...................................................... 6,619,328 13,513 77 1,086,293 Due to other governments......................................... — — 244,136 3,131,746 Benefits payable........................................................ 4,980,913 — 60 — Revenues received in advance .................................. — 11,682 — 20 Deposits..................................................................... — 287,714 — 928,055 Securities lending obligations................................... 53,794,354 — — — Loans payable ........................................................... 5,785,091 — — — Other liabilities.......................................................... 70,197,592 — 53 16,201 Total liabilities ...................................................... 141,377,278 312,909 244,326 5,162,315 DEFERRED INFLOWS OF RESOURCES ........... 483,048 — 74 275 Total liabilities and deferred inflows of resources....................................................... 141,860,326 312,909 244,400 5,162,590 NET POSITION Restricted: Pension benefits ........................................................ 850,538,710 — 263,132 — Other postemployment benefits ................................ 20,987,264 — — — Deferred compensation participants ......................... 28,131,426 — — — Pool participants........................................................ — — 21,974,231 — Individuals, organizations, or other governments..... 10,346 16,740,124 — 684,083 Total net position.................................................. $ 899,667,746 $ 16,740,124 $ 22,237,363 $ 684,083 62 The notes to the financial statements are an integral part of this statement. Fund Financial Statements Statement of Changes in Fiduciary Net Position Fiduciary Funds and Similar Component Units Year Ended June 30, 2024 (amounts in thousands) Pension and Other Employee Private Benefit Purpose Investment Trust Trust Trust Custodial ADDITIONS Contributions: Employer ................................................................. $ 39,342,670 $ — $ 107,701 $ 27,461 Plan member............................................................ 12,279,232 — — — Non-employer.......................................................... 3,945,974 — — — Total contributions................................................ 55,567,876 — 107,701 27,461 Investment income: Net appreciation (depreciation) in fair value of investments .............................................................. 63,771,788 82,147 16,630 — Interest, dividends, and other investment income ... 16,987,935 1,744,059 894,679 6,994 Less: investment expense ........................................ (4,529,510) (14,907) (119) — Net investment income ......................................... 76,230,213 1,811,299 911,190 6,994 Receipts from depositors............................................ — 3,830,011 14,399,979 — Other........................................................................... 451,328 — 460 57,660 Total additions ....................................................... 132,249,417 5,641,310 15,419,330 92,115 DEDUCTIONS Distributions paid and payable to participants ........... 56,140,257 — 892,415 74,442 Refunds of contributions ............................................ 516,513 — — — Administrative expense.............................................. 630,773 738 2,292 1,487 Interest expense.......................................................... 333,508 — — — Payments to and for depositors .................................. 1,126,184 3,307,464 18,104,712 283 Total deductions..................................................... 58,747,235 3,308,202 18,999,419 76,212 Change in net position .......................................... 73,502,182 2,333,108 (3,580,089) 15,903 Net position – beginning, as previously reported..... 826,165,564 14,407,016 25,817,452 668,180 Net position – ending .................................................. $ 899,667,746 $ 16,740,124 $ 22,237,363 $ 684,083 The notes to the financial statements are an integral part of this statement. 63 State of California Annual Comprehensive Financial Report This page intentionally left blank 64 The notes to the financial statements are an integral part of this statement. Discretely Presented Component Units Financial Statements State of California Annual Comprehensive Financial Report Statement of Net Position Discretely Presented Component Units – Enterprise Activity June 30, 2024 (amounts in thousands) California University Housing Nonmajor of Finance Component California Agency Units Total ASSETS Current assets: Cash and pooled investments...................................... $ 765,504 $ 1,925,650 $ 1,762,999 $ 4,454,153 Investments ................................................................. 9,051,079 14 916,869 9,967,962 Restricted assets: Cash and pooled investments ................................... — — 908,178 908,178 Investments............................................................... — — 103,851 103,851 Receivables (net)......................................................... 8,066,821 235,666 714,564 9,017,051 Due from primary government ................................... 561,553 — 173 561,726 Due from other governments ...................................... 222,359 — — 222,359 Prepaid items............................................................... — 451 2,218 2,669 Inventories................................................................... 438,656 — — 438,656 Other current assets..................................................... 600,255 92,690 40,064 733,009 Total current assets................................................... 19,706,227 2,254,471 4,448,916 26,409,614 Noncurrent assets: Restricted assets: Cash and pooled investments ................................... — — 27,390 27,390 Investments............................................................... — — 251,908 251,908 Investments ................................................................. 49,510,006 400,917 3,464,491 53,375,414 Receivables (net)......................................................... 3,608,213 — 763,248 4,371,461 Loans receivable ......................................................... — 2,531,826 532,726 3,064,552 Long-term prepaid charges ......................................... — — 96 96 Capital assets: Land.......................................................................... 2,115,496 — 195,914 2,311,410 Collections – nondepreciable ................................... 657,982 — 13,265 671,247 Buildings and other depreciable property ................ 70,095,391 701 2,595,586 72,691,678 Intangible assets – amortizable ................................ 5,807,627 27,987 348,036 6,183,650 Less: accumulated depreciation/amortization .......... (38,267,885) (7,803) (1,415,485) (39,691,173) Construction/development in progress..................... 8,163,806 — 123,428 8,287,234 Intangible assets – nonamortizable .......................... — — 305 305 Other noncurrent assets............................................... 760,078 47,910 61,139 869,127 Total noncurrent assets............................................. 102,450,714 3,001,538 6,962,047 112,414,299 Total assets........................................................... 122,156,941 5,256,009 11,410,963 138,823,913 DEFERRED OUTFLOWS OF RESOURCES ......... 6,570,718 22,134 145,742 6,738,594 Total assets and deferred outflows of resources ..................................................... $ 128,727,659 $ 5,278,143 $ 11,556,705 $ 145,562,507 66 The notes to the financial statements are an integral part of this statement. Component Unit Financial Statements California University Housing Nonmajor of Finance Component California Agency Units Total LIABILITIES Current liabilities: Accounts payable .......................................................... $ 3,468,303 $ 41,610 $ 988,176 $ 4,498,089 Revenues received in advance....................................... 2,182,463 — 214,642 2,397,105 Deposits......................................................................... — 234,549 1,050 235,599 Contracts and notes payable.......................................... — — 38,890 38,890 Interest payable ............................................................. — 3,314 2,984 6,298 Securities lending obligations ....................................... 2,299,343 — — 2,299,343 Current portion of long-term obligations ...................... 7,620,397 10,010 219,995 7,850,402 Other current liabilities.................................................. 3,510,383 210,397 275,473 3,996,253 Total current liabilities ............................................... 19,080,889 499,880 1,741,210 21,321,979 Noncurrent liabilities: Compensated absences payable .................................... 496,781 2,736 18,783 518,300 Workers’ compensation benefits payable ..................... 1,335,275 — 5,479 1,340,754 Loans payable................................................................ — 379 11,393 11,772 Commercial paper and other borrowings...................... — — 76,599 76,599 Lease liability ................................................................ 2,265,878 19,597 194,324 2,479,799 Subscription liability ..................................................... 145,167 — 3,369 148,536 Revenue bonds payable................................................. 30,156,670 120,461 875,933 31,153,064 Net other postemployment benefits liability ................. 20,911,103 51,954 156,855 21,119,912 Net pension liability ...................................................... 17,494,965 38,486 282,671 17,816,122 Revenues received in advance....................................... — — 29,384 29,384 Other noncurrent liabilities............................................ 1,652,370 601,919 817,406 3,071,695 Total noncurrent liabilities ......................................... 74,458,209 835,532 2,472,196 77,765,937 Total liabilities........................................................ 93,539,098 1,335,412 4,213,406 99,087,916 DEFERRED INFLOWS OF RESOURCES................ 12,866,626 64,993 544,059 13,475,678 Total liabilities and deferred inflows of resources........................................................ 106,405,724 1,400,405 4,757,465 112,563,594 NET POSITION Net investment in capital assets .................................... 18,601,613 (730) 808,018 19,408,901 Restricted: Nonexpendable – endowments................................... 8,773,628 — 2,027,695 10,801,323 Expendable: Endowments and gifts ............................................. 20,711,854 — 39,520 20,751,374 Education................................................................. 898,500 — 1,570,019 2,468,519 Indenture.................................................................. — 790,624 — 790,624 Statute ...................................................................... — 3,127,674 1,179,018 4,306,692 Other purposes......................................................... — — 48,703 48,703 Total expendable................................................... 21,610,354 3,918,298 2,837,260 28,365,912 Unrestricted ................................................................... (26,663,660) (39,830) 1,126,267 (25,577,223) Total net position...................................................... 22,321,935 3,877,738 6,799,240 32,998,913 Total liabilities, deferred inflows of resources, and net position................................................. $ 128,727,659 $ 5,278,143 $ 11,556,705 $ 145,562,507 (concluded) The notes to the financial statements are an integral part of this statement. 67 State of California Annual Comprehensive Financial Report Statement of Activities Discretely Presented Component Units – Enterprise Activity Year Ended June 30, 2024 (amounts in thousands) California University Housing Nonmajor of Finance Component California Agency Units Total OPERATING EXPENSES Personal services .......................................................... $ 34,624,417 $ 41,072 $ 687,700 $ 35,353,189 Scholarships and fellowships ....................................... 963,827 — 119,804 1,083,631 Supplies ........................................................................ 6,410,253 — 23,949 6,434,202 Services and charges .................................................... 422,983 7,723 1,826,941 2,257,647 Department of Energy laboratories .............................. 1,146,576 — — 1,146,576 Depreciation ................................................................. 3,202,066 2,418 114,174 3,318,658 Interest expense and fiscal charges .............................. 1,225,704 24,383 57,750 1,307,837 Other............................................................................. 7,980,267 53,014 74,181 8,107,462 Total operating expenses ........................................ 55,976,093 128,610 2,904,499 59,009,202 PROGRAM REVENUES Charges for services ..................................................... 37,110,230 46,316 901,634 38,058,180 Operating grants and contributions .............................. 14,114,027 — 1,113,197 15,227,224 Capital grants and contributions................................... 186,020 — 31,680 217,700 Total program revenues.......................................... 51,410,277 46,316 2,046,511 53,503,104 Net revenues (expenses)......................................... (4,565,816) (82,294) (857,988) (5,506,098) GENERAL REVENUES Investment and interest income (loss).......................... 6,518,525 181,490 529,209 7,229,224 Other............................................................................. 4,104,827 53,453 945,949 5,104,229 Total general revenues............................................ 10,623,352 234,943 1,475,158 12,333,453 Change in net position............................................ 6,057,536 152,649 617,170 6,827,355 Net position – beginning, as previously reported ....... 16,275,680 3,725,089 6,185,461 26,186,230 Error corrections........................................................... — — (3,391) (3,391) Change to or within the financial reporting entity ....... (11,281) — — (11,281) Net position – beginning, as restated ........................... 16,264,399 3,725,089 6,182,070 26,171,558 Net position – ending..................................................... $ 22,321,935 $ 3,877,738 $ 6,799,240 $ 32,998,913 68 The notes to the financial statements are an integral part of this statement. Notes to the Financial Statements Notes to the Financial Statements – Index Note 1. Summary of Significant Accounting Policies .................................................................... 73 A. Reporting Entity................................................................................................. 73 1. Blended Component Units...................................................................... 73 2. Fiduciary Component Units.................................................................... 73 3. Discretely Presented Component Units .................................................. 74 4. Joint Venture........................................................................................... 75 5. Jointly Governed Organization............................................................... 76 6. Related Organizations............................................................................. 76 B. Government-wide and Fund Financial Statements ............................................ 78 C. Measurement Focus and Basis of Accounting ................................................... 81 1. Government-wide Financial Statements................................................. 81 2. Fund Financial Statements...................................................................... 81 D. Cash and Investments......................................................................................... 82 E. Receivables......................................................................................................... 82 F. Inventories ......................................................................................................... 82 G. Long-term Prepaid Charges ............................................................................... 82 H. Capital Assets and Right-to-Use Assets............................................................. 83 I. Long-term Obligations ....................................................................................... 84 J. Compensated Absences....................................................................................... 86 K. Deferred Outflows and Deferred Inflows of Resources..................................... 86 1. Deferred Outflows of Resources.............................................................. 86 2. Deferred Inflows of Resources ................................................................ 87 L. Nonmajor Enterprise Segment Information ....................................................... 89 M. Net Position and Fund Balance ......................................................................... 89 1. Net Position.............................................................................................. 89 2. Fund Balance ........................................................................................... 90 N. Stabilization Arrangements................................................................................. 90 1. Budget Stabilization Account ................................................................. 90 2. Special Fund for Economic Uncertainties .............................................. 91 3. Public School System Stabilization Account.......................................... 91 O. Guaranty Deposits.............................................................................................. 92 Note 2. Accounting Changes and Error Corrections....................................................................... 92 A. Changes in Accounting Principles ....................................................................... 92 69 State of California Annual Comprehensive Financial Report B. Changes to or within the Financial Reporting Entity ........................................... 93 C. Error Corrections in Previously Issued Financial Statements .............................. 93 1. Government-wide Governmental Activities............................................ 93 2. Government-wide Business-type Activities ............................................ 94 3. Governmental Funds................................................................................ 94 4. Proprietary Funds..................................................................................... 94 5. Internal Service Funds ............................................................................. 95 6. Discretely Presented Component Units ................................................... 95 7. Other Restatements .................................................................................. 95 Note 3. Budgetary and Legal Compliance ...................................................................................... 98 A. Budgeting and Budgetary Control........................................................................ 98 B. Legal Compliance................................................................................................. 98 Note 4. Deposits and Investments................................................................................................... 99 A. Primary Government............................................................................................ 99 1. Control of State Funds ............................................................................. 99 2. Valuation of State Investments ................................................................ 100 3. Oversight of Investing Activities............................................................. 102 4. Risk of Investments.................................................................................. 103 a. Interest Rate Risk ........................................................................ 104 b. Credit Risk .................................................................................. 105 c. Custodial Credit Risk .................................................................. 105 d. Concentration of Credit Risk ...................................................... 105 B. Fiduciary Funds.................................................................................................... 106 C. Discretely Presented Component Units................................................................ 106 Note 5. Accounts Receivable .......................................................................................................... 108 Note 6. Restricted Assets ................................................................................................................ 110 Note 7. Capital Assets..................................................................................................................... 111 Note 8. Deferred Outflows and Deferred Inflows of Resources..................................................... 115 Note 9. Accounts Payable ............................................................................................................... 116 Note 10. Long-term Obligations ...................................................................................................... 118 Note 11. Pension Trusts ................................................................................................................... 122 A. California Public Employees’ Retirement System............................................... 123 1. Public Employees’ Retirement Fund (PERF)......................................... 123 70 Notes to the Financial Statements 2. Single-employer Plans ............................................................................ 133 B. California State Teachers’ Retirement System..................................................... 142 C. Trial Court Pension Plans..................................................................................... 146 Note 12. Other Postemployment Benefits......................................................................................... 148 A. Retiree Health Benefits Program.......................................................................... 148 B. Trial Court OPEB Plans ....................................................................................... 164 Note 13. Commercial Paper and Other Long-term Borrowings ....................................................... 166 Note 14. Leases and Subscription-Based Information Technology Arrangements .......................... 166 Note 15. Commitments ..................................................................................................................... 168 Note 16. General Obligation Bonds.................................................................................................. 170 A. Variable-rate General Obligation Bonds.............................................................. 170 B. Build America Bonds ........................................................................................... 171 C. Debt Service Requirements .................................................................................. 172 D. General Obligation Bond Defeasances ................................................................ 172 1. Current Year Activity ............................................................................. 172 2. Outstanding Balance ............................................................................... 173 Note 17. Revenue Bonds................................................................................................................... 173 A. Governmental Activities ...................................................................................... 173 B. Business-type Activities ....................................................................................... 174 C. Discretely Presented Component Units................................................................ 174 D. Revenue Bond Defeasances ................................................................................. 176 1. Current Year – Governmental Activities ................................................ 176 2. Outstanding Balances.............................................................................. 176 Note 18. Risk Management............................................................................................................... 177 Note 19. Interfund Balances and Transfers....................................................................................... 178 A. Interfund Balances................................................................................................ 178 B. Interfund Transfers ............................................................................................... 184 Note 20. Fund Balances, Net Position Deficits, and Endowments ................................................... 186 A. Fund Balances ...................................................................................................... 186 B. Net Position Deficits............................................................................................. 187 C. Discretely Presented Component Unit Endowments and Gifts............................ 187 Note 21. Conduit Debt ...................................................................................................................... 188 Note 22. Contingent Liabilities......................................................................................................... 188 A. Litigation .............................................................................................................. 188 B. Federal Audit Exceptions ..................................................................................... 190 Note 23. Subsequent Events.............................................................................................................. 190 A. Debt Issuances...................................................................................................... 190 B. Other..................................................................................................................... 191 71 State of California Annual Comprehensive Financial Report This page intentionally left blank 72 Notes to the Financial Statements Notes to the Financial Statements NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements present information on the financial activities of the State of California over which the Governor, the Legislature, and other elected officials have direct or indirect governing and fiscal control. These financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). A. Reporting Entity These financial statements present the primary government of the State and its component units. The primary government consists of all funds, organizations, institutions, agencies, departments, and offices that are not legally separate from the State. Component units are organizations that are legally separate from the State, but for which the State is financially accountable, or organizations whose relationship with the State is such that exclusion would cause the State’s financial statements to be misleading. Following is information on the blended, fiduciary, and discretely presented component units of the State. 1. Blended Component Units Blended component units, although legally separate entities, are in substance part of the primary government’s operations. Therefore, data from these blended component units are integrated into the appropriate funds for reporting purposes. The Golden State Tobacco Securitization Corporation (GSTSC) is a not-for-profit corporation established through legislation in September 2002 solely for the purpose of purchasing Tobacco Settlement Revenues from the State. The five voting members of the State Public Works Board serve ex officio as the directors of the corporation. The GSTSC is authorized to issue bonds as necessary to provide sufficient funds for carrying out its purpose. The GSTSC’s financial activity is reported in the combining statements in the Nonmajor Governmental Funds section as a special revenue fund. For information regarding obtaining copies of the financial statements of GSTSC, contact the Department of Finance, Natural Resources, Energy, Environmental, and Capital Outlay Section, 915 L Street, 9th Floor, Sacramento, California 95814. 2. Fiduciary Component Units The State has two legally separate fiduciary component units that administer pension and other employee benefit trust funds. The State appoints a voting majority of the board members of both plans which, due to their fiduciary nature, are presented in the fiduciary fund statements as pension and other employee benefit trust funds, along with other primary government fiduciary funds. The California Public Employees’ Retirement System (CalPERS) administers pension and health benefit plans for state employees, non-teaching school employees, and employees of California public agencies. Its Board of Administration has plenary authority and fiduciary responsibility for the investment of monies and the administration of the plans. CalPERS administers the following seven pension and other employee benefit trust funds: the Public Employees’ Retirement Fund, the Judges’ Retirement Fund, the 73 State of California Annual Comprehensive Financial Report Judges’ Retirement Fund II, the Legislators’ Retirement Fund, the Public Employees’ Deferred Compensation Fund, the public employee Supplemental Contributions Program Fund, and the California Employers’ Retiree Benefit Trust Fund. CalPERS administers one investment trust fund: the California Employers’ Pension Prefunding Trust Fund. CalPERS also maintains two custodial funds: the Replacement Benefit Fund, and the Old Age and Survivors’ Insurance Revolving Fund. CalPERS’ separately issued financial statements may be found on its website at www.CalPERS.ca.gov. The California State Teachers’ Retirement System (CalSTRS) administers pension benefit plans for California public school teachers and certain other employees of the public school system. The State is financially accountable for CalSTRS. CalSTRS administers a hybrid retirement system consisting of the State Teachers’ Retirement Plan, a defined benefit plan, composed of the Defined Benefit Program, the Defined Benefit Supplement Program, the Cash Balance Benefit Program, and the Replacement Benefits Program; two defined contribution plans; a postemployment benefit plan; and a fund used to account for ancillary activities associated with various deferred compensation plans and programs. CalSTRS’ separately issued financial statements may be found on its website at www.CalSTRS.com. 3. Discretely Presented Component Units Enterprise activity of discretely presented component units is reported in a separate column in the government-wide financial statements. Discretely presented component units are legally separate from the primary government and usually provide services to entities and individuals outside the primary government. Discretely presented component units that report enterprise activity include the University of California, the California Housing Finance Agency, and nonmajor component units. Most component units separately issue their own financial statements. In general, the notes to the financial statements in this publication do not include information found in the component units’ separately issued financial statements. Instead, references to the individual component unit financial statements are provided where applicable. The University of California was founded in 1868 as a public, state-supported, land-grant institution. It was written into the State Constitution of 1879 as a public trust to be administered by a governing board, the Regents of the University of California (Regents). The University is a component unit of the State because the State appoints a voting majority of the Regents and provides financial assistance to the University. The University offers defined benefit pension plans and defined contribution pension plans to its employees through the University of California Retirement System (UCRS), a fiduciary responsibility of the Regents. The financial information of the UCRS is not included in the financial statements of this report due to its fiduciary nature. The University’s financial statements may be found on its website at www.ucop.edu. The California Housing Finance Agency (CalHFA) was created by the Zenovich-Moscone-Chacon Housing and Home Finance Act, as amended. CalHFA’s purpose is to finance the housing needs of persons and families of low and moderate income. It is a component unit of the State because the State appoints a voting majority of CalHFA’s governing board and the executive director, who administers the day-to-day operations. CalHFA’s financial statements may be found on its website at www.CalHFA.ca.gov. State legislation created various nonmajor component units to provide certain services outside the primary government and to provide certain private and public entities with a low-cost source of financing for programs deemed to be in the public interest. California State University Auxiliary Organizations are considered component units because they exist entirely or almost entirely for the direct benefit of the universities. The remaining nonmajor component units are considered component 74 Notes to the Financial Statements units because the majority of members of their governing boards are appointed by or are members of the primary government, and the primary government can impose its will on the entity; or the entity provides a specific financial benefit to or imposes a financial burden on the primary government. For information regarding obtaining copies of the financial statements of these component units, email the State Controller’s Office, State Accounting and Reporting Division at StateGovReports@sco.ca.gov. The nonmajor consolidated component unit segments are: California State University Auxiliary Organizations, which provide services primarily to university students through foundations, associated student organizations, student unions, food service entities, book stores, and similar organizations. Financing authorities, which provide financing for specific purposes. These agencies include: • The California Alternative Energy and Advanced Transportation Financing Authority, which provides financing for alternative energy and advanced transportation technologies; • The California Infrastructure and Economic Development Bank, which provides financing for business development and public improvements; and • The California Urban Waterfront Area Restoration Financing Authority, which provides financing for coastal and inland urban waterfront restoration projects. District agricultural associations, which exhibit all of the industries, industrial enterprises, resources, and products of the State (the district agricultural associations’ financial report is as of and for the year ended December 31, 2023). Other component units, which include the following entities: • The University of California College of the Law, San Francisco, which was established as the law department of the University of California to provide legal education programs and operates independently under its own board of directors. The college has a discretely presented component unit, the Foundation, which provides private sources of funds for academic programs, scholarships, and faculty research; • The State Assistance Fund for Enterprise, Business and Industrial Development Corporation, which provides financial assistance to small business; and • The Public Employees’ Contingency Reserve, which provides health benefit plans for state employees and annuitants. 4. Joint Venture A joint venture is an entity resulting from a contractual arrangement; it is owned, operated, or governed by two or more participants as a separate and specific activity subject to joint control. In such an arrangement, the participants retain an ongoing financial interest or an ongoing financial responsibility in the entity. These entities are not part of the primary government or a component unit. The State participates in a joint venture called the Capitol Area Development Authority (CADA). CADA was created in 1978 by the joint exercise of powers agreement between the primary government and the City of Sacramento for the location of state buildings and other improvements. CADA is a public entity, separate from the primary government and the city; it is administered by a board composed of five 75 State of California Annual Comprehensive Financial Report members—two appointed by the primary government, two appointed by the city, and one appointed by the affirmative vote of at least three of the other four members of the board. The primary government designates the chairperson of the board. Although the primary government does not have an equity interest in CADA, it does have an ongoing financial interest. The primary government subsidizes CADA’s operations by leasing land to CADA without consideration; however, the primary government is not obligated to do so. At June 30, 2024, CADA had total assets and deferred outflows of resources of $87 million, total liabilities and deferred inflows of resources of $53 million, and total net position of $34 million. Total revenues for the fiscal year were $20 million and expenses were $14 million, resulting in an increase in net position of $6 million. As the primary government does not have equity interest in CADA, CADA’s financial information is not included in the financial statements of this report. Separately issued financial statements may be obtained on CADA’s website at www.cadanet.org. 5. Jointly Governed Organization A jointly governed organization is a regional government or other multigovernmental arrangement that is governed by representatives from each of the governments that create the organization, but that is not a joint venture because the participants do not retain an ongoing financial interest or responsibility. These entities are not part of the primary government or a component unit. The State participates in a jointly governed organization called the California Residential Mitigation Program (CRMP). CRMP was created in 2011 by the joint exercise of powers agreement between the primary government and the California Earthquake Authority (CEA); a related organization. The purpose of CRMP is to provide for the joint exercise of powers common to the primary government and the CEA by funding and managing programming to supply grants, assistance, and incentives to owners of dwellings in California who wish to retrofit their homes to protect against earthquake damage. CRMP is a public entity, separate from the primary government and the CEA; it is administered by a board composed of four members – two appointed by the primary government, and two appointed by the CEA. As the primary government does not have an ongoing financial interest or responsibility for CRMP, the financial information of this institution is not included in the financial statements of this report. For information regarding obtaining copies of the financial statements of CRMP, go to its website at www.californiaresidentialmitigationprogram.com. 6. Related Organizations A related organization is an organization for which a primary government is accountable because that government appoints a voting majority of the organization’s governing board, but for which the primary government is not financially accountable. Chapter 854 of the Statutes of 1996 created an Independent System Operator (ISO), a state-chartered, nonprofit market institution. The ISO provides centralized control of the statewide electrical transmission grid to ensure the efficient use and reliable operation of the transmission system. The ISO is governed by a five-member board, the members of which are appointed by the Governor and confirmed by the Senate. The State’s accountability for this institution does not extend beyond making the initial oversight board appointments. As the primary government is not financially accountable for the ISO, the financial information of this institution is not included in the financial statements of this report. For information regarding obtaining copies of the financial statements of the ISO, go to its website at www.caiso.com. 76 Notes to the Financial Statements The California Earthquake Authority (CEA), a legally separate organization, offers earthquake insurance for California homeowners, renters, condominium owners, and mobile home owners. A three-member board composed of state-elected officials governs the CEA. The State’s accountability for this institution does not extend beyond making the appointments. As the primary government is not financially accountable for the CEA, the financial information of this institution is not included in the financial statements of this report. For information regarding obtaining copies of the financial statements of the CEA, go to its website at www.earthquakeauthority.com. The State Compensation Insurance Fund (State Fund) was established by the State through legislation enacted in 1913 to provide an available market for workers’ compensation insurance to employees located in California. State Fund operates in competition with other insurance carriers to serve California businesses. The State appoints all 11 members of the State Fund’s governing board. The State’s accountability for this institution does not extend beyond making the initial oversight board appointments. As the primary government is not financially accountable for the State Fund, the financial information of this institution is not included in the financial statements of this report. For information regarding obtaining copies of the financial statements of the State Fund, go to its website at www.statefundca.com. The California Health Benefit Exchange (Exchange), an independent public entity, offers health insurance to individuals, families, and small businesses. A five-member board of state-appointed officials governs the Exchange. The State’s accountability for this institution does not extend beyond making the appointments. As the primary government is not financially accountable for the Exchange, the financial information of this institution is not included in the financial statements of this report. For information regarding obtaining copies of the financial statements of the Exchange, go to its website at https://hbex.coveredca.com. The California Pollution Control Financing Authority (CPCFA) was created through the California Pollution Control Financing Authority Act of 1972. The CPCFA is a legally separate entity that provides financing for pollution control facilities. A three-member board composed of state-elected officials and an appointee governs the CPCFA. The State’s accountability for this institution does not extend beyond making the appointments. As the primary government is not financially accountable for the CPCFA, the financial information of this institution is not included in the financial statements of this report. For information regarding obtaining copies of the financial statements of the CPCFA, go to its website at www.treasurer.ca.gov/cpcfa. The California Health Facilities Financing Authority (CHFFA) was established by the State through legislation enacted in 1979. The CHFFA is a legally separate entity that provides financing for the construction, equipping, and acquisition of health facilities. A nine-member board composed of state-elected officials and appointees govern the CHFFA. The State’s accountability for this institution does not extend beyond making the appointments. As the primary government is not financially accountable for the CHFFA, the financial information of this institution is not included in the financial statements of this report. For information regarding obtaining copies of the financial statements of the CHFFA, go to its website at www.treasurer.ca.gov/chffa. The California Educational Facilities Authority (CEFA) was created by the State through legislation effective in 1973. The CEFA is a legally separate entity established to issue revenue bonds to finance loans for students attending public and private colleges and universities, and to assist private educational institutions of higher learning in financing the expansion and construction of educational facilities. A 77 State of California Annual Comprehensive Financial Report five-member board composed of state-elected officials and appointees govern the CEFA. The State’s accountability for this institution does not extend beyond making the appointments. As the primary government is not financially accountable for the CEFA, the financial information of this institution is not included in the financial statements of this report. For information regarding obtaining copies of the financial statements for the CEFA, go to its website at www.treasurer.ca.gov/cefa. The California School Finance Authority (CSFA) was created in 1985. The CSFA is a legally separate entity that provides loans to school and community college districts to assist them in obtaining equipment and facilities. A three-member board composed of state-elected officials and an appointee governs the CSFA. The State’s accountability for this institution does not extend beyond making the appointments. As the primary government is not financially accountable for the CSFA, the financial information for this institution is not included in the financial statements of this report. For information regarding obtaining copies of the financial statements of the CSFA, go to its website at www.treasurer.ca.gov/csfa. B. Government-wide and Fund Financial Statements Government-wide financial statements (the Statement of Net Position and the Statement of Activities) provide information on all of the nonfiduciary activities of the primary government and its component units. The primary government is reported separately from legally separate component units for which the State is financially accountable. Within the primary government, the State’s governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The effect of interfund activity has been removed from the statements, with the exception of amounts between governmental and business-type activities, which are presented as internal balances and transfers. Centralized services provided by the General Fund for other funds are charged as direct costs to the funds that received those services. Also, the General Fund recovers the cost of centralized services provided to federal programs from the federal government. The Statement of Net Position reports all of the financial and capital resources of the government as a whole in a format in which assets and deferred outflows of resources equal liabilities and deferred inflows of resources, plus net position. The Statement of Activities demonstrates the degree to which the expenses of a given function are offset by program revenues. Program revenues include charges to customers who purchase, use, or directly benefit from goods, services, or privileges provided by a given function. Program revenues also include grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items that are not program-related are reported as general revenues. Fund financial statements are provided for governmental funds, proprietary funds, fiduciary funds and similar component units, and discretely presented component units. A fund is a fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The State maintains the minimum number of funds consistent with legal and managerial requirements. Fiduciary funds, although excluded from the government-wide statements, are included in the fund financial statements. Major governmental and enterprise funds are reported in separate columns in the fund financial statements. Nonmajor governmental and proprietary funds are grouped into separate columns. Discretely presented component unit statements, which follow the fiduciary fund statements, also separately report the enterprise activity of the major discretely presented component units. In this report, the enterprise activity of nonmajor discretely presented component units is grouped in a separate column. 78 Notes to the Financial Statements Governmental fund types are used to account for activities primarily supported by taxes, grants, and similar revenue sources. The State reports the following major governmental funds: The General Fund is the main operating fund of the State. It accounts for transactions related to resources obtained and used for those services that need not be accounted for in another fund. The Federal Fund accounts for the receipt and use of grants, entitlements, and shared revenues received from the federal government that are all restricted by federal regulations. The Environmental and Natural Resources Fund accounts for fees, bond proceeds, and other revenues that are restricted for maintaining the State’s natural resources and improving the environmental quality of its air, land, and water. Proprietary fund types focus on the determination of operating income, changes in net position, financial position, and cash flows. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. Operating expenses include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. For its proprietary funds, the State applies all applicable GASB pronouncements. The State has two proprietary fund types: enterprise funds and internal service funds. Enterprise funds record business-type activity for which a fee is charged to external users for goods and services. In addition, the State is required to report activities as enterprise funds in the context of the activity’s principal revenue sources when any of the following criteria are met: • The activity’s debt is secured solely by fees and charges of the activity; • There is a legal requirement to recover costs; or • The pricing policies of fees and charges are designed to recover costs. The State reports the following major enterprise funds: The Water Resources Fund accounts for charges to local water districts and the sale of excess power to public utilities. The State Lottery Fund accounts for the sale of California State Lottery (Lottery) tickets and the Lottery’s payments for education. The Unemployment Programs Fund accounts for employer and worker contributions used for payments of unemployment insurance and disability benefits. The California State University Fund accounts for student fees and other receipts from gifts, bequests, donations, federal and state grants, and loans that are used for educational purposes. 79 State of California Annual Comprehensive Financial Report Nonmajor enterprise funds account for additional operations that are financed and operated in a manner similar to private business enterprises. Additionally, the State reports internal service funds as a proprietary fund type with governmental activities. Internal service funds account for goods or services provided to other agencies, departments, or governments on a cost-reimbursement basis. The goods and services provided include architectural services, public building construction and improvements, printing and procurement services, goods produced by inmates of state prisons, data processing services, and administrative services related to water delivery. Internal service funds are included in the governmental activities at the government-wide level. Fiduciary fund types are used to account for assets held by the State. The State acts as a trustee or as a custodian for individuals, private organizations, other governments, or other funds. Fiduciary funds, including fiduciary component units, are not included in the government-wide financial statements. The State has the following four fiduciary fund types: Private purpose trust funds account for all trust arrangements, other than those properly reported in pension or investment trust funds, whereby principal and income benefit individuals, private organizations, or other governments. The following are the State’s largest private purpose trust funds: The Scholarshare Program Trust Fund accounts for money received from participants to fund their beneficiaries’ higher education expenses at certain postsecondary educational institutions. The Unclaimed Property Fund accounts for unclaimed money and properties held in trust by the State. Unclaimed money is remitted to the General Fund where it can be used by the State until it is claimed. Pension and other employee benefit trust funds of the primary government and fiduciary component units account for transactions, assets, liabilities, and net position available for plan benefits of the retirement systems and for other employee benefit programs. Investment trust funds consist of the external portion of investment pools and account for the deposits, withdrawals, and earnings of local governments and public agencies. The Custodial Fund generally accounts for fiduciary activities that are not held under a trust agreement or equivalent, such as receipts and disbursements of sales tax, use tax, and other assessments held for local agencies, cash deposits for bail solicitors, and condemnation deposits. Discretely presented component units consist of certain organizations that have enterprise activity. The enterprise activity component units are the University of California, the California Housing Finance Agency, and nonmajor component units. In this report, all of the enterprise activity of the discretely presented component units is reported in a separate column in the government-wide financial statements and on separate pages following the fund financial statements. 80 Notes to the Financial Statements C. Measurement Focus and Basis of Accounting 1. Government-wide Financial Statements The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when they are earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar transactions are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 2. Fund Financial Statements The measurement focus and basis of accounting for the fund financial statements vary with the type of fund. Governmental fund types are presented using the current financial resources measurement focus. With this measurement focus, operating statements present increases and decreases in net current assets; the unassigned fund balance is a measure of available, spendable resources. The accounts of the governmental fund types are reported using the modified accrual basis of accounting. Under the modified accrual basis, revenues are recorded as they become measurable and available, and expenditures are recorded at the time the liabilities are incurred. The State records revenue sources when they are earned or when they are due, provided they are measurable and available within the ensuing 12 months. When an asset is recorded in a governmental fund statement, but the revenue is not available within the ensuing 12 months, the State reports a deferred inflow of resources until such time as the revenue becomes available. Principal tax revenues susceptible to accrual are recorded as taxpayers earn income (personal income and corporation taxes), as sales are made (consumption and use taxes), and as a taxable event occurs (miscellaneous taxes), net of estimated tax overpayments. Principal tax revenues are reported net of immaterial tax abatements from programs that promote economic development and otherwise benefit the State, such as the Film and Television Tax Credit, the California Competes Tax Credit, the Low-Income Housing Tax Credit, and the Sales and Use Tax Exclusion Program. Proprietary fund types and fiduciary fund types are accounted for using the economic resources measurement focus. The accounts of the proprietary fund types and fiduciary fund types are reported using the accrual basis of accounting. Under the accrual basis, most transactions are recorded when they occur, regardless of when cash is received or disbursed. Lottery revenue and the related prize expenses are recognized when sales are made. Certain prizes are payable in deferred installments. Such liabilities are recorded at the present value of amounts payable in the future. Discretely presented component units are accounted for using the economic resources measurement focus and the accrual basis of accounting. 81 State of California Annual Comprehensive Financial Report D. Cash and Investments The State considers cash and pooled investments, for the purpose of the Statement of Cash Flows, as cash and cash equivalents. Cash and cash equivalents are considered to be cash on hand; deposits in the State’s pooled investment program; restricted cash and pooled investments for debt service, construction, and operations; restricted cash on deposit with fiscal agents (for example, revenue bond trustees); and highly liquid investments with an original maturity date of three months or less. The State reports investments at fair value, as prescribed by GAAP. Additional information on the State’s investments and fair value measurement can be found in Note 4, Deposits and Investments. E. Receivables Amounts are aggregated into a single receivables account net of allowance for uncollectible amounts. The detail of the primary government’s accounts receivable can be found in Note 5, Accounts Receivable. F. Inventories Inventories of supplies are reported at cost and inventories held for resale are stated at the lower of average cost or market. In the government-wide financial statements, inventories for both governmental and business-type activities are expensed when they are consumed and unused inventories are reported as an asset on the Statement of Net Position. In the fund financial statements, governmental funds report inventories as expenditures when purchased, and proprietary funds report inventories as expenditures when consumed. The discretely presented component units have inventory policies similar to those of the primary government. G. Long-term Prepaid Charges The long-term prepaid charges account in the enterprise funds primarily represents operating and maintenance costs that will be recognized in the Water Resources Fund as expenses over the remaining life of long-term state water supply contracts. These costs are billable in future years. In addition, the account includes unbilled interest earnings on unrecovered capital costs that are recorded as long-term prepaid charges. These charges are recognized when billed in the future years under the terms of water supply contracts. Long-term prepaid charges are also included in the State Lottery Fund. These prepaid charges are incurred in connection with certain contracts that extend beyond a one-year period, which are amortized as expenses over the remaining life of the contracts. The long-term prepaid charges for the Public Buildings Construction Fund, an internal service fund, include prepaid insurance costs on revenue bonds issued. In the government-wide financial statements, the prepaid charges for governmental activities include prepaid insurance costs on revenue bonds issued. 82 Notes to the Financial Statements H. Capital Assets and Right-to-Use Assets Capital assets are categorized into land, state highway infrastructure, collections, buildings and other depreciable property, intangible assets, and construction in progress. The buildings and other depreciable property account includes buildings, improvements other than buildings, equipment, certain infrastructure assets, certain books, and other capitalized and depreciable property. Intangible assets include computer software, land-use rights, patents, copyrights, trademarks, and right-to-use assets. The value of the capital assets, including the related accumulated depreciation and amortization, is reported in the applicable governmental, business-type, or component unit activities columns in the government-wide Statement of Net Position. The primary government has a large collection of historical and contemporary treasures that have important documentary and artistic value. These assets are not capitalized or depreciated because they are cultural resources and cannot reasonably be valued and/or the assets have inexhaustible useful lives. These treasures and works of art include furnishings, portraits and other paintings, books, statues, photographs, and miscellaneous artifacts. These collections meet the conditions for exemption from capitalization because the collections are held for public exhibition, education, or research in furtherance of public service, rather than financial gain; protected, kept unencumbered, cared for, and preserved; and subject to an organizational policy that requires the proceeds from sales of collection items to be used to acquire other items for collections. In general, capital assets of the primary government are defined as assets that have a normal useful life of at least one year and a unit cost of at least $5,000. These assets are recorded at historical cost or estimated historical cost, including all costs related to the acquisition. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are recorded at acquisition value on the date received. Major capital asset outlays are capitalized as projects are constructed. Buildings and other depreciable or amortizable capital assets are depreciated using the straight-line method with no salvage value for governmental activities. Generally, buildings and other improvements are depreciated over 40 years, equipment is depreciated over five years, and intangible assets are amortized over 10 to 20 years. Depreciable or amortizable assets of business-type activities are depreciated or amortized using the straight-line method over their estimated useful or service lives, ranging from one to 100 years. California has elected to use the modified approach for capitalizing the infrastructure assets of the state highway system. The state highway system is maintained by the California Department of Transportation. By using the modified approach, the infrastructure assets of the state highway system are not depreciated and all expenditures made for those assets, except for additions and improvements, are expensed in the period incurred. All additions and improvements made after June 30, 2001 are capitalized. All infrastructure assets that are related to projects completed prior to July 1, 2001 are recorded at the historical costs contained in annual reports of the American Association of State Highway and Transportation Officials and the Federal Highway Administration. The capital assets of the discretely presented component units are reported at cost at the date of acquisition or at fair market value at the date of donation, in the case of gifts. They are depreciated or amortized over their estimated useful service lives. 83 State of California Annual Comprehensive Financial Report The State is a lessee for various non-cancelable leases of land, buildings, equipment. For leases that meet the capitalization threshold of $100,000 or greater in total payments over the lease term, the State recognizes right-to-use lease assets at the commencement of a lease. Right-to-use lease assets represent the State’s right to use an underlying asset for the lease term. Right-to-use lease assets are measured at the initial value of the lease liability plus any payments made to the lessor before commencement of the lease term, less any lease incentives received from the lessor at or before the commencement of the lease term, plus any initial direct costs necessary to place the lease asset into service. Right-to-use lease assets are amortized over the shorter of the lease term or useful life of the underlying asset, ranging from two to 50 years, using the straight-line method. Leases below the capitalization threshold and leases with a maximum possible term of 12 months or less at commencement are expended or expensed as incurred. The State has non-cancelable subscription-based information technology arrangements (SBITAs) for the right to use information technology (IT) arrangements. For SBITAs that meet the capitalization threshold of $50,000 or greater in total payments over the subscription term, the State recognizes right-to-use SBITA assets at the commencement of a SBITA. Right-to-use SBITA assets represent the State’s right to use underlying IT assets for the subscription term. The right-to-use SBITA asset is measured at the initial value of the subscription liability, plus any subscription payments made to the SBITA vendor before commencement of the subscription term and capitalizable implementation costs, less any vendor incentive received at or before the SBITA commencement date. The right-to-use SBITA asset is amortized over the shorter of the subscription term or useful life of the underlying IT assets, ranging from two to 10 years, using the straight-line method. SBITAs below the capitalization threshold and SBITAs with a maximum possible term of 12 months or less at commencement are expended or expensed as incurred. I. Long-term Obligations Long-term obligations consist of various types of bonds and other long-term payables, including unmatured general obligation bonds, unmatured revenue bonds, lease liabilities, subscription liabilities, certificates of participation, commercial paper, net pension liability, net other postemployment benefits liability, employees’ compensated absences and workers’ compensation claims, pollution remediation obligations, asset retirement obligations, amounts owed for lawsuits, reimbursement for costs mandated by the State, outstanding Proposition 98 funding guarantee owed to schools, the liability for lottery prizes and annuities, loans from other governments, and the primary government’s share of the University of California’s pension liability that is due in more than one year. In the government-wide financial statements, the obligations are reported as liabilities in the applicable governmental activities, business-type activities, and component units columns of the Statement of Net Position. The current portion—amount due within one year—of the long-term obligations is reported under current liabilities. Pollution remediation obligations are recorded by the State when one or more of the GASB Statement No. 49 obligating events have occurred and when a reasonable estimate of the remediation cost is available. These liabilities are measured using actual contract costs, where no change in cost is expected, or the expected cash flow technique. The remediation obligation estimates that appear in this report are subject to change over time. Costs may vary due to price fluctuations, changes in technology, changes in potential responsible parties, results of environmental studies, changes to statutes or regulations, and other factors that could result in revisions to these estimates. Prospective recoveries from responsible parties may reduce the State’s obligation. Asset retirement obligations are recorded by the State when the internal and external obligating events described in GASB Statement No. 83 have occurred and when a reasonable estimate of the cost to retire 84 Notes to the Financial Statements certain tangible capital assets is available. The types of underlying assets include above ground and underground fuel and chemical storage tanks, various medical equipment, dams, water treatment facilities, bridges and other infrastructure, and electric power generating equipment. Asset retirement obligation estimates are based on professional judgment, experience, and historical cost data, and are subject to change over time due to price fluctuations, changes in technology, updated information from engineering studies or other evaluations, changes to statutes or regulations, and other factors that could result in revisions to these estimates. Bond premiums and discounts for business-type activities and component units are deferred and amortized over the life of the bonds. In these instances, bonds payable is reported net of the applicable premium and discount. Bond premiums and discounts for governmental funds are reported as other financing sources (uses). However, in the government-wide financial statements, the bonds payable for governmental activities is reported net of the applicable unamortized premium and discount. Bond issuance costs, excluding prepaid insurance, are expensed when incurred. With advance approval from the Legislature, certain authorities and state agencies may issue revenue bonds. Principal and interest on revenue bonds are payable from the pledged revenues of the respective funds and agencies. The General Fund has no legal liability for payment of principal and interest on revenue bonds. With the exception of certain special revenue funds (No Place Like Home and the Golden State Tobacco Securitization Corporation), the liability for revenue bonds is recorded in the respective fund. Lease liabilities represent the State’s obligation to make lease payments arising from a lease contract. Lease liabilities are recognized by the State at the lease commencement date based on the present value of future lease payments expected to be made during the lease term. The present value of lease payments is discounted based on a borrowing rate explicitly stated in the lease contract, the incremental borrowing rate published on the State Controller’s website, or other determined incremental borrowing rates. Variable lease payments based on future performance of the lessee or usage of the underlying asset are expensed as incurred, and are not included in the measurement of the lease liability. Subsequent to their initial measurement, lease liabilities are reduced by the principal portion of lease payments made. The State assesses each lease liability annually for changes in the terms of the lease, interest rate, impairment of the underlying leased asset, or other factors that may impact the expected future lease payments. Lease amendments and other modifications could necessitate remeasuring the lease liability. Subscription liabilities represent the State’s obligation to make subscription payments arising from a SBITA contract. Subscription liabilities are recognized by the State at the SBITA commencement date based on the present value of future subscription payments expected to be made during the subscription term. The present value of subscription payments is discounted based on a borrowing rate explicitly stated in the SBITA contract, the incremental borrowing rate published on the State Controller’s Office website, or other determined incremental borrowing rates. Variable payments based on future performance of the government, usage of the underlying IT assets, or number of user seats are expensed as incurred, and are not included in the measurement of the subscription liability. The State assesses each subscription liability annually for changes in the terms of the SBITA, change in the interest rate, impairment of the underlying IT assets, or other factors that may impact the expected future subscription payments. SBITA amendments and other modifications could necessitate remeasuring the subscription liability. Availability Payment Arrangement (APA) liabilities represent the State’s obligation to make APA payments arising from an APA agreement where the operator provides the design, construction, or 85 State of California Annual Comprehensive Financial Report financing of a nonfinancial asset whose ownership transfers to the State at the end of the agreement. APA liabilities are recognized by the State when the APA asset is placed into service and are based on the present value of future APA payments expected to be made during the APA term. The present value of APA payments is discounted based on a borrowing rate explicitly stated in the APA agreement, the incremental borrowing rate published on the State Controller’s Office website, or other determined incremental borrowing rates. APA agreements are reported as a financed purchase by the State. J. Compensated Absences The government-wide financial statements report both the current and the noncurrent liabilities for compensated absences, which are vested unpaid vacation, annual leave, and other paid leave programs. However, unused sick-leave balances are not included in the compensated absences because they do not vest to employees. In the governmental fund financial statements, only the compensated absences liability for employees who have left state service and have unused reimbursable leave at fiscal year-end is included. The amounts of vested unpaid vacation and annual leave accumulated by state employees are accrued in proprietary funds when incurred. In the discretely presented component units, the compensated absences are accounted for in the same manner as in the proprietary funds of the primary government. K. Deferred Outflows and Deferred Inflows of Resources The government-wide and fund financial statements report deferred outflows of resources and deferred inflows of resources. 1. Deferred Outflows of Resources Deferred outflows of resources are the consumption of assets that are applicable to future reporting periods. Deferred outflows of resources are presented separately after “Total Assets” in the Balance Sheet and Statement of Net Position. Deferred outflows of resources consist of the following transactions: • Loss on Refunding of Debt: The defeasance of previously outstanding general obligation and revenue bonds results in deferred refunding losses for governmental activities, business-type activities, and component units. These deferred losses are recognized as a component of interest expense over the remaining life of the old debt or the life of the new debt, whichever is shorter. • Decrease in Fair Value of Hedging Derivative Instruments: Negative changes in the fair value of hedging derivative instruments are reported for component units. • Net Pension Liability: Increases in net pension liability that are not recognized in pension expense for the reporting period are reported as deferred outflows of resources related to pensions. Differences between expected and actual experience with regard to economic or demographic factors; changes of assumptions about future economic or demographic factors, or of other inputs used by the actuaries to determine total pension liability; and increases in the State’s proportionate share of net pension liability for plans that have a special funding situation, such as CalSTRS, are all recognized in pension expense over the average of the expected remaining service lives of participating employees. A deferred outflow of resources is also reported when projected earnings on pension plan investments exceed actual earnings, with the net difference amortized to pension 86 Notes to the Financial Statements expense over a five-year period beginning in the current reporting period. Employer contributions, and state contributions in the case of CalSTRS’ special funding situation, made subsequent to the measurement date are reported as deferred outflows of resources related to pensions and reduce net pension liability in the following year. Deferred outflows of resources related to net pension liability are reported for governmental activities, business-type activities, fiduciary funds, and component units. • Net Other Postemployment Benefits (OPEB) Liability: Increases in net OPEB liability that are not recognized in OPEB expense for the reporting period are reported as deferred outflows of resources related to OPEB. Differences between expected and actual experience with regard to economic or demographic factors; changes of assumptions about future economic or demographic factors, or of other inputs used by the actuaries to determine total OPEB liability; and differences between the actual and proportionate share of OPEB contribution amounts, are all recognized as OPEB expense over the average of the expected remaining service lives of participating employees. A deferred outflow of resources is also reported when projected earnings on OPEB plan investments exceed actual earnings, with the net difference amortized to OPEB expense over a five-year period beginning in the current reporting period. Employer contributions made subsequent to the measurement date are reported as deferred outflows of resources related to OPEB and reduce net OPEB liability in the following year. Deferred outflows of resources related to net OPEB liability are reported for governmental activities, business-type activities, fiduciary funds, and component units. • Asset Retirement Obligations: Increases in asset retirement obligations that are not recognized as expense in the current reporting period are reported as deferred outflows of resources for component units. 2. Deferred Inflows of Resources Deferred inflows of resources are the acquisition of assets that are applicable to future reporting periods. Deferred inflows of resources are presented separately after “Total Liabilities” in the Balance Sheet and Statement of Net Position. The State’s deferred inflows of resources consist of the following transactions: • Unavailable Revenues: Governmental funds report deferred inflows of resources for earned and measurable revenue from long-term receivables that is not available within 12 months of the end of the reporting period. These deferred amounts are recognized as revenue in the periods that they become available. • Gain on Refunding of Debt: The defeasance of previously outstanding general obligation and revenue bonds results in deferred refunding gains for governmental activities and discretely presented component units. These deferred gains are recognized as a component of interest expense over the remaining life of the old debt or the life of the new debt, whichever is shorter. 87 State of California Annual Comprehensive Financial Report • Service Concession Arrangements: The University of California, a discretely presented component unit of the State, has entered into service concession arrangements with third parties for parking, student housing and certain other faculty and student services. Under these arrangements, the University enters into ground leases with third parties at minimal or no cost, and gives the third party the right to construct, operate and maintain a facility, primarily for the benefit of students and faculty at competitive rates. Rate increases for use of the facilities are subject to certain constraints, and ownership of the facilities reverts to the University upon expiration of the ground lease. The facilities are reported as capital assets by the University when placed in service, and a corresponding deferred inflow of resources is reported. The University has not provided guarantees on financing obtained by the third parties under these arrangements. • Irrevocable Split-Interest Agreements: The State and its discretely presented component units have entered into irrevocable split-interest agreements with third parties to receive donations of monetary assets and real property. The value of assets received or expected to be received from the third parties are reported as deferred inflows of resources. • Net Pension Liability: Reductions in net pension liability that are not recognized in pension expense for the reporting period are reported as deferred inflows of resources related to pensions. Differences between expected and actual experience with regard to economic or demographic factors; changes of assumptions about future economic or demographic factors, or of other inputs used by the actuaries to determine total pension liability; and decreases in the State’s proportionate share of net pension liability for plans that have a special funding situation, such as CalSTRS, are all recognized against pension expense over the average of the expected remaining service lives of participating employees. A deferred inflow of resources is also reported when actual earnings on pension plan investments exceed projected earnings, with the net difference amortized against pension expense over a five-year period beginning in the current reporting period. Deferred inflows of resources related to net pension liability are reported for governmental activities, business-type activities, fiduciary funds, and component units. • Net Other Postemployment Benefits Liability: Reductions in net OPEB liability that are not recognized in OPEB expense for the reporting period are reported as deferred inflows of resources related to OPEB. Differences between expected and actual experience with regard to economic or demographic factors; changes of assumptions about future economic or demographic factors, or of other inputs used by the actuaries to determine total OPEB liability; and differences between the actual and proportionate share of OPEB contribution amounts, are all recognized against OPEB expense over the average of the expected remaining service lives of participating employees. A deferred inflow of resources is also reported when actual earnings on OPEB plan investments exceed projected earnings, with the net difference amortized against OPEB expense over a five-year period beginning in the current reporting period. Deferred inflows of resources related to net OPEB liability are reported for governmental activities, business-type activities, fiduciary funds, and component units. • Deferred Inflows of Resources Related to Leases: For lease contracts where the State is a lessor, deferred inflows of resources are reported for governmental and proprietary funds, governmental activities, business-type activities, and component units. Deferred inflows of resources related to leases are recognized as inflows of resources (revenue) on a straight-line basis over the term of each lease contract. 88 Notes to the Financial Statements • Other Deferred Inflows of Resources: Revenues generated from current rates charged by regulated business-type activities that are intended to recover costs expected to be incurred in the future are reported in the government-wide Statement of Net Position. A component unit’s sale of future royalty payments and nonexchange transactions are reported as a deferred inflow of resources. L. Nonmajor Enterprise Segment Information Four nonmajor enterprise fund segments are displayed discretely in the Combining Statement of Net Position; the Combining Statement of Revenues, Expenses, and Changes in Fund Net Position; and the Combining Statement of Cash Flows of the nonmajor enterprise funds. A segment is an identifiable activity reported as or within an enterprise fund or another stand-alone entity for which debt is outstanding and a revenue stream has been pledged in support of that debt. In addition, to qualify as a segment, an activity must be subject to an external requirement to separately account for revenues, expenses, gains and losses, assets and deferred outflows of resources, and liabilities and deferred inflows of resources. All of the activities reported for the fund segments listed below meet these requirements. State Water Pollution Control Revolving Fund: Interest charged on loans to communities for construction of water pollution control facilities and projects. Safe Drinking Water State Revolving Fund: Interest charged on loans to communities for construction of water systems for drinking water infrastructure projects. Housing Loan Fund: Interest payments from low-interest, long-term farm and home mortgage loan contracts to eligible veterans living in California. Electric Power Fund: The acquisition and resale of electric power to retail end-use customers, and charges to public utilities for wildfire prevention and recovery. M. Net Position and Fund Balance The difference between fund assets, deferred outflows of resources, liabilities, and deferred inflows of resources is called “net position” on the government-wide financial statements, the proprietary and fiduciary fund statements, and the component unit statements; it is called “fund balance” on the governmental fund statements. 1. Net Position The government-wide financial statements include the following categories of net position: Net investment in capital assets represents capital assets, net of accumulated depreciation, reduced by the outstanding debt attributable to the acquisition, construction, or improvement of those assets. Restricted net position results from transactions with purpose restrictions and is designated as either nonexpendable or expendable. Nonexpendable restricted net position is subject to externally imposed restrictions that must be retained in perpetuity. Expendable restricted net position is subject to externally imposed restrictions that can be fulfilled by actions of the State. As of June 30, 2024, the government-wide financial statements show restricted net position for the primary government of $77.1 billion, of which $20.2 billion is due to enabling legislation. Unrestricted net position is neither restricted nor invested in capital assets. 89 State of California Annual Comprehensive Financial Report 2. Fund Balance In the fund financial statements, proprietary funds include categories of net position similar to those in the government-wide financial statements. Fund balance amounts for governmental funds are reported as nonspendable, restricted, committed, assigned, or unassigned. Nonspendable fund balance includes amounts that cannot be spent because they are not in spendable form (inventories; prepaid amounts; long-term portion of loans or notes receivable; or property held for resale unless the proceeds are restricted, committed, or assigned) or they are legally or contractually required to remain intact. Restricted fund balance has constraints placed upon the use of the resources either by an external party (creditors, grantors, contributors, or laws and regulations of other governments) or through a constitutional provision or enabling legislation. Committed fund balance can be used only for specific purposes pursuant to constraints imposed by state law as adopted by the California State Legislature. The state law that commits fund balance to a specific purpose must have been adopted prior to the end of the reporting period, but the amount subject to the constraint may be determined in a subsequent period. Committed fund balance incorporates contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. Assigned fund balance: California does not have a formal policy to delegate authority to assign resources. However, fund balance can be classified as assigned when a purchase order creates an outstanding encumbrance amount, unless the purchase order relates to restricted or committed resources. Furthermore, in governmental funds created by state law for a specific purpose, other than the General Fund, all resources that are not reported as nonspendable, restricted, or committed are classified as assigned for the purpose of the respective funds. Unassigned fund balance is the residual amount of the General Fund not included in the four classifications described above. In other governmental funds in which expenditures incurred for specific purposes exceeded amounts restricted, committed, or assigned to those purposes, a negative unassigned fund balance is reported. Fund balance spending order: For the purpose of reporting fund balance in this financial report under GASB Statement No. 54, the State considers resources to be spent in the following order when an expenditure is incurred for which these classifications are available: restricted, committed, assigned, and unassigned. Fiduciary fund net position represents amounts held in trust for pension and other postemployment benefits, deferred compensation or pool participants, individuals, organizations, or other governments. N. Stabilization Arrangements 1. Budget Stabilization Account In accordance with Article 16, Section 20 of the California State Constitution, the State maintains the Budget Stabilization Account. The Budget Stabilization Account is reported in the General Fund. By 90 Notes to the Financial Statements October 1 of each fiscal year, a transfer must be made from the General Fund to the Budget Stabilization Account in an amount equal to one-half of (a) 1.5% of the estimated General Fund revenues for that fiscal year and (b) personal capital gains tax revenues in excess of 8.0% of estimated General Fund taxes for that fiscal year less amounts that must be spent on Proposition 98. The remaining half of the calculated amount is used as appropriated by the State Legislature to pay down (a) interfund loans, (b) specified debts to local governments, and (c) debts for pension and retiree health benefits. The State Legislature may suspend or reduce the transfer of funds to, or withdrawal of funds from, the Budget Stabilization Account if the Governor declares a budget emergency. For this purpose, budget emergency means either (a) a natural disaster or other event that creates a condition of extreme peril to the safety of persons or property, or (b) there is not enough money to keep General Fund spending at the highest level of the past three fiscal years (adjusted for changes in state population and cost of living). The amount of the withdrawal from the Budget Stabilization Account is limited to the actual amount needed for the natural disaster or to keep General Fund spending at the highest level of the past three years. In addition, if no budget emergency occurred in the prior fiscal year, then no more than one-half of the Budget Stabilization Account balance may be withdrawn; however, the entire remaining balance may be withdrawn in the second straight year of a budget emergency. When the balance of the Budget Stabilization Account reaches 10% of the estimated General Fund revenues for that fiscal year, the amount that would have been transferred to the Budget Stabilization Account would instead be used to build and maintain infrastructure. At June 30, 2024, the Budget Stabilization Account had a restricted fund balance of $22.6 billion. 2. Special Fund for Economic Uncertainties State law established the Special Fund for Economic Uncertainties (SFEU) as a contingency reserve to help the State meet its General Fund obligations in the event of declining revenues or unanticipated expenditures. A control section of the State’s Budget Act establishes the annual reserve balance of the SFEU, but that amount would be reduced if certain constitutionally defined excess revenue limits are met during the fiscal year. In addition, SFEU funds may be set aside in a separate account and committed for disaster response operation costs incurred by state agencies as a result of a proclamation of a state of emergency by the Governor. The SFEU is a discretionary budget reserve and is available without additional legislative action to meet the cash needs of the General Fund and to eliminate any General Fund deficit at the end of a fiscal year. The SFEU is reported in the General Fund, and at June 30, 2024, the SFEU represented $3.8 billion of the unassigned balance of the General Fund. 3. Public School System Stabilization Account State law established the Public School System Stabilization Account (PSSSA) as a reserve specifically for schools and community colleges. The State deposits Proposition 98 funding into this reserve when it receives high levels of capital gains revenue and the minimum guarantee is growing relatively quickly, and will withdraw funding from the reserve under certain conditions—generally when the guarantee is growing slowly relative to inflation and student attendance. If the Governor declares a budget emergency, the Legislature can make discretionary withdrawals. At June 30, 2024, the PSSSA represented $10.8 billion of cash reported in the General Fund, $10.8 billion of which was due to other funds, and $1 million of which was due to other governments. Accordingly, the PSSSA reported no fund balance as of June 30, 2024. 91 State of California Annual Comprehensive Financial Report O. Guaranty Deposits The State is the custodian of guaranty deposits held to protect consumers, to secure the State’s deposits in financial institutions, and to ensure payment of taxes and fulfillment of obligations to the State. Guaranty deposits of securities and other properties are not shown on the financial statements. NOTE 2: ACCOUNTING CHANGES AND ERROR CORRECTIONS A. Changes in Accounting Principles The provisions of the following Governmental Accounting Standards Board (GASB) Statements have been implemented for the fiscal year ended June 30, 2024: GASB Statement No. 99, Omnibus 2022 is effective for the fiscal year ended June 30, 2024. The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing practice issues that have been identified during implementation and application of certain GASB Statements and accounting and financial reporting for financial guarantees. The following elements were implemented for the fiscal year ended June 30, 2024; these elements had an insignificant impact on the State’s ACFR: • Accounting and financial reporting for financial guarantees. • Classification and reporting of derivative instruments within the scope of Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, that do not meet the definition of either an investment derivative instrument or a hedging derivative instrument. GASB Statement No. 100, Accounting Changes and Error Corrections - An Amendment of GASB Statement No. 62 is effective for the fiscal year ended June 30, 2024. The primary objective of this Statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. This Statement defines accounting changes as changes in accounting principles, changes in accounting estimates, and changes to or within the financial reporting entity and describes the transactions or other events that constitute those changes. This Statement also addresses corrections of errors in previously issued financial statements. This Statement prescribes the accounting and financial reporting for each type of accounting change and error correction. This Statement requires that (a) changes in accounting principles and error corrections be reported retroactively by restating prior periods, (b) changes to or within the financial reporting entity be reported by adjusting beginning balances of the current period, and (c) changes in accounting estimates be reported prospectively by recognizing the change in the current period. This Statement also requires that the aggregate amount of adjustments to and restatements of beginning net position, fund balance, or fund net position, as applicable, be displayed by reporting unit in the financial statements. Implementation of GASB Statement No. 100 resulted in the removal of Section N., Restatement of Beginning Fund Balances and Net Position, from within Note 1, Summary of Significant Accounting Policies. Implementation of GASB Statement No. 100 also resulted in the creation of a new footnote to the financial statements—Note 2, Accounting Changes and Error Corrections. Further, the implementation of GASB Statement No. 100 has the potential to impact any of the 12 basic or combining financial statements if the presented information includes accounting changes or error corrections. 92 Notes to the Financial Statements B. Changes to or within the Financial Reporting Entity Two major governmental funds, the Transportation Fund and the Health Care Related Programs Fund, were reclassified to nonmajor governmental funds. The reclassification of the Transportation Fund and the Health Care Related Programs Fund resulted in a decrease of $10.8 billion and $2.0 billion, respectively, in the beginning fund balance of major governmental funds, and a combined $12.8 billion increase in the beginning fund balance of nonmajor governmental funds. The effects of this change are shown in the Changes To or Within the Financial Reporting Entity column of Table 1 below. The beginning net position of the University of California, a discretely presented component unit of the State, decreased by $11 million. The University’s ownership of a blended component unit decreased such that the component unit no longer qualified to be blended, but was now to be accounted for under the equity method of accounting. The effects of this change are shown in the Changes To or Within the Financial Reporting Entity column of Table 1 below. C. Error Corrections in Previously Issued Financial Statements 1. Government-wide Governmental Activities Error corrections affecting the prior reporting period increased beginning net position by $47.5 billion for governmental activities. The errors affected loan receivables, capital assets, deferred receivables, pollution remediation obligations, and other liabilities. • Identification of reporting errors such as capital assets unreported, assets reported as capital assets that do not meet the State’s capitalization policy, unreported transfers of capital assets between departments, and other various errors in recognition and measurement of capital assets led to corrections from various departments within the primary government. The beginning balances of capital assets that are not being depreciated or amortized increased by $37 million, the beginning balances of capital assets being depreciated or amortized increased by $594 million, and the beginning balances of accumulated depreciation and amortization decreased by $7 million. Overall, the error corrections resulted in an increase of $638 million in beginning net position. • Error corrections related to managed care health programs, the Public Hospital Bridge Loan Program, the Veteran Housing and Homelessness Prevention Program, Medi-Cal, and to the State’s unemployment programs increased beginning net position by $320 million, $79 million, $6 million, $223 million, and $46.2 billion, respectively, as described in the section for governmental fund error corrections below. • Corrections to right-to-use capital assets such as leases and SBITAs resulted from a failure to apply recognition criteria correctly to both eligible and ineligible contracts, and errors in measurement or remeasurement of lease and SBITA obligations from the prior reporting period. Corrections of these errors decreased beginning net position by $53 million, and included adjustments to lease receivables, right-to-use capital assets and related accumulated amortization, lease and subscription liabilities, deferred inflows of resources, and expenses. • Errors in combining entities within the California State University Fund required corrections to construction/development in progress, equipment, related accumulated depreciation, and net investment in capital assets that increased beginning net position by $357 thousand. 93 State of California Annual Comprehensive Financial Report • Errors in reporting of accounts receivable and deferred inflows of resources for the State’s corrections and rehabilitation programs required corrections that resulted in a decrease of $2 million to beginning net position. • Error corrections to pollution remediation obligations for the State’s transportation and water resources programs increased beginning net position by $90 million. 2. Government-wide Business-type Activities Error corrections related to capital assets for the California State University Fund decreased beginning net position by $357 thousand, as described in the section for proprietary fund error corrections. 3. Governmental Funds • Corrections to the prior reporting period for leases in which the State is a lessor resulted from a failure to apply recognition criteria correctly to both eligible and ineligible contracts, and errors in measurement or remeasurement of lease contracts. Corrections to the beginning balance of lease receivables and deferred inflows of resources increased beginning fund balance by $8 million for governmental funds. Specifically, there was a $6 million increase to the General Fund, a $94 thousand decrease to the Environmental and Natural Resources Fund, and a $2 million increase to nonmajor special revenue funds (Transportation Fund and Other Special Revenue Programs Funds). • Unreported receivables for contract overpayments related to managed care health plans resulted in error corrections that increased beginning fund balance of the General Fund by $320 million. • Unreported loan receivables for the nondesignated public hospital bridge loan program resulted in error corrections that increased the beginning fund balance of the General Fund by $79 million. • An error in reporting prior year loan disbursements for the Veteran Housing and Homelessness Prevention Program resulted in a correction that increased the beginning fund balance of nonmajor governmental funds by $6 million. • An error in reporting prior year accruals of Medi-Cal expenditures and reimbursements resulted in a correction that increased the beginning fund balance of nonmajor governmental funds by $223 million. • As of June 30, 2022, the State’s unemployment insurance department accrued a liability of $55.3 billion in the Federal Fund to account for the large volume of unemployment benefit claims paid to beneficiaries through federal pandemic programs under the CARES Act, for which the State was unable to validate eligibility. In the fiscal year ended June 30, 2023, the amount in the Federal Fund was adjusted down to $46.2 billion. In December 2023, the U.S. Department of Labor (DOL) released Unemployment Insurance Program Letter (UIPL) 05-24, which raised the possibility for states to apply their statutes of limitations to CARES Act unemployment compensation claims. UIPL 05-24 prompted further inquiry from the State due to the lack of clear guidance on this issue. In January 2025, DOL informed the State that under the CARES Act, as amended, there is no requirement for states to repay the federal government for CARES Act unemployment compensation overpayments that remain unrecovered. Accordingly, the position of the State’s unemployment insurance department is that the liability that was accrued in the Federal Fund has been determined to not be owed to the federal government and should be reversed. For the fiscal year ended June 30, 2024, an error correction to reduce the beginning balance of other liabilities and increase beginning fund balance by $46.2 billion is reflected in the Federal Fund. 94 Notes to the Financial Statements 4. Proprietary Funds The California State University Fund, a major enterprise fund, made error corrections to the prior reporting period construction/development in progress, equipment, related accumulated depreciation, and net investment in capital assets that resulted in a decrease of $357 thousand in beginning fund net position. 5. Internal Service Funds Corrections to right-to-use capital assets such as leases and SBITAs resulted from failure to apply recognition criteria correctly to both eligible and ineligible contracts, and from errors in measurement or remeasurement of lease and SBITA obligations from the prior reporting period. Correction of these errors decreased the beginning fund net position by $2 million for internal service funds and included adjustments to right-to-use capital assets and related accumulated amortization, and lease and subscription liabilities. 6. Discretely Presented Component Units The beginning net position of the California State University Auxiliary Organizations, a nonmajor component unit, decreased by $3 million due to prior-period corrections to various accounts such as accounts receivable, prepaid expenses, capital assets, accounts payable, lease liabilities, other current liabilities, unearned revenues, other operating revenues, and interest expense. The sum effect of the above restatements are shown in the Error Corrections column in Table 1 below. 7. Other Restatements In addition, the following restatements impacted various accounts from the prior reporting period but did not impact beginning fund balance, fund net position, or net position: • The California State University Fund, a major enterprise fund, reported lease revenue bonds in the prior reporting period as other long-term obligations. The balance of $97 million was reclassified to revenue bonds outstanding. • The Water Resources Fund, a major enterprise fund, reduced the beginning balance of pollution remediation obligations by $6 million after discovering an error in the measurement estimate of its pollution remediation obligations. • A nonmajor component unit reclassified capital assets and related accumulated depreciation which led to a reduction of infrastructure and an increase to buildings and improvements of $59 million. 95 State of California Annual Comprehensive Financial Report Table 1 presents the effects of restatements to beginning fund balances and net position due to changes to or within the financial reporting entity and error corrections. Table 1 Restatements of Beginning Fund Balance and Net Position (amounts in thousands) 6/30/2023 Changes To or Balance Within the (As Previously Financial Fund Balances or Net Position Reported) Reporting Entity Government-wide Governmental Activities................................................................................. $ (20,276,419) $ — Business-type Activities ................................................................................. (17,667,577) — Total Primary Government.............................................................................. $ (37,943,996) $ — Governmental funds Major funds: General ........................................................................................................... $ 64,003,688 $ — Federal ............................................................................................................ (45,220,048) — Transportation................................................................................................. 10,776,722 (10,776,722) Environmental & Natural Resources.............................................................. 20,702,620 — Health Care and Related Programs................................................................. 2,035,150 (2,035,150) Nonmajor funds ................................................................................................ 23,244,227 12,811,872 Total governmental funds................................................................................. $ 75,542,359 $ — Proprietary funds Major funds: Water Resources............................................................................................. $ 1,238,349 $ — State Lottery ................................................................................................... (279,071) — Unemployment ............................................................................................... (12,091,948) — California State University ............................................................................. (13,895,901) — Nonmajor funds ................................................................................................ 7,360,994 — Total proprietary funds .................................................................................... $ (17,667,577) $ — Internal service funds........................................................................................ $ (1,156,896) $ — Fiduciary funds Pension/OPEB................................................................................................... $ 826,165,564 $ — Private Purpose Trust........................................................................................ 14,407,016 — Investment Trust ............................................................................................... 25,817,452 — Custodial Fund.................................................................................................. 668,180 — Total fiduciary funds......................................................................................... $ 867,058,212 $ — Discretely presented component units University of California .................................................................................... $ 16,275,680 $ (11,281) California Housing Finance Agency................................................................. 3,725,089 — Nonmajor component units .............................................................................. 6,185,461 — Total discretely presented component units ................................................... $ 26,186,230 $ (11,281) 96 Notes to the Financial Statements 6/30/2023 Error Balance Corrections (As Restated) $ 47,544,491 $ 27,268,072 (357) (17,667,934) $ 47,544,134 $ 9,600,138 $ 404,755 $ 64,408,443 46,243,788 1,023,740 — — (94) 20,702,526 — — 229,557 36,285,656 $ 46,878,006 $ 122,420,365 $ — $ 1,238,349 — (279,071) — (12,091,948) (357) (13,896,258) — 7,360,994 $ (357) $ (17,667,934) $ (2,426) $ (1,159,322) $ — $ 826,165,564 — 14,407,016 — 25,817,452 — 668,180 $ — $ 867,058,212 $ — $ 16,264,399 — 3,725,089 (3,391) 6,182,070 $ (3,391) $ 26,171,558 97 State of California Annual Comprehensive Financial Report NOTE 3: BUDGETARY AND LEGAL COMPLIANCE A. Budgeting and Budgetary Control The State’s annual budget is primarily prepared on a modified accrual basis for governmental funds. The Governor recommends a budget for approval by the Legislature each year. This recommended budget includes estimated revenues, but revenues are not included in the annual budget bill adopted by the Legislature. Under state law, the State cannot adopt a spending plan that exceeds estimated revenues. Under the State Constitution, money may be drawn from the treasury only through a legal appropriation. The appropriations contained in the Budget Act, as approved by the Legislature and signed by the Governor, are the primary sources of annual expenditure authorizations and establish the legal level of control for the annual operating budget. The Budget can be amended throughout the year by special legislative action, budget revisions by the Department of Finance, or executive orders of the Governor. Amendments to the original budget for the fiscal year ended June 30, 2024, increased the spending authority for the budgetary/legal basis-reported General Fund and the Environmental and Natural Resources Funds. Appropriations are generally available for expenditure or encumbrance either in the year appropriated or for a period of three years if the legislation does not specify a period of availability. At the end of the availability period, the encumbering authority for the unencumbered balance lapses. Some appropriations continue indefinitely, while others are available until fully spent. Generally, encumbrances must be liquidated within two years from the end of the period in which the appropriation is available. If the encumbrances are not liquidated within this additional two-year period, the spending authority for these encumbrances lapses. B. Legal Compliance State agencies are responsible for exercising basic budgetary control and ensuring that appropriations are not overspent. The State Controller’s Office is responsible for overall appropriation control and does not allow expenditures in excess of authorized appropriations. Financial activities are mainly controlled at the appropriation level but can vary, depending on the presentation and wording contained in the Budget Act. The Budget Act appropriations are identified by department, reference item, and fund. The annual appropriated budget may establish detailed allocations to specific programs, projects, or sources of reimbursement within an appropriation. The Department of Finance can authorize adjustments between the detail allocations but cannot increase the amount of the overall appropriation. While the financial activities are controlled at various levels, the legal level of budgetary control—the extent to which management may amend the budget without seeking approval of the governing body—has been established in the Budget Act for the annual operating budget. The Budgetary Comparison Schedule is not presented in this document at the legal level of budgetary control because such a presentation would be extremely lengthy and cumbersome. The State prepares a separate report, the Annual Comprehensive Financial Report Supplement, which includes statements that demonstrate compliance with the legal level of budgetary control in accordance with GASB’s Codification of Governmental Accounting and Financial Reporting Standards, section 2400.121. The supplement includes the comparison of the annual appropriated budget with expenditures at the legal level of control. A copy of the Annual Comprehensive Financial Report Supplement is available upon 98 Notes to the Financial Statements email request to the State Controller’s Office, State Accounting and Reporting Division at StateGovReports@sco.ca.gov or visit State Government Annual Financial Reports. NOTE 4: DEPOSITS AND INVESTMENTS Cash balances not required for immediate use are invested by the State Treasurer. The State Treasurer administers a single pooled investment program comprising both an internal investment pool and an external investment pool (the Local Agency Investment Fund). A single portfolio of investments exists, with all participants having an undivided interest in the portfolio. Both pools are administered in the same manner. A. Primary Government 1. Control of State Funds The State’s pooled investment program and certain funds of the primary government are allowed by state statutes, bond resolutions, and investment policy resolutions to invest in U.S. government securities, federal agency securities, negotiable certificates of deposit, bankers’ acceptances, commercial paper, corporate bonds, bank notes, other debt securities, repurchase agreements, reverse repurchase agreements, and other investments. Certain discretely presented component units and related organizations participate in the State Treasurer’s Office pooled investment program. As of June 30, 2024, these discretely presented component units and related organizations accounted for approximately 2.08% of the State Treasurer’s pooled investment portfolio. This program enables the State Treasurer’s Office to combine available cash from all funds and to invest cash that exceeds current needs. Both deposits and investments are included in the State’s investment program. For certain banks, the State Treasurer’s Office maintains cash deposits that cover uncleared checks deposited in the State’s accounts and earn income that compensates the banks for their services. Demand and time deposits held by financial institutions as of June 30, 2024, totaling approximately $6.4 billion, were insured by federal depository insurance or by collateral held by the State Treasurer’s Office or an agent of the State Treasurer’s Office in the State’s name. The California Government Code requires that collateral pledged for demand and time deposits be deposited with the State Treasurer. As of June 30, 2024, the State Treasurer’s Office had on deposit with a fiscal agent amounts totaling $18 million related to principal and interest payments to bondholders. These deposits were insured by federal depository insurance or by collateral held by an agent of the State Treasurer’s Office in the State’s name. Certain funds have elected to participate in the pooled investment program even though they have the authority to invest on their own. Others may be required by legislation to participate in the program; as a result, the deposits of these funds may be considered involuntary. However, these funds are part of the State’s reporting entity. The remaining participant in the pool, the Local Agency Investment Fund, is voluntary. 99 State of California Annual Comprehensive Financial Report Certain funds that have deposits in the State Treasurer’s pooled investment program do not receive the interest earnings on their deposits. Instead, by law, the earnings are assigned to the State’s General Fund. Most of the $2.9 billion in interest revenue received by the General Fund from the pooled investment program in the fiscal year 2023-24 was earned on balances in these funds. Enterprise funds and special revenue funds also make separate investments, which are presented at fair value. 2. Valuation of State Investments The State Treasurer’s Office reports its investments at fair value. The State Treasurer’s Office performs a quarterly fair market valuation of the pooled investment program portfolio. The fair value of securities in the State Treasurer’s pooled investment program is generally based on quoted market prices. In addition, the State Treasurer’s Office performs a monthly fair market valuation of all securities held against carrying cost. These valuations can be obtained from the State Treasurer’s Office website at www.treasurer.ca.gov. 100 Notes to the Financial Statements Table 2 categorizes fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the assets and liabilities. Level 1 inputs are quoted prices for identical assets or liabilities in active markets at the date of measurement. Level 2 inputs are significant other directly or indirectly observable inputs other than quoted prices. Debt securities classified in Level 2 are valued using a matrix pricing technique. Matrix pricing is used to value securities based on its relationship to similar securities with an active market. Level 3 inputs are significant unobservable inputs. The State has no investments measured at Level 3. Table 2 Schedule of Investments – Primary Government – Investments by Fair Value Level June 30, 2024 (amounts in thousands) Fair Value Measurements Using Quoted Prices in Active Significant Markets for Other Identical Observable Assets Inputs June 30, 2024 (Level 1) (Level 2) Pooled Investments U.S. Treasury bills and notes................................................................. $ 101,239,531 $ 101,239,531 $ — U.S. Agency bonds and discount notes.................................................. 34,096,899 34,096,899 — Supranational debentures and discount notes ........................................ 9,306,253 9,306,253 — Small Business Administration loans .................................................... 251,790 251,790 — Mortgage-backed securities ................................................................... 1,530 1,530 — Certificates of deposit ............................................................................ 15,446,182 — 15,446,182 Commercial paper.................................................................................. 11,811,743 — 11,811,743 Corporate bonds..................................................................................... 678,297 — 678,297 Total pooled investments at fair value ............................................. 172,832,225 $ 144,896,003 $ 27,936,222 Other primary government investments U.S. Treasuries and agencies ................................................................ 2,950,503 $ 1,443,330 $ 1,507,173 Commercial paper.................................................................................. 244,883 — 244,883 Corporate debt securities ...................................................................... 1,393,394 — 1,393,394 Other ...................................................................................................... 3,430,234 93,854 3,336,380 Total other primary government investments at fair value........... 8,019,014 $ 1,537,184 $ 6,481,830 Investments measured at the net asset value (NAV) Money market funds/2a-7 money market funds.................................... 897,312 Short-Term Investments ........................................................................ 70,065 Total investments measured at the NAV ......................................... 967,377 Other investment instruments State and Local Government Series securities1 ..................................... 2,124,977 Total other investment instruments ................................................. 2,124,977 Funds outside primary government included in pooled investments Less: investment trust funds ................................................................. 21,973,595 Less: other trust and custodial funds...................................................... 6,471,400 Less: discretely presented component units and related organizations . 3,589,981 Total primary government investments .......................................... $ 151,908,617 1 Reported at carrying value 101 State of California Annual Comprehensive Financial Report As of June 30, 2024, the weighted average maturity of the securities in the pooled investment program administered by the State Treasurer’s Office was approximately 220 days. Weighted average maturity is the average number of days, given a dollar-weighted value of individual investments, that the securities in the portfolio have remaining from evaluation date to stated maturity. 3. Oversight of Investing Activities The Pooled Money Investment Board (PMIB) provides oversight of the State Treasurer’s pooled investment program. The purpose of the board is to design and administer an effective cash management and investment program, using all monies flowing through the State Treasurer’s Office bank accounts and keeping all available funds invested in a manner consistent with the goals of safety, liquidity, and yield. The PMIB is comprised of the State Treasurer as chair, the State Controller, and the Director of Finance. This board designates the amounts of money available for investment. The State Treasurer is charged with making the actual investment transactions for this program. This investment program is not registered with the Securities and Exchange Commission as an investment company. The value of the deposits in the State Treasurer’s pooled investment program, including the Local Agency Investment Fund, is equal to the dollars deposited in the program. The fair value of the position in the program may be greater or less than the value of the deposits, with the difference representing the unrealized gain or loss. As of June 30, 2024, this difference was immaterial to the valuation of the program. The pool is run with “dollar-in, dollar-out” participation. There are no share-value adjustments to reflect changes in fair value. The State Treasurer’s pooled investment program values participants’ shares on an amortized cost basis. Specifically, the program distributes income to participants quarterly, based on their relative participation during the quarter. This participation is calculated based on (a) realized investment gains and losses calculated on an amortized cost basis, (b) interest income based on stated rates (both paid and accrued), (c) amortization of discounts and premiums on a straight-line basis, and (d) investment and administrative expenses. This amortized cost method differs from the fair value method used to value investments in these financial statements; the amortized cost method is not designed to distribute to participants all unrealized gains and losses in the fair value of the pool’s investments. Because the total difference between the fair value of the investments in the pool and the value distributed to pool participants using the amortized cost method described above is not material, no adjustment was made to the financial statements. The State Treasurer’s Office also reports participant fair value as a ratio of amortized cost on a quarterly basis. The State Treasurer’s Office has not provided or obtained a legally binding guarantee to support the principal invested in the investment program. As of June 30, 2024, structured notes and medium-term asset-backed securities comprised approximately 1.45% of the pooled investments. A portion of the structured notes was callable agency securities, which represented 1.30% of the pooled investments. The asset-backed securities consist of mortgage-backed securities, Small Business Administration (SBA) pools, and asset-backed commercial paper. The mortgage-backed securities, called real estate mortgage investment conduits (REMICs), are securities backed by pools of mortgages. The REMICs in the State’s portfolio have a fixed principal payment schedule. A portion of the asset-backed securities consisted of floating-rate SBA notes. For floating-rate SBA notes held in the portfolio during the fiscal year, the interest received by the State Treasurer’s pooled investment program rose or fell as the underlying index rate rose or fell. The structure of the floating-rate SBA notes in the State Treasurer’s pooled investment program portfolio provided a hedge against the risk of increasing interest rates. A portion of the asset-backed portfolio 102 Notes to the Financial Statements holdings were short-term, asset-backed commercial paper (ABCP), which represented 1.66% of the pooled investments. Table 3 identifies the investment types that are authorized by the California Government Code and the State Treasurer’s Office Investment Policy for the Pooled Investment Program. Maturities are limited by the State Treasurer’s Office Investment Policy for the Pooled Money Investment Program. For commercial paper, the Investment Policy matches the Government Code. For corporate bonds and notes, the Government Code requires that a security falls within the top three ratings of a nationally recognized statistical ratings organization (NRSRO). Items reported as N/A have no limitation in either the Government Code or the State Treasurer’s Office Investment Policy. Table 3 Authorized Investments Maximum Maximum Maximum Percentage Investment Credit Authorized Investment Type Maturity of Portfolio in One Issuer Rating U.S. Treasury securities 5 years N/A N/A N/A Federal agency and supranational securities 5 years N/A N/A N/A Certificates of deposit 5 years N/A N/A N/A Bankers’ acceptances 180 days N/A N/A N/A Commercial paper 270 days 30% 10% of issuer’s outstanding A-2/P-2/F-2 Commercial paper Corporate bonds/notes 5 years N/A N/A A-/A3/A- Repurchase agreements 1 year N/A N/A N/A Reverse repurchase agreements 1 year 10% N/A N/A 4. Risk of Investments The following types of risks are common in deposits and investments, including those of the State: Interest Rate Risk is the risk that the value of fixed-income securities will decline because of changing interest rates. The prices of fixed-income securities with longer time to maturity tend to be more sensitive to changes in interest rates than those with shorter durations. Credit Risk is the risk that a debt issuer will fail to pay interest or principal in a timely manner, or that negative perceptions of the issuer’s ability to make these payments will cause security prices to decline. Custodial Credit Risk is the risk that in the event a financial institution or counterparty fails, the investor will not be able to recover the value of deposits, investments, or collateral. Concentration of Credit Risk is the risk of loss attributed to the magnitude of an investor’s holdings in a single issuer. Foreign Currency Risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or a deposit. 103 State of California Annual Comprehensive Financial Report a. Interest Rate Risk Table 4 presents the interest rate risk of the primary government’s investments. In calculating SBA holdings’ weighted average maturity, the State Treasurer’s Office assumes that stated maturity is the quarterly reset date. Total pooled investments do not include $5.1 billion of time deposits and $363 million of internal loans to state funds. Most mortgage-backed securities are issued by U.S. government agencies, or government-sponsored enterprises such as the Federal National Mortgage Association, and entitle the purchaser to receive a share of the cash flows, such as principal and interest payments, from a pool of mortgages. Mortgage-backed securities are highly sensitive to interest rate changes because principal prepayments either increase (in a low interest rate environment) or decrease (in a high interest rate environment) the security yield. As of June 30, 2024, only $2 million, or less than 0.01% of the total pooled investments, was invested in mortgage-backed securities. Table 4 Schedule of Investments – Primary Government – Interest Rate Risk June 30, 2024 (amounts in thousands) Weighted Average Fair Value Maturity at Year End (in years) Pooled investments U.S. Treasury bills and notes............................................................................................... $ 101,239,531 0.69 U.S. Agency bonds and discount notes................................................................................ 34,096,899 0.56 Supranational debentures and discount notes ...................................................................... 9,306,253 0.76 Small Business Administration loans .................................................................................. 251,790 0.25 Mortgage-backed securities ................................................................................................. 1,530 0.09 Certificates of deposit .......................................................................................................... 15,446,182 0.25 Commercial paper................................................................................................................ 11,811,743 0.21 Corporate bonds................................................................................................................... 678,297 2.31 Total pooled investments ................................................................................................ 172,832,225 Other primary government investments U.S. Treasuries and agencies ............................................................................................... 2,950,503 2.34 Commercial paper................................................................................................................ 244,883 0.03 State and Local Government Series securities1 ................................................................... 2,124,977 — Corporate debt securities ..................................................................................................... 1,393,394 2.42 Other .................................................................................................................................... 4,397,611 2.03 Total other primary government investments.............................................................. 11,111,368 Funds outside primary government included in pooled investments Less: investment trust funds ................................................................................................ 21,973,595 Less: other trust and custodial funds.................................................................................... 6,471,400 Less: discretely presented component units and related organizations ............................... 3,589,981 Total primary government investments........................................................................ $ 151,908,617 1 Reported at carrying value 104 Notes to the Financial Statements b. Credit Risk Table 5 presents the credit risk of the primary government’s debt securities. If a particular security has multiple ratings, the lowest rating of the three major NRSROs is used. Similar to interest rate risk shown in Table 4, time deposits and internal loans to state funds are not included. Table 5 Schedule of Investments in Debt Securities – Primary Government – Credit Risk June 30, 2024 (amounts in thousands) Credit Rating as of Year End Short-term Long-term Fair Value Pooled investments A-1+/P-1/F-1+ AAA/Aaa/AAA $ 40,372,776 A-1/P-1/F-1 AA/Aa/AA 30,327,605 A-2/P-2/F-2 A/A/A 432,401 A-2/P-2/F-2 A/A/BBB 208,122 Not rated ..................................................................... — Not applicable.............................................................. 101,491,321 Total pooled investments ....................................... $ 172,832,225 Other primary government investments A-1+/P-1/F-1+ AAA/Aaa/AAA $ 1,016,704 A-1/P-1/F-1 AA/Aa/AA 2,922,827 A-2/P-2/F-2 A/A/A 1,399,834 A-3/P-3/F-3 BBB/Baa/BBB 6,958 B/NP/B BB/Ba/BB 84,540 B/NP/B B2/B 238,087 C/NP/C CCC/Caa/CCC 16,922 Not rated...................................................................... 5,425,496 Total other primary government investments ..... $ 11,111,368 c. Custodial Credit Risk The State has a deposit policy for custodial credit risk that requires deposits held by financial institutions to be insured by federal depository insurance or secured by collateral. As of June 30, 2024, there were no guaranteed investment contracts. d. Concentration of Credit Risk The investment policy of the State Treasurer’s Office contains no limitations on the amount that can be invested in any one issuer beyond those limitations stipulated in the California Government Code. As of June 30, 2024, the State had investments in the Federal Home Loan Bank totaling 9.9% of the total pooled investments and other primary government investments. 105 State of California Annual Comprehensive Financial Report B. Fiduciary Funds The fiduciary funds include investment and pension and other employee benefit trust funds of the following fiduciary funds and component units: California Public Employees’ Retirement System (CalPERS), California State Teachers’ Retirement System (CalSTRS), the fund for the California Scholarshare program, and various other funds. Funds administered by CalPERS and CalSTRS account for 96.04% of these separately invested funds. CalPERS and CalSTRS exercise their authority under the State Constitution and invest in stocks, bonds, mortgages, real estate, and other investments, including derivative instruments. Additional disclosures for CalPERS’ investments and derivative instruments are included in CalPERS’ separately issued financial statements, which may be found on its website at www.CalPERS.ca.gov. Additional disclosures for CalSTRS’ investments and derivative instruments are included in CalSTRS’ separately issued financial statements, which may be found on its website at www.CalSTRS.com. C. Discretely Presented Component Units The discretely presented component units consist of the University of California and its foundation, the California Housing Finance Agency (CalHFA), and various nonmajor component units. The University and CalHFA constitute 92.56% of the total investments of discretely presented component units. State law, bond resolutions, and investment policy resolutions allow component units to invest in U.S. government securities, state and municipal securities, commercial paper, corporate bonds, investment agreements, real estate, and other investments. Additionally, a portion of the cash and pooled investments of CalHFA, and other nonmajor component units are invested in the State Treasurer’s pooled investment program. Additional disclosures for the University of California’s investments and derivative instruments are included in the University’s separately issued financial statements, which may be found on its website at www.ucop.edu. Additional disclosures for CalHFA’s investments and derivative instruments are included in CalHFA’s separately issued financial statements, which may be found on its website at www.CalHFA.ca.gov. 106 Notes to the Financial Statements This page intentionally left blank 107 State of California Annual Comprehensive Financial Report NOTE 5: ACCOUNTS RECEIVABLE Table 6 presents the disaggregation of accounts receivable attributable to taxes; licenses, permits, and fees; Lottery retailer collections; unemployment program receipts; and the California State University. Other receivables are for interest, gifts, grants, penalties, leases, and other charges. The University of California, a discretely presented component unit of the State, reported current and noncurrent lease receivables of $48 million and $625 million, respectively. The State’s nonmajor component units reported current and noncurrent lease receivables of $27 million and $483 million, respectively. Additional disclosures for the University of California are included in the University’s separately issued financial statements, which may be found on its website at www.ucop.edu. Table 6 Schedule of Accounts Receivable June 30, 2024 (amounts in thousands) Licenses, Permits, Lottery Taxes and Fees Retailers Current governmental activities General Fund ...................................................................... $ 32,871,429 $ 136 $ — Federal Fund ....................................................................... — — — Environmental and Natural Resources Fund ...................... 26,240 514,035 — Nonmajor governmental funds............................................ 7,187,593 6,779,367 — Internal service funds .......................................................... — — — Adjustment: Unavailable revenue ¹ ....................................................... (2,073,200) (14,878) — Leases receivable .............................................................. — — — Total current governmental activities........................... $ 38,012,062 $ 7,278,660 $ — Amounts not scheduled for collection during the subsequent year (unavailable revenue) ..................... $ 2,073,200 $ 14,878 $ — Current business-type activities Water Resources Fund ........................................................ — — — State Lottery Fund .............................................................. — — 743,050 Unemployment Programs Fund ......................................... — — — California State University ................................................. — — — Nonmajor enterprise funds.................................................. — — — Total current business-type activities ........................... $ — $ — $ 743,050 Amounts not scheduled for collection during the subsequent year (unavailable revenue) ..................... $ — $ — $ — 1 The unavailable revenue reported in the governmental fund financial statements represents revenues that are earned and measurable, but not available within 12 months of the end of the reporting period. 108 Notes to the Financial Statements California Unemployment State Programs University Other Total $ 621,956 $ — $ 3,031,254 $ 36,524,775 — — 3,189,084 3,189,084 — — 56,605 596,880 — — 880,518 14,847,478 — — 81,590 81,590 (150,506) — (201,853) (2,440,437) — — (159,881) (159,881) $ 471,450 $ — $ 6,877,317 $ 52,639,489 $ 150,506 $ — $ 361,734 $ 2,600,318 — — 91,684 91,684 — — — 743,050 1,364,035 — — 1,364,035 — 427,764 — 427,764 — — 140,005 140,005 $ 1,364,035 $ 427,764 $ 231,689 $ 2,766,538 $ 937,470 $ 679,161 $ — $ 1,616,631 109 State of California Annual Comprehensive Financial Report NOTE 6: RESTRICTED ASSETS Table 7 presents a summary of the legal restrictions placed on assets of the primary government and the discretely presented component units. Table 7 Schedule of Restricted Assets June 30, 2024 (amounts in thousands) Cash Due From and Pooled Other Loans Investments Investments Governments Receivable Total Primary government Debt service .................................................... $ 945,346 $ 50,655 $ 238,058 $ 5,508,401 $ 6,742,460 Construction.................................................... 1,045,680 — — — 1,045,680 Operations....................................................... 66,745 — — — 66,745 Other ............................................................... 2,782 — — — 2,782 Total primary government........................ 2,060,553 50,655 238,058 5,508,401 7,857,667 Discretely presented component units Debt service .................................................... 812,327 355,759 — — 1,168,086 Other ............................................................... 123,241 — — — 123,241 Total discretely presented component units ....................................... 935,568 355,759 — — 1,291,327 Total restricted assets ............................. $ 2,996,121 $ 406,414 $ 238,058 $ 5,508,401 $ 9,148,994 110 Notes to the Financial Statements NOTE 7: CAPITAL ASSETS Table 8 summarizes the capital assets activity for the primary government. Table 8 Schedule of Changes in Capital Assets – Primary Government June 30, 2024 (amounts in thousands) Beginning Ending Balance Additions Deductions Balance Governmental activities Capital assets not being depreciated/amortized Land..................................................................................... $ 21,830,184 * $ 170,986 $ 16,216 $ 21,984,954 State highway infrastructure................................................ 83,820,142 * 1,385,394 35,060 85,170,476 Collections........................................................................... 21,828 — 137 21,691 Construction/development in progress ................................ 22,648,708 * 4,862,376 3,080,323 24,430,761 Intangible assets................................................................... 1,251,001 * 67,260 — 1,318,261 Total capital assets not being depreciated/amortized .... 129,571,863 6,486,016 3,131,736 132,926,143 Capital assets being depreciated/amortized Buildings and improvements............................................... 31,166,014 * 1,559,013 30,005 32,695,022 Infrastructure ....................................................................... 755,931 143 1,064 755,010 Equipment and other depreciable assets.............................. 6,466,275 * 918,811 179,642 7,205,444 Other intangible assets......................................................... 3,751,692 * 160,256 19,779 3,892,169 Total capital assets being depreciated/amortized........... 42,139,912 2,638,223 230,490 44,547,645 Less accumulated depreciation/amortization for: Buildings and improvements............................................... 11,822,415 * 799,247 18,627 12,603,035 Infrastructure ....................................................................... 482,585 14,337 806 496,116 Equipment and other depreciable assets.............................. 5,297,183 * 481,405 173,339 5,605,249 Other intangible assets......................................................... 1,843,444 * 298,769 16,773 2,125,440 Total accumulated depreciation/amortization................ 19,445,627 1,593,758 209,545 20,829,840 Total capital assets being depreciated/amortized, net.... 22,694,285 1,044,465 20,945 23,717,805 Right to use assets being amortized Right to use leased land....................................................... 43,996 * 6,773 3,456 47,313 Right to use leased buildings............................................... 3,730,619 * 602,482 277,556 4,055,545 Right to use leased equipment............................................. 23,227 * — — 23,227 Right to use subscription-based information technology arrangements........................................................................ 280,423 * 141,256 85,153 336,526 Total right to use assets being amortized ........................ 4,078,265 750,511 366,165 4,462,611 Less accumulated amortization for: Right to use leased land....................................................... 8,523 * 5,505 1,060 12,968 Right to use leased buildings............................................... 990,250 * 521,829 131,871 1,380,208 Right to use leased equipment............................................. 2,586 * 12,975 — 15,561 Right to use subscription-based information technology arrangements........................................................................ 109,831 * 144,081 82,396 171,516 Total accumulated amortization ...................................... 1,111,190 684,390 215,327 1,580,253 Total right to use assets being amortized, net................. 2,967,075 66,121 150,838 2,882,358 Governmental activities, capital assets, net.......................... $ 155,233,223 $ 7,596,602 $ 3,303,519 $ 159,526,306 *Restated -Refer to Note 2 Accounting Changes and Error Corrections (continued) 111 State of California Annual Comprehensive Financial Report Table 8 (continued) Schedule of Changes in Capital Assets – Primary Government (continued) June 30, 2024 (amounts in thousands) Beginning Ending Balance Additions Deductions Balance Business-type activities Capital assets not being depreciated/amortized Land..................................................................................... $ 466,071 $ 23,207 $ — $ 489,278 Collections........................................................................... 37,312 3,073 611 39,774 Construction/development in progress ................................ 2,598,437 * 1,359,188 1,000,017 2,957,608 Intangible assets................................................................... 136,896 365 421 136,840 Total capital assets not being depreciated/amortized .... 3,238,716 1,385,833 1,001,049 3,623,500 Capital assets being depreciated/amortized Buildings and improvements............................................... 19,893,722 782,232 2,088 20,673,866 Infrastructure ....................................................................... 780,119 193,251 5,469 967,901 Equipment and other assets ................................................. 1,209,065 * 95,250 38,243 1,266,072 Other intangible assets......................................................... 474,779 75,643 2,564 547,858 Total capital assets being depreciated/amortized .......... 22,357,685 1,146,376 48,364 23,455,697 Less accumulated depreciation/amortization for: Buildings and improvements............................................... 7,370,339 * 560,557 662 7,930,234 Infrastructure ....................................................................... 201,354 35,325 5,355 231,324 Equipment and other assets ................................................. 905,551 * 87,287 36,615 956,223 Other intangible assets......................................................... 275,716 19,413 2,515 292,614 Total accumulated depreciation/amortization................ 8,752,960 702,582 45,147 9,410,395 Total capital assets being depreciated/amortized, net.... 13,604,725 443,794 3,217 14,045,302 Right to use assets being amortized Right to use leased land....................................................... 7,081 129 3,692 3,518 Right to use leased buildings............................................... 430,650 214,078 5,281 639,447 Right to use leased equipment............................................. 11,562 7,545 2,127 16,980 Right to use subscription-based information technology arrangements........................................................................ 137,622 50,180 15,156 172,646 Total right to use assets being amortized ........................ 586,915 271,932 26,256 832,591 Less accumulated amortization for: Right to use leased land....................................................... 996 338 527 807 Right to use leased buildings............................................... 79,722 50,849 5,094 125,477 Right to use leased equipment............................................. 4,583 4,306 1,057 7,832 Right to use subscription-based information technology arrangements........................................................................ 43,057 66,556 12,194 97,419 Total accumulated amortization ...................................... 128,358 122,049 18,872 231,535 Total right to use assets being amortized, net................. 458,557 149,883 7,384 601,056 Business-type activities, capital assets, net ........................... $ 17,301,998 $ 1,979,510 $ 1,011,650 $ 18,269,858 * Restated -Refer to Note 2 Accounting Changes and Error Corrections (concluded) 112 Notes to the Financial Statements Table 9 summarizes the depreciation and amortization expense charged to the activities of the primary government. Table 9 Schedule of Depreciation and Amortization Expense – Primary Government June 30, 2024 (amounts in thousands) Amount Governmental activities General government .................................................................................................................................................. $ 596,414 Education................................................................................................................................................................... 130,734 Health and human services........................................................................................................................................ 338,322 Natural resources and environmental protection....................................................................................................... 274,691 Business, consumer services, and housing ................................................................................................................ 53,754 Transportation............................................................................................................................................................ 388,682 Corrections and rehabilitation ................................................................................................................................... 362,044 Internal service funds (charged to the activities that utilize the fund)....................................................................... 133,507 Total governmental activities ............................................................................................................................... 2,278,148 Business-type activities............................................................................................................................................... 824,631 Total primary government ................................................................................................................................ $ 3,102,779 113 State of California Annual Comprehensive Financial Report Table 10 summarizes the capital assets activity for discretely presented component units. Table 10 Schedule of Changes in Capital Assets – Discretely Presented Component Units June 30, 2024 (amounts in thousands) Beginning Ending Balance Additions Deductions Balance Capital assets not being depreciated/amortized Land ..................................................................................... $ 1,899,824 $ 431,015 $ 19,429 $ 2,311,410 Collections ........................................................................... 660,251 11,010 14 671,247 Construction/development in progress ................................ 6,672,314 2,130,623 515,703 8,287,234 Intangible assets................................................................... 2,420 34 2,149 305 Total capital assets not being depreciated/amortized..... 9,234,809 2,572,682 537,295 11,270,196 Capital assets being depreciated/amortized Buildings and improvements ............................................... 52,889,133 * 4,368,182 190,032 57,067,283 Infrastructure........................................................................ 1,089,684 * 35,876 — 1,125,560 Equipment and other depreciable assets .............................. 13,827,703 1,085,032 413,900 14,498,835 Other intangible assets ......................................................... 1,838,007 128,934 126,000 1,840,941 Total capital assets being depreciated/amortized ........... 69,644,527 5,618,024 729,932 74,532,619 Less accumulated depreciation/amortization for: Buildings and improvements ............................................... 24,172,665 * 1,871,989 330,368 25,714,286 Infrastructure........................................................................ 559,624 * 37,714 — 597,338 Equipment and other depreciable assets .............................. 10,014,300 800,281 433,192 10,381,389 Other intangible assets ......................................................... 1,395,879 163,646 99,214 1,460,311 Total accumulated depreciation/amortization ................ 36,142,468 2,873,630 862,774 38,153,324 Total capital assets being depreciated/amortized, net.... 33,502,059 2,744,394 (132,842) 36,379,295 Right to use assets being amortized Right to use leased land ....................................................... 88,906 73 — 88,979 Right to use leased buildings ............................................... 3,356,166 176,950 110,107 3,423,009 Right to use leased equipment ............................................. 201,452 116,815 33,468 284,799 Right to use subscription-based information technology arrangements........................................................................ 406,966 * 200,470 61,514 545,922 Total right to use assets being amortized......................... 4,053,490 494,308 205,089 4,342,709 Less accumulated amortization for: Right to use leased land ....................................................... 12,113 4,450 — 16,563 Right to use leased buildings ............................................... 946,262 269,107 35,623 1,179,746 Right to use leased equipment ............................................. 99,007 43,487 27,560 114,934 Right to use subscription-based information technology arrangements........................................................................ 159,603 * 127,984 60,981 226,606 Total accumulated amortization....................................... 1,216,985 445,028 124,164 1,537,849 Total right to use assets being amortized, net ................. 2,836,505 49,280 80,925 2,804,860 Capital assets, net.................................................................... $ 45,573,373 $ 5,366,356 $ 485,378 $ 50,454,351 * Restated -Refer to Note 2 Accounting Changes and Error Corrections 114 Notes to the Financial Statements NOTE 8: DEFERRED OUTFLOWS AND DEFERRED INFLOWS OF RESOURCES In the fund financial statements, governmental funds reported deferred inflows of resources of $4.5 billion. This amount represents revenues that are earned and measurable, but not available within 12 months of the end of the reporting period. Table 11 shows the detail of the deferred outflows of resources and deferred inflows of resources reported in the government-wide Statement of Net Position. For descriptions of the deferred outflows and deferred inflows of resources transactions, see Note 1.K. Table 11 Schedule of Deferred Outflows and Deferred Inflows of Resources June 30, 2024 (amounts in thousands) Primary Government Governmental Business-type Component Activities Activities Total Units Deferred outflows of resources: Loss on refunding of debt ..................................... $ 783,065 $ 162,554 $ 945,619 $ 235,551 Decrease in fair value of hedging derivative instruments............................................................ — — — 14,054 Net pension liability.............................................. 29,793,373 3,627,296 33,420,669 2,523,572 Net other postemployment benefits liability......... 11,086,525 2,490,778 13,577,303 3,369,010 Deferred asset retirement obligation..................... — — — 59,087 Other deferred outflows ........................................ — — — 537,320 Total deferred outflows of resources.............. $ 41,662,963 $ 6,280,628 $ 47,943,591 $ 6,738,594 Deferred inflows of resources: Gain on refunding of debt..................................... $ 1,082,959 $ 3,077 $ 1,086,036 $ 71,689 Service concession arrangements ......................... — — — 223,504 Irrevocable split-interest agreements .................... — — — 339,948 Net pension liability.............................................. 4,635,623 421,101 5,056,724 2,728,392 Net other postemployment benefits liability......... 17,375,870 4,505,726 21,881,596 8,728,771 Other deferred inflows.......................................... 2,055,402 2,411,080 4,466,482 1,383,374 Total deferred inflows of resources ................ $ 25,149,854 $ 7,340,984 $ 32,490,838 $ 13,475,678 115 State of California Annual Comprehensive Financial Report NOTE 9: ACCOUNTS PAYABLE Accounts payable are amounts, related to different programs, that are due taxpayers, vendors, customers, beneficiaries, and employees. Table 12 presents details related to accounts payable. The adjustment for the fiduciary funds represents amounts due to fiduciary funds that were reclassified as external payables on the government-wide Statement of Net Position. Table 12 Schedule of Accounts Payable June 30, 2024 (amounts in thousands) General Health and Government Education Human Services Governmental activities General Fund .............................................................. $ 1,457,603 $ 1,086,642 $ 12,438,033 Federal Fund .............................................................. 200,563 166,613 25,924,206 Environmental and Natural Resources Fund .............. 6,026 — 4,902 Nonmajor governmental funds ................................... 941,088 11,099 5,878,588 Internal service funds ................................................. 377,758 6 285,306 Adjustment: Fiduciary funds ......................................................... 1,141,576 — — Total governmental activities ............................ $ 4,124,614 $ 1,264,360 $ 44,531,035 Business-type activities Water Resources Fund ............................................... $ — $ — $ — State Lottery Fund....................................................... 55,265 — — Unemployment Programs Fund ................................. — — 300,874 California State University ......................................... — 473,857 — Nonmajor enterprise funds ......................................... 252 2,173 582 Adjustment: Fiduciary funds ......................................................... — — — Total business-type activities ............................. $ 55,517 $ 476,030 $ 301,456 116 Notes to the Financial Statements Natural Resources and Environmental Protection Transportation Other Total $ 749,216 $ 16,726 $ 547,824 $ 16,296,044 99,569 166,678 53,298 26,610,927 732,486 65,920 21,501 830,835 19,475 1,010,096 776,866 8,637,212 45,152 — 12,140 720,362 — 49,733 — 1,191,309 $ 1,645,898 $ 1,309,153 $ 1,411,629 $ 54,286,689 $ 138,810 $ — $ — $ 138,810 — — — 55,265 — — — 300,874 — — — 473,857 18,229 — 4,589 25,825 — — 13 13 $ 157,039 $ — $ 4,602 $ 994,644 117 State of California Annual Comprehensive Financial Report NOTE 10: LONG-TERM OBLIGATIONS As of June 30, 2024, the primary government had long-term obligations totaling $314.0 billion. Of that amount, $8.4 billion is due within one year. Governmental activities had a net increase in long-term obligations of $4.8 billion, primarily due to increases of $2.2 billion in net pension liability and $1.3 billion in net other postemployment benefits (OPEB) liability. Other significant increases included general obligation bonds payable of $794 million. Not included in the mandated cost claims payable shown in Table 13 are certain state-mandated programs that are in the adjudication process. Until the Commission on State Mandates rules on a test claim and the claim’s parameters and guidelines are established, expected costs cannot be reasonably determined; however, a positive finding for any of the claimants could individually or in aggregate pose a significant cost to the State. As of June 30, 2024, pollution remediation obligations decreased by $53 million from the prior fiscal year-end, to $1.7 billion. Under federal Superfund law, responsibility for pollution remediation is placed on current and previous owners or operators of polluted sites. Currently, the State’s most significant Superfund site is the Stringfellow Class 1 Hazardous Waste Disposal Facility (Stringfellow) located in Riverside County. As of June 30, 2024, the State estimates that remediation costs at Stringfellow will total $577 million. At BKK Landfill in Los Angeles County, an obligating event has occurred that will likely result in a liability to the State, but a reasonable estimate of the remediation cost cannot be determined at this time. BKK is a closed Class 1 landfill site at which the State is conducting post-closure care. In addition to Superfund sites, the State’s other pollution remediation efforts include underground storage tank removal and cleanup, cleanup of polluted groundwater, and contaminated soil removal and cleanup as required by state law. The primary government has identified tangible capital assets with associated retirement obligations. Some of these assets have a legally enforceable liability associated with their retirement, but the liability is not yet reasonably estimable. Examples include dams, sewer systems, waste ponds, bridges, roadways, and certain long-term use equipment. The State either has no prior experience decommissioning these types of assets to develop an estimate, or the assets are maintained indefinitely so an estimated useful life cannot be determined. The State will record the asset retirement obligations for such assets once they are reasonably estimable. The remaining measurable asset retirement obligations are immaterial. The State receives a share of net profits generated by the operations of the Wilmington Oil Field. Various unit and production agreements control the character of the oil operations, including the liability associated with the future abandonment of the oil and gas wells and facilities. The State’s share of the liability is apportioned based on its net profit interest, among other factors. The State retains a large majority of the total abandonment liability at the end of oil operations. As of June 30, 2024, the State estimates that the oil field abandonment liability is $1.0 billion, and the State has reserves of $345 million in the Environmental and Natural Resources Fund (a special revenue fund) to liquidate future oil field abandonment costs. The other long-term obligations for governmental activities consist of Water Resources Revolving Fund notes payable of $19 million, availability payment arrangements of $977 million, lessee-type financed purchases of $19 million, Technology Services Revolving Fund notes payable of $21 million and a Transportation Fund performance obligation of $583 million. The net pension liability, net OPEB liability, compensated absences, and availability payment arrangements will be liquidated by the 118 Notes to the Financial Statements General Fund, special revenue funds, capital projects funds, and internal service funds. Workers’ compensation and leases will be liquidated by the General Fund, special revenue funds, and internal service funds. The General Fund will liquidate the Proposition 98 funding guarantee, lawsuits, and reimbursement of costs incurred by local agencies and school districts for costs mandated by the State. Overall, business-type activities experienced a net increase in long-term obligations of $2.1 billion. Significant increases included $949 million in net OPEB liability, $463 million in revenue bonds payable, and $392 million in net pension liability. 119 State of California Annual Comprehensive Financial Report Table 13 summarizes the changes in long-term obligations during the fiscal year ended June 30, 2024. Table 13 Schedule of Changes in Long-term Obligations (amounts in thousands) Balance July 1, 2023 Additions Governmental activities Loans payable adjustment for fiduciary funds........................................................ $ 31,041 $ — Compensated absences payable .............................................................................. 5,326,953 1,905,105 Workers’ compensation benefits payable ............................................................... 6,024,132 986,345 Commercial paper and other borrowings................................................................ 1,327,110 1,244,900 Lease liability.......................................................................................................... 2,874,707 * 605,213 Subscription liability............................................................................................... 151,774 * 126,342 General obligation bonds outstanding .................................................................... 70,666,075 8,300,640 Premiums ................................................................................................................ 8,027,022 662,744 Total general obligation bonds payable................................................................ 78,693,097 8,963,384 Revenue bonds outstanding .................................................................................... 14,563,829 1,924,970 Accreted interest ..................................................................................................... 765,500 69,643 Premiums ................................................................................................................ 769,309 141,814 Discounts................................................................................................................. (726) — Total revenue bonds payable ................................................................................ 16,097,912 2,136,427 Mandated cost claims payable ................................................................................ 1,959,233 200,460 Net other postemployment benefits liability........................................................... 67,359,807 6,209,391 Net pension liability................................................................................................ 80,145,864 34,797,228 Other long-term obligations: Lessee-type financed purchases and availability payment arrangements ............ 1,026,777 * — Oil field abandonment liability............................................................................. 1,046,320 — Pollution remediation obligations......................................................................... 1,740,853 * 43,949 Other..................................................................................................................... 565,928 256,351 Total other long-term obligations ..................................................................... 4,379,878 300,300 Total governmental activities......................................................................... $ 264,371,508 $ 57,475,095 Business-type activities Lottery prizes and annuities .................................................................................... $ 1,563,421 $ 7,381,510 Compensated absences payable .............................................................................. 474,603 169,735 Workers’ compensation benefits payable ............................................................... 12,715 1,886 Commercial paper and other borrowings................................................................ 401,804 383,397 Lease liability.......................................................................................................... 358,448 217,114 Subscription liability............................................................................................... 66,804 40,892 General obligation bonds outstanding .................................................................... 662,785 — Premiums ................................................................................................................ 13,087 — Discounts................................................................................................................. (510) — Total general obligation bonds payable................................................................ 675,362 — Revenue bonds outstanding .................................................................................... 13,527,915 * 1,072,305 Premiums ................................................................................................................ 1,174,709 71,552 Discounts................................................................................................................. (306) — Total revenue bonds payable ................................................................................ 14,702,318 1,143,857 Net other postemployment benefits liability........................................................... 14,453,980 1,675,200 Net pension liability................................................................................................ 9,686,137 3,891,652 Other long-term obligations.................................................................................... 370,244 * 72,532 Total business-type activities ......................................................................... $ 42,765,836 $ 14,977,775 *Restated -Refer to Note 2 Accounting Changes and Error Corrections 120 Notes to the Financial Statements Balance Due Within Noncurrent Deductions June 30, 2024 One Year Liabilities $ 11,231 $ 19,810 $ — $ 19,810 1,912,481 5,319,577 15,439 5,304,138 686,591 6,323,886 634,983 5,688,903 1,540,840 1,031,170 — 1,031,170 654,911 2,825,009 476,097 2,348,912 155,213 122,903 85,447 37,456 7,224,520 71,742,195 3,470,475 68,271,720 944,933 7,744,833 559,057 7,185,776 8,169,453 79,487,028 4,029,532 75,457,496 1,521,221 14,967,578 749,130 14,218,448 — 835,143 — 835,143 133,440 777,683 113,575 664,108 (94) (632) (108) (524) 1,654,567 16,579,772 862,597 15,717,175 183,895 1,975,798 88,526 1,887,272 4,861,897 68,707,301 — 68,707,301 32,560,626 82,382,466 — 82,382,466 30,093 996,684 30,941 965,743 4,570 1,041,750 — 1,041,750 97,092 1,687,710 59,858 1,627,852 199,358 622,921 122,068 500,853 331,113 4,349,065 212,867 4,136,198 $ 52,722,818 $ 269,123,785 $ 6,405,488 $ 262,718,297 $ 7,477,456 $ 1,467,475 $ 908,129 $ 559,346 151,889 492,449 199,450 292,999 — 14,601 — 14,601 128,474 656,727 20,528 636,199 49,738 525,824 198,896 326,928 52,260 55,436 30,422 25,014 28,305 634,480 10,225 624,255 1,144 11,943 — 11,943 (71) (439) — (439) 29,378 645,984 10,225 635,759 583,965 14,016,255 603,405 13,412,850 96,868 1,149,393 21,623 1,127,770 (37) (269) — (269) 680,796 15,165,379 625,028 14,540,351 726,403 15,402,777 — 15,402,777 3,499,260 10,078,529 — 10,078,529 61,625 381,151 25,384 355,767 $ 12,857,279 $ 44,886,332 $ 2,018,062 $ 42,868,270 121 State of California Annual Comprehensive Financial Report NOTE 11: PENSION TRUSTS The California Public Employees’ Retirement System (CalPERS) provides retirement benefits to eligible employees of the State, public agencies, and public schools through single-employer, agent multiple-employer, and cost-sharing plans. The California State Teachers’ Retirement System (CalSTRS) provides pension benefits to full-time and part-time employees of the State’s public school system. Both are fiduciary component units of the State, and their financial activity is included in the pension and other employee benefit trust funds column of the fiduciary funds and similar component units’ financial statements of this report. CalPERS administers four defined benefit retirement plans: the Public Employees’ Retirement Fund (PERF), the Judges’ Retirement Fund (Judges’), the Judges’ Retirement Fund II (Judges’ II), and the Legislators’ Retirement Fund (Legislators’). CalPERS also administers two defined contribution plans: the Public Employees’ Deferred Compensation Fund and the Supplemental Contributions Program Fund. The PERF accounts for the majority of assets and liabilities reported for CalPERS’ plans. CalPERS issues a publicly available financial report that includes financial statements and required supplementary information for these plans. The report may be found on CalPERS’ website at www.CalPERS.ca.gov. Contributions to CalPERS’ pension trust funds are recognized in the period in which the contributions are due, pursuant to legal requirements. Benefits and refunds in the defined benefit plans are recognized when due and payable in accordance with the terms of each plan. CalSTRS administers four defined benefit retirement plans within the State Teachers’ Retirement Plan: the Defined Benefit Program, the Defined Benefit Supplement Program, the Cash Balance Benefit Program, and the Replacement Benefits Program. CalSTRS also administers two defined contribution plans: the Pension2 403(b) Plan and the Pension2 457(b) Plan. CalSTRS issues a publicly available financial report that includes financial statements and required supplementary information for these plans. This report may be found on its website at www.CalSTRS.com. Member, employer, and state contributions to CalSTRS’ pension plans are recognized in the period in which the contributions are required by statute. Benefits and refunds are recognized when due and payable, in accordance with the retirement and benefits programs. Fifty-eight county superior courts (trial courts) are included in the primary government. Either CalPERS or the counties administer the pension plans in which the trial courts participate. For the purpose of measuring net pension liability, deferred outflows and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net positions of CalPERS’ plans and CalSTRS’ plans, and changes to the plans’ fiduciary net positions have been determined on the same basis as reported by the plans. The University of California, a discretely presented component unit, administers the University of California Retirement System (UCRS), which consists of two defined benefit plans funded with University and employee contributions, and four defined contribution plans with options to participate in internally or externally managed investment portfolios generally funded with employee non-elective and elective contributions. The State does not directly contribute to the UCRS. Additional information on the 122 Notes to the Financial Statements UCRS can be found in the University’s separately issued financial statements on its website at www.ucop.edu. A. California Public Employees’ Retirement System 1. Public Employees’ Retirement Fund (PERF) Plan Description: The PERF is comprised of and reported as three separate entities for financial reporting purposes, of which the State reports only PERF A. PERF A is comprised of agent multiple-employer plans, which include the State of California and most public agencies’ rate plans with more than 100 active members. PERF B is a cost-sharing multiple-employer plan comprised of school employers and consisting of non-teaching and non-certified employee members. PERF C is a cost-sharing multiple-employer plan comprised of public agencies’ plans that generally have fewer than 100 active members. Employers participating in the PERF as of June 30, 2023, included the primary government and certain discretely presented component units; 1,332 school employers, including charter schools; and 1,595 public agencies. As the State is not an employer in PERF B or PERF C, the term PERF is used hereafter to refer exclusively to the agent multiple-employer plans that include employees of the primary government and certain discretely presented component units. CalPERS acts as the common investment and administrative agent for participating employers. State employees served by the PERF include first- and second-tier miscellaneous and industrial employees, California Highway Patrol (CHP) employees, peace officers and firefighters, and other safety members. Benefits Provided: All employees in a covered class of employment who work half-time or more are eligible to participate in the PERF. The PERF provides retirement, death, disability, and survivor benefits. Vesting occurs after five years, or after ten years for second-tier employees. The benefit provisions are established by the Public Employees’ Retirement Law (PERL) and the Public Employees’ Pension Reform Act of 2013 (PEPRA), and are summarized in Appendix B of the State’s June 30, 2022 Actuarial Valuation Report, which may be found on the CalPERS website at www.CalPERS.ca.gov. In general, retirement benefits for the PERF plans are based on a formula using a member’s years of service credit, age at retirement, and final compensation (average salary for a defined period of employment). Retirement formulas vary based on: • Classification (e.g., miscellaneous, safety, industrial, CHP, or peace officers and firefighters); • Membership category (pre-PEPRA and post-PEPRA); and • Specific provisions in employees’ contracts. The four basic types of retirement are: • Service Retirement – The normal retirement is a lifetime benefit. In most cases, employees become eligible for service retirement as early as age 50 with five years of service credit. If the employee became a member on or after January 1, 2013, he or she must be at least 52 years old with at least five years of service to retire. Second-tier employees (miscellaneous and industrial) become eligible at age 55 with at least 10 years of service credit. • Vested Deferred Retirement – Vested members who leave employment but keep their contribution balances on deposit with CalPERS are eligible for this benefit. • Disability Retirement – Vested members who can no longer perform the usual duties of their current position due to illness or injury may receive this benefit. 123 State of California Annual Comprehensive Financial Report • Industrial Disability Retirement – This benefit is available for eligible safety members, industrial employees, CHP employees, and peace officers and firefighters who are unable to perform the usual duties of their current position due to job-related illness or injury. Employees Covered by Benefit Terms: The State’s June 30, 2023 Actuarial Valuation Report provides information about the number of employees by type covered within the various PERF plans. Table 14 shows the number of employees covered by the benefit terms of each of the PERF plans as of the most recent valuation. Table 14 Number of Employees by Type Covered by Benefit Terms – PERF Plans June 30, 2023 State Peace California State State State Officers and Highway Total Miscellaneous Industrial Safety Firefighters Patrol PERF Plans Inactive employees or beneficiaries currently receiving benefits................. 213,206 18,014 31,293 49,558 10,252 322,323 Inactive employees entitled to but not yet receiving benefits .................... 78,846 4,482 10,790 9,268 641 104,027 Active employees .................................. 210,072 19,605 32,483 47,172 6,704 316,036 Total................................................... 502,124 42,101 74,566 105,998 17,597 742,386 Contributions: Section 20814(c) of PERL requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Employer contribution rates may change if plan contracts are amended. Payments made by the employer to satisfy contribution requirements that are identified by pension plan terms as plan member contribution requirements are classified as plan member contributions. 124 Notes to the Financial Statements Table 15 shows the average active employee and the employer contribution rates for each of the PERF plans as a percentage of annual pay for the measurement period ended June 30, 2023. Table 15 Contribution Rates – PERF Plans June 30, 2023 State Peace California State State State Officers and Highway Miscellaneous Industrial Safety Firefighters Patrol Average active employee rate..................... 7.47 % 8.68 % 10.92 % 11.86 % 12.53 % Employer rate of annual payroll ................. 30.81 20.39 22.31 48.86 65.21 Total ........................................................ 38.28 % 29.07 % 33.23 % 60.72 % 77.74 % Actuarial Methods and Assumptions: The total pension liability for PERF plans was measured as of June 30, 2023 (measurement date), by rolling forward the total pension liability determined by the June 30, 2022 actuarial valuation (valuation date), based on the actuarial methods and assumptions shown in Table 16. Table 16 Actuarial Methods and Assumptions – PERF Plans Valuation date: June 30, 2022 Actuarial cost method: Entry age normal in accordance with the requirements of GASB 68 Actuarial assumptions: Discount rate 6.90% Inflation 2.30% Salary increases Varies by entry age and service Investment rate of return 6.90% net of pension plan investment expense but without reduction for administrative expenses; includes inflation Mortality Mortality rates are based on the 2021 CalPERS Experience Study adopted by the CalPERS Board, and incorporate full generational mortality improvement using 80% of Scale MP-2020, published by the Society of Actuaries Post-retirement benefit The lesser of Contract COLA or 2.30% until Purchasing Power Protection Allowance adjustments (COLAs) floor on purchasing power applies; 2.30% thereafter Discount Rate: The discount rate used to measure the total pension liability was 6.90% for the PERF. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at actuarially determined statutorily required rates. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied 125 State of California Annual Comprehensive Financial Report to all periods of projected benefit payments to determine the total pension liability. The stress test results are presented in the GASB Crossover Testing Report, which may be found on CalPERS’ website at www.CalPERS.ca.gov The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected ranges of future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations. Using historical returns of all of the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 basis points. Table 17 shows the long-term expected geometric real rate of return by asset class for all plans in the PERF. Table 17 Long-term Expected Real Rate of Return by Asset Class – PERF Plans Assumed Asset Asset Class Allocation Real Return 1,2 Global Equity -Cap-weighted....................................................... 30.0 % 4.54 % Global Equity -Non-Cap-weighted............................................... 12.0 3.84 Private Equity ................................................................................ 13.0 7.28 Treasury ......................................................................................... 5.0 0.27 Mortgage-backed Securities .......................................................... 5.0 0.50 Investment Grade Corporates ........................................................ 10.0 1.56 High Yield ..................................................................................... 5.0 2.27 Emerging Market Debt .................................................................. 5.0 2.48 Private Debt ................................................................................... 5.0 3.57 Real Assets..................................................................................... 15.0 3.21 Leverage ........................................................................................ (5.0) (0.59) Total........................................................................................... 100.0 % 1 An expected inflation rate of 2.30% used for this period. 2 Figures are based on the 2021 Asset Liability Management study. 126 Notes to the Financial Statements This page intentionally left blank 127 State of California Annual Comprehensive Financial Report Changes in Net Pension Liability: Table 18 shows changes in net pension liability recognized over the measurement period for the PERF plans. Table 18 Changes in Net Pension Liability – PERF Plans (amounts in thousands) State Miscellaneous State Industrial Total Plan Net Total Plan Net Pension Fiduciary Pension Pension Fiduciary Pension Liability Net Position Liability Liability Net Position Liability Balance at June 30, 2022 .............................. $ 133,238,443 $ 95,432,373 $ 37,806,070 $ 5,745,534 $ 4,572,146 $ 1,173,388 Changes recognized for the measurement period: Service cost.............................................. 2,566,832 — 2,566,832 151,085 — 151,085 Interest on total pension liability ............. 9,166,157 — 9,166,157 398,940 — 398,940 Changes of assumptions .......................... — — — — — — Difference between expected and actual experience ................................... 2,105,822 — 2,105,822 97,355 — 97,355 Plan to plan resource movement.............. — (1,850) 1,850 — 150 (150) Employer contributions .......................... — 6,271,650 (6,271,650) — 256,851 (256,851) Employee contributions........................... — 1,144,462 (1,144,462) — 70,548 (70,548) Net investment income ............................ — 5,874,720 (5,874,720) — 285,169 (285,169) Benefit payments, including refunds of employee contributions ..................... (7,569,642) (7,569,642) — (273,392) (273,392) — Administrative expense .......................... — (70,176) 70,176 — (3,362) 3,362 Net changes................................................. 6,269,169 5,649,164 620,005 373,988 335,964 38,024 Balance at June 30, 2023 (Measurement Date) ................................. $ 139,507,612 $ 101,081,537 $ 38,426,075 $ 6,119,522 $ 4,908,110 $ 1,211,412 128 Notes to the Financial Statements State Safety State Peace Officers and Firefighters Total Plan Net Total Plan Net Pension Fiduciary Pension Pension Fiduciary Pension Liability Net Position Liability Liability Net Position Liability $ 17,094,217 $ 13,828,565 $ 3,265,652 $ 59,080,825 $ 42,536,734 $ 16,544,091 559,582 — 559,582 1,242,191 — 1,242,191 1,184,611 — 1,184,611 4,112,779 — 4,112,779 — — — — — — 222,715 — 222,715 1,381,891 — 1,381,891 — 586 (586) — 931 (931) — 771,612 (771,612) — 3,371,914 (3,371,914) — 279,174 (279,174) — 490,773 (490,773) — 866,433 (866,433) — 2,690,552 (2,690,552) (856,901) (856,901) — (2,956,624) (2,956,624) — — (10,169) 10,169 — (31,280) 31,280 1,110,007 1,050,735 59,272 3,780,237 3,566,266 213,971 $ 18,204,224 $ 14,879,300 $ 3,324,924 $ 62,861,062 $ 46,103,000 $ 16,758,062 (continued) 129 State of California Annual Comprehensive Financial Report Table 18 (continued) Changes in Net Pension Liability – PERF Plans (continued) (amounts in thousands) California Highway Patrol Total PERF Plans Total Plan Net Total Plan Net Pension Fiduciary Pension Pension Fiduciary Pension Liability Net Position Liability Liability Net Position Liability Balance at June 30, 2022 .............................. $ 16,236,057 $ 11,013,585 $ 5,222,472 $ 231,395,076 $ 167,383,403 $ 64,011,673 Changes recognized for the measurement period: Service cost.............................................. 298,022 — 298,022 4,817,712 — 4,817,712 Interest on total pension liability ............. 1,116,842 — 1,116,842 15,979,329 — 15,979,329 Changes of assumptions .......................... — — — — — — Difference between expected and actual experience ................................... 198,448 — 198,448 4,006,231 — 4,006,231 Plan to plan resource movement.............. — 183 (183) — — — Employer contributions .......................... — 674,104 (674,104) — 11,346,131 (11,346,131) Employee contributions........................... — 123,075 (123,075) — 2,108,032 (2,108,032) Net investment income ............................ — 678,131 (678,131) — 10,395,005 (10,395,005) Benefit payments, including refunds of employee contributions ..................... (794,793) (794,793) — (12,451,352) (12,451,352) — Administrative expense .......................... — (8,099) 8,099 — (123,086) 123,086 Net changes................................................. 818,519 672,601 145,918 12,351,920 11,274,730 1,077,190 Balance at June 30, 2023 (Measurement Date) ................................. $ 17,054,576 $ 11,686,186 $ 5,368,390 $ 243,746,996 $ 178,658,133 $ 65,088,863 Reported in governmental activities $ 52,840,197 Reported in business-type activities 10,078,529 Reported by discretely presented component units 170,504 Not reported in government-wide Statement of Net Position 1 1,999,633 Total net pension liability – PERF plans $ 65,088,863 (concluded) 1 Includes amounts allocated to related organizations and fiduciary funds. Also includes the difference in net pension liability for discretely presented component units with a reporting period ended December 31, 2023; and minor differences related to amounts reported in separately issued financial statements of proprietary funds and discretely presented component units. 130 Notes to the Financial Statements Sensitivity of the Net Pension Liability to Changes in the Discount Rate: Table 19 shows the net pension liability of the State, with regard to the PERF plans, calculated using the discount rate of 6.90%, as well as what the State’s net pension liability would be if it were calculated using a discount rate that is one percentage point lower (5.90%) or one percentage point higher (7.90%) than the current rate. Table 19 Net Pension Liability Sensitivity – PERF Plans June 30, 2024 (amounts in thousands) Current Rate Current Rate Current Rate -1% 6.9% +1% State Miscellaneous..................................................................... $ 55,755,127 $ 38,426,075 $ 23,958,238 State Industrial............................................................................. 2,063,189 1,211,412 512,524 State Safety.................................................................................. 5,758,834 3,324,924 1,318,882 State Peace Officers and Firefighters .......................................... 25,514,357 16,758,062 9,600,291 California Highway Patrol........................................................... 7,763,546 5,368,390 3,412,888 Total PERF plans................................................................... $ 96,855,053 $ 65,088,863 $ 38,802,823 Pension Plans Fiduciary Net Position: Detailed information about the PERF plans’ fiduciary net position is available in the separately issued CalPERS financial report. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions: For the PERF plans, for the fiscal year ended June 30, 2024, the State recognized pension expense of $11.7 billion. At June 30, 2024, the State reported deferred outflows of resources from contributions made by the State to the PERF plans subsequent to the measurement date of June 30, 2023, but prior to the fiscal year ended June 30, 2024. Differences between expected and actual experience are recognized as deferred outflows and inflows of resources. The changes of assumptions are recognized as deferred outflows and inflows of resources. The aggregate differences (positive and negative) between projected and actual earnings on pension plan investments arising in different measurement periods are reported as net deferred outflows of resources. Deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the subsequent year. 131 State of California Annual Comprehensive Financial Report Table 20 shows pension expense and sources of deferred outflows and deferred inflows of resources related to each PERF plan. Table 20 Pension Expense and Sources of Deferred Outflows and Deferred Inflows of Resources Related to Pensions – PERF Plans June 30, 2024 (amounts in thousands) State Peace California Total State State State Officers and Highway PERF Miscellaneous Industrial Safety Firefighters Patrol Plans Pension Expense ........................... $ 6,511,356 $ 276,426 $ 764,336 $ 3,254,693 $ 874,577 $ 11,681,388 Deferred Outflows of Resources: Employer contributions .............. 6,093,536 231,104 784,227 2,877,620 755,385 10,741,872 Changes of assumptions ............. 1,994,563 63,313 238,448 1,258,131 386,485 3,940,940 Difference between expected and actual experience.................. 1,841,416 70,424 168,867 1,343,668 231,596 3,655,971 Net difference between projected and actual earnings on pension plan investments............ 4,651,947 222,431 668,651 2,034,532 533,684 8,111,245 Deferred Inflows of Resources: Difference between expected and actual experience.................. 596,738 26,942 136,104 462,464 98,943 1,321,191 Table 21 shows amounts reported as deferred outflows and inflows of resources related to pensions that will be recognized as pension expense in future years for the PERF plans. Increases to pension expense are shown as positive amounts and decreases to pension expense are shown as negative amounts. Table 21 Recognition of Deferred Outflows and Deferred Inflows of Resources – PERF Plans (amounts in thousands) State Peace California Total State State State Officers and Highway PERF Year Ending June 30 Miscellaneous Industrial Safety Firefighters Patrol Plans 2025 ................................. $ 2,148,687 $ 99,734 $ 225,871 $ 1,105,103 $ 310,005 $ 3,889,400 2026 ................................. 1,647,923 64,918 177,995 913,325 241,898 3,046,059 2027 ................................. 3,808,767 158,284 517,300 1,895,272 462,636 6,842,259 2028 ................................. 285,811 6,290 18,696 260,167 38,283 609,247 Payable to the Pension Plans: At June 30, 2024, the State reported a payable of $1.2 billion for the outstanding amount of contributions to the PERF pension plans required for the fiscal year ended June 30, 2024. 132 Notes to the Financial Statements 2. Single-employer Plans Plan Description: CalPERS administers three single-employer defined benefit retirement plans. Judges’ – Judges’ membership includes judges working in the California Supreme Court, the courts of appeal, and the superior courts who were appointed or elected prior to November 9, 1994. Judges’ is funded on a “pay-as-you-go” basis, where short-term investments, contributions received during the year, and a General Fund augmentation are used to provide funding for benefit payments. Judges’ II – Judges’ II membership includes judges working in the California Supreme Court, the courts of appeal, and the superior courts, who were appointed or elected on or after November 9, 1994. There are two types of service retirement available for plan members: the Defined Benefit Plan and the Monetary Credit Plan, in which members can choose a single lump sum payment or annuity at retirement. Legislators’ – Legislators’ was established in 1947; its members consist of state legislators, constitutional officers, and legislative statutory officers. The PEPRA closed Legislators’ to new participants effective January 1, 2013. Benefits Provided: All employees in a covered class of employment who work on a half-time basis or more are eligible to participate. The benefits for the defined benefit plans are based on a member’s years of service, age, final compensation, and benefit formula. Benefits are provided for disability, death, and survivors of eligible members or beneficiaries. Members become fully vested in their retirement benefits earned to date, to the extent funded, after five years of credited service. Benefits are established in accordance with the provisions of the Judges’ Retirement Law, Judges’ Retirement System II Law, and Legislators’ Retirement Law. Additional information is available in the Actuarial Valuation Report for each plan, which may be found on CalPERS’ website at www.CalPERS.ca.gov. Judges’ – The five basic types of retirement are: • Service Retirement – Members must be at least age 60 with 20 years of service or age 70 with at least 10 years of service. • Deferred Retirement – Vested members are eligible for deferred retirement at any age with at least five years of service. • Disability Retirement (non-work related) – There is no age requirement, but there may be a service requirement depending on when the member became a judge. The retirement allowance is 65% of a judge’s final salary, or 75% of his or her final salary if the judge has 20 or more years of service. • Disability Retirement (work-related) – There is no age or service requirement if the disability is a result of work-related injury or disease. The retirement allowance is the same as non-work-related disability retirement. • Death Benefits – Beneficiaries may receive 25% of a current active judge’s salary for life if the judge was not eligible for retirement. Beneficiaries receive one-half of what the retirement allowance would have been if the judge was retired on the date of death. 133 State of California Annual Comprehensive Financial Report Judges’ II – The four basic types of retirement are: • Service Retirement – Judges must be at least age 65 with 20 years of service or age 70 with a minimum of five years of service to receive the defined benefit plan. Judges must have at least five years of service to receive the monetary credit plan. • Disability Retirement (non-work-related) – Judges who have five years of service and become permanently disabled because of a mental or physical disability may apply to the Commission on Judicial Performance for disability retirement. • Disability Retirement (work-related) – Judges receive 65% of their average monthly salary earned during the 12 or 36 months preceding their retirement date, regardless of age or length of service. • Death Benefits – Beneficiaries receive the judge’s monetary credits or three times the annual salary at the time of death, whichever is greater, if the judge was not eligible for retirement. Beneficiaries receive one-half of the retirement pension for life if the judge was retired on the date of death. Legislators’ – The three basic types of retirement are: • Service Retirement – Members must be age 60, with four or more years of service credit, or any age with 20 or more years. The retirement age for legislative statutory officers is 55, or any age with 20 years or more of service credit. • Disability Retirement – Disability retirement uses the same formula as service retirement. There is no reduction for members of the Legislature if retirement is before age 60. • Death Benefits – Beneficiaries have multiple options depending on whether the member was eligible for retirement or was retired at the time of death. Employees Covered by Benefit Terms: The June 30, 2023 actuarial valuation reports for each single-employer plan provide information about the number of employees by type covered within the plans. Table 22 shows the number of employees covered by the benefit terms of each of the single-employer plans as of the most recent valuation. Table 22 Number of Employees by Type Covered by Benefit Terms – Single-employer Plans June 30, 2023 Judges’ Judges’ II Legislators’ Total Inactive employees or beneficiaries currently receiving benefits........... 1,609 535 183 2,327 Inactive employees entitled to but not yet receiving benefits................. — 4 3 7 Active employees.................................................................................... 80 1,659 — 1,739 Total .................................................................................................... 1,689 2,198 186 4,073 Contributions: As Judges’ is funded on a “pay-as-you-go” basis, the contributions made will be less than the actuarially determined contribution requirement of normal cost plus a 10-year amortization of the unfunded accrued liability. The actual contribution is the estimated amount of benefit payouts during the year. Currently, Judges’ member contributions are 8.0% of pay. In certain situations, employers make member contributions. 134 Notes to the Financial Statements Judges’ II contribution rates are determined through CalPERS’ annual actuarial valuation process as required by section 75600.5(c) of the PERL. Classic members contribute 8.0% of their annual compensation to the plan. The base total normal cost rate for PEPRA new members was re-determined in the June 30, 2023 actuarial valuation as 32.1%. The percentage changes in any given year only once the change to the total normal cost is greater than 1.0% from the base total normal cost. The new member rate should be 50% of the new normal cost rounded to the nearest quarter percentage. For Legislators’, contribution rates are determined through CalPERS’ annual actuarial valuation process as required by section 9358 of the PERL. The minimum employer contribution rate under PEPRA is the greater of the actuarially determined employer rate or the employer normal cost. Table 23 shows the average active employee and the employer contribution rates for each of the single-employer plans as a percentage of annual pay for the measurement period ended June 30, 2023. Table 23 Contribution Rates – Single-employer Plans June 30, 2023 Judges’ Judges’ II Legislators’ Average active employee rate.................................................................. “Pay- 9.72 % 8.00 % Employer rate of annual payroll .............................................................. as-you- 23.23 31.80 Total ..................................................................................................... go” 32.95 % 39.80 % 135 State of California Annual Comprehensive Financial Report Actuarial Methods and Assumptions: The total pension liability for single-employer plans was measured as of June 30, 2023 (measurement date), by rolling forward the total pension liability determined by the June 30, 2022 actuarial valuations (valuation date), based on the actuarial methods and assumptions shown in Table 24. Table 24 Actuarial Methods and Assumptions – Single-employer Plans Valuation date: June 30, 2022 Actuarial cost method: Entry age normal in accordance with the requirements of GASB 68 Actuarial assumptions: Discount rate Judges’ 3.86%, Judges’ II 6.15%, Legislators’ 4.85% Inflation All single-employer plans – 2.30% Salary increases All single-employer plans – 2.80% Investment rate of return Judges’ 3.86%, Judges’ II 6.15%, Legislators’ 4.85%, net of pension plan investment without reduction of administrative expense Mortality Mortality rates are based on the 2021 CalPERS Experience Study adopted by the CalPERS Board, and incorporate full generational mortality improvement using 80% of Scale MP-2020, published by the Society of Actuaries Post-retirement benefit Judges’ – 2.80% adjustments (COLAs) Judges’ II – 2.30% Legislators’ – 2.30% Discount Rate: To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress-tested plans that would most likely result in a discount rate that would differ from the actuarially assumed discount rate. For the single-employer plans, the following rates were used: Judges’ – 3.86%, reflecting the short-term nature of the assets. As the plan is insufficiently funded, CalPERS uses a discount rate of 3.86%, which falls within a reasonable range of yields on 20-year tax-exempt general obligation municipal bonds with an average rating of AA. Judges’II – 6.15% Legislators’ – 4.85% With the exception of Judges’, which uses a lower rate of return, the information regarding the discount rate and the long-term expected real rate of return described previously for the PERF plans is also applicable to the single-employer plans. GAAP requires that the long-term discount rate should be determined without reduction for pension plan administrative expense. 136 Notes to the Financial Statements Table 25 shows long-term expected real rates of return by asset class for Judges’ II and Legislators’. Table 25 Long-term Expected Real Rate of Return by Asset Class – Judges’ II and Legislators’ Plans Judges’ II Legislators’ Assumed Asset Assumed Asset Real Return 1,2 Asset Class Allocation Allocation Public equity ................................................ 51.0 % 18.0 % 4.50 % Global fixed income .................................... 21.0 45.0 1.40 Inflation sensitive ........................................ 5.0 20.0 0.50 Commodities ............................................... 3.0 3.0 1.10 Real estate .................................................... 20.0 14.0 3.70 Total ......................................................... 100.0 % 100.0 % 1 An expected inflation rate of 2.30% used for this period. 2 Figures are based on the 2021-22 Asset Liability Management study. 137 State of California Annual Comprehensive Financial Report Changes in Net Pension Liability: Table 26 shows the changes in net pension liability recognized over the measurement period for the single-employer plans. Table 26 Changes in Net Pension Liability – Single-employer Plans (amounts in thousands) Judges’ Judges’ II Total Plan Net Total Plan Net Pension Fiduciary Pension Pension Fiduciary Pension Liability Net Position Liability/(Asset) Liability Net Position Liability/(Asset) Balance at June 30, 2022 (Valuation Date) ..................................... $ 2,528,973 $ 48,887 $ 2,480,086 $ 2,105,851 $ 2,134,389 $ (28,538) Changes recognized for the measurement period: Service cost ........................................ 9,541 — 9,541 121,141 — 121,141 Interest on total pension liability ........ 96,524 — 96,524 131,805 — 131,805 Change of benefit terms ...................... — — — (1,452) — (1,452) Difference between expected and actual experience........................ 111,908 — 111,908 20,135 — 20,135 Changes of assumptions...................... (36,907) — (36,907) — — — Employer contributions....................... — 208,785 (208,785) — 89,970 (89,970) Employee contributions ...................... — 1,697 (1,697) — 38,669 (38,669) Net investment income........................ — 2,233 (2,233) — 151,744 (151,744) Benefit payments, including refunds of employee contributions.... (216,271) (216,271) — (83,868) (83,868) — Administrative expense....................... — (2,032) 2,032 — (2,126) 2,126 Other miscellaneous income ............... — 3,028 (3,028) — 4 (4) Net changes ............................................ (35,205) (2,560) (32,645) 187,761 194,393 (6,632) Balance at June 30, 2023 (Measurement Date)............................... $ 2,493,768 $ 46,327 $ 2,447,441 $ 2,293,612 $ 2,328,782 $ (35,170) 138 Notes to the Financial Statements Legislators’ Total Single-employer Plans Total Plan Net Total Plan Net Pension Fiduciary Pension Pension Fiduciary Pension Liability Net Position Liability/(Asset) Liability Net Position Liability/(Asset) $ 89,659 $ 102,624 $ (12,965) $ 4,724,483 $ 2,285,900 $ 2,438,583 52 — 52 130,734 — 130,734 4,248 — 4,248 232,577 — 232,577 — — — (1,452) — (1,452) 1,444 — 1,444 133,487 — 133,487 — — — (36,907) — (36,907) — 44 (44) — 298,799 (298,799) — 11 (11) — 40,377 (40,377) — 601 (601) — 154,578 (154,578) (7,088) (7,088) — (307,227) (307,227) — — (525) 525 — (4,683) 4,683 — 2 (2) — 3,034 (3,034) (1,344) (6,955) 5,611 151,212 184,878 (33,666) $ 88,315 $ 95,669 $ (7,354) $ 4,875,695 $ 2,470,778 $ 2,404,917 Reported in governmental activities $ 2,404,917 139 State of California Annual Comprehensive Financial Report Sensitivity of the Net Pension Liability to Changes in the Discount Rate: Judges’ net pension liability was calculated using a discount rate of 3.86%; Judges’ II used 6.15%; and Legislators’ used 4.85%. Table 27 shows the net pension liability for each single-employer plan, calculated using the current discount rate, as well as what the net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate. Table 27 Net Pension Liability/Asset Sensitivity – Single-employer Plans June 30, 2024 (amounts in thousands) Current Rate Current Rate Current Rate -1% +1% Judges’ (3.86%) .......................................................................... $ 2,674,529 $ 2,447,441 $ 2,250,450 Judges’ II (6.15%) ....................................................................... 234,093 (35,170) (257,800) Legislators’ (4.85%) ................................................................... 3,377 (7,354) (16,002) Total Single-employer Plans ................................................. $ 2,911,999 $ 2,404,917 $ 1,976,648 Pension Plans Fiduciary Net Position: Detailed information about the single-employer plans’ fiduciary net position is available in the separately issued CalPERS financial report. Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions: For the single-employer plans, for the fiscal year ended June 30, 2023, the State recognized pension expense of $258 million. At June 30, 2024, the State reported deferred outflows of resources from contributions made by the State to the single-employer plans subsequent to the measurement date of June 30, 2023, but prior to June 30, 2024, which will be recognized as a reduction of the net pension liability in the subsequent year. 140 Notes to the Financial Statements Table 28 shows pension expense and sources of deferred outflows and deferred inflows of resources related to each single-employer plan. Table 28 Pension Expense and Sources of Deferred Outflows and Deferred Inflows of Resources Related to Pensions – Single-employer Plans June 30, 2024 (amounts in thousands) Judges’ Judges’ II Legislators’ Total Pension Expense............................................................................ $ 175,951 $ 78,725 $ 3,426 $ 258,102 Deferred Outflows of Resources: Employer contributions subsequent to the measurement date..... 211,503 87,640 — 299,143 Changes of assumptions .............................................................. — 8,654 — 8,654 Difference between expected and actual experience ................... — 26,218 — 26,218 Net difference between projected and actual earnings on pension plan investments...................................................... 1,046 141,561 10,316 152,923 Deferred Inflows of Resources: Difference between expected and actual experience ................... — 67,656 — 67,656 Changes of assumptions .............................................................. — 54,591 — 54,591 Table 29 shows amounts reported as deferred outflows and deferred inflows of resources related to pensions that will be recognized in pension expense in future years for the single-employer plans. Increases to pension expense are shown as positive amounts and decreases to pension expense are shown as negative amounts. Table 29 Recognition of Deferred Outflows and Deferred Inflows of Resources – Single-employer Plans (amounts in thousands) Year Ending June 30 Judges’ Judges’ II Legislators’ Total 2025 .................................................... $ 403 $ 16,011 $ 2,379 $ 18,793 2026 .................................................... 450 3,492 2,619 6,561 2027 .................................................... 281 74,608 4,479 79,368 2028 .................................................... (88) (18,911) 839 (18,160) 2029 .................................................... — (13,853) — (13,853) Thereafter............................................ — (7,161) — (7,161) 141 State of California Annual Comprehensive Financial Report B. California State Teachers’ Retirement System The State reports a net pension liability, deferred outflows and deferred inflows of resources, and expenses as a result of its statutory requirement to contribute to the State Teachers’ Retirement Fund as a non-employer contributing entity. Plan Description: CalSTRS administers the State Teachers’ Retirement Fund, which is an employee benefit trust fund created to finance the State Teachers’ Retirement Plan (STRP). The STRP is a cost-sharing multiple-employer defined benefit pension plan that provides retirement, disability, and survivor benefits to teachers and certain other employees of the California public school system. Four programs comprise the STRP: the Defined Benefit (DB) Program, the Defined Benefit Supplement (DBS) Program, the Cash Balance Benefit (CBB) Program, and the Replacement Benefits (RB) Program. CalSTRS issues a publicly available financial report, which may be found on CalSTRS’ website at www.CalSTRS.com. Benefits Provided: Membership in the DB Program is mandatory for all employees meeting certain statutory requirements. The DB Program provides retirement benefits based on a member’s age, final compensation, and years of service credit. In addition, the retirement program provides benefits to members upon disability and to their survivors or beneficiaries upon the death of eligible members. The Teachers’ Retirement Law establishes the benefits for the DB Program. The DB Program had approximately 1,800 contributing employers, 467,000 active and 240,000 inactive program members, and 333,000 benefit recipients as of June 30, 2024. The payroll for employees covered by the DB Program for the fiscal year ended June 30, 2023, was approximately $42.6 billion. Membership in the DBS Program is automatic for all members of the DB Program. The DBS Program provides benefits based on the amount of funds contributed. Vesting in the DBS Program occurs automatically with vesting in the DB Program. The Teachers’ Retirement Law establishes the benefits for the DBS Program. The primary government does not contribute to the DBS Program. Contributions: The DB Program contribution rates are based on the provisions of AB 1469 and Education Code section 22955.1(b). The Legislature may amend these provisions at any time and submit the amendment to the Governor for approval. The contribution rates for members and employers for the reporting period were 10.21% and 19.10% of creditable compensation, respectively. The General Fund contributed an additional 6.311% of total creditable compensation of the fiscal year ending in the prior calendar year. Contributions will remain at 6.311% in the next year and may increase until the fiscal year 2045-46. Accordingly, the State contributed $3.9 billion for the fiscal year 2023-24. CalSTRS’ June 30, 2022 Defined Benefit Actuarial Valuation Report may be found on CalSTRS’ website at www.CalSTRS.com. The CBB Program is designed for employees of California public schools who are hired to perform creditable service for less than 50% of the full-time equivalent for the position. Employer participation in the CBB Program is optional. However, if the employer elects to offer the CBB Program, then each eligible employee will automatically be covered by the CBB Program, unless the member elects to participate in the DB Program or an alternative plan provided by the employer within 60 days of hire or the election period determined by the employer. At June 30, 2023, the CBB Program had 29 contributing school districts and 42,095 contributing participants. The RB Program is a qualified excess benefits arrangement for DB Program members that is administered through a separate pension trust apart from the other three STRP programs; it was established in accordance with Internal Revenue Code section 415(m). Internal Revenue Code 142 Notes to the Financial Statements section 415(b) imposes a dollar limit on the annual retirement benefits an individual may receive from a qualified defined benefit pension plan. Monthly contributions that would otherwise be credited to the DB program are instead credited to the RB Program to fund monthly program costs. Monthly employer contributions are received and paid to members in amounts equal to the benefits not paid as a result of Internal Revenue Code section 415(b), subject to withholding for any applicable income or employment taxes. At June 30, 2023, 205 individuals were receiving benefits from the RB program. Actuarial Methods and Assumptions: The total pension liability in the June 30, 2022 actuarial valuation (valuation date) was determined using the actuarial methods and assumptions shown in Table 30, applied to the measurement period ended June 30, 2023. Table 30 Actuarial Methods and Assumptions – CalSTRS Valuation date .............................................................................................................. June 30, 2022 Experience study.......................................................................................................... July 1, 2015, through June 30, 2018 Actuarial cost method .................................................................................................. Entry age normal Investment rate of return.............................................................................................. 7.10% Consumer price inflation.............................................................................................. 2.75% Wage growth................................................................................................................ 3.50% Post-retirement benefit increases (COLAs) ................................................................. 2.00% simple CalSTRS uses a generational mortality assumption, which involves the use of a base mortality table and projection scales to reflect expected annual reductions in mortality rate at each age, resulting in increases in future life expectancies. CalSTRS uses base mortality tables customized to best fit the patterns of mortality among its members. The projection scale was set to equal to 110% of the ultimate improvement factor from the Mortality Improvement Scale table, issued by the Society of Actuaries. Discount Rate: The discount rate used to measure the total pension liability was 7.10%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at statutory contribution rates in accordance with the rate increases created by AB 1469. Projected inflows from investment earnings were calculated using the long-term assumed investment rate of return (7.10%) and assuming that contributions, benefit payments, and administrative expense occur midyear. Based on those assumptions, the STRP’s fiduciary net position was projected to be available to make all projected future benefit payments to current plan members. Therefore, the long-term assumed investment rate of return was applied to all periods of projected benefit payments to determine the total pension liability. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. The best estimate ranges were developed using capital market assumptions from CalSTRS’ general investment consultant as an input to the process. The actuarial investment rate of return assumption was adopted by the board in 2020 in conjunction with the most recent experience study. For each future valuation, CalSTRS’ consulting actuary reviews the return assumption for reasonableness based on the current capital market assumptions. 143 State of California Annual Comprehensive Financial Report Table 31 shows the assumed allocation and best estimates of the 20-year geometric real rate of return for each major asset class. Table 31 Long-term Expected Real Rate of Return by Asset Class – CalSTRS Assumed Asset Long-term Expected Asset Class Allocation Real Rate of Return Public equity............................................................................. 38.0 % 5.25 % Real estate................................................................................. 15.0 4.05 Private equity............................................................................ 14.0 6.75 Fixed income ............................................................................ 14.0 2.45 Risk mitigating strategies ......................................................... 10.0 2.25 Inflation sensitive ..................................................................... 7.0 3.65 Cash/liquidity............................................................................ 2.0 0.05 Total ....................................................................................... 100.0 % Pension Liabilities, Pension Expense, and Deferred Outflows and Deferred Inflows of Resources Related to Pensions: CalSTRS’ net pension liability was measured as of June 30, 2023 (measurement date), by applying update procedures and rolling forward the total pension liability determined by the actuarial valuation as of June 30, 2022 (valuation date). The State’s proportion of the net pension liability was based on CalSTRS’ calculated non-employer contributions to the pension plan relative to the total contributions of the State and all participating school districts. Per CalSTRS’ revenue recognition policy, CalSTRS recognizes state contributions for the entire fiscal year at the beginning of each fiscal year. Contributions excluded from the proportionate share per CalSTRS’ policy include employer contributions for retirement incentives, additional service credit, and unused sick leave. As of June 30, 2023, the State’s proportionate share of the CalSTRS’ net pension liability was 32.39%, or $24.7 billion; this amount is reported in the governmental activities column of the government-wide Statement of Net Position as of June 30, 2024. 144 Notes to the Financial Statements As a result of its requirement to contribute to CalSTRS, the State recognized expense of $2.9 billion for the fiscal year ended June 30, 2024, and reported deferred outflows and deferred inflows of resources as shown in Table 32. Table 32 Sources of Deferred Outflows and Deferred Inflows of Resources Related to Pensions – CalSTRS June 30, 2024 (amounts in thousands) Deferred Outflows Deferred Inflows of Resources of Resources Changes of assumptions ................................................................................. $ 142,853 $ — Net difference between projected and actual earnings on pension plan investments......................................................................... 105,601 — Difference between expected and actual experiences .................................... 1,938,721 1,320,014 Proportionate share change............................................................................. — 1,767,779 State contributions subsequent to the measurement date ............................... 3,945,974 — Total............................................................................................................ $ 6,133,149 $ 3,087,793 The $3.9 billion reported as deferred outflows of resources resulting from state contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the fiscal year ended June 30, 2025. Table 33 shows amounts reported as deferred outflows and deferred inflows of resources related to pensions that will be recognized in pension expense in future years as a result of the State’s requirement to contribute to CalSTRS. Increases to pension expense are shown as positive amounts and decreases to pension expense are shown as negative amounts. Table 33 Recognition of Deferred Outflows and Deferred Inflows of Resources – CalSTRS (amounts in thousands) Year Ending June 30 Amount 2025............................................................................................................................................................ $ (1,329,972) 2026............................................................................................................................................................ (1,678,065) 2027............................................................................................................................................................ 1,754,128 2028............................................................................................................................................................ 5,088 2029............................................................................................................................................................ 129,894 Thereafter................................................................................................................................................... 218,309 145 State of California Annual Comprehensive Financial Report Sensitivity of the State’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate: Table 34 shows the State’s proportionate share of the net pension liability calculated using the discount rate of 7.10%, as well as what the State’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.10%) or one percentage point higher (8.10%) than the current rate. Table 34 Net Pension Liability Sensitivity – CalSTRS June 30, 2024 (amounts in thousands) Current Rate Current Rate Current Rate –1% 7.10% +1% State’s proportionate share of net pension liability ...................... $ 41,383,353 $ 24,670,833 $ 10,789,137 Pension Plan Fiduciary Net Position: Detailed information about CalSTRS’ pension plans’ fiduciary net position is available in the separately issued CalSTRS financial report. C. Trial Court Pension Plans Plan Description: The 58 trial courts are reported as part of the primary government. Twenty-two of the trial courts provide pension benefits to their respective employees through cost-sharing multiple-employer defined benefit plans administered by their respective county public employee retirement systems. Thirty-six of the trial courts participate in county retirement plans administered by CalPERS. Of those participating in CalPERS plans, 32 trial courts provide pension benefits to their respective employees through agent multiple-employer defined benefit plans, and four trial courts provide pension benefits to their respective employees through cost-sharing multiple-employer defined benefit plans. Benefits Provided, Contributions, and Employees Covered by Benefit Terms: To obtain information on eligibility terms, benefits provided, contributions, and actuarial assumptions from individual trial court pension actuarial valuation reports, email the State Controller’s Office, State Accounting and Reporting Division at StateGovReports@sco.ca.gov. Net Pension Liability Actuarial Methods and Assumptions: The net pension liability of 54 trial courts was measured as of each individual plan’s measurement date, by applying update procedures and rolling forward the total pension liability determined by the actuarial valuation as of each individual plan’s valuation date, based on the actuarial methods and assumptions used by each plan. For 17 of the 23 county cost-sharing multiple-employer defined benefit plans, the net pension liability was measured as of June 30, 2023. Of these plans, five had a valuation date of June 30, 2023, and 12 had a valuation date of June 30, 2022. For the six remaining county cost-sharing multiple-employer plans, the net pension liability was measured as of December 31, 2023. Of these plans, three had a valuation date of December 31, 2022, two had a valuation date of January 1, 2023, and one had a valuation date of December 31, 2023. For 31 of the CalPERS agent multiple-employer defined benefit plans, the net pension liability was measured as of June 30, 2023, and valued as of June 30, 2022. One agent multiple-employer defined benefit plan and three cost-sharing multiple employer defined benefit plans administered by CalPERS did not provide an actuarial valuation for this reporting period. 146 Notes to the Financial Statements Table 35 shows selected actuarial assumptions for the trial court pension plans, by plan type. Table 35 Actuarial Methods and Assumptions – Trial Court Pension Plans Agent Multiple-Employer Defined Cost-Sharing Multiple-Employer Benefit Pension Plans Defined Benefit Pension Plans Number of Plans: 31 23 Valuation date(s): June 30, 2022 Twelve plans as of June 30, 2022. Three plans as of December 31, 2022. Two plans as of January 1, 2023. Five plans as of June 30, 2023. One plan as of December 31, 2023. Actuarial assumptions: Discount rate 6.90% Rates ranging from 6.42% to 7.25% Discount Rates: The discount rate used to measure the total pension liability of the trial courts that participate in the agent multiple-employer defined benefit pension plan was 6.90%. The discount rates used to measure the total pension liability of each trial court that participates in a cost-sharing multiple employer defined benefit plan ranged from 6.42% to 7.25% as of the respective measurement date. Pension Accounting Elements: For the trial court pension plans, the State reported total pension liability of $12.9 billion and fiduciary net position of $10.4 billion, which resulted in a net pension liability of $2.5 billion as of June 30, 2024. For the fiscal year ended June 30, 2024, the State recognized pension expense of $386 million. At June 30, 2024, the State reported deferred outflows of resources of $1.2 billion and deferred inflows of resources of $293 million. The reported deferred outflows of resources included $376 million from pension contributions the trial courts made subsequent to the measurement date. These contributions will be recognized as a reduction of the net pension liability in the fiscal year ended June 30, 2025. 147 State of California Annual Comprehensive Financial Report NOTE 12: OTHER POSTEMPLOYMENT BENEFITS The State provides medical and prescription drug benefits to annuitants and their dependents under the Public Employees’ Medical and Hospital Care Act, and dental benefits under the State Employees’ Dental Care Act, through the State of California Retiree Health Benefits Program (Retiree Health Benefits Program). The Retiree Health Benefits Program consists of a number of defined benefit other postemployment benefit (OPEB) plans, to which the State contributes as an employer. The State also offers life insurance, long-term care, and vision benefits to retirees; however, because these benefits are completely paid for by the retirees, the State has no liability. The design of health and dental benefit plans can be amended by the CalPERS Board of Administration and the California Department of Human Resources, respectively. CalPERS is a fiduciary component unit of the State, and its financial activity is included in the pension and other employee benefit trust funds column of the fiduciary funds and similar component units’ financial statements of this report. Fifty-eight county superior courts (trial courts) are included in the primary government. The trial courts offer OPEB outside of the Retiree Health Benefits Program and have separately issued actuarial valuation reports. Additional information related to the trial courts is provided in section B. For the purpose of measuring net OPEB liability, deferred outflows and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net positions of the Retiree Health Benefits Program and the trial court OPEB plans, and changes to the plans’ fiduciary net positions, have been determined on the same basis as reported by the plans. The University of California, a discretely presented component unit, administers the University of California Retiree Health Benefit Trust (UCRHBT), which consists of single-employer OPEB plans that provide medical, dental, and vision benefits to eligible retirees and their dependents. The costs of medical and dental benefits are shared between the University and participating retirees. These costs are funded on a pay-as-you-go basis, and the University does not contribute toward the cost of other benefits available to retirees. The State does not directly contribute to the UCRHBT. Additional information on the UCRHBT can be found in the University’s separately issued financial statements on its website at www.ucop.edu. A. Retiree Health Benefits Program Plan Description: Employer and retiree contributions to the Retiree Health Benefits Program (the Program) are established and amended by state law for different groups of employees. Through the collective bargaining process and through state law, certain bargaining units, judicial employees, and Exempt, Excluded, and Executive (EEE) employees (valuation groups) have begun prefunding retiree healthcare and dental benefits. Assets are held in separate state subaccounts by valuation group within the California Employers’ Retiree Benefit Trust Fund (CERBTF), an agent multiple-employer trust administered by CalPERS for the prefunding of health, dental, and other non-pension benefits. In accordance with California Government Code section 22940, assets accumulated in the CERBTF will be invested and are not available to pay benefits until the earlier of 2046, or the date the funded ratio of the subaccount of a particular valuation group reaches at least 100% of the actuarially determined liability for the valuation group, and then only for the purposes of paying benefits of annuitants and dependents associated with that valuation group. 148 Notes to the Financial Statements The Program has 17 different valuation groups that include different categories of employees. Effective July 1, 2018, valuation groups 1, 3, 4, 11, 14, 15, 17, 20 and 21, were consolidated as one actuarial valuation group, Service Employees International Union (SEIU). Valuation groups that have accumulated prefunding assets in a CERBTF subaccount are reported as separate OPEB plans. As of the June 30, 2024 reporting date, these valuation groups included SEIU as well as Bargaining Units 2, 5, 6, 7, 8, 9, 10, 12, 13, 16, 18, 19, the Judicial Branch, and EEE employees. The OPEB plans for SEIU as well as Bargaining Units 5, 6, 9, and 12 are each reported discretely. The OPEB plans for Bargaining Units 2, 7, 8, 10, 13, 16, 18, 19, the Judicial Branch, and EEE employees are collectively reported as “Other Funded Plans.” The remaining valuation groups (the California State University and Other) for which the State made contributions through the CERBTF on a “pay-as-you-go” basis to fund benefit payments are collectively reported as the “Unfunded Plan.” Prefunding contributions to the CERBTF are nonrefundable, and state employees have no claims or rights to the assets. CalPERS reports on the CERBTF as part of its separately issued annual financial statements, which can be obtained from CalPERS on its website at www.CalPERS.ca.gov. The OPEB plans have common benefit terms and are valued using common actuarial methods and assumptions, with the exception of certain demographic and economic assumptions that are specific to certain valuation groups. The valuation groups also have different prefunding contribution rates determined through collective bargaining and state law. Benefits Provided: Benefit terms are governed by state law and can be amended by the Legislature. To be eligible for OPEB benefits, annuitants must retire within 120 days of separation from employment. Survivors of eligible annuitants may also enroll within 60 days of the annuitant’s death. Dependents of annuitants who are enrolled or eligible to enroll at the time of the annuitant’s death qualify for benefits. Annuitants who qualify for premium-free Medicare Part A, either on their own or through a spouse, must enroll in Medicare Part B coverage as soon as they qualify for Medicare Part A. The annuitant must then enroll in a Medicare supplemental insurance plan sponsored by CalPERS which lowers the costs of retirees’ health care premiums and provides some coverage beyond Medicare. Employees Covered by Benefit Terms: Detailed information about the number of employees covered within the OPEB plans is provided in the State of California Retiree Health Benefits Program GASB Nos. 74 and 75 Actuarial Valuation Report as of June 30, 2023 (June 30, 2023 Actuarial Valuation Report), on the State Controller’s Office website, at www.sco.ca.gov. 149 State of California Annual Comprehensive Financial Report Table 36 shows the number of employees covered by the benefit terms. Table 36 Number of Employees by Type Covered by Benefit Terms – Retiree Health Benefits Program June 30, 2023 Inactive employees or beneficiaries currently receiving Active OPEB Plan benefits Employees Total Service Employees International Union (SEIU) Plan .................................. 77,976 115,637 193,613 Bargaining Unit 5 Plan................................................................................. 7,861 6,846 14,707 Bargaining Unit 6 Plan................................................................................. 29,451 28,954 58,405 Bargaining Unit 9 Plan................................................................................. 9,046 13,959 23,005 Bargaining Unit 12 Plan............................................................................... 10,609 12,956 23,565 Other Funded Plans ...................................................................................... 33,294 50,267 83,561 Unfunded Plan.............................................................................................. 42,925 55,320 98,245 Total.......................................................................................................... 211,162 283,939 495,101 Note: Inactive employees that are entitled to, but not receiving benefits are not currently being tracked. Contributions: The contribution requirements of plan members and the State are established and may be amended by the Legislature, and can be subject to collective bargaining. In accordance with the California Government Code, the State generally pays 100% of the health insurance premium cost for annuitants, plus 90% of the additional premium required for the enrollment of annuitants’ family members. The State generally pays all or a portion of the dental insurance premium cost for annuitants, depending on the completed years of credited state service at retirement and the dental coverage selected by the annuitant, as specified in the California Government Code. The State funds the cost of providing health and dental insurance to annuitants primarily on a “pay-as-you-go” basis, with a modest amount of prefunding for members of SEIU, Bargaining Units 5, 6, 9, 12, and other funded plans. See Table 38 for details on the fiduciary net positions of the OPEB plans. The maximum 2023 monthly State contribution was $883 for one-party coverage, $1,699 for two-party coverage, and $2,124 for family coverage. For the year ended June 30, 2023, the State contributed $3.5 billion toward annuitants’ health and dental benefits. Actuarial Methods and Assumptions: Projections of benefits for financial reporting purposes for the OPEB plans include the types of benefits provided at the time of each valuation and the established pattern of sharing benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used are consistent with a long-term perspective. 150 Notes to the Financial Statements For the measurement period ended June 30, 2023 (the measurement date), total OPEB liability for each plan was based on the actuarial methods and assumptions shown in Table 37. Table 37 Actuarial Methods and Assumptions – Retiree Health Benefits Program Valuation date: June 30, 2023 Actuarial cost method: Entry age normal in accordance with the requirements of GASB Statement No. 75 Actuarial assumptions: Discount rate Blended rate for each valuation group, consisting of 6.00% when assets are available to pay benefits, otherwise 20-year Municipal G.O. Bond AA Index rate of 3.86% Inflation 2.30% Salary increases Varies by entry age and service Investment rate of return 6.00%, net of OPEB plan investment expenses but without reduction for OPEB plan administrative expenses Healthcare cost trend rates Pre-Medicare coverage: Actual rates for 2024, increasing to 7.00% in 2025, grading down to 4.50% from 2030 to 2038, and 4.25% for 2039 and later years Post-Medicare coverage: Actual rates for 2024, increasing to rates ranging from 7.00% to 7.66% in 2025, grading down to 4.50% from 2035 to 2038, and 4.25% for 2039 and later years Dental coverage: 0.23% for 2024, 2.00% for 2025, 3.00% for 2026, 4.00% for 2027, and 4.25% for 2028 and later years Mortality Derived using CalPERS’ membership data for all members Other demographic assumptions used in the June 30, 2023 valuation were based on the results of the 2021 CalPERS Experience Study and Review of Actuarial Assumptions report for the period from 2000 to 2019 and included updates to termination, disability, and retirement rates. The CalPERS experience study can be obtained from CalPERS’ website at www.CalPERS.ca.gov. Healthcare-related assumptions such as plan participation, aging factors, adjustments for disabled members, and adjustments for children of current retirees and survivors are based on the State of California Retiree Health Benefits Program 2022 Experience Review performed by Gabriel, Roeder, Smith and Company (GRS) for the period from 2018 to 2022. Other healthcare assumptions such as member healthcare plan selection, coverage and continuance, select and ultimate healthcare cost trend rates, and per capita claim costs and expenses are based on the most current information available. The 2022 GRS Experience Review can be obtained from the State Controller’s Office website, at www.sco.ca.gov. Investment Rate of Return: The long-term expected rate of return on OPEB plan investments was determined by GRS using a building-block method in which expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. Expected compound (geometric) returns were calculated over a closed period. Based on separate expected real returns for the short-term (first five years) and the long-term (six-20 years), and an average inflation assumption of 2.30%, a single expected return rate of 6.00% was calculated for the combined short-term and long-term periods. If applied to expected cash flows during that period, the resulting present value of benefits is expected to be consistent with the present value of benefits that would be determined by applying the short and long-term expected rates to the same cash flows. 151 State of California Annual Comprehensive Financial Report Table 38 shows the long-term expected real rate of return by asset class. Table 38 Long-term Expected Real Rate of Return by Asset Class Target Asset Real Return Real Return Asset Class Allocation Years 1 – 5 Years 6 -20 Global Equity ............................................................................... 49.0 % 4.40 % 4.50 % Fixed Income ................................................................................ 23.0 (1.00) 2.20 Treasury Inflation-Protected Securities ......................................... 5.0 (1.80) 1.30 Real Estate Investment Trusts ....................................................... 20.0 3.00 3.90 Commodities.................................................................................. 3.0 0.80 1.20 Total........................................................................................... 100.0 % Discount Rates: The blended rates used to measure the June 30, 2023 total OPEB liability consist of the 20-year Municipal G.O. Bond AA Index rate of 3.86% as of June 30, 2023, as reported by Fidelity, when prefunding assets are not available to pay benefits, and 6.00% when prefunding assets are available to pay benefits. The cash flow projections used to calculate the blended discount rates were developed assuming that prefunding agreements in which actuarial determined normal costs are shared between employees and the State will continue and that the required contributions will be made on time and as scheduled in future years. The prefunding agreements are subject to collective bargaining and legislative approval. Detailed information on the blended discount rates by valuation group is available in the State of California Retiree Health Benefits Program GASB Nos. 74 and 75 Actuarial Valuation Report as of June 30, 2023, on the State Controller’s Office website, at www.sco.ca.gov. Blended rates for the June 30, 2024 valuation will be determined using the Fidelity Index 20-year Municipal G.O. Bond AA Index rate of 3.97% when prefunding assets are not available to pay benefits. 152 Notes to the Financial Statements This page intentionally left blank 153 State of California Annual Comprehensive Financial Report Changes in Net OPEB Liability: Table 39 shows the changes in net OPEB liability for the OPEB plans, recognized over the measurement period. Table 39 Changes in Net OPEB Liability (amounts in thousands) SEIU Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability Balance at June 30, 2022........................................................ $ 28,542,796 $ 1,510,300 $ 27,032,496 Changes recognized for the measurement period: Service cost .......................................................................... 951,313 — 951,313 Interest on total OPEB liability ........................................... 1,193,663 — 1,193,663 Difference between expected and actual experiences .......... 248,422 — 248,422 Changes of assumptions ....................................................... 263,281 — 263,281 Employer contributions ........................................................ — 1,369,690 (1,369,690) Employee contributions........................................................ — 301,445 (301,445) Net investment income......................................................... — 122,484 (122,484) Benefit payments.................................................................. (1,068,245) (1,068,245) — Administrative expense ........................................................ — (516) 516 Net changes............................................................................ 1,588,434 724,858 863,576 Balance at June 30, 2023 (Measurement Date)............................................................. $ 30,131,230 $ 2,235,158 $ 27,896,072 154 Notes to the Financial Statements Bargaining Unit 5 Plan Bargaining Unit 6 Plan Total OPEB Plan Fiduciary Net OPEB Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability Liability Net Position Liability $ 4,840,738 $ 658,106 $ 4,182,632 $ 16,304,912 $ 1,363,150 $ 14,941,762 136,920 — 136,920 485,501 — 485,501 207,924 — 207,924 683,945 — 683,945 (15,291) — (15,291) (128,638) — (128,638) 7,641 — 7,641 114,998 — 114,998 — 143,430 (143,430) — 513,109 (513,109) — 16,905 (16,905) — 121,510 (121,510) — 45,222 (45,222) — 97,891 (97,891) (92,714) (92,714) — (391,600) (391,600) — — (200) 200 — (427) 427 244,480 112,643 131,837 764,206 340,483 423,723 $ 5,085,218 $ 770,749 $ 4,314,469 $ 17,069,118 $ 1,703,633 $ 15,365,485 (continued) 155 State of California Annual Comprehensive Financial Report Table 39 (continued) Changes in Net OPEB Liability (continued) (amounts in thousands) Bargaining Unit 9 Plan Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability Balance at June 30, 2022........................................................ $ 4,171,793 $ 278,489 $ 3,893,304 Changes recognized for the measurement period: Service cost .......................................................................... 130,885 — 130,885 Interest on total OPEB liability ............................................ 174,009 — 174,009 Difference between expected and actual experiences .......... 62,131 — 62,131 Changes of assumptions ....................................................... 37,701 — 37,701 Employer contributions ........................................................ — 164,496 (164,496) Employee contributions........................................................ — 35,761 (35,761) Net investment income......................................................... — 20,892 (20,892) Benefit payments.................................................................. (128,736) (128,736) — Administrative expense ........................................................ — (90) 90 Net changes............................................................................ 275,990 92,323 183,667 Balance at June 30, 2023 (Measurement Date) ............................................................ $ 4,447,783 $ 370,812 $ 4,076,971 156 Notes to the Financial Statements Bargaining Unit 12 Other Funded Plans Total OPEB Plan Fiduciary Net OPEB Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability Liability Net Position Liability $ 3,802,832 $ 244,027 $ 3,558,805 $ 14,605,252 $ 1,076,998 $ 13,528,254 115,098 — 115,098 523,411 — 523,411 158,792 — 158,792 621,278 — 621,278 (61,321) — (61,321) (38,737) — (38,737) 52,679 — 52,679 207,290 — 207,290 — 175,199 (175,199) — 593,704 (593,704) — 33,161 (33,161) — 139,289 (139,289) — 18,472 (18,472) — 81,057 (81,057) (142,038) (142,038) — (454,415) (454,415) — — (79) 79 — (349) 349 123,210 84,715 38,495 858,827 359,286 499,541 $ 3,926,042 $ 328,742 $ 3,597,300 $ 15,464,079 $ 1,436,284 $ 14,027,795 (continued) 157 State of California Annual Comprehensive Financial Report Table 39 (continued) Changes in Net OPEB Liability (continued) (amounts in thousands) Unfunded Plan Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability Balance at June 30, 2022........................................................ $ 15,276,175 $ — $ 15,276,175 Changes recognized for the measurement period: Service cost .......................................................................... 579,259 — 579,259 Interest on total OPEB liability ........................................... 575,416 — 575,416 Difference between expected and actual experiences .......... (264,319) — (264,319) Changes of assumptions ....................................................... 264,317 — 264,317 Employer contributions ........................................................ — 527,794 (527,794) Employee contributions........................................................ — — — Net investment income......................................................... — — — Benefit payments.................................................................. (527,794) (527,794) — Administrative expense ........................................................ — — — Net changes............................................................................ 626,879 — 626,879 Balance at June 30, 2023 (Measurement Date) ............................................................ $ 15,903,054 $ — $ 15,903,054 1 Includes amounts allocated to related organizations and fiduciary funds. Also includes the difference in net OPEB liability for discretely presented component units with a reporting period ended December 31, 2023, and minor differences related to amounts reported in separately issued financial statements of proprietary funds and discretely presented component units. 158 Notes to the Financial Statements Total Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability $ 87,544,498 $ 5,131,070 $ 82,413,428 2,922,387 — 2,922,387 3,615,027 — 3,615,027 (197,753) — (197,753) 947,907 — 947,907 — 3,487,422 (3,487,422) — 648,071 (648,071) — 386,018 (386,018) (2,805,542) (2,805,542) — — (1,661) 1,661 4,482,026 1,714,308 2,767,718 $ 92,026,524 $ 6,845,378 $ 85,181,146 Reported in governmental activities $ 67,166,435 Reported in business-type activities 15,402,777 Reported by discretely presented component units 105,869 Not reported in government-wide Statement of Net Position1 2,506,065 Total net OPEB liability $ 85,181,146 (concluded) 159 State of California Annual Comprehensive Financial Report Sensitivity of the Net OPEB Liability to Changes in Blended Discount Rates: Table 40 shows the net OPEB liability for each plan as of the measurement date, calculated using their respective blended discount rates ranging from 3.86% to 4.38%, as well as what the net OPEB liability would be if it were calculated using rates that are one percentage-point lower or one percentage-point higher than the blended discount rates. Table 40 Net OPEB Liability Sensitivity to Changes in Blended Discount Rates June 30, 2024 (amounts in thousands) Blended Blended Discount Rates Blended Discount Rates OPEB Plan Blended Rate -1% Discount Rates +1% Service Employees International Union (SEIU) Plan .............................. 4.26% $ 32,698,607 $ 27,896,072 $ 23,989,954 Bargaining Unit 5 Plan........................ 4.37% 5,256,931 4,314,469 3,576,804 Bargaining Unit 6 Plan........................ 4.29% 18,364,263 15,365,485 12,996,313 Bargaining Unit 9 Plan........................ 4.28% 4,780,552 4,076,971 3,504,388 Bargaining Unit 12 Plan...................... 4.30% 4,194,151 3,597,300 3,111,092 Other Funded Plans............................. 4.21% to 4.38% 16,597,674 14,027,795 11,962,547 Unfunded Plan..................................... 3.86% 18,324,432 15,903,054 13,926,153 Total .................................................................................. $ 100,216,610 $ 85,181,146 $ 73,067,251 Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rates: Table 41 shows the net OPEB liability for each plan as of the measurement date, calculated using the select and ultimate healthcare cost trend rates presented in Table 37, as well as what the net OPEB liability would be if it were calculated using healthcare cost trend rates that are one percentage-point lower or one percentage-point higher than the healthcare cost trend rates presented in Table 37. Table 41 Net OPEB Liability Sensitivity to Changes in the Healthcare Cost Trend Rates June 30, 2024 (amounts in thousands) Healthcare Cost Healthcare Cost Trend Rates Healthcare Cost Trend Rates OPEB Plan -1% Trend Rates +1% Service Employees International Union (SEIU) Plan ............ $ 24,519,879 $ 27,896,072 $ 32,182,770 Bargaining Unit 5 Plan ............................................................ 3,668,724 4,314,469 5,145,585 Bargaining Unit 6 Plan ............................................................ 13,325,714 15,365,485 17,964,399 Bargaining Unit 9 Plan ............................................................ 3,586,832 4,076,971 4,695,128 Bargaining Unit 12 Plan .......................................................... 3,178,269 3,597,300 4,123,199 Other Funded Plans ................................................................. 12,209,575 14,027,795 16,371,660 Unfunded Plan......................................................................... 14,213,913 15,903,054 18,028,048 Total.................................................................................. $ 74,702,906 $ 85,181,146 $ 98,510,789 160 Notes to the Financial Statements OPEB Plan Fiduciary Net Position: Detailed information about the OPEB plans’ fiduciary net positions is available in the separate report issued by CalPERS, at www.CalPERS.ca.gov. OPEB Expense and Deferred Outflows and Deferred Inflows of Resources Related to OPEB: The State recognized OPEB expense for the OPEB plans of $1.1 billion for the year ended June 30, 2024. Deferred outflows of resources are recognized for changes of assumptions, for employer contributions subsequent to the measurement date, and for the difference between expected and actual experience. Deferred inflows of resources are recognized for changes of assumptions and for the difference between expected and actual experience. Net deferred outflows of resources are recognized for the aggregate difference (positive and negative) between projected and actual earnings on the OPEB plans’ investments occurring in different measurement periods. 161 State of California Annual Comprehensive Financial Report As of June 30, 2024, the State reported OPEB expense and deferred outflows and deferred inflows of resources as shown in Table 42. Table 42 OPEB Expense and Sources of Deferred Outflows and Deferred Inflows of Resources Related to OPEB June 30, 2024 (amounts in thousands) Service Employees International Union (SEIU) Bargaining Bargaining Bargaining Description Plan Unit 5 Plan Unit 6 Plan Unit 9 Plan OPEB Expense ........................................................................ $ 98,686 $ 43,905 $ 354,241 $ 83,140 Deferred Outflows of Resources: Employer contributions subsequent to the measurement date ...................................................... 1,451,868 143,298 530,421 181,487 Difference between expected and actual experiences ........... 826,096 10,618 608,239 211,233 Changes of assumptions ........................................................ 1,578,930 525,289 1,269,972 193,116 Net difference between projected and actual earnings on OPEB plan investments......................................................... 127,713 45,122 98,826 21,072 Deferred Inflows of Resources: Difference between expected and actual experiences ........... 2,375,377 455,564 983,056 227,086 Changes of assumptions ........................................................ 4,741,109 920,965 2,398,799 633,933 The $3.7 billion reported as deferred outflows of resources resulting from state contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2025. 162 Notes to the Financial Statements Bargaining Other Funded Unit 12 Plan Plans Unfunded Plan Total $ 21,596 $ 292,962 $ 230,803 $ 1,125,333 179,907 642,053 552,876 3,681,910 159,317 886,716 824,694 3,526,913 171,825 976,370 986,405 5,701,907 19,122 83,154 — 395,009 318,832 1,289,580 1,304,702 6,954,197 537,016 2,456,542 3,049,833 14,738,197 163 State of California Annual Comprehensive Financial Report Table 43 shows amounts for each plan reported as deferred outflows and deferred inflows of resources related to OPEB that will be recognized as OPEB expense in future years. Increases to OPEB expense are shown as positive amounts and decreases to OPEB expense are shown as negative amounts. Table 43 Recognition of Deferred Outflows and Deferred Inflows of Resources Related to OPEB (amounts in thousands) Year Ending June 30 OPEB Plan 2025 2026 2027 2028 2029 Thereafter Service Employees International Union (SEIU) Plan ....................... $ (1,255,719) $ (742,664) $ (764,006) $ (821,803) $ (720,813) $ (278,742) Bargaining Unit 5 .............. (181,962) (165,411) (214,717) (232,280) (1,130) — Bargaining Unit 6 .............. (348,801) (298,268) (324,876) (430,813) (2,060) — Bargaining Unit 9 .............. (107,167) (87,304) (88,479) (95,877) (71,457) 14,686 Bargaining Unit 12 ............ (127,907) (122,972) (105,972) (91,573) (56,174) (986) Other Funded Plans ........... (489,650) (381,516) (310,360) (296,606) (188,281) (133,469) Unfunded Plan................... (683,439) (448,289) (416,220) (445,293) (389,943) (160,252) Total ............................... $ (3,194,645) $ (2,246,424) $ (2,224,630) $ (2,414,245) $ (1,429,858) $ (558,763) B. Trial Court OPEB Plans Plan Description: The 58 trial courts are reported as part of the primary government, but each trial court may utilize a separate OPEB plan, where OPEB is offered to employees, and obtain a separate actuarial valuation report for GASB Statement No. 75 reporting purposes. One trial court (Los Angeles) participates in both an agent multiple-employer defined benefit OPEB plan and a single-employer plan, three trial courts (Alameda, Orange, and San Diego) participate in county administered cost-sharing multiple-employer defined benefit OPEB plans, 39 trial courts participate in an agent multiple-employer defined benefit OPEB plan, and 12 trial courts participate in single-employer defined benefit OPEB plans. Three trial courts (Fresno, Mendocino, and Stanislaus) do not have an OPEB plan. Benefits Provided, Contributions, and Employees Covered by Benefit Terms: To obtain information on eligibility terms, benefits provided, contributions, and actuarial assumptions from individual trial court OPEB actuarial valuation reports, email the State Controller’s Office, State Accounting and Reporting Division at StateGovReports@sco.ca.gov. Net OPEB Liability Actuarial Methods and Assumptions: For two of the trial court valuations, the net OPEB liability was measured as of December 31, 2023 (measurement date), and the remaining 53 valuations had a measurement date of June 30, 2023. One of the courts had an actuarial valuation date of December 31, 2023, and 54 courts were valued as of June 30, 2023. 164 Notes to the Financial Statements Table 44 shows selected actuarial assumptions for the trial court OPEB plans, by plan type. Table 44 Actuarial Methods and Assumptions – Trial Court OPEB Plans Single-Employer Defined Benefit Agent Multiple-Employer Defined Cost-Sharing Multiple-Employer OPEB Plans Benefit OPEB Plans Defined Benefit OPEB Plans Valuation date: June 30, 2023 June 30, 2023 Two plans as of June 30, 2023. One plan as of December 31, 2023. Actuarial assumptions: Discount rate Single rate of 3.86%. Blended and single rates ranging Single rates ranging from 6.50% to from 3.86% to 7.00%. 7.00%. Healthcare cost trend rates Initial rate of 7.60% in 2024, Initial rate of 7.60% in 2024, Initial rates ranging from 7.25% to gradually decreasing to an ultimate gradually decreasing to an ultimate 8.50%, decreasing gradually to rate of 3.90% over 52 years per the rate of 3.90% over 52 years per the ultimate rates ranging from 3.45% to Society of Actuaries Getzen model. Society of Actuaries Getzen model 4.50% in 2035 and later years. Discount Rates: The discount rates used to measure the total OPEB liability were based on either a single or a blended rate for each trial court. The blended rates used to measure the June 30, 2023 total OPEB liability consist of the 20-year Municipal G.O. Bond AA Index rate of 3.86% as of June 30, 2023, when prefunding assets are not available to pay benefits, and full funding discount rates ranging from 4.25% to 7.00% when prefunding assets are available to pay benefits. Single rates range from 3.86% to 7.00%. The projections of cash flows used to determine the discount rates assumed that plan contributions will be made according to funding policy, benefits will be paid out of OPEB trusts until assets are depleted, and employer contributions will first be applied to employee service costs in each period. OPEB Accounting Elements: For the trial court OPEB plans, the State reported total OPEB liability of $1.9 billion and fiduciary net position of $335 million, which resulted in a net OPEB liability of $1.5 billion as of June 30, 2024, reported in governmental activities. For the year ended June 30, 2024, the State recognized OPEB expense of $37 million. At June 30, 2024, the State reported deferred outflows of resources of $275 million and deferred inflows of resources of $508 million. Deferred outflows of resources included $84 million from OPEB contributions made subsequent to the measurement date, which will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2025. 165 State of California Annual Comprehensive Financial Report NOTE 13: COMMERCIAL PAPER AND OTHER LONG-TERM BORROWINGS The primary government has two commercial paper borrowing programs: a general obligation commercial paper program and an enterprise fund commercial paper program for the Department of Water Resources. Commercial paper (new issuance or rollover notes that replace maturing new issuances) may be issued at the prevailing market rate, not to exceed 11% for the general obligation and 12% for the Department of Water Resources enterprise fund program, for periods not to exceed 270 days from the date of issuance. The proceeds from the initial issuance of commercial paper are used for voter-approved projects of the general obligation bond program and certain state water projects. For both commercial paper borrowing programs, the commercial paper is retired by the issuance of long-term debt, so commercial paper is considered a noncurrent liability. To provide liquidity for the programs, the State has entered into revolving credit agreements with credit providers such as commercial banks, which total the maximum authorized issuance of general obligation and enterprise fund commercial paper notes. As of June 30, 2024, there were no borrowings with the banks under the revolving credit agreements. The current “Letter of Credit” agreements for the general obligation commercial paper program authorize the issuance of notes in an aggregate principal amount not to exceed $2.5 billion. As of June 30, 2024, the general obligation commercial paper program had $1.0 billion in outstanding commercial paper notes for governmental activities. The current agreements for the enterprise fund commercial paper program authorize the issuance of notes in an aggregate principal amount not to exceed $1.4 billion. As of June 30, 2024, the enterprise fund commercial paper program had $485 million in outstanding notes. The primary government has a bond anticipation note program that consists of borrowing for capital improvements on certain California State University campuses. As of June 30, 2024, $172 million in outstanding bond anticipation notes existed in anticipation of the primary government issuing revenue bonds to the public. The University of California, a discretely presented component unit, has a commercial paper program and other uncollateralized borrowings. Additional disclosures for the University’s commercial paper and other long-term borrowings are included in the University’s separately issued financial statements, which can be obtained from the University on its website at www.ucop.edu. NOTE 14: LEASES AND SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS The State leases land, buildings, equipment, and other assets as a lessee under a variety of noncancellable long-term lease agreements. The State also has noncancellable subscription-based information technology arrangements (SBITAs) for the right to use information technology software. As of June 30, 2024, the primary government had a lease liability of $2.8 billion and a subscription liability of $123 million for governmental activities. For business-type activities, the lease liability was $526 million, and the subscription liability was $55 million. The State is required to make principal and interest payments through maturity of the lease and SBITA agreements. For governmental activities, the required payments are discounted using either the rates explicit in the lease and SBITA agreements or the State’s incremental borrowing rates. The State’s incremental borrowing rates ranged from 2.63% to 3.26%, depending on the duration of the lease or subscription term at the inception of each lease or SBITA agreement during the 2023-24 fiscal year. Required payments for business-type activities are discounted using the rates explicit in the lease and SBITA agreements, the State’s incremental borrowing rates, or other determined incremental borrowing rates. 166 Notes to the Financial Statements Table 45 includes the principal and interest requirements to maturity for the lease liability of the primary government. Table 45 Schedule of Principal and Interest Requirements to Maturity -Lease Liability (amounts in thousands) Primary Government Governmental Activities Business-type Activities Total Year Ending June 30 Principal Interest Principal Interest Principal Interest 2025 ............................................................ $ 476,097 $ 43,031 $ 198,896 $ 10,001 $ 674,993 $ 53,032 2026 ............................................................ 426,199 37,099 32,988 9,484 459,187 46,583 2027 ............................................................ 373,350 31,458 28,037 8,626 401,387 40,084 2028 ............................................................ 326,586 26,171 23,280 7,774 349,866 33,945 2029 ............................................................ 261,314 21,415 21,610 7,171 282,924 28,586 2030-2034................................................... 679,504 56,578 95,006 27,979 774,510 84,557 2035-2039................................................... 226,101 14,931 58,970 17,336 285,071 32,267 2040-2044................................................... 44,371 2,643 34,845 9,824 79,216 12,467 2045-2049................................................... 6,167 700 22,185 4,981 28,352 5,681 2050-2054................................................... 2,890 271 7,604 1,753 10,494 2,024 Thereafter.................................................... 2,430 603 2,403 962 4,833 1,565 Total ........................................................... $ 2,825,009 $ 234,900 $ 525,824 $ 105,891 $ 3,350,833 $ 340,791 Less: current portion................................... 476,097 198,896 674,993 Lease liability, net of current portion ..... $ 2,348,912 $ 326,928 $ 2,675,840 167 State of California Annual Comprehensive Financial Report Table 46 includes the principal and interest requirements to maturity for the subscription liability of the primary government. Table 46 Schedule of Principal and Interest Requirements to Maturity -Subscription Liability (amounts in thousands) Primary Government Governmental Activities Business-type Activities Total Year Ending June 30 Principal Interest Principal Interest Principal Interest 2025 ............................................................ $ 85,447 $ 1,803 $ 30,422 $ 2,293 $ 115,869 $ 4,096 2026 ............................................................ 29,971 492 16,055 1,113 46,026 1,605 2027 ............................................................ 5,402 133 3,803 390 9,205 523 2028 ............................................................ 1,766 28 2,735 221 4,501 249 2029 ............................................................ 104 1 1,450 104 1,554 105 2030-2034................................................... 213 — 971 41 1,184 41 Total ........................................................... $ 122,903 $ 2,457 $ 55,436 $ 4,162 $ 178,339 $ 6,619 Less: current portion................................... 85,447 30,422 115,869 Subscription liability, net of current portion........................................................ $ 37,456 $ 25,014 $ 62,470 Certain lease and SBITA agreements require variable payments that are not included in the lease and subscription liabilities or related right-to-use lease and SBITA assets. The primary government recognized expenses of $102 million from variable lease payments and $8 million from subscription variable payments for the year ended June 30, 2024. As of June 30, 2024, the discretely presented component units, including the University of California and its foundation, the California Housing Finance Agency (CalHFA), and various nonmajor component units, reported lease liabilities for land, buildings, equipment, and other assets and subscription liabilities for information technology software. Additional disclosures for the University of California’s lease and subscription liabilities are included in the University’s separately issued financial statements, which may be found on its website at www.ucop.edu. Additional disclosures for CalHFA’s lease liability are included in CalHFA’s separately issued financial statements, which may be found on its website at www.CalHFA.ca.gov. NOTE 15: COMMITMENTS As of June 30, 2024, the primary government had commitments of $10.3 billion for certain highway construction projects. These commitments are not included as a liability in the Federal Fund or the Transportation Fund because future expenditures related to these commitments will be reimbursed with $8.6 billion from proceeds of approved federal grants and $1.7 billion from local governments. The primary government also had other commitments for which the future expenditures will be reimbursed by the proceeds of approved federal grants of $5.1 billion for various education programs, $3.5 billion for housing and community development programs, $837 million for terrorism prevention and disaster-preparedness response projects, $495 million for services provided under various public health programs, $270 million for community service programs, $47 million for planning and 168 Notes to the Financial Statements research programs, $24 million for services provided under the child support program, and $17 million for water resources programs. The primary government had other commitments, totaling $37.4 billion, that are not included as a liability on the Balance Sheet or the Statement of Net Position. The $37.4 billion in commitments includes grant agreements totaling approximately $28.8 billion to reimburse other entities for construction projects for school building aid, parks, transportation-related infrastructure, housing, and other improvements; and to reimburse counties and cities for costs associated with various programs. Any assets that have been constructed will not belong to the primary government, whose payments are contingent upon the other entities entering into construction contracts. The $37.4 billion in commitments includes $2.5 billion in undisbursed loan commitments to qualified agencies for clean water projects and $2.8 billion in undisbursed loan commitments for various programs aimed at providing housing and emergency shelter to persons in need. The $37.4 billion in commitments also includes contracts of $790 million for the construction of water projects and the purchase and transmission of power that are not included as a liability on the Statement of Net Position of the Water Resources Fund. Included in this amount are certain power purchase, sale, and exchange contracts. The primary government had commitments of $968 million for CSU construction projects. In addition, CSU participates in forward-purchase contracts of electricity. As of June 30, 2024, CSU’s obligation under these special purchase arrangements requires it to purchase at fixed prices an estimated total of $25 million in electricity through December 2025. The California State Lottery Commission had commitments of $1.5 billion for gaming and telecommunication systems and services. The primary government also had commitments of $41 million to veterans for the purchase of properties under contracts of sale. These are long-term projects, and all of the contracts’ needs may not have been defined. The projects will be funded with existing and future program resources or with the proceeds of revenue and general obligation bonds. As of June 30, 2024, the primary government encumbered expenditures of $13.6 billion for the General Fund, $4.1 billion for the Environmental and Natural Resources Fund, and $6.5 billion for the nonmajor governmental funds. See Note 3, Budgeting and Budgetary Control, for an explanation of the primary government’s policy concerning encumbrances. As of June 30, 2024, the discretely presented and fiduciary component units had other commitments that were not included as liabilities on the corresponding Statement of Net Position. Additional disclosure for the University of California’s commitments is included in its separately issued financial statements, which may be found on its website at www.ucop.edu. Additional disclosure for the California Housing Finance Agency’s (CalHFA) commitments is included in its separately issued financial statements, which may be found on its website at www.CalHFA.ca.gov. Additional disclosure for the California Public Employees’ Retirement System’s (CalPERS) commitments is included in its separately issued financial statements, which may be found on its website at www.CalPERS.ca.gov. Additional disclosure for the California State Teachers’ Retirement System’s (CalSTRS) commitments is included in its separately issued financial statements, which may be found on its website at www.CalSTRS.com. 169 State of California Annual Comprehensive Financial Report NOTE 16: GENERAL OBLIGATION BONDS The State Constitution permits the primary government to issue general obligation bonds for specific purposes and in such amounts as approved by a two-thirds vote of both houses of the Legislature and by a majority of voters in a general or direct primary election. The debt service for general obligation bonds is appropriated from the General Fund. Under the State Constitution, the General Fund is used first to support the public school system and public institutions of higher education; the General Fund can then be used to service the debt on outstanding general obligation bonds. Enterprise funds and certain other funds reimburse the General Fund for any debt service that it provides on their behalf. General obligation bonds that are directly related to, and are expected to be paid from, the resources of enterprise funds are included as a liability of such funds in the financial statements. However, the General Fund may be liable for the payment of any principal and interest on these bonds that is not met from the resources of such enterprise funds. As of June 30, 2024, the State had $71.7 billion in outstanding general obligation bonds related to governmental activities and $634 million related to business-type activities. In addition, $28.1 billion in long-term general obligation bonds had been authorized but not issued, of which $27.3 billion is related to governmental activities and $804 million is related to business-type activities. The total amount authorized but not issued (which may first be issued as commercial paper notes) includes $7.0 billion authorized by the applicable finance committees for issuance in the form of commercial paper notes or bonds. In addition, the State had $1.0 billion in general obligation indebtedness in the form of commercial paper notes that had been issued but not yet retired by long-term bonds as of June 30, 2024. A. Variable-rate General Obligation Bonds The State issues both fixed and variable-rate general obligation bonds. As of June 30, 2024, the State had $669 million in variable-rate general obligation bonds outstanding, consisting of $182 million in daily-rate bonds with credit enhancement, and $487 million in weekly-rate bonds with credit enhancement. The interest rates associated with the credit-enhanced bonds are determined by the remarketing agents, to be the lowest rate that would allow the bonds to sell on the effective date of such rate at a price (without regard to accrued interest) equal to 100% of the principal amount. The interest on variable-rate bonds is generally paid on the first business day of each calendar month. The credit-enhanced bonds are secured by letters of credit that secure payment of principal and interest on the bonds and, as applicable, payment of purchase price upon tender by the holder. The State has entered into different credit agreements with various banks (credit providers) for one or more series of credit-enhanced bonds. Under these credit agreements, the credit providers agree to pay all principal and interest payments to the bondholders up to a commitment amount identified in the applicable credit agreement; the State is then required to reimburse the credit providers for the amounts paid. In return, the credit providers are compensated with commitment fees that are calculated as a percentage of the applicable commitment amount. The bondholders have the right to tender the bonds on any business day in accordance with the applicable bond documents. Upon a tender, the remarketing agent will attempt to remarket the tendered bond to a new investor. If the remarketing of the tendered bond is unsuccessful, the bond will be purchased by the applicable credit provider and become a bank bond and accrue interest at higher rates, which cannot exceed 11% as permitted by law until remarketed, redeemed, or paid at maturity. If a bond cannot be remarketed and remains a bank bond for a period ranging from 90 days to 180 days, the bond will be subject to amortization payments in equal installments under the terms stated in the applicable credit agreement. The amortization period may exceed the expiration date of the 170 Notes to the Financial Statements applicable credit agreement. A bank bond may be remarketed at any time during the amortization period. There were no bank bonds during the 2023-24 fiscal year. As of June 30, 2024, the letters of credit for the Series 2003 variable-rate bonds had expiration dates of December 16, 2024; August 25, 2025; and May 10, 2028. The letter of credit for the Series 2004 variable-rate bonds had an expiration date of December 29, 2025. The letters of credit for the Series 2005 variable-rate bonds had expiration dates of November 18, 2024; April 22, 2025; and May 8, 2026. Sinking fund deposits for the variable-rate general obligation bonds are set aside in a sinking fund at the beginning of each fiscal year; such deposits are required and will continue for each fiscal year with scheduled sinking fund payments. The deposits set aside in any fiscal year may be applied, with approval of the State Treasurer and the appropriate bond finance committees, to the redemption or purchase and retirement of any other general obligation bonds (bonds other than the bonds to which the sinking fund deposits relate) then outstanding. If a sinking fund deposit is not applied by January 31 of that fiscal year to such other bonds, the State Treasurer will select the related variable-rate general obligation bonds that will be redeemed in whole or in part on an interest payment date in that fiscal year. The required sinking fund deposits were set aside for the 2023-24 fiscal year. B. Build America Bonds As of June 30, 2024, the State had $11.3 billion in taxable various-purpose general obligation bonds outstanding that were issued as “Build America Bonds” under the American Recovery and Reinvestment Act of 2009 (ARRA) signed into law on February 17, 2009. The bonds have scheduled maturity dates in the fiscal years ended 2027, 2034, and 2039 to 2041. Pursuant to ARRA, the State receives a cash subsidy payment from the U. S. Treasury equal to 35% of the interest payable by the State on the Build America Bonds on or near each interest payment date. Subsequent federal legislation reduced the Build America Bonds subsidy by 5.7% for the federal fiscal years ending September 30, 2021 to September 30, 2031. The cash payment does not constitute a full faith and credit guarantee of the federal government, but is required to be paid by the U. S. Treasury under ARRA. The subsidy payments are deposited into the State’s General Fund. 171 State of California Annual Comprehensive Financial Report C. Debt Service Requirements Table 47 shows the debt service requirements for all general obligation bonds as of June 30, 2024. The estimated debt service requirements for the $669 million variable-rate general obligation bonds, which are included as part of Governmental Activities, are calculated using the actual interest rates in effect on June 30, 2024. The amounts include scheduled mandatory sinking fund redemptions but do not reflect any interest subsidy under the Build America Bonds program or any other offsets to general fund costs of debt service. Table 47 Schedule of Debt Service Requirements for General Obligation Bonds (amounts in thousands) Governmental Activities Business-type Activities Year Ending June 30 Principal Interest Total Principal Interest Total 2025................................. $ 3,470,475 $ 3,537,514 $ 7,007,989 $ 10,225 $ 22,345 $ 32,570 2026................................. 3,579,610 3,396,550 6,976,160 6,965 22,175 29,140 2027................................. 3,845,280 3,221,356 7,066,636 26,585 21,736 48,321 2028................................. 3,826,185 3,051,282 6,877,467 23,880 21,037 44,917 2029................................. 3,859,160 2,878,952 6,738,112 28,070 20,293 48,363 2030-2034........................ 19,756,395 11,662,444 31,418,839 180,435 83,009 263,444 2035-2039........................ 17,304,330 6,889,831 24,194,161 89,455 61,260 150,715 2040-2044........................ 8,919,605 2,608,334 11,527,939 112,305 44,914 157,219 2045-2049........................ 4,657,540 1,013,811 5,671,351 111,165 22,038 133,203 2050-2054........................ 2,523,615 269,185 2,792,800 45,395 4,589 49,984 Total.................................. $ 71,742,195 $ 38,529,259 $ 110,271,454 $ 634,480 $ 323,396 $ 957,876 D. General Obligation Bond Defeasances 1. Current Year Activity On September 14, 2023, the primary government issued $1.5 billion in general obligation bonds to current refund $1.6 billion of outstanding fixed rate general obligation bonds with principal redemptions scheduled in the fiscal years ended 2025 to 2033, and 2044. As a result, the refunded bonds are considered defeased and the liability for those bonds has been removed from the financial statements. The refunding decreased overall debt service by $159 million and resulted in an economic gain of $118 million. The economic gain is the difference between the present value of the old debt service requirements and the present value of the new debt service requirements, discounted at 3.71% per year over the life of the new bonds. On November 15, 2023, the primary government issued $682 million in general obligation bonds to current refund $741 million of outstanding fixed rate general obligation bonds with principal redemptions scheduled in the fiscal years ended 2025 to 2034. As a result, the refunded bonds are considered defeased and the liability for those bonds has been removed from the financial statements. The refunding decreased overall debt service by $90 million and resulted in an economic gain of $71 million. The economic gain is the difference between the present value of the old debt service requirements and the present value of the new debt service requirements, discounted at 3.27% per year over the life of the new bonds. 172 Notes to the Financial Statements On April 4, 2024, the primary government issued $1.3 billion in general obligation bonds to current refund $1.4 billion of outstanding fixed rate general obligation bonds with principal redemptions scheduled in the fiscal years ended 2025 to 2026, 2028 to 2038, and 2044. As a result, the refunded bonds are considered defeased and the liability for those bonds has been removed from the financial statements. The refunding decreased overall debt service by $252 million and resulted in an economic gain of $178 million. The economic gain is the difference between the present value of the old debt service requirements and the present value of the new debt service requirements, discounted at 3.16% per year over the life of the new bonds. 2. Outstanding Balance In the current and prior years, the primary government placed the proceeds of the refunding bonds and other resources in a special irrevocable escrow trust account with the State Treasury to provide for all future debt service payments on defeased bonds. The assets of the trust accounts and liability for defeased bonds are not included in the State’s financial statements. As of June 30, 2024, there are $1.4 billion in outstanding defeased general obligation bonds. NOTE 17: REVENUE BONDS A. Governmental Activities The California Alternative Energy and Advanced Transportation Financing Authority is authorized to issue Clean Renewable Energy Bonds to fund the acquisition and installation of certain transportation-related solar energy facilities located throughout the State. These bonds finance activity in the Transportation Fund and are included in the governmental activities column of the government-wide Statement of Net Position. All the principal and interest remaining on the bonds were fully paid during the fiscal year 2023-24. The California Health Facilities Financing Authority (CHFFA) is authorized to issue No Place Like Home Program Senior Revenue Bonds to provide permanent supportive housing for persons experiencing homelessness or chronic homelessness, or who are at-risk for chronic homelessness, and who are in need of mental health services. These bonds are secured by and payable from a portion of Proposition 63 Tax Transfers. The primary government has no legal liability for the payment of principal and interest on these revenue bonds. Total principal and interest remaining on the bonds are $2.2 billion, payable through 2041. Interest paid in the current year totaled $58 million. These bonds are included in the governmental activities column of the government-wide Statement of Net Position. The Golden State Tobacco Securitization Corporation (GSTSC), a blended component unit, as authorized by state law, has issued asset-backed bonds to purchase 100% of the State’s rights to future revenues from the Master Settlement Agreement with participating tobacco companies. These bonds are secured by and payable solely from future Tobacco Settlement Revenue and interest earned on that revenue. The primary government has no legal liability for the payment of principal and interest on the bonds. The Legislature has annually granted a General Fund appropriation for payment of debt service in the event tobacco settlement revenues and other available amounts prove insufficient to make these payments during the next fiscal year. However, the use of the appropriated monies has never been required. Total principal and interest remaining on all asset-backed bonds is $9.0 billion, payable through 2066. All of the Tobacco Settlement Revenue and interest has been pledged in support of these asset-backed bonds. Principal and interest paid in the current year totaled $398 million, while Tobacco 173 State of California Annual Comprehensive Financial Report Settlement Revenue and interest earned totaled $392 million. These bonds are included in the governmental activities column of the government-wide Statement of Net Position. Under state law, the State Public Works Board (SPWB), an agency that accounts for its activity in the Public Buildings Construction Fund, an internal service fund, may issue revenue bonds. These bonds are issued for the purpose of designing, acquiring, or constructing state buildings, related improvements, and equipment. Leases with state agencies pay the principal and interest on the revenue bonds issued by the Public Buildings Construction Fund. The General Fund has no legal liability for the payment of principal and interest on these revenue bonds. Total principal and interest remaining on the bonds is $12.2 billion, payable through 2049. These revenue bonds are included in the governmental activities column of the government-wide Statement of Net Position. For the specific debt service coverage ratios, refer to the Schedule of Pledged Revenue Coverage in the Statistical Section. B. Business-type Activities Revenue bonds that are directly related to, and are expected to be paid from, the resources of enterprise funds are included in the accounts of such funds. Principal and interest on revenue bonds are payable from the pledged revenues of the respective funds of agencies that issued the bonds. The General Fund has no legal liability for payment of principal and interest on revenue bonds. For specific debt service coverage ratios, refer to the Schedule of Pledged Revenue Coverage in the Statistical Section. Revenue bonds to acquire, construct, or renovate state facilities or to refund outstanding revenue bonds in advance of maturity are issued for water resources, state university campuses, and certain nonmajor enterprise funds. Revenue bonds related to two enterprise funds contain provisions that define events of default related to punctuality of the payment of the outstanding principal and interest, which could result in acceleration of debt payments. C. Discretely Presented Component Units The University of California issues revenue bonds to finance various auxiliary, administrative, academic, medical center, and research facilities. The revenue bonds are not collateralized by any encumbrance, mortgage, or other pledge of property except pledged revenues, and do not constitute general obligations of the University. For more information regarding revenue bonds, current year defeasances, and outstanding defeasances of the University, refer to its separately issued financial report for the fiscal year 2023-24, which may be found on its website at www.ucop.edu. Under state law, the California Housing Finance Agency (CalHFA) issues fixed-rate and variable-rate revenue bonds to fund loans to qualified borrowers for single-family houses and multifamily developments. Variable-rate debt is typically related to remarketed rates or common indices, such as the Securities Industry and Financial Markets Association (SIFMA) or Secured Overnight Financing Rate (SOFR) and is reset periodically. CalHFA issues both federally taxable and tax-exempt bonds. The bonds issued by CalHFA are payable solely from and collateralized by revenues and other pledged assets. For more information regarding revenue bonds, current year defeasances, and outstanding defeasances of the CalHFA, refer to its separately issued financial report for the fiscal year 2023-24, 174 Notes to the Financial Statements which may be found on its website at www.CalHFA.ca.gov. Table 48 shows outstanding revenue bonds of the primary government and the discretely presented component units. Table 48 Schedule of Revenue Bonds Payable June 30, 2024 (amounts in thousands) Primary government Governmental activities Public Buildings Construction Fund .............................................................................................. $ 9,332,605 Nonmajor governmental funds: Golden State Tobacco Securitization Corporation Fund ............................................................ 5,587,157 No Place Like Home Program .................................................................................................... 1,660,010 Total governmental activities................................................................................................... 16,579,772 Business-type activities Water Resources Fund ................................................................................................................... 3,123,863 California State University............................................................................................................. 9,789,072 Nonmajor enterprise funds ............................................................................................................. 2,252,444 Total business-type activities.................................................................................................... 15,165,379 Total primary government .................................................................................................... 31,745,151 Discretely presented component units University of California ................................................................................................................. 32,693,807 California Housing Finance Agency .............................................................................................. 124,857 Nonmajor component units ............................................................................................................ 900,059 Total discretely presented component units ........................................................................ 33,718,723 Total revenue bonds payable............................................................................................... $ 65,463,874 175 State of California Annual Comprehensive Financial Report Table 49 shows the debt service requirements for fixed-rate and variable-rate bonds. It excludes unamortized premiums and discounts that are included in Table 48. Table 49 Schedule of Debt Service Requirements for Revenue Bonds (amounts in thousands) Primary Government Discretely Presented Governmental Activities Business-type Activities Component Units Year Ending June 30 Principal Interest Principal Interest Principal Interest * 2025......................... $ 749,130 $ 609,297 $ 603,405 $ 542,363 $ 1,092,825 $ 1,358,177 2026......................... 773,975 579,919 623,930 518,420 1,362,893 1,320,323 2027......................... 808,615 547,802 627,255 497,096 1,195,775 1,275,113 2028......................... 847,020 518,485 655,225 475,206 783,801 1,238,890 2029......................... 1,261,975 669,828 661,700 450,153 950,664 1,204,653 2030-2034 ............... 4,265,383 1,971,004 3,141,385 1,860,572 6,595,868 5,262,992 2035-2039 ............... 3,037,102 1,222,760 2,386,355 1,256,214 5,154,598 3,932,055 2040-2044 ............... 1,832,214 903,490 2,078,180 830,952 4,529,286 2,762,555 2045-2049 ............... 1,166,355 521,669 2,030,315 412,393 3,817,672 1,729,050 2050-2054 ............... 937,145 42,319 1,112,875 95,936 3,264,171 912,962 2055-2059 ............... — — 95,630 10,991 185,690 577,307 2060 and thereafter.. 123,807 — — — 2,574,298 4,268,783 Total........................... $ 15,802,721 $ 7,586,573 $ 14,016,255 $ 6,950,296 $ 31,507,541 $ 25,842,860 * Includes interest on variable-rate bonds based on rates in effect on June 30, 2024. D. Revenue Bond Defeasances 1. Current Year – Governmental Activities During the 2023-24 fiscal year, the SPWB issued $640 million in lease revenue refunding bonds. The bond proceeds were used to refund $704 million in outstanding lease revenue bonds. The net proceeds of the refunding bonds, along with additional resources, were deposited in an escrow account to provide for all future debt service payments on the refunded bonds. As a result, the refunded bonds are considered defeased and the liabilities for those bonds have been removed from the financial statements. The refunding decreased debt service payments by $73 million and resulted in an economic gain of $54 million. The lease revenue bonds are reported in the Public Buildings Construction Fund, an internal service fund. 2. Outstanding Balances In current and prior fiscal years, the primary government placed the proceeds of the refunding bonds and other resources in irrevocable trust accounts to provide for all future debt service requirements. Accordingly, the assets and liabilities for these defeased bonds are not included in the financial statements. As of June 30, 2024, the outstanding balance of defeased revenue bonds were $2.5 billion for governmental activities and $490 million for business-type activities. 176 Notes to the Financial Statements NOTE 18: RISK MANAGEMENT The primary government has elected, with a few exceptions, to be self-insured against loss or liability. The primary government generally does not maintain reserves. Losses are covered by appropriations from each fund responsible for payment in the year in which the payment occurs. The State is permissively self-insured and, barring any extraordinary catastrophic event, the potential amount of loss faced by the State is not considered material in relation to the primary government’s financial position. Generally, the exceptions are when a bond resolution or a contract requires the primary government to purchase commercial insurance for coverage against property loss or liability. There have been no significant reductions in insurance coverage from the prior year. In addition, no insurance settlement in the last three years has exceeded insurance coverage. All claim payments are on a “pay-as-you-go” basis, with workers’ compensation benefits for self-insured agencies initially being paid by the State Compensation Insurance Fund. The discounted liability for unpaid self-insurance claims of the primary government is estimated to be $6.3 billion as of June 30, 2024. This estimate is primarily based on actuarial reviews of the State’s workers’ compensation program and includes indemnity payments to claimants, as well as all other costs of providing workers’ compensation benefits, such as medical care and rehabilitation. The estimate also includes the liability for unpaid services fees, industrial disability leave benefits, and incurred-but-not-reported amounts. The estimated total liability of approximately $8.8 billion is discounted to $6.3 billion using a 3.5% interest rate. Of the total discounted liability, $635 million is a current liability, of which $477 million is included in the General Fund, $155 million in the special revenue funds, and $4 million in the internal service funds. The remaining $5.7 billion is reported as other noncurrent liabilities in the government-wide Statement of Net Position. The University of California, a discretely presented component unit, is self-insured or insured through a wholly-owned captive insurance company. Additional disclosures for the University’s risk management and self-insurance claims liability are included in its separately issued financial statements, which can be obtained from the University on its website at www.ucop.edu. Table 50 shows the changes in the self-insurance claims liability for the primary government. Table 50 Schedule of Changes in Self-insurance Claims Year Ended June 30 (amounts in thousands) 2024 2023 Unpaid claims, beginning..................................................................................................... $ 6,036,847 $ 5,472,227 Incurred claims..................................................................................................................... 988,231 1,244,814 Claim payments.................................................................................................................... (686,591) (680,194) Unpaid claims, ending..................................................................................................... $ 6,338,487 $ 6,036,847 177 State of California Annual Comprehensive Financial Report NOTE 19: INTERFUND BALANCES AND TRANSFERS A. Interfund Balances Short-term interfund receivables and payables result from the time lag between the dates on which goods and services are delivered and the dates on which payments between entities are made. In addition, interfund borrowing, mainly from nonmajor governmental funds, is used to meet temporary imbalances of receipts and disbursements in the General Fund. Table 51 shows the amounts due from and due to other funds. Table 51 Schedule of Due From Other Funds and Due To Other Funds June 30, 2024 (amounts in thousands) Due To Environmental and Natural Nonmajor State General Federal Resources Governmental Lottery Due From Fund Fund Fund Fund Fund Governmental funds General Fund.................................. $ — $ — $ — $ 1,699,254 $ — Federal Fund................................... 9,214,505 — 95,285 854,538 — Environmental and Natural Resources Fund ............................ 65,606 — — 43,018 — Nonmajor governmental funds....... 6,427,475 208,674 21,933 387,706 — Total governmental funds ........ 15,707,586 208,674 117,218 2,984,516 — Enterprise funds Water Resources Fund ................... 1 — 268 — — State Lottery Fund.......................... 1,247 — — 525,643 — Nonmajor enterprise funds............. 686 — 11,392 711 — Total enterprise funds.............. 1,934 — 11,660 526,354 — Internal service funds .................... 14,462 19,455 253,467 250,869 10,519 Total due from other funds .. $ 15,723,982 $ 228,129 $ 382,345 $ 3,761,739 $ 10,519 178 Notes to the Financial Statements Due To California Unemployment State Nonmajor Internal Total Programs University Enterprise Service Fiduciary Due To Fund Fund Funds Funds Funds Other Funds $ 69,934 $ 2,833 $ 2,316 $ 295,669 $ 1,141,886 $ 3,211,892 — — 11,516 4,367 98 10,180,309 — — — 22,690 — 131,314 — — — 109,353 47,759 7,202,900 69,934 2,833 13,832 432,079 1,189,743 20,726,415 — — — 120,259 — 120,528 — — — — — 526,890 — — — 12 13 12,814 — — — 120,271 13 660,232 23,177 — 16,874 258,423 1,566 848,812 $ 93,111 $ 2,833 $ 30,706 $ 810,773 $ 1,191,322 $ 22,235,459 179 State of California Annual Comprehensive Financial Report Interfund receivables and payables are the result of interfund loans that are not expected to be repaid within one year. In addition to the temporary interfund cash-flow borrowing shown in Table 51, annual enacted budgets provide for long-term loans from many of the State’s special funds—mainly the Environmental and Natural Resources Fund, nonmajor governmental funds, and Unemployment Programs Fund—to the General Fund. In fiscal year 2017-18, a supplemental employer contribution was made to the California Public Employees’ Retirement System (CalPERS) to help reduce the State’s net pension liability. The supplemental employer contribution was funded through a cash loan from borrowable deposits in the State’s internal investment pool—mainly from the Environmental and Natural Resources Fund and nonmajor governmental funds. The General Fund and other funds that normally contribute to CalPERS and benefit from the supplemental contribution will repay the loan and replenish the internal investment pool deposits. The table below includes an outstanding balance of $1.9 billion of interfund loans. There is an additional $34 million reported as loans receivable from entities outside of the State’s primary government. Table 52 shows the primary government’s interfund receivables and payables. Table 52 Schedule of Interfund Receivables and Payables June 30, 2024 (amounts in thousands) Interfund Payables Environmental and Natural Nonmajor Water General Resources Governmental Resources Interfund Receivables Fund Fund Fund Fund Governmental funds General Fund ............................................................ $ — $ 1,318,257 $ 2,216,064 $ — Environmental and Natural Resources Fund....................................................... 574,014 — — — Nonmajor governmental funds ................................. 5,681 — 15,448 — Total governmental funds ................................... 579,695 1,318,257 2,231,512 — Enterprise funds Water Resources Fund.............................................. — 2,273 1,335 — State Lottery Fund .................................................... — 488 287 — California State University Fund .............................. — 5,813 3,414 — Nonmajor enterprise funds ....................................... 27,720 47 28 — Total enterprise funds.......................................... 27,720 8,621 5,064 — Internal service funds ............................................... 2,865,368 2,021 1,187 180,894 Total interfund receivables ............................... $ 3,472,783 $ 1,328,899 $ 2,237,763 $ 180,894 180 Notes to the Financial Statements Interfund Payables Unemployment Nonmajor Internal Total Programs Enterprise Service Fiduciary Interfund Fund Funds Funds Funds Payables $ 417,500 $ 3,034 $ 23,801 $ 19,614 $ 3,998,270 — — 2,324 — 576,338 — — 617 — 21,746 417,500 3,034 26,742 19,614 4,596,354 247 6 18 42 3,921 53 1 4 9 842 633 17 48 107 10,032 5 — — 1 27,801 938 24 70 159 42,596 220 6 13,897 37 3,063,630 $ 418,658 $ 3,064 $ 40,709 $ 19,810 $ 7,702,580 181 State of California Annual Comprehensive Financial Report The amounts shown as due from primary government and due to component units represent short-term receivables and payables between the primary government and component units resulting from the time lag between the dates on which goods and services are provided and received and the dates on which payments between entities are made. Table 53 shows the amounts due from the primary government and due to component units. Table 53 Schedule of Due From Primary Government and Due To Component Units June 30, 2024 (amounts in thousands) Due To Component Units University Nonmajor of Component Due From California Units Total Governmental funds General Fund ................................................................................ $ 521,281 $ — $ 521,281 Environmental and Natural Resources Fund................................ 2,854 173 3,027 Nonmajor governmental funds ..................................................... 37,418 — 37,418 Total governmental funds....................................................... 561,553 173 561,726 Total due from primary government................................. $ 561,553 $ 173 $ 561,726 182 Notes to the Financial Statements This page intentionally left blank 183 State of California Annual Comprehensive Financial Report B. Interfund Transfers Transfers move money collected by one fund to another fund, which then disburses it as required by law. The General Fund and certain other funds transfer money to support various programs accounted for in other funds. The largest transfer from the General Fund was $4.3 billion to the California State University, an enterprise fund. The General Fund also transferred $4.8 billion to nonmajor governmental funds, mainly for support of trial courts and mental health services. The Transportation Fund transferred $1.4 billion in weight fee revenues to the Transportation Debt Service Fund, a nonmajor governmental fund, for transportation-related debt service costs. The Federal Fund transferred $390 million to the General Fund for administration of the Unemployment Insurance Program. Table 54 shows interfund transfers of the primary government. Table 54 Schedule of Interfund Transfers June 30, 2024 (amounts in thousands) Transferred To Environmental and Natural Nonmajor General Resources Governmental Transferred From Fund Fund Funds Governmental funds General Fund .................................................................................. $ — $ 18,202 $ 5,316,853 Federal Fund................................................................................... 2,598,188 10,331 11,550 Environmental and Natural Resources Fund .................................. 127,269 — 2,074 Nonmajor governmental funds ....................................................... 325,755 29,961 1,615,487 Total governmental funds ................................................ 3,051,212 58,494 6,945,964 Internal service funds...................................................................... 56,346 — — Total transfers from other funds .................................. $ 3,107,558 $ 58,494 $ 6,945,964 184 Notes to the Financial Statements Transferred To California State Nonmajor Internal Total University Enterprise Service Transfers To Fund Funds Funds Other Funds $ 4,263,059 $ — $ 58,336 $ 9,656,450 — — — 2,620,069 — 2,000 — 131,343 — — — 1,971,203 4,263,059 2,000 58,336 14,379,065 — — — 56,346 $ 4,263,059 $ 2,000 $ 58,336 $ 14,435,411 185 State of California Annual Comprehensive Financial Report NOTE 20: FUND BALANCES, NET POSITION DEFICITS, AND ENDOWMENTS A. Fund Balances Table 55 shows the composition of the governmental fund balances. Table 55 Schedule of Fund Balances by Function June 30, 2024 (amounts in thousands) Environmental and Natural Nonmajor General Federal Resources Governmental Fund Fund Fund Funds Nonspendable Long-term interfund receivables ............................... $ 3,472,783 $ — $ — $ — Long-term loans receivable ....................................... 101,711 — — — Other .......................................................................... — — — 41,829 Total nonspendable .............................................. 3,574,494 — — 41,829 Restricted General government .................................................. 2,120,840 50,759 17,782 7,285,888 Education .................................................................. 93,402 — — 1,156,920 Health and human services ....................................... 970,643 229,324 85,220 7,230,470 Natural resources and environmental protection......................................... — 747 7,328,126 586,021 Business, consumer services, and housing.............................................................. 871 437,013 77,909 6,993,643 Transportation............................................................ — — — 10,571,860 Corrections and rehabilitation ................................... 282,962 — — 300,452 Budget stabilization .................................................. 22,559,422 — — — Total restricted...................................................... 26,028,140 717,843 7,509,037 34,125,254 Committed General government .................................................. 594,375 — 10,527 1,007,453 Education .................................................................. 354,595 — — 64,840 Health and human services ....................................... 1,216,045 — — 685,172 Natural resources and environmental protection......................................... 74,337 — 16,217,187 442,388 Business, consumer services, and housing.............................................................. — — 130,871 171,721 Transportation............................................................ — — — 53,719 Corrections and rehabilitation ................................... — — — 1,101 Total committed.................................................... 2,239,352 — 16,358,585 2,426,394 Assigned General government .................................................. 5,548,848 — — 82,390 Education .................................................................. 122,559 — — — Health and human services ....................................... 12,644,915 — — — Natural resources and environmental protection......................................... 6,831,181 — — — Business, consumer services, and housing.............................................................. 427,117 — — — Transportation............................................................ 1,067,616 — — — Corrections and rehabilitation ................................... 1,079,811 — — — Total assigned........................................................ 27,722,047 — — 82,390 Unassigned .................................................................... 3,828,732 (360,632) — (895,617) Total fund balances...................................................... $ 63,392,765 $ 357,211 $ 23,867,622 $ 35,780,250 186 Notes to the Financial Statements B. Net Position Deficits Table 56 shows the net position deficit balances. Table 56 Schedule of Net Position Deficits June 30, 2024 (amounts in thousands) Internal Service Enterprise Funds Funds Service Revolving Fund ............................................................................................ 569,623 — Technology Services Revolving Fund ....................................................................... 242,228 — Water Resources Revolving Fund ............................................................................. 14,328 — Other Internal Service Programs Fund ...................................................................... 909,631 — State Lottery Fund...................................................................................................... — 295,600 Unemployment Programs Fund ................................................................................ — 14,602,754 California State University Fund ............................................................................... — 14,279,969 Total net position deficits...................................................................................... $ 1,735,810 $ 29,178,323 C. Discretely Presented Component Unit Endowments and Gifts The University of California, a discretely presented component unit, administers certain restricted nonexpendable, restricted expendable, and unrestricted endowments that are included in the related net position categories of the government-wide and fund financial statements. As of June 30, 2024, the value of restricted endowments and gifts totaled $29.5 billion, and unrestricted endowments and gifts totaled $11.8 billion. The University’s policy is to retain realized and unrealized appreciation on investments with the endowment after an annual income distribution. The net appreciation available to meet future spending needs upon approval by the Board of Regents amounted to $3.9 billion at June 30, 2024. The portion of investment returns earned on endowments and distributed each year to support current operations is based on a rate approved by the Board of Regents. In addition, the California State University Auxiliary Organizations and the University of California College of the Law, San Francisco, nonmajor component units, have restricted nonexpendable and restricted expendable endowments of $2.0 billion and $22 million, respectively. 187 State of California Annual Comprehensive Financial Report NOTE 21: CONDUIT DEBT The California Housing Finance Agency (CalHFA), a major component unit, issued conduit debt to provide financial assistance for the acquisition, construction, and development of multifamily rental housing. As of June 30, 2024, CalHFA had $6.2 billion of conduit debt obligations outstanding. CalHFA provides a limited commitment for such debt. Neither CalHFA, nor the State assumes the liabilities for the debt service of the debt issuances in the event of default. Revenues and other assets pledged and assigned under applicable indentures and agreements secure the debt. Certain debt of the nonmajor component units is issued to finance activities such as the promotion of renewable energy sources and financing for economic development projects. As of June 30, 2024, the nonmajor component units had approximately $5.2 billion of conduit debt obligations outstanding. The nonmajor component units provide a limited commitment for such debt. Neither the nonmajor component units, nor the State assume the liabilities for the debt service of the debt issuances in the event of default. Revenues and other assets pledged and assigned under applicable indentures and agreements secure the debt. NOTE 22: CONTINGENT LIABILITIES A. Litigation The primary government is a party to numerous legal proceedings, many of which are not unusual for governmental operations. To the extent they existed, the following legal proceedings were accrued as a liability in the government-wide financial statements: those decided against the primary government before June 30, 2024; those in progress as of June 30, 2024, and settled or decided against the primary government as of September 5, 2025; and those having a high probability of resulting in a decision against the primary government as of September 5, 2025, and for which amounts could be estimated. In the governmental fund financial statements, the portion of the liability that is expected to be paid within the next 12 months is recorded as a liability in the fund from which payment will be made. In the proprietary fund financial statements, the entire liability is recorded in the fund from which payment will be made. In addition, the primary government is involved in certain other legal proceedings that, if decided against the primary government, may impair its revenue sources or require it to make significant expenditures. Because of the prospective nature of these proceedings, no provision for the potential liability has been made in the financial statements. Following are descriptions of the more significant lawsuits pending against the primary government: The primary government was a defendant in the following cases: Anthem Blue Cross v. David Maxwell- Jolly, et al.; Molina Family Health Plan v. Department of Health Care Services; and Health Net of California v. Department of Health Care Services regarding application of budget reduction factors to managed-care capitated rates. These cases were settled on a contingent basis based on the plans’ profitability. The estimated combined total potential loss is more than $400 million based on three separate settlement agreements that were entered into in 2013 and 2014. 188 Notes to the Financial Statements The primary government was a defendant in a case, Amalgamated Transit Union International, et al. v. U.S. Department of Labor, et al. Under federal law, as a condition of receiving certain federal transit grants, transit agencies must demonstrate to the Department of Labor’s (DOL) satisfaction that they provide fair and equitable labor arrangements for transit workers, including arrangements that ensure the “continuation of collective bargaining rights.” After California enacted PEPRA in 2012, DOL issued a certification decision finding that PEPRA interfered with the continuation of transit workers’ bargaining rights. The State successfully challenged this determination as violating the Administrative Procedure Act, and the Eastern District of California permanently enjoined DOL from relying on PEPRA as a basis to deny grants to two transit agencies. In 2019, DOL began certifying grants in conformity with the district court’s orders. A transit union objected to these certifications and filed the pending case, asking the same federal judge to reconsider the earlier ruling and reach the opposite conclusion. The State of California intervened in the case to defend DOL’s certification decision. The parties filed and briefed cross-motions for summary judgment, but after the change in presidential administrations in 2020, DOL sought and obtained a voluntary remand of proceedings so it could reconsider its position. In October 2021, DOL issued a new decision reverting to its prior view that PEPRA precludes certification under section 13(c) of the Urban Mass Transportation Act of 1964. The October 2021 reconsideration again finds, in spite of the court’s prior contrary rulings, that PEPRA interferes with the collective bargaining rights of transit workers. The reconsideration states that DOL will decline to certify any future grant applications from local transit agencies that are subject to PEPRA. Media reports have estimated the anticipated loss to California transit agencies of funds under the American Rescue Plan Act to be around $2.5 billion, along with around $9.5 billion of anticipated funds under the Infrastructure Improvement and Jobs Act. The State filed a cross-complaint against DOL challenging the reconsidered certification decision as arbitrary and capricious in violation of the Administrative Procedure Act. In December 2022, the district court ruled in the State’s favor on its motion for summary judgement and entered final judgement on behalf of the State, including a permanent injunction preventing DOL from relying on PEPRA as a basis not to certify grants. The plaintiff and DOL appealed to the Ninth Circuit court and in July 2024, the appellate court vacated the district court’s decision and dismissed the underlying proceedings as prudently unripe on the basis that the 2021 determination did not itself result in the denial of certification of any particular grant application. There was no settlement or monetary judgment against the State for this case; however, on March 31, 2025, DOL issued a letter returning to the position that it took in 2019, that PEPRA does not disqualify California transit agencies from receiving federal grants. This may result in the filing of new litigation upon the approval certification for a specific grant application. The primary government is a defendant in a case, Bear Mountain Development Company, LLC v. State of California, for breach of contract regarding cancellation of a contract for delivery of Personal Protective Equipment (PPE). The State filed a demurrer on August 13, 2021. The court heard the demurrer on December 15, 2021, and the demurrer was granted with leave to amend. On July 27, 2022, the court heard the State’s second demurrer to the Second Amended Complaint, and the demurrer was overruled. The court ordered the plaintiff to file a third amended complaint by August 8, 2022. The State filed an answer to the Third Amended Complaint and filed a cross-complaint alleging fraud and misrepresentation. Plaintiff demurred to the State’s cross-complaint. On March 9, 2023, the court overruled the demurrer to the fraud cause of action. The court sustained the demurrer to the negligent misrepresentation cause of action with leave to amend. The court granted the State’s motion for summary judgment on March 1, 2024, dismissing Bear Mountain’s breach of contract action. The State is pursuing cross claims against defendants and third parties. Plaintiff is seeking damages of $799 million for the State’s cancellation of a contract for delivery of PPE. 189 State of California Annual Comprehensive Financial Report B. Federal Audit Exceptions The primary government receives substantial funding from the federal government in the form of grants and other federal assistance. The primary government, the University of California, California Housing Finance Agency (CalHFA), and certain nonmajor discretely presented component units are entitled to these resources only if they comply with the terms and conditions of the grants and contracts and with the applicable federal laws and regulations; they may spend these resources only for eligible purposes. If audits disclose exceptions, the primary government, the University, CalHFA, and certain nonmajor discretely presented component units may incur a liability to the federal government. NOTE 23: SUBSEQUENT EVENTS The following information describes significant events that occurred subsequent to June 30, 2024, but prior to the date of the auditor’s report. A. Debt Issuances In August 2024 and July 2025, the California State University (CSU) issued $2.4 billion in revenue bonds to finance and refinance projects to acquire, construct, improve, and renovate certain CSU facilities, to refund certain outstanding system-wide revenue bonds, and to pay related issuance costs. In July 2024, and January and March 2025, the University of California, a major component unit, through its conduit, issued a total of $4.9 billion in revenue bonds to finance or refinance certain capital projects of the University, refund certain prior bonds, purchase obligations of the United States and certain federal agencies, and pay related issuance costs. In August and October 2024, and March and April 2025, the primary government issued a total of $7.7 billion in General Obligation bonds to fund various capital projects related to TK-12 schools and higher education facilities, transportation improvements and high-speed rail, water quality and environmental protection, and other public purposes, to pay certain commercial paper notes as they mature, to pay related issuance costs, and to refund outstanding bonds for debt service savings. In September and October 2024, and April 2025, the State Public Works Board issued a total of $1.8 billion in lease revenue bonds to finance and refinance the design and/or construction of various projects, refund and defease previously issued lease revenue bonds, reimburse interim loans from the General Fund, fund capitalized interest on bonds, and pay related issuance costs. In July 2024, the California Earthquake Authority issued $250 million in revenue bonds to enhance its claim-paying capacity. In October 2024 and March 2025, the primary government issued a total of $380 million in Veterans general obligation and revenue bonds to finance the acquisition of residential property for California military veterans, reimburse the department for contracts funded by the 1943 fund, and fund deferred payment assistant loans for the closing costs of the residential property. In March 2025, the State of California Department of Water Resources issued $329 million in Revenue Bonds. The proceeds from this issuance will support infrastructure and capital investments in the State Water Project. 190 Notes to the Financial Statements B. Other California has experienced significant wildfire activity in 2024, with approximately 8,110 fires and 1.1 million acres burned. As of September 2025, there have been 6,844 fires and 517,341 acres burned. The enacted 2025-26 Budget Act includes $181 million from the voter-approved $10.0 billion Climate Bond (Proposition 4) for wildfire and forest resilience and shifts $1.0 billion from the General Fund to the Greenhouse Gas Reduction Fund to support CAL FIRE operations. In addition, the Budget provides $39 million General Fund in 2025-26 to begin transitioning seasonal firefighter positions to permanent status, strengthening California’s wildfire response capacity. California continues to experience large swings between drought and flood conditions; these swings are becoming more severe due to climate change. The 2025-26 Budget Act commits to developing an expenditure plan with the Legislature to allocate funding from the $10.0 billion Climate Bond (Proposition 4) for drought, flood, and water resilience projects, ensuring long-term investments to strengthen the state’s capacity to endure these climate extremes. In response to the federally declared disaster resulting from the wildfires and straight-line winds that began on January 7, 2025, in Los Angeles County, the federal government extended the 2024 tax payment and filing deadlines for impacted individuals and businesses from April 15, 2025, to October 15, 2025. The California Franchise Tax Board followed suit by extending the State’s tax filing deadlines to the same dates. This extension will impact revenues available to the State during the 2024-25 and 2025-26 fiscal years. The United States federal government has provided California with over $43.0 billion in combined recovery funds through the American Rescue Plan Act of 2021, to cover costs incurred by the State between March 3, 2021, and December 31, 2024, to mitigate the impacts of the COVID-19 pandemic. Of the $43.0 billion, $27.0 billion has been allocated to the Coronavirus State Fiscal Recovery Fund (SFRF) to help California build back a stronger, more equitable economy and address the disproportionate negative economic impacts of the pandemic on low-wage earners. Funds from the SFRF have been used to address public health impacts, address negative economic impacts, invest in broadband infrastructure projects, and replace lost state revenue. As of December 31, 2024, California has fully expended its $27.0 billion allocation from the SFRF. To meet the surge in demand for unemployment insurance benefits during the COVID-19 pandemic, California borrowed larger than normal amounts from the U.S. Department of Labor. As of June 28, 2024, the State had $19.1 billion in such loans, which were used to cover the deficits in the Unemployment Programs Fund and continue to provide benefit payments to displaced California workers. Loans outstanding from the U.S. Department of Labor increased by $1.8 billion after the fiscal year to a balance of approximately $20.9 billion as of September 3, 2025. On July 4, 2025, the federal government enacted the One Big Beautiful Bill Act (Public Law No: 119-21), which impacts the federal Medicaid program and potentially impacts state and county health and social services programs, including the Supplemental Nutrition Assistance Program (SNAP). According to the Governor’s Office, the new law could put 3.4 million Californians at risk of losing their health insurance coverage due to the proposed Medicaid changes, which could result in an estimated $24.7 billion in annual federal funding reductions for California. The Governor’s Office also stated that anticipated cuts to federal funding of up to $4.0 billion annually for SNAP could eliminate essential food assistance to hundreds of thousands of Californians. According to the State’s Schedule of Expenditures of Federal Awards for the fiscal year ended June 30, 2024, California received 191 State of California Annual Comprehensive Financial Report $13.8 billion for SNAP and $92.0 billion for Medicaid. For the fiscal year ended June 30, 2023, California received $18.4 billion for SNAP and $87.5 billion for Medicaid. In August 2025, the State’s contracted actuary published the State of California Retiree Health Benefits Program GASB Nos. 74 and 75 Actuarial Valuation Report as of June 30, 2024, which will be used to measure the State’s net Other Post-Employment Benefits (OPEB) liability as of June 30, 2025. Based on the Actuarial Valuation Report, the State will report a net OPEB liability as of June 30, 2025, of $91.5 billion, an increase of $6.3 billion from the net OPEB liability reported as of June 30, 2024. The report is available on the State Controller’s Office website, at www.sco.ca.gov. In the November 5, 2024, general election, California voters approved the following propositions: • Proposition 2 authorizes the State to issue up to $10.0 billion in bonds for repair, upgrade, and construction of TK-12 public schools (including charter schools) and Local Community Colleges. The bonds will result in estimated increased state education costs of up to $500 million annually. • Proposition 4 authorizes the State to issue up to $10.0 billion in bonds for various projects intended to reduce climate risks and impacts. The projects include those related to increasing water resilience and available safe drinking water supplies; wildfire prevention and extreme heat mitigation; the protection of natural lands, parks, and wildlife; the protection of coastal lands, bays and oceans; development of clean energy infrastructure; and improvement of farms and agriculture. The bonds will result in estimated increased costs of up to $400 million annually. • Proposition 35 makes permanent the existing Managed Care Organization (MCO) Provider Tax (“health plan tax”), which was set to expire in 2026. This tax provides revenues to fund health care services under the Medi-Cal program, including primary and specialty care, emergency care, family planning, mental health, and prescription drugs. The proposition implements new rules that direct how the State must spend these tax revenues on Medi-Cal expenditures, which will result in estimated increased General Fund costs between $1.0 billion and $2.0 billion annually. 192 Required Supplementary Information State of California Annual Comprehensive Financial Report Schedule of Changes in Net Pension Liability and Related Ratios For the Past Ten Fiscal Years (amounts in thousands) 20142 20152 20162 PUBLIC EMPLOYEES’ RETIREMENT FUND PLANS STATE MISCELLANEOUS1 Total pension liability Service cost....................................................................................... $ 1,477,762 $ 1,576,695 $ 1,668,682 Interest on total pension liability ...................................................... 6,670,928 6,970,837 7,220,961 Differences between expected and actual experience....................... — 693,639 (101,381) Changes of assumptions ................................................................... — — — Benefit payments, including refunds of employee contributions ..... (4,844,631) (5,098,222) (5,346,864) Net change in total pension liability ............................................. 3,304,059 4,142,949 3,441,398 Total pension liability – beginning.................................................... 88,885,115 92,189,174 96,332,123 Total pension liability – ending (a) ................................................... $ 92,189,174 $ 96,332,123 $ 99,773,521 Plan fiduciary net position Contributions – employer ................................................................. $ 2,156,312 $ 2,608,785 $ 2,818,406 Contributions – employee................................................................. 766,896 771,046 801,023 Net investment income ..................................................................... 10,370,838 1,505,042 339,588 Benefit payments, including refunds of employee contributions ..... (4,844,631) (5,098,222) (5,346,864) Net plan to plan resource movement ................................................ — (354) (1,154) Administrative expense .................................................................... (86,473) (76,678) (41,497) Other miscellaneous income/(expense) — — — Net change in plan fiduciary net position ..................................... 8,362,942 (290,381) (1,430,498) Plan fiduciary net position – beginning............................................ 60,017,620 68,380,562 68,090,181 Plan fiduciary net position – ending (b) ........................................... $ 68,380,562 $ 68,090,181 $ 66,659,683 State’s net pension liability – ending (a) – (b).................................. $ 23,808,612 $ 28,241,942 $ 33,113,838 Plan fiduciary net position as a percentage of the total pension liability .......................................................................... 74.17 % 70.68 % 66.81 % Covered payroll .................................................................................... $ 10,019,739 $ 10,640,884 $ 11,189,932 State’s net pension liability as a percentage of covered payroll........... 237.62 % 265.41 % 295.93 % 1 This schedule includes amounts attributable to related organizations, fiduciary component units, and discretely presented component units, which are not part of the primary government. 2 The date in the column heading represents the end of the measurement period of the net pension liability, which is one year prior to the reporting period. * Beginning balance of pension assets was restated from the prior period. 194 Required Supplementary Information 20172 20182 20192 20202 20212 20222 20232 $ 1,927,531 $ 1,953,761 $ 2,042,862 $ 2,125,738 $ 2,212,280 $ 2,438,345 $ 2,566,832 7,381,049 7,571,997 7,970,572 8,288,391 8,603,225 8,752,910 9,166,157 (387,041) 445,743 2,032,459 742,481 628,341 (1,115,641) 2,105,822 5,667,561 (1,377,556) — — — 3,728,965 — (5,572,707) (5,865,849) (6,190,738) (6,513,916) (6,851,024) (7,174,817) (7,569,642) 9,016,393 2,728,096 5,855,155 4,642,694 4,592,822 6,629,762 6,269,169 99,773,521 108,789,914 111,518,010 117,373,165 122,015,859 126,608,681 133,238,443 $ 108,789,914 $ 111,518,010 $ 117,373,165 $ 122,015,859 $ 126,608,681 $ 133,238,443 $ 139,507,612 $ 3,094,941 $ 7,044,360 $ 3,777,484 $ 5,008,537 $ 3,778,435 $ 5,110,276 $ 6,271,650 843,772 870,402 942,980 1,005,830 928,152 1,081,816 1,144,462 7,329,859 6,127,761 5,163,147 4,138,143 19,299,096 (7,836,089) 5,874,720 (5,572,707) (5,865,849) (6,190,738) (6,513,916) (6,851,024) (7,174,817) (7,569,642) (2,737) (1,340) (1,344) (4,213) (2,558) (2,559) (1,850) (98,419) (112,592) (57,163) (118,050) (87,165) (64,984) (70,176) — (213,815) 185 — — — — 5,594,709 7,848,927 3,634,551 3,516,331 17,064,936 (8,886,357) 5,649,164 66,659,683 72,254,392 80,103,319 83,737,870 87,254,201 104,318,730 * 95,432,373 $ 72,254,392 $ 80,103,319 $ 83,737,870 $ 87,254,201 $ 104,319,137 $ 95,432,373 $ 101,081,537 $ 36,535,522 $ 31,414,691 $ 33,635,295 $ 34,761,658 $ 22,289,544 $ 37,806,070 $ 38,426,075 66.42 % 71.83 % 71.34 % 71.51 % 82.39 % 71.63 % 72.46 % $ 11,591,576 $ 12,254,527 $ 12,913,195 $ 13,579,610 $ 12,909,399 $ 14,727,596 $ 15,486,977 315.19 % 256.35 % 260.47 % 255.98 % 172.66 % 256.70 % 248.12 % (continued) 195 State of California Annual Comprehensive Financial Report Schedule of Changes in Net Pension Liability and Related Ratios (continued) For the Past Ten Fiscal Years (amounts in thousands) 20142 20152 20162 PUBLIC EMPLOYEES’ RETIREMENT FUND PLANS STATE INDUSTRIAL1 Total pension liability Service cost ...................................................................................... $ 92,324 $ 100,006 $ 107,868 Interest on total pension liability...................................................... 241,278 257,527 273,308 Differences between expected and actual experience...................... — 26,976 7,009 Changes of assumptions................................................................... — — — Benefit payments, including refunds of employee contributions..... (146,977) (157,029) (167,359) Net change in total pension liability............................................. 186,625 227,480 220,826 Total pension liability – beginning ................................................... 3,181,282 3,367,907 3,595,387 Total pension liability – ending (a)................................................... $ 3,367,907 $ 3,595,387 $ 3,816,213 Plan fiduciary net position Contributions – employer................................................................. $ 88,516 $ 107,238 $ 116,730 Contributions – employee ................................................................ 44,459 49,482 52,775 Net investment income..................................................................... 423,076 62,385 14,444 Benefit payments, including refunds of employee contributions..... (146,977) (157,029) (167,359) Net plan to plan resource movement................................................ — 30 216 Administrative expense.................................................................... (3,583) (3,252) (1,758) Other miscellaneous income/(expense)............................................ — — — Net change in plan fiduciary net position..................................... 405,491 58,854 15,048 Plan fiduciary net position – beginning ........................................... 2,420,958 2,826,449 2,885,303 Plan fiduciary net position – ending (b)........................................... $ 2,826,449 $ 2,885,303 $ 2,900,351 State’s net pension liability – ending (a) – (b) ................................. $ 541,458 $ 710,084 $ 915,862 Plan fiduciary net position as a percentage of the total pension liability.......................................................................... 83.92 % 80.25 % 76.00 % Covered payroll.................................................................................... $ 532,490 $ 577,711 $ 625,220 State’s net pension liability as a percentage of covered payroll .......... 101.68 % 122.91 % 146.49 % 196 Required Supplementary Information 20172 20182 20192 20202 20212 20222 20232 $ 124,792 $ 119,521 $ 127,006 $ 131,508 $ 136,918 $ 145,767 $ 151,085 290,058 301,134 324,909 343,896 363,230 374,401 398,940 21,516 (19,063) 106,233 24,610 21,852 (65,431) 97,355 245,450 (54,062) — — — 153,761 — (177,654) (190,683) (205,544) (220,912) (238,188) (255,704) (273,392) 504,162 156,847 352,604 279,102 283,812 352,794 373,988 3,816,213 4,320,375 4,477,222 4,829,826 5,108,928 5,392,740 5,745,534 $ 4,320,375 $ 4,477,222 $ 4,829,826 $ 5,108,928 $ 5,392,740 $ 5,745,534 6,119,522 $ 123,163 $ 241,062 $ 148,494 $ 244,773 $ 128,161 $ 187,745 $ 256,851 54,114 58,404 61,338 65,268 58,867 67,664 70,548 322,150 272,379 233,027 191,982 911,996 (374,909) 285,169 (177,654) (190,683) (205,544) (220,912) (238,188) (255,704) (273,392) (141) 268 (754) (1,037) (663) 281 150 (4,282) (5,014) (2,558) (5,383) (4,090) (3,084) (3,362) — (9,522) 8 — — — — 317,350 366,894 234,011 274,691 856,083 (378,007) 335,964 2,900,351 3,217,701 3,584,595 3,818,606 4,093,297 4,950,153 * 4,572,146 $ 3,217,701 $ 3,584,595 $ 3,818,606 $ 4,093,297 $ 4,949,380 $ 4,572,146 4,908,110 $ 1,102,674 $ 892,627 $ 1,011,220 $ 1,015,631 $ 443,360 $ 1,173,388 1,211,412 74.48 % 80.06 % 79.06 % 80.12 % 91.78 % 79.58 % 80.20 % $ 643,295 $ 695,014 $ 728,609 $ 765,840 $ 706,128 $ 802,709 837,312 171.41 % 128.43 % 138.79 % 132.62 % 62.79 % 146.18 % 144.68 % (continued) 197 State of California Annual Comprehensive Financial Report Schedule of Changes in Net Pension Liability and Related Ratios (continued) For the Past Ten Fiscal Years (amounts in thousands) 20142 20152 20162 PUBLIC EMPLOYEES’ RETIREMENT FUND PLANS STATE SAFETY1 Total pension liability Service cost..................................................................................... $ 402,902 $ 422,634 $ 438,147 Interest on total pension liability .................................................... 663,219 734,333 786,096 Differences between expected and actual experience .................... — (4,150) (2,235) Changes of assumptions ................................................................. — — — Benefit payments, including refunds of employee contributions... (429,353) (469,275) (502,427) Net change in total pension liability ........................................... 636,768 683,542 719,581 Total pension liability – beginning.................................................. 8,682,750 9,626,597 * 10,310,139 Total pension liability – ending (a) ................................................. $ 9,319,518 $ 10,310,139 $ 11,029,720 Plan fiduciary net position Contributions – employer ............................................................... $ 339,232 $ 393,925 $ 401,108 Contributions – employee............................................................... 196,148 215,482 221,615 Net investment income ................................................................... 1,162,050 175,677 42,258 Benefit payments, including refunds of employee contributions... (429,353) (469,275) (502,427) Net plan to plan resource movement .............................................. — 499 548 Administrative expense .................................................................. (9,945) (9,200) (4,966) Other miscellaneous income/(expense).......................................... — — — Net change in plan fiduciary net position ................................... 1,258,132 307,108 158,136 Plan fiduciary net position – beginning.......................................... 6,583,260 7,841,392 8,148,500 Plan fiduciary net position – ending (b) ......................................... $ 7,841,392 $ 8,148,500 $ 8,306,636 State’s net pension liability – ending (a) – (b)................................ $ 1,478,126 $ 2,161,639 $ 2,723,084 Plan fiduciary net position as a percentage of the total pension liability........................................................................ 84.14 % 79.03 % 75.31 % Covered payroll.................................................................................. $ 1,901,235 $ 2,003,777 $ 2,100,295 State’s net pension liability as a percentage of covered payroll ........ 77.75 % 107.88 % 129.65 % 198 Required Supplementary Information 20172 20182 20192 20202 20212 20222 20232 $ 497,129 $ 504,383 $ 536,173 $ 553,316 $ 564,198 $ 574,216 $ 559,582 827,412 877,944 951,075 1,012,593 1,072,105 1,110,294 1,184,611 (109,901) (21,592) 227,078 16,473 (33,477) (238,531) 222,716 673,183 (41,225) — — — 455,219 — (538,735) (578,504) (626,451) (677,362) (733,697) (788,819) (856,902) 1,349,088 741,006 1,087,875 905,020 869,129 1,112,379 1,110,007 11,029,720 12,378,808 13,119,814 14,207,689 15,112,709 15,981,838 17,094,217 $ 12,378,808 $ 13,119,814 $ 14,207,689 $ 15,112,709 $ 15,981,838 $ 17,094,217 $ 18,204,224 $ 433,232 $ 774,759 $ 523,076 $ 747,441 $ 429,347 $ 561,229 $ 771,612 231,364 245,021 257,071 267,822 223,408 244,938 279,174 926,106 797,214 691,911 575,732 2,758,504 (1,131,785) 866,433 (538,735) (578,504) (626,451) (677,362) (733,697) (788,819) (856,901) 295 532 1,482 3,907 1,513 950 586 (12,264) (14,565) (7,524) (16,047) (12,272) (9,314) (10,169) — (27,658) 24 — — — — 1,039,998 1,196,799 839,589 901,493 2,666,803 (1,122,801) 1,050,735 8,306,636 9,346,634 10,543,433 11,383,022 12,284,515 14,951,366 * 13,828,565 $ 9,346,634 $ 10,543,433 $ 11,383,022 $ 12,284,515 $ 14,951,318 $ 13,828,565 $ 14,879,300 $ 3,032,174 $ 2,576,381 $ 2,824,667 $ 2,828,194 $ 1,030,520 $ 3,265,652 $ 3,324,924 75.51 % 80.36 % 80.12 % 81.29 % 93.55 % 80.90 % 81.74 % $ 2,167,429 $ 2,339,642 $ 2,468,018 $ 2,566,403 $ 2,367,960 $ 2,633,568 $ 2,637,846 139.90 % 110.12 % 114.45 % 110.20 % 43.52 % 124.00 % 126.05 % (continued) 199 State of California Annual Comprehensive Financial Report Schedule of Changes in Net Pension Liability and Related Ratios (continued) For the Past Ten Fiscal Years (amounts in thousands) 20142 20152 20162 PUBLIC EMPLOYEES’ RETIREMENT FUND PLANS STATE PEACE OFFICERS AND FIREFIGHTERS1 Total pension liability Service cost ..................................................................................... $ 816,836 $ 838,628 $ 861,694 Interest on total pension liability..................................................... 2,622,406 2,759,982 2,902,900 Differences between expected and actual experience..................... — 288,526 18,316 Changes of assumptions.................................................................. — — — Benefit payments, including refunds of employee contributions ... (1,568,738) (1,697,676) (1,822,841) Net change in total pension liability............................................ 1,870,504 2,189,460 1,960,069 Total pension liability – beginning.................................................. 34,655,771 36,219,196 * 38,408,656 Total pension liability – ending (a) ................................................. $ 36,526,275 $ 38,408,656 $ 40,368,725 Plan fiduciary net position Contributions – employer ............................................................... $ 959,741 $ 1,146,192 $ 1,265,145 Contributions – employee............................................................... 331,956 366,419 381,185 Net investment income ................................................................... 3,964,754 584,142 137,927 Benefit payments, including refunds of employee contributions ... (1,568,738) (1,697,676) (1,822,841) Net plan to plan resource movement .............................................. — 194 114 Administrative expense................................................................... (33,334) (30,069) (16,295) Other miscellaneous income/(expense) .......................................... — — — Net change in plan fiduciary net position.................................... 3,654,379 369,202 (54,765) Plan fiduciary net position – beginning.......................................... 22,713,610 26,367,989 26,737,191 Plan fiduciary net position – ending (b) ......................................... $ 26,367,989 $ 26,737,191 $ 26,682,426 State’s net pension liability – ending (a) – (b)................................ $ 10,158,286 $ 11,671,465 $ 13,686,299 Plan fiduciary net position as a percentage of the total pension liability........................................................................ 72.19 % 69.61 % 66.10 % Covered payroll.................................................................................. $ 3,241,895 $ 3,115,287 $ 3,241,895 State’s net pension liability as a percentage of covered payroll ........ 313.34 % 374.65 % 422.17 % 200 Required Supplementary Information 20172 20182 20192 20202 20212 20222 20232 $ 980,897 $ 1,011,482 $ 1,044,955 $ 1,062,486 $ 1,111,888 $ 1,167,715 $ 1,242,191 3,018,186 3,185,628 3,381,608 3,547,687 3,745,062 3,864,043 4,112,779 (286,527) 354,089 664,430 172,204 585,665 (805,030) 1,381,891 2,608,752 (25,104) — — — 2,190,080 — (1,938,027) (2,065,007) (2,209,557) (2,359,940) (2,560,165) (2,735,400) (2,956,624) 4,383,281 2,461,088 2,881,436 2,422,437 2,882,450 3,681,408 3,780,237 40,368,725 44,752,006 47,213,094 50,094,530 52,516,967 55,399,417 59,080,825 $ 44,752,006 $ 47,213,094 $ 50,094,530 $ 52,516,967 $ 55,399,417 $ 59,080,825 $ 62,861,062 $ 1,427,240 $ 3,068,270 $ 1,665,872 $ 3,220,740 $ 1,310,946 $ 2,171,675 $ 3,371,914 399,946 421,662 437,937 462,370 423,995 477,347 490,773 2,954,170 2,522,044 2,175,528 1,812,785 8,602,827 (3,524,276) 2,690,552 (1,938,027) (2,065,007) (2,209,557) (2,359,941) (2,560,165) (2,735,400) (2,956,624) 1,628 (104) 350 735 (66) 1,076 931 (39,395) (45,950) (23,765) (49,832) (38,396) (28,764) (31,280) — (87,261) 77 — — — — 2,805,562 3,813,654 2,046,442 3,086,857 7,739,141 (3,638,342) 3,566,266 26,682,426 29,487,988 33,301,642 35,348,084 38,434,941 46,175,076 * 42,536,734 $ 29,487,988 $ 33,301,642 $ 35,348,084 $ 38,434,941 $ 46,174,082 $ 42,536,734 $ 46,103,000 $ 15,264,018 $ 13,911,452 $ 14,746,446 $ 14,082,026 $ 9,225,335 $ 16,544,091 $ 16,758,062 65.89 % 70.53 % 70.56 % 73.19 % 83.35 % 72.00 % 73.34 % $ 3,416,627 $ 3,557,011 $ 3,676,854 $ 3,904,615 $ 3,629,097 $ 4,035,339 4,148,789 446.76 % 391.10 % 401.06 % 360.65 % 254.20 % 409.98 % 403.93 % (continued) 201 State of California Annual Comprehensive Financial Report Schedule of Changes in Net Pension Liability and Related Ratios (continued) For the Past Ten Fiscal Years (amounts in thousands) 20142 20152 20162 PUBLIC EMPLOYEES’ RETIREMENT FUND PLANS CALIFORNIA HIGHWAY PATROL Total pension liability Service cost ...................................................................................... $ 191,730 $ 198,665 $ 210,619 Interest on total pension liability...................................................... 724,474 764,348 809,691 Differences between expected and actual experience...................... — 75,593 125,614 Changes of assumptions................................................................... — — — Benefit payments, including refunds of employee contributions..... (460,991) (487,061) (516,723) Net change in total pension liability............................................. 455,213 551,545 629,201 Total pension liability – beginning ................................................... 9,604,872 10,060,085 10,611,630 Total pension liability – ending (a)................................................... $ 10,060,085 $ 10,611,630 $ 11,240,831 Plan fiduciary net position Contributions – employer................................................................. $ 277,702 $ 351,197 $ 375,928 Contributions – employee ................................................................ 83,161 85,791 86,111 Net investment income..................................................................... 1,005,007 146,782 33,918 Benefit payments, including refunds of employee contributions..... (460,991) (487,061) (516,723) Net plan to plan resource movement................................................ — (214) 292 Administrative expense.................................................................... (8,417) (7,600) (4,111) Other miscellaneous income/(expense)............................................ — — — Net change in plan fiduciary net position..................................... 896,462 88,895 (24,585) Plan fiduciary net position – beginning ........................................... 5,759,985 6,656,447 6,745,342 Plan fiduciary net position – ending (b)........................................... $ 6,656,447 $ 6,745,342 $ 6,720,757 State’s net pension liability – ending (a) – (b) ................................. $ 3,403,638 $ 3,866,288 $ 4,520,074 Plan fiduciary net position as a percentage of the total pension liability.......................................................................... 66.17 % 63.57 % 59.79 % Covered payroll.................................................................................... $ 765,283 $ 809,610 $ 808,032 State’s net pension liability as a percentage of covered payroll .......... 444.76 % 477.55 % 559.39 % 202 Required Supplementary Information 20172 20182 20192 20202 20212 20222 20232 $ 237,064 $ 248,531 $ 257,384 $ 266,192 $ 268,009 $ 292,213 $ 298,022 833,062 878,113 926,056 974,410 1,022,074 1,062,411 1,116,842 (158,392) 103,283 135,148 120,496 98,575 (178,097) 198,448 721,972 12,213 — — — 695,673 — (543,456) (579,080) (612,298) (651,832) (695,055) (739,443) (794,793) 1,090,250 663,060 706,290 709,266 693,603 1,132,757 818,519 11,240,831 12,331,081 12,994,141 13,700,431 14,409,697 15,103,300 16,236,057 $ 12,331,081 $ 12,994,141 $ 13,700,431 $ 14,409,697 $ 15,103,300 $ 16,236,057 $ 17,054,576 $ 426,603 $ 978,060 $ 507,055 $ 559,585 $ 802,064 $ 628,308 $ 674,103 91,116 95,482 100,080 103,159 95,784 109,080 123,075 747,272 639,591 556,379 450,669 2,200,671 (901,987) 678,131 (543,456) (579,080) (612,298) (651,832) (695,055) (739,443) (794,793) 1,050 330 265 638 1,773 252 184 (9,923) (11,583) (6,090) (12,800) (9,519) (7,428) (8,099) — (21,997) 20 — — — — 712,662 1,100,803 545,411 449,419 2,395,718 (911,218) 672,601 6,720,757 7,433,419 8,534,222 9,079,633 9,529,052 11,924,803 * 11,013,585 $ 7,433,419 $ 8,534,222 $ 9,079,633 $ 9,529,052 $ 11,924,770 $ 11,013,585 $ 11,686,186 $ 4,897,662 $ 4,459,919 $ 4,620,798 $ 4,880,645 $ 3,178,530 $ 5,222,472 $ 5,368,390 60.28 % 65.68 % 66.27 % 66.13 % 78.95 % 67.83 % 68.52 % $ 851,427 $ 884,197 $ 933,689 $ 948,000 $ 882,119 $ 936,496 $ 977,794 575.23 % 504.40 % 494.90 % 514.84 % 360.33 % 557.66 % 549.03 % (continued) 203 State of California Annual Comprehensive Financial Report Schedule of Changes in Net Pension Liability and Related Ratios (continued) For the Past Ten Fiscal Years (amounts in thousands) 20142 20152 20162 SINGLE-EMPLOYER PLANS JUDGES’ Total pension liability Service cost ..................................................................................... $ 27,581 $ 27,841 $ 29,314 Interest on total pension liability..................................................... 140,256 133,181 107,514 Differences between expected and actual experience..................... — 57,568 (59,421) Changes of assumptions.................................................................. — 158,646 384,306 Benefit payments, including refunds of employee contributions.... (193,935) (201,868) (199,349) Net change in total pension liability............................................ (26,098) 175,368 262,364 Total pension liability – beginning .................................................. 3,383,310 3,357,212 3,532,580 Total pension liability – ending (a).................................................. $ 3,357,212 $ 3,532,580 $ 3,794,944 Plan fiduciary net position Contributions – employer................................................................ $ 191,148 $ 180,910 $ 192,287 Contributions – employee ............................................................... 7,248 3,877 3,559 Net investment income.................................................................... 59 88 193 Benefit payments, including refunds of employee contributions.... (193,935) (201,867) (199,349) Administrative expense................................................................... (1,141) (1,227) (642) Other miscellaneous income/(expense)........................................... — 2,198 2,568 Net change in plan fiduciary net position.................................... 3,379 (16,021) (1,384) Plan fiduciary net position – beginning .......................................... 53,820 57,199 41,178 Plan fiduciary net position – ending (b).......................................... $ 57,199 $ 41,178 $ 39,794 State’s net pension liability – ending (a) – (b) ................................ $ 3,300,013 $ 3,491,402 $ 3,755,150 Plan fiduciary net position as a percentage of the total pension liability......................................................................... 1.70 % 1.17 % 1.05 % Covered payroll................................................................................... $ 163,574 $ 28,770 $ 23,537 State’s net pension liability as a percentage of covered payroll ......... 2017.44 % 12135.56 % 15954.24 % 204 Required Supplementary Information 20172 20182 20192 20202 20212 20222 20232 $ 22,733 $ 19,131 $ 20,073 $ 17,026 $ 17,861 $ 10,345 $ 9,541 115,067 109,395 99,427 79,720 64,481 93,559 96,524 (366,200) (121,259) 86,873 (41,794) 40,006 (92,633) 111,908 (107,670) (20,879) 153,651 218,684 179,421 (598,096) (36,907) (200,440) (207,823) (221,954) (213,234) (210,951) (210,491) (216,271) (536,510) (221,435) 138,070 60,402 90,818 (797,316) (35,205) 3,794,944 3,258,434 3,036,999 3,175,069 3,235,471 3,326,289 2,528,973 $ 3,258,434 $ 3,036,999 $ 3,175,069 $ 3,235,471 $ 3,326,289 $ 2,528,973 $ 2,493,768 $ 204,475 $ 199,241 $ 195,903 $ 243,132 $ 225,824 $ 194,960 $ 208,785 3,398 3,061 2,679 2,843 2,146 1,956 1,697 424 846 1,166 885 163 194 2,233 (200,440) (207,823) (221,954) (213,234) (210,951) (210,491) (216,271) (1,771) (2,106) (10,032) (2,270) (1,731) (1,677) (2,032) 2,395 (1,863) 2,776 2,202 2,462 2,305 3,028 8,481 (8,644) (29,462) 33,558 17,913 (12,753) (2,560) 39,794 48,275 39,631 10,169 43,727 61,640 48,887 $ 48,275 $ 39,631 $ 10,169 $ 43,727 $ 61,640 $ 48,887 $ 46,327 $ 3,210,159 $ 2,997,368 $ 3,164,900 $ 3,191,744 $ 3,264,649 $ 2,480,086 $ 2,447,441 1.48 % 1.30 % 0.32 % 1.35 % 1.85 % 1.93 % 1.86 % $ 26,102 $ 24,007 $ 22,117 $ 16,017 $ 13,444 $ 14,061 $ 13,235 12298.52 % 12485.39 % 14309.81 % 19927.23 % 24283.32 % 17638.05 % 18492.19 % (continued) 205 State of California Annual Comprehensive Financial Report Schedule of Changes in Net Pension Liability and Related Ratios (continued) For the Past Ten Fiscal Years (amounts in thousands) 20142 20152 20162 SINGLE-EMPLOYER PLANS JUDGES’ II Total pension liability Service cost..................................................................................... $ 78,670 $ 79,641 $ 86,635 Interest on total pension liability .................................................... 61,044 69,128 78,412 Differences between expected and actual experience .................... — (17,319) (4,546) Changes of assumptions ................................................................. — (16,619) — Benefit payments, including refunds of employee contributions... (8,950) (14,041) (21,704) Net change in total pension liability ........................................... 130,764 100,790 138,797 Total pension liability – beginning.................................................. 837,198 967,962 1,068,752 Total pension liability – ending (a) ................................................. $ 967,962 $ 1,068,752 $ 1,207,549 Plan fiduciary net position Contributions – employer ............................................................... $ 57,027 $ 65,629 $ 65,839 Contributions – employee............................................................... 20,413 22,242 24,598 Net investment income ................................................................... 150,168 (2,402) 20,810 Benefit payments, including refunds of employee contributions... (8,950) (14,041) (21,704) Administrative expense .................................................................. (785) (1,127) (732) Other miscellaneous income/(expense).......................................... — — — Net change in plan fiduciary net position ................................... 217,873 70,301 88,811 Plan fiduciary net position – beginning.......................................... 795,967 1,013,840 1,084,141 Plan fiduciary net position – ending (b) ......................................... $ 1,013,840 $ 1,084,141 $ 1,172,952 State’s net pension liability/(asset) – ending (a) – (b).................... $ (45,878) $ (15,389) $ 34,597 Plan fiduciary net position as a percentage of the total pension liability........................................................................ 104.74 % 101.44 % 97.13 % Covered payroll.................................................................................. $ 40,476 $ 180,230 $ 192,739 State’s net pension liability as a percentage of covered payroll ........ -113.35 % -8.54 % 17.95 % 206 Required Supplementary Information 20172 20182 20192 20202 20212 20222 20232 $ 97,679 $ 95,843 $ 103,791 $ 114,486 $ 116,782 $ 115,808 $ 121,141 85,654 91,418 103,889 115,517 126,949 120,585 131,805 (26,382) (26,875) 30,292 (2,797) (10,976) (67,751) 18,683 69,233 (41,763) — — — (59,394) — (22,406) (31,795) (36,204) (34,547) (61,994) (66,739) (83,868) 203,778 86,828 201,768 192,659 170,761 42,509 187,761 1,207,549 1,411,327 1,498,154 1,699,922 1,892,581 2,063,342 2,105,851 $ 1,411,327 $ 1,498,155 $ 1,699,922 $ 1,892,581 $ 2,063,342 $ 2,105,851 $ 2,293,612 $ 67,102 $ 79,699 $ 84,099 $ 91,147 $ 84,147 $ 92,773 $ 89,970 25,076 27,514 31,375 35,796 34,094 36,529 38,669 115,057 101,820 106,781 80,074 463,478 (324,365) 151,744 (22,406) (31,795) (36,204) (34,547) (61,994) (66,739) (83,868) (1,682) (2,370) (1,477) (2,552) (1,703) (1,842) (2,126) — (5,451) — — — 4 3 183,147 169,417 184,574 169,918 518,022 (263,640) 194,393 1,172,952 1,356,099 1,525,515 1,710,089 1,880,007 2,398,029 2,134,389 $ 1,356,099 $ 1,525,516 $ 1,710,089 $ 1,880,007 $ 2,398,029 $ 2,134,389 $ 2,328,782 $ 55,228 $ (27,361) $ (10,167) $ 12,574 $ (334,687) $ (28,538) $ (35,170) 96.09 % 101.83 % 100.60 % 99.34 % 116.22 % 101.36 % 101.53 % $ 192,786 $ 202,433 $ 220,742 $ 246,968 $ 233,316 $ 242,525 $ 249,328 28.65 % -13.52 % -4.61 % 5.09 % -143.45 % -11.77 % -14.11 % (continued) 207 State of California Annual Comprehensive Financial Report Schedule of Changes in Net Pension Liability and Related Ratios (continued) For the Past Ten Fiscal Years (amounts in thousands) 20142 20152 20162 SINGLE-EMPLOYER PLANS LEGISLATORS’ Total pension liability Service cost..................................................................................... $ 732 $ 769 $ 608 Interest on total pension liability .................................................... 6,465 6,268 5,978 Differences between expected and actual experience .................... — (4,246) (3,530) Changes of assumptions ................................................................. — (2,654) — Benefit payments, including refunds of employee contributions... (7,482) (9,087) (7,407) Net change in total pension liability ........................................... (285) (8,950) (4,351) Total pension liability – beginning.................................................. 115,806 115,521 106,571 Total pension liability – ending (a) ................................................. $ 115,521 $ 106,571 $ 102,220 Plan fiduciary net position Contributions – employer ............................................................... $ 565 $ 590 $ 549 Contributions – employee............................................................... 113 105 96 Net investment income ................................................................... 15,372 (94) 4,545 Benefit payments, including refunds of employee contributions... (7,482) (9,087) (7,407) Administrative expense .................................................................. (362) (399) (202) Other miscellaneous income/(expense).......................................... — — — Net change in plan fiduciary net position ................................... 8,206 (8,885) (2,419) Plan fiduciary net position – beginning.......................................... 122,148 130,354 121,469 Plan fiduciary net position – ending (b) ......................................... $ 130,354 $ 121,469 $ 119,050 State’s net pension liability/(asset) – ending (a) – (b).................... $ (14,833) $ (14,898) $ (16,830) Plan fiduciary net position as a percentage of the total pension liability........................................................................ 112.84 % 113.98 % 116.46 % Covered payroll.................................................................................. $ 1,471 $ 1,397 $ 1,298 State’s net pension liability as a percentage of covered payroll ........ -1008.36 % -1066.43 % -1296.61 % 208 Required Supplementary Information 20172 20182 20192 20202 20212 20222 20232 $ 639 $ 542 $ 268 $ 100 $ 101 $ 108 $ 52 5,291 4,987 4,873 4,885 4,749 4,299 4,248 (5,998) (2,061) (427) 2,320 (732) (992) 1,444 7,857 (2,529) — — — 1,024 — (7,249) (6,918) (7,350) (6,939) (6,761) (6,647) (7,088) 540 (5,979) (2,636) 366 (2,643) (2,208) (1,344) 102,220 102,760 96,780 94,144 94,510 91,867 89,659 $ 102,760 $ 96,781 $ 94,144 $ 94,510 $ 91,867 $ 89,659 $ 88,315 $ 517 $ 467 $ 250 $ 98 $ 78 $ 85 $ 44 94 82 92 22 21 23 11 5,047 5,486 7,860 7,011 15,099 (12,450) 601 (7,249) (6,918) (7,350) (6,939) (6,761) (6,647) (7,088) (575) (670) (324) (550) (450) (436) (525) — (1,454) — 2 13 1 2 (2,166) (3,007) 528 (356) 8,000 (19,424) (6,955) 119,050 116,884 113,876 114,404 114,048 122,048 102,624 $ 116,884 $ 113,877 $ 114,404 $ 114,048 $ 122,048 $ 102,624 $ 95,669 $ (14,124) $ (17,096) $ (20,260) $ (19,538) $ (30,181) $ (12,965) $ (7,354) 113.74 % 117.66 % 121.52 % 120.67 % 132.85 % 114.46 % 108.33 % $ 1,270 $ 1,121 $ 684 $ 284 $ 267 $ 290 $ 138 -1112.13 % -1525.07 % -2961.99 % -6879.58 % -11303.75 % -4470.69 % -5328.99 % (concluded) 209 State of California Annual Comprehensive Financial Report Schedule of State Pension Contributions For the Past Ten Fiscal Years (amounts in thousands) 2015 2016 2017 PUBLIC EMPLOYEES’ RETIREMENT FUND PLANS STATE MISCELLANEOUS1 Actuarially determined contribution...................................... $ 2,421,157 $ 2,718,895 $ 3,078,232 Contributions in relation to the actuarially determined contribution....................................................... (2,583,400) (2,814,126) (3,098,305) Contribution deficiency (excess)......................................... $ (162,243) $ (95,231) $ (20,073) Covered payroll ..................................................................... $ 10,655,117 $ 11,197,607 $ 11,591,576 Contributions as a percentage of covered payroll .................................................................... 24.25 % 25.13 % 26.73 % STATE INDUSTRIAL1 Actuarially determined contribution...................................... $ 92,024 $ 103,293 $ 116,880 Contributions in relation to the actuarially determined contribution....................................................... (104,769) (116,594) (123,789) Contribution deficiency (excess)......................................... $ (12,745) $ (13,301) $ (6,909) Covered payroll ..................................................................... $ 577,713 $ 625,220 $ 643,295 Contributions as a percentage of covered payroll .................................................................... 18.14 % 18.65 % 19.24 % STATE SAFETY1 Actuarially determined contribution...................................... $ 341,509 $ 368,444 $ 400,379 Contributions in relation to the actuarially determined contribution....................................................... (387,508) (404,595) (431,991) Contribution deficiency (excess)......................................... $ (45,999) $ (36,151) $ (31,612) Covered payroll ..................................................................... $ 2,003,716 $ 2,100,289 $ 2,167,429 Contributions as a percentage of covered payroll .................................................................... 19.34 % 19.26 % 19.93 % STATE PEACE OFFICERS AND FIREFIGHTERS1 Actuarially determined contribution...................................... $ 1,086,102 $ 1,197,160 $ 1,343,177 Contributions in relation to the actuarially determined contribution....................................................... (1,148,597) (1,263,436) (1,431,851) Contribution deficiency (excess)......................................... $ (62,495) $ (66,276) $ (88,674) Covered payroll ..................................................................... $ 3,115,364 $ 3,241,763 $ 3,416,627 Contributions as a percentage of covered payroll .................................................................... 36.87 % 38.97 % 41.91 % 1 This schedule includes amounts attributable to related organizations, fiduciary component units, and discretely presented component units, which are not part of the primary government. * Updated based on more current information. 210 Required Supplementary Information 2018 2019 2020 2021 2022 2023 2024 $ 3,397,736 $ 3,631,721 $ 4,006,672 $ 4,324,789 $ 4,160,143 $ 4,452,668 $ 4,749,786 (3,482,291) (3,794,379) (5,032,209) (3,791,620) (4,281,402) (4,918,505) (5,305,363) $ (84,555) $ (162,658) $ (1,025,537) $ 533,169 $ (121,259) $ (465,837) $ (555,577) $ 12,254,527 $ 12,913,195 $ 13,579,610 $ 12,909,399 $ 14,727,596 $ 15,486,977 $ 16,690,904 28.42 % 29.38 % 37.06 % 29.37 % 29.07 % 31.76 % 31.79 % $ 131,131 $ 134,969 $ 153,724 $ 166,535 $ 132,980 $ 157,441 $ 164,652 (141,832) (148,790) (245,757) (128,407) (138,688) (174,595) (186,979) $ (10,701) $ (13,821) $ (92,033) $ 38,128 $ (5,708) $ (17,154) $ (22,327) $ 695,014 $ 728,609 $ 765,840 $ 706,128 $ 802,709 $ 837,312 $ 896,354 20.41 % 20.42 % 32.09 % 18.18 % 17.28 % 20.85 % 20.86 % $ 435,662 $ 466,765 $ 526,375 $ 553,298 $ 476,457 $ 537,135 $ 537,239 (481,479) (531,360) (759,505) (473,147) (499,621) (579,316) (609,278) $ (45,817) $ (64,595) $ (233,130) $ 80,151 $ (23,164) $ (42,181) $ (72,039) $ 2,339,642 $ 2,468,018 $ 2,566,403 $ 2,367,960 $ 2,633,568 $ 2,637,846 $ 2,773,873 20.58 % 21.53 % 29.59 % 19.98 % 18.97 % 21.96 % 21.96 % $ 1,462,630 $ 1,581,049 $ 1,755,306 $ 1,871,841 $ 1,262,871 $ 1,850,940 $ 1,952,094 (1,573,299) (1,667,839) (3,234,348) (1,312,046) (1,325,451) (2,071,961) (2,172,989) $ (110,669) $ (86,790) $ (1,479,042) $ 559,795 $ (62,580) $ (221,021) $ (220,895) $ 3,557,011 $ 3,676,854 $ 3,904,615 $ 3,629,097 $ 4,035,339 $ 4,148,789 $ 4,347,064 44.23 % 45.36 % 82.83 % 36.15 % 32.85 % 49.94 % 49.99 % (continued) 211 State of California Annual Comprehensive Financial Report Schedule of State Pension Contributions (continued) For the Past Ten Fiscal Years (amounts in thousands) 2015 2016 2017 PUBLIC EMPLOYEES’ RETIREMENT FUND PLANS CALIFORNIA HIGHWAY PATROL Actuarially determined contribution .......................... $ 323,393 $ 363,634 $ 414,975 Contributions in relation to the actuarially determined contribution ........................................... (352,139) (377,534) (426,014) Contribution deficiency (excess) ............................. $ (28,746) $ (13,900) $ (11,039) Covered payroll.......................................................... $ 809,610 $ 808,032 $ 851,427 Contributions as a percentage of covered payroll......................................................... 43.49 % 46.72 % 50.04 % SINGLE-EMPLOYER PLANS JUDGES’ Actuarially determined contribution .......................... $ 1,884,555 $ 463,073 $ 448,636 Contributions in relation to the actuarially determined contribution ........................................... (3,598) (3,252) (202,368) Contribution deficiency (excess) ............................. $ 1,880,957 $ 459,821 $ 246,268 Covered payroll.......................................................... $ 167,542 $ 29,771 $ 23,822 Contributions as a percentage of covered payroll......................................................... 2.15 % 10.92 % 849.50 % JUDGES’ II Actuarially determined contribution .......................... $ 63,193 $ 58,362 $ 66,951 Contributions in relation to the actuarially determined contribution ........................................... (59,982) (60,476) (55,965) Contribution deficiency (excess) ............................. $ 3,211 $ (2,114) $ 10,986 Covered payroll.......................................................... $ 41,458 $ 186,505 $ 195,066 Contributions as a percentage of covered payroll......................................................... 144.68 % 32.43 % 28.69 % LEGISLATORS’ Actuarially determined contribution .......................... $ 260 $ 141 $ — Contributions in relation to the actuarially determined contribution ........................................... (544) (549) (516) Contribution deficiency (excess) ............................. $ (284) $ (408) $ (516) Covered payroll.......................................................... $ 1,397 $ 1,298 $ 1,270 Contributions as a percentage of covered payroll......................................................... 38.94 % 42.30 % 40.63 % 212 Required Supplementary Information 2018 2029 2020 2021 2022 2023 2024 $ 447,376 $ 484,056 $ 532,159 $ 574,509 $ 600,841 $ 599,039 $ 653,801 (478,354) (514,683) (560,538) (530,587) (590,087) (660,340) (752,825) $ (30,978) $ (30,627) $ (28,379) $ 43,922 $ 10,754 $ (61,301) $ (99,024) $ 884,197 $ 933,689 $ 948,000 $ 882,119 $ 936,496 $ 977,794 $ 1,048,891 54.10 % 55.12 % 59.13 % 60.15 % 63.01 % 67.53 % 71.77 % $ 438,156 $ 415,110 $ 414,849 $ 366,446 $ 352,881 $ 313,118 $ 315,809 (197,017) (194,189) (241,993) (224,928) (193,763) (207,835) (211,503) $ 241,139 $ 220,921 $ 172,856 $ 141,518 $ 159,118 $ 105,283 $ 104,306 $ 27,003 $ 25,748 $ 16,017 $ 13,444 $ 14,061 $ 13,227 * $ 14,031 729.61 % 754.19 % 1,510.85 % 1,673.07 % 1,378.02 % 1,571.29 % * 1,507.40 % $ 79,181 $ 75,862 $ 81,782 $ 88,439 $ 89,938 * $ 86,154 $ 91,696 (73,916) (76,155) (83,872) (78,784) (81,960) (73,614) (87,640) $ 5,265 $ (293) $ (2,090) $ 9,655 $ 7,978 $ 12,540 $ 4,056 $ 199,438 $ 217,112 $ 246,968 $ 233,316 $ 242,525 $ 249,170 * $ 264,322 37.06 % 35.08 % 33.96 % 33.77 % 33.79 % 29.54 % * 33.16 % $ 20 $ — $ 101 $ 84 $ 88 $ 48 $ — (467) (261) (100) (79) (85) (44) — $ (447) $ (261) $ 1 $ 5 $ 3 $ 4 $ — $ 1,121 $ 684 $ 284 $ 267 $ 290 $ 138 $ — 41.66 % 38.16 % 35.21 % 29.59 % 29.31 % 31.80 % — % (continued) 213 State of California Annual Comprehensive Financial Report Schedule of State Pension Contributions (continued) For the Past Ten Fiscal Years (amounts in thousands) Notes to Required Supplementary Information for the most recent fiscal year presented: Public Employees’ Retirement Fund (PERF) and Single-Employer Plans Actual contribution amounts: Based on statutorily required contributions as outlined in California Government Code section 20683.2, which dictates that any excess employer contributions due to increased employee contributions must be allocated to the unfunded liability. Covered payroll: Pensionable earnings provided by the employer. Valuation date: Actuarially determined contribution rates were calculated as of June 30, 2022. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method See each plan’s June 30, 2021 Funding Valuation Report. Asset valuation method PERF – Fair Value of assets; for details see plan’s June 30, 2021 Funding Valuation Report. Judges’ – Fair Value of Assets Judges’ II – Fair Value of Assets Legislators’ – Fair Value of Assets Inflation PERF – 2.30% Judges’ – 2.30% Judges’ II – 2.30% Legislators’ – 2.30% Salary increases PERF – varies by entry age and service Judges’ – 2.80% Judges’ II – 2.80% Legislators’ – 2.80% Payroll growth PERF – 2.80% Judges’ – 2.75% Judges’ II – 2.75% Legislators’ – 2.75% Investment rate of return Net of pension plan investment expenses and administrative expenses; includes inflation: PERF – 6.80%, which is used for contribution purposes Judges’ – 3.00% Judges’ II – 6.00% Legislators’ – 4.50% Retirement age The probabilities of retirement are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. (concluded) 214 Required Supplementary Information This page intentionally left blank 215 State of California Annual Comprehensive Financial Report Schedule of the State’s Proportionate Share of Net Pension Liability – CalSTRS For the Past Ten Fiscal Years (amounts in thousands) 20141 20151 20161 State’s proportion of CalSTRS’ net pension liability........................ 37.65 % 34.59 % 36.28 % State’s proportionate share of CalSTRS’ net pension liability ......... $ 22,001,531 $ 23,289,391 $ 29,343,626 Plan fiduciary net position as a percentage of the total pension liability ............................................................................................ 76.52 % 74.02 % 70.04 % 1 The date in the column heading represents the end of the measurement period of the net pension liability, which is one year prior to the reporting period. Schedule of the State’s Contributions – CalSTRS For the Past Ten Fiscal Years (amounts in thousands) 2015 2016 2017 Statutorily required contribution ...................................................... $ 1,486,004 $ 1,935,288 $ 2,472,993 Contributions in relation to the statutorily required contribution..... 1,486,004 1,935,288 2,472,993 Annual contribution deficiency/(excess)....................................... $ — $ — $ — Notes to Required Supplementary Information for the most recent fiscal year presented: State’s participation in CalSTRS Actual contribution amounts: Based on statutorily required contributions as outlined in California Education Code sections 22954, 22955 and 22955.1, as well as California Public Resources Code section 6217. Valuation date: Actuarially determined contribution rates were calculated as of June 30, 2022. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method/period Level percent of payroll, closed period, ending June 30, 2046 Asset valuation method Adjustment to fair value Consumer price inflation 2.75% Payroll growth 3.50% Investment rate of return For calculating the actuarially determined contribution: 7.00%, net of pension plan investment and administrative expenses For calculating total pension liability: 7.10%, net of pension plan investment expenses, but gross of administrative expenses Interest on accounts 3.00% Post-retirement benefit increases (COLAs) 2.00% simple 216 Required Supplementary Information 20171 20181 20191 20201 20211 20221 20231 37.17 % 36.41 % 35.30 % 34.02 % 33.47 % 33.37 % 32.39 % $ 34,374,816 $ 33,462,419 $ 31,880,645 $ 32,963,596 $ 15,233,348 $ 23,186,783 $ 24,670,833 69.46 % 70.99 % 72.56 % 71.82 % 87.21 % 81.25 % 80.62 % 2018 2019 2020 2021 2022 2023 2024 $ 2,790,444 $ 3,082,316 $ 4,446,836 $ 3,730,902 $ 4,279,964 $ 3,719,874 $ 3,945,974 2,790,444 3,082,316 4,446,836 3,730,902 4,279,964 3,719,874 3,945,974 $ — $ — $ — $ — $ — $ — $ — 217 State of California Annual Comprehensive Financial Report Schedule of Changes in Net OPEB Liability and Related Ratios For the Past Five Fiscal Years1 (amounts in thousands) 20192,6 20202 RETIREE HEALTH BENEFITS PROGRAM SERVICE EMPLOYEES INTERNATIONAL UNION (SEIU)3 Total OPEB liability Service cost............................................................................................................................. $ 1,078,364 $ 1,116,519 Interest on total OPEB liability .............................................................................................. 1,201,673 1,162,741 Differences between expected and actual experiences5......................................................... (525,007) (720,036) Changes in assumptions ......................................................................................................... 1,213,332 480,992 Benefit payments.................................................................................................................... (856,494) (910,765) Net change in total OPEB liability ..................................................................................... 2,111,868 1,129,451 Total OPEB liability – beginning............................................................................................ 29,485,488 31,597,356 Total OPEB liability – ending (a) ........................................................................................... $ 31,597,356 $ 32,726,807 Plan fiduciary net position Contributions – employer....................................................................................................... $ 856,494 $ 910,765 Contributions – prefunding .................................................................................................... 71,712 174,235 Contributions – employee ...................................................................................................... 71,712 174,235 Net investment income........................................................................................................... 8,202 9,788 Benefit payments.................................................................................................................... (856,494) (910,765) Administrative expense .......................................................................................................... (14) (148) Other expenses ....................................................................................................................... — — Net change in plan fiduciary net position ........................................................................... 151,612 358,110 Plan fiduciary net position – beginning.................................................................................. — 151,612 Plan fiduciary net position – ending (b)................................................................................. $ 151,612 $ 509,722 State’s net OPEB liability – ending (a) – (b).......................................................................... $ 31,445,744 $ 32,217,085 Plan fiduciary net position as a percentage of the total OPEB liability..................................... 0.48 % 1.56 % Covered payroll.......................................................................................................................... $ 7,317,203 $ 7,701,525 State’s net OPEB liability as a percentage of covered payroll................................................... 429.75 % 418.32 % 1 This schedule will be built prospectively until it contains ten years of data. 2 The date in the column heading represents the end of the measurement period of the net OPEB liability, which is one year prior to the reporting period. 3 This schedule includes amounts attributable to related organizations, fiduciary component units, and discretely presented component units, which are not part of the primary government. 4 The valuation groups that comprise the Unfunded and Other Funded plans shifted from the prior year. 5 Includes differences between projected pay-as-you-go contributions, based on expected benefit payments, disclosed in the State of California Retiree Health Benefits Program -GASB Nos. 74 and 75 Actuarial Valuation Report as of June 30, 2023, and the actual pay-as-you-go contributions allocated to plans. 6 This is the first year the SEIU valuation group is presented, as it began prefunding in the 2018-19 measurement period and shifted from the Unfunded plan from the prior year. * Beginning balance of OPEB assets was restated from the prior period. 218 Required Supplementary Information 20212 20222 20232 $ 1,190,049 $ 1,297,725 $ 951,313 1,028,924 908,980 1,193,663 (2,498,623) 831,414 248,422 1,275,481 (6,216,338) 263,281 (962,640) (1,038,983) (1,068,245) 33,191 (4,217,202) 1,588,434 32,726,807 32,759,998 28,542,796 $ 32,759,998 $ 28,542,796 $ 30,131,230 $ 962,640 $ 1,038,983 $ 1,068,245 241,973 537,987 301,445 — 286,986 301,445 162,795 (228,601) 122,484 (962,640) (1,038,983) (1,068,245) (229) (333) (516) — — — 404,539 596,039 724,858 509,722 914,261 1,510,300 $ 914,261 $ 1,510,300 $ 2,235,158 $ 31,845,737 $ 27,032,496 $ 27,896,072 2.79 % 5.29 % 7.42 % $ 7,477,126 $ 8,705,771 $ 8,705,889 425.91 % 310.51 % 320.43 % (continued) 219 State of California Annual Comprehensive Financial Report Schedule of Changes in Net OPEB Liability and Related Ratios (continued) For the Past Seven Fiscal Years1 (amounts in thousands) 20172 20182 RETIREE HEALTH BENEFITS PROGRAM BARGAINING UNIT 5 PLAN Total OPEB liability Service cost............................................................................................................................. $ 168,057 $ 146,042 Interest on total OPEB liability .............................................................................................. 179,397 195,713 Differences between expected and actual experiences5......................................................... — (108,271) Changes in assumptions ......................................................................................................... (474,646) (137,150) Benefit payments.................................................................................................................... (95,517) (77,897) Net change in total OPEB liability ..................................................................................... (222,709) 18,437 Total OPEB liability – beginning............................................................................................ 4,764,812 4,542,103 Total OPEB liability – ending (a) ........................................................................................... $ 4,542,103 $ 4,560,540 Plan fiduciary net position Contributions – employer....................................................................................................... $ 95,517 $ 77,897 Contributions – prefunding .................................................................................................... 77,454 59,697 Contributions – employee ...................................................................................................... 12,783 4,089 Net investment income........................................................................................................... 21,109 20,988 Benefit payments.................................................................................................................... (95,517) (77,897) Administrative expense .......................................................................................................... (95) (144) Other expenses ....................................................................................................................... (290) — Net change in plan fiduciary net position ........................................................................... 110,961 84,630 Plan fiduciary net position – beginning.................................................................................. 135,701 246,662 Plan fiduciary net position – ending (b)................................................................................. $ 246,662 $ 331,292 State’s net OPEB liability – ending (a) – (b).......................................................................... $ 4,295,441 $ 4,229,248 Plan fiduciary net position as a percentage of the total OPEB liability..................................... 5.43 % 7.26 % Covered payroll.......................................................................................................................... $ 866,040 $ 895,430 State’s net OPEB liability as a percentage of covered payroll................................................... 495.99 % 472.31 % 220 Required Supplementary Information 20192 20202 20212 20222 20232 $ 140,545 $ 159,410 $ 183,703 $ 209,691 $ 136,920 199,637 204,078 202,901 181,784 207,924 41,288 (64,174) (699,133) (92,802) (15,291) 318,292 466,272 531,615 (1,359,809) 7,641 (78,501) (84,544) (87,872) (92,183) (92,714) 621,261 681,042 131,214 (1,153,319) 244,480 4,560,540 5,181,801 5,862,843 5,994,057 4,840,738 $ 5,181,801 $ 5,862,843 $ 5,994,057 $ 4,840,738 $ 5,085,218 $ 78,501 $ 84,544 $ 87,872 $ 92,183 $ 92,714 57,567 59,296 1 120,580 50,716 3,943 4,061 — 8,452 16,905 23,834 16,069 136,197 (102,287) 45,222 (78,501) (84,544) (87,872) (92,183) (92,714) (77) (217) (188) (177) (200) — — — — — 85,267 79,209 136,010 26,568 112,643 331,052 * 416,319 495,528 631,538 658,106 $ 416,319 $ 495,528 $ 631,538 $ 658,106 $ 770,749 $ 4,765,482 $ 5,367,315 $ 5,362,519 $ 4,182,632 $ 4,314,469 8.03 % 8.45 % 10.54 % 13.60 % 15.16 % $ 942,765 $ 958,694 $ 890,777 $ 950,596 $ 993,733 505.48 % 559.86 % 602.00 % 440.00 % 434.17 % (continued) 221 State of California Annual Comprehensive Financial Report Schedule of Changes in Net OPEB Liability and Related Ratios (continued) For the Past Seven Fiscal Years1 (amounts in thousands) 20172 20182 RETIREE HEALTH BENEFITS PROGRAM BARGAINING UNIT 6 PLAN Total OPEB liability Service cost ........................................................................................................................... $ 609,551 $ 531,916 Interest on total OPEB liability............................................................................................. 574,853 634,360 Differences between expected and actual experiences5 ....................................................... — (1,186,530) Changes in assumptions........................................................................................................ (1,637,897) (164,236) Benefit payments................................................................................................................... (325,344) (327,604) Net change in total OPEB liability ..................................................................................... (778,837) (512,094) Total OPEB liability – beginning .......................................................................................... 15,990,189 15,211,352 Total OPEB liability – ending (a) .......................................................................................... $ 15,211,352 $ 14,699,258 Plan fiduciary net position Contributions – employer...................................................................................................... $ 325,344 $ 327,604 Contributions – prefunding ................................................................................................... 146,933 65,245 Contributions – employee ..................................................................................................... 23,181 65,245 Net investment income.......................................................................................................... 15,089 17,235 Benefit payments................................................................................................................... (325,344) (327,604) Administrative expense......................................................................................................... (48) (128) Other expenses ...................................................................................................................... — — Net change in plan fiduciary net position ........................................................................... 185,155 147,597 Plan fiduciary net position – beginning ................................................................................ — 185,155 Plan fiduciary net position – ending (b)................................................................................ $ 185,155 $ 332,752 State’s net OPEB liability – ending (a) – (b) ........................................................................ $ 15,026,197 $ 14,366,506 Plan fiduciary net position as a percentage of the total OPEB liability.................................... 1.22 % 2.26 % Covered payroll ........................................................................................................................ $ 2,653,404 $ 2,726,616 State’s net OPEB liability as a percentage of covered payroll ................................................. 566.30 % 526.90 % 222 Required Supplementary Information 20192 20202 20212 20222 20232 $ 503,829 $ 535,696 $ 578,629 $ 655,259 $ 485,501 622,325 608,903 562,522 531,126 683,945 (460,414) (354,942) (1,113,335) 916,117 (128,638) 912,754 675,803 1,438,841 (3,595,519) 114,998 (294,213) (357,726) (370,922) (389,079) (391,600) 1,284,281 1,107,734 1,095,735 (1,882,096) 764,206 14,699,258 15,983,539 17,091,273 18,187,008 16,304,912 $ 15,983,539 $ 17,091,273 $ 18,187,008 $ 16,304,912 $ 17,069,118 $ 294,213 $ 357,726 $ 370,922 $ 389,079 $ 391,600 106,592 129,540 109,211 234,564 121,509 106,592 129,540 — 119,564 121,510 33,447 24,249 247,525 (209,053) 97,891 (294,213) (357,726) (370,922) (389,079) (391,600) (94) (342) (343) (353) (427) — — — — — 246,537 282,987 356,393 144,722 340,483 332,511 * 579,048 862,035 1,218,428 1,363,150 $ 579,048 $ 862,035 $ 1,218,428 $ 1,363,150 $ 1,703,633 $ 15,404,491 $ 16,229,238 $ 16,968,580 $ 14,941,762 $ 15,365,485 3.62 % 5.04 % 6.70 % 8.36 % 9.98 % $ 2,819,233 $ 2,989,457 $ 2,709,765 $ 2,983,435 $ 2,996,198 546.41 % 542.88 % 626.20 % 500.82 % 512.83 % (continued) 223 State of California Annual Comprehensive Financial Report Schedule of Changes in Net OPEB Liability and Related Ratios (continued) For the Past Seven Fiscal Years1 (amounts in thousands) 20172 20182 RETIREE HEALTH BENEFITS PROGRAM BARGAINING UNIT 9 PLAN3 Total OPEB liability Service cost............................................................................................................................ $ 166,173 $ 142,954 Interest on total OPEB liability.............................................................................................. 154,495 174,062 Differences between expected and actual experiences5 ........................................................ — (334,650) Changes in assumptions......................................................................................................... (475,991) (200,549) Benefit payments ................................................................................................................... (82,449) (85,278) Net change in total OPEB liability..................................................................................... (237,772) (303,461) Total OPEB liability – beginning........................................................................................... 4,640,159 4,402,387 Total OPEB liability – ending (a)........................................................................................... $ 4,402,387 $ 4,098,926 Plan fiduciary net position Contributions – employer ...................................................................................................... $ 82,449 $ 85,278 Contributions – prefunding.................................................................................................... 35,210 5,688 Contributions – employee...................................................................................................... — 5,688 Net investment income .......................................................................................................... 3,630 3,246 Benefit payments ................................................................................................................... (82,449) (85,278) Administrative expense ......................................................................................................... (11) (22) Other expenses....................................................................................................................... — — Net change in plan fiduciary net position .......................................................................... 38,829 14,600 Plan fiduciary net position – beginning................................................................................. — 38,829 Plan fiduciary net position – ending (b) ................................................................................ $ 38,829 $ 53,429 State’s net OPEB liability – ending (a) – (b) ......................................................................... $ 4,363,558 $ 4,045,497 Plan fiduciary net position as a percentage of the total OPEB liability .................................... 0.88 % 1.30 % Covered payroll ......................................................................................................................... $ 1,366,302 $ 1,376,743 State’s net OPEB liability as a percentage of covered payroll.................................................. 319.37 % 293.85 % 224 Required Supplementary Information 20192 20202 20212 20222 20232 $ 127,060 $ 136,522 $ 155,301 $ 173,027 $ 130,885 165,399 159,587 144,901 129,982 174,009 (88,806) (55,316) (308,759) 222,406 62,131 145,634 93,540 166,566 (879,542) 37,701 (84,522) (100,777) (109,002) (120,334) (128,736) 264,765 233,556 49,007 (474,461) 275,990 4,098,926 4,363,691 4,597,247 4,646,254 4,171,793 $ 4,363,691 $ 4,597,247 $ 4,646,254 $ 4,171,793 $ 4,447,783 $ 84,522 $ 100,777 $ 109,002 $ 120,334 $ 128,736 13,311 31,649 28,942 61,871 35,760 13,311 31,649 — 33,871 35,761 4,789 3,793 44,511 (42,399) 20,892 (84,522) (100,777) (109,002) (120,334) (128,736) (14) (55) (62) (69) (90) — — — — — 31,397 67,036 73,391 53,274 92,323 53,391 * 84,788 151,824 225,215 278,489 $ 84,788 $ 151,824 $ 225,215 $ 278,489 $ 370,812 $ 4,278,903 $ 4,445,423 $ 4,421,039 $ 3,893,304 $ 4,076,971 1.94 % 3.30 % 4.85 % 6.68 % 8.34 % $ 1,502,529 $ 1,596,949 $ 1,498,878 $ 1,770,060 $ 1,796,847 284.78 % 278.37 % 294.96 % 219.95 % 226.90 % (continued) 225 State of California Annual Comprehensive Financial Report Schedule of Changes in Net OPEB Liability and Related Ratios (continued) For the Past Seven Fiscal Years1 (amounts in thousands) 20172 20182 RETIREE HEALTH BENEFITS PROGRAM BARGAINING UNIT 12 PLAN3 Total OPEB liability Service cost............................................................................................................................ $ 167,689 $ 146,732 Interest on total OPEB liability ............................................................................................. 154,036 172,744 Differences between expected and actual experiences5........................................................ — (362,455) Changes in assumptions ........................................................................................................ (433,966) (166,573) Benefit payments................................................................................................................... (110,860) (114,235) Net change in total OPEB liability .................................................................................... (223,101) (323,787) Total OPEB liability – beginning........................................................................................... 4,540,951 4,317,850 Total OPEB liability – ending (a) .......................................................................................... $ 4,317,850 $ 3,994,063 Plan fiduciary net position Contributions – employer...................................................................................................... $ 110,860 $ 114,235 Contributions – prefunding ................................................................................................... 1,076 8,280 Contributions – employee ..................................................................................................... 1,076 8,280 Net investment income.......................................................................................................... 872 1,051 Benefit payments................................................................................................................... (110,860) (114,235) Administrative expense ......................................................................................................... (4) (9) Other expenses ...................................................................................................................... — — Net change in plan fiduciary net position.......................................................................... 3,020 17,602 Plan fiduciary net position – beginning................................................................................. 7,186 10,206 Plan fiduciary net position – ending (b)................................................................................ $ 10,206 $ 27,808 State’s net OPEB liability – ending (a) – (b)......................................................................... $ 4,307,644 $ 3,966,255 Plan fiduciary net position as a percentage of the total OPEB liability.................................... 0.24 % 0.70 % Covered payroll......................................................................................................................... $ 627,283 $ 676,752 State’s net OPEB liability as a percentage of covered payroll.................................................. 686.71 % 586.07 % 226 Required Supplementary Information 20192 20202 20212 20222 20232 $ 129,311 $ 134,649 $ 137,010 $ 145,385 $ 115,098 162,948 154,691 135,412 118,610 158,792 (97,510) (149,086) (348,753) 227,285 (61,321) 152,849 21,353 165,715 (760,893) 52,679 (120,833) (127,671) (132,052) (139,651) (142,038) 226,765 33,936 (42,668) (409,264) 123,210 3,994,063 4,220,828 4,254,764 4,212,096 3,802,832 $ 4,220,828 $ 4,254,764 $ 4,212,096 $ 3,802,832 $ 3,926,042 $ 120,833 $ 127,671 $ 132,052 $ 139,651 $ 142,038 16,268 26,329 31,233 63,357 33,161 16,268 26,329 — 31,356 33,161 3,552 2,974 36,034 (37,298) 18,472 (120,833) (127,671) (132,052) (139,651) (142,038) (9) (43) (52) (59) (79) — — — — — 36,079 55,589 67,215 57,356 84,715 27,788 * 63,867 119,456 186,671 244,027 $ 63,867 $ 119,456 $ 186,671 $ 244,027 $ 328,742 $ 4,156,961 $ 4,135,308 $ 4,025,425 $ 3,558,805 $ 3,597,300 1.51 % 2.81 % 4.43 % 6.42 % 8.37 % $ 723,964 $ 748,801 $ 673,098 $ 805,625 $ 824,956 574.19 % 552.26 % 598.04 % 441.74 % 436.06 % (continued) 227 State of California Annual Comprehensive Financial Report Schedule of Changes in Net OPEB Liability and Related Ratios (continued) For the Past Seven Fiscal Years1 (amounts in thousands) 20172 20182,4 RETIREE HEALTH BENEFITS PROGRAM OTHER FUNDED PLANS3 Total OPEB liability Service cost.......................................................................................................................... $ 92,991 $ 501,028 Interest on total OPEB liability............................................................................................ 74,923 523,258 Differences between expected and actual experiences5 ...................................................... — (1,033,520) Changes in assumptions....................................................................................................... (197,059) (304,299) Benefit payments ................................................................................................................. (46,820) (288,774) Net change in total OPEB liability................................................................................... (75,965) (602,307) Total OPEB liability – beginning......................................................................................... 2,116,405 12,699,917 Total OPEB liability – ending (a)......................................................................................... $ 2,040,440 $ 12,097,610 Plan fiduciary net position Contributions – employer .................................................................................................... $ 46,820 $ 288,774 Contributions – prefunding.................................................................................................. 10,442 32,759 Contributions – employee.................................................................................................... 2,323 32,759 Net investment income ........................................................................................................ 1,589 5,578 Benefit payments ................................................................................................................. (46,820) (288,774) Administrative expense ....................................................................................................... (7) (47) Other expenses..................................................................................................................... — — Net change in plan fiduciary net position ........................................................................ 14,347 71,049 Plan fiduciary net position – beginning............................................................................... 4,836 57,956 * Plan fiduciary net position – ending (b) .............................................................................. $ 19,183 $ 129,005 State’s net OPEB liability – ending (a) – (b) ....................................................................... $ 2,021,257 $ 11,968,605 Plan fiduciary net position as a percentage of the total OPEB liability .................................. 0.94 % 1.07 % Covered payroll ....................................................................................................................... $ 851,868 $ 3,469,855 State’s net OPEB liability as a percentage of covered payroll................................................ 237.27 % 344.93 % 228 Required Supplementary Information 20192, 4 20202 20212 20222 20232 $ 528,502 $ 546,766 $ 597,140 $ 674,238 $ 523,411 581,170 570,727 508,583 464,427 621,278 (221,816) (517,882) (1,092,126) 1,023,794 (38,737) 506,543 305,572 811,046 (3,182,977) 207,290 (364,207) (371,323) (401,508) (436,182) (454,415) 1,030,192 533,860 423,135 (1,456,700) 858,827 14,074,765 15,104,957 15,638,817 16,061,952 14,605,252 $ 15,104,957 $ 15,638,817 $ 16,061,952 $ 14,605,252 $ 15,464,079 $ 364,207 $ 371,323 $ 401,508 $ 436,182 $ 454,415 71,376 124,916 127,043 262,488 139,289 71,376 124,916 — 137,487 139,289 16,116 13,386 163,783 (164,073) 81,057 (364,207) (371,323) (401,508) (436,182) (454,415) (43) (194) (230) (263) (349) — — — — — 158,825 263,024 290,596 235,639 359,286 128,914 * 287,739 550,763 841,359 1,076,998 $ 287,739 $ 550,763 $ 841,359 $ 1,076,998 $ 1,436,284 $ 14,817,218 $ 15,088,054 $ 15,220,593 $ 13,528,254 $ 14,027,795 1.90 % 3.52 % 5.24 % 7.37 % 9.29 % $ 4,162,765 $ 4,363,200 $ 3,875,766 $ 4,500,952 $ 5,075,978 355.95 % 345.80 % 392.71 % 300.56 % 276.36 % (continued) 229 State of California Annual Comprehensive Financial Report Schedule of Changes in Net OPEB Liability and Related Ratios (continued) For the Past Seven Fiscal Years1 (amounts in thousands) 20172 20182,4 RETIREE HEALTH BENEFITS PROGRAM UNFUNDED PLAN3 Total OPEB liability Service cost............................................................................................................................. $ 2,805,040 $ 2,008,794 Interest on total OPEB liability .............................................................................................. 2,112,139 1,959,522 Differences between expected and actual experiences5......................................................... — (4,164,211) Changes in assumptions ......................................................................................................... (6,610,919) (1,766,620) Benefit payments.................................................................................................................... (1,457,705) (1,352,652) Net change in total OPEB liability ..................................................................................... (3,151,445) (3,315,167) Total OPEB liability – beginning........................................................................................... 64,144,931 50,334,009 Total OPEB liability – ending (a) .......................................................................................... $ 60,993,486 $ 47,018,842 Plan fiduciary net position Contributions – employer....................................................................................................... $ 1,457,705 $ 1,352,652 Contributions – prefunding .................................................................................................... — — Contributions – employee ...................................................................................................... — — Net investment income........................................................................................................... — — Benefit payments.................................................................................................................... (1,457,705) (1,352,652) Administrative expense .......................................................................................................... — — Other expenses ....................................................................................................................... — — Net change in plan fiduciary net position ........................................................................... — — Plan fiduciary net position – beginning................................................................................. — — Plan fiduciary net position – ending (b)................................................................................ $ — $ — State’s net OPEB liability – ending (a) – (b)......................................................................... $ 60,993,486 $ 47,018,842 Plan fiduciary net position as a percentage of the total OPEB liability.................................... — % — % Covered payroll......................................................................................................................... $ 12,525,617 $ 10,825,049 State’s net OPEB liability as a percentage of covered payroll.................................................. 486.95 % 434.35 % 230 Required Supplementary Information 20192,4,6 20202 20212 20222 20232 $ 651,082 $ 695,884 $ 826,026 $ 828,893 $ 579,259 576,896 547,791 447,744 350,040 575,416 (41,161) (665,066) (1,270,439) 1,171,850 (264,319) 863,523 583,238 476,706 (4,210,439) 264,317 (546,742) (512,702) (522,538) (530,610) (527,794) 1,503,598 649,145 (42,501) (2,390,266) 626,879 15,556,199 17,059,797 17,708,942 17,666,441 15,276,175 $ 17,059,797 $ 17,708,942 $ 17,666,441 $ 15,276,175 $ 15,903,054 $ 546,742 $ 512,702 $ 522,538 $ 530,610 $ 527,794 — — — — — — — — — — — — — — — (546,742) (512,702) (522,538) (530,610) (527,794) — — — — — — — — — — — — — — — — — — — — $ — $ — $ — $ — $ — $ 17,059,797 $ 17,708,942 $ 17,666,441 $ 15,276,175 $ 15,903,054 — % — % — % — % — % $ 3,366,371 $ 3,536,386 $ 3,483,142 $ 3,539,212 $ 3,805,373 506.77 % 500.76 % 507.20 % 431.63 % 417.91 % (concluded) 231 State of California Annual Comprehensive Financial Report Schedule of OPEB Contributions For the Past Seven Fiscal Years1 (amounts in thousands) 2018 20193 RETIREE HEALTH BENEFITS PROGRAM SERVICE EMPLOYEES INTERNATIONAL UNION PLAN2 Actuarially determined contribution......................................................................... $ — $ — Contributions in relation to the actuarially determined contribution........................ — — Contribution deficiency (excess) .............................................................................. $ — $ — Covered payroll ........................................................................................................ $ — $ — Contributions as a percentage of covered payroll..................................................... — — BARGAINING UNIT 5 PLAN Actuarially determined contribution......................................................................... $ 204,361 $ 210,626 Contributions in relation to the actuarially determined contribution........................ (184,456) (137,475) Contribution deficiency ............................................................................................ $ 19,905 $ 73,151 Covered payroll ........................................................................................................ $ 915,549 $ 942,765 Contributions as a percentage of covered payroll..................................................... 20.15 % 14.58 % BARGAINING UNIT 6 PLAN Actuarially determined contribution......................................................................... $ 743,757 $ 671,262 Contributions in relation to the actuarially determined contribution........................ (503,636) (445,061) Contribution deficiency ............................................................................................ $ 240,121 $ 226,201 Covered payroll ........................................................................................................ $ 2,805,093 $ 2,819,233 Contributions as a percentage of covered payroll..................................................... 17.95 % 15.79 % BARGAINING UNIT 9 PLAN2 Actuarially determined contribution......................................................................... $ 207,027 $ 191,109 Contributions in relation to the actuarially determined contribution........................ (125,471) (102,971) Contribution deficiency ............................................................................................ $ 81,556 $ 88,138 Covered payroll ........................................................................................................ $ 1,444,410 $ 1,502,529 Contributions as a percentage of covered payroll..................................................... 8.69 % 6.85 % 1 This schedule will be built prospectively until it contains ten years of data. 2 This schedule includes amounts attributable to related organizations, fiduciary component units, and discretely presented component units, which are not part of the primary government. 3 The valuation groups that comprise the Unfunded and Other Funded plans shifted from the prior year. 232 Required Supplementary Information 20203 2021 2022 2023 2024 $ 1,543,231 $ 1,584,331 $ 1,336,683 $ 1,453,078 $ 1,557,071 (1,077,554) (1,204,613) (1,576,969) (1,369,690) (1,451,868) $ 465,677 $ 379,718 $ (240,286) $ 83,388 $ 105,203 $ 7,701,525 $ 7,477,126 $ 8,705,771 $ 8,705,889 $ 9,364,496 13.99 % 16.11 % 18.11 % 15.73 % 15.50 % $ 229,183 $ 240,749 $ 239,989 $ 230,075 $ 236,378 (139,230) (87,872) (212,763) (143,430) (143,298) $ 89,953 $ 152,877 $ 27,226 $ 86,645 $ 93,080 $ 958,694 $ 890,777 $ 950,596 $ 993,733 $ 1,074,372 14.52 % 9.86 % 22.38 % 14.43 % 13.34 % $ 676,241 $ 772,683 $ 681,831 $ 769,312 $ 825,327 (477,342) (480,133) (623,643) (513,110) (530,421) $ 198,899 $ 292,550 $ 58,188 $ 256,202 $ 294,906 $ 2,989,457 $ 2,709,765 $ 2,983,435 $ 2,996,198 $ 3,076,242 15.97 % 17.72 % 20.90 % 17.13 % 17.24 % $ 194,353 $ 212,002 $ 182,301 $ 205,694 $ 224,963 (131,031) (137,944) (182,205) (164,497) (181,487) $ 63,322 $ 74,058 $ 96 $ 41,197 $ 43,476 $ 1,596,949 $ 1,498,878 $ 1,770,060 $ 1,796,847 $ 1,927,511 8.21 % 9.20 % 10.29 % 9.15 % 9.42 % (continued) 233 State of California Annual Comprehensive Financial Report Schedule of OPEB Contributions (continued) For the Past Seven Fiscal Years1 (amounts in thousands) 2018 20193 RETIREE HEALTH BENEFITS PROGRAM BARGAINING UNIT 12 PLAN2 Actuarially determined contribution......................................................................... $ 217,883 $ 197,202 Contributions in relation to the actuarially determined contribution ....................... (119,368) (137,758) Contribution deficiency (excess).............................................................................. $ 98,515 $ 59,444 Covered payroll ........................................................................................................ $ 663,143 $ 723,870 Contributions as a percentage of covered payroll .................................................... 18.00 % 19.03 % OTHER FUNDED PLANS2 Actuarially determined contribution......................................................................... $ 109,630 $ 608,960 Contributions in relation to the actuarially determined contribution ....................... (61,064) (366,050) Contribution deficiency (excess).............................................................................. $ 48,566 $ 242,910 Covered payroll ........................................................................................................ $ 900,567 $ 3,595,234 Contributions as a percentage of covered payroll .................................................... 6.78 % 10.18 % UNFUNDED PLAN2 Actuarially determined contribution......................................................................... $ 3,199,223 $ 2,552,923 Contributions in relation to the actuarially determined contribution ....................... (1,547,989) (1,493,023) Contribution deficiency............................................................................................ $ 1,651,234 $ 1,059,900 Covered payroll ........................................................................................................ $ 13,241,681 $ 11,391,811 Contributions as a percentage of covered payroll .................................................... 11.69 % 13.11 % 234 Required Supplementary Information 20203 2021 2022 2023 2024 $ 198,316 $ 203,358 $ 169,461 $ 190,550 $ 200,732 (153,368) (160,882) (203,007) (175,199) (179,907) $ 44,948 $ 42,476 $ (33,546) $ 15,351 $ 20,825 $ 748,801 $ 673,098 $ 805,625 $ 824,956 $ 881,112 20.48 % 23.90 % 25.20 % 21.24 % 20.42 % $ 707,352 $ 756,965 $ 645,590 $ 738,895 $ 797,852 (492,373) (522,778) (698,669) (593,704) (642,053) $ 214,979 $ 234,187 $ (53,079) $ 145,191 $ 155,799 $ 4,363,200 $ 3,875,766 $ 4,500,952 $ 5,075,978 $ 5,464,851 11.28 % 13.49 % 15.52 % 11.70 % 11.75 % $ 977,820 $ 944,654 $ 915,632 $ 1,056,808 $ 1,155,890 (512,702) (504,813) (530,610) (527,794) (552,876) $ 465,118 $ 439,841 $ 385,022 $ 529,014 $ 603,014 $ 3,536,386 $ 3,483,142 $ 3,539,212 $ 3,805,373 $ 4,079,450 14.50 % 14.49 % 14.99 % 13.87 % 13.55 % (concluded) 235 State of California Annual Comprehensive Financial Report Schedule of OPEB Contributions (continued) For the Past Fiscal Year Notes to Required Supplementary Information for the most recent fiscal year presented: Retiree Health Benefits Program Covered payroll: Pensionable earnings provided by employer Valuation date: Actuarially determined contribution rates were calculated as of June 30, 2023. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method Level percentage of payroll, closed Amortization period 30 years Asset valuation method Market value of assets; for details see the June 30, 2022 Actuarial Valuation Report Inflation 2.30% Healthcare cost trend Pre-Medicare coverage: Actual rates for 2024, increasing to 7.00% in 2025, grading rates down to 4.50% in 2030 to 2038, and 4.25% for 2039 and later years. Post-Medicare coverage: Actual rates for 2024, increasing to rates ranging from 7.00% to 7.66% in 2025, grading down to 4.50% from 2035 to 2038, and 4.25% for 2039 and later years. Dental coverage: 0.23% for 2024, 2.00% for 2025, 3.00% for 2026, 4.00% for 2027, and 4.25% for 2028 and later years. Salary increases Varies by entry age and service Investment rate of return 6.00%, net of OPEB plan investment expenses but without reduction for OPEB administrative expenses. Retirement age The probabilities of retirement are based on the 2021 CalPERS Experience Study for the period from 2000 to 2019. Mortality Mortality rates are based on the 2021 CalPERS Experience Study adopted by the CalPERS Board. Post-retirement mortality rates include 15 years of projected ongoing mortality improvements using 80% of scale MP-2020 published by the Society of Actuaries. (concluded) 236 Required Supplementary Information Infrastructure Assets Using the Modified Approach Pursuant to Governmental Accounting Standards Board (GASB) Statement No. 34, the State uses the modified approach to report the cost of its infrastructure assets (state bridges, roadways, and high-speed rail). Under the modified approach, the State does not report depreciation expense for infrastructure assets but capitalizes all costs that add to the capacity and efficiency of state-owned bridges, roads, and the high-speed rail system. All maintenance and preservation costs are expensed and not capitalized. A. Infrastructure Asset Reporting Categories The infrastructure assets reported in the State’s financial statements for the fiscal year ending June 30, 2024, are in the following categories and amounts: state highway infrastructure, consisting of completed highway projects totaling $85.2 billion; land purchased for highway projects totaling $15.3 billion; infrastructure construction-in-progress (uncompleted highway projects) totaling $10.5 billion; and high-speed rail system infrastructure, consist of construction work-in-progress (uncompleted construction projects) totaling $7.8 billion. Donation and Relinquishment: Donation and relinquishment activity affects the inventory of statewide lane miles, land, and/or bridges as adjustments to the infrastructure assets and/or land balance in the State’s financial statements. For the fiscal year ending June 30, 2024, there were no donations of infrastructure land, and relinquishments were $35 million of state highway infrastructure (completed highway projects) and $7 million of infrastructure land. B. Condition Baselines and Assessments 1. Bridges The federal Fixing America’s Surface Transportation (FAST) Act required all states to adopt national asset management performance measures to establish nationwide consistency for condition reporting of highway assets. Under the FAST Act, the national performance measure for bridges/tunnels is total deck area of the structures in good, fair, or poor condition. The inspection data is based on the American Association of State Highway Transportation Officials’ Manual for Bridge Element Inspection, the Caltrans Bridge Element Inspection Manual, National Tunnel Inspection Standards, Specifications for the National Tunnel Inventory, and the Tunnel Operations Maintenance Inspection and Evaluation Manual. The State’s established condition baseline for fiscal year 2023-24 is to have at least 90% of the State’s bridge deck area in fair or better condition. 237 State of California Annual Comprehensive Financial Report The following table shows the State’s established condition baseline and actual statewide bridge condition for the last three fiscal years: Fiscal Year Ended June 30 Established Condition1 Actual Condition 2022 90.0% Fair or Better 94.1% Fair or Better 2023 90.0% Fair or Better 93.7% Fair or Better 2024 90.0% Fair or Better 94.0% Fair or Better 1 The actual statewide bridge conditions should not be lower than the baseline condition established by the State. The following table provides details on the actual condition of the State’s bridges as of June 30, 2024: Number of Condition Bridges/Tunnels Deck Area (sq. ft.) Deck Area (%) Good 6,388 110,942,776 43.05 % Fair 5,769 131,264,291 50.93 Poor 524 15,522,868 6.02 Total 12,681 257,729,935 100.00 % 2. Roadways The State conducts a periodic pavement-condition survey, which evaluates ride quality and structural integrity and identifies the number of distressed lane miles. The State classifies a roadway’s pavement condition by the following descriptions: • Excellent/good condition – few potholes or cracks • Fair condition – moderate number of potholes or cracks • Poor condition – significant or extensive number of potholes or cracks Statewide lane miles are considered “distressed lane miles” if they are in poor condition. The actual distressed lane miles are compared to the established condition baseline to ensure that the baseline is not exceeded. 238 Required Supplementary Information The following table shows the State’s established condition baseline and actual distressed lane miles from the last three completed pavement-condition surveys: Condition Established Condition Actual Actual Distressed Assessment Baseline Distressed Distressed Lane Miles as Percent Date1 Lane Miles (maximum)2 Lane Miles of Total Lane Miles April 2022 18,000 6,872 13.6 % July 2023 18,000 6,980 13.8 September 2024 18,000 7,453 14.7 1 Condition assessment for the State’s established condition baseline and actual distressed lane miles are being reported in the latest 2022 State of the Pavement Report with the publication date of September 2024. 2 The actual statewide distressed lane miles should not exceed the maximum distressed lane miles established by the State. The following table provides details on the State’s actual distressed lane miles as of the last completed pavement-condition survey: Pavement Condition Lane Miles Distressed Lane Miles Excellent/Good 32,788 — Fair 10,365 — Poor 7,453 7,453 Total 50,606 7,453 C. Budgeted and Actual Preservation Costs The estimated budgeted preservation costs represent the preservation projects approved by the California Transportation Commission and the State’s scheduled preservation work for each fiscal year. The actual preservation costs represent the cumulative cost to date for the projects approved and work scheduled in each fiscal year. 239 State of California Annual Comprehensive Financial Report 1. Bridges The following table shows the State’s budgeted and actual preservation cost information for the State’s bridges for the most recent and four previous fiscal years: Estimated Budgeted Actual Fiscal Year Preservation Costs Preservation Costs Ending June 30 (in millions)1 (in millions)1 2020 $ 228 $ 228 2021 256 250 2022 231 226 2023 293 270 2024 245 192 1Some prior years were updated based on more current information. 2. Roadways The following table shows the State’s budgeted and actual preservation cost information for the State’s roadways for the most recent and four previous fiscal years: Estimated Budgeted Actual Fiscal Year Preservation Costs Preservation Costs Ending June 30 (in millions)1 (in millions)1 2020 $ 5,076 $ 4,932 2021 5,258 5,015 2022 5,116 4,643 2023 7,360 5,357 2024 6,944 3,261 1Some prior years were updated based on more current information. 240 Required Supplementary Information This page intentionally left blank 241 State of California Annual Comprehensive Financial Report Budgetary Comparison Schedule General Fund and Major Special Revenue Funds Year Ended June 30, 2024 (amounts in thousands) General Budgeted Amounts Actual Variance with Original Final Amounts Final Budget REVENUES Corporation tax ................................................................... $ 36,913,221 $ 34,317,908 $ 35,148,505 $ 830,597 Intergovernmental ............................................................... — — — — Cigarette and tobacco taxes ................................................ 43,322 39,609 39,609 — Insurance gross premiums tax ............................................ 3,893,820 3,966,362 3,957,601 (8,761) Vehicle license fees ............................................................ 801 1,077 1,077 — Motor vehicle fuel tax ......................................................... — — — — Personal income tax ............................................................ 113,768,047 113,379,954 111,651,539 (1,728,415) Retail sales and use taxes .................................................... 34,642,737 33,341,796 33,194,001 (147,795) Other major taxes and licenses ........................................... 427,063 418,350 417,175 (1,175) Other revenues .................................................................... 6,249,135 6,850,052 7,066,697 216,645 Total revenues ............................................................. 195,938,146 192,315,108 191,476,204 (838,904) EXPENDITURES Business, consumer services, and housing ......................... 2,962,719 2,432,148 2,266,646 (165,502) Transportation ..................................................................... 4,658,918 6,708,918 4,540,279 (2,168,639) Natural resources and environmental protection ................ 12,310,243 12,054,747 9,098,962 (2,955,785) Health and human services ................................................. 71,180,889 76,567,341 71,738,551 (4,828,790) Corrections and rehabilitation ............................................ 14,115,668 15,395,425 14,981,654 (413,771) Education............................................................................. 41,059,480 98,483,679 97,549,330 (934,349) General government: Tax relief .......................................................................... 382,351 415,001 382,351 (32,650) Debt service ..................................................................... 6,893,465 5,348,274 5,333,273 (15,001) Other general government ............................................... 1,184,498 5,355,733 2,763,878 (2,591,855) Total expenditures ...................................................... 154,748,231 222,761,266 208,654,924 (14,106,342) OTHER FINANCING SOURCES (USES) Transfers from other funds ................................................. — — 5,078,099 — Transfers to other funds ...................................................... — — (4,295,647) — Other additions (deductions) .............................................. — — 3,912,182 — Total other financing sources (uses) .......................... — — 4,694,634 — Excess (deficiency) of revenues and other sources over (under) expenditures and other uses ................ — — (12,484,086) — Fund balances – beginning................................................... — — 32,103,655 — Fund balances – ending........................................................ $ — $ — $ 19,619,569 $ — 242 Required Supplementary Information Federal Environmental and Natural Resources Budgeted Amounts Actual Variance with Budgeted Amounts Actual Variance with Original Final Amounts Final Budget Original Final Amounts Final Budget $ — $ — $ — $ — $ — $ — $ — $ — 139,971,835 139,971,835 139,971,835 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 166,939 166,939 166,939 — 27 27 27 — 10,874,113 10,874,113 10,874,113 — 139,971,862 139,971,862 139,971,862 — 11,041,052 11,041,052 11,041,052 — 281,663 281,663 281,663 — 330,488 331,018 284,023 (46,995) 6,065,992 6,065,992 6,065,992 — 1,018,325 1,018,373 798,367 (220,006) 824,707 824,707 824,707 — 8,312,884 8,400,490 7,429,914 (970,576) 111,401,793 111,401,793 111,401,793 — 64,943 65,589 50,222 (15,367) 87,556 87,556 87,556 — — — — — 7,794,789 7,794,789 7,794,789 — 3,131 3,133 3,118 (15) — — — — — — — — — — — — 4,627 4,627 4,627 — 5,341,506 5,341,506 5,341,506 — 93,940 557,876 536,665 (21,211) 131,798,006 131,798,006 131,798,006 — 9,828,338 10,381,106 9,106,936 (1,274,170) — — 15,642 — — — 1,109,670 — — — (8,191,341) — — — (1,121,742) — — — 1,870 — — — 1,635,828 — — — (8,173,829) — — — 1,623,756 — — — 27 — — — 3,557,872 — — — 674 — — — 20,519,598 — $ — $ — $ 701 $ — $ — $ — $ 24,077,470 $ — 243 State of California Annual Comprehensive Financial Report Reconciliation of Budgetary Basis Fund Balances of the General Fund and Major Special Revenue Funds to GAAP Basis Fund Balances June 30, 2024 (amounts in thousands) Major Special Revenue Funds Environmental and Natural General Federal Resources Budgetary fund balance reclassified into GAAP statement fund structure............................................................... $ 19,619,569 $ 701 $ 24,077,470 Basis difference: Interfund receivables........................................................................................... 3,354,783 — 253,223 Loans receivable ................................................................................................. 106,452 437,264 930,139 Interfund payables............................................................................................... (4,039,433) — (593,320) Escheat property.................................................................................................. (1,553,567) — — Tax revenues ....................................................................................................... 4,734,887 — — Fund classification changes ................................................................................ 30,139,770 2,029,681 — Other ................................................................................................................... 14,257,503 8,023,978 (795,874) Timing difference: Liabilities budgeted in subsequent years ............................................................ (3,227,199) (10,134,413) (4,016) GAAP fund balance – ending ............................................................................ $ 63,392,765 $ 357,211 $ 23,867,622 Notes to the Required Supplementary Information Budgetary Comparison Schedule The State annually reports its financial condition based on a Generally Accepted Accounting Principles (GAAP) basis and on the State’s budgetary provisions (budgetary basis). The Budgetary Comparison Schedule for the General Fund and Major Special Revenue Funds reports the original budget, the final budget, the actual expenditures, and the variance between the final budget and the actual expenditures, using the budgetary basis of accounting. On the budgetary basis, individual appropriations are charged as expenditures when commitments for goods and services are incurred. However, for financial reporting purposes, the State reports expenditures based on the year in which goods and services are received. The Budgetary Comparison Schedule includes all of the current-year expenditures for the General Fund and major special revenue funds, as well as related appropriations that typically are legislatively authorized annually, continually, or by project. While the encumbrances relate to all programs’ expenditures on a budgetary basis, adjustments for encumbrances are made under “other general government,” except for Environmental and Natural Resources, for which adjustments for encumbrances are made under each program’s expenditures. The Budgetary Comparison Schedule is not presented in this document at the legal level of budgetary control because such a presentation would be extremely lengthy and cumbersome. The State of California prepares a separate report, the Annual Comprehensive Financial Report Supplement, which 244 Required Supplementary Information includes statements that demonstrate compliance with the legal level of budgetary control in accordance with Government Accounting Standards Board’s (GASB) Codification of Governmental Accounting and Financial Reporting Standards, Section 2400.121. The supplement includes a comparison of the annual appropriated budget with expenditures at the legal level of control. A copy of the Annual Comprehensive Financial Report Supplement is available at https://sco.ca.gov/ard_state_acfr_sup.html. Reconciliation of Budgetary with GAAP Basis The reconciliation of budgetary basis fund balances of the General Fund and the major special revenue funds to GAAP basis fund balances is presented on the previous page, and the reconciling items are explained in the following paragraphs. Basis Difference Interfund Receivables and Loans Receivable: Loans made to other funds or to other governments are normally recorded as either expenditures or transfers on a budgetary basis. However, in accordance with GAAP, these loans are recorded as assets. The adjustments related to interfund receivables caused increases of $3.4 billion in the General Fund, and $253 million in the Environmental and Natural Resources Fund. The adjustments related to loans receivable caused increases of $106 million in the General Fund, $437 million in the Federal Fund, and $930 million in the Environmental and Natural Resources Fund. Interfund Payables: Loans received from other funds are normally recorded as transfers on a budgetary basis. However, in accordance with GAAP, these loans are recorded as liabilities. The adjustments related to interfund payables caused decreases of $4.0 billion in the General Fund, $593 million in the Environmental and Natural Resources Fund. Escheat Property: A liability for the estimated amount of escheat property expected to ultimately be reclaimed and paid is not reported on a budgetary basis. The liability is required to be reported on a GAAP basis. This adjustment caused a $1.6 billion decrease in the General Fund. Tax Revenues: Estimated tax payments are accrued on a budgetary basis pursuant to Chapter 751, Statutes of 2008; however, in accordance with GAAP, tax payments are accrued based on the portion of estimated net final payments related to the fiscal year. This adjustment caused an increase of $4.7 billion in the General Fund. Fund Classification Changes: The fund balance amounts for governmental funds have been reclassified in accordance with governmental accounting standards. These reclassifications caused increases of $30.1 billion in the General Fund and $2.0 billion in the Federal Fund. These increases represent the fund balances of funds that are not considered part of the General Fund or the Federal Fund for any budgetary purpose or for the Budgetary/Legal Basis Annual Report. Other: Certain other adjustments and reclassifications are necessary to present the financial statements in accordance with GAAP. The other adjustments caused an increase of $14.3 billion in the General Fund, a decrease of $8.0 billion in the Federal Fund, and a decrease of $796 million in the Environmental and Natural Resources Fund. 245 State of California Annual Comprehensive Financial Report Timing Difference Liabilities Budgeted in Subsequent Years: On a budgetary basis, the primary government does not accrue liabilities for which there is no existing appropriation or no currently available appropriation. The adjustments made to account for these liabilities in accordance with GAAP caused decreases of $3.2 billion in the General Fund, $10.1 billion in the Federal Fund, and $4 million in the Environmental and Natural Resources Fund. The large decrease in the General Fund primarily consists of $2.3 billion for medical assistance and $477 million for workers’ compensation claims. The large decrease in the Federal Fund consists of $8.4 billion for unemployment programs and $1.7 billion for coronavirus relief. 246 Combining Financial Statements and Schedules – Nonmajor and Other Funds This page intentionally left blank Nonmajor Governmental Funds Nonmajor Governmental Funds Nonmajor governmental funds account for the State’s activities that do not meet the criteria of a major governmental fund. Following are brief descriptions of nonmajor governmental funds. Special revenue funds account for the proceeds of specific revenue sources, other than debt service or capital projects, that are restricted, committed, or assigned to expenditures for specific purposes. The Transportation Fund accounts for fuel taxes, bond proceeds, automobile registration fees, and other revenues used for bridge and highway maintenance, passenger rail construction, and transportation safety programs. The Health Care Related Programs Fund accounts for fees, taxes, intergovernmental revenue, bond proceeds, transfers from other state funds, and other revenue used for the Medi-Cal program, medical research, and other health care related programs. The Business and Professions Regulatory and Licensing Fund accounts for fees and other revenues charged for regulating and licensing specific industries, professions, and vocations. The Financing for Local Governments and the Public Fund accounts for taxes, fees, bond proceeds, and other revenues used to finance the construction and maintenance of parks, jails, and other public and local government programs. The Cigarette, Tobacco, and Cannabis Tax Fund accounts for a surtax on cigarette and tobacco products that is used for various health programs; and cannabis excise and cultivation taxes that are used for various health, youth education, and research programs. The Local Revenue and Public Safety Fund accounts for vehicle license fees and a 1.5625% state sales tax dedicated to local governments for realigning costs from the State to local governments, and a 0.5% state sales tax dedicated to local governments to fund public safety programs. The Trial Courts Fund accounts for the various fees collected by the courts, maintenance-of-effort payments from the counties, transfers in from the General Fund, and trial court operating costs. The Golden State Tobacco Securitization Corporation Fund is a blended component unit that accounts for the receipt of Tobacco Revenue Settlements pledged for the payment of debt service. Other special revenue programs funds account for all other proceeds of revenue sources, other than debt service or capital projects, that are restricted or committed to expenditures for specific purposes. (continued) 249 State of California Annual Comprehensive Financial Report (continued) Debt service funds account for and report financial resources that are restricted, committed, or assigned for the payment of principal and interest on general long-term obligations. The No Place Like Home Fund accounts for bond proceeds and other revenues used to implement and administer the No Place Like Home Program to reduce homelessness and provide affordable housing for individuals with mental illness. The Transportation Debt Service Fund accounts for Transportation Fund transfers used for the payment of principal and interest related to various transportation-related general obligation bonds. Capital projects funds account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. The Higher Education Construction Fund accounts for bond proceeds used to construct state colleges and universities. The Hospital Construction Fund accounts for bond proceeds used to construct hospitals. The Local Government Construction Fund accounts for bond proceeds used to construct schools, libraries, and other major capital facilities for local governments. Other capital projects funds account for transactions related to resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. 250 Nonmajor Governmental Funds This page intentionally left blank 251 State of California Annual Comprehensive Financial Report Combining Balance Sheet Nonmajor Governmental Funds June 30, 2024 (amounts in thousands) Special Revenue Business and Financing Health Care Professions for Local Related Regulatory Governments Transportation Programs and Licensing and the Public ASSETS Cash and pooled investments ............................... $ 11,775,889 $ 3,109,872 $ 2,605,227 $ 3,511,214 Investments........................................................... — — — 681,708 Receivables (net).................................................. 2,045,465 10,362,945 170,559 248,691 Due from other funds ........................................... 1,119,863 90,650 56,566 1,454,771 Due from other governments................................ 4,526 491,862 1,653 214,235 Interfund receivables............................................ 113,280 516,520 290,225 81,301 Loans receivable................................................... 1,257 1,603 70,541 3,050,034 Other assets .......................................................... 14,125 — — — Total assets ...................................................... $ 15,074,405 $ 14,573,452 $ 3,194,771 $ 9,241,954 LIABILITIES Accounts payable ................................................. $ 1,532,942 $ 5,267,168 $ 180,134 $ 391,281 Due to other funds................................................ 337,043 6,340,108 48,483 567 Due to component units........................................ 8,528 — — — Due to other governments .................................... 1,347,676 1,675,349 16,893 436,775 Interfund payables................................................ 617 — 21,129 — Revenues received in advance.............................. 10,992 1,527 71,360 1,032 Deposits................................................................ 3,107 — — — Other liabilities..................................................... 1,100,981 — 38,418 130 Total liabilities................................................. 4,341,886 13,284,152 376,417 829,785 DEFERRED INFLOWS OF RESOURCES....... 62,497 155,254 — — Total liabilities and deferred inflows of resources ...................................................... 4,404,383 13,439,406 376,417 829,785 FUND BALANCES Nonspendable....................................................... — — — — Restricted.............................................................. 10,617,666 1,887,729 2,007,657 8,224,913 Committed............................................................ 52,356 121,332 810,697 207,858 Assigned............................................................... — — — — Unassigned ........................................................... — (875,015) — (20,602) Total fund balances ........................................ 10,670,022 1,134,046 2,818,354 8,412,169 Total liabilities, deferred inflows of resources, and fund balances ..................... $ 15,074,405 $ 14,573,452 $ 3,194,771 $ 9,241,954 252 Nonmajor Governmental Funds Special Revenue Golden State Other Total Cigarette, Local Tobacco Special Nonmajor Tobacco, and Revenue and Trial Securitization Revenue Special Cannabis Tax Public Safety Courts Corporation Programs Revenue $ 2,970,690 $ 3,944,845 $ 1,183,531 $ 77,323 $ 5,500,464 $ 34,679,055 — — 897,312 236,116 — 1,815,136 1,223,125 12,682 270,458 215,125 296,762 14,845,812 6,796 203,542 110,971 — 627,658 3,670,817 83 — 42,547 — 34,751 789,657 17,579 36,802 42,577 — 1,135,527 2,233,811 326 682 789 — 60,646 3,185,878 — — 46,191 — — 60,316 $ 4,218,599 $ 4,198,553 $ 2,594,376 $ 528,564 $ 7,655,808 $ 61,280,482 $ 506,153 $ 5,410 $ 405,856 $ 3 $ 341,575 $ 8,630,522 234,558 63,215 65,956 — 32,042 7,121,972 20,943 — — — 7,947 37,418 76,231 4,086,977 117,232 — 494,691 8,251,824 — — — — — 21,746 — — 107,832 — 109,693 302,436 26,281 — 384,567 — 111,016 524,971 — — 123,627 — 32,129 1,295,285 864,166 4,155,602 1,205,070 3 1,129,093 26,186,174 222,898 — 1,382 — 46,568 488,599 1,087,064 4,155,602 1,206,452 3 1,175,661 26,674,773 — — 41,829 — — 41,829 3,093,489 1,427 1,058,552 528,561 5,620,436 33,040,430 38,046 41,524 205,153 — 859,711 2,336,677 — — 82,390 — — 82,390 — — — — — (895,617) 3,131,535 42,951 1,387,924 528,561 6,480,147 34,605,709 $ 4,218,599 $ 4,198,553 $ 2,594,376 $ 528,564 $ 7,655,808 $ 61,280,482 (continued) 253 State of California Annual Comprehensive Financial Report Combining Balance Sheet (continued) Nonmajor Governmental Funds June 30, 2024 (amounts in thousands) Debt Service Total No Place Transportation Nonmajor Like Home Debt Debt Debt Service Service Service ASSETS Cash and pooled investments ................................................................ $ 89,776 $ — $ 89,776 Investments............................................................................................ — — — Receivables (net)................................................................................... — — — Due from other funds ............................................................................ 1,677 77,403 79,080 Due from other governments................................................................. — — — Interfund receivables............................................................................. — — — Loans receivable.................................................................................... — — — Other assets ........................................................................................... — — — Total assets ....................................................................................... $ 91,453 $ 77,403 $ 168,856 LIABILITIES Accounts payable .................................................................................. $ 201 $ — $ 201 Due to other funds................................................................................. — 77,403 77,403 Due to component units......................................................................... — — — Due to other governments ..................................................................... — — — Interfund payables................................................................................. — — — Revenues received in advance............................................................... — — — Deposits................................................................................................. — — — Other liabilities...................................................................................... — — — Total liabilities.................................................................................. 201 77,403 77,604 DEFERRED INFLOWS OF RESOURCES ....................................... — — — Total liabilities and deferred inflows of resources..................... 201 77,403 77,604 FUND BALANCES Nonspendable........................................................................................ — — — Restricted............................................................................................... 91,252 — 91,252 Committed............................................................................................. — — — Assigned................................................................................................ — — — Total fund balances ......................................................................... 91,252 — 91,252 Total liabilities, deferred inflows of resources, and fund balances ....................................................................... $ 91,453 $ 77,403 $ 168,856 254 Nonmajor Governmental Funds Capital Projects Total Higher Local Other Nonmajor Total Education Hospital Government Capital Capital Nonmajor Construction Construction Construction Projects Projects Governmental $ 298,569 $ 75,890 $ 197,665 $ 251,889 $ 824,013 $ 35,592,844 — — — — — 1,815,136 — — — 1,666 1,666 14,847,478 3,132 815 1,852 6,043 11,842 3,761,739 — — 3,056 5 3,061 792,718 — — — 3,952 3,952 2,237,763 — — — 259,596 259,596 3,445,474 — — — — — 60,316 $ 301,701 $ 76,705 $ 202,573 $ 523,151 $ 1,104,130 $ 62,553,468 $ 1 $ 243 $ 3 $ 6,242 $ 6,489 $ 8,637,212 135 793 697 1,900 3,525 7,202,900 — — — — — 37,418 — — — 9,183 9,183 8,261,007 — — — — — 21,746 — — — — — 302,436 — — — — — 524,971 — — — — — 1,295,285 136 1,036 700 17,325 19,197 26,282,975 — — — 1,644 1,644 490,243 136 1,036 700 18,969 20,841 26,773,218 — — — — — 41,829 301,565 75,669 201,873 414,465 993,572 34,125,254 — — — 89,717 89,717 2,426,394 — — — — — 82,390 301,565 75,669 201,873 504,182 1,083,289 35,780,250 $ 301,701 $ 76,705 $ 202,573 $ 523,151 $ 1,104,130 $ 62,553,468 (concluded) 255 State of California Annual Comprehensive Financial Report Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2024 (amounts in thousands) Special Revenue Business and Financing Health Care Professions for Local Related Regulatory Governments Transportation Programs and Licensing and the Public REVENUES Personal income taxes ......................................... $ — $ — $ — $ 2,169,875 Sales and use taxes .............................................. 1,265,733 — — — Motor vehicle excise taxes .................................. 8,846,285 — 85,216 62,203 Managed care organization enrollment tax ......... — 10,451,644 — — Other taxes........................................................... — — 1,320 949,136 Intergovernmental................................................ — 2,032,890 — — Licenses and permits ........................................... 5,996,118 661 906,674 14,741 Charges for services ............................................ 144,795 49,955 54,892 2,891 Fees...................................................................... 2,424,275 5,819,124 1,903,300 237,491 Penalties............................................................... 10,645 997 56,456 186 Investment and interest........................................ 462,887 163,282 96,379 105,306 Escheat................................................................. 5 — 58 — Other .................................................................... 86,913 1,849,888 23,291 67,165 Total revenues ............................................. 19,237,656 20,368,441 3,127,586 3,608,994 EXPENDITURES Current: General government......................................... 508,107 373,841 1,043,656 1,189,307 Education.......................................................... 10,633 324,592 29,842 341 Health and human services............................... 5,001 21,211,239 755,083 4,006,562 Natural resources and environmental protection.......................................................... 200,945 483 147,170 81,959 Business, consumer services, and housing....... 115,559 — 855,359 1,035,847 Transportation .................................................. 18,257,547 — 12,115 105 Corrections and rehabilitation.......................... — — — — Capital outlay....................................................... 205,850 682 57,193 — Debt service: Bond, commercial paper, and lease principal retirement ......................................................... 2,229,341 7,566 55,683 191,927 Interest and fiscal charges ................................ 68,514 28,860 4,849 722 Total expenditures ...................................... 21,601,497 21,947,263 2,960,950 6,506,770 Excess (deficiency) of revenues over (under) expenditures.................................. (2,363,841) (1,578,822) 166,636 (2,897,776) OTHER FINANCING SOURCES (USES) General obligation bonds and commercial paper issued ................................................................... 1,692,760 486,525 — 682,475 Refunding debt issued ......................................... 1,574,370 — — 10 Premium on bonds issued.................................... 160,235 3,537 — 1,940 Long-term capital financing issued ..................... 202,706 682 56,892 — Transfers in.......................................................... 2,598 457,974 55,461 1,696,531 Transfers out........................................................ (1,375,694) (271,000) (12,756) (181,123) Total other financing sources (uses).......... 2,256,975 677,718 99,597 2,199,833 Net change in fund balances...................... (106,866) (901,104) 266,233 (697,943) Fund balances – beginning, as previously reported.................................................................. — — 2,552,121 9,110,112 Error corrections.................................................. 166 — — — Change to or within the financial reporting entity .................................................................... 10,776,722 2,035,150 — — Fund balances – beginning, as restated............... 10,776,888 2,035,150 2,552,121 9,110,112 Fund balances – ending ........................................ $ 10,670,022 $ 1,134,046 $ 2,818,354 $ 8,412,169 256 Nonmajor Governmental Funds Special Revenue Golden State Other Total Cigarette, Local Tobacco Special Nonmajor Tobacco, and Revenue and Trial Securitization Revenue Special Cannabis Tax Public Safety Courts Corporation Programs Revenue $ — $ — $ — $ — $ — $ 2,169,875 — 18,775,453 — — 23,478 20,064,664 — — — — — 8,993,704 — — — — — 10,451,644 1,983,510 — — — — 2,933,966 — — 830,670 — — 2,863,560 188 3,549,868 — — 138,296 10,606,546 670 — 47,837 — 316,812 617,852 1,212 — 632,916 — 1,762,939 12,781,257 — 108 194,110 — 725,326 987,828 24,560 31,149 45,762 14,169 157,226 1,100,720 — — 50,302 — — 50,365 1,007 — 112,865 378,034 1,467,357 3,986,520 2,011,147 22,356,578 1,914,462 392,203 4,591,434 77,608,501 369,744 6,250,436 4,377,310 955 2,282,444 16,395,800 91,807 — — — 6,458 463,673 1,726,483 13,891,678 — — 1,063,959 42,660,005 61,686 — — — 76,121 568,364 3,116 1,054 117 — 32,433 2,043,485 16,673 — — — 2,988 18,289,428 12,963 2,292,422 — — — 2,305,385 — — 1,318 — 36,790 301,833 734 — 33,390 252,750 31,705 2,803,096 83 — 20,552 145,327 7,143 276,050 2,283,289 22,435,590 4,432,687 399,032 3,540,041 86,107,119 (272,142) (79,012) (2,518,225) (6,829) 1,051,393 (8,498,618) — — — — — 2,861,760 — — — — — 1,574,380 — — — — — 165,712 — — 1,318 — 36,789 298,387 439,493 20,011 2,611,632 — 110,105 5,393,805 (13,898) 3 — — (115,913) (1,970,381) 425,595 20,014 2,612,950 — 30,981 8,323,663 153,453 (58,998) 94,725 (6,829) 1,082,374 (174,955) 2,755,551 101,949 1,293,199 535,390 5,396,421 21,744,743 222,531 — — — 1,352 224,049 — — — — — 12,811,872 2,978,082 101,949 1,293,199 535,390 5,397,773 34,780,664 $ 3,131,535 $ 42,951 $ 1,387,924 $ 528,561 $ 6,480,147 $ 34,605,709 (continued) 257 State of California Annual Comprehensive Financial Report Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (continued) Nonmajor Governmental Funds Year Ended June 30, 2024 (amounts in thousands) Debt Service Total No Place Transportation Nonmajor Like Home Debt Debt Debt Service Service Service REVENUES Personal income taxes ........................................................................... $ — $ — $ — Sales and use taxes ................................................................................ — — — Motor vehicle excise taxes .................................................................... — — — Managed care organization enrollment tax ........................................... — — — Other taxes............................................................................................. — — — Intergovernmental ................................................................................. — — — Licenses and permits ............................................................................. — — — Charges for services .............................................................................. — — — Fees........................................................................................................ — — — Penalties ................................................................................................ — — — Investment and interest.......................................................................... 5,467 — 5,467 Escheat .................................................................................................. — — — Other...................................................................................................... — — — Total revenues................................................................................ 5,467 — 5,467 EXPENDITURES Current: General government ........................................................................... 290 — 290 Education............................................................................................ — — — Health and human services................................................................. — — — Natural resources and environmental protection................................ — — — Business, consumer services, and housing......................................... — — — Transportation .................................................................................... — — — Corrections and rehabilitation ............................................................ — — — Capital outlay ........................................................................................ — — — Debt service: Bond, commercial paper, and lease principal retirement................... 81,425 737,743 819,168 Interest and fiscal charges .................................................................. 57,745 633,759 691,504 Total expenditures ......................................................................... 139,460 1,371,502 1,510,962 Excess (deficiency) of revenues over (under) expenditures......... (133,993) (1,371,502) (1,505,495) OTHER FINANCING SOURCES (USES) General obligation bonds and commercial paper issued....................... — — — Refunding debt issued ........................................................................... — — — Premium on bonds issued...................................................................... — — — Long-term capital financing issued....................................................... — — — Transfers in............................................................................................ 139,531 1,371,502 1,511,033 Transfers out.......................................................................................... — — — Total other financing sources (uses)............................................. 139,531 1,371,502 1,511,033 Net change in fund balances......................................................... 5,538 — 5,538 Fund balances – beginning, as previously reported............................ 85,714 — 85,714 Error corrections.................................................................................... — — — Change to or within the financial reporting entity ................................ — — — Fund balances – beginning, as restated................................................ 85,714 — 85,714 Fund balances – ending ......................................................................... $ 91,252 $ — $ 91,252 258 Nonmajor Governmental Funds Capital Projects Total Higher Local Other Nonmajor Total Education Hospital Government Capital Capital Nonmajor Construction Construction Construction Projects Projects Governmental $ — $ — $ — $ — $ — $ 2,169,875 — — — — — 20,064,664 — — — — — 8,993,704 — — — — — 10,451,644 — — — — — 2,933,966 — — — — — 2,863,560 — — — 51 51 10,606,597 — — — — — 617,852 — — — — — 12,781,257 — — — — — 987,828 9,099 96 17,019 2,401 28,615 1,134,802 — — — — — 50,365 — — — 6,583 6,583 3,993,103 9,099 96 17,019 9,035 35,249 77,649,217 — 118,414 — 19,827 138,241 16,534,331 — — 729,142 — 729,142 1,192,815 — — — — — 42,660,005 — — — 11,945 11,945 580,309 — — — — — 2,043,485 — — — — — 18,289,428 — — — — — 2,305,385 316,804 856 5,972 18,582 342,214 644,047 531,610 55,875 1,413,300 42,055 2,042,840 5,665,104 4,938 40 11,408 41 16,427 983,981 853,352 175,185 2,159,822 92,450 3,280,809 90,898,890 (844,253) (175,089) (2,142,803) (83,415) (3,245,560) (13,249,673) 464,545 205,200 286,815 104,730 1,061,290 3,923,050 417,375 5 1,234,100 — 1,651,480 3,225,860 54,628 6,170 95,260 439 156,497 322,209 — — — — — 298,387 — — — 41,126 41,126 6,945,964 — — (807) (15) (822) (1,971,203) 936,548 211,375 1,615,368 146,280 2,909,571 12,744,267 92,295 36,286 (527,435) 62,865 (335,989) (505,406) 209,270 39,383 729,308 435,809 1,413,770 23,244,227 — — — 5,508 5,508 229,557 — — — — — 12,811,872 209,270 39,383 729,308 441,317 1,419,278 36,285,656 $ 301,565 $ 75,669 $ 201,873 $ 504,182 $ 1,083,289 $ 35,780,250 (concluded) 259 State of California Annual Comprehensive Financial Report Budgetary Comparison Schedule Nonmajor Governmental Funds1 Year Ended June 30, 2024 (amounts in thousands) Budgeted Actual Variance with Amounts Amounts Final Budget REVENUES Cigarette and tobacco taxes.................................................................... $ 288,446 $ 288,446 $ — Vehicle license fees ............................................................................... 11,359,618 11,359,618 — Personal income tax .............................................................................. 2,169,875 2,169,875 — Retail sales and use taxes ...................................................................... 18,796,909 18,796,909 — Other major taxes and licenses .............................................................. 7,288,036 7,288,036 — Other revenues ....................................................................................... 185,475,407 185,475,407 — Total revenues .................................................................................. 225,378,291 225,378,291 — EXPENDITURES Business, consumer services, and housing ............................................ 1,450,230 1,257,515 (192,715) Transportation ....................................................................................... 21,804,167 19,409,827 (2,394,340) Natural resources and environmental protection ................................... 661,610 604,657 (56,953) Health and human services .................................................................... 197,839,912 196,599,146 (1,240,766) Corrections and rehabilitation ............................................................... 85,658 85,629 (29) Education ............................................................................................... 1,395,003 1,284,975 (110,028) General government: Tax relief ............................................................................................ 6,301 6,301 — Other general government ................................................................. 12,128,836 11,434,748 (694,088) Total expenditures ........................................................................... 235,371,717 230,682,798 (4,688,919) OTHER FINANCING SOURCES (USES) Transfers from other funds .................................................................... — 64,477,302 — Transfers to other funds ......................................................................... — (62,725,533) — Other additions ....................................................................................... — 3,264,407 — Total other financing sources (uses) ............................................... — 5,016,176 — Excess of revenues and other sources over expenditures and other uses........................................................... — (288,331) — Fund balances – beginning, restated ..................................................... — 29,103,304 Fund balances – ending .......................................................................... $ — $ 28,814,973 $ — 1On a budgetary basis, the State’s funds are classified as either governmental cost funds or nongovernmental cost funds. The governmental cost funds include the General Fund, the Environmental and Natural Resources Fund, and many other funds that make up the nonmajor governmental funds reported in these financial statements. Governmental cost funds derive their revenue from taxes, licenses, and fees that support the general operations of the State. The appropriations of the budgetary basis governmental cost funds form the annual appropriated budget of the State. Nongovernmental cost funds consist of funds that derive their receipts from sources other than general and special taxes, licenses, fees, or state revenues and mainly represent the proprietary and fiduciary funds reported in these financial statements. Expenditures of these funds do not represent a cost of government and most of the nongovernmental cost funds are not included in the annual appropriated budget. Therefore, the expenditures of these funds are not included in this schedule. The Federal Fund is one nongovernmental cost fund that is included in the annual appropriated budget. The Budgetary Comparison Schedule for the General Fund, Federal Fund, and Environmental and Natural Resources Fund is included in the Required Supplementary Information section; the remaining governmental cost funds are reflected in this schedule. Additional information on the budgetary basis of accounting can be found in the Management’s Discussion and Analysis, Note 3 – Budgetary and Legal Compliance, notes to the Required Supplementary Information, and in the separately issued Annual Comprehensive Financial Report Supplement. 260 Internal Service Funds Internal service funds account for state activities that provide goods and services to other state departments or agencies on a cost reimbursement basis. Following are brief descriptions of the internal service funds. The Public Buildings Construction Fund accounts for rental charges from the lease of public assets and the related lease-purchase revenue bonds. The Architecture Revolving Fund accounts for charges for the costs of architectural services, construction, and improvements. The Service Revolving Fund accounts for charges for printing and procurement services rendered by the Department of General Services for state departments and other public entities. The Prison Industries Fund accounts for charges for goods produced by inmates in state prisons that are sold to state departments and other governmental entities. The Financial Information Systems Fund accounts for charges for the development and subsequent use of the State’s new financial information system. The Technology Services Revolving Fund accounts for charges for technology services performed for various state, federal, and local government entities by the Department of Technology. The Water Resources Revolving Fund accounts for charges for administrative services related to water delivery provided by the Department of Water Resources to federal, state, and local government agencies. Other internal service program funds account for all other goods and services provided to other agencies, departments, or governments on a cost-reimbursement basis. 261 State of California Annual Comprehensive Financial Report Combining Statement of Net Position Internal Service Funds June 30, 2024 (amounts in thousands) Public Buildings Architecture Construction Revolving ASSETS Current assets: Cash and pooled investments ............................................................................................... $ — $ 1,703,806 Restricted assets: Cash and pooled investments ............................................................................................ 996,378 — Contracts and installments receivable .................................................................................. 613,688 — Receivables (net) .................................................................................................................. — 2,602 Due from other funds............................................................................................................ 254,139 41,342 Due from other governments................................................................................................ — — Prepaid items ........................................................................................................................ — 15,014 Inventories ............................................................................................................................ — — Total current assets ............................................................................................................ 1,864,205 1,762,764 Noncurrent assets: Restricted assets: Cash and pooled investments ............................................................................................ 106,788 — Contracts and installments receivable .................................................................................. 8,309,069 — Receivables (net) .................................................................................................................. — — Interfund receivables ............................................................................................................ — — Loans receivable................................................................................................................... — — Long-term prepaid charges................................................................................................... 110 — Capital assets: Land................................................................................................................................... — — Buildings and other depreciable property.......................................................................... — 211 Intangible assets – amortizable.......................................................................................... — — Less: accumulated depreciation/amortization ................................................................... — (211) Construction/development in progress .............................................................................. 2,069,383 — Total noncurrent assets ...................................................................................................... 10,485,350 — Total assets .................................................................................................................... 12,349,555 1,762,764 DEFERRED OUTFLOWS OF RESOURCES.................................................................... 84,277 — Total assets and deferred outflows of resources...................................................... $ 12,433,832 $ 1,762,764 262 Internal Service Funds Other Financial Technology Water Internal Service Prison Information Services Resources Service Revolving Industries Systems Revolving Revolving Programs Total $ 320,113 $ 428,056 $ 10,575 $ 85,239 $ 122,777 $ 1,076,767 $ 3,747,333 — — — — — — 996,378 — — — — — — 613,688 3,258 2,362 — 4,433 909 61,105 74,669 218,671 2,051 — 69,839 219,148 5,583 810,773 1,814 231 — 3,024 — 18,184 23,253 169,910 1,088 — 637 3,896 1,463 192,008 25,675 51,678 — — 704 18,187 96,244 739,441 485,466 10,575 163,172 347,434 1,181,289 6,554,346 — — — — — — 106,788 — — — — — — 8,309,069 2,289 — — — — 4,632 6,921 — — — 850 — 39,859 40,709 — — — 16 — 4,125 4,141 — — — — — — 110 — — — — — 2,080 2,080 180,242 223,475 2,977 156,071 34,852 83,313 681,141 248,462 11,474 349,281 34,424 12,176 126,842 782,659 (208,489) (168,381) (62,812) (148,615) (42,060) (127,759) (758,327) — 1,137 — — — 1,259 2,071,779 222,504 67,705 289,446 42,746 4,968 134,351 11,247,070 961,945 553,171 300,021 205,918 352,402 1,315,640 17,801,416 309,291 77,943 — 90,236 — 295,887 857,634 $ 1,271,236 $ 631,114 $ 300,021 $ 296,154 $ 352,402 $ 1,611,527 $ 18,659,050 (continued) 263 State of California Annual Comprehensive Financial Report Combining Statement of Net Position (continued) Internal Service Funds June 30, 2024 (amounts in thousands) Public Buildings Architecture Construction Revolving LIABILITIES Current liabilities: Accounts payable.................................................................................................................. $ 43,530 $ 108 Due to other funds................................................................................................................. 23,902 168,913 Due to other governments..................................................................................................... 18,463 — Revenues received in advance .............................................................................................. — 1,592,137 Deposits................................................................................................................................. — — Contracts and notes payable.................................................................................................. — — Interest payable ..................................................................................................................... 105,690 — Current portion of long-term obligations.............................................................................. 642,235 — Other current liabilities ......................................................................................................... 13,836 — Total current liabilities....................................................................................................... 847,656 1,761,158 Noncurrent liabilities: Interfund payables................................................................................................................. 2,709,718 744 Compensated absences payable ............................................................................................ — — Workers’ compensation benefits payable ............................................................................. — 158 Lease liability........................................................................................................................ — — Subscription liability............................................................................................................. — — Revenue bonds payable......................................................................................................... 8,690,370 — Net other postemployment benefits liability......................................................................... — — Net pension liability.............................................................................................................. — — Other noncurrent liabilities ................................................................................................... — — Total noncurrent liabilities................................................................................................. 11,400,088 902 Total liabilities............................................................................................................... 12,247,744 1,762,060 DEFERRED INFLOWS OF RESOURCES........................................................................ 48,769 — Total liabilities and deferred inflows of resources.................................................. 12,296,513 1,762,060 NET POSITION Net investment in capital assets ............................................................................................ — — Restricted – expendable: Construction.................................................................................................................... 137,319 — Total expendable.......................................................................................................... 137,319 — Unrestricted........................................................................................................................... — 704 Total net position (deficit) ............................................................................................ 137,319 704 Total liabilities, deferred inflows of resources, and net position ........................... $ 12,433,832 $ 1,762,764 264 Internal Service Funds Other Financial Technology Water Internal Service Prison Information Services Resources Service Revolving Industries Systems Revolving Revolving Programs Total $ 61,099 $ 12,278 $ 39 $ 35,623 $ 45,152 $ 522,533 $ 720,362 61,187 6,454 — 729 1,756 585,871 848,812 764 — — 1,450 15 5,072 25,764 16,193 3,383 — — 2,343 92,388 1,706,444 1,149 — — — — — 1,149 894 — — 11,671 16,248 — 28,813 — — — — — — 105,690 21,468 3,670 — 5,163 — 24,117 696,653 9 13,228 — — 18 — 27,091 162,763 39,013 39 54,636 65,532 1,229,981 4,160,778 16,896 17 37,650 455 298,150 — 3,063,630 85,497 17,580 — 41,934 — 46,808 191,819 24,526 22,350 — 46 — 1,281 48,361 151,389 — — 1,332 — 54,818 207,539 — — — 1,140 — 401 1,541 — — — — — — 8,690,370 678,631 241,558 — 250,255 — 460,819 1,631,263 545,971 84,305 — 114,397 — 602,790 1,347,463 — — — 9,097 3,048 — 12,145 1,502,910 365,810 37,650 418,656 301,198 1,166,917 15,194,131 1,665,673 404,823 37,689 473,292 366,730 2,396,898 19,354,909 175,186 73,645 — 65,090 — 124,260 486,950 1,840,859 478,468 37,689 538,382 366,730 2,521,158 19,841,859 220,025 67,705 289,529 16,554 — 28,045 621,858 — — — — — — 137,319 — — — — — — 137,319 (789,648) 84,941 (27,197) (258,782) (14,328) (937,676) (1,941,986) (569,623) 152,646 262,332 (242,228) (14,328) (909,631) (1,182,809) $ 1,271,236 $ 631,114 $ 300,021 $ 296,154 $ 352,402 $ 1,611,527 $ 18,659,050 (concluded) 265 State of California Annual Comprehensive Financial Report Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds Year Ended June 30, 2024 (amounts in thousands) Public Buildings Architecture Construction Revolving OPERATING REVENUES Services and sales .................................................................................................................... $ — $ 1,297,378 Investment and interest ........................................................................................................... 54,523 — Rent.......................................................................................................................................... 319,198 — Total operating revenues.................................................................................................... 373,721 1,297,378 OPERATING EXPENSES Personal services ..................................................................................................................... — 1,581 Supplies .................................................................................................................................. — — Services and charges ............................................................................................................... 9,548 1,294,662 Depreciation............................................................................................................................. — — Interest expense ....................................................................................................................... 331,936 — Amortization of long-term prepaid charges ............................................................................ 33 — Total operating expenses ................................................................................................... 341,517 1,296,243 Operating income (loss) .................................................................................................... 32,204 1,135 NONOPERATING REVENUES (EXPENSES) Investment and interest income .............................................................................................. — — Interest expense and fiscal charges ......................................................................................... — — Other ........................................................................................................................................ (68,171) — Total nonoperating revenues (expenses)........................................................................... (68,171) — Income (loss) before transfers ........................................................................................... (35,967) 1,135 Loss on early extinguishment of debt ..................................................................................... (3,911) — Transfers in ............................................................................................................................. — — Transfers out ........................................................................................................................... — — Change in net position........................................................................................................ (39,878) 1,135 Total net position (deficit) – beginning, as previously reported ........................................... 177,197 (431) Error corrections...................................................................................................................... — — Total net position (deficit) – beginning, as restated ............................................................... 177,197 (431) Total net position (deficit) – ending ........................................................................................ $ 137,319 $ 704 266 Internal Service Funds Other Financial Technology Water Internal Service Prison Information Services Resources Service Revolving Industries Systems Revolving Revolving Programs Total $ 866,665 $ 362,008 $ — $ 562,405 $ 748,131 $ 1,327,199 $ 5,163,786 45 — — — — 73 54,641 1,108 — — — — 220 320,526 867,818 362,008 — 562,405 748,131 1,327,492 5,538,953 427,128 115,258 — 41,291 — 377,824 963,082 — 4,202 — — 23,389 — 27,591 343,023 226,623 275 398,077 716,454 1,035,299 4,023,961 40,142 10,698 28,960 21,475 3,983 28,249 133,507 — — — 636 — — 332,572 — — — — — — 33 810,293 356,781 29,235 461,479 743,826 1,441,372 5,480,746 57,525 5,227 (29,235) 100,926 4,305 (113,880) 58,207 — 1,148 — 1,387 — 5,695 8,230 (3,336) (95) — (384) — (11,964) (15,779) — (3,615) — (438) — — (72,224) (3,336) (2,562) — 565 — (6,269) (79,773) 54,189 2,665 (29,235) 101,491 4,305 (120,149) (21,566) — — — — — — (3,911) 46,321 — — 6,515 — 5,500 58,336 — — — — — (56,346) (56,346) 100,510 2,665 (29,235) 108,006 4,305 (170,995) (23,487) (669,839) 149,981 291,567 (349,112) (18,633) (737,626) (1,156,896) (294) — — (1,122) — (1,010) (2,426) (670,133) 149,981 291,567 (350,234) (18,633) (738,636) (1,159,322) $ (569,623) $ 152,646 $ 262,332 $ (242,228) $ (14,328) $ (909,631) $ (1,182,809) 267 State of California Annual Comprehensive Financial Report Combining Statement of Cash Flows Internal Service Funds Year Ended June 30, 2024 (amounts in thousands) Public Buildings Architecture Construction Revolving CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers ....................................................................................................... $ 11,177 $ — Receipts from interfund services provided ........................................................................... 916,083 1,413,246 Payments to suppliers ........................................................................................................... (6,957) (1,294,539) Payments to employees ......................................................................................................... — (1,713) Other receipts (payments)...................................................................................................... (371,879) (954) Net cash provided by (used in) operating activities ....................................................... 548,424 116,040 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Receipts from / (payment on) interfund receivables.............................................................. — — Proceeds from / (payment on) loans and interfund borrowings............................................ (502,184) (2,275) Interest paid ........................................................................................................................... — — Transfers in ........................................................................................................................... 14,005 — Transfers out .......................................................................................................................... (180) — Net cash provided by (used in) noncapital financing activities..................................... (488,359) (2,275) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets .................................................................................................. (1,137,426) — Proceeds from sale of capital assets ...................................................................................... — — Proceeds from long-term capital financing............................................................................ — — Payment on long-term capital financing................................................................................ — — Proceeds from revenue bonds ................................................................................................ 2,066,784 — Retirement of revenue bonds ................................................................................................. (1,186,620) — Interest paid............................................................................................................................ — — Net cash used in capital and related financing activities ............................................... (257,262) — CASH FLOWS FROM INVESTING ACTIVITIES Earnings on investments ........................................................................................................ — — Net cash provided by investing activities ........................................................................ — — Net increase (decrease) in cash and pooled investments.................................................. (197,197) 113,765 Cash and pooled investments – beginning ........................................................................... 1,300,363 1,590,041 Cash and pooled investments – ending................................................................................. $ 1,103,166 $ 1,703,806 268 Internal Service Funds Other Financial Technology Water Internal Service Prison Information Services Resources Service Revolving Industries Systems Revolving Revolving Programs Total $ — $ — $ — $ — $ — $ — $ 11,177 865,516 359,927 1,764 551,651 783,445 1,589,476 6,481,108 (377,039) (211,350) — (399,728) (724,799) (850,359) (3,864,771) (390,004) (113,979) — (120,806) — (359,694) (986,196) (13,799) 5 — 7,760 (6,833) 12,888 (372,812) 84,674 34,603 1,764 38,877 51,813 392,311 1,268,506 — (1,085) — (866) — 11,161 9,210 (11,453) — — (4,101) — — (520,013) — (95) — — — (4) (99) 47,113 — — 6,515 — 5,500 73,133 (792) — — — — (56,346) (57,318) 34,868 (1,180) — 1,548 — (39,689) (495,087) (21,054) (9,854) — (14,187) (1,446) (47,295) (1,231,262) 4,650 28 — 576 — 3,538 8,792 586 — — — — 6,710 7,296 (19,673) — — (4,177) — (3,906) (27,756) — — — — — — 2,066,784 — — — — — — (1,186,620) (3,336) — — (384) — (11,960) (15,680) (38,827) (9,826) — (18,172) (1,446) (52,913) (378,446) — 840 — 1,387 — 5,695 7,922 — 840 — 1,387 — 5,695 7,922 80,715 24,437 1,764 23,640 50,367 305,404 402,895 239,398 403,619 8,811 61,599 72,410 771,363 4,447,604 $ 320,113 $ 428,056 $ 10,575 $ 85,239 $ 122,777 $ 1,076,767 $ 4,850,499 (continued) 269 State of California Annual Comprehensive Financial Report Combining Statement of Cash Flows (continued) Internal Service Funds Year Ended June 30, 2024 (amounts in thousands) Public Buildings Architecture Construction Revolving RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Operating income (loss) ........................................................................................................... $ 32,204 $ 1,135 Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation .......................................................................................................................... — — Amortization of premiums and discounts ............................................................................. (122,430) — Amortization of long-term prepaid charges .......................................................................... 33 — Other...................................................................................................................................... 6,946 — Change in account balances: Receivables......................................................................................................................... — (992) Due from other funds.......................................................................................................... (29,587) 26,059 Due from other governments.............................................................................................. — — Prepaid items ...................................................................................................................... — — Inventories .......................................................................................................................... — — Contracts and installments receivable ................................................................................ 632,309 — Leases receivable................................................................................................................ — — Deferred outflow of resources ............................................................................................ — — Accounts payable................................................................................................................ 5,595 123 Due to other funds .............................................................................................................. 10,801 10,100 Due to other governments................................................................................................... — (954) Deposits .............................................................................................................................. — — Contracts and notes payable ............................................................................................... — — Interest payable................................................................................................................... 7,933 — Revenues received in advance............................................................................................ 940 80,701 Other current liabilities....................................................................................................... 3,680 — Compensated absences payable.......................................................................................... — (290) Other noncurrent liabilities................................................................................................. — 158 Deferred inflow of resources .............................................................................................. — — Total adjustments............................................................................................................. 516,220 114,905 Net cash provided by (used in) operating activities ............................................................ $ 548,424 $ 116,040 Noncash investing, capital, and financing activities Transfers of construction work-in-progress to state departments ........................................ $ 84,214 $ — Miscellaneous noncash activities transactions ...................................................................... — — 270 Internal Service Funds Other Financial Technology Water Internal Service Prison Information Services Resources Service Revolving Industries Systems Revolving Revolving Programs Total $ 57,525 $ 5,227 $ (29,235) $ 100,926 $ 4,305 $ (113,880) $ 58,207 40,142 10,698 28,960 21,475 3,983 28,249 133,507 — — — — — — (122,430) — — — — — — 33 — 5 — — — — 6,951 (1,733) 4,015 — 986 539 66,515 69,330 (17,938) (1,445) — (9,715) 32,430 (23,813) (24,009) 155 (34) — 13,763 — 1,927 15,811 (3,526) 338 2,000 55 (674) 2 (1,805) (1,343) 6,993 — — 17 1,759 7,426 — — — — — — 632,309 2,624 — — — — 155 2,779 (10,285) (3,142) — 28,640 — 3,690 18,903 (29,147) (732) 39 (1,070) 15,701 183,179 173,688 15,646 3,708 — (2,025) 1,149 203,582 242,961 (2,694) — — 1,450 7 (805) (2,996) — — — — — 3,356 3,356 (457) — — (2,082) (3,016) — (5,555) — — — — — — 7,933 (901) 449 — — 1,196 15,545 97,930 (10,803) 10,282 — — 2 8,410 11,571 (11,629) 3,046 — (2,561) — 2,150 (9,284) 88,560 43,956 — (91,895) (3,826) 36,429 73,382 (29,522) (48,761) — (19,070) — (24,139) (121,492) 27,149 29,376 30,999 (62,049) 47,508 506,191 1,210,299 $ 84,674 $ 34,603 $ 1,764 $ 38,877 $ 51,813 $ 392,311 $ 1,268,506 (concluded) $ — $ — $ — $ — $ — $ — $ 84,214 — 94 — — — — 94 271 State of California Annual Comprehensive Financial Report This page intentionally left blank 272 Nonmajor Enterprise Funds Enterprise funds account for operations that are financed and operated in a manner similar to private business enterprises, in which the costs of providing goods or services to the general public on a continuing basis are intended to be financed or recovered primarily through user charges. Following are brief descriptions of nonmajor enterprise funds. The State Water Pollution Control Revolving Fund accounts for loans to finance the construction of publicly owned water pollution control facilities. The Safe Drinking Water State Revolving Fund accounts for loans to finance the construction of publicly owned water systems for drinking water infrastructure projects. The Housing Loan Fund accounts for financing and contracts for the sale of properties to eligible California veterans. The Electric Power Fund accounts for assistance in mitigating the effects of a statewide energy supply emergency. Other enterprise program funds account for all other goods or services provided to the general public on a continuing basis when all or most of the cost involved is to be financed by user charges, or when periodic measurement of the results of operations is appropriate for management control, accountability, capital maintenance, public policy, or other purposes. 273 State of California Annual Comprehensive Financial Report Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2024 (amounts in thousands) State Water Safe Drinking Pollution Control Water State Revolving Revolving ASSETS Current assets: Cash and pooled investments ........................................................................................ $ 406,224 $ 113,738 Restricted assets: Cash and pooled investments ..................................................................................... 650,137 62,861 Due from other governments...................................................................................... 218,133 19,925 Receivables (net)........................................................................................................... — 6,373 Due from other funds .................................................................................................... 14,383 11,098 Due from other governments......................................................................................... 50,710 47,087 Prepaid items................................................................................................................. — — Inventories..................................................................................................................... — — Total current assets ..................................................................................................... 1,339,587 261,082 Noncurrent assets: Restricted assets: Loans receivable......................................................................................................... 4,814,573 693,828 Investments.................................................................................................................... — — Interfund receivables..................................................................................................... 2,787 — Loans receivable............................................................................................................ 864,625 1,545,404 Capital assets: Land............................................................................................................................ — — Buildings and other depreciable property................................................................... — — Intangible assets – amortizable................................................................................... — — Less: accumulated depreciation/amortization ............................................................ — — Construction/development in progress ....................................................................... — — Other noncurrent assets ................................................................................................. — — Total noncurrent assets ............................................................................................... 5,681,985 2,239,232 Total assets.............................................................................................................. 7,021,572 2,500,314 DEFERRED OUTFLOWS OF RESOURCES ........................................................... — — Total assets and deferred outflows of resources............................................... $ 7,021,572 $ 2,500,314 274 Nonmajor Enterprise Funds Other Housing Enterprise Loan Electric Power Programs Total $ 194,922 $ 1,377 $ 272,128 $ 988,389 — 66,745 — 779,743 — — — 238,058 29,163 103,877 592 140,005 — — 5,225 30,706 1,871 — 70 99,738 — — 12 12 — — 9,281 9,281 225,956 171,999 287,308 2,285,932 — — — 5,508,401 14,099 — — 14,099 — — 277 3,064 962,532 — 40,880 3,413,441 444 — 829 1,273 16,260 — 10,510 26,770 — 636 26,728 27,364 (16,260) (181) (16,861) (33,302) — — 111 111 7,866 — — 7,866 984,941 455 62,474 8,969,087 1,210,897 172,454 349,782 11,255,019 5,489 8,262 18,997 32,748 $ 1,216,386 $ 180,716 $ 368,779 $ 11,287,767 (continued) 275 State of California Annual Comprehensive Financial Report Combining Statement of Net Position (continued) Nonmajor Enterprise Funds June 30, 2024 (amounts in thousands) State Water Safe Drinking Pollution Control Water State Revolving Revolving LIABILITIES Current liabilities: Accounts payable .......................................................................................................... $ — $ — Due to other funds......................................................................................................... 2,266 9,461 Due to other governments ............................................................................................. — — Revenues received in advance....................................................................................... — — Interest payable ............................................................................................................. 19,398 716 Current portion of long-term obligations ...................................................................... 116,837 7,826 Total current liabilities................................................................................................ 138,501 18,003 Noncurrent liabilities: Interfund payables......................................................................................................... — — Compensated absences payable .................................................................................... — — Workers’ compensation benefits payable ..................................................................... — — Lease liability ................................................................................................................ — — Subscription liability ..................................................................................................... — — General obligation bonds payable................................................................................. — — Revenue bonds payable................................................................................................. 1,677,918 56,447 Net other postemployment benefits liability ................................................................. — — Net pension liability ...................................................................................................... — — Other noncurrent liabilities............................................................................................ — — Total noncurrent liabilities.......................................................................................... 1,677,918 56,447 Total liabilities........................................................................................................ 1,816,419 74,450 DEFERRED INFLOWS OF RESOURCES ............................................................... — — Total liabilities and deferred inflows of resources ........................................................................................................ 1,816,419 74,450 NET POSITION Net investment in capital assets .................................................................................... — — Restricted – expendable: Debt service ................................................................................................................ 399,410 — Security for revenue bonds......................................................................................... 3,218,553 — Other purposes............................................................................................................ — 2,425,864 Total expendable...................................................................................................... 3,617,963 2,425,864 Unrestricted ................................................................................................................... 1,587,190 — Total net position.................................................................................................... 5,205,153 2,425,864 Total liabilities, deferred inflows of resources, and net position .................... $ 7,021,572 $ 2,500,314 276 Nonmajor Enterprise Funds Other Housing Enterprise Loan Electric Power Programs Total $ — $ 18,201 $ 7,624 $ 25,825 351 — 736 12,814 332 — 23 355 — — 26 26 25,311 — — 45,425 30,005 461 2,621 157,750 55,999 18,662 11,030 242,195 81 — 27,720 27,801 — — 10,194 10,194 — — 4,428 4,428 — 311 17,252 17,563 — 2 — 2 635,759 — — 635,759 373,601 — — 2,107,966 7,316 6,011 23,542 36,869 12,745 5,419 29,859 48,023 3,544 — — 3,544 1,033,046 11,743 112,995 2,892,149 1,089,045 30,405 124,025 3,134,344 4,354 27,203 6,967 38,524 1,093,399 57,608 130,992 3,172,868 — — 1,377 1,377 — — — 399,410 — — — 3,218,553 122,987 123,108 167,394 2,839,353 122,987 123,108 167,394 6,457,316 — — 69,016 1,656,206 122,987 123,108 237,787 8,114,899 $ 1,216,386 $ 180,716 $ 368,779 $ 11,287,767 (concluded) 277 State of California Annual Comprehensive Financial Report Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Nonmajor Enterprise Funds Year Ended June 30, 2024 (amounts in thousands) State Water Safe Drinking Pollution Control Water State Revolving Revolving OPERATING REVENUES Services and sales.............................................................................................................. $ 10,532 $ — Investment and interest...................................................................................................... 60,201 29,738 Other ................................................................................................................................. — — Total operating revenues.............................................................................................. 70,733 29,738 OPERATING EXPENSES Personal services ............................................................................................................... 6,150 23,415 Supplies ............................................................................................................................. — — Services and charges ......................................................................................................... 3,293 — Depreciation ...................................................................................................................... — — Interest expense................................................................................................................. — — Other.................................................................................................................................. 2,964 9,473 Total operating expenses.............................................................................................. 12,407 32,888 Operating income (loss) ............................................................................................... 58,326 (3,150) NONOPERATING REVENUES (EXPENSES) Donations and grants......................................................................................................... 475,509 198,672 Investment and interest income......................................................................................... 35,401 6,279 Interest expense and fiscal charges ................................................................................... (50,123) (1,476) Other.................................................................................................................................. — — Total nonoperating revenues (expenses)..................................................................... 460,787 203,475 Income (loss) before capital contributions and transfers ............................................................................................................... 519,113 200,325 Transfers in........................................................................................................................ — — Transfers out...................................................................................................................... — — Change in net position 519,113 200,325 Total net position – beginning, as previously reported .................................................. 4,686,040 2,225,539 Total net position – ending................................................................................................ $ 5,205,153 $ 2,425,864 278 Nonmajor Enterprise Funds Other Housing Enterprise Loan Electric Power Programs Total $ 1,907 $ 182 $ 125,994 $ 138,615 61,842 — 2,493 154,274 2,736 — 2,316 5,052 66,485 182 130,803 297,941 4,830 — 32,019 66,414 — — 69,307 69,307 13,304 4,986 12,024 33,607 — 159 4,826 4,985 34,306 — — 34,306 — — — 12,437 52,440 5,145 118,176 221,056 14,045 (4,963) 12,627 76,885 — — — 674,181 — 2,433 7,708 51,821 — (1,000) (86) (52,685) 440 1,263 — 1,703 440 2,696 7,622 675,020 14,485 (2,267) 20,249 751,905 — — 2,000 2,000 — — — — 14,485 (2,267) 22,249 753,905 108,502 125,375 215,538 7,360,994 $ 122,987 $ 123,108 $ 237,787 $ 8,114,899 279 State of California Annual Comprehensive Financial Report Combining Statement of Cash Flows Nonmajor Enterprise Funds Year Ended June 30, 2024 (amounts in thousands) State Water Safe Drinking Pollution Control Water State Revolving Revolving CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers/employers ............................................................................ $ 50,823 $ 27,557 Receipts from interfund services provided................................................................... — — Payments to suppliers................................................................................................... (11,814) (43,582) Payments to employees ................................................................................................ — — Payments for interfund services used........................................................................... (236) — Other receipts (payments) ............................................................................................ (583,085) (166,030) Net cash provided by (used in) operating activities.............................................. (544,312) (182,055) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Proceeds from/(payment on) loans and interfund borrowings..................................... 191 — Retirement of general obligation bonds ....................................................................... — — Proceeds from revenue bonds ...................................................................................... 301,544 — Retirement of revenue bonds........................................................................................ (94,250) (6,410) Interest paid.................................................................................................................. (68,548) (3,160) Transfers in................................................................................................................... — — Grants received............................................................................................................. 478,089 209,669 Net cash provided by (used in) noncapital financing activities ........................... 617,026 200,099 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets......................................................................................... — — Proceeds from sale of capital assets ............................................................................. — — Payment on long-term capital financing ...................................................................... — — Interest paid.................................................................................................................. — — Net cash used in capital and related financing activities ..................................... — — CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments............................................................................................... — — Earnings on investments............................................................................................... 30,855 5,358 Net cash provided by (used in) investing activities............................................... 30,855 5,358 Net increase (decrease) in cash and pooled investments ........................................ 103,569 23,402 Cash and pooled investments – beginning .................................................................. 952,792 153,197 Cash and pooled investments – ending........................................................................ $ 1,056,361 $ 176,599 280 Nonmajor Enterprise Funds Other Housing Enterprise Loan Electric Power Programs Total $ 134,928 $ — $ 31,180 $ 244,488 — 182 105,706 105,888 (4,248) (488) (90,145) (150,277) (4,828) (4,856) (29,548) (39,232) (81) — (829) (1,146) (231,262) 8,804 (14,085) (985,658) (105,491) 3,642 2,279 (825,937) 82 — 9,521 9,794 (28,220) — — (28,220) — — — 301,544 (31,510) — — (132,170) — — (6) (71,714) — — 2,000 2,000 — — — 687,758 (59,648) — 11,515 768,992 — — (2,456) (2,456) — — 18 18 — (177) (575) (752) — — (80) (80) — (177) (3,093) (3,270) (2,807) — — (2,807) — 2,657 7,708 46,578 (2,807) 2,657 7,708 43,771 (167,946) 6,122 18,409 (16,444) 362,868 62,000 253,719 1,784,576 $ 194,922 $ 68,122 $ 272,128 $ 1,768,132 (continued) 281 State of California Annual Comprehensive Financial Report Combining Statement of Cash Flows (continued) Nonmajor Enterprise Funds Year Ended June 30, 2024 (amounts in thousands) State Water Safe Drinking Pollution Control Water State Revolving Revolving RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Operating income (loss) .................................................................................................. $ 58,326 $ (3,150) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation ................................................................................................................. — — Provisions and allowances ........................................................................................... — — Amortization of premiums and discounts .................................................................... — — Other............................................................................................................................. (12,192) — Change in account balances: Receivables................................................................................................................ — — Due from other funds................................................................................................. (236) — Due from other governments..................................................................................... (7,246) (2,181) Prepaid items ............................................................................................................. — — Inventories ................................................................................................................. — — Other current assets ................................................................................................... — — Loans receivable........................................................................................................ (583,557) — Deferred outflow of resources ................................................................................... — (166,030) Leases receivable....................................................................................................... — — Accounts payable....................................................................................................... — (10,694) Due to other funds ..................................................................................................... 593 — Due to other governments.......................................................................................... — — Interest payable.......................................................................................................... — — Revenues received in advance................................................................................... — — Other current liabilities.............................................................................................. — — Compensated absences payable................................................................................. — — Other noncurrent liabilities........................................................................................ — — Deferred inflows of resources.................................................................................... — — Total adjustments.................................................................................................... (602,638) (178,905) Net cash provided by (used in) operating activities ................................................... $ (544,312) $ (182,055) Noncash investing, capital, and financing activities Miscellaneous noncash activities transactions ............................................................. $ — $ — 282 Nonmajor Enterprise Funds Other Housing Electric Enterprise Loan Power Programs Total $ 14,045 $ (4,963) $ 12,627 $ 76,885 — 159 4,826 4,985 (128) — — (128) (1,663) — — (1,663) 347 8,804 — (3,041) 6,573 — (9) 6,564 — — 1,041 805 — — 38 (9,389) — — 18 18 — — (2,949) (2,949) 2,199 — — 2,199 (130,953) — 4,137 (710,373) (4,548) 700 (2,173) (172,051) — (1,000) — (1,000) (900) (29) 1,651 (9,972) (1,653) — 91 (969) — — (21) (21) 10,534 — — 10,534 — — (6) (6) 351 — — 351 — — (2,809) (2,809) (719) 62 (13,771) (14,428) 1,024 (91) (412) 521 (119,536) 8,605 (10,348) (902,822) $ (105,491) $ 3,642 $ 2,279 $ (825,937) (concluded) $ 3,299 $ — $ — $ 3,299 283 State of California Annual Comprehensive Financial Report This page intentionally left blank 284 Pension and Other Employee Benefit Trust Funds Fiduciary Funds and Similar Component Units – Pension and Other Employee Benefit Trust Funds Pension and other employee benefit trust funds account for transactions, assets, liabilities, and net position available for pension and other employee benefits of the two public employees’ retirement systems that are fiduciary component units, and for other primary government employee benefit programs. Following are brief descriptions of pension and other employee benefit trust funds. Defined Benefit Pension Plans are pension plans that provide defined benefit pensions to employees after separation from service: The Public Employees’ Retirement Fund is administered by the California Public Employees’ Retirement System (CalPERS) and accounts for the employee and employer contributions of the agent and cost-sharing multiple-employer retirement plans that provide pension benefits to employees of the State of California, non-teaching school employees, and employees of California public agencies. The State Teachers’ Retirement Fund is administered by the California State Teachers’ Retirement System (CalSTRS) and accounts for the employee, employer, and primary government contributions of the cost-sharing multiple-employer retirement plan that provides pension benefits to teachers and certain other employees of the California public school system. The Judges’ Retirement Fund is administered by CalPERS and accounts for the employee and employer contributions of the single-employer retirement plan that provides pension benefits to judges of the California Supreme Court, courts of appeal, and superior courts who were appointed or elected prior to November 9, 1994. The Judges’ Retirement Fund II is administered by CalPERS and accounts for the employee and employer contributions of the single-employer retirement plan that provides pension benefits to judges of the California Supreme Court, courts of appeal, and superior courts who were appointed or elected on or subsequent to November 9, 1994. The Legislators’ Retirement Fund is administered by CalPERS and accounts for the employee and employer contributions of the single-employer retirement plan that provides pension benefits to members of the Legislature serving prior to November 7, 1990, constitutional officers, and legislative statutory officers who elect to participate in the plan. (continued) 285 State of California Annual Comprehensive Financial Report (continued) The Defined Benefit Other Postemployment Benefits (OPEB) Plan provides defined benefit OPEB, other than pensions, to employees after separation from service: The Annuitants’ Health Care Coverage Fund is administered by CalPERS as the California Employers’ Retiree Benefit Trust Fund (CERBTF), an agent multiple-employer plan for employers to prefund health, dental, and other nonpension postemployment benefits for state and local government annuitants, and to pay related administrative costs. The Deferred Compensation Fund accounts for monies withheld from the salaries of participants per Internal Revenue Code sections 401(k), 457, and 403(b). The monies are invested until the employee retires or resigns, at which time all money withdrawn, including investment income, is subject to income taxes, with the exclusion of eligible Roth 457 contributions and earnings, which are protected from income tax during distribution. Other pension and other employee benefit trust funds account for funds contributed to smaller retirement plans and programs that are not defined benefit pension plans including the Teachers’ Health Benefits Fund, Supplemental Contributions Program Fund, Boxers’ Pension Fund, and Flexelect Benefit Fund. 286 Pension and Other Employee Benefit Trust Funds This page intentionally left blank 287 State of California Annual Comprehensive Financial Report Combining Statement of Fiduciary Net Position Fiduciary Funds and Similar Component Units – Pension and Other Employee Benefit Trust Funds June 30, 2024 (amounts in thousands) Defined Benefit Public State Employees’ Teachers’ Judges’ Retirement Retirement Retirement ASSETS Cash and pooled investments............................................................................ $ 4,417,279 $ 330,069 $ 4,954 Investments, at fair value: Short-term....................................................................................................... 17,311,934 11,633,279 52,486 Equity securities ............................................................................................. 204,590,819 138,429,197 — Debt securities ................................................................................................ 166,380,465 51,262,571 — Real estate....................................................................................................... 65,737,642 43,431,207 — Securities lending collateral............................................................................ 8,903,958 32,564,283 — Other ............................................................................................................... 94,294,392 100,721,524 — Total investments ......................................................................................... 557,219,210 378,042,061 52,486 Receivables (net)............................................................................................... 34,167,951 6,351,002 1,419 Due from other funds........................................................................................ 1,140,033 882 183 Due from other governments ............................................................................ — 13 — Loans receivable ............................................................................................... — 6,256,014 — Other assets ....................................................................................................... 204,623 814,350 — Total assets .................................................................................................... 597,149,096 391,794,391 59,042 DEFERRED OUTFLOWS OF RESOURCES............................................... 221,564 165,165 1,017 Total assets and deferred outflows of resources...................................... 597,370,660 391,959,556 60,059 LIABILITIES Accounts payable.............................................................................................. 11,180 6,595,949 333 Benefits payable................................................................................................ 2,776,010 2,099,378 — Securities lending obligations........................................................................... 21,221,026 32,573,328 — Loans payable ................................................................................................... — 5,785,091 — Other liabilities.................................................................................................. 66,587,698 3,564,306 7,403 Total liabilities............................................................................................... 90,595,914 50,618,052 7,736 DEFERRED INFLOWS OF RESOURCES................................................... 151,780 323,828 689 Total liabilities and deferred inflows of resources .................................. 90,747,694 50,941,880 8,425 NET POSITION Restricted: Pension benefits ................................................................................................ 506,622,966 341,017,676 51,634 Other postemployment benefits ........................................................................ — — — Deferred compensation participants ................................................................. — — — Individuals, organizations, or other governments............................................. — — — Total net position .......................................................................................... $ 506,622,966 $ 341,017,676 $ 51,634 288 Pension and Other Employee Benefit Trust Funds Defined Benefit Other Pension Plans OPEB Plan Pension and Other Judges’ Legislators’ Annuitants’ Health Deferred Employee Retirement II Retirement Care Coverage Compensation Benefit Trust Total $ 5,127 $ 2,024 $ 20,123 $ 21,212 $ 13,537 $ 4,814,325 266 14 45,923 2,935,310 15,955 31,995,167 1,947,765 32,465 14,501,366 17,095,266 63,631 376,660,509 675,806 60,058 6,414,877 2,715,777 41,177 227,550,731 — — — — — 109,168,849 — — — — — 41,468,241 — — — 5,333,138 — 200,349,054 2,623,837 92,537 20,962,166 28,079,491 120,763 987,192,551 11,363 35 119,541 44,018 6,809 40,702,138 116 — 248 50 20 1,141,532 — — — — — 13 — — — 8,514 — 6,264,528 — — — 2 — 1,018,975 2,640,443 94,596 21,102,078 28,153,287 141,129 1,041,134,062 1,205 319 2,413 1,880 447 394,010 2,641,648 94,915 21,104,491 28,155,167 141,576 1,041,528,072 438 125 1,538 3,261 6,504 6,619,328 — 641 104,235 109 540 4,980,913 — — — — — 53,794,354 — — — — — 5,785,091 6,738 1,500 9,405 17,733 2,809 70,197,592 7,176 2,266 115,178 21,103 9,853 141,377,278 822 174 2,049 2,638 1,068 483,048 7,998 2,440 117,227 23,741 10,921 141,860,326 2,633,650 92,475 — — 120,309 850,538,710 — — 20,987,264 — — 20,987,264 — — — 28,131,426 — 28,131,426 — — — — 10,346 10,346 $ 2,633,650 $ 92,475 $ 20,987,264 $ 28,131,426 $ 130,655 $ 899,667,746 289 State of California Annual Comprehensive Financial Report Combining Statement of Changes in Fiduciary Net Position Fiduciary Funds and Similar Component Units – Pension and Other Employee Benefit Trust Funds Year Ended June 30, 2024 (amounts in thousands) Defined Benefit Public State Employees’ Teachers’ Judges’ Retirement Retirement Retirement ADDITIONS Contributions: Employer ..................................................................................................... $ 24,872,799 $ 8,585,432 $ 212,532 Plan member................................................................................................ 6,389,252 4,734,724 1,481 Non-employer.............................................................................................. — 3,945,974 — Total contributions ................................................................................... 31,262,051 17,266,130 214,013 Investment income: Net appreciation (depreciation) in fair value of investments ...................... 38,350,526 19,748,609 — Interest, dividends, and other investment income....................................... 8,384,128 8,538,398 3,428 Less: investment expense............................................................................ (2,404,885) (2,113,947) (12) Net investment income............................................................................. 44,329,769 26,173,060 3,416 Other............................................................................................................... 13,996 391,348 2,831 Total additions 75,605,816 43,830,538 220,260 DEDUCTIONS Distributions to beneficiaries ......................................................................... 32,815,645 19,046,225 212,542 Refunds of contributions ................................................................................ 366,423 141,857 — Administrative expense.................................................................................. 378,941 209,788 2,411 Interest expense.............................................................................................. — 333,502 — Payments to and for depositors ...................................................................... — — — Total deductions ........................................................................................ 33,561,009 19,731,372 214,953 Change in net position.............................................................................. 42,044,807 24,099,166 5,307 Net position – beginning, as previously reported.......................................... 464,578,159 316,918,510 46,327 Net position – ending ....................................................................................... $ 506,622,966 $ 341,017,676 $ 51,634 290 Pension and Other Employee Benefit Trust Funds Defined Benefit Other Pension Plans OPEB Plan Pension and Other Judges’ Legislators’ Annuitants’ Health Deferred Employee Retirement II Retirement Care Coverage Compensation Benefit Trust Total $ 96,316 $ — $ 5,548,531 $ 3,470 $ 23,590 $ 39,342,670 42,936 — — 1,064,228 46,611 12,279,232 — — — — — 3,945,974 139,252 — 5,548,531 1,067,698 70,201 55,567,876 268,015 5,030 1,940,405 3,447,453 11,750 63,771,788 594 19 5,427 55,439 502 16,987,935 (1,193) (145) (8,388) (806) (134) (4,529,510) 267,416 4,904 1,937,444 3,502,086 12,118 76,230,213 5 1 16,127 26,942 78 451,328 406,673 4,905 7,502,102 4,596,726 82,397 132,249,417 98,912 7,436 3,759,272 132,572 67,653 56,140,257 256 — — 7,977 — 516,513 2,637 663 5,977 29,660 696 630,773 — — — 5 1 333,508 — — 408,933 711,212 6,039 1,126,184 101,805 8,099 4,174,182 881,426 74,389 58,747,235 304,868 (3,194) 3,327,920 3,715,300 8,008 73,502,182 2,328,782 95,669 17,659,344 24,416,126 122,647 826,165,564 $ 2,633,650 $ 92,475 $ 20,987,264 $ 28,131,426 $ 130,655 $ 899,667,746 291 State of California Annual Comprehensive Financial Report This page intentionally left blank 292 Private Purpose Trust Funds Private purpose trust funds account for all trust arrangements, other than those properly reported in pension and other employee benefit trust funds or investment trust funds, under which both principal and income benefit individuals, private organizations, or other governments. Following are brief descriptions of private purpose trust funds. The Scholarshare Program Trust Fund accounts for money received from participants to fund their beneficiaries’ higher-education expenses at certain postsecondary educational institutions. The Unclaimed Property Fund accounts for unclaimed money and properties held in trust by the State. Other private purpose trust funds account for other assets held in a trustee capacity when both principal and income benefit individuals, private organizations, or other governments. 293 State of California Annual Comprehensive Financial Report Combining Statement of Fiduciary Net Position Private Purpose Trust Funds June 30, 2024 (amounts in thousands) Scholarshare Other Private Program Unclaimed Purpose Trust Property Trust Total ASSETS Cash and pooled investments ...................................... $ 6,239 $ 68,611 $ 13,107 $ 87,957 Investments, at fair value: Short-term................................................................. 281,038 — — 281,038 Equity securities ....................................................... 9,214,820 — 70,510 9,285,330 Debt securities.......................................................... 3,244,285 — 38,516 3,282,801 Real estate ............................................................... 336,049 — 336,049 Other......................................................................... 2,504,947 — 980,779 3,485,726 Total investments ................................................. 15,581,139 — 1,089,805 16,670,944 Receivables (net).......................................................... 4,356 1,600 462 6,418 Other assets .................................................................. — 287,714 — 287,714 Total assets.............................................................. 15,591,734 357,925 1,103,374 17,053,033 LIABILITIES Accounts payable......................................................... 10,846 1,941 726 13,513 Revenues received in advance ..................................... — — 11,682 11,682 Deposits........................................................................ — 287,714 — 287,714 Total liabilities ........................................................ 10,846 289,655 12,408 312,909 NET POSITION Restricted for individuals, organizations, or other governments.................................................. $ 15,580,888 $ 68,270 $ 1,090,966 $ 16,740,124 294 Private Purpose Trust Funds Combining Statement of Changes in Fiduciary Net Position Private Purpose Trust Funds Year Ended June 30, 2024 (amounts in thousands) Scholarshare Other Private Program Unclaimed Purpose Trust Property Trust Total ADDITIONS Investment income: Net appreciation (depreciation) in fair value of investments ........................................................ $ — $ — $ 82,147 $ 82,147 Interest, dividends, and other investment income.... 1,715,292 — 28,767 1,744,059 Less: investment expense......................................... (3,251) — (11,656) (14,907) Net investment income (loss)................................ 1,712,041 — 99,258 1,811,299 Receipts from depositors............................................. 2,345,100 1,023,367 461,544 3,830,011 Total additions..................................................... 4,057,141 1,023,367 560,802 5,641,310 DEDUCTIONS Administrative expenses ............................................. — — 738 738 Payments to and for depositors ................................... 2,151,186 1,014,109 142,169 3,307,464 Total deductions .................................................. 2,151,186 1,014,109 142,907 3,308,202 Change in net position........................................ 1,905,955 9,258 417,895 2,333,108 Net position – beginning, as previously reported....... 13,674,933 59,012 673,071 14,407,016 Net position – ending .................................................... $ 15,580,888 $ 68,270 $ 1,090,966 $ 16,740,124 295 State of California Annual Comprehensive Financial Report This page intentionally left blank 296 Investment Trust Funds Investment trust funds account for the external portion of investment pools held in a trust. Following are brief descriptions of investment trust funds. The Local Agency Investment Fund accounts for the deposits, withdrawals, and earnings of local governments and public agencies. The California Employers’ Pension Prefunding Trust Fund is administered by the California Public Employees’ Retirement System (CalPERS) to invest prefunding deposits made by local governments and public agency employers for the purpose of funding future defined benefit pension plan contributions. 297 State of California Annual Comprehensive Financial Report Combining Statement of Fiduciary Net Position Investment Trust Funds June 30, 2024 (amounts in thousands) California Employers’ Pension Local Agency Prefunding Investment Trust Total ASSETS Cash and pooled investments............................................................... $ 21,973,259 $ 1,070 $ 21,974,329 Investments, at fair value: Short-term.......................................................................................... — 594 594 Equity securities ................................................................................ — 122,033 122,033 Debt securities................................................................................... — 139,606 139,606 Total investments............................................................................ — 262,233 262,233 Receivables (net).................................................................................. 245,153 10 245,163 Total assets....................................................................................... 22,218,412 263,313 22,481,725 DEFERRED OUTFLOWS OF RESOURCES .................................. — 38 38 Total assets and deferred outflows of resources.................................................................................. 22,218,412 263,351 22,481,763 LIABILITIES Accounts payable................................................................................. 45 32 77 Due to other governments.................................................................... 244,136 — 244,136 Benefits payable................................................................................... — 60 60 Other liabilities..................................................................................... — 53 53 Total liabilities ................................................................................. 244,181 145 244,326 DEFERRED INFLOWS OF RESOURCES ...................................... — 74 74 Total liabilities and deferred inflows of resources.................................................................................. 244,181 219 244,400 NET POSITION Restricted: Pension and other postemployment benefits........................................ — 263,132 263,132 Pool participants................................................................................... 21,974,231 — 21,974,231 Total net position............................................................................. $ 21,974,231 $ 263,132 $ 22,237,363 298 Investment Trust Funds Combining Statement of Changes in Fiduciary Net Position Investment Trust Funds Year Ended June 30, 2024 (amounts in thousands) California Employers’ Pension Local Agency Prefunding Investment Trust Total ADDITIONS Contributions: Employer ............................................................................................ $ — $ 107,701 $ 107,701 Total contributions........................................................................... — 107,701 107,701 Investment income: Net appreciation (depreciation) in fair value of investments ............. — 16,630 16,630 Interest, dividends, and other investment income .............................. 894,593 86 894,679 Less: investment expense ................................................................... — (119) (119) Net investment income .................................................................... 894,593 16,597 911,190 Receipts from depositors....................................................................... 14,399,979 — 14,399,979 Other...................................................................................................... — 460 460 Total additions .................................................................................. 15,294,572 124,758 15,419,330 DEDUCTIONS Distributions paid and payable to participants ...................................... 892,415 — 892,415 Administrative expense......................................................................... 2,178 114 2,292 Payments to and for depositors ............................................................. 18,103,077 1,635 18,104,712 Total deductions................................................................................ 18,997,670 1,749 18,999,419 Change in net position ..................................................................... (3,703,098) 123,009 (3,580,089) Net position – beginning, as previously reported................................ 25,677,329 140,123 25,817,452 Net position – ending ............................................................................. $ 21,974,231 $ 263,132 $ 22,237,363 299 This page intentionally left blank 300 Nonmajor Component Units Nonmajor component units are legally separate entities that are discretely presented in the State’s financial statements in accordance with Generally Accepted Accounting Principles (GAAP). The inclusion of component units in the State’s financial statements reflects the State’s financial accountability for or relationships with these organizations such that exclusion would cause the State’s financial statements to be misleading. Following are brief descriptions of the nonmajor consolidated component unit segments. Financing authorities provide financing for transportation, business development and public improvements, and coastal and inland urban waterfront restoration projects. These agencies include the California Alternative Energy and Advanced Transportation Financing Authority, the California Infrastructure and Economic Development Bank, and the California Urban Waterfront Area Restoration Financing Authority. California State University Auxiliary Organizations provide services primarily to university students through foundations, associated student organizations, student unions, food service entities, book stores, and similar organizations. District agricultural associations were created to exhibit all of the industries, industrial enterprises, resources, and products of the State. The financial information presented is as of and for the year ended December 31, 2023. Other component units provide legal education programs, financial assistance to businesses, and health benefits for state employees and annuitants. These entities include the University of California College of the Law, San Francisco; the State Assistance Fund for Enterprise, Business and Industrial Development Corporation; and the Public Employees’ Contingency Reserve. 301 State of California Annual Comprehensive Financial Report Combining Statement of Net Position Nonmajor Component Units June 30, 2024 (amounts in thousands) California State University Financing Auxiliary Authorities Organizations ASSETS Current assets: Cash and pooled investments ................................................................................................ $ 11,896 $ 677,433 Investments............................................................................................................................ — 916,869 Restricted assets: Cash and pooled investments .............................................................................................. 812,327 — Investments.......................................................................................................................... 101,206 — Receivables (net) ................................................................................................................... 38,717 616,773 Due from primary government.............................................................................................. 173 — Prepaid items ......................................................................................................................... — — Other current assets ............................................................................................................... — 35,703 Total current assets.............................................................................................................. 964,319 2,246,778 Noncurrent assets: Restricted assets: Cash and pooled investments .............................................................................................. — 27,390 Investments.......................................................................................................................... 244,981 — Investments............................................................................................................................ — 3,278,728 Receivables (net) ................................................................................................................... — 756,666 Loans receivable.................................................................................................................... 532,726 — Long-term prepaid charges.................................................................................................... — — Capital assets: Land..................................................................................................................................... — 159,182 Collections – nondepreciable .............................................................................................. — 12,830 Buildings and other depreciable property ........................................................................... 9 1,256,449 Intangible assets – amortizable ........................................................................................... — 343,319 Less: accumulated depreciation/amortization ..................................................................... (9) (749,652) Construction/development in progress................................................................................ — 69,874 Intangible assets – nonamortizable ..................................................................................... — 189 Other noncurrent assets ......................................................................................................... — 50,408 Total noncurrent assets........................................................................................................ 777,707 5,205,383 Total assets....................................................................................................................... 1,742,026 7,452,161 DEFERRED OUTFLOWS OF RESOURCES .................................................................... 18,769 65,695 Total assets and deferred outflows of resources ........................................................ $ 1,760,795 $ 7,517,856 302 Nonmajor Component Units District Other Agricultural Component Associations Units Total $ 194,528 $ 879,142 $ 1,762,999 — — 916,869 17,026 78,825 908,178 2,645 — 103,851 17,719 41,355 714,564 — — 173 1,183 1,035 2,218 4,361 — 40,064 237,462 1,000,357 4,448,916 — — 27,390 6,927 — 251,908 — 185,763 3,464,491 — 6,582 763,248 — — 532,726 — 96 96 31,485 5,247 195,914 — 435 13,265 861,158 477,970 2,595,586 — 4,717 348,036 (598,700) (67,124) (1,415,485) 44,727 8,827 123,428 — 116 305 — 10,731 61,139 345,597 633,360 6,962,047 583,059 1,633,717 11,410,963 34,772 26,506 145,742 $ 617,831 $ 1,660,223 $ 11,556,705 (continued) 303 State of California Annual Comprehensive Financial Report Combining Statement of Net Position (continued) Nonmajor Component Units June 30, 2024 (amounts in thousands) California State University Financing Auxiliary Authorities Organizations LIABILITIES Current liabilities: Accounts payable................................................................................................................... $ 7,569 $ 162,891 Revenues received in advance ............................................................................................... 1,024 201,787 Deposits.................................................................................................................................. — — Contracts and notes payable................................................................................................... — 38,890 Interest payable ...................................................................................................................... 2,558 — Current portion of long-term obligations............................................................................... 18,942 193,280 Other current liabilities .......................................................................................................... 30,843 156,801 Total current liabilities......................................................................................................... 60,936 753,649 Noncurrent liabilities: Compensated absences payable ............................................................................................. 597 10,014 Workers’ compensation benefits payable .............................................................................. — 5,479 Loans payable ........................................................................................................................ 39 — Commercial paper and other borrowings............................................................................... — 76,599 Lease liability......................................................................................................................... — 194,149 Subscription Liability............................................................................................................. — 2,892 Revenue bonds payable.......................................................................................................... 366,368 51,213 Net other postemployment benefits liability.......................................................................... 10,758 69,260 Net pension liability............................................................................................................... 11,292 123,621 Revenues received in advance ............................................................................................... — — Other noncurrent liabilities .................................................................................................... 123,214 650,437 Total noncurrent liabilities................................................................................................... 512,268 1,183,664 Total liabilities ................................................................................................................. 573,204 1,937,313 DEFERRED INFLOWS OF RESOURCES......................................................................... 4,262 461,439 Total liabilities and deferred inflows of resources..................................................... 577,466 2,398,752 NET POSITION Net investment in capital assets ............................................................................................. — 437,783 Restricted: Nonexpendable – endowments............................................................................................ — 1,999,323 Expendable: Endowments and gifts ....................................................................................................... — — Education........................................................................................................................... — 1,570,019 Statute................................................................................................................................ 1,179,018 — Other purposes................................................................................................................... 4,200 — Total expendable............................................................................................................. 1,183,218 1,570,019 Unrestricted............................................................................................................................ 111 1,111,979 Total net position ............................................................................................................... 1,183,329 5,119,104 Total liabilities, deferred inflows of resources, and net position .............................. $ 1,760,795 $ 7,517,856 304 Nonmajor Component Units District Other Agricultural Component Associations Units Total $ 21,128 $ 796,588 $ 988,176 8,710 3,121 214,642 1,023 27 1,050 — — 38,890 426 — 2,984 2,428 5,345 219,995 3,832 83,997 275,473 37,547 889,078 1,741,210 8,172 — 18,783 — — 5,479 11,354 — 11,393 — — 76,599 — 175 194,324 — 477 3,369 32,878 425,474 875,933 12,777 64,060 156,855 83,586 64,172 282,671 29,384 — 29,384 25,102 18,653 817,406 203,253 573,011 2,472,196 240,800 1,462,089 4,213,406 28,912 49,446 544,059 269,712 1,511,535 4,757,465 286,629 83,606 808,018 — 28,372 2,027,695 — 39,520 39,520 — — 1,570,019 — — 1,179,018 24,620 19,883 48,703 24,620 59,403 2,837,260 36,870 (22,693) 1,126,267 348,119 148,688 6,799,240 $ 617,831 $ 1,660,223 $ 11,556,705 (concluded) 305 State of California Annual Comprehensive Financial Report Combining Statement of Activities Nonmajor Component Units Year Ended June 30, 2024 (amounts in thousands) California State University Financing Auxiliary Authorities Organizations OPERATING EXPENSES Personal services ....................................................................................................................... $ 21,856 $ 482,001 Scholarships and fellowships .................................................................................................... — 113,109 Supplies ..................................................................................................................................... — — Services and charges ................................................................................................................. 13,782 1,632,696 Depreciation .............................................................................................................................. — 83,511 Interest expense and fiscal charges ........................................................................................... 11,088 24,438 Other.......................................................................................................................................... — 64,920 Total operating expenses ...................................................................................................... 46,726 2,400,675 PROGRAM REVENUES Charges for services .................................................................................................................. 3,174 526,248 Operating grants and contributions ........................................................................................... 135,861 944,732 Capital grants and contributions................................................................................................ — 31,604 Total program revenues ....................................................................................................... 139,035 1,502,584 Net revenues (expenses) ....................................................................................................... 92,309 (898,091) GENERAL REVENUES Investment and interest income (loss)....................................................................................... 65,834 418,258 Other.......................................................................................................................................... 2,542 910,868 Total general revenues.......................................................................................................... 68,376 1,329,126 Change in net position .......................................................................................................... 160,685 431,035 Net position – beginning, as previously reported..................................................................... 1,022,644 4,691,460 Error correction ......................................................................................................................... — (3,391) Net position – beginning, as restated......................................................................................... 1,022,644 4,688,069 Net position – ending .................................................................................................................. $ 1,183,329 $ 5,119,104 306 Nonmajor Component Units District Other Agricultural Component Associations Units Total $ 138,454 $ 45,389 $ 687,700 — 6,695 119,804 — 23,949 23,949 145,864 34,599 1,826,941 22,483 8,180 114,174 1,724 20,500 57,750 1,882 7,379 74,181 310,407 146,691 2,904,499 292,603 79,609 901,634 — 32,604 1,113,197 — 76 31,680 292,603 112,289 2,046,511 (17,804) (34,402) (857,988) 831 44,286 529,209 4,761 27,778 945,949 5,592 72,064 1,475,158 (12,212) 37,662 617,170 360,331 111,026 6,185,461 — — (3,391) 360,331 111,026 6,182,070 $ 348,119 $ 148,688 $ 6,799,240 307 State of California Annual Comprehensive Financial Report This page intentionally left blank 308 Statistical Section 309 State of California Annual Comprehensive Financial Report This page intentionally left blank 310 Financial Trends Financial trend schedules contain trend information to help the reader understand how the State’s financial performance and well-being have changed over time. This section includes the following financial trend schedules. Schedule of Net Position by Component Schedule of Changes in Net Position Schedule of Fund Balances – Governmental Funds Schedule of Changes in Fund Balances – Governmental Funds Source: The information in the following schedules is derived from the State’s Annual Comprehensive Financial Reports. 311 State of California Annual Comprehensive Financial Report Schedule of Net Position by Component For the Past Ten Fiscal Years (accrual basis of accounting, amounts in thousands) 2015 2 2016 2017 2018 3 Governmental activities Net investment in capital assets .................................... $ 100,694,652 $ 104,596,917 $ 107,042,274 $ 109,614,321 Restricted – Expendable ............................................... 26,632,502 29,060,971 33,832,232 35,053,202 Unrestricted 1 ................................................................ (169,744,967) (168,542,861) (169,499,683) (213,316,033) Total governmental activities net position (deficit) ..... $ (42,417,813) $ (34,884,973) $ (28,625,177) $ (68,648,510) Business-type activities Net investment in capital assets .................................... $ 2,278,252 $ 2,520,621 $ 2,295,270 $ 2,469,723 Restricted – Nonexpendable ......................................... 13,448 8,653 1,746 1,708 Restricted – Expendable ............................................... 4,523,496 5,750,634 6,307,218 12,083,737 Unrestricted................................................................... (5,360,817) (3,707,406) (1,321,132) (16,464,573) Total business-type activities net position (deficit)...... $ 1,454,379 $ 4,572,502 $ 7,283,102 $ (1,909,405) Primary government Net investment in capital assets .................................... $ 102,972,904 $ 107,117,538 $ 109,337,544 $ 112,084,044 Restricted – Nonexpendable ......................................... 13,448 8,653 1,746 1,708 Restricted – Expendable ............................................... 31,155,998 34,811,605 40,139,450 47,136,939 Unrestricted................................................................... (175,105,784) (172,250,267) (170,820,815) (229,780,606) Total primary government net position (deficit) ......... $ (40,963,434) $ (30,312,471) $ (21,342,075) $ (70,557,915) 1 Governmental activities’ unrestricted net position reflects a negative balance because of outstanding bonded debt issued to build capital assets for school districts and other local governmental entities and unfunded employee-related obligations—net pension liability, net other postemployment benefits (OPEB) liability and compensated absences. 2 In fiscal year 2015, the net position of governmental activities and business-type activities significantly decreased as a result of implementing GASB Statements No. 68 and No. 71 requiring the recognition of net pension liability and related pension expense and deferred outflows and inflows of resources. 3 In fiscal year 2018, the net position of governmental activities and business-type activities significantly decreased as a result of implementing GASB Statement No. 75 requiring the recognition of net OPEB liability and related OPEB expense and deferred outflows and inflows of resources. 4 Prior-year adjustments recorded in the current year have not been reflected in the prior-year columns due to the complexity and quantity of adjustments to various accounts. Refer to Note 2 Accounting Changes and Error Corrections for details of current year adjustments. 312 Statistical Section 2019 2020 2021 2022 2023 2024 4 $ 112,279,950 $ 116,773,259 $ 120,745,220 $ 125,862,983 $ 131,322,297 $ 134,088,866 41,371,805 46,670,678 46,362,528 60,482,461 66,645,014 68,517,593 (208,377,265) (207,968,523) (174,427,918) (221,863,616) (218,243,729) (168,171,253) $ (54,725,510) $ (44,524,586) $ (7,320,170) $ (35,518,172) $ (20,276,418) $ 34,435,206 $ 2,534,257 $ 2,907,066 $ 2,677,917 $ 3,340,905 $ 3,538,034 $ 3,867,059 1,693 1,677 1,663 1,641 1,595 1,612 12,945,567 7,722,116 7,651,874 10,639,641 9,900,307 8,629,619 (16,718,860) (20,948,611) (52,668,204) (33,212,073) (31,107,513) (32,289,060) $ (1,237,343) $ (10,317,752) $ (42,336,750) $ (19,229,886) $ (17,667,577) $ (19,790,770) $ 114,814,207 $ 119,680,325 $ 123,423,137 $ 129,203,888 $ 134,860,331 $ 137,955,925 1,693 1,677 1,663 1,641 1,595 1,612 54,317,372 54,392,794 54,014,402 71,122,102 76,545,321 77,147,212 (225,096,125) (228,917,134) (227,096,122) (255,075,689) (249,351,242) (200,460,313) $ (55,962,853) $ (54,842,338) $ (49,656,920) $ (54,748,058) $ (37,943,995) $ 14,644,436 313 State of California Annual Comprehensive Financial Report Schedule of Changes in Net Position For the Past Ten Fiscal Years (accrual basis of accounting, amounts in thousands) 2015 2016 2017 20184 Governmental activities Expenses General government .................................................. $ 15,804,281 $ 16,686,037 $ 17,400,482 $ 18,378,216 Education................................................................... 59,521,018 65,467,497 67,377,805 70,280,444 Health and human services........................................ 122,063,805 127,543,288 135,090,171 137,828,737 Natural resources and environmental protection....... 6,419,591 6,988,442 7,342,079 8,304,162 Business, consumer services, and housing ................ 903,782 814,676 1,163,511 1,258,104 Transportation............................................................ 12,897,591 12,120,820 12,947,296 14,259,461 Corrections and rehabilitation ................................... 11,483,573 11,875,294 13,086,499 14,921,295 Interest on long-term debt.......................................... 4,880,625 4,231,581 4,191,283 4,154,485 Total expenses ....................................................... 233,974,266 245,727,635 258,599,126 269,384,904 Program revenues Charges for services: General government .............................................. 6,502,363 6,525,736 5,825,533 5,726,900 Education................................................................ 53,498 66,298 74,548 37,147 Health and human services..................................... 8,259,696 10,630,859 11,638,503 12,968,379 Natural resources and environmental protection.... 4,546,413 4,823,861 3,998,751 6,319,879 Business, consumer services, and housing ............. 626,960 823,189 844,445 957,885 Transportation......................................................... 4,382,901 4,532,300 4,611,244 6,053,140 Corrections and rehabilitation ................................ 18,557 19,411 17,988 39,887 Operating grants/contributions .................................. 84,896,237 86,628,827 89,497,290 87,812,627 Capital grants/contributions....................................... 1,319,430 1,480,351 3,027,780 1,882,595 Total program revenues....................................... 110,606,055 115,530,832 119,536,082 121,798,439 Total governmental activities net program expenses (123,368,211) (130,196,803) (139,063,044) (147,586,465) General revenues and other changes in net position General revenues: Personal income taxes .............................................. 78,098,865 80,303,076 85,712,013 94,460,551 Sales and use taxes .................................................... 38,224,080 39,121,061 38,726,332 39,784,494 Corporation taxes....................................................... 10,720,647 9,213,173 11,128,198 12,608,756 Motor vehicle excise taxes 1 ..................................... 5,393,994 5,028,589 4,878,953 6,680,858 Insurance taxes ......................................................... 3,926,319 4,203,885 2,719,489 2,754,056 Managed care organization enrollment tax 2 ............. — — 2,282,313 2,397,531 Other taxes 1............................................................... 2,235,498 2,158,874 2,574,456 3,573,848 Investment and interest ............................................. 58,016 131,615 149,135 297,782 Escheat ...................................................................... 400,807 304,960 325,755 378,180 Gain (loss) on early extinguishment of debt 3 .............. — 40,516 30,986 — Transfers....................................................................... (2,554,970) (2,800,101) (3,083,437) (4,339,995) Total general revenues and other changes in net position ..................... 136,503,256 137,705,648 145,444,193 158,596,061 Total governmental activities change in net position $ 13,135,045 $ 7,508,845 $ 6,381,149 $ 11,009,596 1 Motor vehicle excise taxes, reported separately in fiscal year 2012 due to material increases, were included with “other taxes” in prior years. 2 In fiscal year 2017, the State restructured its managed care organization enrollment tax to conform to federal Medicaid requirements. This tax revenue was included with “insurance taxes” in prior years. 3 In fiscal year 2016, the California State University, an enterprise fund, assumed debt on behalf of the Public Buildings Construction Fund, an internal service fund. In fiscal year 2017, the Golden State Tobacco Securitization Corporation, a nonmajor special revenue fund, recognized a gain from using existing resources to defease a portion of its capital appreciation bonds. In fiscal year 2022, the Public Building Construction Fund, an internal service fund, recognized a gain on extinguishment of debt. 4 In fiscal year 2018, the Safe Drinking Water State Revolving Fund was reclassified from a governmental fund to an enterprise fund. 5 In fiscal year 2023, Electric Power was reclassified from a major to a nonmajor enterprise fund. 314 Statistical Section 2019 2020 2021 2022 2023 2024 $ 17,900,629 $ 23,489,012 $ 30,604,918 $ 38,760,471 $ 24,946,231 $ 30,364,857 75,643,779 75,803,990 101,569,505 108,450,558 100,496,652 104,989,072 144,936,676 192,576,208 311,925,505 216,232,017 219,032,287 239,312,614 9,774,290 10,110,777 9,923,185 12,502,619 13,314,762 15,843,903 2,133,480 2,603,823 2,946,561 7,364,028 5,641,942 4,587,805 17,022,071 18,424,746 18,119,697 15,792,836 19,100,099 22,096,992 15,153,502 16,861,994 14,185,645 16,526,318 18,204,561 16,282,066 3,995,597 3,841,351 3,505,827 3,508,229 3,705,403 3,780,126 286,560,024 343,711,901 492,780,843 419,137,076 404,441,937 437,257,435 5,755,165 5,847,276 6,583,975 6,167,925 6,992,729 7,657,849 78,445 49,780 69,727 65,810 111,947 77,886 13,874,296 13,836,881 12,664,071 11,402,121 14,195,544 16,884,897 6,644,917 5,551,029 6,592,526 8,422,029 8,488,546 10,428,203 1,206,126 1,378,181 1,697,687 1,671,025 1,561,023 1,589,280 7,093,122 7,244,317 7,731,094 8,479,493 8,346,084 8,975,999 10,993 14,753 15,776 13,563 11,403 3,415 94,501,862 143,670,642 268,258,265 170,662,661 147,291,889 161,736,406 1,561,483 2,107,963 1,847,263 1,895,160 1,847,186 2,698,882 130,726,409 179,700,822 305,460,384 208,779,787 188,846,351 210,052,817 (155,833,615) (164,011,079) (187,320,459) (210,357,289) (215,595,586) (227,204,618) 100,657,551 108,308,455 132,042,516 126,058,884 114,593,854 116,314,391 41,006,121 40,703,239 45,905,984 52,328,196 53,471,988 53,239,701 14,625,724 13,180,402 32,108,028 35,850,573 36,685,982 37,466,478 7,632,365 7,876,545 7,942,519 8,453,232 8,654,176 9,266,839 2,734,068 3,161,634 3,156,992 3,516,612 3,720,620 3,964,555 2,562,919 1,031,357 2,318,011 2,584,077 3,478,815 10,451,644 3,790,987 3,789,610 3,827,360 4,402,939 3,667,941 3,802,735 706,637 690,169 140,329 788,612 2,596,512 3,286,074 447,401 614,394 640,226 660,143 876,112 848,305 — — — 11,576 22,783 (3,911) (3,930,906) (5,963,068) (3,851,666) (5,465,790) (6,047,026) (4,265,059) 170,232,867 173,392,737 224,230,299 229,189,054 221,721,757 234,371,752 $ 14,399,252 $ 9,381,658 $ 36,909,840 $ 18,831,765 $ 6,126,171 $ 7,167,134 (continued) 315 State of California Annual Comprehensive Financial Report Schedule of Changes in Net Position (continued) For the Past Ten Fiscal Years (accrual basis of accounting, amounts in thousands) 2015 2016 2017 20184 Business-type activities Expenses Electric Power 5 .............................................................. $ 799,000 $ 728,000 $ 945,000 $ 952,000 Water Resources ............................................................ 1,019,378 1,086,650 1,223,340 1,221,866 State Lottery ................................................................... 5,560,299 6,315,957 6,271,875 7,006,591 Unemployment Programs .............................................. 11,390,227 11,458,966 11,907,623 12,133,531 California State University 3........................................... 6,847,789 7,199,277 8,001,396 9,806,114 State Water Pollution Control Revolving....................... 9,082 11,814 17,112 32,335 Safe Drinking Water State Revolving 4.......................... — — — 21,994 Housing Loan ................................................................ 58,280 55,627 62,885 57,088 Other enterprise programs.............................................. 77,475 84,188 75,397 96,078 Total expenses............................................................ 25,761,530 26,940,479 28,504,628 31,327,597 Program revenues Charges for services: Electric Power 5 ........................................................... 799,000 728,000 945,000 952,000 Water Resources.......................................................... 1,019,378 1,086,650 1,223,340 1,221,866 State Lottery ............................................................... 5,553,418 6,367,902 6,213,074 6,975,168 Unemployment Programs ........................................... 13,402,902 13,866,028 14,437,094 15,594,045 California State University 3 ....................................... 3,113,988 3,172,154 3,224,919 3,387,420 State Water Pollution Control Revolving ................... 65,959 70,245 75,912 86,789 Safe Drinking Water State Revolving 4....................... — — — 22,675 Housing Loan ............................................................. 57,742 53,617 52,842 52,735 Other enterprise programs........................................... 78,625 82,029 93,177 86,911 Operating grants/contributions ...................................... 1,666,292 1,764,962 1,805,406 2,132,665 Capital grants/contributions ........................................... 107,746 66,914 61,027 — Total program revenues............................................ 25,865,050 27,258,501 28,131,791 30,512,274 Total business-type activities net program revenues (expenses) ....................... 103,520 318,022 (372,837) (815,323) Other changes in net position Gain (loss) on early extinguishment of debt 2 ................ — — — — Transfers......................................................................... 2,554,970 2,800,101 3,083,437 4,339,995 Total business-type activities change in net position...... 2,658,490 3,118,123 2,710,600 3,524,672 Total primary government change in net position ........ $ 15,793,535 $ 10,626,968 $ 9,091,749 $ 14,534,268 316 Statistical Section 2019 2020 2021 2022 20235 2024 $ 913,000 $ 905,115 $ 290,411 $ 36,239 $ — $ — 1,199,823 1,184,458 1,157,325 1,233,036 1,460,049 1,623,577 7,435,755 6,665,062 8,452,743 8,885,370 9,291,352 9,361,888 13,229,332 23,622,023 55,737,215 14,965,703 15,533,539 18,212,170 9,779,084 10,592,814 10,391,177 10,778,052 10,877,952 11,867,582 49,860 45,288 41,466 35,334 46,948 62,530 19,371 25,007 23,570 24,608 28,052 34,364 54,402 53,656 54,540 45,316 50,682 52,440 109,113 148,450 88,903 165,655 152,586 124,407 32,789,740 43,241,873 76,237,350 36,169,313 37,441,160 41,338,958 913,000 903,000 406,588 124,467 — — 1,172,134 1,155,001 1,125,002 1,295,670 1,531,195 1,657,882 7,473,452 6,735,321 8,395,767 8,785,557 9,250,527 9,345,359 14,039,030 12,564,665 23,903,289 16,288,566 15,303,547 15,701,364 3,529,083 3,323,307 3,236,482 3,199,357 3,977,056 4,569,374 95,703 87,110 73,790 69,695 83,654 106,134 25,762 29,717 26,457 27,377 30,890 36,017 60,002 61,990 51,953 45,820 53,383 66,925 106,687 105,874 107,929 130,837 136,636 142,389 2,125,362 2,593,383 3,103,175 4,010,488 2,797,050 3,325,619 — — — — — — 29,540,215 27,559,368 40,430,432 33,977,834 33,163,938 34,951,063 (3,249,525) (15,682,505) (35,806,918) (2,191,479) (4,277,222) (6,387,895) — — — — — — 3,930,906 5,963,068 3,851,666 5,465,790 6,047,026 4,265,059 681,381 (9,719,437) (31,955,252) 3,274,311 1,769,804 (2,122,836) $ 15,080,633 $ (337,779) $ 4,954,588 $ 22,106,076 $ 7,895,975 $ 5,044,298 (concluded) 317 State of California Annual Comprehensive Financial Report Schedule of Fund Balances – Governmental Funds For the Past Ten Fiscal Years (modified accrual basis of accounting, amounts in thousands) 2015 2016 2017 2018 General Fund Reserved ....................................................................... $ — $ — $ — $ — Unreserved .................................................................... — — — — Nonspendable ............................................................... 53,431 75,939 103,903 559,644 Restricted....................................................................... 2,266,635 4,044,911 7,429,825 9,807,729 Committed ..................................................................... 102,793 68,102 180,755 171,020 Assigned ........................................................................ — — — — Unassigned..................................................................... (4,651,491) (3,827,224) (1,904,097) 1,648,511 Total General Fund......................................................... $ (2,228,632) $ 361,728 $ 5,810,386 $ 12,186,904 All other governmental funds Reserved ........................................................................ $ — $ — $ — $ — Unreserved, reported in: Special revenue funds ................................................ — — — — Capital projects funds ................................................ — — — — Nonspendable ................................................................ 5,620 11,188 20,172 69,868 Restricted....................................................................... 24,224,167 24,885,166 26,233,389 25,051,548 Committed .................................................................... 4,090,563 5,652,478 5,847,879 7,897,362 Assigned ........................................................................ 16,767 14,622 12,033 26,346 Unassigned..................................................................... (6,456) (1,037) (15,152) — Total all other governmental funds ............................... $ 28,330,661 $ 30,562,417 $ 32,098,321 $ 33,045,124 1 Prior-year adjustments recorded in the current year have not been reflected in the prior-year columns due to the complexity and quantity of adjustments to various accounts. Refer to Note 2 Accounting Changes and Error Corrections for details of current year adjustments. 318 Statistical Section 2019 2020 2021 2022 2023 2024 1 $ — $ — $ — $ — $ — $ — — — — — — — 1,180,575 2,129,227 2,878,611 2,958,319 3,950,919 3,574,494 14,834,597 16,709,782 12,928,039 23,251,079 24,830,454 26,028,140 1,787,142 2,965,662 668,351 4,024,689 4,210,891 2,239,352 — 3,080,372 4,938,117 7,290,655 20,714,283 27,722,047 765,568 3,616,557 52,731,990 36,522,416 10,297,141 3,828,732 $ 18,567,882 $ 28,501,600 $ 74,145,108 $ 74,047,158 $ 64,003,688 $ 63,392,765 $ — $ — $ — $ — $ — $ — — — — — — — — — — — — — 12,760 13,702 10,238 39,130 95,021 41,829 26,329,109 29,796,900 33,282,001 37,132,326 41,637,363 42,352,134 9,994,978 10,066,141 10,160,675 12,949,069 16,158,684 18,784,979 19,247 49,868 45,543 63,457 77,937 82,390 — (2,474,960) (8,822,239) (55,655,634) (46,430,334) (1,256,249) $ 36,356,094 $ 37,451,651 $ 34,676,218 $ (5,471,652) $ 11,538,671 $ 60,005,083 319 State of California Annual Comprehensive Financial Report Schedule of Changes in Fund Balances - Governmental Funds For the Past Ten Fiscal Years (modified accrual basis of accounting, amounts in thousands) 2015 2016 2017 2018 Revenues Personal income taxes ........................................................... $ 78,245,616 $ 79,934,285 $ 85,737,905 $ 94,484,443 Sales and use taxes ................................................................ 38,389,972 39,136,040 38,741,715 39,777,069 Corporation taxes ................................................................... 10,780,647 9,214,173 11,125,198 12,597,928 Motor vehicle excise taxes 1 ................................................... 5,393,994 5,028,589 4,878,953 6,680,858 Insurance taxes ....................................................................... 3,926,319 4,203,885 2,719,489 2,754,056 Managed care organization enrollment tax 2 .......................... — — 2,282,313 2,397,531 Other taxes 1............................................................................ 2,312,875 2,185,690 2,565,928 3,548,182 Intergovernmental................................................................... 87,740,667 91,069,753 95,709,784 92,904,469 Licenses and permits .............................................................. 7,270,994 7,612,551 8,113,542 8,761,620 Charges for services................................................................ 849,895 870,142 860,241 975,314 Fees and penalties .................................................................. 10,510,727 11,882,699 11,571,934 13,548,471 Investment and interest........................................................... 119,690 232,285 318,502 607,418 Escheat.................................................................................... 406,899 305,394 327,614 382,793 Other ....................................................................................... 3,975,144 4,049,789 2,934,157 5,318,739 Total revenues .................................................................... 249,923,439 255,725,275 267,887,275 284,738,891 Expenditures General government .............................................................. 16,202,395 16,715,892 17,250,720 18,978,389 Education................................................................................ 62,952,621 65,213,542 67,224,796 69,902,627 Health and human services..................................................... 122,259,036 127,201,314 134,372,094 138,018,275 Natural resources and environmental protection.................... 6,006,446 6,278,363 6,712,838 7,987,878 Business, consumer services, and housing ............................. 670,774 1,130,213 1,103,694 1,189,365 Transportation ........................................................................ 15,137,217 14,814,829 15,007,639 17,169,040 Corrections and rehabilitation ................................................ 11,182,926 11,450,980 12,276,391 14,665,524 Capital outlay.......................................................................... 1,019,335 1,492,442 1,238,700 612,769 Debt service: Bond and commercial paper retirement............................... 8,482,380 6,929,866 9,364,550 8,598,856 Interest and fiscal charges ................................................... 4,473,799 4,057,907 3,986,270 3,961,704 Total expenditures ............................................................. 248,386,929 255,285,348 268,537,692 281,084,427 Excess (deficiency) of revenues over (under) expenditures... 1,536,510 439,927 (650,417) 3,654,464 Other financing sources (uses) General obligation bonds and commercial paper issued ........ 4,343,165 4,074,980 4,325,075 5,283,365 Revenue bonds issued............................................................. — — — — Refunding/remarketing debt issued........................................ 5,086,100 5,220,320 7,074,225 6,681,855 Payment to refund/remarket long-term debt........................... (3,865,093) (4,378,328) (3,038,281) (3,726,204) Premium on bonds issued....................................................... 1,116,811 1,037,920 1,309,254 1,036,320 Leases ..................................................................................... 625,282 1,148,774 988,680 405,930 Transfers in............................................................................. 5,344,134 4,385,123 4,586,199 4,266,596 Transfers out........................................................................... (7,934,754) (7,130,142) (7,551,627) (8,555,594) Total other financing sources............................................ 4,715,645 4,358,647 7,693,525 5,392,268 Total change in fund balance.................................................. $ 6,252,155 $ 4,798,574 $ 7,043,108 $ 9,046,732 Debt service as a percentage of noncapital expenditures ......... 5.2 % 4.3 % 5.0 % 4.5 % 1 Motor vehicle excise taxes, reported separately in fiscal year 2012 due to material increases, were included with “other taxes” in prior years. 2 In fiscal year 2017, the State restructured its managed care organization enrollment tax to conform to federal Medicaid requirements. This tax revenue was included with “insurance taxes” in prior years. 320 Statistical Section 2019 2020 2021 2022 2023 2024 $ 96,801,076 $ 111,831,167 $ 132,095,124 $ 125,914,865 $ 114,439,619 $ 116,485,890 41,085,626 40,709,462 45,906,755 52,317,376 53,469,731 53,243,830 14,038,348 13,722,735 32,122,361 35,824,715 36,662,999 37,298,102 7,632,365 7,876,545 7,942,519 8,453,232 8,654,176 9,266,839 2,734,068 3,161,634 3,156,993 3,516,612 3,720,620 3,964,555 2,562,919 1,031,357 2,318,011 2,584,077 3,478,815 10,451,644 3,688,531 3,862,045 4,007,125 4,421,355 3,690,842 3,830,385 99,867,750 148,951,650 272,691,880 175,107,421 151,498,528 167,307,839 9,186,945 9,256,454 9,999,107 10,126,549 10,733,076 11,102,901 956,032 972,805 1,025,167 1,028,747 1,127,528 1,133,899 14,187,698 14,322,983 15,062,529 15,461,639 15,955,991 17,948,226 1,321,143 1,328,956 626,478 643,594 3,610,075 5,140,098 448,756 615,720 644,248 661,698 915,711 898,607 5,594,587 4,595,386 6,802,576 7,862,830 8,378,244 10,718,697 300,105,844 362,238,899 534,400,873 443,924,710 416,335,955 448,791,512 19,263,146 27,393,107 29,908,484 44,249,597 29,427,864 31,854,563 75,071,188 76,347,719 99,964,095 111,764,166 101,582,047 105,621,065 144,543,589 191,819,998 311,093,756 216,174,091 219,002,631 239,291,354 9,069,777 9,244,813 8,862,649 12,175,743 13,125,620 15,613,435 2,013,409 2,457,248 2,824,462 7,637,467 5,644,310 4,578,734 17,893,338 20,025,848 19,623,756 19,491,005 22,118,228 25,653,795 14,055,766 14,680,705 12,598,851 15,689,740 17,279,129 16,932,135 287,487 401,066 886,020 682,904 905,327 1,009,313 10,444,825 10,276,581 9,594,575 13,402,490 10,243,562 9,739,972 3,971,353 3,856,390 3,650,153 4,126,022 3,756,623 4,028,729 296,613,878 356,503,475 499,006,801 445,393,225 423,085,341 454,323,095 3,491,966 5,735,424 35,394,072 (1,468,515) (6,749,386) (5,531,583) 3,626,765 5,085,590 5,051,305 4,552,690 6,822,625 6,033,760 — 500,000 450,000 1,050,000 — — 5,683,865 4,384,895 3,657,445 10,011,411 3,701,890 3,511,780 (411,340) — (428,395) (2,935,087) (37,408) — 1,003,337 1,217,615 1,218,766 1,229,185 679,529 662,745 50,506 24,082 439,180 143,759 370,731 567,830 4,414,250 5,776,094 6,408,853 7,121,202 8,372,233 10,112,016 (8,298,095) (11,731,486) (10,249,393) (12,547,219) (14,485,271) (14,379,065) 6,069,288 5,256,790 6,547,761 8,625,941 5,424,329 6,509,066 $ 9,561,254 $ 10,992,214 $ 41,941,833 $ 7,157,426 $ (1,325,057) $ 977,483 4.9% 4.0% 2.7% 3.9% 3.3% 3.0% 321 State of California Annual Comprehensive Financial Report This page intentionally left blank 322 Revenue Capacity Revenue capacity schedules contain information to help the reader assess the State’s capacity to raise revenue and the sources of that revenue. This section includes the following revenue capacity schedules. Schedule of Revenue Base Schedule of Revenue Payers by Income Level/Industry Schedule of Personal Income Tax Rates 323 State of California Annual Comprehensive Financial Report Schedule of Revenue Base For the Past Ten Calendar Years (amounts in thousands) 2014 2015 2016 2017 Personal Income by Industry (items restated as footnoted) 1 Farm earnings...................................................... $ 22,609,066 $ 21,222,250 $ 18,646,282 $ 20,041,415 Forestry, fishing, and other natural resources..... 8,303,175 9,216,947 9,898,303 10,176,211 Mining................................................................. 6,712,256 4,963,527 3,753,851 3,216,216 Construction and utilities .................................... 79,692,915 88,130,646 93,511,037 102,974,465 Manufacturing..................................................... 133,035,011 139,414,534 145,528,697 153,661,389 Wholesale trade................................................... 65,805,068 70,215,535 70,149,369 73,535,459 Retail trade.......................................................... 81,107,100 84,898,965 84,819,197 87,143,887 Transportation and warehousing......................... 42,142,663 45,945,185 49,332,199 53,670,285 Information, finance, and insurance.................... 159,848,610 174,617,028 190,140,120 206,955,669 Real estate and rental and leasing ....................... 49,055,596 51,762,077 54,244,467 55,830,864 Services............................................................... 516,952,464 552,135,538 574,579,377 604,183,727 Federal, civilian................................................... 26,450,856 27,477,720 28,337,175 29,073,247 Military ............................................................... 15,071,769 14,952,018 16,333,621 16,101,002 State and local government................................. 200,331,079 212,528,644 223,593,750 230,997,705 Other 2 ................................................................. 517,464,525 566,525,160 593,930,254 612,061,700 Total personal income .......................................... $ 1,924,582,153 $ 2,064,005,774 $ 2,156,797,699 $ 2,259,623,241 Average effective rate 3 .......................................... 5.6 % 6.1 % 6.0 % 5.9 % Source: Bureau of Economic Analysis, U.S. Department of Commerce 1 Prior years were updated based on more current information. 2 Other personal income includes dividends, interest, rental income, residence adjustment, government transfers for individuals, and deductions for social insurance. 3 The total direct rate for personal income is not available. The average effective rate equals personal income tax revenue divided by adjusted gross income. 324 Statistical Section 2018 2019 2020 2021 2022 2023 $ 15,669,285 $ 15,978,888 $ 17,315,815 $ 15,575,403 $ 16,004,335 $ 14,625,032 10,765,747 11,261,626 12,690,920 12,409,090 12,925,476 14,007,676 3,717,373 3,427,775 2,839,729 2,644,161 3,050,869 3,419,007 112,396,379 120,240,852 117,965,220 122,073,288 128,386,931 132,808,626 159,126,826 161,854,115 172,313,755 187,218,373 194,388,210 203,479,845 71,639,917 72,727,682 73,620,933 76,454,399 82,264,226 87,659,558 90,173,648 92,171,144 93,632,170 103,125,834 107,785,050 109,434,715 60,511,132 69,759,793 68,916,210 82,190,820 87,291,248 91,746,013 218,388,275 229,828,550 252,396,092 293,219,543 284,043,606 294,571,411 60,774,043 69,549,333 72,006,102 77,184,395 71,136,357 71,842,577 640,289,889 680,264,303 678,958,934 760,246,498 812,720,468 848,768,567 30,340,685 31,010,832 32,936,947 33,470,612 34,627,542 37,068,768 15,238,777 15,611,106 16,600,127 17,841,972 17,727,105 18,693,772 237,580,482 245,796,913 255,052,712 263,859,389 269,916,478 286,351,192 643,820,394 677,994,115 858,162,187 919,383,466 838,104,995 903,270,844 $ 2,370,432,852 $ 2,497,477,027 $ 2,725,407,853 $ 2,966,897,243 $ 2,960,372,896 $ 3,117,747,603 6.1% 6.0% 6.5% 6.5% 6.0% 5.7% (continued) 325 State of California Annual Comprehensive Financial Report Schedule of Revenue Base (continued) For the Past Ten Calendar Years (amounts in thousands) 2014 2015 2016 2017 Taxable Sales by Industry Retail and Food Services: Motor vehicle and parts dealers................................. $ 73,232,242 $ 80,346,595 $ 84,225,652 $ 86,983,280 Furniture and home furnishings stores ...................... 11,408,837 12,169,888 12,790,041 13,035,340 Electronics and appliance stores................................ 15,148,893 16,349,542 17,120,030 17,170,671 Building materials, garden equipment, and supplies. 31,299,110 33,601,538 35,238,333 37,504,347 Food and beverage..................................................... 26,298,414 27,134,034 27,678,056 28,799,044 Health and personal care stores ................................. 11,640,870 12,364,559 13,163,569 13,669,415 Gasoline stations........................................................ 55,733,384 48,203,175 43,273,182 47,434,923 Clothing and clothing accessories stores................... 36,822,241 38,438,074 39,698,156 40,206,581 Sporting goods, hobby, book, and music stores ........ 11,056,024 11,341,328 11,441,556 10,900,749 General merchandise stores....................................... 52,013,855 53,119,200 53,032,357 54,684,182 Miscellaneous store retailers ..................................... 19,024,905 19,852,685 19,617,820 19,719,301 Nonstore retailers....................................................... 8,292,788 9,531,606 11,717,407 13,599,808 Food services and drinking places............................. 67,864,614 73,889,708 78,494,623 82,355,474 All other outlets ............................................................ 195,985,698 202,290,021 206,365,477 211,760,378 Total taxable sales......................................................... $ 615,821,875 638,631,953 $ 653,856,259 $ 677,823,493 Direct sales tax rate 1....................................................... 6.50 % 2 6.50 % 6.50 % 6.00 % Source: California Department of Tax and Fee Administration (CDTFA) 1 The direct sales tax rate used is the state tax rate that provides revenue to the State’s General Fund. It does not include the local tax rate that is allocated to cities and counties. 2 Rate change was effective on January 1, 2013. 3 Rate change was effective on January 1, 2017. 326 Statistical Section 2018 2019 2020 2021 2022 2023 $ 89,696,669 $ 88,526,876 $ 87,847,344 $ 106,686,238 $ 108,863,945 $ 103,274,029 13,578,685 13,427,029 13,626,241 16,375,319 16,004,779 14,101,249 17,520,474 16,999,111 16,926,013 19,232,973 18,833,052 17,469,866 39,469,798 40,313,948 45,966,216 50,775,894 51,775,096 49,231,753 29,697,424 30,216,432 32,042,780 33,308,785 34,725,455 34,700,617 14,384,602 15,160,891 15,622,747 17,397,455 17,653,263 17,179,020 54,302,232 54,141,178 38,345,721 56,231,375 71,264,403 63,541,643 42,233,560 43,130,842 32,500,749 47,599,716 49,393,086 48,703,455 10,467,200 10,407,608 10,110,131 11,776,823 11,389,486 10,803,928 56,416,293 58,066,003 57,003,022 66,201,633 69,575,648 67,343,669 20,503,078 20,952,870 20,863,193 24,996,467 26,319,225 25,631,272 15,663,789 20,276,518 53,383,005 60,520,452 64,329,865 69,166,754 85,226,197 89,403,960 63,665,386 87,700,329 102,862,887 108,416,494 217,675,199 231,733,635 218,853,973 263,908,719 308,785,176 306,331,191 $ 706,835,200 $ 732,756,901 $ 706,756,521 $ 862,712,178 $ 951,775,366 $ 935,894,940 6.00 % 3 6.00 % 6.00 % 6.00 % 6.00 % 6.00 % (concluded) 327 State of California Annual Comprehensive Financial Report Schedule of Revenue Payers by Income Level/Industry For Calendar Years 2015 and 2023 Personal Income Tax Filers and Liability by Income Level 1 2015 Number Percent Tax Percent of Filers of Total Liability 2 of Total Under $ 50,000 ....................................... 9,733,138 59.8 % $ 1,493,142 2.1 % 50,000 to 99,999 ....................................... 3,457,434 21.2 6,048,161 8.5 100,000 to 149,999 ....................................... 1,423,390 8.7 6,871,415 9.7 150,000 to 199,999 ....................................... 671,279 4.1 5,862,855 8.3 200,000 to 299,999 ....................................... 524,092 3.2 7,575,259 10.7 300,000 to 399,999 ....................................... 191,247 1.2 4,471,202 6.3 400,000 to 499,999 ....................................... 91,808 0.6 3,043,316 4.3 500,000 to 599,999 ....................................... 50,815 0.3 2,164,174 3.1 600,000 to 699,999 ....................................... 32,404 0.2 1,708,745 2.4 700,000 to 799,999 ....................................... 21,106 0.1 1,331,637 1.9 800,000 to 899,999 ....................................... 15,130 0.1 1,115,407 1.6 900,000 to 999,999 ....................................... 11,665 0.1 990,301 1.4 1,000,000 to 1,999,999 ....................................... 43,790 0.3 5,849,776 8.3 2,000,000 to 2,999,999 ....................................... 11,041 0.1 2,910,335 4.1 3,000,000 to 3,999,999 ....................................... 4,828 — 1,879,590 2.7 4,000,000 to 4,999,999 ....................................... 2,727 — 1,405,595 2.0 $ 5,000,000 and over.................................................... 8,051 — 15,956,198 22.6 Total................................................................................ 16,293,945 100.0 % $ 70,677,108 100.0 % 2023 Number Percent Tax Percent of Filers of Total Liability 2 of Total Under $ 50,000 ....................................... 8,347,920 47.8 % $ 1,160,763 1.2 % 50,000 to 99,999 ....................................... 4,273,358 24.5 6,256,706 6.4 100,000 to 149,999 ....................................... 1,904,088 10.9 8,120,046 8.4 150,000 to 199,999 ....................................... 1,010,979 5.8 7,811,483 8.0 200,000 to 299,999 ....................................... 921,923 5.3 12,177,567 12.6 300,000 to 399,999 ....................................... 380,518 2.2 8,147,667 8.4 400,000 to 499,999 ....................................... 196,251 1.1 5,780,535 6.0 500,000 to 599,999 ....................................... 116,577 0.7 4,412,303 4.6 600,000 to 699,999 ....................................... 75,646 0.4 3,490,080 3.6 700,000 to 799,999 ....................................... 51,931 0.2 2,813,421 2.9 800,000 to 899,999 ....................................... 36,633 0.2 2,285,746 2.4 900,000 to 999,999 ....................................... 27,139 0.2 1,932,575 2.0 1,000,000 to 1,999,999 ....................................... 87,181 0.5 9,254,119 9.6 2,000,000 to 2,999,999 ....................................... 19,094 0.1 3,885,211 4.0 3,000,000 to 3,999,999 ....................................... 7,972 — 2,327,720 2.4 4,000,000 to 4,999,999 ....................................... 4,496 — 1,698,321 1.8 $ 5,000,000 and over.................................................... 12,149 0.1 15,189,004 15.7 Total ............................................................................... 17,473,855 100.0 % $ 96,743,267 100.0 % Source: California Franchise Tax Board 1 For California resident tax returns. Calendar year 2023 is the most applicable recent year for which data is available. 2 Amounts are in thousands. 328 Statistical Section For Calendar Years 2014 and 2023 Sales Tax Permits and Tax Liability by Industry 2014 Number Percent Tax Percent of Permits of Total Liability 1 of Total Retail and Food Services: Motor vehicle and parts dealers ...................................... 31,278 3.1 % $ 73,232,242 11.9 % Furniture and home furnishings stores............................ 16,283 1.6 11,408,837 1.9 Electronics and appliance stores ..................................... 21,345 2.2 15,148,893 2.5 Building materials, garden equipment, and supplies ...... 15,551 1.5 31,299,110 5.0 Food and beverage .......................................................... 31,014 3.1 26,298,414 4.2 Health and personal care stores....................................... 22,318 2.2 11,640,870 1.9 Gasoline stations ............................................................. 9,797 1.0 55,733,384 9.0 Clothing and clothing accessories stores ........................ 59,174 5.9 36,822,241 6.0 Sporting goods, hobby, book, and music stores.............. 23,946 2.4 11,056,024 1.8 General merchandise stores ............................................ 14,366 1.4 52,013,855 8.5 Miscellaneous store retailers........................................... 108,378 10.8 19,024,905 3.1 Nonstore retailers............................................................ 233,431 23.3 8,292,788 1.4 Food services and drinking places .................................. 99,340 9.9 67,864,614 11.0 All other outlets.................................................................. 317,586 31.6 195,985,698 31.8 Total .................................................................................. 1,003,807 100.0 % $ 615,821,875 100.0 % 2023 Number Percent Tax Percent of Permits of Total Liability 1 of Total Retail and Food Services: Motor vehicle and parts dealers ...................................... 33,381 2.5 % $ 103,274,029 11.0 % Furniture and home furnishings stores............................ 16,655 1.3 14,101,249 1.5 Electronics and appliance stores ..................................... 17,927 1.4 17,469,866 1.9 Building materials, garden equipment, and supplies ...... 15,755 1.2 49,231,753 5.3 Food and beverage .......................................................... 37,469 2.8 34,700,617 3.7 Health and personal care stores....................................... 44,489 3.4 17,179,020 1.8 Gasoline stations ............................................................. 10,535 0.8 63,541,643 6.8 Clothing and clothing accessories stores ........................ 116,201 8.8 48,703,455 5.2 Sporting goods, hobby, book, and music stores.............. 31,675 2.4 10,803,928 1.2 General merchandise stores ............................................ 32,957 2.5 67,343,669 7.2 Miscellaneous store retailers........................................... 164,914 12.5 25,631,272 2.7 Nonstore retailers............................................................ 83,763 6.4 69,166,754 7.4 Food services and drinking places .................................. 131,433 10.0 108,416,494 11.6 All other outlets.................................................................. 579,191 44.0 306,331,191 32.7 Total .................................................................................. 1,316,345 100.0 % $ 935,894,940 100.0 % Source: California Department of Tax and Fee Administration (CDTFA) 1 Calculated by multiplying the taxable sales by industry shown on pages 326 and 327 by the direct sales tax rate. Amounts are in thousands. 329 State of California Annual Comprehensive Financial Report Schedule of Personal Income Tax Rates For Calendar Years 2014-2023 Married Filing Jointly and Surviving Spouse 2014 2015 2016 2017 Tax Rate 1 Income Level Income Level Income Level Income Level 1.0 Up to $15,498 Up to $15,700 Up to $16,030 Up to $16,446 2.0 15,499 – 36,742 15,701 – 37,220 16,031 – 38,002 16,447 – 38,990 4.0 36,743 – 57,990 37,221 – 58,744 38,003 – 59,978 38,991 – 61,538 6.0 57,991 – 80,500 58,745 – 81,546 59,979 – 83,258 61,539 – 85,422 8.0 80,501 – 101,738 81,547 – 103,060 83,259 – 105,224 85,423 – 107,960 9.3 101,739 – 519,688 103,061 – 526,444 105,225 – 537,500 107,961 – 551,476 10.3 519,689 – 623,624 526,445 – 631,732 537,501 – 644,998 551,477 – 661,768 11.3 623,625 – 1,000,000 631,733 – 1,000,000 644,999 – 1,000,000 661,769 – 1,000,000 12.3 1,000,001 – 1,039,374 1,000,001 – 1,052,886 1,000,001 – 1,074,996 1,000,001 – 1,102,946 13.3 $1,039,375 and over $1,052,887 and over $1,074,997 and over $1,102,947 and over Single and Married Filing Separately 2014 2015 2016 2017 Tax Rate 1 Income Level Income Level Income Level Income Level 1.0 Up to $7,749 Up to $7,850 Up to $8,015 Up to $8,223 2.0 7,750 – 18,371 7,851 – 18,610 8,016 – 19,001 8,224 – 19,495 4.0 18,372 – 28,995 18,611 – 29,372 19,002 – 29,989 19,496 – 30,769 6.0 28,996 – 40,250 29,373 – 40,773 29.990 – 41,629 30,770 – 42,711 8.0 40,251 – 50,869 40,774 – 51,530 41,630 – 52,612 42,712 – 53,980 9.3 50,870 – 259,844 51,531 – 263,222 52,613 – 268,750 53,981 – 275,738 10.3 259,845 – 311,812 263,223 – 315,866 268,751 – 322,499 275,739 – 330,884 11.3 311,813 – 519,687 315,867 – 526,443 322,500 – 537,498 330,885 – 551,473 12.3 519,688 – 1,000,000 526,444 – 1,000,000 537,499 – 1,000,000 551,474 – 1,000,000 13.3 $1,000,001 and over $1,000,001 and over $1,000,001 and over $1,000,001 and over Head of Household 2014 2015 2016 2017 Tax Rate 1 Income Level Income Level Income Level Income Level 1.0 Up to $15,508 Up to $15,710 Up to $16,040 Up to $16,457 2.0 15,509 – 36,743 15,711 – 37,221 16,041 – 38,003 16,458 – 38,991 4.0 36,744 – 47,366 37,222 – 47,982 38,004 – 48,990 38,992 – 50,264 6.0 47,367 – 58,621 47,983 – 59,383 48,991 – 60,630 50,265 – 62,206 8.0 58,622 – 69,242 59,384 – 70,142 60,631 – 71,615 62,207 – 73,477 9.3 69,243 – 353,387 70,143 – 357,981 71,616 – 365,499 73,478 – 375,002 10.3 353,388 – 424,065 357,982 – 429,578 365,500 – 438,599 375,003 – 450,003 11.3 424,066 – 706,774 429,579 – 715,962 438,600 – 730,997 450,004 – 750,003 12.3 706,775 – 1,000,000 715,963 – 1,000,000 730,998 – 1,000,000 750,004 – 1,000,000 13.3 $1,000,001 and over $1,000,001 and over $1,000,001 and over $1,000,001 and over Source: California Franchise Tax Board (FTB) 1 FTB tax brackets are indexed to the California Consumer Price Index and are adjusted accordingly on a yearly basis. Average Effective Rate (amounts in thousands) 2014 2015 2016 2017 Personal income tax revenue 1 ................................ $ 67,584,256 $ 76,879,115 $ 78,510,777 $ 84,253,851 Adjusted gross income 2.......................................... $ 1,216,002,700 $ 1,265,341,200 $ 1,318,362,700 $ 1,430,332,000 Average effective rate 3 ........................................... 5.6 % 6.1 % 6.0 % 5.9 % 1 Personal income tax revenue is reported on a fiscal year basis. 2 Source: California Franchise Tax Board. Fiscal year 2023 information reflects returns processed as of December 2024 3 The average effective rate equals personal income tax revenue divided by adjusted gross income. 330 Statistical Section Married Filing Jointly and Surviving Spouse 2018 2019 2020 2021 2022 2023 Income Level Income Level Income Level Income Level Income Level Income Level Up to $17,088 Up to $17,618 Up to $17,864 Up to $18,650 Up to $20,198 Up to $20,824 17,089 – 40,510 17,619 – 41,766 17,865 – 42,350 18,651 – 44,214 20,199 – 47,884 20,825 – 49,368 40,511 – 63,938 41,767 – 65,920 42,351 – 66,842 44,215 – 69,784 47,885 – 75,576 49,369 – 77,918 63,939 – 88,754 65,921 – 91,506 66,843 – 92,788 69,785 – 96,870 75,577 – 104,910 77,919 – 108,162 88,755 – 112,170 91,507 – 115,648 92,789 – 117,268 96,871 – 122,428 104,911 – 132,590 108,163 – 136,700 112,171 – 572,984 115,649 – 590,746 117,269 – 599,016 122,429 – 625,372 132,591 – 677,278 136,701 – 698,274 572,985 – 687,576 590,747 – 708,890 599,017 – 718,814 625,373 – 750,442 677,279 – 812,728 698,275 – 837,922 687,577 – 1,000,000 708,891 – 1,000,000 718,815 – 1,000,000 750,443 – 1,000,000 812,729 – 1,000,000 837,923 – 1,000,000 1,000,001 – 1,145,960 1,000,001 – 1,181,484 1,000,001 – 1,198,024 1,000,001 – 1,250,738 1,000,001 – 1,354,550 1,000,001 – 1,396,542 $1,145,961 and over $1,181,485 and over 1,198,025 and over 1,250,739 and over 1,354,551 and over 1,396,543 and over Single and Married Filing Separately 2018 2019 2020 2021 2022 2023 Income Level Income Level Income Level Income Level Income Level Income Level Up to $8,544 Up to $8,809 Up to $8,932 Up to $9,325 Up to $10,099 Up to $10,412 8,545 – 20,255 8,810 – 20,883 8,933 – 21,175 9,326 – 22,107 10,099 – 23,942 10,413 – 24,684 20,256 – 31,969 20,884 – 32,960 21,176 – 33,421 22,108 – 34,892 23,943 – 37,788 24,685 – 38,959 31,970 – 44,377 32,961 – 45,753 33,422 – 46,394 34,893 – 48,435 37,789 – 52,455 38,960 – 54,081 44,378 – 56,085 45,754 – 57,824 46,395 – 58,634 48,436 – 61,214 52,456 – 66,295 54,082 – 68,350 56,086 – 286,492 57,825 – 295,373 58,635 – 295,508 61,215 – 312,686 66,296 – 338,639 68,351 – 349,137 286,493 – 343,788 295,374 – 354,445 295,509 – 359,407 312,687 – 375,221 338,640 – 406,364 349,138 – 418,961 343,789 – 572,980 354,446 – 590,742 359,408 – 599,012 375,222 – 625,369 406,365 – 677,275 418,962 – 698,271 572,981 – 1,000,000 590,743 – 1,000,000 599,013 – 1,000,000 625,370 – 1,000,000 677,276 – 1,000,000 698,272 – 1,000,000 $1,000,001 and over $1,000,001 and over $1,000,001 and over $1,000,001 and over $1,000,001 and over $1,000,001 and over Head of Household 2018 2019 2020 2021 2022 2023 Income Level Income Level Income Level Income Level Income Level Income Level Up to $17,099 Up to $17,629 Up to $17,876 Up to $18,663 Up to $20,212 Up to $20,839 17,099 – 40,512 17,630 – 41,768 17,877 – 42,353 18,664 – 44,217 20,213 – 47,887 20,840 – 49,371 40,512 – 52,224 41,769 – 53,843 42,354 – 54,597 44,218 – 56,999 47,888 – 61,730 49,372 – 63,765 52,224 – 64,632 53,844 – 66,636 54,598 – 67,569 57,000 – 70,542 61,731 – 76,397 63,765 – 78,765 64,632 – 76,343 66,637 – 78,710 67,570 – 79,812 70,543 – 83,324 76,398 – 90,240 78,766 – 93,037 76,343 – 389,627 78,711 – 401,705 79,813 – 407,329 83,325 – 425,251 90,241 – 460,547 93,038 – 474,824 389,627 – 467,553 401,706 – 482,047 407,330 – 488,796 425,252 – 510,303 460,548 – 552,658 474,825 – 569,790 467,553 – 779,253 482,048 – 803,410 488,797 – 814,658 510,304 – 850,503 552,659 – 921,095 569,791 – 949,649 779,253 – 1,000,000 803,411 – 1,000,000 814,659 – 1,000,000 850,504 – 1,000,000 921,096 – 1,000,000 949,650 – 1,000,000 $1,000,001 and over $1,000,001 and over $1,000,001 and over $1,000,001 and over $1,000,001 and over 1,000,001 and over 2018 2019 2020 2021 2022 2023 $ 92,808,996 $ 95,026,913 $ 110,352,220 $ 129,514,535 $ 112,736,701 $ 109,539,318 $ 1,531,670,000 $ 1,596,322,000 $ 1,693,751,000 $ 1,991,347,000 $ 1,883,047,000 $ 1,912,092,000 6.1 % 6.0 % 6.5 % 6.5 % 6.0 % 5.7 % 331 State of California Annual Comprehensive Financial Report This page intentionally left blank 332 Debt Capacity Debt capacity schedules contain information to help the reader understand the State’s outstanding debt, the capacity to repay that debt, and the ability to issue additional debt in the future. This section includes the following debt capacity schedules. Schedule of Ratios of Outstanding Debt by Type Schedule of Ratios of General Bonded Debt Outstanding Schedule of General Obligation Bonds Outstanding Schedule of Pledged Revenue Coverage Sources: Unless otherwise noted, the information in the following schedules is derived from the State’s Annual Comprehensive Financial Reports. 333 State of California Annual Comprehensive Financial Report Schedule of Ratios of Outstanding Debt by Type For the Past Ten Fiscal Years (amounts in thousands, except per capita) 2015 2016 2017 2018 Governmental activities General obligation bonds 1 ............................................. $ 80,509,802 $ 79,043,295 $ 79,503,871 $ 79,663,028 Revenue bonds ............................................................... 18,409,971 17,210,499 16,879,900 16,364,255 Certificates of participation and commercial paper 2 ..... 493,770 771,215 1,158,080 859,695 Capital lease obligations 5 .............................................. 274,760 370,182 416,468 481,261 Lease Liability ............................................................... — — — — Subscription Liability ..................................................... — — — — Total governmental activities ......................................... 99,688,303 97,395,191 97,958,319 97,368,239 Business-type activities General obligation bonds 1 ............................................. 650,133 794,369 703,754 694,100 Revenue bonds ............................................................... 12,670,619 13,928,374 14,955,858 14,319,372 Commercial paper........................................................... 237,186 47,416 147,765 749,877 Capital lease obligations 5............................................... 1,210,409 389,385 353,453 309,928 Lease Liability ................................................................ — — — — Subscription Liability ..................................................... — — — — Total business-type activities .......................................... 14,768,347 15,159,544 16,160,830 16,073,277 Total primary government ............................................. $ 114,456,650 $ 112,554,735 $ 114,119,149 $ 113,441,516 Debt as a percentage of personal income 3........................ 5.7% 5.2% 5.0% 4.8% Amount of debt per capita 4............................................... $ 2,965 $ 2,892 $ 2,914 $ 2,882 Note: Details regarding the State’s outstanding debt can be found in Notes 10, 13, 14, 16, and 17 of the financial statements. 1 Beginning in fiscal year 2013, refunding gains/losses are no longer included in bonds payable, but are shown as deferred inflows and deferred outflows of resources. 2 All certificates of participation were retired in fiscal year 2016. 3 Ratio calculated using personal income data shown on pages 344 and 345 for the prior calendar year. 4 Amount calculated using population data shown on pages 344 and 345 for the prior calendar year. 5 Due to implementation of GASB 87, capital lease obligations are no longer reported. 334 Statistical Section 2019 2020 2021 2022 2023 2024 $ 78,772,850 $ 78,883,746 $ 78,481,408 $ 77,346,130 $ 78,693,097 $ 79,487,028 15,711,660 15,905,264 15,998,239 17,157,391 16,097,912 16,579,772 1,032,760 1,108,720 1,176,235 1,448,725 1,327,110 1,031,170 434,876 393,089 359,812 — — — — — — 2,659,291 2,513,875 2,825,009 — — — 160,866 136,463 122,903 95,952,146 96,290,819 96,015,694 98,772,403 98,768,457 100,045,882 850,762 788,052 598,384 536,352 675,362 645,984 14,521,460 14,277,362 14,806,645 14,421,501 14,605,513 15,165,379 799,643 1,049,226 401,219 323,313 401,804 656,727 315,322 357,072 336,081 — — — — — — 332,851 358,448 525,824 — — — 95,145 66,804 55,436 16,487,187 16,471,712 16,142,329 15,709,162 16,107,931 17,049,350 $ 112,439,333 $ 112,762,531 $ 112,158,023 $ 114,481,565 $ 114,876,388 $ 117,095,232 4.5% 4.3% 4.1% 3.8% 3.8% 3.7% $ 2,849 $ 2,859 $ 2,839 $ 2,925 $ 2,935 $ 2,987 335 State of California Annual Comprehensive Financial Report Schedule of Ratios of General Bonded Debt Outstanding For the Past Ten Fiscal Years (amounts in thousands, except per capita) 2015 2016 2017 2018 Net general bonded debt General obligation bonds 1.............................................. $ 80,215,650 $ 79,837,664 $ 79,503,871 $ 80,357,128 Economic Recovery bonds ............................................. 944,285 — — — Less: restricted debt service fund................................. 818,321 — — — Net Economic Recovery bonds 2 .................................... 125,964 — — — Net general bonded debt.................................................. $ 80,341,614 $ 79,837,664 $ 79,503,871 $ 80,357,128 Net general bonded debt as a percentage of personal income 3............................................................. 4.0% 3.7% 3.5% 3.4% Amount of net general bonded debt per capita 4................ $ 2,082 $ 2,051 $ 2,030 $ 2,042 Note: Details regarding the State’s general bonded debt outstanding can be found in Note 16 of the financial statements. 1 Beginning in fiscal year 2013, refunding gains/losses are no longer included in bonds payable, but are shown as deferred inflows and deferred outflows of resources. 2 In fiscal year 2016, the outstanding balance of the Economic Recovery bonds was defeased and the balance in the restricted debt service fund was transferred out. 3 Ratio calculated using personal income data shown on pages 344 and 345 for the prior calendar year. 4 Amount calculated using population data shown on pages 344 and 345 for the prior calendar year. 336 Statistical Section 2019 2020 2021 2022 2023 2024 $ 79,623,612 $ 79,671,798 $ 79,079,792 $ 77,882,481 $ 79,368,459 $ 80,133,012 — — — — — — — — — — — — — — — — — — $ 79,623,612 $ 79,671,798 $ 79,079,792 $ 77,882,481 $ 79,368,459 $ 80,133,012 3.2% 3.0% 2.9% 2.6% 2.6% 2.5% $ 2,018 $ 2,020 $ 2,002 $ 1,990 $ 2,033 $ 2,044 337 State of California Annual Comprehensive Financial Report Schedule of General Obligation Bonds Outstanding June 30, 2024 (amounts in thousands) Governmental activity California Clean Water, Clean Air, Safe Neighborhood Parks, and Coastal Protection ........................................ $ 1,501,870 California Drought, Water, Parks, Climate, Coastal Protection, and Out Door Access For All ............................ 1,298,955 California Library Construction and Renovation ................................................................................................... 188,080 California Park and Recreational Facilities ............................................................................................................ 1,555 California Parklands................................................................................................................................................ 50 California Safe Drinking Water.............................................................................................................................. 13,495 California Stem Cell Research and Cures............................................................................................................... 1,605,360 California Wildlife, Coastal, and Park Land Conservation .................................................................................... 18,155 Children’s Hospital ................................................................................................................................................. 1,453,535 Class-Size Reduction Public Education Facilities .................................................................................................. 2,905,735 Clean Air and Transportation Improvement........................................................................................................... 202,845 Clean Water ............................................................................................................................................................ 100 Clean Water and Water Conservation..................................................................................................................... 755 Clean Water and Water Reclamation...................................................................................................................... 3,000 County Correctional Facility Capital Expenditure and Youth Facility .................................................................. 6,875 Disaster Preparedness and Flood Prevention.......................................................................................................... 2,781,900 Earthquake Safety and Public Buildings Rehabilitation......................................................................................... 2,200 Fish and Wildlife Habitat Enhancement................................................................................................................. 1,925 Higher Education Facilities..................................................................................................................................... 53,050 Highway Safety, Traffic Reduction, Air Quality, and Port Security...................................................................... 12,951,205 Housing and Emergency Shelter............................................................................................................................. 891,840 Kindergarten-University Public Education Facilities ............................................................................................. 28,091,905 New Prison Construction ........................................................................................................................................ 3,145 Public Education Facilities ..................................................................................................................................... 484,125 Safe, Clean, Reliable Water Supply........................................................................................................................ 289,075 Safe Drinking Water, Clean Water, Watershed Protection, and Flood Protection................................................. 875,730 Safe Drinking Water, Water Quality and Supply, Flood Control, River and Coastal Protection........................... 3,152,255 Safe Neighborhood Parks, Clean Water, Clean Air, and Coastal Protection ......................................................... 878,810 Safe, Reliable High-Speed Passenger Train ........................................................................................................... 5,185,860 School Building and Earthquake ............................................................................................................................ 2,660 School Facilities...................................................................................................................................................... 70,200 Seismic Retrofit ...................................................................................................................................................... 550,150 State, Urban, and Coastal Park ............................................................................................................................... 535 Veterans and Affordable Housing ......................................................................................................................... 969,855 Veterans Homes...................................................................................................................................................... 29,455 Veterans Housing and Homeless Prevention.......................................................................................................... 242,020 Voting Modernization ............................................................................................................................................ 35,635 Water Conservation ................................................................................................................................................ 4,575 Water Conservation and Water Quality.................................................................................................................. 5,715 Water Quality, Supply, and Infrastructure Improvement ....................................................................................... 2,913,435 Water Security, Clean Drinking Water, Coastal and Beach Protection.................................................................. 2,074,570 Total governmental activity............................................................................................................................... 71,742,195 Business-type activity California Water Resources Development.............................................................................................................. 35 Veterans’ Farm and Home Purchase....................................................................................................................... 634,445 Total business-type activity................................................................................................................................ 634,480 Total outstanding general obligation bonds................................................................................................. 72,376,675 Unamortized bond premiums/discounts ..................................................................................................................... 7,756,337 * Total general obligation bonds payable .............................................................................................................. $ 80,133,012 Source: California State Treasurer’s Office, except for SCO calculated amount denoted by * 338 Statistical Section This page intentionally left blank 339 State of California Annual Comprehensive Financial Report Schedule of Pledged Revenue Coverage For the Past Ten Fiscal Years (amounts in thousands) Net Revenue Debt Service Requirements 3 Gross Operating Available for June 30 Revenue 1 Expenses 2 Debt Service Principal Interest Total Coverage Housing Loans 2015 $ 57,742 $ 24,413 $ 33,329 $ 12,960 $ 14,095 $ 27,055 1.23 2016 53,428 21,916 31,512 381,175 21,525 402,700 0.08 2017 52,117 30,926 21,191 131,010 11,368 142,378 0.15 2018 52,480 25,943 26,537 14,000 10,380 24,380 1.09 2019 59,743 20,248 39,495 6,435 11,401 17,836 2.21 2020 61,588 15,463 46,125 17,980 11,392 29,372 1.57 2021 51,953 20,035 31,918 79,140 11,296 90,436 0.35 2022 45,820 18,656 27,164 142,575 9,132 151,707 0.18 2023 53,383 18,358 35,025 25,145 11,130 36,275 0.97 2024 66,485 18,134 48,351 31,510 11,109 42,619 1.13 Water Resources 2015 $ 1,019,378 $ 607,407 $ 411,971 $ 203,481 $ 200,563 $ 404,044 1.02 2016 1,086,650 796,591 290,059 171,455 84,099 255,554 1.14 2017 1,223,340 941,984 281,356 134,185 34,408 168,593 1.67 2018 1,221,866 820,163 401,703 138,570 75,670 214,240 1.88 2019 1,172,134 784,173 387,961 129,400 86,809 216,209 1.79 2020 1,155,001 720,577 434,424 147,035 139,197 286,232 1.52 2021 1,125,002 856,011 268,991 172,815 87,404 260,219 1.03 2022 1,295,670 660,537 635,133 160,300 88,108 248,408 2.56 2023 1,531,195 908,463 622,732 217,147 8,051 225,198 2.77 2024 1,657,882 933,401 724,481 222,140 121,751 343,891 2.11 Water Pollution 2015 $ 56,350 $ 1,092 $ 55,258 $ 13,000 $ 293 $ 13,293 4.16 Control 2016 59,034 321 58,713 13,000 2,199 15,199 3.86 2017 65,635 350 65,285 12,940 12,458 25,398 2.57 2018 77,135 183 76,952 27,350 28,748 56,098 1.37 2019 86,828 435 86,393 58,845 37,384 96,229 0.90 2020 80,627 353 80,274 77,170 35,174 112,344 0.71 2021 66,662 355 66,307 82,615 33,155 115,770 0.57 2022 61,698 510 61,188 87,375 30,656 118,031 0.52 2023 71,514 2,265 69,249 92,820 39,140 131,960 0.52 2024 95,601 9,114 86,487 94,250 50,123 144,373 0.60 (continued) Source: California State Controller’s Office 1 Total gross revenue includes non-operating interest revenue. Building authorities’ revenue includes operating transfers in. The nature of the revenue pledged for each type of debt is as follows: investment and interest earnings for Housing Loans bonds and Water Pollution Control bonds; charges for services and sales for Water Resources bonds; power sales revenue for Electric Power bonds; rental revenue for Public Buildings Construction bonds and building authorities bonds; residence fees for California State University bonds; tobacco settlements and investment earnings for the Golden State Tobacco Securitization Corporation bonds; and federal transportation funds for Grant Anticipation Revenue Vehicles. 2 Total operating expenses are exclusive of depreciation, interest expense, and amortization (recovery) of long-term prepaid charges and refunding gains/ losses. 3 Debt service requirements include principal and interest of revenue bonds. 4 All revenue bonds have been redeemed. 5 Federal transportation funds are the only source of state revenue to pay these bonds, and the state obligation to pay debt service on these bonds is limited to and dependent on receipt of the federal funds. 6 San Francisco State Building Authority bond was paid off in fiscal year 2021-2022. Oakland State Building Authority and Riverside County Public Financing Authority final debt service payment was made during the year ended June 30, 2023. 340 Statistical Section Schedule of Pledged Revenue Coverage For the Past Ten Fiscal Years (amounts in thousands) Net Revenue Debt Service Requirements 3 Gross Operating Available for June 30 Revenue 1 Expenses 2 Debt Service Principal Interest Total Coverage Electric Power 2015 $ 799,000 $ (132,000) $ 931,000 $ 618,000 $ 268,000 $ 886,000 1.05 2016 728,000 (182,000) 910,000 669,000 253,000 922,000 0.99 2017 945,000 (29,000) 974,000 690,000 215,000 905,000 1.08 2018 952,000 — 952,000 719,000 175,000 894,000 1.06 2019 923,000 (5,000) 928,000 753,000 139,000 892,000 1.04 2020 925,000 (11,000) 936,000 970,000 109,000 1,079,000 0.87 2021 299,000 (7,000) 306,000 735,000 48,000 783,000 0.39 2022 311,000 (140,000) 451,000 — — — — 2023 1,000 (1) 1,001 — 1,001 1,001 1.00 2024 1,000 — 1,000 — 1,000 1,000 1.00 Public Buildings 2015 $ 462,703 $ 3,646 $ 459,057 $ 782,975 $ 492,868 $ 1,275,843 0.36 Construction 2016 413,807 6,455 407,352 1,192,065 452,796 1,644,861 0.25 2017 447,238 6,899 440,339 481,680 402,201 883,881 0.50 2018 440,902 4,023 436,879 709,805 415,551 1,125,356 0.39 2019 442,022 1,945 440,077 518,640 363,983 882,623 0.50 2020 422,614 4,430 418,184 635,985 353,371 989,356 0.42 2021 344,095 4,879 339,216 535,695 345,741 881,436 0.38 2022 366,050 7,396 358,654 1,922,085 411,384 2,333,469 0.15 2023 383,331 3,936 379,395 1,294,870 307,543 1,602,413 0.24 2024 377,632 9,548 368,084 1,186,620 331,936 1,518,556 0.24 California State 2015 $ 4,780,280 $ 6,363,534 $ (1,583,254) $ 400,412 $ 177,642 $ 578,054 (2.74) University 2016 4,937,116 6,672,956 (1,735,840) 114,585 166,964 281,549 (6.17) 2017 5,030,325 7,479,645 (2,449,320) 120,570 200,678 321,248 (7.62) 2018 5,393,953 9,225,942 (3,831,989) 296,516 255,133 551,649 (6.95) 2019 5,573,812 9,139,677 (3,565,865) 237,971 297,486 535,457 (6.66) 2020 5,695,853 9,908,839 (4,212,986) 299,162 342,642 641,804 (6.56) 2021 6,279,180 9,685,352 (3,406,172) 245,384 364,037 609,421 (5.59) 2022 7,675,072 9,969,192 (2,294,120) 498,712 345,120 843,832 (2.72) 2023 6,622,233 9,990,465 (3,368,232) 603,600 339,531 943,131 (3.57) 2024 7,220,812 10,878,380 (3,657,568) 811,184 375,411 1,186,595 (3.08) (continued) 341 State of California Annual Comprehensive Financial Report Schedule of Pledged Revenue Coverage (continued) For the Past Ten Fiscal Years (amounts in thousands) Net Revenue Debt Service Requirements 3 Gross Operating Available for June 30 Revenue 1 Expenses 2 Debt Service Principal Interest Total Coverage Building 2015 $ 54,090 $ — $ 54,090 $ 38,800 $ 19,701 $ 58,501 0.92 Authorities6 2016 48,722 — 48,722 19,815 14,502 34,317 1.42 2017 40,718 — 40,718 27,420 10,096 37,516 1.09 2018 38,251 — 38,251 30,180 7,441 37,621 1.02 2019 38,327 — 38,327 31,605 6,012 37,617 1.02 2020 35,546 — 35,546 33,215 4,383 37,598 0.95 2021 25,434 — 25,434 31,580 2,774 34,354 0.74 2022 11,478 — 11,478 29,485 1,260 30,745 0.37 2023 1,971 — 1,971 10,650 268 10,918 0.18 Golden State 2015 $ 414,992 $ 394 $ 414,598 $ 133,900 $ 292,173 $ 426,073 0.97 Tobacco 2016 365,300 586 364,714 70,535 299,935 370,470 0.98 Securitization 2017 370,612 462 370,150 745,888 308,638 1,054,526 0.35 Corporation 2018 433,836 518 433,318 2,044,750 319,550 2,364,300 0.18 2019 446,462 653 445,809 878,094 288,841 1,166,935 0.38 2020 423,369 530 422,839 154,190 265,519 419,709 1.01 2021 471,222 535 470,687 212,215 323,920 536,135 0.88 2022 482,247 371 481,876 2,981,103 799,366 3,780,469 0.13 2023 476,351 1,191 475,160 644,351 55,867 700,218 0.68 2024 392,203 955 391,248 252,750 145,327 398,077 0.98 Grant Anticipation 2015 $ 84,289 $ — $ 84,289 $ 78,090 $ 6,199 $ 84,289 1.00 Revenue 2016 11,393 — 11,393 8,970 2,423 11,393 1.00 Vehicles4, 5 2017 11,390 — 11,390 9,360 2,030 11,390 1.00 2018 11,393 — 11,393 9,830 1,563 11,393 1.00 2019 11,390 — 11,390 10,320 1,070 11,390 1.00 2020 11,390 — 11,390 10,835 555 11,390 1.00 (concluded) 342 Demographic and Economic Information The demographic and economic schedules contain trend information to help the reader understand the environment in which the State’s financial activities occur. This section includes the following demographic and economic schedules. Schedule of Demographic and Economic Indicators Schedule of Employment by Industry 343 State of California Annual Comprehensive Financial Report Schedule of Demographic and Economic Indicators For the Past Ten Calendar Years 2014 2015 2016 2017 Population (in thousands) 1 California......................................................................... 38,636 38,966 39,223 39,424 % Change...................................................................... 0.9% 0.9% 0.7% 0.5% United States ................................................................... 319,270 321,829 324,368 326,609 % Change...................................................................... 0.8% 0.8% 0.8% 0.7% Total personal income (in millions) 1 California......................................................................... $ 1,955,718 $ 2,097,050 $ 2,191,138 $ 2,295,049 % Change...................................................................... 6.2% 7.2% 4.5% 4.7% United States ................................................................... $ 14,778,160 $ 15,467,113 $ 15,884,741 $ 16,658,962 % Change...................................................................... 5.1% 4.7% 2.7% 4.9% Per capita personal income 1, 2 California......................................................................... $ 50,619 $ 53,817 $ 55,863 $ 58,214 % Change...................................................................... 5.3% 6.3% 3.8% 4.2% United States ................................................................... $ 46,287 $ 48,060 $ 48,971 $ 51,006 % Change...................................................................... 4.2% 3.8% 1.9% 4.2% Labor force and employment (in thousands) California Civilian labor force....................................................... 18,941 18,996 19,099 19,205 Employed...................................................................... 17,600 17,894 18,141 18,278 Unemployed.................................................................. 1,341 1,102 957 927 Unemployment rate ...................................................... 7.1% 5.8% 5% 4.8% United States unemployment rate ................................... 6.2% 5.3% 4.9% 4.3% Sources: Economic Research Unit, California Department of Finance; Bureau of Economic Analysis, U.S. Department of Commerce; Labor Market Information Division, California Employment Development Department; and Bureau of Labor Statistics, U.S. Department of Labor. Note: Last updated: March 29, 2024--new statistics for 2023; revised statistics for 2020-2022. 1 Some prior years were updated based on more current information. 2 Calculated by dividing total personal income by population. 344 Statistical Section 2018 2019 2020 2021 2022 2023 39,536 39,548 39,502 39,143 39,041 39,199 0.3% — -0.1% -0.9% -0.3% 0.4% 328,530 330,226 331,527 332,049 333,271 336,806 0.6% 0.5% 0.4% 0.2% 0.4% 1.1% $ 2,411,055 $ 2,537,951 $ 2,767,521 $ 3,013,677 $ 3,006,647 $ 3,166,135 5.1% 5.3% 9.0% 8.9% -0.2% 5.3% $ 17,514,402 $ 18,343,601 $ 19,609,985 $ 21,392,812 $ 21,820,248 $ 23,380,269 5.1% 4.7% 6.9% 9.1% 2.0% 7.1% $ 60,984 $ 64,174 $ 70,061 $ 76,991 $ 77,013 $ 80,771 4.8% 5.2% 9.2% 9.9% — 4.9% $ 53,311 $ 55,547 $ 59,150 $ 64,427 $ 65,473 $ 69,418 4.5% 4.2% 6.5% 8.9% 1.6% 6.0% 19,307 18,743 18,920 19,234 19,240 19,471 18,485 16,104 17,367 18,445 18,325 18,552 821 2,640 1,553 789 914 919 4.3% 14.1% 8.2% 4.1% 4.7% 4.7% 3.9% 3.7% 8.1% 5.3% 3.6% 3.6% 345 State of California Annual Comprehensive Financial Report Schedule of Employment by Industry For Calendar Years 2014 and 2023 2014 2023 Percent Percent of Total State of Total State Employees Employment Employees Employment Industry Services ............................................................... 7,097,800 44.4 % 8,526,500 46.8 % Government Federal .............................................................. 184,200 1.1 189,600 1.0 Military ............................................................. 58,200 0.4 61,000 0.3 State and Local ................................................. 2,171,500 13.6 2,349,500 12.9 Retail trade .......................................................... 1,615,700 10.1 1,606,300 8.8 Manufacturing ..................................................... 1,282,100 8.0 1,285,600 7.1 Information, finance, and insurance .................... 985,000 6.2 1,066,700 5.8 Construction and utilities ..................................... 732,900 4.6 976,800 5.4 Wholesale trade.................................................... 684,200 4.3 666,800 3.7 Transportation and warehousing ......................... 468,900 2.9 766,900 4.2 Farming ............................................................... 416,800 2.6 407,700 2.2 Real estate ........................................................... 265,800 1.6 305,200 1.7 Natural resources and mining ............................. 29,400 0.2 19,400 0.1 Total ....................................................................... 15,992,500 100.0 % 18,228,000 100.0 % Source: Labor Market Information Division, California Employment Development Department 346 Operating Information The operating information schedules assist the reader in evaluating the size, efficiency, and effectiveness of the State’s government. This section includes the following operating information schedules. Schedule of Full-time Equivalent State Employees by Function Schedule of Operating Indicators by Function Schedule of Capital Asset Statistics by Function 347 State of California Annual Comprehensive Financial Report Schedule of Full-time Equivalent State Employees by Function For the Past Ten Fiscal Years Natural Resources Health and State and Business, Corrections General and Human Environmental Consumer Transportation, and Government Education Services Protection Services and Housing Rehabilitation Total Fiscal Year 2014 43,858 136,244 44,343 24,156 5,409 39,015 60,871 353,896 Natural Resources Business, Health and Consumer Corrections General and Human Environmental Services, and Government1 Education Services Protection and Housing1 Transportation1 Rehabilitation Total Fiscal Year 2015 45,383 139,958 44,589 24,996 5,552 39,636 60,745 360,859 2016 42,904 146,552 40,943 22,804 5,083 39,050 53,344 350,680 2017 44,844 154,479 41,350 23,880 5,153 38,375 53,662 361,743 2018 44,041 161,842 40,399 21,785 5,327 38,488 56,638 368,520 2019 44,989 164,337 40,761 24,447 5,644 39,670 57,140 376,988 2020 45,028 166,059 41,965 25,410 5,876 40,316 57,812 382,466 2021 45,300 166,799 48,596 26,187 6,008 40,454 57,350 390,694 2022 50,360 169,350 51,137 30,701 7,430 41,444 61,823 412,245 2023 52,052 176,300 50,670 33,210 7,749 42,477 64,828 427,286 2024 53,250 173,452 50,803 34,821 7,877 42,737 62,421 425,360 Source: Annual Governor’s Budget Summary, California Department of Finance Note: The number of full-time equivalent employees is calculated by counting each person who works full time as one full-time equivalent and those who work part time as fractional equivalents based on time worked. 1 Effective July 1, 2013, under the Governor’s 2012 Reorganization Plan No. 2, a significant reorganization took place that impacted previously reported functions. The Government Operations Agency, including but not limited to Franchise Tax Board, Department of General Services, and the Public Employees’ Retirement System, was created and added to the General Government function. Also, the business and housing components under the previously reported Business, Transportation, and Housing function merged with the State and Consumer Services function and the remaining transportation components now comprise the Transportation Agency. Information reported under the new functions are not comparable to that of prior years. 348 Statistical Section This page intentionally left blank 349 State of California Annual Comprehensive Financial Report Schedule of Operating Indicators by Function For the Past Ten Fiscal Years 2015 2016 2017 2018 General Government State Lottery Total revenue 1 ........................................................ $ 5,525 $ 6,276 $ 6,233 $ 6,966 Allocation to Education Fund 1 ............................... $ 1,364 $ 1,563 $ 1,499 $ 1,665 Judicial Council of California Supreme Court 2, 9 Cases filed ........................................................... 7,871 8,090 7,325 6,825 Cases disposed..................................................... 7,554 7,953 6,993 6,726 Courts of Appeal 9 Notices of appeal filed 3 Civil ................................................................. 6,062 5,935 5,975 6,002 Criminal........................................................... 7,113 6,714 5,593 5,221 Juvenile............................................................ 3,036 3,025 3,029 3,068 Trial Courts 9 Total civil cases 4 Filings .............................................................. 1,145,892 1,148,205 1,198,076 1,235,568 Dispositions ..................................................... 1,118,443 1,031,105 1,039,092 985,039 Department of Food and Agriculture Milk production (million lbs.) 5, 9 ............................ 40,897 40,469 39,798 40,404 Farm land (thousand acres) 5 ................................... 24,900 24,800 24,500 24,300 Education Public Colleges and Universities Fall enrollment 9 Community Colleges........................................... 1,674,652 1,674,798 1,681,195 1,681,514 California State University.................................. 474,571 478,638 484,297 481,210 University of California ...................................... 257,438 270,112 278,996 286,271 K-12 Schools Fall enrollment 9 Public................................................................... 6,235,520 6,226,737 6,228,235 6,220,413 Private.................................................................. 503,295 500,543 490,966 488,854 Sources: California State Lottery; Judicial Council of California; U.S. Department of Agriculture, National Agricultural Statistics Service; California Departments of the California Highway Patrol, Finance, Fish and Wildlife, Education, Public Health, Motor Vehicles, Transportation, Corrections and Rehabilitation; Employment Development Department; California Energy Commission; Franchise Tax Board; California Community Colleges Chancellor’s Office; The California State University, and California Department of Education. Note: This schedule presents data available as of September 2024. 1 Dollars in millions. 2 Includes death penalty cases, habeas corpus related to automatic appeals, petitions for review, original proceedings, and State Bar matters. 3 Includes only one notice of appeal per case. 4 Includes personal injury, property damage, wrongful death, small claims, family law, probate, and other cases. 5 Data based on calendar year. 6 Total nonfarm and farm. 7 Data compiled from a 10% sample of California licensed drivers. 8 A center-line mile is measured by the yellow dividing strip that runs down the middle of the road, regardless of the number of lanes on each side. 9 Some prior years were updated based on more current information. 10 The amount for fiscal year 2024 is projected. N/A = Not Available 350 Statistical Section 2019 2020 2021 2022 2023 2024 $ 7,388 $ 6,622 $ 8,418 $ 8,853 $ 9,239 $ 9,275 $ 1,825 $ 1,437 $ 1,863 $ 2,020 $ 2,257 $ 2,221 6,896 6,485 6,542 5,680 5,490 4,944 7,048 6,354 6,314 5,776 5,764 4,825 5,697 5,144 4,769 5,390 5,904 6,316 5,577 6,286 4,546 4,321 6,665 7,952 3,332 2,818 3,223 3,916 3,689 3,504 1,289,017 1,112,225 989,249 1,019,879 1,114,331 886,644 1,110,908 996,977 572,540 602,481 605,058 619,621 40,595 41,311 41,861 41,800 40,902 40,283 24,300 24,300 24,300 24,200 23,800 23,700 1,659,399 1,459,960 1,355,658 1,386,854 1,517,943 1,315,733 481,929 485,550 477,466 457,992 454,640 461,612 285,216 285,862 294,662 294,309 295,573 299,407 6,186,278 6,163,001 6,002,523 5,852,544 5,837,690 5,837,700 495,693 488,984 471,653 498,486 516,571 501,650 (continued) 351 State of California Annual Comprehensive Financial Report Schedule of Operating Indicators by Function (continued) For the Past Ten Fiscal Years 2015 2016 2017 2018 Health and Human Services Department of Public Health Vital statistics Live births 5, 10 ......................................................... 491,789 488,925 471,806 454,244 Department of Social Services Calfresh programs households (avg. per month)......... 2,102,031 2,130,583 2,032,818 1,979,526 Employment Development Department Number of employed 5, 6, 9.......................................... 16,474,300 16,905,700 17,249,500 17,593,600 Resources Department of Fish and Wildlife Sport fishing licenses sold 5, 9 ..................................... 2,485,400 2,508,490 2,502,863 2,498,077 Hunting licenses sold 5, 9 ............................................. 2,131,655 2,143,146 2,143,026 2,113,888 California Energy Commission Electrical energy generation plus net imports (gigawatt hours) 9 ......................... 295,878 290,797 292,115 285,884 Business, Consumer Services, and Housing Franchise Tax Board Personal Income Tax 5, 9 Number of tax returns filed...................................... 16,293,947 16,586,622 16,888,470 17,101,753 Taxable income 1..................................................... $ 1,127,700 $ 1,159,688 $ 1,259,819 $ 1,357,636 Total tax liability 1 .................................................. $ 70,677 $ 71,558 $ 79,999 $ 87,168 Corporation Tax 5, 9 Number of tax returns filed..................................... 865,593 900,358 936,211 974,652 Income reported for taxation 1 ................................ $ 140,534 $ 129,452 $ 127,290 $ 172,954 Total tax liability 1 .................................................. $ 9,235 $ 9,276 $ 8,822 $ 11,625 Transportation California Highway Patrol Total number of DUI arrests 5 .................................... 65,016 63,210 58,894 59,708 Department of Motor Vehicles Motor vehicle registration 5, 9...................................... 34,346,325 34,721,195 35,391,347 35,707,821 License issued by age 5, 7, 9 Under age 18........................................................... 221,250 225,569 219,572 213,402 Between 18-80 ........................................................ 25,089,910 25,639,270 26,078,773 26,275,559 Over age 80.............................................................. 603,691 619,807 659,530 647,831 Department of Transportation Highway center-line miles – rural 5, 8, 9....................... 10,407 10,259 10,259 10,259 Highway center-line miles – urban 5, 8, 9 ..................... 4,686 4,833 4,833 4,833 Correctional Programs Department of Corrections and Rehabilitation Division of Adult Institutions Institution population at December 31 each year ... 127,815 129,415 130,263 127,709 Division of Juvenile Justice Institution population at June 30 each year............. 681 690 638 629 352 Statistical Section 2019 2020 2021 2022 2023 2024 446,548 448,758 436,883 437,326 435,328 401,222 1,782,500 2,249,323 2,446,529 2,618,623 2,963,047 2,549,135 17,583,000 16,593,800 17,162,300 18,089,000 18,231,700 N/A 2,371,800 2,780,352 2,713,545 2,430,559 2,477,182 2,230,443 2,043,323 2,404,425 2,387,932 2,066,134 2,129,959 1,867,070 278,177 274,254 281,001 288,010 N/A N/A 17,530,141 18,381,491 17,978,845 17,475,057 N/A N/A $ 1,412,083 $ 1,519,003 $ 1,842,709 $ 1,690,307 N/A N/A $ 90,071 $ 103,753 $ 125,851 $ 97,583 N/A N/A 1,003,389 1,048,599 1,063,592 1,109,201 N/A N/A $ 191,621 $ 168,413 $ 264,189 $ 255,955 N/A N/A $ 13,861 $ 15,174 $ 27,754 $ 26,430 N/A N/A 66,059 55,692 60,271 57,244 58,764 N/A 36,423,657 35,820,417 36,229,205 35,656,590 35,727,841 35,983,261 215,084 182,187 205,668 207,465 208,109 N/A 26,439,138 26,063,084 26,560,379 26,763,045 26,802,930 N/A 650,998 624,254 696,062 750,908 754,339 N/A 10,511 10,458 10,430 N/A N/A N/A 4,547 4,564 4,597 N/A N/A N/A 124,027 95,432 99,729 91,385 94,188 91,358 720 782 677 558 N/A N/A (concluded) 353 State of California Annual Comprehensive Financial Report Schedule of Capital Asset Statistics by Function For the Past Ten Fiscal Years 2015 2016 2017 2018 General Government Department of Food and Agriculture Vehicles and mobile equipment ................................. 747 752 677 823 Square footage of structures (in thousands) ................ 455 455 462 384 Department of Justice Vehicles and mobile equipment .................................. 520 484 511 509 Department of Military Vehicles and mobile equipment .................................. 211 217 218 261 Square footage of structures (in thousands)................. 3,977 3,965 3,954 3,770 Department of Veterans Affairs Veterans homes ............................................................ 8 8 8 8 Vehicles and mobile equipment .................................. 285 235 280 292 Square footage of structures (in thousands) ................ 2,541 2,541 2,552 2,552 Education California State University Vehicles and mobile equipment ................................. 4,619 4,945 4,838 5,216 Campuses ..................................................................... 23 23 23 23 Square footage of structures (in thousands) ................ 73,988 75,292 75,786 76,227 Health and Human Services Department of Developmental Services Vehicles and mobile equipment .................................. 571 640 559 616 Developmental centers ................................................ 3 3 3 3 Square footage of structures (in thousands) ................ 4,699 3,664 3,664 3,595 Department of State Hospitals Vehicles and mobile equipment .................................. 752 678 674 728 State hospitals.............................................................. 7 8 5 5 Square footage of structures (in thousands) ................ 6,445 6,445 5,944 5,944 Source: California Department of General Services (DGS). Note: This schedule presents data available as of June 2024. 354 Statistical Section 2019 2020 2021 2022 2023 2024 633 780 752 672 672 639 384 384 394 394 394 394 495 485 549 536 536 503 221 241 212 212 212 222 3,268 3,254 3,253 3,217 3,191 3,168 8 8 8 8 8 8 247 276 279 278 278 282 2,536 2,541 2,541 2,541 2,524 2,524 5,246 5,397 5,447 5,434 5,467 5,569 23 23 23 23 23 23 76,969 78,447 79,572 80,271 81,973 83,383 600 490 418 392 392 340 2 2 2 2 2 3,578 2,321 2,321 2,321 2,321 2,321 820 969 900 973 973 924 5 5 5 5 5 5 6,425 6,433 6,478 6,485 6,485 6,888 (continued) 355 State of California Annual Comprehensive Financial Report Schedule of Capital Asset Statistics by Function (continued) For the Past Ten Fiscal Years 2015 2016 2017 2018 Resources Department of Fish and Wildlife Vehicles and mobile equipment................................... 2,954 3,104 3,126 2,970 Square footage of structures (in thousands) ................ 1,311 1,297 1,322 1,322 Department of Forestry and Fire Protection Vehicles and mobile equipment .................................. 2,748 3,151 3,073 3,115 Square footage of structures (in thousands) ................ 3,664 3,666 3,677 3,640 Department of Parks and Recreation Vehicles and mobile equipment................................... 3,489 3,538 3,542 3,804 State Parks................................................................... 280 280 280 280 Acres of state park land (in thousands)........................ 1,605 1,605 1,617 1,619 Square footage of structures (in thousands) ................ 6,761 6,790 7,363 7,360 State Lands Commission Vehicles and mobile equipment .................................. 41 41 43 48 Acres of land (in thousands) ........................................ 4,482 4,480 4,480 4,480 Business, Consumer Services, and Housing Department of Consumer Affairs Vehicles and mobile equipment .................................. 554 588 596 600 Department of General Services Vehicles and mobile equipment .................................. 5,053 4,697 4,476 4,465 Square footage of structures (in thousands) ................ 19,448 19,311 19,487 19,565 Transportation California Highway Patrol Vehicles and mobile equipment .................................. 5,170 5,167 5,336 4,912 Square footage of structures (in thousands) ................ 1,169 1,211 1,191 1,182 Department of Motor Vehicles Vehicles and mobile equipment ................................ 295 287 276 283 Square footage of structures (in thousands) .............. 1,786 1,780 1,777 1,785 Department of Transportation Vehicles and mobile equipment .................................. 11,596 11,776 11,585 11,494 Square footage of structures (in thousands) ................ 7,965 7,968 7,960 7,933 Correctional Programs Department of Corrections and Rehabilitation Vehicles and mobile equipment .................................. 5,968 5,291 8,079 7,571 Prisons and juvenile facilities...................................... 39 39 40 39 Square footage of structures (in thousands) ................ 40,590 40,485 42,198 42,209 356 Statistical Section 2019 2020 2021 2022 2023 2024 3,266 3,334 3,392 3,167 3,167 3,187 1,333 1,333 1,333 1,334 1,333 1,314 3,144 3,090 3,681 3,608 3,608 3,745 3,626 3,654 3,765 3,762 3,775 3,747 3,571 3,794 3,835 3,878 3,878 3,947 280 280 279 280 280 280 1,618 1,641 1,360 1,643 1,643 1,642 7,544 7,554 7,558 7,429 7,224 7,316 42 43 44 43 43 40 4,480 4,480 4,480 4,480 4,480 4,480 622 671 614 612 612 590 4,552 4,664 4,838 4,838 4,876 4,440 19,490 20,267 20,285 22,017 22,031 23,565 4,946 4,807 5,656 5,362 5,362 5,654 1,199 1,301 1,302 1,308 1,308 1,292 266 314 308 314 314 321 1,785 1,785 1,785 1,785 1,785 1,812 11,483 11,449 11,416 11,303 11,303 11,957 8,074 8,096 8,365 8,402 8,783 8,998 7,139 7,312 7,632 8,356 8,356 8,098 39 39 38 37 33 31 42,605 42,936 42,932 42,932 42,940 42,603 (concluded) 357 State of California Annual Comprehensive Financial Report This page intentionally left blank Acknowledgments STATE OF CALIFORNIA Office of the State Controller MALIA M. COHEN CALIFORNIA STATE CONTROLLER Executive Office Cathy Leal Regina Evans Chief Operating Officer Chief of Staff State Accounting and Reporting Division Ted Lambert Division Chief James Anderson, CPA Jay Singh Assistant Division Chief, Reporting Assistant Division Chief, Operations State Government Reporting Bureau Chiefs April Ramos, CPA Yi-Wen Tsai Managers Christopher Bradford May Lam Kao Saephan Janti Tam Yumi Li Eli Paul, CPA Samprit Shergill, CPA Supervisors Alex Formanyuk Will LeMarQuand Marissa Parris Wendy Tram Carrie Wylie Devon Golez Modupe Otusanya Cameron Quinn Hao Phan Staff Kutaiba Al Badri Forrest Flanagan, CPA Prabhjot Kaur Nia Mandlik, CPA Jessica Phan Jared Au Alexander Francisco Harpreet Khinda Sally Masterson Randy Phan Mark Awad Luis Gonzalez Dayne Lagazo Adnan Muhammad Nickolaus Ponce-Sánchez Gisela Brock Meredith Hatai Garcia Samantha Lam Anh Nguyen Moses Reginalds Nicole Caccam Yolandalynn Green Nangcua Lee Heather Nguyen Xiaoqing Sun Rahul Chaudhary Mila Henwood, CPA Bing Leng Elizabeth Ocaranza Fatima Toure Janet Delorey Weixian Jiang Daniel Lopez Lijo Paul Tuyen Truong Aqel Elhady Michael Kiarie Josey Lu Mauricio Perez Tayyaba Zeeshan Financial Information Editor Special Thanks Systems and Technology Estelle Manticas Garin Casaleggio Manager Supervisor Liliana Franco Andy Leung Ross Boyer Jihun Kim Staff Shivam Patel Megan Hang Thomas Wong Justine Rulloda Sylvia Liu MALIA M. COHEN California State Controller’s Office State Accounting and Reporting Division P.O. Box 942850 I Sacramento, CA 94250 I 916.445.2636 www.sco.ca.gov