2025-001—State of California: Financial Report Year Ended June 30, 2025

State of California Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2025 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 May 12, 2026 To the Citizens, Governor, and Members of the Legislature of the State of California: As California’s Chief Fiscal Officer, I am pleased to submit the State of California’s Annual Comprehensive Financial Report (ACFR) for the fiscal year ended June 30, 2025. The State Controller’s Office (SCO) is tasked with ensuring the accurate accounting of California’s finances. For more than three years, the SCO has dedicated significant time and resources toward returning the ACFR publication to its Spring target date which, until now, was last achieved in 2018. Timely publication of the fiscal year 24-25 ACFR is the capstone of ongoing engagement with reporting entities, increased efficiencies through leveraging technology, and accelerated key milestones that historically delayed publication. This year’s report was accelerated to completion just eight months after the previous ACFR – the fastest turnaround time on record. In addition, as a result of ongoing efforts to improve accuracy of financial reporting, I am proud to report that for the first time since 2019, the State has received an unmodified auditor’s opinion, meaning the financial statements are fairly presented and are reliable. This ACFR demonstrates that California is making measurable progress in financial accountability and reporting—reducing delays, resolving repeat findings, and restoring timely audited financial reporting for the fourth largest economy in the world. This report meets the requirements of Government Code section 12460 for an annual report prepared in accordance with Generally Accepted Accounting Principles (GAAP) and contains information to help readers gain a reasonable understanding of California’s financial activities and condition. The ACFR provides a detailed and transparent account of the State’s long-term obligations, capital assets, revenues, expenditures, and overall fiscal performance. As a resource, it reflects California’s strong financial stewardship, reliable accounting, and financial transparency. Our unprecedented “Team California” partnership was essential to the production of a financial report of this magnitude. The “Team California” partners included the Governor and his administration – in particular the Department of Finance, the state agencies and departments, and the Legislature who collaborated to meet the requirements of an audit performed in accordance with Generally Accepted Government Auditing Standards (GAGAS) as conducted by the California State Auditor’s Office. To illustrate the scale of the State’s financial reporting structure and the noteworthy accomplishment of this year’s financial statements, the numbers below reflect the enormity of the fiscal year 2024-25 ACFR. • $595.5 billion in revenues reported by the primary government and component units • $582.5 billion in expenses reported by the primary government and component units • $1.2 trillion in fiduciary assets held in trust by the State of California • 201 state agencies, departments, boards, and commissions 300 Capitol Mall, Suite 1850, Sacramento, CA 95814 | P.O. Box 942850, Sacramento, CA 94250 | Fax: 916.322.4404 sco.ca.gov • 1,780 fund financial statement packages from departments • 37 independent audit reports including the University of California, the California State University, California Public Employees Retirement System, and California State Teachers Retirement System. • 13,650 journal entry lines While there is no statutory deadline for publishing the ACFR, its timely and accurate completion satisfies several compliance requirements for the State and provides numerous benefits to California residents, taxpayers, creditors, and bondholders. Credit rating agencies closely evaluate the timeliness and quality of a government’s financial reporting when assessing creditworthiness, and a higher credit rating directly benefits taxpayers by lowering the State’s cost of borrowing for major infrastructure projects. If long-term interest costs are reduced, the State of California may direct more taxpayer dollars toward essential services, capital improvements, and long-term community investments rather than servicing debt. Our progress does not stop here. In addition to an accurate and on-time ACFR, my office has launched several initiatives that are transforming the future of California’s financial management and transparency with intentionality. These efforts include the following initiatives: • Book of Record Migration into FI$Cal – Migrating the State’s accounting and reporting book of record from an aging legacy mainframe system to the Financial Information System for California (FI$Cal). • Modernizing California’s State Payroll System – Modernizing California’s payroll system from an aging legacy mainframe core human resources and payroll system to an integrated solution for the State of California. • Chief Financial Officer Academy – Launching recurring financial forums later this calendar year and an annual Chief Financial Officer Public Finance Academy in the future. These forums and academy will shape the future of financial reporting in the State of California and aim to provide critical finance related education and updates, highlight emerging trends, deliver targeted training, and promote leading practices across the State government enterprise. This convening of senior finance leaders and industry experts to explore innovations and shape the future of public finance in California is similar to the State’s successful Chief Information Officer Academy. In closing, I would like to acknowledge “Team California” for every action taken and investment made in this milestone achievement. First, to the Governor and Legislature, thank you for ensuring that the SCO had the resources needed to return to accurate and on-time reporting. Second, to the Department of Finance, our 201 state agencies and departments, and our independent California State Auditor, thank you for fulfilling your respective roles in achieving this ACFR publication. And lastly, to the SCO State Accounting and Reporting team, thank you for your dedication and unwavering commitment to producing this complex financial report and realizing our goal of returning to accurate and timely ACFR reporting. We continue to move California forward through fiscal oversight and transparency! 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, 2025 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 ..................................................................................... 7 BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS Statement of Net Position................................................................................................... 34 Statement of Activities........................................................................................................ 38 FUND FINANCIAL STATEMENTS Balance Sheet – Governmental Funds ................................................................................ 42 Reconciliation of the Governmental Funds Balance Sheet to the Statement of 44 Net Position............................................................................................................... Statement of Revenues, Expenditures, and Changes in Fund Balances – 46 Governmental Funds.................................................................................................. Reconciliation of the Statement of Revenues, Expenditures, and Changes in 48 Fund Balances of Governmental Funds to the Statement of Activities............................. Statement of Net Position – Proprietary Funds ..................................................................... 50 Statement of Revenues, Expenses, and Changes in Fund Net Position – 54 Proprietary Funds ...................................................................................................... Statement of Cash Flows – Proprietary Funds...................................................................... 56 Statement of Fiduciary Net Position – Fiduciary Funds and Similar 60 Component Units....................................................................................................... Statement of Changes in Fiduciary Net Position – Fiduciary Funds and Similar 61 Component Units....................................................................................................... DISCRETELY PRESENTED COMPONENT UNITS FINANCIAL STATEMENTS Statement of Net Position – Discretely Presented Component Units – 64 Enterprise Activity...................................................................................................... Statement of Activities – Discretely Presented Component Units – 66 Enterprise Activity...................................................................................................... NOTES TO THE FINANCIAL STATEMENTS Notes to the Financial Statements – Index ........................................................................... 67 Notes to the Financial Statements....................................................................................... 71 State of California Annual Comprehensive Financial Report REQUIRED SUPPLEMENTARY INFORMATION Schedule of Changes in Net Pension Liability and Related Ratios – PERF and 190 Single-Employer Plans ............................................................................................... Schedule of State Pension Contributions – PERF and Single-Employer Plans ........................ 206 Schedule of the State’s Proportionate Share of Net Pension Liability and 212 Schedule of the State’s Contributions – CalSTRS......................................................... Schedule of Changes in Net OPEB Liability and Related Ratios – Retiree Health 214 Benefits Program....................................................................................................... Schedule of OPEB Contributions – Retiree Health Benefits Program...................................... 228 Infrastructure Assets Using the Modified Approach............................................................... 233 Budgetary Comparison Schedule – General Fund and Major Special 236 Revenue Funds ......................................................................................................... Reconciliation of Budgetary Basis Fund Balances of the General Fund and Major 238 Special Revenue Funds to GAAP Basis Fund Balances................................................ Notes to the Required Supplementary Information................................................................ 238 COMBINING FINANCIAL STATEMENTS AND SCHEDULES – NONMAJOR AND OTHER FUNDS Nonmajor Governmental Funds....................................................................................... 243 Combining Balance Sheet .................................................................................................. 246 Combining Statement of Revenues, Expenditures, and Changes in 250 Fund Balances .......................................................................................................... Budgetary Comparison Schedule – Nonmajor Governmental Funds....................................... 254 Internal Service Funds..................................................................................................... 255 Combining Statement of Net Position .................................................................................. 256 Combining Statement of Revenues, Expenses, and Changes in 260 Fund Net Position ...................................................................................................... Combining Statement of Cash Flows................................................................................... 262 Nonmajor Enterprise Funds............................................................................................. 267 Combining Statement of Net Position .................................................................................. 268 Combining Statement of Revenues, Expenses, and Changes in Fund 272 Net Position............................................................................................................... Combining Statement of Cash Flows................................................................................... 274 Fiduciary Funds and Similar Component Units – Pension and Other Employee 279 Benefit Trust Funds ................................................................................................. Combining Statement of Fiduciary Net Position .................................................................... 282 Combining Statement of Changes in Fiduciary Net Position................................................... 284 Private Purpose Trust Funds ........................................................................................... 287 Combining Statement of Fiduciary Net Position .................................................................... 288 Combining Statement of Changes in Fiduciary Net Position................................................... 289 Investment Trust Funds................................................................................................... 291 Combining Statement of Fiduciary Net Position .................................................................... 292 Combining Statement of Changes in Fiduciary Net Position................................................... 293 Contents Nonmajor Component Units............................................................................................. 295 Combining Statement of Net Position .................................................................................. 296 Combining Statement of Activities....................................................................................... 300 STATISTICAL SECTION Financial Trends.............................................................................................................. 305 Schedule of Net Position by Component.............................................................................. 306 Schedule of Changes in Net Position................................................................................... 308 Schedule of Fund Balances – Governmental Funds.............................................................. 312 Schedule of Changes in Fund Balances – Governmental Funds ............................................ 314 Revenue Capacity............................................................................................................ 317 Schedule of Revenue Base ................................................................................................ 318 Schedule of Revenue Payers by Income Level/Industry ........................................................ 322 Schedule of Personal Income Tax Rates ............................................................................. 324 Debt Capacity .................................................................................................................. 327 Schedule of Ratios of Outstanding Debt by Type.................................................................. 328 Schedule of Ratios of General Bonded Debt Outstanding...................................................... 330 Schedule of General Obligation Bonds Outstanding.............................................................. 332 Schedule of Pledged Revenue Coverage............................................................................. 334 Demographic and Economic Information......................................................................... 337 Schedule of Demographic and Economic Indicators.............................................................. 338 Schedule of Employment by Industry................................................................................... 340 Operating Information...................................................................................................... 341 Schedule of Full-time Equivalent State Employees by Function.............................................. 342 Schedule of Operating Indicators by Function ...................................................................... 344 Schedule of Capital Asset Statistics by Function................................................................... 348 Acknowledgments................................................................................................................................. 353 State of California Annual Comprehensive Financial Report This page intentionally left blank Introductory Section Introductory Section Report Overview General Overview The State’s management assumes responsibility for the accuracy, completeness, and fairness of information presented in the Annual Comprehensive Financial Report (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 an unmodified opinion on the State’s basic financial statements for the year ended June 30, 2025, 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. 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, 2025, and its economic performance as of December 31, 2025, for the year ending June 30, 2026. 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 2025, 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 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. v State of California Annual Comprehensive Financial Report 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 13.8% of the U.S. Gross Domestic Product (GDP) in 2025 and at the end of the year kept the rank of the fourth largest in the world (in terms of GDP). Sectors of California’s diverse economy include technology, trade, entertainment, manufacturing, agriculture, government, tourism, construction, education, and healthcare and services. Significant recent growth within the technology sector is due to investments and spending related to artificial intelligence, which has supported both economic activity and state revenue. California’s GDP totaled $4.2 trillion at fiscal year-end, representing a 3.3% increase during the fiscal year, which was less than the United States’ GDP increase of 5.1%. In 2025, California exported $188.4 billion in goods to approximately 227 foreign economies, a 2.78 % increase from the 2024 total of $183.3 billion in exported goods. Despite uncertainty around the 2025 tariffs, California remained a top exporting state through the end of the year, accounting for roughly 9.1% of all U.S. goods exports and maintaining its rank as the second-largest exporting state in the nation. Conditions in the labor market showed slight weakening, as California’s unemployment rate rose to 5.4% by June 2025. The state added 98,000 non-farm jobs overall; private education and health services added a combined 160,000 jobs, while several other job categories declined. The housing market faced persistent challenges from high home prices and elevated mortgage rates, which averaged 6.82% in June 2025. Personal income for Californians increased by 5.5%, exceeding the national growth rate of 5.1%. Consumer trends were mixed, but new vehicle registration surged by 6.6% in the first half of 2025 as buyers rushed to purchase vehicles before the anticipated tariff-related price increases took effect. Wildfires in the Los Angeles region in January 2025 caused major economic disruption, with an unprecedented economic loss of more than $250.0 billion and destruction of an estimated 16,000 structures. Despite long-term income growth, the ongoing inflationary pressures and uncertainty regarding federal trade and immigration policies continue to pose significant risks to the State’s economy. vi Introductory Section Budget Outlook Fiscal Year 2025-26 The State’s enacted fiscal year 2025-26 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 2024-25. Enacted in June 2025, the California 2025-26 Budget Act authorized $321.1 billion in total appropriations, allocating $228.4 billion to the General Fund. While General Fund expenditures were initially budgeted to decrease by 2.2% from previous year, the State faced significant fiscal challenges that required immediate corrective actions to maintain a balanced fiscal plan. The General Fund shortfall of $11.8 billion was driven by implementation of broad-based federal tariffs and a substantial spending increase in Medi-Cal programs. 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. The State implemented $2.8 billion in spending reductions, such as cuts to health care center payments and pharmacy drug rebates. Additional solutions included $7.8 billion in new revenue sources and borrowing and a $7.1 billion drawdown from the Budget Stabilization Account (BSA), also known as the “Rainy Day Fund.” Fiscal Year 2026-27 The Governor’s Budget for the 2026-27 year, released in January 2026, reflects a significantly improved revenue outlook compared to previous estimates, though it remains tempered by a projected shortfall and substantial long-term risks. General Fund revenues are anticipated to be $227.4 billion after transfers. This represents a decrease of $7.8 billion (3.3%) from the revised 2025-26 estimates, primarily due to changes in BSA transfers and a decline in other revenue sources. Despite an overall decline in General Fund revenues, personal income taxes are projected to increase by $4.4 billion and corporate taxes by $1.8 billion. General Fund expenditures are budgeted at $248.3 billion, an increase of $10.7 billion or 4.5% over the revised 2025-26 levels. The State identified a General Fund budget shortfall of approximately $2.9 billion prior to implementing fiscal solutions. To achieve a balanced budget for 2026-27, the Governor’s Budget focuses on the continued implementation of previously approved investments rather than introducing significant new spending, retaining a discretionary reserve of $4.5 billion, and managing the shortfall through reserve-related actions and adjustments. The Budget plans to maintain $23.0 billion in total budgetary reserves, including $14.4 billion in the BSA, $4.5 billion in the operating reserve, and $4.1 billion in the Public School System Stabilization Account. Revenues for the three-year period 2024-25 through 2026-27 are projected to be $42.0 billion higher than estimated in the 2025 Budget Act; the increase is driven largely by the technology sector and artificial intelligence. The reliance on tax revenues from artificial intelligence-related technology stock earnings poses a risk, however, as historical trends suggest that such revenue gains may not be sustained indefinitely. Additional risks include federal policy uncertainty regarding tariffs, immigration, and inflation. Long-term Financial Planning California’s long-term financial planning is focused on managing structural deficits, volatile revenue streams, and massive unfunded liabilities, while maintaining a robust reserve system to buffer against future economic shocks. The State’s long-term financial outlook and planning include the following implementation issues and measures: vii State of California Annual Comprehensive Financial Report • While the State achieved a balanced budget for the 2026-27 fiscal year, the outlook for future years is concerning. The Governor’s Budget projects a significant General Fund deficit of approximately $22.0 billion for the 2027-28 fiscal year, with shortfalls expected to continue in the subsequent two years. Consequently, long-term planning currently focuses on curbing new spending and prioritizing the implementation of previously approved investments to provide long-term stability for critical programs. • The State will focus on the management of long-term liabilities. At the end of fiscal year 2024-25, the State had a positive $19.4 billion total net position, and the unrestricted net position stood at negative $196.5 billion. The unrestricted net position deficit was primarily driven by unfunded employee obligations, which stood at approximately $176.5 billion, or 89.8% of the unrestricted net position, consisting of long-term liabilities for pensions, other post-employment benefits, and compensated absences. These are recognized as obligations now, even though payments will occur over many future years. The State carries $64.4 billion in bonded debt used to build capital assets for local school districts and other local governmental entities. Because the State does not own these assets, the debt reduces the State’s net position without an offsetting asset. The State will continue to experience a deficit in its unrestricted net position as long as these unfunded obligations and local government-related debts remain outstanding. The Governor’s proposed budget includes spending $11.8 billion over the next four years (including $3.0 billion in 2026-27) to pay down state pension liabilities. • The State’s long-term planning process aims to address the challenges of revenue sustainability and volatility. A substantial portion of recent revenue gains is attributable to the small number of technology companies involved in artificial intelligence; however, these gains may not be sustained indefinitely, and a downturn in technology stock prices poses a major risk to future General Fund revenues. • The Consumer Price Index grew by 3.3% through the third quarter of 2025. During the same period, personal income growth for Californians was more robust, increasing by 5.5%. The uncertainty around federal policy regarding tariffs poses a risk to consumer prices and overall economic demand. • California’s minimum wage rose to $16.50 per hour on January 1, 2025. While the increase in wages supports lower-income workers, it may contribute to higher labor costs for employers, particularly in sectors with high minimum-wage employment. • The 2026-27 Governor’s Budget continues to allocate significant funding to support climate change resilience, and to protect natural resources and the environment from climate related threats. California continues to face the risk of catastrophic wildfires that threaten communities, landscapes, and ecosystems across the state. The State is making progress—data collected by California Department of Forestry and Fire Protection indicates that more than 80% of fuel reduction projects analyzed have positively changed fire behavior, assisted in fire suppression efforts, or both. 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 Monique Limón 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 Legislative Executive Judicial I I I I I I I State State ... Lieutenant 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 ... State Superior ... Corpus Commissioner ~ Treasurer Courts Resource Center ~ t'-- Commission Secretary of State Bar of ... State ... ~!~~nr:y California on Judicial ~I Appointments I lJ I I I I I ~ Business Board of Office of Office of~ Consumer Office of Government Governors State Boa rd of Student Aid Business and Use and Services and Operations C C om ol m leg u e n s it y Education \ Commission H A o g u e s n i c n y g De E v c e o l n o o p m m i e c n t ._ _ In C n_o lim v_a a t t i_ e o n __, ~ I :: ~ v~ 1 c e e n s c y Agency I I '\ I I I I I " I " University of Department of Trustees of Fair Political ~~, California Transportation Corrections State State Lottery Practices Universities Board of Commission Agency and "' Regents Rehabilitation ___ .__ _. I 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 Deve1oprrrem- Finance Services Community General Council Agriculture Agency I">"---- Agency Corrections .__;;;a:...-,.----' I I I I I I I I I Commission :!::~:\ Natural De!=arntt Office of on Peace Public Utilities Military State Public State Resources of Veteran Service and Officer Commission Department Defender Library Agency Affairs ~ommunity Standards -----...) ._______. L x Financial Section -~ · Grant Parks StateAuditor - • Mike Tilden Chief Deputy • .... w"" • ,,,,,qjt,/2 . Independent Auditor’s Report THE GOVERNOR AND THE LEGISLATURE OF THE STATE OF CALIFORNIA 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, and the aggregate remaining fund information of the State of California, as of and for the year ended June 30, 2025, 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. 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, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the State of California, as of June 30, 2025, 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 84 percent of the assets and deferred outflows, and 52 percent of the revenues of the business-type activities. • The University of California and the California Housing Finance Agency that represent 91 percent of the assets and deferred outflows, and 94 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 Building 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 50 percent of the additions, revenues, and other financing sources of the aggregate remaining fund information. 621 Capitol Mall, Suite 1200 I Sacramento, CA 95814 I 916.445.0255 I 916.323.0913 fax I www.auditor.ca.gov • 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 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 Building Construction fund, the State Lottery fund, and the Campus Foundations of the University of California, which represents 14 percent of university’s total assets and deferred outflows, and 5 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 unmodified audit opinions. 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 will issue a separate report 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 May 5, 2026 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, 2025. 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 California continued its trend of gradual but steady economic expansion during fiscal year 2024-25, driven by growth in the technology, entertainment, agriculture, and manufacturing industry segments, as the state surpassed Japan to become the fourth largest economy in the world. Revenue growth for the State’s primary government was also stimulated by an unexpected surge in financial markets in fiscal year 2024-25, characterized by back-to-back years of double-digit gains for the S&P 500 in spite of high interest rates and global geopolitical volatility. General revenues, comprised primarily of taxes, increased by $28.6 billion (12.0%), compared to an increase of $10.9 billion (4.8%) recorded for fiscal year 2023-24. This tax revenue increase was attributable to California’s rebounding job market, stock market growth fueling capital gains, and aggressive changes in tax policy. The State’s managed care organization (MCO) enrollment tax, intended to generate funding to support Medi-Cal programs, increased by $2.2 billion, which also contributed to the increase in general revenues. As of June 30, 2025, the Budget Stabilization Account, California’s “Rainy Day Fund,” held reserves of $18.3 billion, and accounted for a significant portion of the State’s $22.2 billion in total budgetary reserves. Expenses and transfers for the State’s governmental activities increased by $38.7 billion (8.8%), and were less than total revenues received, resulting in a $3.5 billion increase in the governmental activities’ net position, as restated. Total expenses for the State’s business-type activities were less than total revenues and transfers, resulting in a $1.3 billion increase in the business-type activities’ net position, as restated, for fiscal year 2024-25. For fiscal year 2024-25, the State implemented GASB Statement No. 101, Compensated Absences, which is intended to update the recognition and measurement guidance for compensated absences under a unified model. As a result of the implementation, the primary government’s statement of net position had a decrease of $1.4 billion for governmental activities. Additionally, the State implemented GASB Statement No. 102, Certain Risk Disclosures, to provide users of financial statements with essential information about risks related to vulnerabilities due to certain concentrations or constraints. Implementation of GASB Statement No. 102 resulted in no changes to the ACFR. See Note 2 for additional details related to accounting changes and error corrections. Net Position – The primary government ended fiscal year 2024-25 with a net position of $19.4 billion, an increase of $4.8 billion (32.9%) from the previous year, as restated. The total net position is reduced by $141.3 billion for net investment in capital assets and by $74.6 billion for restricted net position, yielding a negative unrestricted net position of $196.5 billion. Restricted net position is dedicated for specified uses and is not available to fund current activities. Approximately 89.8%, or $176.5 billion, of the negative $196.5 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 $64.4 billion to build capital assets 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. 7 Management’s Discussion and Analysis Fund Highlights Governmental Funds – As of June 30, 2025, the primary government’s governmental funds reported a combined ending fund balance of $122.1 billion, a decrease of $2.5 billion from the prior fiscal year fund balance, as restated. The unrestricted fund balance, comprised of committed, assigned, and unassigned balances, was $55.0 billion, an increase of $3.6 billion over the prior year unrestricted fund balance of $51.4 billion. The nonspendable and restricted fund balances were $3.4 billion and $63.7 billion, respectively. Proprietary Funds – As of June 30, 2025, the primary government’s proprietary funds reported a combined ending deficit net position of $19.6 billion, an increase of $1.5 billion from the prior fiscal year, as restated. The total net position is reduced by $4.6 billion for net investment in capital assets, expendable restrictions of $10.9 billion, and nonexpendable restrictions of $2 million, yielding a negative unrestricted net position of $35.1 billion. Noncurrent Assets and Liabilities As of June 30, 2025, the primary government’s noncurrent assets totaled $211.2 billion, of which $184.2 billion is related to capital assets. State highway infrastructure assets of $86.5 billion represent the largest portion of the State’s capital assets, while buildings and other depreciable property are the second largest portion at $64.8 billion. The primary government’s noncurrent liabilities totaled $302.4 billion, consisting of $176.5 billion in unfunded employee-related future obligations, $76.1 billion in general obligation bonds, $30.8 billion in revenue bonds, and $19.0 billion in other noncurrent liabilities. During fiscal year 2024-25, the primary government’s noncurrent liabilities decreased by $3.2 billion (1.0%) from the previously reported noncurrent liabilities. The net decrease in noncurrent liabilities is primarily driven by a decrease of $10.7 billion in net pension liability, offset by an increase of $6.1 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 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. 8 State of California Annual Comprehensive Financial Report • 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 K–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 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. 9 Management’s Discussion and Analysis • 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 capital 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 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. 10 State of California Annual Comprehensive Financial Report 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 $4.8 billion (32.9%), from $14.6 billion, as restated, to $19.4 billion at June 30, 2025. The fiscal year 2024-25 beginning balance restatements were mainly due to the implementation of GASB Statement No. 101, Compensated Absences, which resulted in a decrease of $1.4 billion to the primary government’s beginning net position. More information concerning the implementation of GASB Statement No. 101 can be found in Note 2. The primary government’s $141.3 billion net investment in capital assets, such as land, buildings, equipment, and infrastructure (roads, bridges, and other immovable assets), comprise a significant 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 $74.6 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, 2025, the primary government’s combined unrestricted deficit net position was $196.5 billion—$163.2 billion for governmental activities and $33.3 billion for business-type activities. 11 Management’s Discussion and Analysis 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, 2025 and 2024 (amounts in millions) Governmental Activities Business-type Activities Total 2025 2024 2025 2024 2025 2024 ASSETS Current and other assets ............... $ 259,774 $ 245,935 $ 33,157 $ 30,446 $ 292,931 $ 276,381 Capital assets............................... 164,870 159,526 19,339 18,270 184,209 177,796 Total assets............................. 424,644 405,461 52,496 48,716 477,140 454,177 DEFERRED OUTFLOWS OF RESOURCES ............................... 34,664 41,663 5,318 6,281 39,982 47,944 Total assets and deferred outflows of resources ........ $ 459,308 $ 447,124 $ 57,814 $ 54,997 $ 517,122 $ 502,121 LIABILITIES Noncurrent liabilities...................... $ 258,367 $ 262,718 $ 43,988 $ 42,869 $ 302,355 $ 305,587 Other liabilities.............................. 143,240 124,821 25,959 24,578 169,199 149,399 Total liabilities ......................... 401,607 387,539 69,947 67,447 471,554 454,986 DEFERRED INFLOWS OF RESOURCES ............................... 19,840 25,150 6,341 7,341 26,181 32,491 Total liabilities and deferred inflows of resources .......... 421,447 412,689 76,288 74,788 497,735 487,477 NET POSITION Net investment in capital assets ..... 137,256 134,089 4,015 3,867 141,271 137,956 Restricted..................................... 63,849 68,517 10,726 8,631 74,575 77,148 Unrestricted.................................. (163,244) (168,171) (33,215) (32,289) (196,459) (200,460) Total net position (deficit)........ 37,861 34,435 (18,474) (19,791) 19,387 14,644 Total liabilities, deferred inflows of resources, and net position ....................... $ 459,308 $ 447,124 $ 57,814 $ 54,997 $ 517,122 $ 502,121 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. 12 State of California Annual Comprehensive Financial Report 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, 2025, the primary government recognized $176.5 billion (89.8% of the negative $196.5 billion unrestricted net position) in unfunded employee-related obligations—net pension liability, net other post employment benefits liability and compensated absences. In addition, the primary government recognized $64.4 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, 2025 and 2024 (amounts in billions) 141.3 Net Investment in Capital Assets 138.0 74.6 Restricted 77.1 -196.5 Unrestricted -200.5 $-300 $-250 $-200 $-150 $-100 $-50 $0 $50 $100 $150 ■ 2025 □ 2024 Changes in Net Position The expenses of the primary government totaled $520.0 billion for the fiscal year ended June 30, 2025. Of this amount, $257.6 billion (49.5%) was funded with program revenues (charges for services or program-specific grants and contributions), leaving $262.4 billion to be funded with general revenues (mainly taxes). The primary government’s general revenues of $267.2 billion were greater than the unfunded expenses. As a result, the total net position, as restated, increased by $4.8 billion. 13 Management’s Discussion and Analysis 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, 2025 and 2024 (amounts in millions) Governmental Activities Business-type Activities Total 2025 2024 2025 2024 2025 2024 REVENUES Program Revenues: Charges for services ........................... $ 48,155 $ 45,618 $ 37,424 $ 31,625 $ 85,579 $ 77,243 Operating grants and contributions....... 165,058 161,736 3,703 3,326 168,761 165,062 Capital grants and contributions ........... 3,223 2,699 1 — 3,224 2,699 General Revenues: Taxes ................................................ 262,959 234,506 — — 262,959 234,505 Investment and interest ....................... 3,290 3,286 — — 3,290 3,286 Miscellaneous .................................... 970 848 — — 970 848 Total revenues .............................. 483,655 448,692 41,128 34,951 524,783 483,643 EXPENSES Program Expenses: General government ........................... 27,780 30,365 — — 27,780 30,365 Education........................................... 111,485 104,989 — — 111,485 104,989 Health and human services ................. 267,964 239,313 — — 267,964 239,312 Natural resources and environmental protection....................................... 17,002 15,844 — — 17,002 15,844 Business, consumer services, and housing.......................................... 4,677 4,588 — — 4,677 4,588 Transportation .................................... 24,890 22,097 — — 24,890 22,097 Corrections and rehabilitation............... 17,182 16,282 — — 17,182 16,282 Interest on long-term debt.................... 3,825 3,780 — — 3,825 3,780 Water Resources................................ — — 1,558 1,624 1,558 1,624 State Lottery....................................... — — 8,997 9,362 8,997 9,362 Unemployment Programs.................... — — 21,371 18,212 21,371 18,212 California State University ................... — — 12,923 11,868 12,923 11,868 Other enterprise programs................... — — 326 273 326 273 Total expenses ............................. 474,805 437,257 45,175 41,339 519,980 478,596 Excess (deficiency) before transfers.................................... 8,850 11,435 (4,047) (6,388) 4,803 5,047 Gain/loss on early extinguishment of — (4) — — — (3) Transfers ........................................... (5,350) (4,265) 5,350 4,265 — — Change in net position......................... 3,500 7,167 1,303 (2,123) 4,803 5,044 Net position (deficit), beginning, as previously reported ........................... 34,435 (20,276) (19,791) (17,668) 14,644 (37,944) Error corrections................................. 1,368 47,544 — — 1,368 47,544 Change within financial reporting entity. (27) — — — (27) — Changes in accounting principle........... (1,415) — 14 — (1,401) — Net position (deficit), beginning, as restated ............................................. 34,361 27,268 (19,777) (17,668) 14,584 9,600 Net position (deficit), ending................. $ 37,861 $ 34,435 $ (18,474) $ (19,791) $ 19,387 $ 14,644 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. 14 State of California Annual Comprehensive Financial Report Governmental Activities During fiscal year 2024-25, governmental activities’ expenses and transfers totaled $480.2 billion. Program revenues totaling $216.5 billion, including $168.3 billion in federal grants and contributions, funded 45.1% of expenses and transfers, leaving $263.7 billion to be funded with general revenues (mainly taxes). General revenues for governmental activities of $267.2 billion exceeded net unfunded expenses and transfers by $3.5 billion, resulting in the governmental activities’ net position of $37.9 billion after restatement, as of June 30, 2025, an increase from the prior year’s restated net position of $34.4 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, 2025 (amounts in billions) 14.6 General government 27.8 10.2 Education 111.5 162.9 Health and human services 268.0 16.5 Transportation 24.9 0.1 Corrections and rehabilitation 17.2 12.1 Other programs 25.5 $0 $40 $80 $120 $160 $200 $240 $280 ■ Program Revenues □ Expenses For the fiscal year ended June 30, 2025, total governmental activities’ revenue was $483.7 billion, an increase of 7.8% from the prior year. General revenues increased by $28.6 billion (12.0%), to $267.2 billion, and program revenues increased by $6.4 billion (3.0%), to $216.5 billion. Personal income taxes increased by $20.6 billion (17.7%) from the prior year in fiscal year 2024-25, primarily driven by sustained growth in AI in the technology sector, supporting elevated stock market performance and increased wage and bonus income. Corporation taxes rose by $4.8 billion (12.8%) over the prior year due to aggressive state tax policy changes, including limitations in the use of business tax credits and suspension of net operating loss deductions. Sales and use taxes increased by $392 million (0.7%) from the prior year. Additionally, the State’s managed (MCO) tax contributed a $2.2 billion increase to general revenues, and is expected to be a continuous revenue source due to voter approval of Proposition 35 in November 2024. 15 Management’s Discussion and Analysis Chart 3 presents the percentage of total revenues by source for each governmental activities program. Chart 3 Revenues by Source Year ended June 30, 2025 (as a percent) Sales and use tax 11.1% Personal income tax 28.3% Corporation tax 8.7% Charges for services 10.0% Other revenue 7.1% Grants and contributions 34.8% Overall, expenses for governmental activities increased by $37.5 billion (8.6%) from the prior year, to $474.8 billion. The largest increase in expenditures, $28.7 billion (12.0%), occurred in health and human services due to expansion of the Medi-Cal program. Another notable increase in expenditures included $6.5 billion (6.2%) in education. Chart 4 presents the percentage of total expenses for each governmental activities program. Chart 4 Expenses by Program Year ended June 30, 2025 (as a percent) Education 23.5% General government 5.9% Corrections and rehabilitation 3.6% Transportation 5.2% Other 5.4% Health and human services 56.4% 16 State of California Annual Comprehensive Financial Report Business-type Activities As of June 30, 2025, business-type activities’ expenses totaled $45.2 billion. Program revenues of $41.1 billion, primarily generated from charges for services, and $5.4 billion in transfers, were sufficient to cover these expenses. As a result, the restated business-type activities’ net position increased from a deficit of $19.8 billion, to a deficit of $18.5 billion at June 30, 2025, an increase of $1.3 billion. 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, 2025 and 2024 (amounts in billions) 1.6 Water Resources 1.6 9.0 State Lottery 9.4 21.4 Unemployment Programs 18.2 12.9 California State University 11.9 0.3 Other enterprise programs 0.3 $0 $5 $10 $15 $20 ■ 2025 □ 2024 17 Management’s Discussion and Analysis Fund Financial Analysis The financial position of the State’s governmental funds declined in fiscal year 2024-25, with a combined fund balance decrease of $2.5 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 as a result of strong stock-market growth. Governmental funds also received a boost in revenue during fiscal year 2024-25 due to an increase of $2.2 billion in managed care organization enrollment taxes, which was implemented in the fiscal year 2022-23 to address increasing costs related to the Medi-Cal program. Health and human services expenditures, consisting primarily of Medi-Cal, increased by $28.1 billion (11.7%); this increase contributed largely to the decrease in the fund balance. The proprietary funds’ total net position increased by $1.5 billion during fiscal year 2024-25; the increase was comprised of a $1.3 billion net position increase for enterprise funds, as well as a $196 million increase for internal service funds. The increase in the enterprise funds’ net position includes a net position increase of $367 million in the California State University Fund to a deficit balance of $13.9 billion, a net position increase of $302 million in the Unemployment Programs Fund to a deficit balance of $14.3 billion, and a net position increase of $602 million in the nonmajor enterprise funds to a balance of $8.7 billion. The deficit net position in Unemployment Programs reflects excessive advances from the federal government during the pandemic to sustain unemployment insurance benefits, pursuant to Title XII of the Social Security Act. The advance of federal funds was necessary due to the State’s rising unemployment costs, outdated tax system, and failure to build adequate unemployment program reserves during periods of economic growth. As of June 30, 2025, the State’s advances had been outstanding for more than two years, resulting in a reduction of 1.2% of the amount of Federal Unemployment Tax Act (FUTA) credits California employers could claim on their tax returns. These credit reductions will be applied to the State’s outstanding advances until they are paid off. Governmental Funds As of June 30, 2025, the governmental funds’ balance sheet reported $275.0 billion in assets, $152.9 billion in liabilities and deferred inflows of resources, and fund balances totaling $122.1 billion. Total assets of governmental funds increased by 2.7%, while total liabilities and deferred inflows of resources increased by 6.0%, which yielded a net fund balance decrease of $2.5 billion. Within the governmental funds’ total fund balance, $3.4 billion is classified as nonspendable, as this amount consists of long-term interfund receivables, loans receivable, and legal or contractual requirements. Another $63.7 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, $22.4 billion of the total fund balance is classified as committed for specific purposes and $29.5 billion is classified as assigned for specific purposes. The remaining unassigned balance of the governmental funds is $3.1 billion — $517 million 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 $482.5 billion in revenues, $488.3 billion in expenditures, and $3.3 billion in net proceeds from other financing sources. The ending fund balance of the governmental funds for the fiscal year ended June 30, 2025, was $122.1 billion, a $2.5 billion decrease from the prior year’s restated ending fund balance of $124.6 billion. 18 State of California Annual Comprehensive Financial Report Governmental funds’ revenue consists primarily of taxes (54.4%) and intergovernmental revenue (36.2%). Personal income taxes accounted for 52.0% of tax revenues, and increased by $20.0 billion over the prior fiscal year. Sales and use taxes accounted for 20.4% of tax revenues, and increased by $386 million from the prior fiscal year. Corporation taxes accounted for 16.1% of tax revenues, and increased by $5.0 billion over the prior fiscal year. Intergovernmental revenue, primarily from the federal government, increased by $7.2 billion (4.3%) over the prior fiscal year. Governmental funds’ expenditures increased by $34.0 billion (7.5%) from the prior fiscal year. The increase is mainly due to the growth in health and human services expenditures of $28.1 billion (11.7%), consisting primarily of spending on Medi-Cal. The overall increase in governmental funds’ expenditures also consists of an increase in education expenditures of $6.6 billion (6.3%) from the prior fiscal year to comply with constitutional requirements (Proposition 98) that provide 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 $3.0 billion (11.7%) for transportation, and $689 million (4.4%) for natural resources and environmental protection. Notable decreases in governmental funds’ expenditures include $2.2 billion (6.9%) for general government and $1.1 billion (11.8%) for bond, commercial paper, and lease principal retirement. 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, 2025 and 2024 (amounts in billions) 136.5 Personal income taxes 116.5 53.6 Sales and use taxes 53.2 42.3 Corporation taxes 37.3 9.5 Motor vehicle excise taxes 9.3 4.3 Insurance taxes 4.0 Managed care organization 12.7 enrollment tax 10.5 3.7 Other taxes 3.8 $0 $20 $40 $60 $80 $100 $120 $140 ■ 2025 □ 2024 19 Management’s Discussion and Analysis The State’s major governmental funds are the General Fund, the Federal Fund, and the Environmental and Natural Resources Fund. The General Fund ended the fiscal year with a fund balance of $57.8 billion, a decrease of $6.5 billion from the prior year’s fund balance, as restated. The Federal Fund ended the year with a fund balance of $533 million, while the Environmental and Natural Resources Fund ended the fiscal year with a fund balance of $25.9 billion. The nonmajor governmental funds ended the fiscal year with a combined fund balance of $37.8 billion. General Fund: As shown on the Balance Sheet, the General Fund (the State’s main operating fund) ended fiscal year 2024-25 with assets of $132.0 billion; liabilities and deferred inflows of resources of $74.2 billion; and nonspendable, restricted, committed, and assigned fund balances of $3.4 billion, $19.5 billion, $2.0 billion, and $29.4 billion, respectively. These balances left the General Fund with an unassigned fund balance of $3.5 billion, a decrease of $319 million from the prior year. Total assets of the General Fund increased by $2.2 billion (1.7%) from the prior fiscal year, and total liabilities and deferred inflows of resources increased by $7.7 billion (11.6%) from the prior year. 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, 2025 and 2024 (amounts in billions) 3.4 Nonspendable 3.6 63.7 Restricted 68.4 22.4 Committed 21.0 29.5 Assigned 27.8 3.1 Unassigned 2.6 $0 $10 $20 $30 $40 $50 $60 $70 ■ 2025 □ 2024 As shown on the Statement of Revenue, Expenditures, and Changes in Fund Balances, the General Fund had expenditures in excess of revenues of $236 million ($221.6 billion in revenues and $221.8 billion in expenditures). Approximately $210.2 billion (94.9%) of General Fund revenue is derived from the State’s largest three taxes— personal income taxes ($134.2 billion), corporation taxes ($42.3 billion), and sales and use taxes ($33.7 billion). A total of $765 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. 20 State of California Annual Comprehensive Financial Report During fiscal year 2024-25, total General Fund revenue increased by $26.3 billion (13.5%), mainly due to an increase in personal income taxes resulting from stock market growth. Meanwhile, General Fund expenditures increased by $31.5 billion. The General Fund ended the fiscal year with a fund balance of $57.8 billion after transfers, a decrease of $6.5 billion from the prior year’s restated ending fund balance of $64.3 billion. The General Fund’s ending fund balance includes $18.3 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 $142.5 billion (86.1%) of the total $165.4 billion in fund expenditures. Education, transportation, general government programs, and natural resources and environmental protection constituted $10.1 billion (6.1%), $6.1 billion (3.7%), $4.7 billion (2.8%), and $1.2 billion (0.7%) of the fund’s expenditures, respectively. The Federal Fund’s revenues increased by $3.8 billion from the prior year, while expenditures and transfers had a combined increase of $2.9 billion, resulting in a $176 million increase from the prior year’s ending fund balance of $357 million, to $533 million. 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 decreased by $1.8 billion (16.1%) from the prior year, and the expenditures decreased by $600 million (5.7%). Other financing sources provided net receipts of $2.3 billion, mainly from bond proceeds, including those sold under the Parks and Water Bond Act of 2018 (Proposition 68), passed by voters in June 2018. The Environmental and Natural Resources Fund ended the fiscal year with a $25.9 billion fund balance, an increase of $1.8 billion (7.5%) over the prior year’s restated fund balance. Proprietary Funds Enterprise Funds: The total deficit net position of the enterprise funds at June 30, 2025, was $18.5 billion—a $1.3 billion improvement from the prior year’s restated deficit net position of $19.8 billion. The largest portion of this improvement in net position was attributable to the Nonmajor Enterprise Funds, with a $602 million increase to net position, ending the fiscal year with a net position of $8.7 billion. Other improvements included increases in the net position of the California State University Fund by $367 million, and the Unemployment Programs Fund by $302 million. As shown on the proprietary funds’ Statement of Net Position, total assets and deferred outflows of resources for the enterprise funds were $58.4 billion as of June 30, 2025. Of this amount, current assets totaled $17.6 billion, noncurrent assets totaled $35.5 billion, and deferred outflows of resources totaled $5.3 billion. Total liabilities and deferred inflows of resources for the enterprise funds was $76.9 billion. One of the largest liabilities of the enterprise funds was $21.0 billion due to other governments, $20.6 billion of which represents borrowings from the U.S. Department of Labor for the Unemployment Programs Fund, primarily associated with federal pandemic relief programs. Other noteworthy cumulative liabilities of the enterprise funds include a net OPEB liability of $16.9 billion, $15.7 billion in revenue bonds payable including the current portion, and $9.0 billion in net pension liability. Total net position for enterprise funds consisted of four segments: net investment in capital assets of $4.0 billion, nonexpendable restricted net position of $2 million, restricted expendable net position of $10.7 billion, and unrestricted net deficit of $33.2 billion. 21 Management’s Discussion and Analysis 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 $36.2 billion, operating expenses of $42.4 billion, and net revenues from other transactions and transfers of $7.6 billion. The largest sources of operating revenues were unemployment and disability insurance receipts of $21.5 billion in the Unemployment Programs Fund, and lottery ticket sales of $8.9 billion collected by the State Lottery Fund. Unemployment and disability insurance receipts in the Unemployment Programs Fund were $5.9 billion (38.0%) greater than the prior fiscal year. The largest operating expenses were distributions to beneficiaries of $21.0 billion reported in the Unemployment Programs Fund, personal services expenses of $7.6 billion reported in the California State University Fund, and lottery prizes of $6.0 billion distributed by the State Lottery Fund. Internal Service Funds: The total deficit net position of the internal service funds was $1.1 billion as of June 30, 2025. The total deficit net position consists of three segments: net investment in capital assets of $601 million, restricted expendable net position of $144 million, and unrestricted deficit net position of $1.8 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 $993.4 billion. The private purpose trust funds ended the fiscal year with a net position of $19.4 billion. The investment trust funds ended the fiscal year with a net position of $24.8 billion. The custodial fund ended the fiscal year with a net position of $879 million. For the fiscal year ended June 30, 2025, the fiduciary funds’ combined net position was $1.0 trillion, a $99.2 billion increase from the prior-year’s net position. The net position of the investment trust funds increased by 11.5% compared to the prior year, and 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 $226.8 billion was increased by $2.2 billion during fiscal year 2024-25. This increase is primarily attributable to additional funding for health and human services. The Health and Human Services budget increased based on higher overall enrollment in Medi-Cal due to redetermination of eligibility, and higher-than-projected caseload and pharmacy costs. Cost increases were offset by additional support from the MCO Tax. 22 State of California Annual Comprehensive Financial Report 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, 2025 (amounts in millions) Increase/ Original Final (Decrease) Budgeted amounts Business, consumer services, and housing................................................. $ 4,665 $ 4,672 $ 7 Transportation.......................................................................................... 895 895 — Natural resources and environmental protection.......................................... 7,329 8,274 945 Health and human services ....................................................................... 76,521 79,545 3,024 Corrections and rehabilitation .................................................................... 14,714 14,423 (291) Education ................................................................................................ 97,863 96,758 (1,105) General government: Tax relief.............................................................................................. 423 423 — Debt service ......................................................................................... 5,170 5,175 5 Other general government..................................................................... 19,260 18,887 (373) Total ................................................................................................ $ 226,840 $ 229,052 $ 2,212 Capital Assets and Debt Administration Capital Assets As of June 30, 2025, the State’s investment in capital assets for its governmental and business-type activities amounted to $184.2 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, 2025, the State’s capital assets increased by $6.4 billion, or 3.6% over the prior fiscal year. The majority of the increase is attributable to net additions to construction/development in progress of $4.9 billion (primarily due to highway infrastructure and high-speed passenger rail projects), state highway infrastructure of $1.3 billion, and buildings and other depreciable property of $1.2 billion, offset by an increase in accumulated depreciation/amortization of $1.8 billion. Additional information on the State’s capital assets can be found in Note 7. 23 Management’s Discussion and Analysis 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, 2025 and 2024 (amounts in millions) Governmental Activities Business-type Activities Total 2025 2024 2025 2024 2025 2024 Land................................................ $ 22,146 $ 21,985 $ 490 $ 489 $ 22,636 $ 22,474 State highway infrastructure .............. 86,499 85,170 — — 86,499 85,170 Collections – nondepreciable............. 22 22 40 40 62 62 Buildings and other depreciable property ........................................ 40,820 40,655 23,988 22,907 64,808 63,562 Intangible assets – amortizable.......... 4,052 3,892 574 548 4,626 4,440 Right to use leased assets................. 4,591 4,463 987 833 5,578 5,296 Less: accumulated depreciation/ amortization .................................. (23,478) (22,410) (10,394) (9,642) (33,872) (32,052) Construction/development in progress 28,794 24,431 3,523 2,958 32,317 27,389 Intangible assets – nonamortizable .... 1,426 1,318 131 137 1,557 1,455 Total........................................ $ 164,872 $ 159,526 $ 19,339 $ 18,270 $ 184,211 $ 177,796 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 2024-25, the actual amount spent on preservation was 48.8% 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 94.7% of bridge deck area judged to be of fair or better quality and 85.1% of lane miles judged to be of fair or better quality in the last completed pavement-condition survey. The State is responsible for maintaining 12,939 bridges and tunnels and 50,727 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. 24 State of California Annual Comprehensive Financial Report Debt Administration At June 30, 2025, the State had total bonded debt outstanding of $112.6 billion. Of this amount, $80.3 billion (71.3%) 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 $4.2 billion and the long-term portion is $76.1 billion. The remaining $32.3 billion (28.7%) 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 $30.8 billion. During the fiscal year, the State issued a total of $8.0 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, 2025 and 2024 (amounts in millions) Governmental Activities Business-type Activities Total 2025 2024 2025 2024 2025 2024 Government-wide noncurrent liabilities General obligation bonds............... $ 75,181 $ 75,458 $ 901 $ 636 $ 76,082 $ 76,094 Revenue bonds payable ................ 15,751 15,717 15,002 14,540 30,753 30,257 Total bonded debt ..................... 90,932 91,175 15,903 15,176 106,835 106,351 Net pension liability ....................... 72,758 82,383 9,016 10,079 81,774 92,462 Net other postemployment benefits liability...................................... 73,313 68,707 16,862 15,403 90,175 84,110 Mandated cost claims payable ....... 1,785 1,887 — — 1,785 1,887 Loans payable .............................. 12 20 — — 12 20 Compensated absences payable.... 4,287 5,304 269 293 4,556 5,597 Workers’ compensation benefits payable .................................... 6,011 5,689 12 15 6,023 5,704 Lease liability................................ 2,198 2,349 367 327 2,565 2,676 Subscription liability....................... 70 37 56 25 126 62 Commercial paper......................... 1,011 1,031 638 636 1,649 1,667 Other noncurrent liabilities ............. 5,992 4,136 866 915 6,858 5,051 Total noncurrent liabilities....... 258,369 262,718 43,989 42,869 302,358 305,587 Current portion of long-term obligations .................................... 9,270 6,405 2,162 2,018 11,432 8,423 Total long-term obligations...... $ 267,639 $ 269,123 $ 46,151 $ 44,887 $ 313,790 $ 314,010 Note: Prior-year adjustments recorded in the current year have not been reflected in the prior-year column. 25 Management’s Discussion and Analysis During the fiscal year ended June 30, 2025, the primary government’s total long-term obligations decreased by $1.8 billion from the prior year’s balance. The largest decrease in long-term obligations during the fiscal year was a $10.7 billion decrease in net pension liability resulting from an increase in pension plan net investment income. Other significant increases included a $6.1 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. During the year ended June 30, 2025, 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 ended June 30, 2025 During the 2024-25 fiscal year, California’s economy exhibited slowing but relatively stable growth in the midst of a mature economic expansion, overtaking Japan to become the fourth-largest economy in the world. While cooling consumer spending moderated overall activity, continued strength in segments of the technology sector, including industries associated with artificial intelligence, partially offset weaker performance in other areas of the economy. Several economic headwinds started to emerge in the latter half of the fiscal year as the new federal administration enacted broad and elevated tariffs, began enforcing strict immigration policies, and made substantial cuts to the federal government workforce. California also experienced devastating wildfires in the Los Angeles region in January 2025, which burned an estimated 16,000 homes, businesses, and other structures and caused an unprecedented economic loss of more than $250 billion, leading to a state tax filing postponement for affected individuals and businesses until October 15, 2025. As a result of these challenges, California’s economy continued in an incremental growth pattern amid vigilant oversight. California’s real gross domestic product (GDP) reached $4.2 trillion at June 30, 2025, an increase of 3.3% during fiscal year 2024-25, compared to real GDP of $4.1 trillion at June 30, 2024, and growth of 6.3% during the 2023-24 fiscal year. California’s economic growth was slower than that of the United States GDP, which increased by 5.1% during fiscal year 2024-25. Labor market conditions weakened slightly during fiscal year 2024-25. The State experienced moderate job growth alongside an increase of approximately 29,000 unemployed workers, resulting in a 0.1% increase in the State’s unemployment rate. Weekly unemployment insurance claims, which had decreased to 381,000 at the end of fiscal year 2023-24, increased marginally as California issued approximately 388,000 claims per week to unemployed workers by the end of fiscal year 2024-25. The unemployment rate rose slightly to 5.4% at June 30, 2025, compared to 5.3% at the end of the prior year. During fiscal year 2024-25, new non-farm jobs saw an increase of approximately 98,000 compared to approximately 78,000 jobs added in the prior fiscal year. Job growth was concentrated in a limited number of industries, with only three of California’s 11 major industry sectors experiencing net employment gains. The private education and health services sectors saw growth for a fifth consecutive year, with a collective 5.8% gain in jobs during fiscal year 2023-24 and another 160,000 jobs added in fiscal year 2024-25, an increase of 4.9%. The private education and health services sectors include jobs in private educational institutions and services as well as health care and social assistance. 26 State of California Annual Comprehensive Financial Report The California housing market continued to face challenges during fiscal year 2024-25 due to elevated mortgage rates and high home prices, despite signs of improving supply conditions. The median price of homes in California was $899,790 as of June 2025, a decrease of 0.1% from the prior year and a nominal increase of 7.4% over a two-year span. By comparison, the national median home price increased by 1.3% from the prior year to $432,700 in June 2025. Thirty-year fixed mortgage rates averaged approximately 6.8% in June 2025, slightly below the average of 6.9% in June 2024. The elevated rates continued to impact sales of existing single-family homes; in June 2025, sales were down 0.3% compared to June 2024. However, new active listings increased by approximately 43% over the same period, reflecting improved housing availability. New privately owned residential construction totaled approximately 99,900 units in the 2024-25 fiscal year, a decline of 5.6% from the prior year, as higher borrowing costs continued to dampen residential construction activity. Despite ongoing affordability challenges, rising inventory, longer on-market times, and a slight decline in the proportion of homes selling above asking price collectively indicate a gradual shift toward conditions that are more favorable to buyers. Consumer activity showed mixed trends during the fiscal year. New light vehicle registrations increased by 6.6% during the first six months of calendar year 2025 compared to the same period in 2024, in part reflecting accelerated purchasing ahead of anticipated vehicle price increases associated with tariffs. Personal income for Californians increased by 5.5% during fiscal year 2024-25, exceeding the national growth rate of 5.1%. Since 2015, California personal income has grown at an average annual rate of 5.7%, largely due to the low unemployment rate sustained during most of this period. Comparatively, personal income in the United States grew an average of 5.4% over the same period. Effective January 1, 2025, California’s minimum wage increased to $16.50 per hour, with an additional increase to $16.90 per hour on January 1, 2026. The minimum wage is adjusted annually based on the national consumer price index for urban wage earners and clerical workers (CPI-W). The increase supports wage growth for lower-income workers but may contribute to higher labor costs for employers, particularly in sectors with a large share of minimum-wage employment. Despite long-term income growth, ongoing inflationary pressures and continued uncertainty related to federal policy on trade and immigration will continue to pose risks to the State’s economy. Economic Conditions for the 2025-26 Fiscal Year and Future Outlook In the 2025-26 fiscal year, California’s economy demonstrated resilience despite ongoing uncertainties surrounding federal trade, immigration, and fiscal policies. While the implementation of sweeping tariff measures in early 2025 initially raised concerns about potential cost pressures and broader economic impacts, subsequent reductions in tariff rates helped limit their overall effect, and economic activity in California remained relatively stable. The stronger-than-expected economic performance was supported by continued consumer spending, protracted pass-through of higher tariff costs to consumers, and strong personal income growth. In addition, investment and spending related to artificial intelligence supported notable economic growth within the State’s technology sector. At the end of the third quarter of 2025, the State’s GDP reached $4.3 trillion, an increase of 4% over the same period in 2024. In comparison, the United States’ GDP increased by 5.9%. Personal income growth for Californians was robust, increasing by 5.5% through the third quarter of 2025; the increase surpassed the 3.3% growth in the Consumer Price Index for the same period, but was below the United States’ personal income growth of 6.1%. California added approximately 10,000 total non-farm jobs through the end of 2025 compared to approximately 22,000 added in the previous year. The unemployment rate remained relatively stable in 2025, standing at 5.5% as of the end of the year. 27 Management’s Discussion and Analysis California’s housing market closed out 2025 on solid footing, with both home sales and available inventory improving over the previous year. Existing home sales totaled approximately 288,000 units in December 2025, a 2.0% increase from the prior year. The 30-year fixed mortgage interest rate decreased from an average of 6.7% in December 2024, to a 6.2% average in December 2025. The statewide median home price was $851,000 in December 2025, a small decrease from $861,000 in the prior year. Easing price growth, improving inventory and mortgage rates at near-three-year lows have helped increase optimism for 2026, with increased opportunities for buyers and a healthier, more balanced market for both buyers and sellers. New vehicle registrations increased 3.3% in 2025 compared to the previous year. Consumers faced the prospect of higher vehicle prices due to tariffs, which were expected to have a negative impact on new vehicle sales. However, the anticipation of tariffs during the first half of 2025 caused a surge in sales as car buyers moved to buy prior to the commencement of tariffs; this countered the impact of tariffs overall and produced better-than-expected sales results for the year. While tariff-related headwinds are projected to lower sales by 1.5% in 2026, pent-up demand and the prospect of lower interest rates should help prevent a significant decline. California’s economy continues to face risks due to the fast-moving and unpredictable nature of federal policymaking, especially as it relates to international trade and immigration. Although the inflationary effects of tariffs on consumer prices are now projected to be smaller and more gradual than initially anticipated, ongoing adjustments to tariff policy and uncertainty surrounding their administration continue to pose risks to consumer prices, business investment, and overall economic demand. In addition, ongoing changes to federal immigration policy poses risks to labor supply in key sectors of the California economy, including agriculture, construction, hospitality and health care, potentially weighing on job growth and consumer spending in the medium term. Finally, while equity markets have performed strongly—driven in part by elevated valuations of firms associated with artificial intelligence—any renewed market volatility or a significant downturn would negatively affect household wealth, consumer confidence, and state revenue performance. California’s 2025-26 Budget California’s 2025-26 Budget Act was enacted on June 27, 2025. The Budget Act appropriated $321.1 billion; $228.4 billion from the General Fund, $88.8 billion from special funds, and $3.9 billion from bond funds. Budgeted expenditures for the General Fund decreased by $5.2 billion (2.2%) from last year’s budget, to $228.4 billion, and General Fund revenues were projected to be $215.7 billion after $7.1 billion in transfers from the Budget Stabilization Account (BSA), the State’s “Rainy Day Fund.” General Fund revenue comes predominantly from taxes, with personal income taxes expected to provide 60.4% of total revenue in fiscal year 2025-26. California’s major taxes, including personal income taxes, sales and use taxes, and corporation taxes were projected to supply approximately 94.2% of the General Fund’s resources in the 2025-26 fiscal year. The General Fund was projected to end the 2025-26 fiscal year with $15.7 billion in total reserves, including $11.2 billion in the BSA for fiscal emergencies and $4.5 billion in the State’s operating reserve. The 2025-26 Budget Act increased total state expenditures by $21.7 billion from the 2024-25 enacted budget level. Notable General Fund spending changes included increases of $15.8 billion for Health and Human Services and $4.5 billion for General Government. The General Fund’s share of the Proposition 98 guaranteed minimum funding level for TK-12 schools and community colleges decreased by $724 million from the 2024-25 enacted budget level, to $114.6 billion. 28 State of California Annual Comprehensive Financial Report The Budget included total funding of $137.6 billion for all TK-12 education programs, reflecting significant Proposition 98 funding intended to enable increased support for core programs such as the Local Control Funding Formula, special education, transitional kindergarten, nutrition, and preschool. The Budget provided $2.1 billion in ongoing support for full implementation of universal transitional kindergarten; $515 million for the full implementation of the Expanded Learning Opportunities Program for before, after, and summer school programs; and continued authority to spend from the previously approved $2.5 billion to support ongoing fire recovery efforts in Los Angeles County. Additionally, the Budget enacted a series of statutory changes to significantly address the State’s housing affordability challenges and to facilitate and streamline housing and infrastructure production, including a one-time $500 million investment for the Low-Income Housing Tax Credit. Despite substantial, ongoing uncertainty created by federal policy changes, the Budget provided a balanced fiscal plan that maintained significant reserves. It reduced state spending while maintaining support for key programs, and incorporated a comprehensive regulatory streamlining package to advance more affordable housing and infrastructure. The 2025-26 Governor’s Budget projected modest but slow economic growth with a slight surplus in the budget window. However, the imposition of federal policy changes significantly slowed growth in the California economy. Most notably, broad-based tariffs blunted this growth and drove 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 Budget closed this gap through a range of solutions, taking difficult but necessary actions to reduce ongoing expenditure growth to maintain budget resilience, and provide long-term stability for critical state programs. Included in the Budget were $2.8 billion in reductions, including a $1.0 billion reduction in Prospective Payment System payments to health care centers and rural health clinics, and a $370 million reduction in pharmacy drug rebates. Additional solutions included $7.8 billion in revenue and borrowing, consisting of $4.4 billion across the budget window for a Medical Providers Interim Payment Fund loan to support Medi-Cal, $1.5 billion in additional special fund and internal borrowing, and $1.3 billion in Proposition 35 support for Medi-Cal rate increases. The Budget also continued the $7.1 billion draw down from the BSA which was authorized in the 2024 Budget Act. In January 2026, the 2026-27 Governor’s Budget was released, providing updated estimates of fiscal year 2025-26 General Fund revenues, expenditures, and reserves. The 2026-27 Governor’s Budget projected fiscal year 2025-26 General Fund revenue of $235.2 billion after transfers—$19.4 billion (9.0%) more than projected in the 2025-26 Budget Act—and expenditures of $237.7 billion. Total year-end reserves were estimated at $41.3 billion —$25.5 billion in the State’s operating reserve, $11.3 billion in the BSA, and $4.5 billion in the Public School System Stabilization Account (PSSSA)—which was $25.6 billion (162.9%) more than projected in the 2025-26 Budget Act. California’s 2026-27 Budget California’s fiscal year 2026-27 Governor’s Budget was released on January 9, 2026, and includes projections of fiscal year 2026-27 General Fund revenues, expenditures, and reserves. General Fund revenues are anticipated to be $227.4 billion after transfers, a decrease of $7.8 billion (3.3%) from revised fiscal year 2025-26 revenue estimates. The decline primarily reflects a change in the direction of BSA transfers and a projected decrease of $4.8 billion in other revenue sources, partially offset by projected increases of $4.4 billion in personal income taxes and $1.8 billion in corporation taxes. General Fund expenditures for fiscal year 2026-27 are budgeted at $248.3 billion, an increase of $10.7 billion (4.5%) compared to the revised fiscal year 2025-26 estimates. The Governor’s Budget maintains fiscal discipline by preserving a total of $23.0 billion in budgetary reserves— $14.4 billion in the BSA for fiscal emergencies, $4.5 billion in the State’s operating reserve, and $4.1 billion in the PSSSA. 29 Management’s Discussion and Analysis The 2026-27 Governor’s Budget continues to allocate significant funding to education, climate change resilience, housing and homelessness, and safety net programs. The Budget allocates total funding of $149.1 billion for all TK-12 education programs and $50.4 billion for higher-education entities. Ongoing climate-related investments, the creation of the California Housing and Homelessness Agency under the Governor’s Reorganization Plan, and health and social services programs remain key areas of expenditure. The Budget reflects a significantly improved revenue outlook relative to the 2025 Budget Act. General Fund revenues over the 2024-25 through 2026-27 budget window are projected to be more than $42.0 billion higher than previously estimated, driven primarily by higher cash receipts, elevated stock market valuations, and an improved economic outlook for the State. A substantial portion of this increase is attributable to a relatively small number of technology companies, particularly those associated with artificial intelligence-related activities. Given the outsized effect that technology companies’ stocks have on personal income tax revenues, historical trends indicate that such revenue gains may not be sustained indefinitely. As a result, declines in asset prices—particularly within the technology sector—pose a significant risk to future General Fund revenues. Additional risks include uncertainty related to federal policies affecting tariffs, immigration, inflation, labor markets, and overall economic demand. The Budget identifies a General Fund shortfall of approximately $2.9 billion prior to budgetary solutions. The Budget proposes a combination of expenditure adjustments and reserve-related actions to address this shortfall, resulting in a balanced budget for the 2026-27 fiscal year while retaining a discretionary reserve of $4.5 billion. However, absent additional corrective actions, the Governor’s administration projects a deficit of approximately $22.0 billion in the 2027-28 fiscal year and continuing shortfalls in the two subsequent fiscal years. Consequently, the Budget does not include significant new spending proposals and instead focuses on the continued implementation of previously approved investments. The Governor’s administration intends to build on this proposal in May with a revised plan reflecting updated revenue and expenditure data. 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. 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, 2025 (amounts in thousands) Primary Government Governmental Business-type Component Activities Activities Total Units ASSETS Current assets: Cash and pooled investments................................................. $ 132,222,814 $ 9,376,539 $ 141,599,353 $ 5,123,829 Amount on deposit with U.S. Treasury..................................... — 345,933 345,933 — Investments .......................................................................... 820,052 3,850,664 4,670,716 10,255,744 Restricted assets: Cash and pooled investments............................................. 837,967 420,686 1,258,653 1,277,337 Investments ...................................................................... — — — 210,958 Due from other governments .............................................. — 234,099 234,099 — Contracts and installments receivable ..................................... 14,863 — 14,863 — Receivables (net) .................................................................. 61,190,851 2,807,407 63,998,258 10,368,685 Internal balances................................................................... (168,874) 168,874 — — Due from primary government ................................................ — — — 1,043,141 Due from other governments .................................................. 52,917,565 232,594 53,150,159 223,075 Prepaid items........................................................................ 236,855 80,862 317,717 2,487 Inventories............................................................................ 90,330 33,777 124,107 522,598 Other current assets .............................................................. 196,312 7,653 203,965 811,644 Total current assets ........................................................... 248,358,735 17,559,088 265,917,823 29,839,498 Noncurrent assets: Restricted assets: Cash and pooled investments............................................. 89,989 200,103 290,092 33,858 Investments ...................................................................... — 50,690 50,690 246,432 Loans receivable ............................................................... — 5,658,667 5,658,667 — Investments .......................................................................... — 3,163,899 3,163,899 57,500,544 Contracts and installments receivable ..................................... 157,535 — 157,535 — Receivables (net) .................................................................. 3,651,235 1,888,323 5,539,558 3,600,450 Loans receivable ................................................................... 7,516,502 4,063,787 11,580,289 3,784,721 Long-term prepaid charges .................................................... 81 543,616 543,697 89 Capital assets: Land................................................................................. 22,145,574 490,083 22,635,657 2,552,900 State highway infrastructure ............................................... 86,499,369 — 86,499,369 — Collections -nondepreciable............................................... 21,691 40,374 62,065 715,610 Buildings and other depreciable property............................. 40,819,532 23,987,947 64,807,479 76,951,292 Intangible assets -amortizable ........................................... 8,642,718 1,560,476 10,203,194 6,931,563 Less: accumulated depreciation/amortization....................... (23,477,927) (10,394,190) (33,872,117) (42,210,379) Construction/development in progress................................. 28,793,673 3,523,199 32,316,872 9,871,712 Intangible assets -nonamortizable...................................... 1,425,599 131,097 1,556,696 318 Other noncurrent assets......................................................... — 29,028 29,028 981,433 Total noncurrent assets...................................................... 176,285,571 34,937,099 211,222,670 120,960,543 Total assets.................................................................. 424,644,306 52,496,187 477,140,493 150,800,041 DEFERRED OUTFLOWS OF RESOURCES............................... 34,663,404 5,317,958 39,981,362 5,451,083 Total assets and deferred outflows of resources....... $ 459,307,710 $ 57,814,145 $ 517,121,855 $ 156,251,124 34 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.................................................................. $ 64,139,614 $ 985,668 $ 65,125,282 $ 5,903,675 Due to component units ......................................................... 1,043,141 — 1,043,141 — Due to other governments...................................................... 41,966,720 20,978,956 62,945,676 — Revenues received in advance............................................... 3,130,352 259,141 3,389,493 2,016,524 Tax overpayments................................................................. 19,273,187 — 19,273,187 — Deposits ............................................................................... 533,346 — 533,346 247,567 Contracts and notes payable .................................................. 261 — 261 60,912 Unclaimed property liability..................................................... 1,877,797 — 1,877,797 — Interest payable..................................................................... 1,136,918 47,865 1,184,783 8,117 Securities lending obligations ................................................. — — — 2,422,644 Benefits payable.................................................................... 17,788 339,793 357,581 — Current portion of long-term obligations................................... 9,272,233 2,161,522 11,433,755 6,507,019 Other current liabilities ........................................................... 848,929 1,186,193 2,035,122 5,542,811 Total current liabilities ........................................................ 143,240,286 25,959,138 169,199,424 22,709,269 Noncurrent liabilities: Loans payable....................................................................... 12,172 — 12,172 11,354 Lottery prizes and annuities.................................................... — 540,710 540,710 — Compensated absences payable ............................................ 4,286,736 268,832 4,555,568 715,909 Workers’ compensation benefits payable................................. 6,010,564 12,031 6,022,595 1,702,657 Commercial paper and other borrowings ................................. 1,010,795 638,238 1,649,033 121,400 Lease liability ........................................................................ 2,197,807 367,099 2,564,906 2,879,398 Subscription liability ............................................................... 70,056 55,516 125,572 169,258 General obligation bonds payable........................................... 75,181,146 900,922 76,082,068 — Revenue bonds payable ........................................................ 15,750,938 15,001,772 30,752,710 34,006,398 Mandated cost claims payable................................................ 1,785,202 — 1,785,202 — Net other postemployment benefits liability .............................. 73,312,584 16,862,094 90,174,678 20,026,236 Net pension liability................................................................ 72,757,544 9,015,766 81,773,310 12,243,702 Revenues received in advance............................................... — 4,208 4,208 17,360 Other noncurrent liabilities...................................................... 5,991,716 320,739 6,312,455 2,912,698 Total noncurrent liabilities................................................... 258,367,260 43,987,927 302,355,187 74,806,370 Total liabilities.............................................................. 401,607,546 69,947,065 471,554,611 97,515,639 DEFERRED INFLOWS OF RESOURCES................................... 19,839,385 6,340,818 26,180,203 16,488,924 Total liabilities and deferred in flows of resources .... $ 421,446,931 $ 76,287,883 $ 497,734,814 $ 114,004,563 (continued) The notes to the financial statements are an integral part of this statement. 35 State of California Annual Comprehensive Financial Report Statement of Net Position (continued) June 30, 2025 (amounts in thousands) Primary Government Governmental Business-type Component Activities Activities Total Units NET POSITION Net investment in capital assets.............................................. $ 137,255,696 $ 4,014,699 $ 141,270,395 $ 21,946,390 Restricted: Nonexpendable -endowments ........................................... — 1,605 1,605 11,540,222 Expendable: Endowments and gifts .................................................... — — — 22,512,967 General government....................................................... 8,165,681 139,167 8,304,848 — Education ...................................................................... 1,073,823 283,677 1,357,500 4,512,498 Health and human services............................................. 7,413,526 2,799,664 10,213,190 — Natural resources and environmental protection................ 9,036,642 3,927,214 12,963,856 — Business, consumer services and housing ....................... 8,147,944 95 8,148,039 — Transportation................................................................ 11,055,236 327 11,055,563 — Corrections and rehabilitation.......................................... 665,224 14,105 679,329 — Unemployment programs................................................ — 3,560,211 3,560,211 — Indenture....................................................................... — — — 857,444 Statute .......................................................................... — — — 4,778,609 Budget stabilization ........................................................ 18,291,422 — 18,291,422 — Other purposes .............................................................. — — — 582,547 Total expendable ........................................................ 63,849,498 10,724,460 74,573,958 33,244,065 Unrestricted .......................................................................... (163,244,415) (33,214,502) (196,458,917) (24,484,116) Total net position (deficit)................................................ 37,860,779 (18,473,738) 19,387,041 42,246,561 Total liabilities, deferred inflows of resources, and net position..................................................................... $ 459,307,710 $ 57,814,145 $ 517,121,855 $ 156,251,124 (concluded) 36 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. 37 State of California Annual Comprehensive Financial Report Statement of Activities Year Ended June 30, 2025 (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.......................................................... $ 27,779,495 $ 6,856,175 $ 7,713,184 $ — Education ......................................................................... 111,485,163 88,036 10,096,459 — Health and human services ................................................ 267,963,925 20,351,921 142,557,373 — Natural resources and environmental protection................... 17,002,436 8,694,375 1,356,939 — Business, consumer services, and housing.......................... 4,676,884 1,684,583 411,489 — Transportation................................................................... 24,890,406 10,471,329 2,839,062 3,222,765 Corrections and rehabilitation ............................................. 17,182,052 8,876 83,236 — Interest on long-term debt .................................................. 3,825,128 — — — Total governmental activities ........................................... 474,805,489 48,155,295 165,057,742 3,222,765 Business-type activities: Water Resources............................................................... 1,557,452 1,581,506 — — State Lottery ..................................................................... 8,997,179 9,004,421 — — Unemployment Programs................................................... 21,370,913 21,672,895 — — California State University .................................................. 12,923,303 4,802,019 3,137,773 835 State Water Pollution Control Revolving .............................. 74,652 115,751 329,503 — Safe Drinking Water State Revolving................................... 45,918 37,065 235,382 — Housing Loan.................................................................... 61,719 78,344 — — Other enterprise programs ................................................. 143,999 132,617 — — Total business-type activities........................................... 45,175,135 37,424,618 3,702,658 835 Total primary government......................................... $ 519,980,624 $ 85,579,913 $ 168,760,400 $ 3,223,600 Component Units University of California ........................................................... 59,173,221 42,053,266 14,782,203 40,698 California Housing Finance Agency......................................... 145,222 64,184 — — Nonmajor component units..................................................... 3,150,596 959,150 1,407,886 28,695 Total component units .............................................. $ 62,469,039 $ 43,076,600 $ 16,190,089 $ 69,393 General revenues: Personal income taxes................................................................................... Sales and use taxes....................................................................................... Corporation taxes .......................................................................................... Managed care organization enrollment tax....................................................... Motor vehicle excise tax ................................................................................. Insurance taxes............................................................................................. Other taxes ................................................................................................... Investment and interest income (loss).............................................................. Escheat ........................................................................................................ Other............................................................................................................ Transfers .......................................................................................................... Total general revenues and transfers........................................................... Change in net position................................................................................ Net position (deficit) – beginning, as previously reported ................................ Error corrections............................................................................................ Change within financial reporting entity............................................................ Changes in accounting principle...................................................................... Net position (deficit) – beginning, as restated .................................................. Net position (deficit) – ending .......................................................................... 38 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 $ (13,210,136) $ (13,210,136) (101,300,668) (101,300,668) (105,054,631) (105,054,631) (6,951,122) (6,951,122) (2,580,812) (2,580,812) (8,357,250) (8,357,250) (17,089,940) (17,089,940) (3,825,128) (3,825,128) (258,369,687) (258,369,687) 24,054 24,054 7,242 7,242 301,982 301,982 (4,982,676) (4,982,676) 370,602 370,602 226,529 226,529 16,625 16,625 (11,382) (11,382) (4,047,024) (4,047,024) $ (258,369,687) $ (4,047,024) $ (262,416,711) $ (2,297,054) (81,038) (754,865) $ (3,132,957) $ 136,914,382 $ — $ 136,914,382 $ — 53,631,984 — 53,631,984 — 42,314,846 — 42,314,846 — 12,701,905 — 12,701,905 — 9,466,839 — 9,466,839 — 4,278,061 — 4,278,061 — 3,651,215 — 3,651,215 — 3,290,200 — 3,290,200 7,127,081 969,528 — 969,528 — — — — 4,258,590 (5,349,759) 5,349,759 — — 261,869,201 5,349,759 267,218,960 11,385,671 3,499,514 1,302,735 4,802,249 8,252,714 34,435,206 (19,790,770) 14,644,436 32,998,913 1,367,911 354 1,368,265 507,522 (27,081) — (27,081) — (1,414,771) 13,943 (1,400,828) 487,412 34,361,265 (19,776,473) 14,584,792 33,993,847 $ 37,860,779 $ (18,473,738) $ 19,387,041 $ 42,246,561 The notes to the financial statements are an integral part of this statement. 39 State of California Annual Comprehensive Financial Report This page intentionally left blank 40 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, 2025 (amounts in thousands) General Federal ASSETS Cash and pooled investments ............................................................................................................... $ 65,359,964 $ 1,418,887 Investments......................................................................................................................................... — — Receivables (net)................................................................................................................................. 45,676,562 3,832,105 Due from other funds............................................................................................................................ 9,426,858 — Due from other governments................................................................................................................. 6,749,392 44,804,502 Interfund receivables ............................................................................................................................ 2,704,541 — Loans receivable.................................................................................................................................. 1,979,581 518,709 Other assets........................................................................................................................................ 133,521 22,346 Total assets.................................................................................................................................... $ 132,030,419 $ 50,596,549 LIABILITIES Accounts payable................................................................................................................................. $ 18,734,334 $ 32,969,581 Due to other funds................................................................................................................................ 1,569,091 6,107,120 Due to component units........................................................................................................................ 485,014 476,365 Due to other governments..................................................................................................................... 24,159,266 9,617,720 Interfund payables................................................................................................................................ 4,401,293 — Benefits payable .................................................................................................................................. — 17,788 Revenues received in advance.............................................................................................................. 53,556 844,143 Tax overpayments................................................................................................................................ 19,273,187 — Deposits.............................................................................................................................................. 6,133 — Unclaimed property liability ................................................................................................................... 1,877,797 — Other liabilities..................................................................................................................................... 567,477 27,650 Total liabilities................................................................................................................................ 71,127,148 50,060,367 DEFERRED INFLOWS OF RESOURCES ................................................................................................. 3,054,677 3,511 Total liabilities and deferred inflows of resources....................................................................... 74,181,825 50,063,878 FUND BALANCES Nonspendable ..................................................................................................................................... 3,354,122 — Restricted............................................................................................................................................ 19,463,236 953,733 Committed........................................................................................................................................... 2,099,524 — Assigned............................................................................................................................................. 29,421,537 — Unassigned ......................................................................................................................................... 3,510,175 (421,062) Total fund balances (deficit)........................................................................................................... 57,848,594 532,671 Total liabilities, deferred inflows of resources, and fund balances .............................................. $ 132,030,419 $ 50,596,549 42 The notes to the financial statements are an integral part of this statement. Fund Financial Statements Environmental and Natural Nonmajor Resources Governmental Total $ 25,385,330 $ 36,415,414 $ 128,579,595 — 820,052 820,052 535,773 14,714,434 64,758,874 350,038 3,778,663 13,555,559 8,337 1,329,904 52,892,135 1,213,648 2,765,873 6,684,062 1,171,846 3,842,464 7,512,600 4,284 36,178 196,329 $ 28,669,256 $ 63,702,982 $ 274,999,206 $ 1,232,362 $ 10,434,677 $ 63,370,954 352,370 5,330,534 13,359,115 5,830 75,932 1,043,141 858,847 7,389,808 42,025,641 2,227 25,256 4,428,776 — — 17,788 235,609 338,109 1,471,417 — — 19,273,187 235 525,829 532,197 — — 1,877,797 28,104 1,043,997 1,667,228 2,715,584 25,164,142 149,067,241 15,619 758,687 3,832,494 2,731,203 25,922,829 152,899,735 — 16,235 3,370,357 8,637,229 34,651,012 63,705,210 17,300,824 3,027,014 22,427,362 — 85,892 29,507,429 — — 3,089,113 25,938,053 37,780,153 122,099,471 $ 28,669,256 $ 63,702,982 $ 274,999,206 The notes to the financial statements are an integral part of this statement. 43 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 $ 122,099,471 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 22,143,494 State highway infrastructure 86,499,369 Collections – nondepreciable 21,691 Buildings and other depreciable property 40,138,860 Intangible assets – amortizable 7,886,481 Less: accumulated depreciation/amortization (22,681,838) Construction/development in progress 25,964,029 Intangible assets – nonamortizable 1,425,599 161,397,685 • State revenues that are earned and measurable, but not available within 12 months of the end of the reporting period, are 3,496,519 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 building construction and (9,541,854) 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 and are included in the (7,472,470) governmental activities in the Statement of Net Position. • Deferred inflows and outflows of resources related to pension and OPEB transactions are not reported in the funds. 15,404,890 • Deferred inflows and outflows of resources resulting from bond refunding gains and losses, respectively, are amortized over the (580,450) life of the bonds and are not reported in the funds. • General obligation bonds and related accrued interest totaling $72,884,174, revenue bonds totaling $6,983,575, and (80,878,544) commercial paper totaling $1,010,795 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 (6,582,934) Lease, subscription, and financed purchase liability (2,586,936) Net pension liability (71,551,482) Net other postemployment benefits liability (71,535,023) Mandated cost claims (1,785,202) Workers’ compensation (5,960,539) Pollution remediation obligations (1,817,031) Proposition 98 funding guarantee (1,916,848) Other noncurrent liabilities (2,328,473) (166,064,468) Net position of governmental activities $ 37,860,779 44 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. 45 State of California Annual Comprehensive Financial Report Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2025 (amounts in thousands) General Federal REVENUES Personal income taxes ......................................................................................................................... $ 134,221,314 $ — Sales and use taxes............................................................................................................................. 33,680,105 — Corporation taxes................................................................................................................................. 42,299,552 — Motor vehicle excise taxes .................................................................................................................... 168,853 — Insurance taxes ................................................................................................................................... 4,278,061 — Managed care organization enrollment tax ............................................................................................. — — Other taxes.......................................................................................................................................... 661,069 — Intergovernmental ................................................................................................................................ 341,540 168,281,474 Licenses and permits............................................................................................................................ 5,599 — Charges for services ............................................................................................................................ 364,036 — Fees ................................................................................................................................................... 18,431 — Penalties............................................................................................................................................. 649,929 33 Investment and interest ........................................................................................................................ 3,169,096 101,484 Escheat............................................................................................................................................... 969,434 — Other .................................................................................................................................................. 764,182 15,021 Total revenues ............................................................................................................................... 221,591,201 168,398,012 EXPENDITURES Current: General government......................................................................................................................... 8,926,889 4,722,130 Education........................................................................................................................................ 101,426,636 10,103,619 Health and human services............................................................................................................... 78,939,314 142,546,040 Natural resources and environmental protection ................................................................................. 7,896,845 1,201,658 Businesses, consumer services, and housing..................................................................................... 2,086,799 657,082 Transportation ................................................................................................................................. 2,754,638 6,061,537 Corrections and rehabilitation............................................................................................................ 13,650,161 83,283 Capital outlay....................................................................................................................................... 185,760 19,805 Debt service: Bond, commercial paper, and lease principal retirement ...................................................................... 3,062,982 13,872 Interest and fiscal charges ................................................................................................................ 2,896,883 701 Total expenditures ......................................................................................................................... 221,826,907 165,409,727 Excess (deficiency) of revenues over (under) expenditures .............................................................. (235,706) 2,988,285 OTHER FINANCING SOURCES (USES) General obligation bonds and commercial paper issued .......................................................................... — — Refunding debt issued.......................................................................................................................... — — Payment to refund/remarket long-term debt............................................................................................ — — Premium on bonds issued..................................................................................................................... 124,231 — Long-term capital financing issued......................................................................................................... 174,817 14,923 Transfers in ......................................................................................................................................... 3,203,413 2,100 Transfers out ....................................................................................................................................... (9,767,418) (2,829,848) Total other financing sources (uses) .............................................................................................. (6,264,957) (2,812,825) Net change in fund balances.......................................................................................................... (6,500,663) 175,460 Fund balances – beginning, as previously reported ............................................................................... 63,392,765 357,211 Error corrections .................................................................................................................................. 956,492 — Change to or within the financial reporting entity ..................................................................................... — — Fund balances – beginning, as restated ................................................................................................. 64,349,257 357,211 Fund balances (deficits) – ending........................................................................................................... $ 57,848,594 $ 532,671 46 The notes to the financial statements are an integral part of this statement. Fund Financial Statements Environmental and Natural Nonmajor Resources Governmental Total $ — $ 2,269,742 $ 136,491,056 — 19,949,617 53,629,722 — — 42,299,552 75,033 9,222,953 9,466,839 — — 4,278,061 — 12,701,905 12,701,905 284,911 2,719,341 3,665,321 — 5,874,405 174,497,419 493,762 10,993,869 11,493,230 147,476 687,807 1,199,319 3,209,156 14,095,984 17,323,571 83,325 501,287 1,234,574 991,046 1,217,395 5,479,021 — 1,556 970,990 4,104,841 2,922,451 7,806,495 9,389,550 83,158,312 482,537,075 316,392 15,713,505 29,678,916 3,638 715,955 112,249,848 51,052 45,896,296 267,432,702 6,599,656 604,518 16,302,677 106,557 1,694,745 4,545,183 1,613,006 18,234,184 28,663,365 — 2,446,271 16,179,715 102,584 422,848 730,997 1,073,216 4,443,579 8,593,649 11,186 1,002,632 3,911,402 9,877,287 91,174,533 488,288,454 (487,737) (8,016,221) (5,751,379) 1,203,575 3,607,390 4,810,965 774,615 2,966,600 3,741,215 (220,362) (567,163) (787,525) 121,690 296,198 542,119 20,154 132,360 342,254 717,114 6,296,767 10,219,394 (293,327) (2,748,143) (15,638,736) 2,323,459 9,984,009 3,229,686 1,835,722 1,967,788 (2,521,693) 23,867,622 35,780,250 123,397,848 234,709 59,196 1,250,397 — (27,081) (27,081) 24,102,331 35,812,365 124,621,164 $ 25,938,053 $ 37,780,153 $ 122,099,471 The notes to the financial statements are an integral part of this statement. 47 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 $ (2,521,693) 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 6,579,650 Disposal of assets (407,709) Depreciation expense, net of asset disposal (1,229,552) 4,942,389 • Some revenues in the Statement of Activities do not provide current financial resources and, therefore, are unavailable in 1,056,082 governmental funds. • Internal service funds are used by management to charge the costs of certain activities, such as building construction and 195,764 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 Obligations Revenue Commercial Bonds Bonds Paper Total Debt issued (7,679,445) — (872,735) (8,552,180) Premium on debt issued (542,120) — — (542,120) Accreted interest — (48,704) — (48,704) Principal repayments 6,778,365 320,080 893,110 7,991,555 Payments to refund long-term debt 787,526 — — 787,526 Related expenses not reported in governmental funds: Premium/discount amortization 546,422 147 — 546,569 Deferred gain/loss on refunding 44,905 (30,694) — 14,211 Accrued interest (43,782) 612 — (43,170) (108,129) 241,441 20,375 153,687 (continued) 48 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 (156,033) Lease, subscription, and financed purchase liability 29,400 Net pension liability 865,533 Net other postemployment benefits liability 980,973 Mandated cost claims 102,070 Workers’ compensation (319,997) Pollution remediation obligations (47,929) Other noncurrent liabilities (1,780,732) (326,715) Change in net position of governmental activities $ 3,499,514 (concluded) The notes to the financial statements are an integral part of this statement. 49 State of California Annual Comprehensive Financial Report Statement of Net Position Proprietary Funds June 30, 2025 (amounts in thousands) Water State Resources Lottery ASSETS Current assets: Cash and pooled investments ............................................................................................................... $ 1,139,038 $ 623,039 Amount on deposit with U.S. Treasury ................................................................................................... — — Investments......................................................................................................................................... — 56,390 Restricted assets: Cash and pooled investments ........................................................................................................... — — Due from other governments............................................................................................................. — — Contracts and installments receivable.................................................................................................... — — Receivables (net)................................................................................................................................. 126,760 779,716 Due from other funds............................................................................................................................ — 10,575 Due from other governments................................................................................................................. 94,532 — Prepaid items ...................................................................................................................................... — — Inventories .......................................................................................................................................... 5,454 19,713 Other current assets............................................................................................................................. — 7,653 Total current assets.......................................................................................................................... 1,365,784 1,497,086 Noncurrent assets: Restricted assets: Cash and pooled investments ........................................................................................................... 200,103 — Investments..................................................................................................................................... 50,690 — Loans receivable.............................................................................................................................. — — Investments......................................................................................................................................... — 466,182 Contracts and installments receivable.................................................................................................... — — Receivables (net)................................................................................................................................. — — Interfund receivables ............................................................................................................................ 180,600 — Loans receivable.................................................................................................................................. 5,472 — Long-term prepaid charges ................................................................................................................... 540,662 2,954 Capital assets: Land ............................................................................................................................................... 224,530 18,798 Collections -nondepreciable ............................................................................................................. — — Buildings and other depreciable property............................................................................................ 7,875,740 305,484 Intangible assets -amortizable .......................................................................................................... 119,343 34,594 Less: accumulated depreciation/amortization...................................................................................... (3,074,911) (186,321) Construction/development in progress ............................................................................................... 1,740,213 — Intangible assets -nonamortizable..................................................................................................... 119,253 — Other noncurrent assets ....................................................................................................................... — — Total noncurrent assets .................................................................................................................... 7,981,695 641,691 Total assets ................................................................................................................................ 9,347,479 2,138,777 DEFERRED OUTFLOWS OF RESOURCES.............................................................................................. 344,144 147,053 Total assets and deferred outflows of resources ..................................................................... $ 9,691,623 $ 2,285,830 50 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 $ 4,308,811 $ 1,947,307 $ 1,358,344 $ 9,376,539 $ 3,643,209 345,933 — — 345,933 — — 3,794,274 — 3,850,664 — — — 420,686 420,686 837,967 — — 234,099 234,099 — — — — — 647,398 1,301,980 446,875 152,076 2,807,407 77,370 141,099 2,833 32,425 186,932 878,413 29,470 — 108,592 232,594 25,429 — 80,822 40 80,862 236,855 — — 8,610 33,777 90,330 — — — 7,653 — 6,127,293 6,272,111 2,314,872 17,577,146 6,436,971 — — — 200,103 89,989 — — — 50,690 — — — 5,658,667 5,658,667 — — 2,682,602 15,115 3,163,899 — — — — — 7,973,725 1,081,218 807,105 — 1,888,323 5,842 402,479 — 3,761 586,840 40,182 1,889 27,038 4,029,388 4,063,787 3,902 — — — 543,616 81 — 245,482 1,273 490,083 2,080 — 40,374 — 40,374 — 34,537 15,744,677 27,509 23,987,947 680,672 244,119 1,136,952 25,468 1,560,476 756,236 (120,423) (6,980,015) (32,520) (10,394,190) (796,090) — 1,782,986 — 3,523,199 2,829,644 — 11,844 — 131,097 — — 19,810 9,218 29,028 — 1,643,819 15,518,855 9,737,879 35,523,939 11,586,263 7,771,112 21,790,966 12,052,751 53,101,085 18,023,234 200,525 4,604,630 21,606 5,317,958 738,309 $ 7,971,637 $ 26,395,596 $ 12,074,357 $ 58,419,043 $ 18,761,543 (continued) 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 (continued) Proprietary Funds June 30, 2025 (amounts in thousands) Water State Resources Lottery LIABILITIES Current liabilities: Accounts payable................................................................................................................................. $ 178,583 $ 96,470 Due to other funds................................................................................................................................ 153,014 407,391 Due to other governments..................................................................................................................... 372,566 — Revenues received in advance.............................................................................................................. — 2,543 Deposits.............................................................................................................................................. — — Contracts and notes payable................................................................................................................. — — Interest payable ................................................................................................................................... 9,592 — Benefits payable .................................................................................................................................. — — Current portion of long-term obligations.................................................................................................. 279,362 1,025,996 Other current liabilities.......................................................................................................................... — 150 Total current liabilities....................................................................................................................... 993,117 1,532,550 Noncurrent liabilities: Interfund payables................................................................................................................................ — — Lottery prizes and annuities .................................................................................................................. — 540,710 Compensated absences payable........................................................................................................... 56,328 — Workers’ compensation benefits payable ............................................................................................... — 7,535 Commercial paper and other borrowings................................................................................................ 349,389 — Lease liability....................................................................................................................................... 27,454 1,804 Subscription liability.............................................................................................................................. 2,469 485 General obligation bonds payable.......................................................................................................... — — Revenue bonds payable ....................................................................................................................... 2,970,997 — Net other postemployment benefits liability............................................................................................. 747,062 261,314 Net pension liability .............................................................................................................................. 550,008 158,994 Revenues received in advance.............................................................................................................. — — Other noncurrent liabilities .................................................................................................................... 80,978 — Total noncurrent liabilities ................................................................................................................. 4,784,685 970,842 Total liabilities............................................................................................................................. 5,777,802 2,503,392 DEFERRED INFLOWS OF RESOURCES ................................................................................................. 2,617,113 70,796 Total liabilities and deferred inflows of resources ................................................................... 8,394,915 2,574,188 NET POSITION Net investment in capital assets ............................................................................................................ 1,325,283 168,874 Restricted: Nonexpendable -endowments .......................................................................................................... — — Expendable: Construction................................................................................................................................. — — Debt service ................................................................................................................................. — — Security for revenue bonds ............................................................................................................ — — Unemployment programs............................................................................................................... — — Other purposes............................................................................................................................. — — Total expendable....................................................................................................................... — — Unrestricted......................................................................................................................................... (28,575) (457,232) Total net position (deficit) .......................................................................................................... 1,296,708 (288,358) Total liabilities, deferred inflows of resources, and net position .............................................. $ 9,691,623 $ 2,285,830 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 $ 190,599 $ 480,094 $ 39,848 $ 985,594 $ 660,749 — — 16,047 576,452 793,322 20,604,884 — 1,506 20,978,956 32,614 — 256,574 24 259,141 1,658,935 — — — — 1,149 — — — — 19,365 — — 38,273 47,865 109,364 339,793 — — 339,793 — 23,153 679,393 153,618 2,161,522 838,723 84,702 1,101,341 — 1,186,193 29,223 21,243,131 2,517,402 249,316 26,535,516 4,143,444 — — 28,520 28,520 2,865,959 — — — 540,710 — 38,179 159,983 14,342 268,832 196,550 — — 4,496 12,031 50,025 — 288,849 — 638,238 — — 321,376 16,465 367,099 194,817 — 52,538 24 55,516 9,164 — — 900,922 900,922 — — 9,998,803 2,031,972 15,001,772 9,004,064 561,120 15,251,655 40,943 16,862,094 1,777,561 308,584 7,959,882 38,298 9,015,766 1,206,062 — 4,208 — 4,208 — — 236,034 3,727 320,739 4,271 907,883 34,273,328 3,079,709 44,016,447 15,308,473 22,151,014 36,790,730 3,329,025 70,551,963 19,451,917 101,146 3,517,752 34,011 6,340,818 402,755 22,252,160 40,308,482 3,363,036 76,892,781 19,854,672 233,766 2,285,032 1,744 4,014,699 601,368 — 1,605 — 1,605 — — 168,644 — 168,644 144,286 — 18,316 293,570 311,886 — — — 3,518,061 3,518,061 — 3,560,211 — — 3,560,211 — — 96,717 3,068,941 3,165,658 — 3,560,211 283,677 6,880,572 10,724,460 144,286 (18,074,500) (16,483,200) 1,829,005 (33,214,502) (1,838,783) (14,280,523) (13,912,886) 8,711,321 (18,473,738) (1,093,129) $ 7,971,637 $ 26,395,596 $ 12,074,357 $ 58,419,043 $ 18,761,543 (concluded) The notes to the financial statements are an integral part of this statement. 53 State of California Annual Comprehensive Financial Report Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds Year Ended June 30, 2025 (amounts in thousands) Water State Resources Lottery OPERATING REVENUES Unemployment and disability insurance.................................................................................................. $ — $ — Lottery ticket sales ............................................................................................................................... — 8,932,712 Power sales......................................................................................................................................... 97,266 — Student tuition and fees ........................................................................................................................ — — Services and sales............................................................................................................................... 1,417,582 — Investment and interest ........................................................................................................................ — — Rent.................................................................................................................................................... — — Grants and contracts ............................................................................................................................ — — Other .................................................................................................................................................. — — Total operating revenues................................................................................................................ 1,514,848 8,932,712 OPERATING EXPENSES Lottery prizes....................................................................................................................................... — 5,994,177 Power purchases (net of recoverable power cost) ................................................................................... 271,242 — Personal services................................................................................................................................. 506,120 142,050 Supplies.............................................................................................................................................. — 24,263 Services and charges........................................................................................................................... 149,642 912,720 Depreciation ........................................................................................................................................ 158,024 15,274 Scholarships and fellowships ................................................................................................................ — — Distributions to beneficiaries.................................................................................................................. — — Interest expense .................................................................................................................................. — — Other .................................................................................................................................................. 90,622 — Total operating expenses............................................................................................................... 1,175,650 7,088,484 Operating income (loss)................................................................................................................. 339,198 1,844,228 NONOPERATING REVENUES (EXPENSES) Donations and grants ........................................................................................................................... — — Private gifts ......................................................................................................................................... — — Investment and interest income (loss).................................................................................................... 66,658 71,582 Interest expense and fiscal charges....................................................................................................... (86,329) (22,088) Lottery payments for education.............................................................................................................. — (1,886,607) Other .................................................................................................................................................. (295,473) 127 Total nonoperating revenues (expenses)........................................................................................ (315,144) (1,836,986) Income (loss) before capital contributions and transfers.................................................................... 24,054 7,242 Capital Contributions ............................................................................................................................ — — Transfers in ......................................................................................................................................... — — Transfers out ....................................................................................................................................... — — Change in net position................................................................................................................... 24,054 7,242 Total net position (deficit) – beginning, as previously reported ............................................................. 1,272,654 (295,600) Error corrections .................................................................................................................................. — — Changes in accounting principle............................................................................................................ — — Total net position (deficit) – beginning, as restated................................................................................ 1,272,654 (295,600) Total net position (deficit) – ending........................................................................................................ $ 1,296,708 $ (288,358) 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 $ 21,540,039 $ — $ — $ 21,540,039 $ — — — — 8,932,712 — — — — 97,266 — — 2,408,432 — 2,408,432 — — 929,219 132,514 2,479,315 4,854,798 — — 169,017 169,017 52,316 — — — — 326,396 — 115,647 — 115,647 — — 414,673 4,709 419,382 — 21,540,039 3,867,971 306,240 36,161,810 5,233,510 — — — 5,994,177 — — — — 271,242 — 241,195 7,598,910 76,263 8,564,538 1,053,442 — 2,493,894 76,784 2,594,941 25,530 120,802 — 52,022 1,235,186 3,532,222 12,141 682,963 2,783 871,185 134,681 — 1,745,166 — 1,745,166 — 20,996,686 — — 20,996,686 — — — 39,960 39,960 377,066 — — 17,758 108,380 — 21,370,824 12,520,933 265,570 42,421,461 5,122,941 169,215 (8,652,962) 40,670 (6,259,651) 110,569 — 3,137,773 564,885 3,702,658 — — 115,699 — 115,699 — 132,856 630,839 55,942 957,877 11,033 (90) (402,370) (55,763) (566,640) (7,048) — — — (1,886,607) — — 187,510 (3,359) (111,195) 11,627 132,766 3,669,451 561,705 2,211,792 15,612 301,981 (4,983,511) 602,375 (4,047,859) 126,181 — 835 — 835 — — 5,349,759 — 5,349,759 126,418 — — — — (56,835) 301,981 367,083 602,375 1,302,735 195,764 (14,602,754) (14,279,969) 8,114,899 (19,790,770) (1,182,809) 354 — — 354 6,370 19,896 — (5,953) 13,943 (112,454) (14,582,504) (14,279,969) 8,108,946 (19,776,473) (1,288,893) $ (14,280,523) $ (13,912,886) $ 8,711,321 $ (18,473,738) $ (1,093,129) The notes to the financial statements are an integral part of this statement. 55 State of California Annual Comprehensive Financial Report Statement of Cash Flows Proprietary Funds Year Ended June 30, 2025 (amounts in thousands) Water Resources State Lottery CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers/employers ...................................................................................................... $ 1,454,224 $ 8,917,804 Receipts from interfund services provided .............................................................................................. — — Payments to suppliers .......................................................................................................................... (381,300) (284,177) Payments to employees........................................................................................................................ (506,120) (129,211) Payments for interfund services used..................................................................................................... — (16,871) Payments for lottery prizes.................................................................................................................... — (6,698,075) Claims paid to other than employees ..................................................................................................... — (614,805) Other receipts (payments)..................................................................................................................... (10,591) 799,588 Net cash provided by (used in) operating activities........................................................................ 556,213 1,974,253 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Receipts from / (payment on) notes receivable and leases receivable....................................................... — — Proceeds from / (payment on) loans and interfund borrowings ................................................................. — — Proceeds from general obligation bonds................................................................................................. — — 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.............................................................................................................. — (2,051,363) Net cash provided by (used in) noncapital financing activities....................................................... — (2,051,363) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets .................................................................................................................. (428,416) (2,502) Proceeds from sale of capital assets...................................................................................................... — 52 Proceeds from notes payable and commercial paper............................................................................... 246,638 — Principal paid on notes payable and commercial paper............................................................................ (382,100) — Proceeds from long-term capital financing.............................................................................................. — — Payment on long-term capital financing.................................................................................................. — (9,260) Proceeds from revenue bonds............................................................................................................... 329,200 — Retirement of general obligation/revenue bonds ..................................................................................... (237,409) — Interest paid ........................................................................................................................................ (75,645) — Grants received ................................................................................................................................... 2,334 — Net cash used in capital and related financing activities ................................................................ (545,398) (11,710) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments....................................................................................................................... (252,172) (14,907) Proceeds from maturity and sale of investments ..................................................................................... 252,600 86,335 Proceeds from / (issuance of) loans receivable ....................................................................................... 668 — Earnings on investments....................................................................................................................... 65,776 46,463 Net cash provided by (used in) investing activities......................................................................... 66,872 117,891 Net increase (decrease) in cash and pooled investments.................................................................. 77,687 29,071 Cash and pooled investments – beginning............................................................................................. 1,261,454 593,968 Cash and pooled investments – ending.................................................................................................. $ 1,339,141 $ 623,039 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 $ 21,458,343 $ 3,211,201 $ 281,982 $ 35,323,554 $ 11,743 — — 108,127 108,127 5,553,241 (231,049) (2,452,665) (155,692) (3,504,883) (3,564,439) (209,822) (6,973,601) (75,644) (7,894,398) (1,049,177) (61,810) — (504) (79,185) (75,277) — — — (6,698,075) — (21,070,038) — — (21,684,843) — 1,483,939 (1,341,611) (891,340) 39,985 (391,417) 1,369,563 (7,556,676) (733,071) (4,389,718) 484,674 16,460 (141,760) (676) (125,976) 709 — (3,992) 800 (3,192) (197,654) — — 300,000 300,000 — — (35,385) (35,385) — — 58,240 80,000 138,240 — — (29,005) (139,180) (168,185) — — 1,458 — 1,458 26 — (21,499) (77,931) (99,430) — — 4,878,462 223 4,878,685 130,039 — — — — (56,835) — 3,341,309 562,420 3,903,729 — — — — (2,051,363) — 16,460 8,083,213 690,271 6,738,581 (123,715) (4,514) (1,235,928) (2,248) (1,673,608) (1,243,577) — 3,274 352 3,678 102,725 — — — 246,638 — — — — (382,100) — — — — — 16,341 — (418,448) (1,837) (429,545) (27,567) — 906,443 — 1,235,643 1,940,416 — — — (237,409) (1,432,590) (90) (396,876) (54) (472,665) (7,074) — 45,705 — 48,039 — (4,604) (1,095,830) (3,787) (1,661,329) (651,326) — (12,511,477) (1,016) (12,779,572) — 128,188 12,803,143 — 13,270,266 — — — — 668 — 132,856 404,536 58,501 708,132 11,033 261,044 696,202 57,485 1,199,494 11,033 1,642,463 126,909 10,898 1,887,028 (279,334) 2,666,348 1,820,398 1,768,132 8,110,300 4,850,499 $ 4,308,811 $ 1,947,307 $ 1,779,030 $ 9,997,328 $ 4,571,165 (continued) 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 (continued) Proprietary Funds Year Ended June 30, 2025 (amounts in thousands) Water Resources State Lottery RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Operating income (loss)............................................................................................................................ $ 339,198 $ 1,844,228 Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation ........................................................................................................................................ 158,024 15,274 Provisions and allowances.................................................................................................................... — 13,333 Amortization of premiums and discounts ................................................................................................ — — Amortization of long-term prepaid charges and credits............................................................................. 86,309 — Other .................................................................................................................................................. (10,591) 232 Change in account balances: Receivables..................................................................................................................................... (22,324) (50,231) Due from other funds........................................................................................................................ — — Due from other governments............................................................................................................. (12,512) 1 Prepaid items .................................................................................................................................. — 2,658 Inventories ...................................................................................................................................... (52) (12) Contracts and installments receivable................................................................................................ — — Leases receivable ............................................................................................................................ — — Other current assets......................................................................................................................... — (411) Loans receivable.............................................................................................................................. — — Deferred outflow of resources............................................................................................................ — — Accounts payable............................................................................................................................. 44,984 41,454 Due to other funds............................................................................................................................ 2,398 17,583 Due to other governments................................................................................................................. (25,299) — Contracts and notes payable............................................................................................................. — — Interest payable ............................................................................................................................... — — Revenues received in advance.......................................................................................................... — 10 Other current liabilities...................................................................................................................... — 6,502 Benefits payable .............................................................................................................................. — — Lottery prizes and annuities .............................................................................................................. — 95,432 Compensated absences payable....................................................................................................... — — Other noncurrent liabilities ................................................................................................................ (3,922) (11,800) Deferred inflow of resources.............................................................................................................. — — Total adjustments ......................................................................................................................... 217,015 130,025 Net cash provided by (used in) operating activities................................................................................ $ 556,213 $ 1,974,253 Noncash investing, capital, and financing activities: Unclaimed lottery prizes directly allocated to another entity...................................................................... $ — $ 44,969 Amortization/defeasance of bond premium and discount ......................................................................... 45,633 — Unrealized gain/loss on investments ...................................................................................................... — 8,085 Amortization of deferred loss on refundings............................................................................................ 11,708 — State's contribution for pension and OPEB ............................................................................................. — — Other assets paid through long-term debt............................................................................................... — — Gifts in kind ......................................................................................................................................... — — Change / transfer of capital assets......................................................................................................... — — Other miscellaneous noncash transactions............................................................................................. — 39,298 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 $ 169,215 $ (8,652,962) $ 40,670 $ (6,259,651) $ 110,567 12,141 683,001 2,783 871,223 134,681 — — (702) 12,631 — — — (1,770) (1,770) (123,057) — — — 86,309 29 — (3,187) (939) (14,485) 9,247 (81,695) 846 (5,831) (159,235) (1,917) (37,851) (2,430) 2,533 (37,748) (60,221) (3,418) — (1,743) (17,672) (7,418) — (1,258) (28) 1,372 (44,846) — — 671 607 5,914 — — — — 624,949 — — (13,260) (13,260) 165 — — (1,539) (1,950) — — — (749,986) (749,986) — 23,929 1,313,658 8,730 1,346,317 108,534 (110,275) (30,045) (2,932) (56,814) 20,336 (10,138) — 512 10,355 (137,969) 1,458,408 — 1,336 1,434,445 9,709 — — — — (9,448) — — (4,308) (4,308) 3,673 — (167,456) (2) (167,448) (45,506) 15,128 (25,354) — (3,724) 1,701 (73,324) 59,815 — (13,509) — — — — 95,432 — 112 6,077 1,418 7,607 (2,882) 28,535 383,461 (5,583) 390,691 (1,312) (21,204) (1,120,842) (3,101) (1,145,147) (110,255) 1,200,348 1,096,286 (773,741) 1,869,933 374,107 $ 1,369,563 $ (7,556,676) $ (733,071) $ (4,389,718) $ 484,674 (concluded) $ — $ — $ — $ 44,969 $ — — 29,985 — 75,618 — — 230,916 — 239,001 — — 6,974 — 18,682 — — 471,297 — 471,297 — — 163,836 — 163,836 — — 113,549 — 113,549 — — 140,069 — 140,069 1,874,889 — — 3,406 42,704 40 The notes to the financial statements are an integral part of this statement. 59 State of California Annual Comprehensive Financial Report Statement of Fiduciary Net Position Fiduciary Funds and Similar Component Units June 30, 2025 (amounts in thousands) Pension and Other Employee Private Benefit Purpose Investment Trust Trust Trust Custodial ASSETS Cash and pooled investments................................................... $ 4,934,784 $ 152,351 $ 24,489,901 $ 2,716,564 Investments, at fair value: Short-term........................................................................... 38,624,730 312,614 1,196 — Equity securities .................................................................. 413,518,936 11,206,432 148,826 — Debt securities .................................................................... 256,395,809 3,288,678 162,799 — Real estate.......................................................................... 117,914,941 366,447 — — Securities lending collateral .................................................. 47,528,250 — — — Other.................................................................................. 241,059,722 4,121,665 — — Total investments ............................................................. 1,115,042,388 19,295,836 312,821 — Receivables (net)..................................................................... 60,443,056 8,096 262,238 3,452,613 Due from other funds ............................................................... 44,731 — — 63,254 Due from other governments .................................................... 119 — — 1,301 Interfund receivable ................................................................. — — — 12,172 Loans receivable ..................................................................... 6,303,362 — — 228 Other assets............................................................................ 1,086,180 428,599 — 15 Total assets ....................................................................... 1,187,854,620 19,884,882 25,064,960 6,246,147 DEFERRED OUTFLOWS OF RESOURCES ................................. 319,947 — 11 170 Total assets and deferred outflows of resources ............ 1,188,174,567 19,884,882 25,064,971 6,246,317 LIABILITIES Accounts payable .................................................................... 6,914,369 20,902 82 1,055,525 Due to other governments ........................................................ — — 261,735 3,307,234 Tax overpayments ................................................................... — — — (10) Benefits payable...................................................................... 5,214,605 — — — Revenues received in advance ................................................. — 6,473 — 20 Deposits ................................................................................. — 428,501 — 987,122 Securities lending obligations.................................................... 64,847,494 — — — Loans payable......................................................................... 6,251,450 — — — Other liabilities......................................................................... 111,213,857 — 103 17,387 Total liabilities ................................................................... 194,441,775 455,876 261,920 5,367,278 DEFERRED INFLOWS OF RESOURCES..................................... 355,084 — 56 215 Total liabilities and deferred inflows of resources........... 194,796,859 455,876 261,976 5,367,493 NET POSITION Restricted: Pension benefits...................................................................... 936,417,052 — 313,328 — Other postemployment benefits................................................. 25,213,244 — — — Deferred compensation participants .......................................... 31,735,129 — — — Pool participants...................................................................... — — 24,489,667 — Individuals, organizations, or other governments ........................ 12,283 19,429,006 — 878,824 Total net position............................................................... $ 993,377,708 $ 19,429,006 $ 24,802,995 $ 878,824 60 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, 2025 (amounts in thousands) Pension and Other Employee Private Benefit Purpose Investment Trust Trust Trust Custodial ADDITIONS Contributions: Employer.......................................................................... $ 38,282,837 $ — $ 54,238 $ 30,086 Plan member .................................................................... 12,984,254 — — — Non-employer ................................................................... 4,263,762 — — — Total contributions.......................................................... 55,530,853 — 54,238 30,086 Investment income: Net appreciation in fair value of investments ........................ 85,101,568 121,997 26,759 — Interest, dividends, and other investment income ................. 19,344,683 1,807,810 978,702 8,129 Less: investment expense.................................................. (5,132,438) (17,610) (227) — Net investment income ................................................... 99,313,813 1,912,197 1,005,234 8,129 Receipts from depositors........................................................ — 5,224,531 18,006,954 — Other.................................................................................... 434,606 — 650 273,862 Total additions................................................................. 155,279,272 7,136,728 19,067,076 312,077 DEDUCTIONS Distributions paid and payable to participants........................... 59,189,686 — 976,310 56,606 Refunds of contributions ........................................................ 543,959 — — — Administrative expense.......................................................... 668,244 1,010 2,513 1,523 Interest expense.................................................................... 317,315 — — — Payments to and for depositors .............................................. 850,107 4,473,917 15,522,621 941 Total deductions.............................................................. 61,569,311 4,474,927 16,501,444 59,070 Change in net position.................................................... 93,709,961 2,661,801 2,565,632 253,007 Net position – beginning, as previously reported..................... 899,667,747 16,740,124 22,237,363 684,083 Error corrections.................................................................... — — — (58,266) Change to or within the financial reporting entity....................... — 27,081 — — Net position – beginning, as restated....................................... 899,667,747 16,767,205 22,237,363 625,817 Net position – ending............................................................... $ 993,377,708 $ 19,429,006 $ 24,802,995 $ 878,824 The notes to the financial statements are an integral part of this statement. 61 State of California Annual Comprehensive Financial Report This page intentionally left blank 62 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, 2025 (amounts in thousands) University California Nonmajor of Housing Finance Component California Agency Units Total ASSETS Current assets: Cash and pooled investments................................................. $ 886,158 $ 2,156,540 $ 2,081,131 $ 5,123,829 Investments................................................................. 9,300,004 2 955,738 10,255,744 Restricted assets: Cash and pooled investments............................................. — — 1,277,337 1,277,337 Investments ...................................................................... — — 210,958 210,958 Receivables (net) .................................................................. 9,252,035 246,150 870,500 10,368,685 Due from primary government ................................................ 1,043,061 — 80 1,043,141 Due from other governments .................................................. 223,075 — — 223,075 Prepaid items........................................................................ — 573 1,914 2,487 Inventories............................................................................ 522,598 — — 522,598 Other current assets .............................................................. 692,135 68,519 50,990 811,644 Total current assets ........................................................... 21,919,066 2,471,784 5,448,648 29,839,498 Noncurrent assets: Restricted assets: Cash and pooled investments............................................. — — 33,858 33,858 Investments ...................................................................... — — 246,432 246,432 Investments .......................................................................... 53,251,823 454,476 3,794,245 57,500,544 Receivables (net) .................................................................. 2,901,937 — 698,513 3,600,450 Loans receivable ................................................................... — 3,203,899 580,822 3,784,721 Long-term prepaid charges .................................................... — — 89 89 Capital assets: Land................................................................................. 2,334,215 — 218,685 2,552,900 Collections -nondepreciable............................................... 702,209 — 13,401 715,610 Buildings and other depreciable property............................. 74,119,460 706 2,831,126 76,951,292 Intangible assets -amortizable ........................................... 6,552,482 27,987 351,094 6,931,563 Less: accumulated depreciation/amortization....................... (40,700,292) (9,864) (1,500,223) (42,210,379) Construction/development in progress................................. 9,691,226 — 180,486 9,871,712 Intangible assets -nonamortizable...................................... — — 318 318 Other noncurrent assets......................................................... 876,337 33,276 71,820 981,433 Total noncurrent assets...................................................... 109,729,397 3,710,480 7,520,666 120,960,543 Total assets.................................................................. 131,648,463 6,182,264 12,969,314 150,800,041 DEFERRED OUTFLOWS OF RESOURCES............................... 5,306,903 19,948 124,232 5,451,083 Total assets and deferred outflows of resources....... $ 136,955,366 $ 6,202,212 $ 13,093,546 $ 156,251,124 64 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.................................................................. $ 4,244,952 $ 41,995 $ 1,616,728 $ 5,903,675 Revenues received in advance............................................... 1,815,660 — 200,864 2,016,524 Deposits ............................................................................... — 246,031 1,536 247,567 Contracts and notes payable .................................................. — — 60,912 60,912 Interest payable..................................................................... — 5,192 2,925 8,117 Securities lending obligations ................................................. 2,422,644 — — 2,422,644 Current portion of long-term obligations................................... 6,350,001 16,422 140,596 6,507,019 Other current liabilities ........................................................... 5,007,841 122,756 412,214 5,542,811 Total current liabilities ........................................................ 19,841,098 432,396 2,435,775 22,709,269 Noncurrent liabilities: Compensated absences payable ............................................ 685,173 3,425 27,311 715,909 Workers’ compensation benefits payable................................. 1,697,952 — 4,705 1,702,657 Loans payable....................................................................... — — 11,354 11,354 Commercial paper and other borrowings ................................. — — 121,400 121,400 Lease liability ........................................................................ 2,685,017 17,490 176,891 2,879,398 Subscription liability ............................................................... 165,697 — 3,561 169,258 Revenue bonds payable ........................................................ 32,700,128 450,425 855,845 34,006,398 Net other postemployment benefits liability .............................. 19,810,706 55,550 159,980 20,026,236 Net pension liability................................................................ 11,939,036 35,204 269,462 12,243,702 Revenues received in advance............................................... — — 17,360 17,360 Other noncurrent liabilities...................................................... 1,519,001 557,574 836,123 2,912,698 Total noncurrent liabilities................................................... 71,202,710 1,119,668 2,483,992 74,806,370 Total liabilities.............................................................. 91,043,808 1,552,064 4,919,767 97,515,639 DEFERRED INFLOWS OF RESOURCES................................... 15,909,756 45,643 533,525 16,488,924 Total liabilities and deferred inflows of resources ..... 106,953,564 1,597,707 5,453,292 114,004,563 NET POSITION Net investment in capital assets.............................................. 21,092,930 (768) 854,228 21,946,390 Restricted: Nonexpendable -endowments ........................................... 9,355,363 — 2,184,859 11,540,222 Expendable: Endowments and gifts .................................................... 22,467,182 — 45,785 22,512,967 Education ...................................................................... 2,738,350 — 1,774,148 4,512,498 Indenture....................................................................... — 857,444 — 857,444 Statute .......................................................................... — 3,292,381 1,486,228 4,778,609 Other purposes .............................................................. — 495,285 87,262 582,547 Total expendable ........................................................ 25,205,532 4,645,110 3,393,423 33,244,065 Unrestricted .......................................................................... (25,652,023) (39,837) 1,207,744 (24,484,116) Total net position............................................................. 30,001,802 4,604,505 7,640,254 42,246,561 Total liabilities, deferred inflows of resources, and net position..................................................................... $ 136,955,366 $ 6,202,212 $ 13,093,546 $ 156,251,124 The notes to the financial statements are an integral part of this statement. 65 State of California Annual Comprehensive Financial Report Statement of Activities Discretely Presented Component Units – Enterprise Activity Year Ended June 30, 2025 (amounts in thousands) California University Housing Nonmajor of Finance Component California Agency Units Total OPERATING EXPENSES Personal services.................................................................. $ 35,437,245 $ — $ 771,767 $ 36,209,012 Scholarships and fellowships.................................................. 1,097,826 — 127,384 1,225,210 Supplies ............................................................................... 7,612,143 — 22,814 7,634,957 Services and charges ............................................................ 470,773 57,140 1,965,998 2,493,911 Department of Energy laboratories.......................................... 1,194,419 — — 1,194,419 Depreciation ......................................................................... 3,124,013 2,429 121,242 3,247,684 Interest expense and fiscal charges ........................................ 1,318,340 27,150 59,199 1,404,689 Other.................................................................................... 8,918,462 58,503 82,192 9,059,157 Total operating expenses ................................................ 59,173,221 145,222 3,150,596 62,469,039 PROGRAM REVENUES Charges for services.............................................................. 42,053,266 64,184 959,150 43,076,600 Operating grants and contributions.......................................... 14,782,203 — 1,407,886 16,190,089 Capital grants and contributions.............................................. 40,698 — 28,695 69,393 Total program revenues................................................... 56,876,167 64,184 2,395,731 59,336,082 Net revenues (expenses)................................................ (2,297,054) (81,038) (754,865) (3,132,957) GENERAL REVENUES Investment and interest income (loss) ..................................... 6,306,093 220,009 600,979 7,127,081 Other.................................................................................... 3,170,394 84,170 1,004,026 4,258,590 Total general revenues .................................................... 9,476,487 304,179 1,605,005 11,385,671 Change in net position.................................................... 7,179,433 223,141 850,140 8,252,714 Net position – beginning, as previously reported..................... 22,321,935 3,877,738 6,799,240 32,998,913 Error corrections.................................................................... — 503,626 3,896 507,522 Changes in accounting principle ............................................. 500,434 — (13,022) 487,412 Net position – beginning, as restated....................................... 22,822,369 4,381,364 6,790,114 33,993,847 Net position – ending............................................................... $ 30,001,802 $ 4,604,505 $ 7,640,254 $ 42,246,561 66 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............................................................................. 71 A. Reporting Entity............................................................................................................. 71 1. Blended Component Units.......................................................................................... 71 2. Fiduciary Component Units......................................................................................... 71 3. Discretely Presented Component Units........................................................................ 72 4. Joint Venture............................................................................................................. 73 5. Jointly Governed Organization.................................................................................... 74 6. Related Organizations................................................................................................ 74 B. Government-wide and Fund Financial Statements............................................................ 76 C. Measurement Focus and Basis of Accounting.................................................................. 79 1. Government-wide Financial Statements....................................................................... 79 2. Fund Financial Statements ......................................................................................... 79 D. Cash and Investments ................................................................................................... 79 E. Receivables .................................................................................................................. 80 F. Inventories .................................................................................................................... 80 G. Long-term Prepaid Charges ........................................................................................... 80 H. Capital Assets and Right-to-Use Assets .......................................................................... 80 I. Long-term Obligations..................................................................................................... 82 J. Compensated Absences................................................................................................. 83 K. Deferred Outflows and Deferred Inflows of Resources ...................................................... 84 1. Deferred Outflows of Resources ................................................................................. 84 2. Deferred Inflows of Resources.................................................................................... 85 L. Nonmajor Enterprise Segment Information....................................................................... 86 M. Net Position and Fund Balance ...................................................................................... 86 1. Net Position .............................................................................................................. 87 2. Fund Balance............................................................................................................ 87 N. Stabilization Arrangements............................................................................................. 88 1. Budget Stabilization Account ...................................................................................... 88 2. Special Fund for Economic Uncertainties..................................................................... 88 3. Public School System Stabilization Account ................................................................. 89 O. Guaranty Deposits ........................................................................................................ 89 Note 2. Accounting Changes and Error Corrections ............................................................................. 89 A. Changes in Accounting Principles ................................................................................... 89 B. Changes to or within the Financial Reporting Entity .......................................................... 90 C. Error Corrections in Previously Issued Financial Statements ............................................. 90 67 State of California Annual Comprehensive Financial Report 1. Government-wide Governmental Activities................................................................... 90 2. Governmental Funds ................................................................................................. 91 3. Custodial Fund .......................................................................................................... 91 4. Discretely Presented Component Units........................................................................ 91 Note 3. Budgetary and Legal Compliance ........................................................................................... 94 A. Budgeting and Budgetary Control ................................................................................... 94 B. Legal Compliance.......................................................................................................... 94 Note 4. Deposits and Investments...................................................................................................... 95 A. Primary Government...................................................................................................... 95 1. Control of State Funds ............................................................................................... 95 2. Valuation of State Investments.................................................................................... 96 3. Oversight of Investing Activities................................................................................... 98 4. Risk of Investments.................................................................................................... 99 a. Interest Rate Risk ................................................................................................ 100 b. Credit Risk .......................................................................................................... 101 c. Custodial Credit Risk............................................................................................ 101 d. Concentration of Credit Risk ................................................................................. 102 B. Fiduciary Funds............................................................................................................. 102 C. Discretely Presented Component Units ........................................................................... 102 Note 5. Accounts Receivable ............................................................................................................. 104 Note 6. Restricted Assets .................................................................................................................. 106 Note 7. Capital Assets....................................................................................................................... 107 Note 8. Deferred Outflows and Deferred Inflows of Resources.............................................................. 111 Note 9. Accounts Payable ................................................................................................................. 112 Note 10. Long-term Obligations.......................................................................................................... 114 Note 11. Pension Trusts.................................................................................................................... 118 A. California Public Employees’ Retirement System.............................................................. 119 1. Public Employees’ Retirement Fund (PERF) ................................................................ 119 2. Single-employer Plans ............................................................................................... 129 B. California State Teachers’ Retirement System ................................................................. 138 C. Trial Court Pension Plans............................................................................................... 142 Note 12. Other Postemployment Benefits............................................................................................ 144 A. Retiree Health Benefits Program..................................................................................... 144 B. Trial Court OPEB Plans ................................................................................................. 160 68 Notes to the Financial Statements Note 13. Commercial Paper and Other Long-term Borrowings .............................................................. 162 Note 14. Leases and Subscription-Based Information Technology Arrangements................................... 162 Note 15. Commitments...................................................................................................................... 164 Note 16. General Obligation Bonds .................................................................................................... 166 A. Variable-rate General Obligation Bonds........................................................................... 166 B. Build America Bonds ..................................................................................................... 167 C. Debt Service Requirements............................................................................................ 168 D. General Obligation Bond Defeasances............................................................................ 168 1. Current Year Activity .................................................................................................. 168 2. Outstanding Balance.................................................................................................. 169 Note 17. Revenue Bonds................................................................................................................... 169 A. Governmental Activities ................................................................................................. 169 B. Business-type Activities ................................................................................................. 170 C. Discretely Presented Component Units ........................................................................... 170 D. Revenue Bond Defeasances.......................................................................................... 172 1. Current Year – Governmental Activities ....................................................................... 172 2. Outstanding Balances ................................................................................................ 172 Note 18. Risk Management ............................................................................................................... 173 Note 19. Interfund Balances and Transfers ......................................................................................... 174 A. Interfund Balances......................................................................................................... 174 B. Interfund Transfers ........................................................................................................ 180 Note 20. Fund Balances, Net Position Deficits, and Endowments.......................................................... 182 A. Fund Balances .............................................................................................................. 182 B. Net Position Deficits....................................................................................................... 183 C. Discretely Presented Component Unit Endowments and Gifts........................................... 183 Note 21. Conduit Debt....................................................................................................................... 184 Note 22. Contingent Liabilities............................................................................................................ 184 A. Litigation....................................................................................................................... 184 B. Federal Audit Exceptions ............................................................................................... 185 Note 23. Subsequent Events ............................................................................................................. 185 A. Debt Issuances ............................................................................................................. 185 B. Other............................................................................................................................ 186 69 State of California Annual Comprehensive Financial Report This page intentionally left blank 70 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. 71 State of California Annual Comprehensive Financial Report 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 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 (UC) 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 UC is a component unit of the State because the State appoints a voting majority of the Regents and provides financial assistance to the UC. The UC 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 UC’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. 72 Notes to the Financial Statements 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 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, 2024). 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; 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. 73 State of California Annual Comprehensive Financial Report 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 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, 2025, CADA had total assets and deferred outflows of resources of $81 million, total liabilities and deferred inflows of resources of $58 million, and total net position of $23 million. Total revenues for the fiscal year were $23 million and expenses were $34 million, resulting in an decrease in net position of $11 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.crmp.org/. 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. 74 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 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. 75 State of California Annual Comprehensive Financial Report 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. 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. 76 Notes to the Financial Statements 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. Nonmajor enterprise funds account for additional operations that are financed and operated in a manner similar to private business enterprises. 77 State of California Annual Comprehensive Financial Report 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 most noteworthy 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 CalSavers Retirement Savings Trust Program Fund accounts for money received from California private employees to provide greater retirement savings in a convenient, voluntary, low-cost, and portable manner. 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. 78 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. 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. 79 State of California Annual Comprehensive Financial Report 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. 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. 80 Notes to the Financial Statements 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. 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. 81 State of California Annual Comprehensive Financial Report 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 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 and internal service funds (No Place Like Home, Golden State Tobacco Securitization Corporation, and the Public Building Construction), the liability for revenue bonds is recorded in the respective fund. 82 Notes to the Financial Statements 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 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. Leave that has not been used is recognized as a liability if it (a) is attributable to services already rendered, (b) accumulates, and (c) is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. Employee leave benefits include annual leave, vacation leave, sick leave, and other paid leave programs. Liabilities for compensated absences are recognized when the leave is earned and meets the criteria above. The compensated absences liability is measured using the weighted average employee pay rate multiplied by the leave balances determined to be more likely than not to be used for time off or otherwise paid in cash or settled through noncash means as of the date of the financial statements. Certain salary-related payments that are directly and incrementally associated with payments to be made for compensated absences, such as Medicare and Social Security payroll taxes, are included in the calculation of the compensated absences liability. 83 State of California Annual Comprehensive Financial Report 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 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, 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. 84 Notes to the Financial Statements • 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. • Service Concession Arrangements: The University of California (UC), 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 UC 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 UC upon expiration of the ground lease. The facilities are reported as capital assets by the UC when placed in service, and a corresponding deferred inflow of resources is reported. The UC has not provided guarantees on financing obtained by the third parties under these arrangements. • Irrevocable Split-Interest Agreements: The State’s 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. 85 State of California Annual Comprehensive Financial Report • 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 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. • 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. 86 Notes to the Financial 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, 2025, the government-wide financial statements show restricted net position for the primary government of $74.6 billion, of which $23.9 billion is due to enabling legislation. Unrestricted net position is neither restricted nor invested in capital assets. 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. 87 State of California Annual Comprehensive Financial Report 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 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, 2025, the Budget Stabilization Account had a restricted fund balance of $18.3 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, 2025, the SFEU represented $3.5 billion of the unassigned balance of the General Fund. 88 Notes to the Financial Statements 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, 2025, the PSSSA represented $2.2 billion of cash reported in the General Fund, $1.7 billion of which was due to other funds, and $461 million of which was due to other governments. Accordingly, the PSSSA reported no fund balance as of June 30, 2025. 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, 2025: GASB Statement No. 101, Compensated Absences is effective for the fiscal year ended June 30, 2025. The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. This Statement requires that liabilities for compensated absences be recognized for (1) leave that has not been used and (2) leave that has been used but not yet paid in cash or settled through noncash means. A liability should be recognized for leave that has not been used if (a) the leave is attributable to services already rendered, (b) the leave accumulates, and (c) the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. Certain salary-related payments that are directly and incrementally associated with payments for leave also should be included in the measurement of the liabilities. These requirements resulted in an increase of the State’s compensated absence liability because sick leave is no longer excluded from recognition criteria. This Statement amends the existing requirement to disclose the gross increases and decreases in the liability for compensated absences to allow governments to disclose only the net change in the liability (as long as they identify it as a net change). The State has chosen to present the change in compensated absence liability as a net figure in Note 10, Long-term Obligations. The impact on the State’s Statement of Net Position as a result of the implementation of GASB Statement No. 101 is a decrease of $1.4 billion in beginning net position of governmental activities and an increase of $14 million in beginning net position of business-type activities. 89 State of California Annual Comprehensive Financial Report GASB Statement No. 102, Certain Risk Disclosures is effective for the fiscal year ended June 30, 2025. Governments may be vulnerable to a variety of risks; although existing authoritative guidance requires governments to disclose information about their exposure to certain risks, information about other risks that are prevalent among governments is not routinely disclosed because it is not explicitly required. The objective of this Statement is to provide users of government financial statements with essential information about risks related to a government’s vulnerabilities due to certain concentrations or constraints. This Statement requires governments to assess whether an event or events associated with a concentration or constraint that could cause a substantial impact have occurred, have begun to occur, or are more likely than not to begin to occur within 12 months of the date the financial statements are issued and disclose that information if all criteria have been met. Implementation of GASB Statement No. 102 resulted in no changes to the ACFR. The University of California (UC), a discretely presented component unit of the State, increased its beginning net position by a net $500 million due to the adoption of GASB 101 and a change in accounting principle not resulting from the adoption of a new accounting pronouncement. Additional information about this change in accounting principle can be found in the UC’s separately issued financial statements on its website at www.ucop.edu. B. Changes to or within the Financial Reporting Entity The State’s administrator of the Scholarshare program made a change to the activities within an existing nonmajor governmental fund (Other Special Revenue Programs Fund) which required the fund to be reclassified as a private purpose trust fund (Other Private Purpose Trust Fund). The beginning fund balance decreased in nonmajor governmental funds and increased in the private purpose trust funds by $27 million. As a result of this movement, the beginning net position of the primary government’s governmental activities decreased by $27 million. California State University (CSU) Auxiliary Organizations, a nonmajor discretely presented component unit of the State, removed one of its component units due to the cessation of its operations. The change had no impact to the beginning net position of CSU. Additional information about this change to or within the financial reporting entity can be found in the CSU’s separately issued financial statements on its website at www.calstate.edu. 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 $1.4 billion for governmental activities. The errors affected capital assets, pollution remediation obligations, leases, financed purchases, availability payment arrangements, and other items. • 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 $326 million, the beginning balances of capital assets being depreciated or amortized decreased by $631 million, and the beginning balances of accumulated depreciation and amortization increased by $427 million. Overall, the error corrections resulted in a increase of $122 million in beginning net position. • Error corrections to pollution remediation obligations from the prior reporting period decreased beginning net position by $83 million. 90 Notes to the Financial Statements • The beginning net position of governmental activities increased by $57 million to correct pension expense timing differences between the State’s contributions and the actuarial validation report for the prior reporting period. • Error corrections related to governmental funds and internal service funds increased beginning net position of governmental activities by $1.2 billion, as described in the sections below. 2. Governmental Funds • Corrections to the General Fund resulted in an increase in the beginning fund balance by $950 million due to a loan receivable that was not reported in the financial statements in the prior reporting period. • Corrections to the Environmental and Natural Resources Fund resulted in an increase to the beginning fund balance of $234 million due to grant commitments that were erroneously reported as due to other governments in the prior reporting period. • Activities reported in the Custodial Fund in the prior reporting period were determined to not be fiduciary in nature. As a result, the fund activities were moved to the Health Care Related Programs Fund and increased the beginning fund balance of nonmajor governmental funds by $58 million. 3. Custodial Fund Corrections to the Custodial Fund resulted in a decrease in the beginning net position of $58 million. Refer to governmental funds above for more details. 4. Discretely Presented Component Units An increase of $504 million to the beginning net position of the California Housing Finance Agency, a major component unit, occurred because the activities of a recently added agency program were not included in the prior year’s financial statements 91 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, changes in accounting principles, and error corrections. Table 1 Restatements of Beginning Fund Balance and Net Position (amounts in thousands) 6/30/2024 Changes To or Balance Within the (As Previously Financial Reported) Reporting Entity Fund Balances or Net Position Government-wide Governmental Activities .................................................................................................................... $ 34,435,206 $ (27,081) Business-type Activities .................................................................................................................... (19,790,770) — Total Primary Government ..................................................................................................................... $ 14,644,436 $ (27,081) Governmental funds Major funds General........................................................................................................................................... $ 63,392,765 $ — Federal ........................................................................................................................................... 357,211 — Environmental & Natural Resources .................................................................................................. 23,867,622 — Nonmajor funds ................................................................................................................................. 35,780,250 (27,081) Total governmental funds ...................................................................................................................... $ 123,397,848 $ (27,081) Proprietary funds Major funds Water Resources ............................................................................................................................. $ 1,272,654 $ — State Lottery.................................................................................................................................... (295,600) — Unemployment ................................................................................................................................ (14,602,754) — California State University................................................................................................................. (14,279,969) — Nonmajor funds ................................................................................................................................. 8,114,899 — Total proprietary funds........................................................................................................................... $ (19,790,770) $ — Internal service funds............................................................................................................................. $ (1,182,809) $ — Fiduciary funds Pension/OPEB..................................................................................................................................... $ 899,667,747 $ — Private Purpose Trust........................................................................................................................... 16,740,124 27,081 Investment Trust .................................................................................................................................. 22,237,363 — Custodial Fund .................................................................................................................................... 684,083 — Total fiduciary funds .............................................................................................................................. $ 939,329,317 $ 27,081 Discretely presented component units University of California.......................................................................................................................... $ 22,321,935 $ — California Housing Finance Agency ....................................................................................................... 3,877,738 — Nonmajor component units................................................................................................................ 6,799,240 — Total discretely presented component units........................................................................................... $ 32,998,913 $ — 92 Notes to the Financial Statements Changes in 6/30/2024 Error Accounting Balance Corrections Principle (As Restated) $ 1,367,911 $ (1,414,771) $ 34,361,265 354 13,943 (19,776,473) $ 1,368,265 $ (1,400,828) $ 14,584,792 $ 956,492 $ — $ 64,349,257 — — 357,211 234,709 — 24,102,331 59,196 — 35,812,365 $ 1,250,397 $ — $ 124,621,164 $ — $ — $ 1,272,654 — — (295,600) 354 19,896 (14,582,504) — — (14,279,969) — (5,953) 8,108,946 $ 354 $ 13,943 $ (19,776,473) $ 6,370 $ (112,454) $ (1,288,893) $ — $ — $ 899,667,747 — — 16,767,205 — — 22,237,363 (58,266) — 625,817 $ (58,266) $ — $ 939,298,132 $ — $ 500,434 $ 22,822,369 503,626 — 4,381,364 3,896 (13,022) 6,790,114 $ 507,522 $ 487,412 $ 33,993,847 93 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, 2025, increased the spending authority for the budgetary/legal basis-reported General Fund and decreased spending authority for 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 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. 94 Notes to the Financial Statements 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, 2025, these discretely presented component units and related organizations accounted for approximately 2.46% 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, 2025, totaling approximately $7.6 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, 2025, 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. 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 $3.1 billion in interest revenue received by the General Fund from the pooled investment program in the fiscal year 2024-25 was earned on balances in these funds. Enterprise funds and special revenue funds also make separate investments, which are presented at fair value. 95 State of California Annual Comprehensive Financial Report 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. 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 their relationship to similar securities with an active market. Level 3 inputs are significant unobservable inputs. The State has no investments measured at Level 3. 96 Notes to the Financial Statements Table 2 Schedule of Investments – Primary Government – Investments by Fair Value Level June 30, 2025 (amounts in thousands) Fair Value Measurements Using Quoted Prices in Active Significant Markets for Other Identical Observable Assets Inputs June 30, 2025 (Level 1) (Level 2) Pooled Investments U.S. Treasury bills and notes .................................................................... $ 99,557,816 $ 99,557,816 $ — U.S. Agency bonds and discount notes ..................................................... 33,297,083 33,297,083 — Supranational debentures and discount notes ............................................ 12,499,733 12,499,733 — Small Business Administration loans ......................................................... 244,165 244,165 — Mortgage-backed securities ...................................................................... 1,053 1,053 — Certificates of deposit .............................................................................. 16,448,095 — 16,448,095 Commercial paper ................................................................................... 12,185,826 — 12,185,826 Corporate bonds ..................................................................................... 950,692 950,692 — Total pooled investments at fair value ................................................ 175,184,463 $ 146,550,542 $ 28,633,921 Other primary government investments U.S. Treasuries and agencies ................................................................... 1,959,599 $ 753,633 $ 1,205,966 Commercial paper ................................................................................... 171,317 — 171,317 Corporate debt securities ......................................................................... 1,277,312 — 1,277,312 Other ...................................................................................................... 3,808,150 55,375 3,752,775 Total other primary government investments at fair value .................. 7,216,378 $ 809,008 $ 6,407,370 Investments measured at the net asset value (NAV) Money market funds/2a-7 money market funds .......................................... 584,306 Short-Term Investments ........................................................................... 48,401 Other External Investment Pools ............................................................... 36,220 Total investments measured at the NAV ............................................. 668,927 Other investment instruments State and Local Government Series securities1 ........................................... 1,973,698 Total other investment instruments ................................................... 1,973,698 Funds outside primary government included in pooled investments Less: investment trust funds ..................................................................... 24,489,901 Less: other trust and custodial funds ......................................................... 4,636,521 Less: discretely presented component units and related organizations ........ 4,312,671 Total primary government investments .............................................. $ 151,604,373 1Reported at carrying value 97 State of California Annual Comprehensive Financial Report As of June 30, 2025, the weighted average maturity of the securities in the pooled investment program administered by the State Treasurer’s Office was approximately 253 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, 2025, 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, 2025, structured notes and medium-term asset-backed securities comprised approximately 2.00% of the pooled investments. A portion of the structured notes was callable agency securities, which represented 1.86% 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 holdings were short-term, asset-backed commercial paper (ABCP), which represented 1.81% of the pooled investments. 98 Notes to the Financial Statements 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 of Investment Credit Authorized Investment Type Maturity Portfolio in One Issuer Rating U.S. Treasury securities 5 years N/A N/A N/A AA by 2 Federal agency and supranational securities 5 years N/A N/A NRSROs A-1, P1, or F1 Certificates of deposit 5 years N/A N/A by 1 NRSRO A-1, P1, or F1 Bankers’ acceptances 180 days N/A N/A by 1 NRSRO Commercial paper 270 days 30% 10% of issuer's outstanding A-1, P1, or F1 Commercial paper by 1 NRSRO A category by 2 Corporate bonds/notes 5 years 10% N/A NRSROs 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. 99 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 $5.3 billion of time deposits and $262 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, 2025, only $1 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, 2025 (amounts in thousands) Weighted Average Fair Value Maturity at Year End (in years) Pooled investments U.S. Treasury bills and notes ................................................................................................ $ 99,557,816 0.75 U.S. Agency bonds and discount notes .................................................................................. 33,297,083 0.77 Supranational debentures and discount notes ........................................................................ 12,499,733 0.95 Small Business Administration loans ..................................................................................... 244,165 0.25 Mortgage-backed securities .................................................................................................. 1,053 0.34 Certificates of deposit ........................................................................................................... 16,448,095 0.28 Commercial paper ............................................................................................................... 12,185,826 0.22 Corporate bonds .................................................................................................................. 950,692 1.90 Total pooled investments ............................................................................................... 175,184,463 Other primary government investments U.S. Treasuries and agencies ............................................................................................... 1,959,599 2.94 Commercial paper ............................................................................................................... 171,317 0.04 State and Local Government Series securities1 ....................................................................... 1,973,698 — Corporate debt securities ..................................................................................................... 1,277,312 3.10 Other .................................................................................................................................. 4,477,077 2.22 Total other primary government investments ................................................................. 9,859,003 Funds outside primary government included in pooled investments Less: investment trust funds ................................................................................................. 24,489,901 Less: other trust and custodial funds ..................................................................................... 4,636,521 Less: discretely presented component units and related organizations ..................................... 4,312,671 Total primary government investments .......................................................................... $ 151,604,373 1Reported at carrying value 100 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, 2025 (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 $ 42,949,445 A-1/P-1/F-1 AA/Aa/AA 31,364,500 A-2/P-2/F-2 A/A/A 771,613 A-2/P-2/F-2 A/A/BBB 296,924 Not rated...................................................................... — Not applicable............................................................... 99,801,981 Total pooled investments ........................................ $ 175,184,463 Other primary government investments A-1+/P-1/F-1+ AAA/Aaa/AAA $ 1,011,473 A-1/P-1/F-1 AA/Aa/AA 2,696,546 A-2/P-2/F-2 A/A/A 1,267,782 A-3/P-3/F-3 BBB/Baa/BBB 19,124 B/NP/B BB/Ba/BB 95,092 B/NP/B B2/B 266,265 C/NP/C CCC/Caa/CCC 18,914 Not rated...................................................................... 4,483,807 Total other primary government investments .......... $ 9,859,003 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, 2025, there were no guaranteed investment contracts. 101 State of California Annual Comprehensive Financial Report 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, except for corporate bonds and notes which is limited to 10% of the total pooled investments. As of June 30, 2025, the State had investments in the Federal Home Loan Bank totaling 9.01% of the total pooled investments and other primary government investments. 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. CalPERS and CalSTRS account for 96.02% 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 (UC) and its foundation, the California Housing Finance Agency (CalHFA), and various nonmajor component units. The UC and CalHFA constitute 92.37% 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 UC’s investments and derivative instruments are included in the UC’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. 102 Notes to the Financial Statements This page intentionally left blank 103 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 (UC), a discretely presented component unit of the State, reported current and noncurrent lease receivables of $58 million and $649 million, respectively. The State’s nonmajor component units reported current and noncurrent lease receivables of $27 million and $476 million, respectively. Additional disclosures for the UC are included in the UC’s separately issued financial statements, which may be found on its website at www.ucop.edu. Table 6 Schedule of Accounts Receivable June 30, 2025 (amounts in thousands) Licenses, Permits, Lottery Taxes and Fees Retailers Current governmental activities General Fund .......................................................................................... $ 41,895,644 $ 83 $ — Federal Fund .......................................................................................... — — — Environmental and Natural Resources Fund .............................................. 24,971 426,158 — Nonmajor governmental funds .................................................................. 5,224,197 8,560,518 — Internal service funds ............................................................................... — — — Adjustment: Unavailable revenue1 ............................................................................ (2,766,342) (13,333) — Leases receivable ................................................................................ — — — Total current governmental activities .............................................. $ 44,378,470 $ 8,973,426 $ — Amounts not scheduled for collection during the subsequent year (unavailable revenue) ............................................................................. $ 2,766,342 $ 13,333 $ — Current business-type activities Water Resources Fund ............................................................................ — — — State Lottery Fund ................................................................................... — — 779,716 Unemployment Programs Fund ................................................................ — — — California State University ........................................................................ — — — Nonmajor enterprise funds ....................................................................... — — — Total current business-type activities ................................................ $ — $ — $ 779,716 Amounts not scheduled for collection during the subsequent year (unavailable revenue) ............................................................................. $ — $ — $ — 1The 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. 104 Notes to the Financial Statements California Unemployment State Programs University Other Total $ 682,831 $ — $ 3,098,004 $ 45,676,562 — — 3,832,105 3,832,105 — — 84,644 535,773 — — 929,719 14,714,434 — — 83,212 83,212 (509,845) — (206,999) (3,496,519) — — (154,716) (154,716) $ 172,986 $ — $ 7,665,969 $ 61,190,851 $ 509,845 $ — $ 361,715 $ 3,651,235 — — 126,760 126,760 — — — 779,716 1,301,980 — — 1,301,980 — 446,875 — 446,875 — — 152,076 152,076 $ 1,301,980 $ 446,875 $ 278,836 $ 2,807,407 $ 1,081,218 $ 807,105 $ — $ 1,888,323 105 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, 2025 (amounts in thousands) Cash Due From and Pooled Other Loans Investments Investments Governments Receivable Total Primary government Debt service .................................... $ 596,231 $ 50,690 $ 234,099 $ 5,658,667 $ 6,539,687 Construction .................................... 874,070 — — — 874,070 Operations ...................................... 73,648 — — — 73,648 Other .............................................. 4,796 — — — 4,796 Total primary government .......... 1,548,745 50,690 234,099 5,658,667 7,492,201 Discretely presented component units Debt service .................................... 1,170,672 457,390 — — 1,628,062 Other .............................................. 140,523 — — — 140,523 Total discretely presented component units...................... 1,311,195 457,390 — — 1,768,585 Total restricted assets................ $ 2,859,940 $ 508,080 $ 234,099 $ 5,658,667 $ 9,260,786 106 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, 2025 (amounts in thousands) Beginning Ending Balance Additions Deductions Balance Governmental activities Capital assets not being depreciated/amortized Land...................................................................................... $ 21,987,553 * $ 161,479 $ 3,458 $ 22,145,574 State highway infrastructure .................................................... 85,480,148 * 1,035,191 15,970 86,499,369 Collections............................................................................. 21,691 — — 21,691 Construction/development in progress...................................... 24,442,469 * 5,740,932 1,389,728 28,793,673 Intangible assets .................................................................... 1,320,549 * 105,050 — 1,425,599 Total capital assets not being depreciated/amortized ........... 133,252,410 7,042,652 1,409,156 138,885,906 Capital assets being depreciated/amortized Buildings and improvements.................................................... 32,020,884 * 452,189 22,954 32,450,119 Infrastructure.......................................................................... 755,010 4,868 136 759,742 Equipment and other depreciable assets .................................. 7,198,864 * 777,025 366,218 7,609,671 Other intangible assets ........................................................... 3,887,850 * 187,237 23,170 4,051,917 Total capital assets being depreciated/amortized ................. 43,862,608 1,421,319 412,478 44,871,449 Less accumulated depreciation/amortization for: Buildings and improvements.................................................... 12,128,074 * 780,639 12,853 12,895,860 Infrastructure.......................................................................... 496,116 14,145 10 510,251 Equipment and other depreciable assets .................................. 5,598,475 * 576,860 365,502 5,809,833 Other intangible assets ........................................................... 2,123,234 * 316,310 21,942 2,417,602 Total accumulated depreciation/amortization ....................... 20,345,899 1,687,954 400,307 21,633,546 Total capital assets being depreciated/amortized, net........... 23,516,709 (266,635) 12,171 23,237,903 Right to use assets being amortized Right to use leased land.......................................................... 50,175 * 9,475 2,219 57,431 Right to use leased buildings................................................... 4,156,068 * 516,189 564,688 4,107,569 Right to use leased equipment................................................. 43,303 * 323 18,029 25,597 Right to use subscription-based information technology arrangements ..................................................................... 423,799 * 182,976 206,571 400,204 Total right to use assets being amortized ............................. 4,673,345 708,963 791,507 4,590,801 Less accumulated amortization for: Right to use leased land.......................................................... 12,608 * 5,883 637 17,854 Right to use leased buildings .................................................. 1,389,905 * 527,484 297,786 1,619,603 Right to use leased equipment................................................. 27,653 * 8,110 18,029 17,734 Right to use subscription-based information technology arrangements ..................................................................... 248,474 * 142,428 201,712 189,190 Total accumulated amortization............................................ 1,678,640 683,905 518,164 1,844,381 Total right to use assets being amortized, net ...................... 2,994,705 25,058 273,343 2,746,420 Governmental activities, capital assets, net.................................. $ 159,763,824 $ 6,801,075 $ 1,694,670 $ 164,870,229 * Restated -Refer to Note 2 Accounting Changes and Error Corrections 107 State of California Annual Comprehensive Financial Report Table 8 (continued) Schedule of Changes in Capital Assets – Primary Government June 30, 2025 (amounts in thousands) Beginning Ending Balance Additions Deductions Balance Business-type activities Capital assets not being depreciated/amortized Land...................................................................................... $ 489,278 $ 805 $ — $ 490,083 Collections............................................................................. 39,774 600 — 40,374 Construction/development in progress...................................... 2,957,608 1,582,186 1,016,595 3,523,199 Intangible assets .................................................................... 136,840 844 6,587 131,097 Total capital assets not being depreciated/amortized ........... 3,623,500 1,584,435 1,023,182 4,184,753 Capital assets being depreciated/amortized Buildings and improvements.................................................... 20,673,866 963,511 2,843 21,634,534 Infrastructure.......................................................................... 967,901 76,347 8,342 1,035,906 Equipment and other assets ................................................... 1,266,220 * 86,628 35,341 1,317,507 Other intangible assets ........................................................... 547,858 26,560 759 573,659 Total capital assets being depreciated/amortized ................. 23,455,845 1,153,046 47,285 24,561,606 Less accumulated depreciation/amortization for: Buildings and improvements.................................................... 7,929,880 * 580,627 1,080 8,509,427 Infrastructure.......................................................................... 231,324 35,609 8,514 258,419 Equipment and other assets ................................................... 956,371 * 88,500 33,549 1,011,322 Other intangible assets ........................................................... 292,614 24,161 760 316,015 Total accumulated depreciation/amortization ....................... 9,410,189 728,897 43,903 10,095,183 Total capital assets being depreciated/amortized, net........... 14,045,656 424,149 3,382 14,466,423 Right to use assets being amortized Right to use leased land.......................................................... 3,518 1,442 152 4,808 Right to use leased buildings................................................... 639,447 77,544 17,213 699,778 Right to use leased equipment................................................. 16,980 6,649 3,097 20,532 Right to use subscription-based information technology arrangements ..................................................................... 172,646 143,556 54,503 261,699 Total right to use assets being amortized ............................. 832,591 229,191 74,965 986,817 Less accumulated amortization for: Right to use leased land.......................................................... 807 556 141 1,222 Right to use leased buildings .................................................. 125,477 51,018 17,130 159,365 Right to use leased equipment................................................. 7,832 3,823 3,052 8,603 Right to use subscription-based information technology arrangements ..................................................................... 97,419 86,891 54,493 129,817 Total accumulated amortization............................................ 231,535 142,288 74,816 299,007 Total right to use assets being amortized, net ...................... 601,056 86,903 149 687,810 Business-type activities, capital assets, net ................................. $ 18,270,212 $ 2,095,487 $ 1,026,713 $ 19,338,986 * Restated -Refer to Note 2 Accounting Changes and Error Corrections 108 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, 2025 (amounts in thousands) Amount Governmental activities General government ......................................................................................................................................... $ 606,486 Education......................................................................................................................................................... 127,098 Health and human services ............................................................................................................................... 330,571 Natural resources and environmental protection .................................................................................................. 369,892 Business, consumer services, and housing ......................................................................................................... 43,373 Transportation .................................................................................................................................................. 414,974 Corrections and rehabilitation............................................................................................................................. 344,784 Internal service funds (charged to the activities that utilize the fund) ...................................................................... 134,681 Total governmental activities ...................................................................................................................... 2,371,859 Business-type activities ..................................................................................................................................... 871,185 Total primary government ........................................................................................................................ $ 3,243,044 109 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, 2025 (amounts in thousands) Beginning Ending Balance Additions Deductions Balance Capital assets not being depreciated/amortized Land ................................................................................ $ 2,311,410 $ 250,001 $ 8,511 $ 2,552,900 Collections ....................................................................... 671,247 46,908 2,545 715,610 Construction/development in progress ................................ 8,287,234 1,729,454 144,976 9,871,712 Intangible assets............................................................... 305 35 22 318 Total capital assets not being depreciated/amortized...... 11,270,196 2,026,398 156,054 13,140,540 Capital assets being depreciated/amortized Buildings and improvements .............................................. 57,067,283 3,540,673 72,920 60,535,036 Infrastructure .................................................................... 1,125,560 62,110 — 1,187,670 Equipment and other depreciable assets............................. 14,502,841 * 1,111,469 385,724 15,228,586 Other intangible assets...................................................... 1,836,935 * 152,182 71,449 1,917,668 Total capital assets being depreciated/amortized............ 74,532,619 4,866,434 530,093 78,868,960 Less accumulated depreciation/amortization for: Buildings and improvements .............................................. 25,712,698 * 1,801,971 58,311 27,456,358 Infrastructure .................................................................... 597,332 * 37,567 — 634,899 Equipment and other depreciable assets............................. 10,391,424 * 822,492 380,858 10,833,058 Other intangible assets...................................................... 1,450,191 * 113,274 23,074 1,540,391 Total accumulated depreciation/amortization.................. 38,151,645 2,775,304 462,243 40,464,706 Total capital assets being depreciated/amortized, net ..... 36,380,974 2,091,130 67,850 38,404,254 Right to use assets being amortized Right to use leased land .................................................... 88,979 21,125 (3,082) 113,186 Right to use leased buildings.............................................. 3,423,016 * 694,993 227,816 3,890,193 Right to use leased equipment ........................................... 284,799 67,772 53,013 299,558 Right to use subscription-based information technology arrangements ............................................................... 545,506 * 237,201 71,749 710,958 Total right to use assets being amortized........................ 4,342,300 1,021,091 349,496 5,013,895 Less accumulated amortization for: Right to use leased land .................................................... 16,563 4,600 1,236 19,927 Right to use leased buildings.............................................. 1,179,746 254,940 152,052 1,282,634 Right to use leased equipment ........................................... 114,934 48,464 37,525 125,873 Right to use subscription-based information technology arrangements ............................................................... 226,191 * 164,376 73,328 317,239 Total accumulated amortization ...................................... 1,537,434 472,380 264,141 1,745,673 Total right to use assets being amortized, net................. 2,804,866 548,711 85,355 3,268,222 Capital assets, net............................................................... $ 50,456,036 $ 4,666,239 $ 309,259 $ 54,813,016 * Restated -Refer to Note 2 Accounting Changes and Error Corrections 110 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 $3.8 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, 2025 (amounts in thousands) Primary Government Governmental Business-type Component Activities Activities Total Units Deferred outflows of resources: Loss on refunding of debt................................................ $ 710,628 $ 144,345 $ 854,973 $ 191,635 Decrease in fair value of hedging derivative instruments .... — — — 17,479 Net pension liability......................................................... 21,765,418 2,440,663 24,206,081 2,248,825 Net other postemployment benefits liability ....................... 12,187,358 2,732,950 14,920,308 2,406,867 Deferred asset retirement obligation................................. — — — 73,860 Other deferred outflows................................................... — — — 512,417 Total deferred outflows of resources......................... $ 34,663,404 $ 5,317,958 $ 39,981,362 $ 5,451,083 Deferred inflows of resources: Gain on refunding of debt................................................ $ 1,292,421 $ 2,495 $ 1,294,916 $ 122,536 Service concession arrangements.................................... — — — 407,630 Irrevocable split-interest agreements................................ — — — 364,847 Net pension liability......................................................... 5,319,970 301,706 5,621,676 5,724,332 Net other postemployment benefits liability ....................... 12,884,628 3,415,104 16,299,732 8,523,827 Other deferred inflows..................................................... 342,366 2,621,513 2,963,879 1,345,752 Total deferred inflows of resources........................... $ 19,839,385 $ 6,340,818 $ 26,180,203 $ 16,488,924 111 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, 2025 (amounts in thousands) Health and General Human Governmental Education Services Governmental activities General Fund........................................................................................... $ 2,419,200 $ 613,408 $ 14,407,899 Federal Fund ........................................................................................... 671,007 12,130 31,689,877 Environmental and Natural Resources Fund............................................... 7,034 — 117 Nonmajor governmental funds................................................................... 829,716 3,784 7,303,651 Internal service funds................................................................................ 330,887 10 289,094 Adjustment: Fiduciary funds..................................................................................... 46,148 — — Total governmental activities ........................................................... $ 4,303,992 $ 629,332 $ 53,690,638 Business-type activities Water Resources Fund ............................................................................. $ — $ — $ — State Lottery Fund.................................................................................... 96,470 — — Unemployment Programs Fund ................................................................. — — 190,599 California State University ......................................................................... — 480,094 — Nonmajor enterprise funds ........................................................................ 216 304 370 Adjustment: Fiduciary funds..................................................................................... — — — Total business-type activities........................................................... $ 96,686 $ 480,398 $ 190,969 112 Notes to the Financial Statements Natural Resources and Environmental Protection Transportation Other Total $ 771,903 $ 2,886 $ 519,038 $ 18,734,334 351,626 141,838 103,103 32,969,581 1,136,482 78,540 10,189 1,232,362 27,453 2,070,993 199,080 10,434,677 39,196 — 1,562 660,749 — 61,763 — 107,911 $ 2,326,660 $ 2,356,020 $ 832,972 $ 64,139,614 $ 178,583 $ — $ — $ 178,583 — — — 96,470 — — — 190,599 — — — 480,094 35,656 — 3,302 39,848 — — 74 74 $ 214,239 $ — $ 3,376 $ 985,668 113 State of California Annual Comprehensive Financial Report NOTE 10: LONG-TERM OBLIGATIONS As of June 30, 2025, the primary government had long-term obligations totaling $313.8 billion. Of that amount, $11.4 billion was due within one year. Governmental activities had a net decrease in long-term obligations of $3.1 billion, primarily consisting of a decrease of $9.6 billion in net pension liability, offset by an increase of $4.6 billion in net other postemployment benefits (OPEB) liability. Other significant increases included total other long-term obligations of $1.9 billion. 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, 2025, pollution remediation obligations increased by $49 million from the prior fiscal year-end, to $1.8 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, 2025, the State estimates that remediation costs at Stringfellow will total $579 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, 2025, the State estimates that the oil field abandonment liability is $1.0 billion, and the State has reserves of $396 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 $15 million, availability payment arrangements of $949 million, lessee-type financed purchases of $17 million, Technology Services Revolving Fund notes payable of $8 million and a Transportation Fund performance obligation of $523 million. The net pension liability, net OPEB liability, and availability payment arrangements will be liquidated by the 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. 114 Notes to the Financial Statements Overall, business-type activities experienced a net increase in long-term obligations of $1.3 billion. Significant increases included $1.5 billion in net OPEB liability and $485 million in revenue bonds payable, while significant decreases included a $1.1 billion decrease in net pension liability. 115 State of California Annual Comprehensive Financial Report Table 13 summarizes the changes in long-term obligations during the fiscal year ended June 30, 2025. Table 13 Schedule of Changes in Long-term Obligations (amounts in thousands) Balance July 1, 2024 Additions Governmental activities Loans payable adjustment for fiduciary funds .................................................................................... $ 19,810 $ — Compensated absences payable1 ..................................................................................................... 6,734,348 * 154,014 Workers’ compensation benefits payable .......................................................................................... 6,323,886 1,107,500 Commercial paper and other borrowings ........................................................................................... 1,031,170 872,735 Lease liability .................................................................................................................................. 2,925,099 * 479,511 Subscription liability ........................................................................................................................ 126,804 * 169,054 General obligation bonds outstanding ............................................................................................... 71,742,195 7,679,445 Premiums ....................................................................................................................................... 7,744,833 542,120 Total general obligation bonds payable ......................................................................................... 79,487,028 8,221,565 Revenue bonds outstanding ............................................................................................................ 14,967,578 1,770,790 Accreted interest ............................................................................................................................. 835,143 48,704 Premiums ....................................................................................................................................... 777,683 169,626 Discounts ....................................................................................................................................... (632) — Total revenue bonds payable ....................................................................................................... 16,579,772 1,989,120 Mandated cost claims payable ......................................................................................................... 1,975,798 216,768 Net other postemployment benefits liability ........................................................................................ 68,707,301 9,304,948 Net pension liability ......................................................................................................................... 82,382,466 32,027,534 Other long-term obligations: Lessee-type financed purchases and availability payment arrangements ......................................... 996,746 * 562 Oil field abandonment liability ....................................................................................................... 1,041,750 — Proposition 98 funding guarantee ................................................................................................. — 1,916,848 Pollution remediation obligations .................................................................................................. 1,770,504 * 174,946 Other ......................................................................................................................................... 617,855 * 45,637 Total other long-term obligations ............................................................................................... 4,426,855 2,137,993 Total governmental activities.................................................................................................. $ 270,720,337 $ 56,680,742 Business-type activities Lottery prizes and annuities ............................................................................................................. $ 1,467,475 $ 6,815,596 Compensated absences payable1 ..................................................................................................... 472,080 * 39,489 Workers’ compensation benefits payable .......................................................................................... 14,601 — Commercial paper and other borrowings ........................................................................................... 656,727 459,890 Lease liability .................................................................................................................................. 525,824 83,998 Subscription liability ........................................................................................................................ 55,436 131,457 General obligation bonds outstanding ............................................................................................... 634,480 300,000 Premiums ....................................................................................................................................... 11,943 — Discounts ....................................................................................................................................... (439) — Total general obligation bonds payable ......................................................................................... 645,984 300,000 Revenue bonds outstanding ............................................................................................................ 14,016,255 1,080,115 Premiums ....................................................................................................................................... 1,149,393 123,153 Discounts ....................................................................................................................................... (269) — Total revenue bonds payable ....................................................................................................... 15,165,379 1,203,268 Net other postemployment benefits liability ........................................................................................ 15,402,777 2,030,656 Net pension liability ......................................................................................................................... 10,078,529 3,358,964 Other long-term obligations .............................................................................................................. 381,151 122,566 Total business-type activities ................................................................................................. $ 44,865,963 $ 14,545,884 1The change in the compensated absences liability is presented as a net change. * Restated -Refer to Note 2 Accounting Changes and Error Corrections 116 Notes to the Financial Statements Balance Due Within Noncurrent Deductions June 30, 2025 One Year Liabilities $ 7,638 $ 12,172 $ — $ 12,172 — 6,888,362 2,601,626 4,286,736 737,587 6,693,799 683,235 6,010,564 893,110 1,010,795 — 1,010,795 753,653 2,650,957 453,150 2,197,807 146,539 149,319 79,263 70,056 7,549,470 71,872,170 3,598,775 68,273,395 822,102 7,464,851 557,100 6,907,751 8,371,572 79,337,021 4,155,875 75,181,146 1,752,671 14,985,697 796,035 14,189,662 — 883,847 — 883,847 154,433 792,876 115,045 677,831 (108) (524) (122) (402) 1,906,996 16,661,896 910,958 15,750,938 315,835 1,876,731 91,529 1,785,202 4,699,665 73,312,584 — 73,312,584 41,652,456 72,757,544 — 72,757,544 31,091 966,217 32,088 934,129 3,890 1,037,860 — 1,037,860 — 1,916,848 — 1,916,848 126,268 1,819,182 77,059 1,742,123 117,272 546,220 185,464 360,756 278,521 6,286,327 294,611 5,991,716 $ 59,763,572 $ 267,637,507 $ 9,270,247 $ 258,367,260 $ 6,743,044 $ 1,540,027 $ 999,317 $ 540,710 — 511,569 242,737 268,832 2,570 12,031 — 12,031 477,943 638,674 436 638,238 47,899 561,923 194,824 367,099 83,727 103,166 47,650 55,516 35,420 899,060 8,510 890,550 1,203 10,740 — 10,740 (71) (368) — (368) 36,552 909,432 8,510 900,922 620,465 14,475,905 628,885 13,847,020 97,917 1,174,629 19,645 1,154,984 (37) (232) — (232) 718,345 15,650,302 648,530 15,001,772 571,339 16,862,094 — 16,862,094 4,421,727 9,015,766 — 9,015,766 159,252 344,465 19,518 324,947 $ 13,262,398 $ 46,149,449 $ 2,161,522 $ 43,987,927 117 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 (UC), a discretely presented component unit, administers the University of California Retirement System (UCRS), which consists of two defined benefit plans funded with UC 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 UCRS can be found in the UC’s separately issued financial statements on its website at www.ucop.edu. 118 Notes to the Financial Statements 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, 2024, included the primary government and certain discretely presented component units; 1,336 school employers, including charter schools; and 1,600 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, 2023 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. 119 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, 2024 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, 2024 State Peace California State State State Officers and Highway Total Miscellaneous Industrial Safety Firefighters Patrol PERF Plans Inactive employees or beneficiaries currently receiving benefits............. 216,324 18,502 32,188 51,227 10,517 328,758 Inactive employees entitled to but not yet receiving benefits ..................... 82,960 4,776 10,986 10,045 606 109,373 Active employees ............................. 216,900 19,978 34,240 47,018 6,793 324,929 Total ........................................... 516,184 43,256 77,414 108,290 17,916 763,060 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. 120 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, 2024. Table 15 Contribution Rates – PERF Plans June 30, 2024 State Peace California State State State Officers and Highway Miscellaneous Industrial Safety Firefighters Patrol Average active employee rate ..................... 7.49 % 8.65 % 10.95 % 11.87 % 12.57 % Employer rate of annual payroll ................... 30.97 20.42 22.72 47.91 69.01 Total..................................................... 38.46 % 29.07 % 33.67 % 59.78 % 81.58 % Actuarial Methods and Assumptions: The total pension liability for PERF plans was measured as of June 30, 2024 (measurement date), by rolling forward the total pension liability determined by the June 30, 2023 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, 2023 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 Derived using CalPERS’ membership data for all funds. Post-retirement benefit adjustments The lesser of Contract COLA or 2.30% until Purchasing Power Protection Allowance floor on (COLAs) purchasing power applies; 2.30% thereafter. 121 State of California Annual Comprehensive Financial Report 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 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 Return1, 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 % 1An expected inflation rate of 2.30% used for this period. 2Figures are based on the 2021 Asset Liability Management study. 122 Notes to the Financial Statements This page intentionally left blank 123 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, 2023....................... $ 139,507,612 $ 101,081,537 $ 38,426,075 $ 6,119,522 $ 4,908,110 $ 1,211,412 Changes recognized for the measurement period: Service cost ................................... 2,713,022 — 2,713,022 157,301 — 157,301 Interest on total pension liability ....... 9,509,569 — 9,509,569 419,207 — 419,207 Difference between expected and actual experience ........................ 910,930 — 910,930 22,880 — 22,880 Plan to plan resource movement...... — (480) 480 — (1,172) 1,172 Employer contributions.................... — 6,093,536 (6,093,536) — 231,104 (231,104) Employee contributions ................... — 1,273,742 (1,273,742) — 78,425 (78,425) Net investment income.................... — 9,590,976 (9,590,976) — 471,324 (471,324) Benefit payments, including refunds of employee contributions............. (7,910,411) (7,910,411) — (291,180) (291,180) — Administrative expense ................... — (82,250) 82,250 — (3,994) 3,994 Net changes...................................... 5,223,110 8,965,113 (3,742,003) 308,208 484,507 (176,299) Balance at June 30, 2024 (Measurement Date)........................... $ 144,730,722 $ 110,046,650 $ 34,684,072 $ 6,427,730 $ 5,392,617 $ 1,035,113 124 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 $ 18,204,224 $ 14,879,300 $ 3,324,924 $ 62,861,062 $ 46,103,000 $ 16,758,062 565,174 — 565,174 1,249,852 — 1,249,852 1,250,737 — 1,250,737 4,289,911 — 4,289,911 98,235 — 98,235 261,062 — 261,062 — 1,761 (1,761) — (285) 285 — 784,227 (784,227) — 2,877,620 (2,877,620) — 321,424 (321,424) — 517,361 (517,361) — 1,445,883 (1,445,883) — 4,466,739 (4,466,739) (916,852) (916,852) — (3,148,857) (3,148,857) — — (12,107) 12,107 — (37,514) 37,514 997,294 1,624,336 (627,042) 2,651,968 4,675,064 (2,023,096) $ 19,201,518 $ 16,503,636 $ 2,697,882 $ 65,513,030 $ 50,778,064 $ 14,734,966 (continued) 125 State of California Annual Comprehensive Financial Report Table 18 (continued) Changes in Net Pension Liability – PERF Plans (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, 2023........................ $ 17,054,576 $ 11,686,186 $ 5,368,390 $ 243,746,996 $ 178,658,133 $ 65,088,863 Changes recognized for the measurement period: Service cost .................................... 299,152 — 299,152 $ 4,984,501 — 4,984,501 Interest on total pension liability ........ 1,170,324 — 1,170,324 16,639,748 — 16,639,748 Difference between expected and actual experience ......................... 182,745 — 182,745 1,475,852 — 1,475,852 Plan to plan resource movement....... — 176 (176) — — — Employer contributions..................... — 755,384 (755,384) — 10,741,871 (10,741,871) Employee contributions .................... — 134,856 (134,856) — 2,325,808 (2,325,808) Net investment income..................... — 1,113,204 (1,113,204) — 17,088,126 (17,088,126) Benefit payments, including refunds of employee contributions.............. (851,349) (851,349) — (13,118,649) (13,118,649) — Administrative expense .................... — (9,509) 9,509 — (145,374) 145,374 Net changes....................................... 800,872 1,142,762 (341,890) 9,981,452 16,891,782 (6,910,330) Balance at June 30, 2024 (Measurement Date)............................ $ 17,855,448 $ 12,828,948 $ 5,026,500 $ 253,728,448 $ 195,549,915 $ 58,178,533 Reported in governmental activities $ 47,247,331 Reported in business-type activities 9,015,766 Reported by discretely presented component units 166,274 Not reported in government-wide Statement of Net Position1 1,749,162 Total net pension liability – PERF plans $ 58,178,533 (concluded) 1Includes 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, 2024; and minor differences related to amounts reported in separately issued financial statements of proprietary funds and discretely presented component units. 126 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, 2025 (amounts in thousands) Current Rate Current Rate Current Rate -1% 6.9% +1% State Miscellaneous ..................................................................................... $ 52,640,125 $ 34,684,072 $ 19,696,468 State Industrial............................................................................................. 1,926,418 1,035,113 303,886 State Safety................................................................................................. 5,251,727 2,697,882 592,359 State Peace Officers and Firefighters............................................................. 23,787,480 14,734,966 7,331,758 California Highway Patrol.............................................................................. 7,515,701 5,026,500 2,993,517 Total PERF plans ................................................................................... $ 91,121,451 $ 58,178,533 $ 30,917,988 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, 2025, the State recognized pension expense of $10.4 billion. At June 30, 2025, 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, 2024, but prior to the fiscal year ended June 30, 2025. 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. 127 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, 2025 (amounts in thousands) State Peace California Total State State State Officers and Highway PERF Miscellaneous Industrial Safety Firefighters Patrol Plans Pension Expense .................... $ 5,917,060 $ 244,805 $ 641,556 $ 2,778,900 $ 827,279 $ 10,409,600 Deferred Outflows of Resources: Employer contributions.......... 4,900,301 156,506 577,916 1,582,780 789,294 8,006,797 Changes of assumptions ....... 1,127,362 18,089 130,063 792,157 231,891 2,299,562 Difference between expected and actual experience ....... 1,869,294 54,299 183,741 1,106,941 275,811 3,490,086 Net difference between projected and actual earnings on pension plan investments...................... 1,666,293 74,536 213,559 641,574 190,701 2,786,663 Deferred Inflows of Resources: Difference between expected and actual experience ....... 337,287 7,698 71,871 291,181 59,366 767,403 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 2026....................................... $ 1,330,786 $ 45,299 $ 121,126 $ 712,672 $ 222,183 $ 2,432,066 2027....................................... 3,491,630 138,663 460,430 1,694,620 442,921 6,228,264 2028....................................... (31,326) (18,183) (43,344) 59,515 18,568 (14,770) 2029....................................... (465,428) (26,553) (82,720) (217,316) (44,635) (836,652) Payable to the Pension Plans: At June 30, 2025, the State reported a payable of $53 million for the outstanding amount of contributions to the PERF pension plans required for the fiscal year ended June 30, 2025. 128 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. 129 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, 2024, 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, 2024 Judges’ Judges’ II Legislators’ Total Inactive employees or beneficiaries currently receiving benefits ... 1,565 630 182 2,377 Inactive employees entitled to but not yet receiving benefits......... — 2 3 5 Active employees..................................................................... 68 1,689 — 1,757 Total ................................................................................... 1,633 2,321 185 4,139 130 Notes to the Financial Statements 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 8.00% of pay. In certain situations, employers make member contributions. 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 8.00% of their annual compensation to the plan. The base total normal cost rate for PEPRA new members was re-determined in the June 30, 2024, actuarial valuation as 33.35%. 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. Legislators’ contribution rates in the fiscal year 2023-24 reflect the closed nature of the plan and the termination of all active members as of June 30, 2023. 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, 2024. Table 23 Contribution Rates – Single-employer Plans June 30, 2024 Judges’ Judges’ II Legislators’ Average active employee rate....................................................................... “Pay- 9.94 % — % Employer rate of annual payroll .................................................................... as-you- 23.58 — Total....................................................................................................... go” 33.52% —% 131 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, 2024 (measurement date), by rolling forward the total pension liability determined by the June 30, 2023, 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, 2023 Actuarial cost method: Entry age normal in accordance with the requirements of GASB 68. Actuarial assumptions: Discount rate Judges’ 3.97%, 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’ 3.97%, 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 adjustments Judges’ – 2.80% (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’ – 3.97%, reflecting the short-term nature of the assets. As the plan is insufficiently funded, CalPERS uses a discount rate of 3.97%, 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. 132 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 Assumed Real Return1,2 Asset Asset 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 % 1An expected inflation rate of 2.30% used for this period. 2Figures are based on the 2021-22 Asset Liability Management study. 133 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 Net Net Total Plan Pension Total Plan Pension Pension Fiduciary Liability/ Pension Fiduciary Liability/ Liability Net Position (Asset) Liability Net Position (Asset) Balance at June 30, 2023 (Valuation Date)................................. $ 2,493,768 $ 46,327 $ 2,447,441 $ 2,293,612 $ 2,328,782 $ (35,170) Changes recognized for the measurement period: Service cost ................................... 7,660 — 7,660 128,635 — 128,635 Interest on total pension liability ....... 93,495 — 93,495 143,959 — 143,959 Difference between expected and actual experience ........................ (14,317) — (14,317) 32,448 — 32,448 Changes of assumptions ................. (21,972) — (21,972) — — — Employer contributions.................... — 212,532 (212,532) — 96,316 (96,316) Employee contributions ................... — 1,481 (1,481) — 42,936 (42,936) Net investment income.................... — 3,416 (3,416) — 267,417 (267,417) Benefit payments, including refunds of employee contributions............. (212,542) (212,542) — (99,168) (99,168) — Administrative expense ................... — (2,411) 2,411 — (2,638) 2,638 Other miscellaneous income............ — 2,831 (2,831) — 5 (5) Net changes...................................... (147,676) 5,307 (152,983) 205,874 304,868 (98,994) Balance at June 30, 2024 (Measurement Date)........................... $ 2,346,092 $ 51,634 $ 2,294,458 $ 2,499,486 $ 2,633,650 $ (134,164) 134 Notes to the Financial Statements Legislators’ Total Single-employer Plans Net Net Total Plan Pension Total Plan Pension Pension Fiduciary Liability/ Pension Fiduciary Liability/ Liability Net Position (Asset) Liability Net Position (Asset) $ 88,315 $ 95,669 $ (7,354) $ 4,875,695 $ 2,470,778 $ 2,404,917 — — — 136,295 — 136,295 4,351 — 4,351 241,805 — 241,805 5,119 — 5,119 23,250 — 23,250 — — — (21,972) — (21,972) — — — — 308,848 (308,848) — — — — 44,417 (44,417) — 4,905 (4,905) — 275,738 (275,738) (7,436) (7,436) — (319,146) (319,146) — — (663) 663 — (5,712) 5,712 — 1 (1) — 2,837 (2,837) 2,034 (3,193) 5,227 60,232 306,982 (246,750) $ 90,349 $ 92,476 $ (2,127) $ 4,935,927 $ 2,777,760 $ 2,158,167 Reported in governmental activities $ 2,158,167 135 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 3.97%; 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, 2025 (amounts in thousands) Current Rate Current Rate Current Rate -1% +1% Judges’ (3.97%)........................................................................................... $ 2,502,307 $ 2,294,458 $ 2,113,796 Judges’ II (6.15%)........................................................................................ 153,650 (134,164) (371,317) Legislators’ (4.85%) ..................................................................................... 8,699 (2,127) (10,859) Total Single-employer Plans................................................................... $ 2,664,656 $ 2,158,167 $ 1,731,620 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, 2024, the State recognized pension expense of $143 million. At June 30, 2025, 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, 2024, but prior to June 30, 2025, which will be recognized as a reduction of the net pension liability in the subsequent year. 136 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, 2025 (amounts in thousands) Judges’ Judges’ II Legislators’ Total Pension Expense ........................................................... $ 60,153 $ 75,281 $ 7,976 $ 143,410 Deferred Outflows of Resources: Employer contributions subsequent to the measurement date......................................................................... 217,738 91,286 — 309,024 Difference between expected and actual experience ....... — 46,888 — 46,888 Net difference between projected and actual earnings on pension plan investments.......................................... — 12,219 7,569 19,788 Deferred Inflows of Resources: Difference between expected and actual experience ....... — 49,935 — 49,935 Changes of assumptions............................................... — 41,620 — 41,620 Net difference between projected and actual earnings on pension plan investments.......................................... 588 — — 588 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 2026............................................................................... $ 142 $ (16,481) $ 2,527 $ (13,812) 2027............................................................................... (27) 54,634 4,387 58,994 2028............................................................................... (395) (38,885) 747 (38,533) 2029............................................................................... (308) (33,826) (92) (34,226) 2030............................................................................... — (2,526) — (2,526) Thereafter ....................................................................... — 4,636 — 4,636 137 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, 471,000 active and 244,000 inactive program members, and 339,000 benefit recipients as of June 30, 2025. The payroll for employees covered by the DB Program for the fiscal year ended June 30, 2024, was approximately $46.7 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 $4.3 billion for the fiscal year 2024-25. CalSTRS’ June 30, 2023 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, 2024, the CBB Program had 29 contributing school districts and 42,793 contributing participants. 138 Notes to the Financial Statements 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 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, 2024, 178 individuals were receiving benefits from the RB program. Actuarial Methods and Assumptions: The total pension liability in the June 30, 2023 actuarial valuation (valuation date) was determined using the actuarial methods and assumptions shown in Table 30, applied to the measurement period ended June 30, 2024. Table 30 Actuarial Methods and Assumptions – CalSTRS Valuation date............................................................................................................ June 30, 2023 Experience study........................................................................................................ July 1, 2007, through June 30, 2022 Actuarial cost method ................................................................................................. Entry age normal Investment rate of return ............................................................................................. 7.10% Consumer price inflation ............................................................................................. 2.75% Payroll growth ............................................................................................................ 3.25% Wage growth ............................................................................................................. 3.50% Post-retirement benefit increases (COLAs) ................................................................... 2.00% simple CalSTRS uses a generational mortality assumption, which is based off generational mortality tables that reflect expected future improvements in mortality and includes a base table and a projection table. The base mortality tables are CalSTRS custom tables derived to best fit the patterns of mortality amongst our members. The projection table reflects the expected annual reduction in mortality rates at each age. The current mortality assumption uses a base year of 2023 and projected improvement is based on the MP–2021 Ultimate Projection Scale. 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. 139 State of California Annual Comprehensive Financial Report 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 2024 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. 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 Long-term Long-term Asset Expected Rate Expected Real Asset Class Allocation of Return Rate of Return Public equity .................................................................................... 38.0 % 8.00 % 5.25 % Real estate ...................................................................................... 15.0 6.80 4.05 Private equity................................................................................... 14.0 9.50 6.75 Fixed income ................................................................................... 14.0 5.20 2.45 Risk mitigating strategies .................................................................. 10.0 5.00 2.25 Inflation sensitive.............................................................................. 7.0 6.40 3.65 Cash/liquidity ................................................................................... 2.0 2.80 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, 2024 (measurement date), by applying update procedures and rolling forward the total pension liability determined by the actuarial valuation as of June 2023 (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, 2024, the State’s proportionate share of the CalSTRS’ net pension liability was 31.45%, or $21.1 billion; this amount is reported in the governmental activities column of the government-wide Statement of Net Position as of June 30, 2025. 140 Notes to the Financial Statements As a result of its requirement to contribute to CalSTRS, the State recognized expense of $1.3 billion for the fiscal year ended June 30, 2025, 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, 2025 (amounts in thousands) Deferred Deferred Outflows of Inflows of Resources Resources Changes of assumptions........................................................................................................... $ 92,466 $ 1,442,657 Net difference between projected and actual earnings on pension plan investments ...................... — 85,232 Difference between expected and actual experiences ................................................................. 2,389,332 923,716 Proportionate share change ...................................................................................................... — 1,805,656 State contributions subsequent to the measurement date ............................................................ 4,263,762 — Total ................................................................................................................................... $ 6,745,560 $ 4,257,261 The $4.3 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, 2026. 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 2026.................................................................................................................................................................... $ (2,080,850) 2027.................................................................................................................................................................... 1,255,328 2028.................................................................................................................................................................... (438,336) 2029.................................................................................................................................................................... (314,872) 2030.................................................................................................................................................................... 6,573 Thereafter............................................................................................................................................................ (203,306) 141 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, 2025 (amounts in thousands) Current Rate Current Rate Current Rate –1% 7.10% +1% State’s proportionate share of net pension liability........................................... $ 37,571,679 $ 21,123,435 $ 7,388,469 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, 33 trial courts provide pension benefits to their respective employees through agent multiple-employer defined benefit plans, and three 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. 142 Notes to the Financial Statements Net Pension Liability Actuarial Methods and Assumptions: The net pension liability of 55 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 16 of the 22 county cost-sharing multiple-employer defined benefit plans, the net pension liability was measured as of June 30, 2024. Of these plans, five had a valuation date of June 30, 2024, and 11 had a valuation date of June 30, 2023. For the six remaining county cost-sharing multiple-employer plans, the net pension liability was measured as of December 31, 2024. Of these plans, four had a valuation date of December 31, 2023, one had a valuation date of January 1, 2024, and one had a valuation date of December 31, 2024. For 32 CalPERS agent multiple-employer defined benefit plans and one CalPERS cost-sharing multiple-employer defined benefit plan, the net pension liability was measured as of June 30, 2024, and valued as of June 30, 2023. One agent multiple-employer defined benefit plan and two cost-sharing multiple employer defined benefit plans administered by CalPERS did not provide an actuarial valuation for this reporting period. 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: 32 23 Valuation date(s): June 30, 2023 Twelve plans as of June 30, 2023. Four plans as of December 31, 2023. One plan as of January 1, 2024. Five plans as of June 30, 2024. One plan as of December 31, 2024. 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 $13.3 billion and fiduciary net position of $11.1 billion, which resulted in a net pension liability of $2.2 billion as of June 30, 2025. For the fiscal year ended June 30, 2025, the State recognized pension expense of $350 million. At June 30, 2025, the State reported deferred outflows of resources of $1.0 billion and deferred inflows of resources of $308 million. The reported deferred outflows of resources included $387 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, 2026. 143 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 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. 144 Notes to the Financial Statements The Retiree Health Benefits 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, 2025 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, 2024 (June 30, 2024 Actuarial Valuation Report), on the State Controller’s Office website, at www.sco.ca.gov. 145 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, 2024 Inactive employees or beneficiaries currently Active OPEB Plan receiving benefits Employees Total Service Employees International Union (SEIU) Plan ............................ 79,088 119,580 198,668 Bargaining Unit 5 Plan ...................................................................... 8,123 7,116 15,239 Bargaining Unit 6 Plan ...................................................................... 30,306 28,644 58,950 Bargaining Unit 9 Plan ...................................................................... 9,398 14,700 24,098 Bargaining Unit 12 Plan .................................................................... 10,623 13,118 23,741 Other Funded Plans ......................................................................... 33,852 52,490 86,342 Unfunded Plan................................................................................. 42,770 55,699 98,469 Total ........................................................................................... 214,160 291,347 505,507 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 39 for details on the fiduciary net positions of the OPEB plans. The maximum 2024 monthly state contribution was $983 for one-party coverage, $1,890 for two-party coverage, and $2,366 for family coverage. For the year ended June 30, 2024, the State contributed $3.7 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. 146 Notes to the Financial Statements For the measurement period ended June 30, 2024 (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, 2024 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 3.97%. 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 administrative expenses. Healthcare cost trend rates Pre-Medicare coverage: Actual rates for 2025, increasing to 7.00% in 2026, grading down to 4.50% from 2031 to 2039, and 4.25% for 2040 and later years. Post-Medicare coverage: Actual rates for 2025, increasing to rates ranging from 7.00% to 8.01% in 2026, grading down to 4.50% from 2035 to 2039, and 4.25% for 2040 and later years. Dental coverage: 0.00% for 2025, 2.00% for 2026, 3.00% for 2027, 4.00% for 2028, and 4.25% for 2029 and later years. Mortality Derived using CalPERS’ membership data for all members. Other demographic assumptions used in the June 30, 2024 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. 147 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, 2024 total OPEB liability consist of the 20-year Municipal G.O. Bond AA Index rate of 3.97% as of June 30, 2024, 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, 2024, on the State Controller’s Office website, at www.sco.ca.gov. Blended rates for the June 30, 2025 valuation will be determined using The Bond Buyer Index 20-year Municipal G.O. Bond AA Index rate of 5.20% when prefunding assets are not available to pay benefits. 148 Notes to the Financial Statements This page intentionally left blank 149 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, 2023............................................................................ $ 30,131,230 $ 2,235,158 $ 27,896,072 Changes recognized for the measurement period: Service cost ......................................................................................... 972,829 — 972,829 Interest on total OPEB liability................................................................ 1,300,226 — 1,300,226 Difference between expected and actual experiences .............................. 1,587,749 — 1,587,749 Changes of assumptions ....................................................................... 217,938 — 217,938 Employer contributions.......................................................................... — 1,451,868 (1,451,868) Employee contributions ......................................................................... — 289,428 (289,428) Net investment income.......................................................................... — 285,389 (285,389) Benefit payments.................................................................................. (1,162,440) (1,162,440) — Administrative expense ......................................................................... — (815) 815 Net changes ........................................................................................... 2,916,302 863,430 2,052,872 Balance at June 30, 2024 (Measurement Date)............................................ $ 33,047,532 $ 3,098,588 $ 29,948,944 150 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 $ 5,085,218 $ 770,749 $ 4,314,469 $ 17,069,118 $ 1,703,633 $ 15,365,485 133,754 — 133,754 481,770 — 481,770 225,844 — 225,844 744,327 — 744,327 202,634 — 202,634 417,491 — 417,491 58,235 — 58,235 197,812 — 197,812 — 143,298 (143,298) — 530,420 (530,420) — 27,957 (27,957) — 124,955 (124,955) — 89,804 (89,804) — 204,115 (204,115) (98,136) (98,136) — (405,466) (405,466) — — (262) 262 — (592) 592 522,331 162,661 359,670 1,435,934 453,432 982,502 $ 5,607,549 $ 933,410 $ 4,674,139 $ 18,505,052 $ 2,157,065 $ 16,347,987 (continued) 151 State of California Annual Comprehensive Financial Report Table 39 (continued) Changes in Net OPEB Liability (amounts in thousands) Bargaining Unit 9 Plan Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability Balance at June 30, 2023............................................................................ $ 4,447,783 $ 370,812 $ 4,076,971 Changes recognized for the measurement period: Service cost ......................................................................................... 133,947 — 133,947 Interest on total OPEB liability................................................................ 193,203 — 193,203 Difference between expected and actual experiences .............................. 224,536 — 224,536 Changes of assumptions ....................................................................... 52,070 — 52,070 Employer contributions.......................................................................... — 181,486 (181,486) Employee contributions ......................................................................... — 38,362 (38,362) Net investment income.......................................................................... — 46,207 (46,207) Benefit payments.................................................................................. (143,125) (143,125) — Administrative expense ......................................................................... — (132) 132 Net changes ........................................................................................... 460,631 122,798 337,833 Balance at June 30, 2024 (Measurement Date)............................................ $ 4,908,414 $ 493,610 $ 4,414,804 152 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 $ 3,926,042 $ 328,742 $ 3,597,300 $ 15,464,079 $ 1,436,284 $ 14,027,795 113,910 — 113,910 539,048 — 539,048 170,664 — 170,664 680,169 — 680,169 80,475 — 80,475 604,294 — 604,294 56,912 — 56,912 146,498 — 146,498 — 179,906 (179,906) — 642,054 (642,054) — 30,770 (30,770) — 143,814 (143,814) — 40,218 (40,218) — 177,865 (177,865) (149,137) (149,137) — (498,238) (498,238) — — (116) 116 — (510) 510 272,824 101,641 171,183 1,471,771 464,985 1,006,786 $ 4,198,866 $ 430,383 $ 3,768,483 $ 16,935,850 $ 1,901,269 $ 15,034,581 (continued) 153 State of California Annual Comprehensive Financial Report Table 39 (continued) Changes in Net OPEB Liability (amounts in thousands) Unfunded Plan Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability Balance at June 30, 2023............................................................................ $ 15,903,054 $ — $ 15,903,054 Changes recognized for the measurement period: Service cost ......................................................................................... 600,394 — 600,394 Interest on total OPEB liability................................................................ 626,464 — 626,464 Difference between expected and actual experiences .............................. 537,274 — 537,274 Changes of assumptions ....................................................................... 173,487 — 173,487 Employer contributions.......................................................................... — 552,876 (552,876) Employee contributions ......................................................................... — — — Net investment income.......................................................................... — — — Benefit payments.................................................................................. (552,876) (552,876) — Administrative expense ......................................................................... — — — Net changes ........................................................................................... 1,384,743 — 1,384,743 Balance at June 30, 2024 (Measurement Date)............................................ $ 17,287,797 $ — $ 17,287,797 1Includes 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, 2024, and minor differences related to amounts reported in separately issued financial statements of proprietary funds and discretely presented component units. 154 Notes to the Financial Statements Total Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability $ 92,026,524 $ 6,845,378 $ 85,181,146 2,975,652 — 2,975,652 3,940,897 — 3,940,897 3,654,453 — 3,654,453 902,952 — 902,952 — 3,681,908 (3,681,908) — 655,286 (655,286) — 843,598 (843,598) (3,009,418) (3,009,418) — — (2,427) 2,427 8,464,536 2,168,947 6,295,589 $ 100,491,060 $ 9,014,325 $ 91,476,735 Reported in governmental activities $ 71,809,905 Reported in business-type activities 16,862,094 Reported by discretely presented component units 116,650 Not reported in government-wide Statement of Net Position1 2,688,086 Total net OPEB liability $ 91,476,735 (concluded) 155 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 3.97% to 4.50% , 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, 2025 (amounts in thousands) Blended Blended Discount Rates Blended Discount Rates OPEB Plan Blended Rate -1% Discount Rates +1% Service Employees International Union (SEIU) Plan ........... 4.39% $ 35,200,537 $ 29,948,944 $ 25,676,294 Bargaining Unit 5 Plan...................................................... 4.46% 5,709,372 4,674,139 3,863,355 Bargaining Unit 6 Plan...................................................... 4.38% 19,589,573 16,347,987 13,785,719 Bargaining Unit 9 Plan...................................................... 4.38% 5,190,591 4,414,804 3,783,546 Bargaining Unit 12 Plan.................................................... 4.39% 4,402,588 3,768,483 3,251,339 Other Funded Plans......................................................... 4.33% to 4.50% 17,844,987 15,034,581 12,775,339 Unfunded Plan................................................................. 3.97% 19,921,007 17,287,797 15,137,875 Total....................................................................................................... $ 107,858,655 $ 91,476,735 $ 78,273,467 156 Notes to the Financial Statements 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, 2025 (amounts in thousands) Healthcare Healthcare Cost Trend Healthcare Cost Trend Rates Cost Trend Rates OPEB Plan -1% Rates +1% Service Employees International Union (SEIU) Plan........................................ $ 25,285,764 $ 29,948,944 $ 35,875,277 Bargaining Unit 5 Plan.................................................................................. 3,830,394 4,674,139 5,763,512 Bargaining Unit 6 Plan.................................................................................. 13,672,282 16,347,987 19,768,952 Bargaining Unit 9 Plan.................................................................................. 3,732,156 4,414,804 5,278,409 Bargaining Unit 12 Plan................................................................................ 3,220,839 3,768,483 4,455,707 Other Funded Plans ..................................................................................... 12,583,174 15,034,581 18,171,242 Unfunded Plan............................................................................................. 14,954,983 17,287,797 20,238,290 Total....................................................................................................... $ 77,279,592 $ 91,476,735 $ 109,551,389 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 $3.2 billion for the year ended June 30, 2025. 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. 157 State of California Annual Comprehensive Financial Report As of June 30, 2025, 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, 2025 (amounts in thousands) Service Employees International Union (SEIU) Bargaining Bargaining Bargaining Description Plan Unit 5 Plan Unit 6 Plan Unit 9 Plan OPEB Expense............................................................... $ 787,811 $ 135,934 $ 730,188 $ 190,806 Deferred Outflows of Resources: Employer contributions subsequent to the measurement date.................................................... 1,601,419 146,371 562,863 200,024 Difference between expected and actual experiences ..... 2,061,948 173,971 800,039 363,931 Changes of assumptions............................................... 1,327,664 362,584 926,879 170,808 Net difference between projected and actual earnings on OPEB plan investments........................................ — 1,674 — — Deferred Inflows of Resources: Difference between expected and actual experiences ..... 1,483,857 293,460 564,919 142,972 Changes of assumptions............................................... 3,755,849 673,235 1,783,009 497,090 Net difference between projected and actual earnings on OPEB plan investments........................................ 16,724 — 1,074 1,762 The $4.0 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, 2026. 158 Notes to the Financial Statements Bargaining Other Funded Unit 12 Plan Plans Unfunded Plan Total $ 120,817 $ 575,150 $ 644,765 $ 3,185,471 196,605 720,144 616,066 4,043,492 194,046 1,256,434 1,112,538 5,962,907 158,928 851,623 844,810 4,643,296 — — — 1,674 207,766 882,808 853,303 4,429,085 419,586 1,946,018 2,354,627 11,429,414 934 5,423 — 25,917 159 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 2026 2027 2028 2029 2030 Thereafter Service Employees International Union (SEIU) Plan ................. $ (532,378) $ (553,720) $ (611,517) $ (510,528) $ (76,838) $ 418,163 Bargaining Unit 5...................... (131,019) (180,325) (197,888) 33,262 42,673 4,831 Bargaining Unit 6...................... (211,424) (238,032) (343,969) 84,783 86,558 — Bargaining Unit 9...................... (53,738) (54,913) (62,311) (37,890) 52,096 49,671 Bargaining Unit 12 .................... (106,628) (89,628) (75,229) (39,828) 19,094 16,907 Other Funded Plans.................. (297,964) (226,808) (213,054) (108,414) 28,607 91,441 Unfunded Plan ......................... (346,943) (314,874) (343,947) (298,234) (74,354) 127,770 Total ................................... $ (1,680,094) $ (1,658,300) $ (1,847,915) $ (876,849) $ 77,836 $ 708,783 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, 40 trial courts participate in an agent multiple-employer defined benefit OPEB plan, and 10 trial courts participate in single-employer defined benefit OPEB plans. Four trial courts (Fresno, Kings, 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, 2024 (measurement date), and the remaining 52 valuations had a measurement date of June 30, 2024. One of the courts had an actuarial valuation date of December 31, 2023, 52 courts were valued as of June 30, 2023, and one court was valued as of June 30, 2024. 160 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 Cost-Sharing Multiple-Employer OPEB Plans Defined Benefit OPEB Plans Defined Benefit OPEB Plans Valuation date: June 30, 2023 June 30, 2023 One plan as of June 30, 2023. One plan as of December 31, 2023. One plan as of June 30, 2024. Actuarial assumptions: Discount rate Single rate of 3.97%. Blended and single rates ranging Single rates ranging from 6.50% to from 3.97% 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 7.00% to gradually decreasing to an ultimate gradually decreasing to an ultimate 8.50%, decreasing gradually to rate of 3.90% over 52 years per rate of 3.90% over 52 years per ultimate rates ranging from 3.45% to the Society of Actuaries Getzen the Society of Actuaries Getzen 4.50% in 2035 and later years. model. model. 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, 2024 total OPEB liability consist of the 20-year Municipal G.O. Bond AA Index rate of 3.97% as of June 30, 2024, 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 3.97% 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 $366 million, which resulted in a net OPEB liability of $1.5 billion as of June 30, 2025, reported in governmental activities. For the year ended June 30, 2025, the State recognized OPEB expense of $26 million. At June 30, 2025, the State reported deferred outflows of resources of $225 million and deferred inflows of resources of $432 million. Deferred outflows of resources included $89 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, 2026. 161 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 program 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, 2025, 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, 2025, 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 $1.1 billion. As of June 30, 2025, the enterprise fund commercial paper program had $349 million in outstanding notes. The primary government has a commercial paper program that consists of borrowing for capital improvements on certain California State University campuses. As of June 30, 2025, $289 million in outstanding commercial paper existed in anticipation of the primary government issuing revenue bonds to the public. The University of California (UC), a discretely presented component unit, has a commercial paper program and other uncollateralized borrowings. Additional disclosures for the UC’s commercial paper and other long-term borrowings are included in the UC’s separately issued financial statements, which can be obtained from the UC 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, 2025, the primary government had a lease liability of $2.7 billion and a subscription liability of $149 million for governmental activities. For business-type activities, the lease liability was $562 million, and the subscription liability was $103 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 2.92% to 3.70%, depending on the duration of the lease or subscription term at the inception of each lease or SBITA agreement during the 2024-25 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. 162 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 2026.................................................................. $ 453,150 $ 46,478 $ 194,824 $ 21,833 $ 647,974 $ 68,311 2027.................................................................. 410,877 39,778 32,674 12,375 443,551 52,153 2028.................................................................. 349,751 33,069 28,153 11,250 377,904 44,319 2029.................................................................. 288,169 27,220 26,286 10,421 314,455 37,641 2030.................................................................. 229,811 22,376 25,626 9,654 255,437 32,030 2031-2035 ......................................................... 656,348 56,141 104,182 38,040 760,530 94,181 2036-2040 ......................................................... 193,233 14,279 74,490 23,529 267,723 37,808 2041-2045 ......................................................... 36,935 3,486 48,365 11,028 85,300 14,514 2046-2050 ......................................................... 11,955 1,741 18,716 4,138 30,671 5,879 2051-2055 ......................................................... 10,328 848 7,949 1,336 18,277 2,184 Thereafter .......................................................... 10,400 536 658 871 11,058 1,407 Total ......................................................... $ 2,650,957 $ 245,952 $ 561,923 $ 144,475 $ 3,212,880 $ 390,427 Less: current portion ........................................... 453,150 194,824 647,974 Lease liability, net of current portion................. $ 2,197,807 $ 367,099 $ 2,564,906 163 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 2026................................................................ $ 79,263 $ 3,629 $ 47,650 $ 4,625 $ 126,913 $ 8,254 2027................................................................ 50,908 1,361 32,748 2,529 83,656 3,890 2028................................................................ 12,894 380 12,303 1,104 25,197 1,484 2029................................................................ 6,049 101 8,180 511 14,229 612 2030................................................................ 88 — 1,436 103 1,524 103 2031-2035 ....................................................... 117 — 849 85 966 85 Total ............................................................... $ 149,319 $ 5,471 $ 103,166 $ 8,957 $ 252,485 $ 14,428 Less: current portion ......................................... 79,263 47,650 126,913 Subscription liability, net of current portion.... $ 70,056 $ 55,516 $ 125,572 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 $96 million from variable lease payments and $8 million from variable subscription payments for the year ended June 30, 2025. As of June 30, 2025, the discretely presented component units, including the University of California (UC) 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 UC’s lease and subscription liabilities are included in the UC’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, 2025, the primary government had commitments of $10.0 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 $8.4 billion from proceeds of approved federal grants and $1.6 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 $2.0 billion for various education programs, $1.1 billion for housing and community development programs, $442 million for services provided under various public health programs, $237 million for community service programs, $27 million for service and community engagement programs, $22 million for services provided under the child support program, $738 million for terrorism prevention and disaster-preparedness response projects, $10 million for land use and climate innovation programs, and $4 million for services provided under the welfare program. 164 Notes to the Financial Statements The primary government had other commitments, totaling $30.8 billion, that are not included as liabilities on the Balance Sheet or the Statement of Net Position. The $30.8 billion in commitments includes grant agreements totaling approximately $21.8 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 $30.8 billion in commitments includes $2.4 billion in undisbursed loan commitments to qualified agencies for clean water projects and $3.5 billion in undisbursed loan commitments for various programs aimed at providing housing and emergency shelter to persons in need. The $30.8 billion in commitments also includes contracts of $763 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 $1.0 billion for CSU construction projects. In addition, CSU participates in forward-purchase contracts of electricity. As of June 30, 2025, CSU’s obligation under these special purchase arrangements requires it to purchase at fixed prices an estimated total of $17 million in electricity through December 2025. The California State Lottery Commission had commitments of $1.3 billion for gaming and telecommunication systems and services. The primary government also had commitments of $36 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, 2025, the primary government encumbered expenditures of $13.5 billion for the General Fund, $3.8 billion for the Environmental and Natural Resources Fund, and $7.7 billion for the nonmajor governmental funds. The primary government also encumbered expenditures of $1.1 billion for the Federal Fund, which will typically be reimbursed by the federal government. See Note 3, Budgeting and Budgetary Control, for an explanation of the primary government’s policy concerning encumbrances. As of June 30, 2025, 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 (UC) 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. 165 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, 2025, the State had $71.9 billion in outstanding general obligation bonds related to governmental activities and $899 million related to business-type activities. In addition, $43.8 billion in long-term general obligation bonds had been authorized but not issued, of which $43.3 billion is related to governmental activities and $504 million is related to business-type activities. The total amount authorized but not issued (which may first be issued as commercial paper notes) includes $5.3 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, 2025. A. Variable-rate General Obligation Bonds The State issues both fixed and variable-rate general obligation bonds. As of June 30, 2025, the State had $1.2 billion in outstanding variable-rate general obligation bonds, consisting of $71 million in daily-rate bonds with credit enhancement, and $1.2 billion 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 applicable credit agreement. A bank bond may be remarketed at any time during the amortization period. There were no bank bonds during the 2024-25 fiscal year. 166 Notes to the Financial Statements As of June 30, 2025, the letters of credit for the Series 2003 variable-rate bonds had expiration dates of 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 May 8, 2026 and February 25, 2028. The letters of credit for the Series 2024 variable-rate bonds had expiration dates of October 8, 2027 and October 9, 2029. Sinking fund deposits, if any, for the variable-rate general obligation bonds issued prior to 2024 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 such 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 2024-25 fiscal year. Sinking fund payments for the variable-rate general obligation bonds issued during 2024 are expected to be made in accordance with the applicable mandatory sinking fund schedules for the related issues. B. Build America Bonds As of June 30, 2025, 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. 167 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, 2025. The estimated debt service requirements for the $1.2 billion 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, 2025. 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 2026................................ $ 3,598,775 $ 3,518,740 $ 7,117,515 $ 8,510 $ 34,006 $ 42,516 2027................................ 3,905,310 3,360,590 7,265,900 30,805 32,586 63,391 2028................................ 3,929,160 3,189,162 7,118,322 27,995 31,766 59,761 2029................................ 4,010,245 3,010,293 7,020,538 32,425 30,899 63,324 2030................................ 4,501,345 2,806,672 7,308,017 47,920 29,627 77,547 2031-2035 ....................... 19,758,155 11,158,568 30,916,723 182,255 127,225 309,480 2036-2040 ....................... 16,266,600 6,321,108 22,587,708 124,840 102,780 227,620 2041-2045 ....................... 8,088,500 2,473,801 10,562,301 164,800 77,403 242,203 2046-2050 ....................... 5,165,465 1,053,472 6,218,937 151,705 44,651 196,356 2051-2055 ....................... 2,648,615 298,376 2,946,991 118,695 14,858 133,553 2056-2060 ....................... — — — 9,110 212 9,322 Total................................... $ 71,872,170 $ 37,190,782 $ 109,062,952 $ 899,060 $ 526,013 $ 1,425,073 D. General Obligation Bond Defeasances 1. Current Year Activity On September 5, 2024, the primary government issued $1.8 billion in general obligation bonds to current refund $1.9 billion of outstanding fixed rate and variable-rate general obligation bonds with principal redemptions scheduled in the fiscal years ended 2025 to 2038, 2040, and 2045. 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 $269 million and resulted in an economic gain of $199 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 3.18% per year over the life of the new bonds. 168 Notes to the Financial Statements On November 5, 2024, the primary government issued $532 million in general obligation bonds to current refund $571 million of outstanding fixed rate general obligation bonds with principal redemptions scheduled in the fiscal years ended 2026 to 2035, and 2045. 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 $106 million and resulted in an economic gain of $65 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 2.98% per year over the life of the new bonds. On March 27, 2025, the primary government issued $30 million in general obligation bonds to advance refund $32 million of outstanding fixed rate general obligation bonds with principal redemptions scheduled in the fiscal years ended 2031 to 2033, 2035 to 2036, 2044, and 2047. 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 $7 million. The purpose of this refunding was to effect a favorable reorganization of the debt structure of the State. On April 10, 2025, the primary government issued $1.4 billion in general obligation bonds to current and advance refund $1.5 billion of outstanding fixed rate general obligation bonds with principal redemptions scheduled in the fiscal years ended 2026 to 2033, 2035 to 2038, and 2045. 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 $134 million and resulted in an economic gain of $91 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 3.83% 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, 2025, there are $777 million in outstanding defeased general obligation bonds. NOTE 17: REVENUE BONDS A. Governmental Activities 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 $2.1 billion, payable through 2041. Interest paid in the current year totaled $57 million. These bonds are included in the governmental activities column of the government-wide Statement of Net Position. 169 State of California Annual Comprehensive Financial Report 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 $8.3 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 $377 million, while Tobacco Settlement Revenue and interest earned totaled $370 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 $12.8 billion, payable through 2050. 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 (UC) 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 UC. For more information regarding revenue bonds, current year defeasances, and outstanding defeasances of the UC, refer to its separately issued financial report for the fiscal year 2024-25, which may be found on its website at www.ucop.edu. 170 Notes to the Financial Statements 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 Secured Overnight Financing Rate (SOFR) or the Effective Federal Fund Rate (EFFR) 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 and are not liabilities of the State. 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 2024-25, 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, 2025 (amounts in thousands) Primary government Governmental activities Public Buildings Construction Fund................................................................................................................. $ 9,686,253 Nonmajor governmental funds: Golden State Tobacco Securitization Corporation Fund ................................................................................ 5,398,218 No Place Like Home Program .................................................................................................................... 1,577,425 Total governmental activities ................................................................................................................... 16,661,896 Business-type activities Water Resources Fund.................................................................................................................................. 3,213,307 California State University ............................................................................................................................. 10,265,993 Nonmajor enterprise funds ............................................................................................................................ 2,171,002 Total business-type activities ................................................................................................................... 15,650,302 Total primary government ..................................................................................................................... 32,312,198 Discretely presented component units University of California .................................................................................................................................. 35,428,278 California Housing Finance Agency ................................................................................................................ 459,340 Nonmajor component units ............................................................................................................................ 879,433 Total discretely presented component units ............................................................................................ 36,767,051 Total revenue bonds payable................................................................................................................. $ 69,079,249 171 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 * 2026.............................................. $ 796,035 $ 617,292 $ 628,885 $ 570,905 $ 1,020,493 $ 1,500,893 2027.............................................. 830,080 585,761 669,280 548,428 1,238,895 1,450,666 2028.............................................. 869,440 555,506 703,445 524,218 805,466 1,412,468 2029.............................................. 898,460 535,911 712,335 496,814 1,250,534 1,377,005 2030.............................................. 901,216 504,305 730,975 468,799 1,879,685 1,312,176 2031-2035 ..................................... 4,448,683 2,024,561 3,339,120 1,907,044 6,852,082 5,683,307 2036-2040 ..................................... 3,397,299 1,287,853 2,274,085 1,301,761 6,190,087 4,132,299 2041-2045 ..................................... 1,941,343 903,269 2,224,015 857,808 4,750,078 2,780,020 2046-2050 ..................................... 1,536,978 351,201 2,070,775 410,797 4,238,865 1,770,603 2051-2055 ..................................... 77,500 3,875 1,022,445 91,933 3,158,328 922,088 2056-2060 ..................................... — — 100,545 10,136 1,171,554 587,782 2061 and thereafter ........................ 172,510 — — — 1,717,876 4,159,785 Total................................................. $ 15,869,544 $ 7,369,534 $ 14,475,905 $ 7,188,643 $ 34,273,943 $ 27,089,092 * Includes interest on variable-rate bonds based on rates in effect on June 30, 2025. D. Revenue Bond Defeasances 1. Current Year – Governmental Activities During the 2024-25 fiscal year, the SPWB issued $796 million in lease revenue refunding bonds. The bond proceeds were used to refund $904 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 $154 million and resulted in an economic gain of $125 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, 2025, the outstanding balance of defeased revenue bonds were $855 million for governmental activities and $143 million for business-type activities. 172 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 $6.7 billion as of June 30, 2025. 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 $9.3 billion is discounted to $6.7 billion using a 3.5% interest rate. Of the total discounted liability, $683 million is a current liability, of which $517 million is included in the General Fund, $162 million in the special revenue funds, and $4 million in the internal service funds. The remaining $6.0 billion is reported as workers’ compensation benefits payable in the government-wide Statement of Net Position. The University of California (UC), a discretely presented component unit, is self-insured or insured through a wholly-owned captive insurance company. Additional disclosures for the UC’s risk management and self-insurance claims liability are included in its separately issued financial statements, which can be obtained from the UC 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) 2025 2024 Unpaid claims, beginning.......................................................................................................... $ 6,338,487 $ 6,036,847 Incurred claims ........................................................................................................................ 1,107,500 988,231 Claim payments ....................................................................................................................... (740,157) (686,591) Unpaid claims, ending ........................................................................................................ $ 6,705,830 $ 6,338,487 173 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, 2025 (amounts in thousands) Due To Environmental and Natural Nonmajor State General Resources Governmental Lottery Due From Fund Fund Fund Fund Governmental funds General Fund ................................................ $ — $ — $ 1,071,032 $ — Federal Fund ................................................. 4,601,878 65,571 1,321,942 — Environmental and Natural Resources Fund ..... 29,784 — 297,353 — Nonmajor governmental funds ........................ 4,778,238 7,514 382,146 — Total governmental funds ........................ 9,409,900 73,085 3,072,473 — Enterprise funds Water Resources Fund ................................... 1 294 — — State Lottery Fund ......................................... 1,536 — 405,855 — Nonmajor enterprise funds .............................. 1,988 13,708 277 — Total enterprise funds............................... 3,525 14,002 406,132 — Internal service funds ...................................... 13,433 262,951 300,058 10,575 Total due from other funds ................... $ 9,426,858 $ 350,038 $ 3,778,663 $ 10,575 174 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 $ 102,350 $ 2,833 $ — $ 344,876 $ 48,000 $ 1,569,091 — — 13,981 103,748 — 6,107,120 — — — 25,233 — 352,370 — — — 104,221 58,415 5,330,534 102,350 2,833 13,981 578,078 106,415 13,359,115 — — — 152,719 — 153,014 — — — — — 407,391 — — — — 74 16,047 — — — 152,719 74 576,452 38,749 — 18,444 147,616 1,496 793,322 $ 141,099 $ 2,833 $ 32,425 $ 878,413 $ 107,985 $ 14,728,889 175 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 $1.1 billion of interfund loans. There is an additional $21 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, 2025 (amounts in thousands) Interfund Payables Environmental and Natural Nonmajor Water General Resources Governmental Resources Interfund Receivables Fund Fund Fund Fund Governmental funds General Fund .............................................................. $ — $ 1,203,303 $ 2,759,268 $ — Environmental and Natural Resources Fund................... — — — — Nonmajor governmental funds ...................................... 5,681 10,345 6,605 — Total governmental funds ...................................... 5,681 1,213,648 2,765,873 — Enterprise funds Nonmajor enterprise funds ........................................... 28,520 — — — Total enterprise funds............................................. 28,520 — — — Internal service funds ................................................... 2,670,340 — — 180,600 Total interfund receivables .................................. $ 2,704,541 $ 1,213,648 $ 2,765,873 $ 180,600 176 Notes to the Financial Statements Interfund Payables Unemployment Nonmajor Internal Total Programs Enterprise Service Fiduciary Interfund Fund Funds Funds Funds Payables $ 400,848 $ 3,700 $ 22,199 $ 11,975 $ 4,401,293 — — 2,227 — 2,227 1,631 61 737 197 25,257 402,479 3,761 25,163 12,172 4,428,777 — — — — 28,520 — — — — 28,520 — — 15,019 — 2,865,959 $ 402,479 $ 3,761 $ 40,182 $ 12,172 $ 7,323,256 177 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, 2025 (amounts in thousands) Due To Component Units University Nonmajor of Component Due From California Units Total Governmental funds General Fund .......................................................................................... $ 485,014 $ — $ 485,014 Federal Fund ........................................................................................... 476,365 — 476,365 Environmental and Natural Resources Fund .............................................. 5,750 80 5,830 Nonmajor governmental funds .................................................................. 75,932 — 75,932 Total governmental funds .................................................................. 1,043,061 80 1,043,141 Total due from primary government................................................. $ 1,043,061 $ 80 $ 1,043,141 178 Notes to the Financial Statements This page intentionally left blank 179 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 $5.4 billion to the California State University, an enterprise fund. The General Fund also transferred $3.6 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 $2.8 billion to General Fund for the emergency relief. Table 54 shows interfund transfers of the primary government. Table 54 Schedule of Interfund Transfers June 30, 2025 (amounts in thousands) Transferred To Environmental and Natural General Federal Resources Transferred From Fund Fund Fund Governmental funds General Fund .......................................................................................... $ — $ 2,100 $ 651,571 Federal Fund .......................................................................................... 2,797,706 — 21,523 Environmental and Natural Resources Fund .............................................. 291,273 — — Nonmajor governmental funds .................................................................. 57,599 — 44,020 Total governmental funds .................................................................. 3,146,578 2,100 717,114 Internal service funds................................................................................. 56,835 — — Total transfers from other funds ...................................................... $ 3,203,413 $ 2,100 $ 717,114 180 Notes to the Financial Statements Transferred To California Nonmajor State Internal Total Governmental University Service Transfers To Fund Fund Funds Other Funds $ 3,637,570 $ 5,349,759 $ 126,418 $ 9,767,418 10,619 — — 2,829,848 2,054 — — 293,327 2,646,524 — — 2,748,143 6,296,767 5,349,759 126,418 15,638,736 — — — 56,835 $ 6,296,767 $ 5,349,759 $ 126,418 $ 15,695,571 181 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, 2025 (amounts in thousands) Environmental and Natural Nonmajor General Federal Resources Governmental Fund Fund Fund Funds Nonspendable Long-term interfund receivables.............................................. $ 2,704,541 $ — $ — $ — Long-term loans receivable .................................................... 649,581 — — — Other.................................................................................... — — — 16,235 Total nonspendable......................................................... 3,354,122 — — 16,235 Restricted General government.............................................................. 27,875 432,759 18,449 7,542,311 Education ............................................................................. 86,645 — — 987,178 Health and human services .................................................... 732,469 1,616 93,741 6,585,700 Natural resources and environmental protection....................... — 780 8,419,873 615,989 Business, consumer services, and housing.............................. 3,584 518,578 105,166 7,520,615 Transportation....................................................................... — — — 11,055,236 Corrections and rehabilitation ................................................. 321,241 — — 343,983 Budget stabilization ............................................................... 18,291,422 — — — Total restricted ................................................................ 19,463,236 953,733 8,637,229 34,651,012 Committed General government.............................................................. 316,496 — 14,734 961,395 Education ............................................................................. 177,150 — — 45,008 Health and human services .................................................... 177,958 — — 1,305,041 Natural resources and environmental protection....................... 1,427,920 — 17,145,927 453,213 Business, consumer services, and housing.............................. — — 140,163 203,603 Transportation....................................................................... — — — 57,862 Corrections and rehabilitation ................................................. — — — 892 Total committed............................................................... 2,099,524 — 17,300,824 3,027,014 Assigned General government.............................................................. 9,022,550 — — 85,892 Education ............................................................................. 50,094 — — — Health and human services .................................................... 12,140,724 — — — Natural resources and environmental protection....................... 5,292,217 — — — Business, consumer services, and housing.............................. 772,514 — — — Transportation....................................................................... 954,040 — — — Corrections and rehabilitation ................................................. 1,189,398 — — — Total assigned................................................................. 29,421,537 — — 85,892 Unassigned ............................................................................. 3,510,175 (421,062) — — Total fund balances ................................................................. $ 57,848,594 $ 532,671 $ 25,938,053 $ 37,780,153 182 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, 2025 (amounts in thousands) Internal Enterprise Service Funds Funds Architecture Revolving.............................................................................................................. $ 1,876 $ — Service Revolving Fund............................................................................................................ 622,079 — Technology Services Revolving Fund ........................................................................................ 217,286 — Water Resources Revolving Fund.............................................................................................. 12,950 — Other Internal Service Programs Fund ....................................................................................... 757,366 — State Lottery Fund.................................................................................................................... — 288,358 Unemployment Programs Fund ................................................................................................. — 14,280,523 California State University Fund................................................................................................. — 13,912,886 Total net position deficits ................................................................................................... $ 1,611,557 $ 28,481,767 C. Discretely Presented Component Unit Endowments and Gifts The University of California (UC), 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, 2025, the value of restricted endowments and gifts totaled $31.8 billion, and unrestricted endowments and gifts totaled $12.1 billion. The UC’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 $4.3 billion at June 30, 2025. 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 $2.2 billion and $25 million, respectively. 183 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, 2025, CalHFA had $6.8 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, 2025, the nonmajor component units had approximately $7.4 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, 2025; those in progress as of June 30, 2025, and settled or decided against the primary government as of May 5, 2026; and those having a high probability of resulting in a decision against the primary government as of May 5, 2026, 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 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. 184 Notes to the Financial Statements The primary government is a defendant in more than 660 coordinated cases related to the Palisades Fire in 2025. Plaintiffs claim the State improperly owned, operated, controlled and/or maintained Topanga State Park by allowing mature dry chaparral to grow unchecked in and/or around the Temescal Canyon Trail near Skull Rock, knowing that chaparral is known to burn underground without visible flames for weeks. After being subjected to fire on January 1, 2025, the growth this chaparral continued to burn, resulting in the Palisades Fire. Plaintiffs also allege that the state defendants failed to contain the fire, allowing it to escape into the Pacific Palisades and Malibu. The Court sustained the State’s demurrer in part and overruled in part. The State filed a writ petition on April 20, 2026 and awaits a ruling on a request for a stay of discovery. Prior to hearing the demurrer, the court has ordered coordinated late claim filing procedures and limited discovery of state and county personnel. The potential loss cannot be estimated at this time given the number of claimants and varying property values, and because the period to file late claim petitions has not yet expired; however, the total loss can easily exceed $1.0 billion. 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 (UC), 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 UC, 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, 2025, but prior to the date of the auditor’s report. A. Debt Issuances In July 2025, the California State University (CSU) issued $1.7 billion in revenue bonds to finance and refinance projects to acquire, construct, improve, and renovate CSU facilities, to refund certain outstanding systemwide revenue bonds, and to pay related issuance costs. In December 2025 and January and February 2026, the University of California (UC), a major component unit, through its conduit, issued a total of $4.3 billion in revenue bonds to finance or refinance certain capital projects of the UC, including the Series 2026 projects related to the development and historic rehabilitation of the McAllister Tower at UC Law San Francisco, refund certain prior bonds, and pay related issuance cost. In September and October 2025, and March and April 2026 the primary government issued a total of $6.8 billion in general obligation bonds to fund various capital projects, to pay certain commercial paper notes as they mature, to pay related issuance costs, and to refund outstanding bonds. In October 2025 and March 2026, the State Public Works Board issued a total of $1.4 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. 185 State of California Annual Comprehensive Financial Report In October 2025 and April 2026 the primary government issued a total of $171 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 December 2025 and March 2026, the California Infrastructure and Economic Development Bank (I-Bank), a component unit, issued $679 million in Clean Water and Drinking Water Revolving Revenue Bond to advance refund and defease a portion of its outstanding bonds, to fund construction projects, and to pay related issuance costs. In February 2026, the Department of Water Resources issued $546 million in revenue bonds to repay all of the outstanding commercial paper, fund interest on a portion of outstanding bonds, pay related issuance costs, and fund construction of water system projects. B. Other California experienced significant wildfire activity in 2025, with approximately 8,232 fires and 507,817 acres burned. As of April 2026, there have been 841 fires and 9,756 acres burned in the 2026 calendar year. The 2026-27 Governor’s Budget proposes includes $314 million to continue investments in various wildfire and forest resilience projects and programs. This includes $58 million to fund wildfire prevention and hazardous fuels reduction near threatened communities, $20 million for technical and financial assistance to help homeowners in vulnerable areas, and $15 million for grants in coordination with the Office of Energy Infrastructure Safety to further support fuel reduction in at-risk communities. California continues to experience large swings between drought and flood conditions; these swings are becoming more severe due to climate change. The Governor’s Budget proposes $792 million to continue investments that improve water storage, replenish groundwater, improve conditions in streams and rivers, and complete various water resilience and water-related infrastructure projects. The Governor’s Budget commits to spending $232 million for flood control projects, $173 million for drinking water projects, and $69 million for repairs to existing or new water conveyance projects. 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 July 1, 2025, the State had $20.6 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 $415 million after the fiscal year, to a balance of approximately $21.0 billion as of April 14, 2026. 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 billions of dollars 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 $13.8 billion for SNAP and $92.0 billion for Medicaid. For the fiscal year ended June 30, 2025, California received $13.9 billion for SNAP and $102.4 billion for Medicaid. 186 Notes to the Financial Statements In the November 4, 2025, general election, California voters approved the following proposition: • Proposition 50 requires California to use new legislatively enacted congressional district maps for all congressional elections through 2030. The measure retains the California Citizens Redistricting Commission and directs the nonpartisan commission to resume enacting revisions to congressional district maps beginning in 2031 (after the 2030 census) and every ten years thereafter. The implementation of this legislation is expected to have a one-time cost to counties of up to a few million dollars statewide to update election materials, and a one-time state cost of approximately $200,000. Chapter 97 of Senate Bill No. 280 appropriated $251 million from the General Fund to cover the cost of conducting the statewide special election. 187 State of California Annual Comprehensive Financial Report This page intentionally left blank 188 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) 20152 20162 20172 PUBLIC EMPLOYEES' RETIREMENT FUND PLANS STATE MISCELLANEOUS1 Total pension liability Service cost....................................................................................................... $ 1,576,695 $ 1,668,682 $ 1,927,531 Interest on total pension liability ........................................................................... 6,970,837 7,220,961 7,381,049 Differences between expected and actual experience............................................ 693,639 (101,381) (387,041) Changes of assumptions .................................................................................... — — 5,667,561 Benefit payments, including refunds of employee contributions............................... (5,098,222) (5,346,864) (5,572,707) Net change in total pension liability ...................................................................... 4,142,949 3,441,398 9,016,393 Total pension liability – beginning........................................................................ 92,189,174 96,332,123 99,773,521 Total pension liability – ending (a)........................................................................ $ 96,332,123 $ 99,773,521 $ 108,789,914 Plan fiduciary net position Contributions – employer .................................................................................... $ 2,608,785 $ 2,818,406 $ 3,094,941 Contributions – employee.................................................................................... 771,046 801,023 843,772 Net investment income........................................................................................ 1,505,042 339,588 7,329,859 Benefit payments, including refunds of employee contributions............................... (5,098,222) (5,346,864) (5,572,707) Net plan to plan resource movement.................................................................... (354) (1,154) (2,737) Administrative expense....................................................................................... (76,678) (41,497) (98,419) Other miscellaneous income/(expense)................................................................ — — — Net change in plan fiduciary net position............................................................... (290,381) (1,430,498) 5,594,709 Plan fiduciary net position – beginning................................................................. 68,380,562 68,090,181 66,659,683 Plan fiduciary net position – ending (b) ................................................................ $ 68,090,181 $ 66,659,683 $ 72,254,392 State’s net pension liability – ending (a) – (b) ....................................................... $ 28,241,942 $ 33,113,838 $ 36,535,522 Plan fiduciary net position as a percentage of the total pension liability........................ 70.68 % 66.81 % 66.42 % Covered payroll...................................................................................................... $ 10,640,884 $ 11,189,932 $ 11,591,576 State’s net pension liability as a percentage of covered payroll................................... 265.41 % 295.93 % 315.19 % 1This schedule includes amounts attributable to related organizations, fiduciary component units, and discretely presented component units, which are not part of the primary government. 2The 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. 190 Required Supplementary Information 20182 20192 20202 20212 20222 20232 20242 $ 1,953,761 $ 2,042,862 $ 2,125,738 $ 2,212,280 $ 2,438,345 $ 2,566,832 $ 2,713,022 7,571,997 7,970,572 8,288,391 8,603,225 8,752,910 9,166,157 9,509,569 445,743 2,032,459 742,481 628,341 (1,115,641) 2,105,822 910,930 (1,377,556) — — — 3,728,965 — — (5,865,849) (6,190,738) (6,513,916) (6,851,024) (7,174,817) (7,569,642) (7,910,411) 2,728,096 5,855,155 4,642,694 4,592,822 6,629,762 6,269,169 5,223,110 108,789,914 111,518,010 117,373,165 122,015,859 126,608,681 133,238,443 139,507,612 $ 111,518,010 $ 117,373,165 $ 122,015,859 $ 126,608,681 $ 133,238,443 $ 139,507,612 $ 144,730,722 $ 7,044,360 $ 3,777,484 $ 5,008,537 $ 3,778,435 $ 5,110,276 $ 6,271,650 $ 6,093,536 870,402 942,980 1,005,830 928,152 1,081,816 1,144,462 1,273,742 6,127,761 5,163,147 4,138,143 19,299,096 (7,836,089) 5,874,720 9,590,976 (5,865,849) (6,190,738) (6,513,916) (6,851,024) (7,174,817) (7,569,642) (7,910,411) (1,340) (1,344) (4,213) (2,558) (2,559) (1,850) (480) (112,592) (57,163) (118,050) (87,165) (64,984) (70,176) (82,250) (213,815) 185 — — — — — 7,848,927 3,634,551 3,516,331 17,064,936 (8,886,357) 5,649,164 8,965,113 72,254,392 80,103,319 83,737,870 87,254,201 104,318,730 * 95,432,373 101,081,537 $ 80,103,319 $ 83,737,870 $ 87,254,201 $ 104,319,137 $ 95,432,373 $ 101,081,537 $ 110,046,650 $ 31,414,691 $ 33,635,295 $ 34,761,658 $ 22,289,544 $ 37,806,070 $ 38,426,075 $ 34,684,072 71.83 % 71.34 % 71.51 % 82.39 % 71.63 % 72.46 % 76.04 % $ 12,254,527 $ 12,913,195 $ 13,579,610 $ 12,909,399 $ 14,727,596 $ 15,486,977 $ 16,690,904 256.35 % 260.47 % 255.98 % 172.66 % 256.70 % 248.12 % 207.80 % (continued) 191 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) 20152 20162 20172 PUBLIC EMPLOYEES' RETIREMENT FUND PLANS STATE INDUSTRIAL1 Total pension liability Service cost ......................................................................................................... $ 100,006 $ 107,868 $ 124,792 Interest on total pension liability ............................................................................. 257,527 273,308 290,058 Differences between expected and actual experience .............................................. 26,976 7,009 21,516 Changes of assumptions ...................................................................................... — — 245,450 Benefit payments, including refunds of employee contributions................................. (157,029) (167,359) (177,654) Net change in total pension liability......................................................................... 227,480 220,826 504,162 Total pension liability – beginning .......................................................................... 3,367,907 3,595,387 3,816,213 Total pension liability – ending (a) .......................................................................... $ 3,595,387 $ 3,816,213 $ 4,320,375 Plan fiduciary net position Contributions – employer....................................................................................... $ 107,238 $ 116,730 $ 123,163 Contributions – employee...................................................................................... 49,482 52,775 54,114 Net investment income.......................................................................................... 62,385 14,444 322,150 Benefit payments, including refunds of employee contributions................................. (157,029) (167,359) (177,654) Net plan to plan resource movement ...................................................................... 30 216 (141) Administrative expense ......................................................................................... (3,252) (1,758) (4,282) Other miscellaneous income/(expense) .................................................................. — — — Net change in plan fiduciary net position ................................................................. 58,854 15,048 317,350 Plan fiduciary net position – beginning................................................................... 2,826,449 2,885,303 2,900,351 Plan fiduciary net position – ending (b)................................................................... $ 2,885,303 $ 2,900,351 $ 3,217,701 State’s net pension liability – ending (a) – (b).......................................................... $ 710,084 $ 915,862 $ 1,102,674 Plan fiduciary net position as a percentage of the total pension liability.......................... 80.25 % 76.00 % 74.48 % Covered payroll ........................................................................................................ $ 577,711 $ 625,220 $ 643,295 State’s net pension liability as a percentage of covered payroll ..................................... 122.91 % 146.49 % 171.41 % 192 Required Supplementary Information 20182 20192 20202 20212 20222 20232 20242 $ 119,521 $ 127,006 $ 131,508 $ 136,918 $ 145,767 $ 151,085 $ 157,301 301,134 324,909 343,896 363,230 374,401 398,940 419,207 (19,063) 106,233 24,610 21,852 (65,431) 97,355 22,880 (54,062) — — — 153,761 — — (190,683) (205,544) (220,912) (238,188) (255,704) (273,392) (291,180) 156,847 352,604 279,102 283,812 352,794 373,988 308,208 4,320,375 4,477,222 4,829,826 5,108,928 5,392,740 5,745,534 6,119,522 $ 4,477,222 $ 4,829,826 $ 5,108,928 $ 5,392,740 $ 5,745,534 $ 6,119,522 $ 6,427,730 $ 241,062 $ 148,494 $ 244,773 $ 128,161 $ 187,745 $ 256,851 $ 231,104 58,404 61,338 65,268 58,867 67,664 70,548 78,425 272,379 233,027 191,982 911,996 (374,909) 285,169 471,324 (190,683) (205,544) (220,912) (238,188) (255,704) (273,392) (291,180) 268 (754) (1,037) (663) 281 150 (1,172) (5,014) (2,558) (5,383) (4,090) (3,084) (3,362) (3,994) (9,522) 8 — — — — — 366,894 234,011 274,691 856,083 (378,007) 335,964 484,507 3,217,701 3,584,595 3,818,606 4,093,297 4,950,153 * 4,572,146 4,908,110 $ 3,584,595 $ 3,818,606 $ 4,093,297 $ 4,949,380 $ 4,572,146 $ 4,908,110 $ 5,392,617 $ 892,627 $ 1,011,220 $ 1,015,631 $ 443,360 $ 1,173,388 $ 1,211,412 $ 1,035,113 80.06 % 79.06 % 80.12 % 91.78 % 79.58 % 80.20 % 83.90 % $ 695,014 $ 728,609 $ 765,840 $ 706,128 $ 802,709 $ 837,312 $ 896,354 128.43 % 138.79 % 132.62 % 62.79 % 146.18 % 144.68 % 115.48 % (continued) 193 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) 20152 20162 20172 PUBLIC EMPLOYEES' RETIREMENT FUND PLANS STATE SAFETY1 Total pension liability Service cost..................................................................................................... $ 422,634 $ 438,147 $ 497,129 Interest on total pension liability ......................................................................... 734,333 786,096 827,412 Differences between expected and actual experience.......................................... (4,150) (2,235) (109,901) Changes of assumptions .................................................................................. — — 673,183 Benefit payments, including refunds of employee contributions............................. (469,275) (502,427) (538,735) Net change in total pension liability .................................................................... 683,542 719,581 1,349,088 Total pension liability – beginning...................................................................... 9,626,597 * 10,310,139 11,029,720 Total pension liability – ending (a)...................................................................... $ 10,310,139 $ 11,029,720 $ 12,378,808 Plan fiduciary net position Contributions – employer .................................................................................. $ 393,925 $ 401,108 $ 433,232 Contributions – employee.................................................................................. 215,482 221,615 231,364 Net investment income...................................................................................... 175,677 42,258 926,106 Benefit payments, including refunds of employee contributions............................. (469,275) (502,427) (538,735) Net plan to plan resource movement.................................................................. 499 548 295 Administrative expense..................................................................................... (9,200) (4,966) (12,264) Other miscellaneous income/(expense).............................................................. — — — Net change in plan fiduciary net position............................................................. 307,108 158,136 1,039,998 Plan fiduciary net position – beginning............................................................... 7,841,392 8,148,500 8,306,636 Plan fiduciary net position – ending (b) .............................................................. $ 8,148,500 $ 8,306,636 $ 9,346,634 State’s net pension liability – ending (a) – (b) ..................................................... $ 2,161,639 $ 2,723,084 $ 3,032,174 Plan fiduciary net position as a percentage of the total pension liability...................... 79.03 % 75.31 % 75.51 % Covered payroll.................................................................................................... $ 2,003,777 $ 2,100,295 $ 2,167,429 State’s net pension liability as a percentage of covered payroll................................. 107.88 % 129.65 % 139.90 % 194 Required Supplementary Information 20182 20192 20202 20212 20222 20232 20242 $ 504,383 $ 536,173 $ 553,316 $ 564,198 $ 574,216 $ 559,582 $ 565,174 877,944 951,075 1,012,593 1,072,105 1,110,294 1,184,611 1,250,737 (21,592) 227,078 16,473 (33,477) (238,531) 222,715 98,235 (41,225) — — — 455,219 — — (578,504) (626,451) (677,362) (733,697) (788,819) (856,901) (916,852) 741,006 1,087,875 905,020 869,129 1,112,379 1,110,007 997,294 12,378,808 13,119,814 14,207,689 15,112,709 15,981,838 17,094,217 18,204,224 $ 13,119,814 $ 14,207,689 $ 15,112,709 $ 15,981,838 $ 17,094,217 $ 18,204,224 $ 19,201,518 $ 774,759 $ 523,076 $ 747,441 $ 429,347 $ 561,229 $ 771,612 $ 784,227 245,021 257,071 267,822 223,408 244,938 279,174 321,424 797,214 691,911 575,732 2,758,504 (1,131,785) 866,433 1,445,883 (578,504) (626,451) (677,362) (733,697) (788,819) (856,901) (916,852) 532 1,482 3,907 1,513 950 586 1,761 (14,565) (7,524) (16,047) (12,272) (9,314) (10,169) (12,107) (27,658) 24 — — — — — 1,196,799 839,589 901,493 2,666,803 (1,122,801) 1,050,735 1,624,336 9,346,634 10,543,433 11,383,022 12,284,515 14,951,366 * 13,828,565 14,879,300 $ 10,543,433 $ 11,383,022 $ 12,284,515 $ 14,951,318 $ 13,828,565 $ 14,879,300 $ 16,503,636 $ 2,576,381 $ 2,824,667 $ 2,828,194 $ 1,030,520 $ 3,265,652 $ 3,324,924 $ 2,697,882 80.36 % 80.12 % 81.29 % 93.55 % 80.90 % 81.74 % 85.95 % $ 2,339,642 $ 2,468,018 $ 2,566,403 $ 2,367,960 $ 2,633,568 $ 2,637,846 $ 2,773,873 110.12 % 114.45 % 110.20 % 43.52 % 124.00 % 126.05 % 97.26 % (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) 20152 20162 20172 PUBLIC EMPLOYEES' RETIREMENT FUND PLANS STATE PEACE OFFICERS AND FIREFIGHTERS1 Total pension liability Service cost..................................................................................................... $ 838,628 $ 861,694 $ 980,897 Interest on total pension liability ......................................................................... 2,759,982 2,902,900 3,018,186 Differences between expected and actual experience.......................................... 288,526 18,316 (286,527) Changes of assumptions .................................................................................. — — 2,608,752 Benefit payments, including refunds of employee contributions............................. (1,697,676) (1,822,841) (1,938,027) Net change in total pension liability .................................................................... 2,189,460 1,960,069 4,383,281 Total pension liability – beginning...................................................................... 36,219,196 * 38,408,656 40,368,725 Total pension liability – ending (a)...................................................................... $ 38,408,656 $ 40,368,725 $ 44,752,006 Plan fiduciary net position Contributions – employer .................................................................................. $ 1,146,192 $ 1,265,145 $ 1,427,240 Contributions – employee.................................................................................. 366,419 381,185 399,946 Net investment income...................................................................................... 584,142 137,927 2,954,170 Benefit payments, including refunds of employee contributions............................. (1,697,676) (1,822,841) (1,938,027) Net plan to plan resource movement.................................................................. 194 114 1,628 Administrative expense..................................................................................... (30,069) (16,295) (39,395) Other miscellaneous income/(expense).............................................................. — — — Net change in plan fiduciary net position............................................................. 369,202 (54,765) 2,805,562 Plan fiduciary net position – beginning............................................................... 26,367,989 26,737,191 26,682,426 Plan fiduciary net position – ending (b) .............................................................. $ 26,737,191 $ 26,682,426 $ 29,487,988 State’s net pension liability – ending (a) – (b) ..................................................... $ 11,671,465 $ 13,686,299 $ 15,264,018 Plan fiduciary net position as a percentage of the total pension liability...................... 69.61 % 66.10 % 65.89 % Covered payroll.................................................................................................... $ 3,115,287 $ 3,241,895 $ 3,416,627 State’s net pension liability as a percentage of covered payroll................................. 374.65 % 422.17 % 446.76 % 196 Required Supplementary Information 20182 20192 20202 20212 20222 20232 20242 $ 1,011,482 $ 1,044,955 $ 1,062,486 $ 1,111,888 $ 1,167,715 $ 1,242,191 $ 1,249,852 3,185,628 3,381,608 3,547,687 3,745,062 3,864,043 4,112,779 4,289,911 354,089 664,430 172,204 585,665 (805,030) 1,381,891 261,062 (25,104) — — — 2,190,080 — — (2,065,007) (2,209,557) (2,359,940) (2,560,165) (2,735,400) (2,956,624) (3,148,857) 2,461,088 2,881,436 2,422,437 2,882,450 3,681,408 3,780,237 2,651,968 44,752,006 47,213,094 50,094,530 52,516,967 55,399,417 59,080,825 62,861,062 $ 47,213,094 $ 50,094,530 $ 52,516,967 $ 55,399,417 $ 59,080,825 $ 62,861,062 $ 65,513,030 $ 3,068,270 $ 1,665,872 $ 3,220,740 $ 1,310,946 $ 2,171,675 $ 3,371,914 $ 2,877,620 421,662 437,937 462,370 423,995 477,347 490,773 517,361 2,522,044 2,175,528 1,812,785 8,602,827 (3,524,276) 2,690,552 4,466,739 (2,065,007) (2,209,557) (2,359,941) (2,560,165) (2,735,400) (2,956,624) (3,148,857) (104) 350 735 (66) 1,076 931 (285) (45,950) (23,765) (49,832) (38,396) (28,764) (31,280) (37,514) (87,261) 77 — — — — — 3,813,654 2,046,442 3,086,857 7,739,141 (3,638,342) 3,566,266 4,675,064 29,487,988 33,301,642 35,348,084 38,434,941 46,175,076 * 42,536,734 46,103,000 $ 33,301,642 $ 35,348,084 $ 38,434,941 $ 46,174,082 $ 42,536,734 $ 46,103,000 $ 50,778,064 $ 13,911,452 $ 14,746,446 $ 14,082,026 $ 9,225,335 $ 16,544,091 $ 16,758,062 $ 14,734,966 70.53 % 70.56 % 73.19 % 83.35 % 72.00 % 73.34 % 77.51 % $ 3,557,011 $ 3,676,854 $ 3,904,615 $ 3,629,097 $ 4,035,339 $ 4,148,789 $ 4,347,064 391.10 % 401.06 % 360.65 % 254.20 % 409.98 % 403.93 % 338.96 % (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) 20152 20162 20172 PUBLIC EMPLOYEES' RETIREMENT FUND PLANS CALIFORNIA HIGHWAY PATROL Total pension liability Service cost ......................................................................................................... $ 198,665 $ 210,619 $ 237,064 Interest on total pension liability ............................................................................. 764,348 809,691 833,062 Differences between expected and actual experience .............................................. 75,593 125,614 (158,392) Changes of assumptions ...................................................................................... — — 721,972 Benefit payments, including refunds of employee contributions................................. (487,061) (516,723) (543,456) Net change in total pension liability......................................................................... 551,545 629,201 1,090,250 Total pension liability – beginning .......................................................................... 10,060,085 10,611,630 11,240,831 Total pension liability – ending (a) .......................................................................... $ 10,611,630 $ 11,240,831 $ 12,331,081 Plan fiduciary net position Contributions – employer....................................................................................... $ 351,197 $ 375,928 $ 426,603 Contributions – employee...................................................................................... 85,791 86,111 91,116 Net investment income.......................................................................................... 146,782 33,918 747,272 Benefit payments, including refunds of employee contributions................................. (487,061) (516,723) (543,456) Net plan to plan resource movement ...................................................................... (214) 292 1,050 Administrative expense ......................................................................................... (7,600) (4,111) (9,923) Other miscellaneous income/(expense) .................................................................. — — — Net change in plan fiduciary net position ................................................................. 88,895 (24,585) 712,662 Plan fiduciary net position – beginning................................................................... 6,656,447 6,745,342 6,720,757 Plan fiduciary net position – ending (b)................................................................... $ 6,745,342 $ 6,720,757 $ 7,433,419 State’s net pension liability – ending (a) – (b).......................................................... $ 3,866,288 $ 4,520,074 $ 4,897,662 Plan fiduciary net position as a percentage of the total pension liability.......................... 63.57 % 59.79 % 60.28 % Covered payroll ........................................................................................................ $ 809,610 $ 808,032 $ 851,427 State’s net pension liability as a percentage of covered payroll ..................................... 477.55 % 559.39 % 575.23 % 198 Required Supplementary Information 20182 20192 20202 20212 20222 20232 20242 $ 248,531 $ 257,384 $ 266,192 $ 268,009 $ 292,213 $ 298,022 $ 299,152 878,113 926,056 974,410 1,022,074 1,062,411 1,116,842 1,170,324 103,283 135,148 120,496 98,575 (178,097) 198,448 182,745 12,213 — — — 695,673 — — (579,080) (612,298) (651,832) (695,055) (739,443) (794,793) (851,349) 663,060 706,290 709,266 693,603 1,132,757 818,519 800,872 12,331,081 12,994,141 13,700,431 14,409,697 15,103,300 16,236,057 17,054,576 $ 12,994,141 $ 13,700,431 $ 14,409,697 $ 15,103,300 $ 16,236,057 $ 17,054,576 $ 17,855,448 $ 978,060 $ 507,055 $ 559,585 $ 802,064 $ 628,308 $ 674,104 $ 755,384 95,482 100,080 103,159 95,784 109,080 123,075 134,856 639,591 556,379 450,669 2,200,671 (901,987) 678,131 1,113,204 (579,080) (612,298) (651,832) (695,055) (739,443) (794,793) (851,349) 330 265 638 1,773 252 183 176 (11,583) (6,090) (12,800) (9,519) (7,428) (8,099) (9,509) (21,997) 20 — — — — — 1,100,803 545,411 449,419 2,395,718 (911,218) 672,601 1,142,762 7,433,419 8,534,222 9,079,633 9,529,052 11,924,803 * 11,013,585 11,686,186 $ 8,534,222 $ 9,079,633 $ 9,529,052 $ 11,924,770 $ 11,013,585 $ 11,686,186 $ 12,828,948 $ 4,459,919 $ 4,620,798 $ 4,880,645 $ 3,178,530 $ 5,222,472 $ 5,368,390 $ 5,026,500 65.68 % 66.27 % 66.13 % 78.95 % 67.83 % 68.52 % 71.85 % $ 884,197 $ 933,689 $ 948,000 $ 882,119 $ 936,496 $ 977,794 $ 1,048,891 504.40 % 494.90 % 514.84 % 360.33 % 557.66 % 549.03 % 479.22 % (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) 20152 20162 20172 SINGLE-EMPLOYER PLANS JUDGES’ Total pension liability Service cost ......................................................................................................... $ 27,841 $ 29,314 $ 22,733 Interest on total pension liability ............................................................................. 133,181 107,514 115,067 Differences between expected and actual experience .............................................. 57,568 (59,421) (366,200) Changes of assumptions ...................................................................................... 158,646 384,306 (107,670) Benefit payments, including refunds of employee contributions................................. (201,868) (199,349) (200,440) Net change in total pension liability......................................................................... 175,368 262,364 (536,510) Total pension liability – beginning .......................................................................... 3,357,212 3,532,580 3,794,944 Total pension liability – ending (a) .......................................................................... $ 3,532,580 $ 3,794,944 $ 3,258,434 Plan fiduciary net position Contributions – employer....................................................................................... $ 180,910 $ 192,287 $ 204,475 Contributions – employee...................................................................................... 3,877 3,559 3,398 Net investment income.......................................................................................... 88 193 424 Benefit payments, including refunds of employee contributions................................. (201,867) (199,349) (200,440) Administrative expense ......................................................................................... (1,227) (642) (1,771) Other miscellaneous income/(expense) .................................................................. 2,198 2,568 2,395 Net change in plan fiduciary net position ................................................................. (16,021) (1,384) 8,481 Plan fiduciary net position – beginning................................................................... 57,199 41,178 39,794 Plan fiduciary net position – ending (b)................................................................... $ 41,178 $ 39,794 $ 48,275 State’s net pension liability – ending (a) – (b).......................................................... $ 3,491,402 $ 3,755,150 $ 3,210,159 Plan fiduciary net position as a percentage of the total pension liability.......................... 1.17 % 1.05 % 1.48 % Covered payroll ........................................................................................................ $ 28,770 $ 23,537 $ 26,102 State’s net pension liability as a percentage of covered payroll ..................................... 12,135.56 % 15,954.24 % 12,298.52 % 200 Required Supplementary Information 20182 20192 20202 20212 20222 20232 20242 $ 19,131 $ 20,073 $ 17,026 $ 17,861 $ 10,345 $ 9,541 $ 7,660 109,395 99,427 79,720 64,481 93,559 96,524 93,495 (121,259) 86,873 (41,794) 40,006 (92,633) 111,908 (14,317) (20,879) 153,651 218,684 179,421 (598,096) (36,907) (21,972) (207,823) (221,954) (213,234) (210,951) (210,491) (216,271) (212,542) (221,435) 138,070 60,402 90,818 (797,316) (35,205) (147,676) 3,258,434 3,036,999 3,175,069 3,235,471 3,326,289 2,528,973 2,493,768 $ 3,036,999 $ 3,175,069 $ 3,235,471 $ 3,326,289 $ 2,528,973 $ 2,493,768 $ 2,346,092 $ 199,241 $ 195,903 $ 243,132 $ 225,824 $ 194,960 $ 208,785 $ 212,532 3,061 2,679 2,843 2,146 1,956 1,697 1,481 846 1,166 885 163 194 2,233 3,416 (207,823) (221,954) (213,234) (210,951) (210,491) (216,271) (212,542) (2,106) (10,032) (2,270) (1,731) (1,677) (2,032) (2,411) (1,863) 2,776 2,202 2,462 2,305 3,028 2,831 (8,644) (29,462) 33,558 17,913 (12,753) (2,560) 5,307 48,275 39,631 10,169 43,727 61,640 48,887 46,327 $ 39,631 $ 10,169 $ 43,727 $ 61,640 $ 48,887 $ 46,327 $ 51,634 $ 2,997,368 $ 3,164,900 $ 3,191,744 $ 3,264,649 $ 2,480,086 $ 2,447,441 $ 2,294,458 1.30 % 0.32 % 1.35 % 1.85 % 1.93 % 1.86 % 2.20 % $ 24,007 $ 22,117 $ 16,017 $ 13,444 $ 14,061 $ 13,235 $ 11,023 12,485.39 % 14,309.81 % 19,927.23 % 24,283.32 % 17,638.05 % 18,492.19 % 20,815.19 % (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) 20152 20162 20172 SINGLE-EMPLOYER PLANS JUDGES’ II Total pension liability Service cost ......................................................................................................... $ 79,641 $ 86,635 $ 97,679 Interest on total pension liability ............................................................................. 69,128 78,412 85,654 Differences between expected and actual experience .............................................. (17,319) (4,546) (26,382) Changes of assumptions ...................................................................................... (16,619) — 69,233 Benefit payments, including refunds of employee contributions................................. (14,041) (21,704) (22,406) Net change in total pension liability......................................................................... 100,790 138,797 203,778 Total pension liability – beginning .......................................................................... 967,962 1,068,752 1,207,549 Total pension liability – ending (a) .......................................................................... $ 1,068,752 $ 1,207,549 $ 1,411,327 Plan fiduciary net position Contributions – employer....................................................................................... $ 65,629 $ 65,839 $ 67,102 Contributions – employee...................................................................................... 22,242 24,598 25,076 Net investment income.......................................................................................... (2,402) 20,810 115,057 Benefit payments, including refunds of employee contributions................................. (14,041) (21,704) (22,406) Administrative expense ......................................................................................... (1,127) (732) (1,682) Other miscellaneous income/(expense) .................................................................. — — — Net change in plan fiduciary net position ................................................................. 70,301 88,811 183,147 Plan fiduciary net position – beginning................................................................... 1,013,840 1,084,141 1,172,952 Plan fiduciary net position – ending (b)................................................................... $ 1,084,141 $ 1,172,952 $ 1,356,099 State’s net pension liability/(asset) – ending (a) – (b) .............................................. $ (15,389) $ 34,597 $ 55,228 Plan fiduciary net position as a percentage of the total pension liability.......................... 101.44 % 97.13 % 96.09 % Covered payroll ........................................................................................................ $ 180,230 $ 192,739 $ 192,786 State’s net pension liability as a percentage of covered payroll ..................................... -8.54 % 17.95 % 28.65 % 202 Required Supplementary Information 20182 20192 20202 20212 20222 20232 20242 $ 95,843 $ 103,791 $ 114,486 $ 116,782 $ 115,808 $ 121,141 $ 128,635 91,418 103,889 115,517 126,949 120,585 131,805 143,959 (26,875) 30,292 (2,797) (10,976) (67,751) 18,683 32,448 (41,763) — — — (59,394) — — (31,795) (36,204) (34,547) (61,994) (66,739) (83,868) (99,168) 86,828 201,768 192,659 170,761 42,509 187,761 205,874 1,411,327 1,498,154 1,699,922 1,892,581 2,063,342 2,105,851 2,293,612 $ 1,498,155 $ 1,699,922 $ 1,892,581 $ 2,063,342 $ 2,105,851 $ 2,293,612 $ 2,499,486 $ 79,699 $ 84,099 $ 91,147 $ 84,147 $ 92,773 $ 89,970 $ 96,316 27,514 31,375 35,796 34,094 36,529 38,669 42,936 101,820 106,781 80,074 463,478 (324,365) 151,744 267,417 (31,795) (36,204) (34,547) (61,994) (66,739) (83,868) (99,168) (2,370) (1,477) (2,552) (1,703) (1,842) (2,126) (2,638) (5,451) — — — 4 4 5 169,417 184,574 169,918 518,022 (263,640) 194,393 304,868 1,356,099 1,525,515 1,710,089 1,880,007 2,398,029 2,134,389 2,328,782 $ 1,525,516 $ 1,710,089 $ 1,880,007 $ 2,398,029 $ 2,134,389 $ 2,328,782 $ 2,633,650 $ (27,361) $ (10,167) $ 12,574 $ (334,687) $ (28,538) $ (35,170) $ (134,164) 101.83 % 100.60 % 99.34 % 116.22 % 101.36 % 101.53 % 105.37 % $ 202,433 $ 220,742 $ 246,968 $ 233,316 $ 242,525 $ 249,328 $ 267,330 -13.52 % -4.61 % 5.09 % -143.45 % -11.77 % -14.11 % -50.19 % (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) 20152 20162 20172 SINGLE-EMPLOYER PLANS LEGISLATORS’ Total pension liability Service cost ......................................................................................................... $ 769 $ 608 $ 639 Interest on total pension liability ............................................................................. 6,268 5,978 5,291 Differences between expected and actual experience .............................................. (4,246) (3,530) (5,998) Changes of assumptions ...................................................................................... (2,654) — 7,857 Benefit payments, including refunds of employee contributions................................. (9,087) (7,407) (7,249) Net change in total pension liability......................................................................... (8,950) (4,351) 540 Total pension liability – beginning .......................................................................... 115,521 106,571 102,220 Total pension liability – ending (a) .......................................................................... $ 106,571 $ 102,220 $ 102,760 Plan fiduciary net position Contributions – employer....................................................................................... $ 590 $ 549 $ 517 Contributions – employee...................................................................................... 105 96 94 Net investment income.......................................................................................... (94) 4,545 5,047 Benefit payments, including refunds of employee contributions................................. (9,087) (7,407) (7,249) Administrative expense ......................................................................................... (399) (202) (575) Other miscellaneous income/(expense) .................................................................. — — — Net change in plan fiduciary net position ................................................................. (8,885) (2,419) (2,166) Plan fiduciary net position – beginning................................................................... 130,354 121,469 119,050 Plan fiduciary net position – ending (b)................................................................... $ 121,469 $ 119,050 $ 116,884 State’s net pension liability/(asset) – ending (a) – (b) .............................................. $ (14,898) $ (16,830) $ (14,124) Plan fiduciary net position as a percentage of the total pension liability.......................... 113.98 % 116.46 % 113.74 % Covered payroll ........................................................................................................ $ 1,397 $ 1,298 $ 1,270 State’s net pension liability as a percentage of covered payroll ..................................... -1,066.43 % -1,296.61 % -1,112.13 % 204 Required Supplementary Information 20182 20192 20202 20212 20222 20232 20242 $ 542 $ 268 $ 100 $ 101 $ 108 $ 52 $ — 4,987 4,873 4,885 4,749 4,299 4,248 4,351 (2,061) (427) 2,320 (732) (992) 1,444 5,119 (2,529) — — — 1,024 — — (6,918) (7,350) (6,939) (6,761) (6,647) (7,088) (7,436) (5,979) (2,636) 366 (2,643) (2,208) (1,344) 2,034 102,760 96,780 94,144 94,510 91,867 89,659 88,315 $ 96,781 $ 94,144 $ 94,510 $ 91,867 $ 89,659 $ 88,315 $ 90,349 $ 467 $ 250 $ 98 $ 78 $ 85 $ 44 $ — 82 92 22 21 23 11 — 5,486 7,860 7,011 15,099 (12,450) 601 4,905 (6,918) (7,350) (6,939) (6,761) (6,647) (7,088) (7,436) (670) (324) (550) (450) (436) (525) (663) (1,454) — 2 13 1 2 1 (3,007) 528 (356) 8,000 (19,424) (6,955) (3,193) 116,884 113,876 114,404 114,048 122,048 102,624 95,669 $ 113,877 $ 114,404 $ 114,048 $ 122,048 $ 102,624 $ 95,669 $ 92,476 $ (17,096) $ (20,260) $ (19,538) $ (30,181) $ (12,965) $ (7,354) $ (2,127) 117.66 % 121.52 % 120.67 % 132.85 % 114.46 % 108.33 % 102.35 % $ 1,121 $ 684 $ 284 $ 267 $ 290 $ 138 $ — -1,525.07 % -2,961.99 % -6,879.58 % -11,303.75 % -4,470.69 % -5,328.99 % — % (concluded) 205 State of California Annual Comprehensive Financial Report Schedule of State Pension Contributions For the Past Ten Fiscal Years (amounts in thousands) 2016 2017 2018 PUBLIC EMPLOYEES’ RETIREMENT FUND PLANS STATE MISCELLANEOUS1 Actuarially determined contribution.......................................................................... $ 2,718,895 $ 3,078,232 $ 3,397,736 Contributions in relation to the actuarially determined contribution.............................. (2,814,126) (3,098,305) (3,482,291) Contribution deficiency (excess) ......................................................................... $ (95,231) $ (20,073) $ (84,555) Covered payroll..................................................................................................... $ 11,197,607 $ 11,591,576 $ 12,254,527 Contributions as a percentage of covered payroll ..................................................... 25.13 % 26.73 % 28.42 % STATE INDUSTRIAL1 Actuarially determined contribution.......................................................................... $ 103,293 $ 116,880 $ 131,131 Contributions in relation to the actuarially determined contribution.............................. (116,594) (123,789) (141,832) Contribution deficiency (excess) ......................................................................... $ (13,301) $ (6,909) $ (10,701) Covered payroll..................................................................................................... $ 625,220 $ 643,295 $ 695,014 Contributions as a percentage of covered payroll ..................................................... 18.65 % 19.24 % 20.41 % STATE SAFETY1 Actuarially determined contribution.......................................................................... $ 368,444 $ 400,379 $ 435,662 Contributions in relation to the actuarially determined contribution.............................. (404,595) (431,991) (481,479) Contribution deficiency (excess) ......................................................................... $ (36,151) $ (31,612) $ (45,817) Covered payroll..................................................................................................... $ 2,100,289 $ 2,167,429 $ 2,339,642 Contributions as a percentage of covered payroll ..................................................... 19.26 % 19.93 % 20.58 % STATE PEACE OFFICERS AND FIREFIGHTERS1 Actuarially determined contribution.......................................................................... $ 1,197,160 $ 1,343,177 $ 1,462,630 Contributions in relation to the actuarially determined contribution.............................. (1,263,436) (1,431,851) (1,573,299) Contribution deficiency (excess) ......................................................................... $ (66,276) $ (88,674) $ (110,669) Covered payroll..................................................................................................... $ 3,241,763 $ 3,416,627 $ 3,557,011 Contributions as a percentage of covered payroll ..................................................... 38.97 % 41.91 % 44.23 % 1This schedule includes amounts attributable to related organizations, fiduciary component units, and discretely presented component units, which are not part of the primary government. 206 Required Supplementary Information 2019 2020 2021 2022 2023 2024 2025 $ 3,631,721 $ 4,006,672 $ 4,324,789 $ 4,160,143 $ 4,452,668 $ 4,749,786 $ 5,122,934 (3,794,379) (5,032,209) (3,791,620) (4,281,402) (4,918,505) (5,305,363) (4,651,700) $ (162,658) $ (1,025,537) $ 533,169 $ (121,259) $ (465,837) $ (555,577) $ 471,234 $ 12,913,195 $ 13,579,610 $ 12,909,399 $ 14,727,596 $ 15,486,977 $ 16,690,904 $ 17,812,079 29.38 % 37.06 % 29.37 % 29.07 % 31.76 % 31.79 % 26.12 % $ 134,969 $ 153,724 $ 166,535 $ 132,980 $ 157,441 $ 164,652 $ 178,276 (148,790) (245,757) (128,407) (138,688) (174,595) (186,979) (144,027) $ (13,821) $ (92,033) $ 38,128 $ (5,708) $ (17,154) $ (22,327) $ 34,249 $ 728,609 $ 765,840 $ 706,128 $ 802,709 $ 837,312 $ 896,354 $ 935,015 20.42 % 32.09 % 18.18 % 17.28 % 20.85 % 20.86 % 15.40 % $ 466,765 $ 526,375 $ 553,298 $ 476,457 $ 537,135 $ 537,239 $ 564,510 (531,360) (759,505) (473,147) (499,621) (579,316) (609,278) (538,560) $ (64,595) $ (233,130) $ 80,151 $ (23,164) $ (42,181) $ (72,039) $ 25,950 $ 2,468,018 $ 2,566,403 $ 2,367,960 $ 2,633,568 $ 2,637,846 $ 2,773,873 $ 2,945,213 21.53 % 29.59 % 19.98 % 18.97 % 21.96 % 21.96 % 18.29 % $ 1,581,049 $ 1,755,306 $ 1,871,841 $ 1,262,871 $ 1,850,940 $ 1,952,094 $ 2,063,719 (1,667,839) (3,234,348) (1,312,046) (1,325,451) (2,071,961) (2,172,989) (1,393,592) $ (86,790) $ (1,479,042) $ 559,795 $ (62,580) $ (221,021) $ (220,895) $ 670,127 $ 3,676,854 $ 3,904,615 $ 3,629,097 $ 4,035,339 $ 4,148,789 $ 4,347,064 $ 4,526,704 45.36 % 82.83 % 36.15 % 32.85 % 49.94 % 49.99 % 30.79 % (continued) 207 State of California Annual Comprehensive Financial Report Schedule of State Pension Contributions (continued) For the Past Ten Fiscal Years (amounts in thousands) 2016 2017 2018 PUBLIC EMPLOYEES’ RETIREMENT FUND PLANS CALIFORNIA HIGHWAY PATROL Actuarially determined contribution............................................................................... $ 363,634 $ 414,975 $ 447,376 Contributions in relation to the actuarially determined contribution................................... (377,534) (426,014) (478,354) Contribution deficiency (excess)............................................................................... $ (13,900) $ (11,039) $ (30,978) Covered payroll .......................................................................................................... $ 808,032 $ 851,427 $ 884,197 Contributions as a percentage of covered payroll........................................................... 46.72 % 50.04 % 54.10 % SINGLE-EMPLOYER PLANS JUDGES’ Actuarially determined contribution............................................................................... $ 463,073 $ 448,636 $ 438,156 Contributions in relation to the actuarially determined contribution................................... (3,252) (202,368) (197,017) Contribution deficiency (excess)............................................................................... $ 459,821 $ 246,268 $ 241,139 Covered payroll .......................................................................................................... $ 29,771 $ 23,822 $ 27,003 Contributions as a percentage of covered payroll........................................................... 10.92 % 849.50 % 729.61 % JUDGES’ II Actuarially determined contribution............................................................................... $ 58,362 $ 66,951 $ 79,181 Contributions in relation to the actuarially determined contribution................................... (60,476) (55,965) (73,916) Contribution deficiency (excess)............................................................................... $ (2,114) $ 10,986 $ 5,265 Covered payroll .......................................................................................................... $ 186,505 $ 195,066 $ 199,438 Contributions as a percentage of covered payroll........................................................... 32.43 % 28.69 % 37.06 % LEGISLATORS’ Actuarially determined contribution............................................................................... $ 141 $ — $ 20 Contributions in relation to the actuarially determined contribution................................... (549) (516) (467) Contribution deficiency (excess)............................................................................... $ (408) $ (516) $ (447) Covered payroll .......................................................................................................... $ 1,298 $ 1,270 $ 1,121 Contributions as a percentage of covered payroll........................................................... 42.30 % 40.63 % 41.66 % 208 Required Supplementary Information 2019 2020 2021 2022 2023 2024 2025 $ 484,056 $ 532,159 $ 574,509 $ 600,841 $ 599,039 $ 653,801 $ 686,478 (514,683) (560,538) (530,587) (590,087) (660,340) (752,825) (792,884) $ (30,627) $ (28,379) $ 43,922 $ 10,754 $ (61,301) $ (99,024) $ (106,406) $ 933,689 $ 948,000 $ 882,119 $ 936,496 $ 977,794 $ 1,048,891 $ 1,113,549 55.12 % 59.13 % 60.15 % 63.01 % 67.53 % 71.77 % 71.20 % $ 415,110 $ 414,849 $ 366,446 $ 352,881 $ 313,118 $ 315,809 $ 297,054 (194,189) (241,993) (224,928) (193,763) (207,835) (211,503) (217,738) $ 220,921 $ 172,856 $ 141,518 $ 159,118 $ 105,283 $ 104,306 $ 79,316 $ 25,748 $ 16,017 $ 13,444 $ 14,061 $ 13,227 $ 14,031 $ 11,458 754.19 % 1,510.85 % 1,673.07 % 1,378.02 % 1,571.29 % 1,507.40 % 1,900.31 % $ 75,862 $ 81,782 $ 88,439 $ 89,938 $ 86,154 $ 91,696 $ 97,620 (76,155) (83,872) (78,784) (81,960) (73,614) (87,640) (91,286) $ (293) $ (2,090) $ 9,655 $ 7,978 $ 12,540 $ 4,056 $ 6,334 $ 217,112 $ 246,968 $ 233,316 $ 242,525 $ 249,170 $ 264,322 $ 277,887 35.08 % 33.96 % 33.77 % 33.79 % 29.54 % 33.16 % 32.85 % $ — $ 101 $ 84 $ 88 $ 48 $ — $ 75 (261) (100) (79) (85) (44) — — $ (261) $ 1 $ 5 $ 3 $ 4 $ — $ 75 $ 684 $ 284 $ 267 $ 290 $ 138 $ — $ — 38.16 % 35.21 % 29.59 % 29.31 % 31.88 % — % — % (continued) 209 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, 2023. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method See each plan’s June 30, 2022, Funding Valuation Report. Asset valuation method PERF – Fair Value of assets; for details see plan’s June 30, 2022, 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) 210 Required Supplementary Information This page intentionally left blank 211 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) 20151 20161 20171 State’s proportion of CalSTRS’ net pension liability.................................................. 34.59 % 36.28 % 37.17 % State’s proportionate share of CalSTRS’ net pension liability .................................... $ 23,289,391 $ 29,343,626 $ 34,374,816 Plan fiduciary net position as a percentage of the total pension liability...................... 74.02 % 70.04 % 69.46 % 1The 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) 2016 2017 2018 Statutorily required contribution.............................................................................. $ 1,935,288 $ 2,472,993 $ 2,790,444 Contributions in relation to the statutorily required contribution.................................. 1,935,288 2,472,993 2,790,444 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, 2023. 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 3.25% 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 212 Required Supplementary Information 20181 20191 20201 20211 20221 20231 20241 36.41 % 35.30 % 34.02 % 33.47 % 33.37 % 32.39 % 31.45 % $ 33,462,419 $ 31,880,645 $ 32,963,596 $ 15,233,348 $ 23,186,783 $ 24,670,833 $ 21,123,435 70.99 % 72.56 % 71.82 % 87.21 % 81.25 % 80.62 % 83.55 % 2019 2020 2021 2022 2023 2024 2025 $ 3,082,316 $ 4,446,836 $ 3,730,902 $ 4,279,964 $ 3,719,874 $ 3,945,974 $ 4,263,762 3,082,316 4,446,836 3,730,902 4,279,964 3,719,874 3,945,974 4,263,762 $ — $ — $ — $ — $ — $ — $ — 213 State of California Annual Comprehensive Financial Report Schedule of Changes in Net OPEB Liability and Related Ratios For the Past Six Fiscal Years1 (amounts in thousands) 20192, 6 20202 20212 RETIREE HEALTH BENEFITS PROGRAM SERVICE EMPLOYEES INTERNATIONAL UNION (SEIU)3 Total OPEB liability Service cost .............................................................................................. $ 1,078,364 $ 1,116,519 $ 1,190,049 Interest on total OPEB liability ..................................................................... 1,201,673 1,162,741 1,028,924 Differences between expected and actual experiences5 ................................. (525,007) (720,036) (2,498,623) Changes in assumptions ............................................................................ 1,213,332 480,992 1,275,481 Benefit payments ....................................................................................... (856,494) (910,765) (962,640) Net change in total OPEB liability ............................................................. 2,111,868 1,129,451 33,191 Total OPEB liability – beginning ................................................................... 29,485,488 31,597,356 32,726,807 Total OPEB liability – ending (a) ................................................................... $ 31,597,356 $ 32,726,807 $ 32,759,998 Plan fiduciary net position Contributions – employer ............................................................................ $ 856,494 $ 910,765 $ 962,640 Contributions – prefunding .......................................................................... 71,712 174,235 241,973 Contributions – employee ........................................................................... 71,712 174,235 — Net investment income ............................................................................... 8,202 9,788 162,795 Benefit payments ....................................................................................... (856,494) (910,765) (962,640) Administrative expense .............................................................................. (14) (148) (229) Other expenses ......................................................................................... — — — Net change in plan fiduciary net position ................................................... 151,612 358,110 404,539 Plan fiduciary net position – beginning ........................................................ — 151,612 509,722 Plan fiduciary net position – ending (b) ........................................................ $ 151,612 $ 509,722 $ 914,261 State’s net OPEB liability – ending (a) – (b) .................................................. $ 31,445,744 $ 32,217,085 $ 31,845,737 Plan fiduciary net position as a percentage of the total OPEB liability .................. 0.48 % 1.56 % 2.79 % Covered payroll ............................................................................................. $ 7,317,203 $ 7,701,525 $ 7,477,126 State’s net OPEB liability as a percentage of covered payroll ............................. 429.75 % 418.32 % 425.91 % 1This schedule will be built prospectively until it contains ten years of data. 2The 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. 3This schedule includes amounts attributable to related organizations, fiduciary component units, and discretely presented component units, which are not part of the primary government. 4The valuation groups that comprise the Unfunded and Other Funded plans shifted from the prior year. 5Includes 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. 6This 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. 214 Required Supplementary Information 20222 20232 20242 $ 1,297,725 $ 951,313 $ 972,829 908,980 1,193,663 1,300,226 831,414 248,422 1,587,749 (6,216,338) 263,281 217,938 (1,038,983) (1,068,245) (1,162,440) (4,217,202) 1,588,434 2,916,302 32,759,998 28,542,796 30,131,230 $ 28,542,796 $ 30,131,230 $ 33,047,532 $ 1,038,983 $ 1,068,245 $ 1,162,440 537,987 301,445 289,428 286,986 301,445 289,428 (228,601) 122,484 285,389 (1,038,983) (1,068,245) (1,162,440) (333) (516) (815) — — — 596,039 724,858 863,430 914,261 1,510,300 2,235,158 $ 1,510,300 $ 2,235,158 $ 3,098,588 $ 27,032,496 $ 27,896,072 $ 29,948,944 5.29 % 7.42 % 9.38 % $ 8,705,771 $ 8,705,889 $ 9,364,496 310.51 % 320.43 % 319.81 % (continued) 215 State of California Annual Comprehensive Financial Report Schedule of Changes in Net OPEB Liability and Related Ratios (continued) For the Past Eight Fiscal Years1 (amounts in thousands) 20172 20182 20192 RETIREE HEALTH BENEFITS PROGRAM BARGAINING UNIT 5 PLAN Total OPEB liability Service cost ............................................................................................... $ 168,057 $ 146,042 $ 140,545 Interest on total OPEB liability ...................................................................... 179,397 195,713 199,637 Differences between expected and actual experiences5 .................................. — (108,271) 41,288 Changes in assumptions ............................................................................. (474,646) (137,150) 318,292 Benefit payments ........................................................................................ (95,517) (77,897) (78,501) Net change in total OPEB liability .............................................................. (222,709) 18,437 621,261 Total OPEB liability – beginning ................................................................... 4,764,812 4,542,103 4,560,540 Total OPEB liability – ending (a) ................................................................... $ 4,542,103 $ 4,560,540 $ 5,181,801 Plan fiduciary net position Contributions – employer ............................................................................. $ 95,517 $ 77,897 $ 78,501 Contributions – prefunding .......................................................................... 77,454 59,697 57,567 Contributions – employee ............................................................................ 12,783 4,089 3,943 Net investment income ................................................................................ 21,109 20,988 23,834 Benefit payments ........................................................................................ (95,517) (77,897) (78,501) Administrative expense ............................................................................... (95) (144) (77) Other expenses .......................................................................................... (290) — — Net change in plan fiduciary net position .................................................... 110,961 84,630 85,267 Plan fiduciary net position – beginning ......................................................... 135,701 246,662 331,052 * Plan fiduciary net position – ending (b) ......................................................... $ 246,662 $ 331,292 $ 416,319 State’s net OPEB liability – ending (a) – (b) ................................................... $ 4,295,441 $ 4,229,248 $ 4,765,482 Plan fiduciary net position as a percentage of the total OPEB liability .................. 5.43 % 7.26 % 8.03 % Covered payroll .............................................................................................. $ 866,040 $ 895,430 $ 942,765 State’s net OPEB liability as a percentage of covered payroll .............................. 495.99 % 472.31 % 505.48 % 216 Required Supplementary Information 20202 20212 20222 20232 20242 $ 159,410 $ 183,703 $ 209,691 $ 136,920 $ 133,754 204,078 202,901 181,784 207,924 225,844 (64,174) (699,133) (92,802) (15,291) 202,634 466,272 531,615 (1,359,809) 7,641 58,235 (84,544) (87,872) (92,183) (92,714) (98,136) 681,042 131,214 (1,153,319) 244,480 522,331 5,181,801 5,862,843 5,994,057 4,840,738 5,085,218 $ 5,862,843 $ 5,994,057 $ 4,840,738 $ 5,085,218 $ 5,607,549 $ 84,544 $ 87,872 $ 92,183 $ 92,714 $ 98,136 59,296 1 120,580 50,716 45,162 4,061 — 8,452 16,905 27,957 16,069 136,197 (102,287) 45,222 89,804 (84,544) (87,872) (92,183) (92,714) (98,136) (217) (188) (177) (200) (262) — — — — — 79,209 136,010 26,568 112,643 162,661 416,319 495,528 631,538 658,106 770,749 $ 495,528 $ 631,538 $ 658,106 $ 770,749 $ 933,410 $ 5,367,315 $ 5,362,519 $ 4,182,632 $ 4,314,469 $ 4,674,139 8.45 % 10.54 % 13.60 % 15.16 % 16.65 % $ 958,694 $ 890,777 $ 950,596 $ 993,733 $ 1,074,372 559.86 % 602.00 % 440.00 % 434.17 % 435.06 % (continued) 217 State of California Annual Comprehensive Financial Report Schedule of Changes in Net OPEB Liability and Related Ratios (continued) For the Past Eight Fiscal Years1 (amounts in thousands) 20172 20182 20192 RETIREE HEALTH BENEFITS PROGRAM BARGAINING UNIT 6 PLAN Total OPEB liability Service cost ............................................................................................... $ 609,551 $ 531,916 $ 503,829 Interest on total OPEB liability ...................................................................... 574,853 634,360 622,325 Differences between expected and actual experiences5 .................................. — (1,186,530) (460,414) Changes in assumptions ............................................................................. (1,637,897) (164,236) 912,754 Benefit payments ........................................................................................ (325,344) (327,604) (294,213) Net change in total OPEB liability .............................................................. (778,837) (512,094) 1,284,281 Total OPEB liability – beginning ................................................................... 15,990,189 15,211,352 14,699,258 Total OPEB liability – ending (a) ................................................................... $ 15,211,352 $ 14,699,258 $ 15,983,539 Plan fiduciary net position Contributions – employer ............................................................................. $ 325,344 $ 327,604 $ 294,213 Contributions – prefunding .......................................................................... 146,933 65,245 106,592 Contributions – employee ............................................................................ 23,181 65,245 106,592 Net investment income ................................................................................ 15,089 17,235 33,447 Benefit payments ........................................................................................ (325,344) (327,604) (294,213) Administrative expense ............................................................................... (48) (128) (94) Other expenses .......................................................................................... — — — Net change in plan fiduciary net position .................................................... 185,155 147,597 246,537 Plan fiduciary net position – beginning ......................................................... — 185,155 332,511 * Plan fiduciary net position – ending (b) ......................................................... $ 185,155 $ 332,752 $ 579,048 State’s net OPEB liability – ending (a) – (b) ................................................... $ 15,026,197 $ 14,366,506 $ 15,404,491 Plan fiduciary net position as a percentage of the total OPEB liability ...................... 1.22 % 2.26 % 3.62 % Covered payroll .................................................................................................. $ 2,653,404 $ 2,726,616 $ 2,819,233 State’s net OPEB liability as a percentage of covered payroll .................................. 566.30 % 526.90 % 546.41 % 218 Required Supplementary Information 20202 20212 20222 20232 20242 $ 535,696 $ 578,629 $ 655,259 $ 485,501 $ 481,770 608,903 562,522 531,126 683,945 744,327 (354,942) (1,113,335) 916,117 (128,638) 417,491 675,803 1,438,841 (3,595,519) 114,998 197,812 (357,726) (370,922) (389,079) (391,600) (405,466) 1,107,734 1,095,735 (1,882,096) 764,206 1,435,934 15,983,539 17,091,273 18,187,008 16,304,912 17,069,118 $ 17,091,273 $ 18,187,008 $ 16,304,912 $ 17,069,118 $ 18,505,052 $ 357,726 $ 370,922 $ 389,079 $ 391,600 $ 405,466 129,540 109,211 234,564 121,509 124,954 129,540 — 119,564 121,510 124,955 24,249 247,525 (209,053) 97,891 204,115 (357,726) (370,922) (389,079) (391,600) (405,466) (342) (343) (353) (427) (592) — — — — — 282,987 356,393 144,722 340,483 453,432 579,048 862,035 1,218,428 1,363,150 1,703,633 $ 862,035 $ 1,218,428 $ 1,363,150 $ 1,703,633 $ 2,157,065 $ 16,229,238 $ 16,968,580 $ 14,941,762 $ 15,365,485 $ 16,347,987 5.04 % 6.70 % 8.36 % 9.98 % 11.66 % $ 2,989,457 $ 2,709,765 $ 2,983,435 $ 2,996,198 $ 3,076,242 542.88 % 626.20 % 500.82 % 512.83 % 531.43 % (continued) 219 State of California Annual Comprehensive Financial Report Schedule of Changes in Net OPEB Liability and Related Ratios (continued) For the Past Eight Fiscal Years1 (amounts in thousands) 20172 20182 20192 RETIREE HEALTH BENEFITS PROGRAM BARGAINING UNIT 9 PLAN3 Total OPEB liability Service cost ............................................................................................... $ 166,173 $ 142,954 $ 127,060 Interest on total OPEB liability ...................................................................... 154,495 174,062 165,399 Differences between expected and actual experiences5 .................................. — (334,650) (88,806) Changes in assumptions ............................................................................. (475,991) (200,549) 145,634 Benefit payments ........................................................................................ (82,449) (85,278) (84,522) Net change in total OPEB liability .............................................................. (237,772) (303,461) 264,765 Total OPEB liability – beginning ................................................................... 4,640,159 4,402,387 4,098,926 Total OPEB liability – ending (a) ................................................................... $ 4,402,387 $ 4,098,926 $ 4,363,691 Plan fiduciary net position Contributions – employer ............................................................................. $ 82,449 $ 85,278 $ 84,522 Contributions – prefunding .......................................................................... 35,210 5,688 13,311 Contributions – employee ............................................................................ — 5,688 13,311 Net investment income ................................................................................ 3,630 3,246 4,789 Benefit payments ........................................................................................ (82,449) (85,278) (84,522) Administrative expense ............................................................................... (11) (22) (14) Other expenses .......................................................................................... — — — Net change in plan fiduciary net position .................................................... 38,829 14,600 31,397 Plan fiduciary net position – beginning ......................................................... — 38,829 53,391 * Plan fiduciary net position – ending (b) ......................................................... $ 38,829 $ 53,429 $ 84,788 State’s net OPEB liability – ending (a) – (b) ................................................... $ 4,363,558 $ 4,045,497 $ 4,278,903 Plan fiduciary net position as a percentage of the total OPEB liability .................. 0.88 % 1.30 % 1.94 % Covered payroll .............................................................................................. $ 1,366,302 $ 1,376,743 $ 1,502,529 State’s net OPEB liability as a percentage of covered payroll .............................. 319.37 % 293.85 % 284.78 % 220 Required Supplementary Information 20202 20212 20222 20232 20242 $ 136,522 $ 155,301 $ 173,027 $ 130,885 $ 133,947 159,587 144,901 129,982 174,009 193,203 (55,316) (308,759) 222,406 62,131 224,536 93,540 166,566 (879,542) 37,701 52,070 (100,777) (109,002) (120,334) (128,736) (143,125) 233,556 49,007 (474,461) 275,990 460,631 4,363,691 4,597,247 4,646,254 4,171,793 4,447,783 $ 4,597,247 $ 4,646,254 $ 4,171,793 $ 4,447,783 $ 4,908,414 $ 100,777 $ 109,002 $ 120,334 $ 128,736 $ 143,125 31,649 28,942 61,871 35,760 38,361 31,649 — 33,871 35,761 38,362 3,793 44,511 (42,399) 20,892 46,207 (100,777) (109,002) (120,334) (128,736) (143,125) (55) (62) (69) (90) (132) — — — — — 67,036 73,391 53,274 92,323 122,798 84,788 151,824 225,215 278,489 370,812 $ 151,824 $ 225,215 $ 278,489 $ 370,812 $ 493,610 $ 4,445,423 $ 4,421,039 $ 3,893,304 $ 4,076,971 $ 4,414,804 3.30 % 4.85 % 6.68 % 8.34 % 10.06 % $ 1,596,949 $ 1,498,878 $ 1,770,060 $ 1,796,847 $ 1,927,511 278.37 % 294.96 % 219.95 % 226.90 % 229.04 % (continued) 221 State of California Annual Comprehensive Financial Report Schedule of Changes in Net OPEB Liability and Related Ratios (continued) For the Past Eight Fiscal Years1 (amounts in thousands) 20172 20182 20192 RETIREE HEALTH BENEFITS PROGRAM BARGAINING UNIT 12 PLAN3 Total OPEB liability Service cost ............................................................................................... $ 167,689 $ 146,732 $ 129,311 Interest on total OPEB liability ...................................................................... 154,036 172,744 162,948 Differences between expected and actual experiences5 .................................. — (362,455) (97,510) Changes in assumptions ............................................................................. (433,966) (166,573) 152,849 Benefit payments ........................................................................................ (110,860) (114,235) (120,833) Net change in total OPEB liability .............................................................. (223,101) (323,787) 226,765 Total OPEB liability – beginning ................................................................... 4,540,951 4,317,850 3,994,063 Total OPEB liability – ending (a) ................................................................... $ 4,317,850 $ 3,994,063 $ 4,220,828 Plan fiduciary net position Contributions – employer ............................................................................. $ 110,860 $ 114,235 $ 120,833 Contributions – prefunding .......................................................................... 1,076 8,280 16,268 Contributions – employee ............................................................................ 1,076 8,280 16,268 Net investment income ................................................................................ 872 1,051 3,552 Benefit payments ........................................................................................ (110,860) (114,235) (120,833) Administrative expense ............................................................................... (4) (9) (9) Other expenses .......................................................................................... — — — Net change in plan fiduciary net position .................................................... 3,020 17,602 36,079 Plan fiduciary net position – beginning ......................................................... 7,186 10,206 27,788 * Plan fiduciary net position – ending (b) ......................................................... $ 10,206 $ 27,808 $ 63,867 State’s net OPEB liability – ending (a) – (b) ................................................... $ 4,307,644 $ 3,966,255 $ 4,156,961 Plan fiduciary net position as a percentage of the total OPEB liability .................. 0.24 % 0.70 % 1.51 % Covered payroll .............................................................................................. $ 627,283 $ 676,752 $ 723,964 State’s net OPEB liability as a percentage of covered payroll .............................. 686.71 % 586.07 % 574.19 % 222 Required Supplementary Information 20202 20212 20222 20232 20242 $ 134,649 $ 137,010 $ 145,385 $ 115,098 $ 113,910 154,691 135,412 118,610 158,792 170,664 (149,086) (348,753) 227,285 (61,321) 80,475 21,353 165,715 (760,893) 52,679 56,912 (127,671) (132,052) (139,651) (142,038) (149,137) 33,936 (42,668) (409,264) 123,210 272,824 4,220,828 4,254,764 4,212,096 3,802,832 3,926,042 $ 4,254,764 $ 4,212,096 $ 3,802,832 $ 3,926,042 $ 4,198,866 $ 127,671 $ 132,052 $ 139,651 $ 142,038 $ 149,137 26,329 31,233 63,357 33,161 30,769 26,329 — 31,356 33,161 30,770 2,974 36,034 (37,298) 18,472 40,218 (127,671) (132,052) (139,651) (142,038) (149,137) (43) (52) (59) (79) (116) — — — — — 55,589 67,215 57,356 84,715 101,641 63,867 119,456 186,671 244,027 328,742 $ 119,456 $ 186,671 $ 244,027 $ 328,742 $ 430,383 $ 4,135,308 $ 4,025,425 $ 3,558,805 $ 3,597,300 $ 3,768,483 2.81 % 4.43 % 6.42 % 8.37 % 10.25 % $ 748,801 $ 673,098 $ 805,625 $ 824,956 $ 881,112 552.26 % 598.04 % 441.74 % 436.06 % 427.70 % (continued) 223 State of California Annual Comprehensive Financial Report Schedule of Changes in Net OPEB Liability and Related Ratios (continued) For the Past Eight Fiscal Years1 (amounts in thousands) 20172 20182, 4 20192, 4 RETIREE HEALTH BENEFITS PROGRAM OTHER FUNDED PLANS3 Total OPEB liability Service cost ............................................................................................ $ 92,991 $ 501,028 $ 528,502 Interest on total OPEB liability .................................................................. 74,923 523,258 581,170 Differences between expected and actual experiences5............................... — (1,033,520) (221,816) Changes in assumptions .......................................................................... (197,059) (304,299) 506,543 Benefit payments .................................................................................... (46,820) (288,774) (364,207) Net change in total OPEB liability .......................................................... (75,965) (602,307) 1,030,192 Total OPEB liability – beginning ................................................................ 2,116,405 12,699,917 * 14,074,765 * Total OPEB liability – ending (a) ................................................................ $ 2,040,440 $ 12,097,610 $ 15,104,957 Plan fiduciary net position Contributions – employer ......................................................................... $ 46,820 $ 288,774 $ 364,207 Contributions – prefunding ....................................................................... 10,442 32,759 71,376 Contributions – employee ........................................................................ 2,323 32,759 71,376 Net investment income ............................................................................ 1,589 5,578 16,116 Benefit payments .................................................................................... (46,820) (288,774) (364,207) Administrative expense ............................................................................ (7) (47) (43) Other expenses ...................................................................................... — — — Net change in plan fiduciary net position ................................................ 14,347 71,049 158,825 Plan fiduciary net position – beginning ..................................................... 4,836 57,956 * 128,914 * Plan fiduciary net position – ending (b) ..................................................... $ 19,183 $ 129,005 $ 287,739 State’s net OPEB liability – ending (a) – (b) ................................................ $ 2,021,257 $ 11,968,605 $ 14,817,218 Plan fiduciary net position as a percentage of the total OPEB liability ............... 0.94 % 1.07 % 1.90 % Covered payroll ........................................................................................... $ 851,868 $ 3,469,855 $ 4,162,765 State’s net OPEB liability as a percentage of covered payroll .......................... 237.27 % 344.93 % 355.95 % 224 Required Supplementary Information 20202 20212 20222 20232 20242 $ 546,766 $ 597,140 $ 674,238 $ 523,411 $ 539,048 570,727 508,583 464,427 621,278 680,169 (517,882) (1,092,126) 1,023,794 (38,737) 604,294 305,572 811,046 (3,182,977) 207,290 146,498 (371,323) (401,508) (436,182) (454,415) (498,238) 533,860 423,135 (1,456,700) 858,827 1,471,771 15,104,957 15,638,817 16,061,952 14,605,252 15,464,079 $ 15,638,817 $ 16,061,952 $ 14,605,252 $ 15,464,079 $ 16,935,850 $ 371,323 $ 401,508 $ 436,182 $ 454,415 $ 498,238 124,916 127,043 262,488 139,289 143,816 124,916 — 137,487 139,289 143,814 13,386 163,783 (164,073) 81,057 177,865 (371,323) (401,508) (436,182) (454,415) (498,238) (194) (230) (263) (349) (510) — — — — — 263,024 290,596 235,639 359,286 464,985 287,739 550,763 841,359 1,076,998 1,436,284 $ 550,763 $ 841,359 $ 1,076,998 $ 1,436,284 $ 1,901,269 $ 15,088,054 $ 15,220,593 $ 13,528,254 $ 14,027,795 $ 15,034,581 3.52 % 5.24 % 7.37 % 9.29 % 11.23 % $ 4,363,200 $ 3,875,766 $ 4,500,952 $ 5,075,978 $ 5,464,851 345.80 % 392.71 % 300.56 % 276.36 % 275.11 % (continued) 225 State of California Annual Comprehensive Financial Report Schedule of Changes in Net OPEB Liability and Related Ratios (continued) For the Past Eight Fiscal Years1 (amounts in thousands) 20172 20182, 4 20192, 4, 6 RETIREE HEALTH BENEFITS PROGRAM UNFUNDED PLAN3 Total OPEB liability Service cost ............................................................................................ $ 2,805,040 $ 2,008,794 $ 651,082 Interest on total OPEB liability .................................................................. 2,112,139 1,959,522 576,896 Differences between expected and actual experiences5............................... — (4,164,211) (41,161) Changes in assumptions .......................................................................... (6,610,919) (1,766,620) 863,523 Benefit payments .................................................................................... (1,457,705) (1,352,652) (546,742) Net change in total OPEB liability .......................................................... (3,151,445) (3,315,167) 1,503,598 Total OPEB liability – beginning ................................................................ 64,144,931 50,334,009 * 15,556,199 * Total OPEB liability – ending (a) ................................................................ $ 60,993,486 $ 47,018,842 $ 17,059,797 Plan fiduciary net position Contributions – employer ......................................................................... $ 1,457,705 $ 1,352,652 $ 546,742 Contributions – prefunding ....................................................................... — — — Contributions – employee ........................................................................ — — — Net investment income ............................................................................ — — — Benefit payments .................................................................................... (1,457,705) (1,352,652) (546,742) 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 $ 17,059,797 Plan fiduciary net position as a percentage of the total OPEB liability ............... —% —% —% Covered payroll ........................................................................................... $ 12,525,617 $ 10,825,049 $ 3,366,371 State’s net OPEB liability as a percentage of covered payroll .......................... 486.95 % 434.35 % 506.77 % 226 Required Supplementary Information 20202 20212 20222 20232 20242 $ 695,884 $ 826,026 $ 828,893 $ 579,259 $ 600,394 547,791 447,744 350,040 575,416 626,464 (665,066) (1,270,439) 1,171,850 (264,319) 537,274 583,238 476,706 (4,210,439) 264,317 173,487 (512,702) (522,538) (530,610) (527,794) (552,876) 649,145 (42,501) (2,390,266) 626,879 1,384,743 17,059,797 17,708,942 17,666,441 15,276,175 15,903,054 $ 17,708,942 $ 17,666,441 $ 15,276,175 $ 15,903,054 $ 17,287,797 $ 512,702 $ 522,538 $ 530,610 $ 527,794 $ 552,876 — — — — — — — — — — — — — — — (512,702) (522,538) (530,610) (527,794) (552,876) — — — — — — — — — — — — — — — — — — — — $ — $ — $ — $ — $ — $ 17,708,942 $ 17,666,441 $ 15,276,175 $ 15,903,054 $ 17,287,797 — % — % — % — % — % $ 3,536,386 $ 3,483,142 $ 3,539,212 $ 3,805,373 $ 4,079,450 500.76 % 507.20 % 431.63 % 417.91 % 423.78 % (concluded) 227 State of California Annual Comprehensive Financial Report Schedule of OPEB Contributions For the Past Eight Fiscal Years1 (amounts in thousands) 2018 20193 20203 RETIREE HEALTH BENEFITS PROGRAM SERVICE EMPLOYEES INTERNATIONAL UNION PLAN2 Actuarially determined contribution...................................................................... $ — $ — $ 1,543,231 Contributions in relation to the actuarially determined contribution.......................... — — (1,077,554) Contribution deficiency (excess) ......................................................................... $ — $ — $ 465,677 Covered payroll................................................................................................. $ — $ — $ 7,701,525 Contributions as a percentage of covered payroll ................................................. — — 13.99 % BARGAINING UNIT 5 PLAN Actuarially determined contribution ......................................................... $ 204,361 $ 210,626 $ 229,183 Contributions in relation to the actuarially determined contribution ............. (184,456) (137,475) (139,230) Contribution deficiency........................................................................... $ 19,905 $ 73,151 $ 89,953 Covered payroll................................................................................................. $ 915,549 $ 942,765 $ 958,694 Contributions as a percentage of covered payroll ................................................. 20.15 % 14.58 % 14.52 % BARGAINING UNIT 6 PLAN Actuarially determined contribution...................................................................... $ 743,757 $ 671,262 $ 676,241 Contributions in relation to the actuarially determined contribution.......................... (503,636) (445,061) (477,342) Contribution deficiency....................................................................................... $ 240,121 $ 226,201 $ 198,899 Covered payroll................................................................................................. $ 2,805,093 $ 2,819,233 $ 2,989,457 Contributions as a percentage of covered payroll ................................................. 17.95 % 15.79 % 15.97 % BARGAINING UNIT 9 PLAN2 Actuarially determined contribution...................................................................... $ 207,027 $ 191,109 $ 194,353 Contributions in relation to the actuarially determined contribution.......................... (125,471) (102,971) (131,031) Contribution deficiency....................................................................................... $ 81,556 $ 88,138 $ 63,322 Covered payroll................................................................................................. $ 1,444,410 $ 1,502,529 $ 1,596,949 Contributions as a percentage of covered payroll ................................................. 8.69 % 6.85 % 8.21 % 1This schedule will be built prospectively until it contains ten years of data. 2This schedule includes amounts attributable to related organizations, fiduciary component units, and discretely presented component units, which are not part of the primary government. 3The valuation groups that comprise the Unfunded and Other Funded plans shifted from the prior year. 228 Required Supplementary Information 2021 2022 2023 2024 2025 $ 1,584,331 $ 1,336,683 $ 1,453,078 $ 1,557,071 $ 1,742,828 (1,204,613) (1,576,969) (1,369,690) (1,451,868) (1,601,419) $ 379,718 $ (240,286) $ 83,388 $ 105,203 $ 141,409 $ 7,477,126 $ 8,705,771 $ 8,705,889 $ 9,364,496 $ 9,950,053 16.11 % 18.11 % 15.73 % 15.50 % 16.09 % $ 240,749 $ 239,989 $ 230,075 $ 236,378 $ 254,589 (87,872) (212,763) (143,430) (143,298) (146,371) $ 152,877 $ 27,226 $ 86,645 $ 93,080 $ 108,218 $ 890,777 $ 950,596 $ 993,733 $ 1,074,372 $ 1,144,416 9.86 % 22.38 % 14.43 % 13.34 % 12.79 % $ 772,683 $ 681,831 $ 769,312 $ 825,327 $ 904,388 (480,133) (623,643) (513,110) (530,421) (562,863) $ 292,550 $ 58,188 $ 256,202 $ 294,906 $ 341,525 $ 2,709,765 $ 2,983,435 $ 2,996,198 $ 3,076,242 $ 3,137,556 17.72 % 20.90 % 17.13 % 17.24 % 17.94 % $ 212,002 $ 182,301 $ 205,694 $ 224,963 $ 252,502 (137,944) (182,205) (164,497) (181,487) (200,024) $ 74,058 $ 96 $ 41,197 $ 43,476 $ 52,478 $ 1,498,878 $ 1,770,060 $ 1,796,847 $ 1,927,511 $ 2,029,192 9.20 % 10.29 % 9.15 % 9.42 % 9.86 % (continued) 229 State of California Annual Comprehensive Financial Report Schedule of OPEB Contributions (continued) For the Past Eight Fiscal Years (amounts in thousands) 2018 20193 20203 RETIREE HEALTH BENEFITS PROGRAM BARGAINING UNIT 12 PLAN2 Actuarially determined contribution...................................................................... $ 217,883 $ 197,202 $ 198,316 Contributions in relation to the actuarially determined contribution.......................... (119,368) (137,758) (153,368) Contribution deficiency (excess) ......................................................................... $ 98,515 $ 59,444 $ 44,948 Covered payroll................................................................................................. $ 663,143 $ 723,870 $ 748,801 Contributions as a percentage of covered payroll ................................................. 18.00 % 19.03 % 20.48 % OTHER FUNDED PLANS2 Actuarially determined contribution...................................................................... $ 109,630 $ 608,960 $ 707,352 Contributions in relation to the actuarially determined contribution.......................... (61,064) (366,050) (492,373) Contribution deficiency (excess) ......................................................................... $ 48,566 $ 242,910 $ 214,979 Covered payroll................................................................................................. $ 900,567 $ 3,595,234 $ 4,363,200 Contributions as a percentage of covered payroll ................................................. 6.78 % 10.18 % 11.28 % UNFUNDED PLAN2 Actuarially determined contribution...................................................................... $ 3,199,223 $ 2,552,923 $ 977,820 Contributions in relation to the actuarially determined contribution.......................... (1,547,989) (1,493,023) (512,702) Contribution deficiency....................................................................................... $ 1,651,234 $ 1,059,900 $ 465,118 Covered payroll................................................................................................. $ 13,241,681 $ 11,391,811 $ 3,536,386 Contributions as a percentage of covered payroll ................................................. 11.69 % 13.11 % 14.50 % 230 Required Supplementary Information 2021 2022 2023 2024 2025 $ 203,358 $ 169,461 $ 190,550 $ 200,732 $ 217,800 (160,882) (203,007) (175,199) (179,907) (196,605) $ 42,476 $ (33,546) $ 15,351 $ 20,825 $ 21,195 $ 673,098 $ 805,625 $ 824,956 $ 881,112 $ 902,765 23.90 % 25.20 % 21.24 % 20.42 % 21.78 % $ 756,965 $ 645,590 $ 738,895 $ 797,852 $ 889,871 (522,778) (698,669) (593,704) (642,053) (720,144) $ 234,187 $ (53,079) $ 145,191 $ 155,799 $ 169,727 $ 3,875,766 $ 4,500,952 $ 5,075,978 $ 5,464,851 $ 5,963,861 13.49 % 15.52 % 11.70 % 11.75 % 12.08 % $ 944,654 $ 915,632 $ 1,056,808 $ 1,155,890 $ 1,315,474 (504,813) (530,610) (527,794) (552,876) (616,066) $ 439,841 $ 385,022 $ 529,014 $ 603,014 $ 699,408 $ 3,483,142 $ 3,539,212 $ 3,805,373 $ 4,079,450 $ 4,318,552 14.49 % 14.99 % 13.87 % 13.55 % 14.27 % (continued) 231 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, 2024. 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, 2023, Actuarial Valuation Report. Inflation 2.30% Healthcare cost trend rates Pre-Medicare coverage: Actual rates for 2025, increasing to 7.00% in 2026, grading down to 4.50% from 2031 to 2039, and 4.25% for 2040 and later years. Post-Medicare coverage: Actual rates for 2025, increasing to rates ranging from 7.00% to 8.01% in 2026, grading down to 4.50% from 2035 to 2039, and 4.25% for 2040 and later years. Dental coverage: 0.00% for 2025, 2.00% for 2026, 3.00% for 2027, 4.00% for 2028, and 4.25% for 2029 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) 232 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, 2025, are in the following categories and amounts: state highway infrastructure, consisting of completed highway projects totaling $86.5 billion; land purchased for highway projects totaling $15.4 billion; infrastructure construction-in-progress (uncompleted highway projects) totaling $12.2 billion; and high-speed rail system infrastructure, consisting of construction-in-progress (uncompleted construction projects) totaling $9.0 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, 2025, there were no donations of infrastructure land, and relinquishments were $16 million of state highway infrastructure (completed highway projects) and $3 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’ (AASHTO) 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 2024-25 is to have at least 90% of the State’s bridge deck area in fair or better condition. 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 2023 90.0% Fair or Better 93.7% Fair or Better 2024 90.0% Fair or Better 94.0% Fair or Better 2025 90.0% Fair or Better 94.7% Fair or Better 1The actual statewide bridge conditions should not be lower than the baseline condition established by the State. 233 State of California Annual Comprehensive Financial Report The following table provides details on the actual condition of the State’s bridges as of June 30, 2025: Number of Condition Bridges/Tunnels Deck Area (sq. ft.) Deck Area (%) Good 6,911 116,778,042 43.89 % Fair 5,646 135,223,746 50.83 Poor 382 14,046,042 5.28 Total 12,939 266,047,830 100.00 % 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. 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 July 2023 18,000 6,980 13.76 % September 2024 18,000 7,453 14.69 July 2025 18,000 7,568 14.92 1Condition assessment for the State’s established condition baseline and actual distressed lane miles are being reported in the latest 2023 State of the Pavement Report with the publication date of July 2025. 2The actual statewide distressed lane miles should not exceed the maximum distressed lane miles established by the State. 234 Required Supplementary Information 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 31,983 — Fair 11,176 — Poor 7,568 7,568 Total 50,727 7,568 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. 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 2021 $ 255 $ 256 2022 231 226 2023 307 302 2024 313 298 2025 241 196 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 2021 $ 5,263 $ 5,168 2022 5,145 4,925 2023 7,503 6,669 2024 7,161 5,569 2025 6,287 3,068 1Some prior years were updated based on more current information. 235 State of California Annual Comprehensive Financial Report Budgetary Comparison Schedule General Fund and Major Special Revenue Funds Year Ended June 30, 2025 (amounts in thousands) General Budgeted Amounts Actual Variance with Original Final Amounts Final Budget REVENUES Corporation tax ..................................................................... $ 43,199,442 $ 41,338,259 $ 41,655,877 $ 317,618 Intergovernmental ................................................................. — — — — Cigarette and tobacco taxes................................................... 36,832 37,026 37,026 — Insurance gross premiums tax................................................ 4,063,907 4,298,323 4,264,423 (33,900) Vehicle license fees............................................................... 746 912 912 — Personal income tax .............................................................. 121,106,412 130,177,960 132,764,985 2,587,025 Retail sales and use taxes...................................................... 34,110,326 33,602,178 33,898,727 296,549 Other major taxes and licenses............................................... 423,340 414,268 419,039 4,771 Other revenues ..................................................................... 6,047,751 8,637,025 8,488,629 (148,396) Total revenues.............................................................. 208,988,756 218,505,951 221,529,618 3,023,667 EXPENDITURES Business, consumer services, and housing.............................. 4,664,887 4,672,276 4,012,903 (659,373) Transportation....................................................................... 894,699 894,610 571,508 (323,102) Natural resources and environmental protection....................... 7,328,541 8,274,280 5,991,883 (2,282,397) Health and human services .................................................... 76,520,876 79,544,603 74,245,708 (5,298,895) Corrections and rehabilitation ................................................. 14,713,904 14,423,158 14,119,511 (303,647) Education ............................................................................. 97,863,049 96,758,116 96,686,709 (71,407) General government: Tax relief .......................................................................... 423,150 423,150 385,794 (37,356) Debt service...................................................................... 5,169,604 5,174,678 5,130,977 (43,701) Other general government.................................................. 19,261,291 18,887,179 16,902,028 (1,985,151) Total expenditures........................................................ 226,840,001 229,052,050 218,047,021 (11,005,029) OTHER FINANCING SOURCES (USES) Transfers from other funds ..................................................... 18,997,572 — Transfers to other funds......................................................... (4,008,524) — Other additions (deductions)................................................... 6,257,241 — Total other financing sources (uses) ............................ — — 21,246,289 — Excess (deficiency) of revenues and other sources over (under) expenditures and other uses ......................... 24,728,886 — Fund balances – beginning...................................................... 19,619,568 * — Fund balances – ending........................................................... $ — $ — $ 44,348,454 $ — * Restated 236 Required Supplementary Information Federal Environmental and Natural Resources Budgeted Amounts Budgeted Amounts Actual Variance with Actual Variance with Original Final Amounts Final Budget Original Final Amounts Final Budget $ — $ — $ — $ — $ — $ — $ — $ — 152,863,825 152,863,825 152,863,825 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 166,289 166,289 166,289 — 31 31 31 — 9,184,426 9,184,426 9,184,426 — 152,863,856 152,863,856 152,863,856 — 9,350,715 9,350,715 9,350,715 — 550,581 550,581 550,581 — 380,006 379,587 342,118 (37,469) 5,802,246 5,802,246 5,802,246 — 1,975,800 1,975,832 1,565,653 (410,179) 1,316,896 1,316,896 1,316,896 — 7,380,161 7,219,332 6,740,943 (478,389) 121,581,914 121,581,914 121,581,914 — 66,346 63,319 52,438 (10,881) 83,301 83,301 83,301 — — — — — 7,819,036 7,819,036 7,819,036 — 3,663 3,663 3,651 (12) — — — — — — — — — — — — (499) (499) (499) — 7,022,724 7,022,724 7,022,724 — 181,264 179,288 159,402 (19,886) 144,176,698 144,176,698 144,176,698 — 9,986,741 9,820,522 8,863,706 (956,816) — — 17,800 — — — 1,048,011 — — — (8,704,927) — — — (1,544,595) — — — — — — — 950,919 — — — (8,687,127) — — — 454,335 — — — 31 — — — 941,344 — — — 701 — — — 24,077,474 * — $ — $ — $ 732 $ — $ — $ — $ 25,018,818 $ — 237 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, 2025 (amounts in thousands) Major Special Revenue Funds Environmental and Natural General Federal Resources Budgetary fund balance reclassified into GAAP statement fund structure .... $ 44,348,454 $ 732 $ 25,018,818 Basis difference: Interfund receivables ................................................................................... 2,586,541 573,675 Loans receivable......................................................................................... 1,979,581 518,709 1,159,867 Interfund payables....................................................................................... (4,423,327) (2,227) Escheat property......................................................................................... (2,182,406) Tax revenues.............................................................................................. 2,368,189 Fund classification changes ......................................................................... 21,286,881 19,472 Other ......................................................................................................... (7,256,135) (807,676) Timing difference: Liabilities budgeted in subsequent years ....................................................... (859,184) (6,242) (4,404) GAAP fund balance – ending ....................................................................... $ 57,848,594 $ 532,671 $ 25,938,053 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. 238 Required Supplementary Information 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 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 $2.6 billion in the General Fund, and $574 million in the Environmental and Natural Resources Fund. The adjustments related to loans receivable caused increases of $2.0 billion in the General Fund, $519 million in the Federal Fund, and $1.2 billion 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 $4.4 billion in the General Fund, $2 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 $2.2 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 $2.4 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 $21.3 billion in the General Fund and $19 million 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 a decrease of $7.3 billion in the General Fund and a decrease of $808 million in the Environmental and Natural Resources Fund. 239 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 $859 million in the General Fund and $4 million in the Environmental and Natural Resources Fund. The large decrease in the General Fund primarily consists of $517 million for workers’ compensation claims. 240 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) 243 State of California Annual Comprehensive Financial Report 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. 244 Nonmajor Governmental Funds This page intentionally left blank 245 State of California Annual Comprehensive Financial Report Combining Balance Sheet Nonmajor Governmental Funds June 30, 2025 (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................................................. $ 12,304,123 $ 2,736,434 $ 2,718,522 $ 3,955,272 Investments .......................................................................... — — — — Receivables (net) .................................................................. 1,807,338 11,049,781 155,603 265,600 Due from other funds............................................................. 1,779,454 357,558 39,146 713,135 Due from other governments .................................................. 7,398 908,909 8,806 328,521 Interfund receivables ............................................................. 948 998,528 256,793 31,802 Loans receivable ................................................................... — 759 54,355 3,402,312 Other assets ......................................................................... 16,305 — — — Total assets..................................................................... $ 15,915,566 $ 16,051,969 $ 3,233,225 $ 8,696,642 LIABILITIES Accounts payable.................................................................. $ 2,126,022 $ 7,183,068 $ 151,305 $ 295,637 Due to other funds................................................................. 370,875 4,629,130 79,264 1,032 Due to component units ......................................................... 11,972 1,972 — — Due to other governments...................................................... 1,285,661 888,524 30,650 508,193 Interfund payables................................................................. 18,628 — 6,628 — Revenues received in advance............................................... 67,009 1,453 76,966 5,969 Deposits ............................................................................... 2,913 — — — Other liabilities ...................................................................... 841,195 — 33,447 125 Total liabilities ................................................................. 4,724,275 12,704,147 378,260 810,956 DEFERRED INFLOWS OF RESOURCES................................... 70,608 181,540 — — Total liabilities and deferred inflows of resources ..... 4,794,883 12,885,687 378,260 810,956 FUND BALANCES Nonspendable....................................................................... — — — — Restricted ............................................................................. 11,063,064 2,441,353 2,056,872 7,683,652 Committed............................................................................ 57,619 724,929 798,093 202,034 Assigned .............................................................................. — — — — Total fund balances ......................................................... 11,120,683 3,166,282 2,854,965 7,885,686 Total liabilities, deferred inflows of resources, and fund balances ........................................................... $ 15,915,566 $ 16,051,969 $ 3,233,225 $ 8,696,642 246 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 $ 2,529,516 $ 4,019,584 $ 1,327,307 $ 74,524 $ 5,862,740 $ 35,528,022 — — 584,306 235,746 — 820,052 710,129 17,539 232,837 210,569 262,086 14,711,482 55,535 228,627 24,611 — 497,682 3,695,748 38 — 39,872 — 31,924 1,325,468 184,400 17,916 21,602 — 1,251,384 2,763,373 176 335 404 — 61,295 3,519,636 — — 19,873 — — 36,178 $ 3,479,794 $ 4,284,001 $ 2,250,812 $ 520,839 $ 7,967,111 $ 62,399,959 $ 68,336 $ 6,633 $ 259,600 $ — $ 331,497 $ 10,422,098 8,593 42,901 62,842 — 63,931 5,258,568 49,739 — — — 12,249 75,932 64,529 4,109,662 101,139 — 399,468 7,387,826 — — — — — 25,256 — — 64,685 — 122,027 338,109 59,167 — 389,056 — 74,693 525,829 — — 135,894 — 33,336 1,043,997 250,364 4,159,196 1,013,216 — 1,037,201 25,077,615 453,106 — 1,045 — 49,537 755,836 703,470 4,159,196 1,014,261 — 1,086,738 25,833,451 — — 16,235 — — 16,235 2,714,368 68,899 982,676 520,839 6,009,974 33,541,697 61,956 55,906 151,748 — 870,399 2,922,684 — — 85,892 — — 85,892 2,776,324 124,805 1,236,551 520,839 6,880,373 36,566,508 $ 3,479,794 $ 4,284,001 $ 2,250,812 $ 520,839 $ 7,967,111 $ 62,399,959 (continued) 247 State of California Annual Comprehensive Financial Report Combining Balance Sheet (continued) Nonmajor Governmental Funds June 30, 2025 (amounts in thousands) Debt Service Total No Place Transportation Nonmajor Like Home Debt Debt Debt Service Service Service ASSETS Cash and pooled investments................................................................................ $ 96,073 $ — $ 96,073 Investments ......................................................................................................... — — — Receivables (net).................................................................................................. — — — Due from other funds ............................................................................................ 1,701 70,256 71,957 Due from other governments ................................................................................. — — — Interfund receivables............................................................................................. — — — Loans receivable .................................................................................................. — — — Other assets......................................................................................................... — — — Total assets .................................................................................................... $ 97,774 $ 70,256 $ 168,030 LIABILITIES Accounts payable ................................................................................................. $ 201 $ — $ 201 Due to other funds ................................................................................................ 29 70,256 70,285 Due to component units......................................................................................... — — — Due to other governments ..................................................................................... — — — Interfund payables ................................................................................................ — — — Revenues received in advance .............................................................................. — — — Deposits .............................................................................................................. — — — Other liabilities...................................................................................................... — — — Total liabilities ................................................................................................ 230 70,256 70,486 DEFERRED INFLOWS OF RESOURCES.................................................................. — — — Total liabilities and deferred inflows of resources........................................ 230 70,256 70,486 FUND BALANCES Nonspendable...................................................................................................... — — — Restricted ............................................................................................................ 97,544 — 97,544 Committed ........................................................................................................... — — — Assigned.............................................................................................................. — — — Total fund balances ........................................................................................ 97,544 — 97,544 Total liabilities, deferred inflows of resources, and fund balances............... $ 97,774 $ 70,256 $ 168,030 248 Nonmajor Governmental Funds Capital Projects Total Higher Local Other Nonmajor Total Education Hospital Government Capital Capital Nonmajor Construction Construction Construction Projects Projects Governmental $ 332,103 $ 38,002 $ 99,688 $ 321,526 $ 791,319 $ 36,415,414 — — — — — 820,052 — — — 2,952 2,952 14,714,434 3,425 453 1,070 6,010 10,958 3,778,663 — — 4,436 — 4,436 1,329,904 — — — 2,500 2,500 2,765,873 — — — 322,828 322,828 3,842,464 — — — — — 36,178 $ 335,528 $ 38,455 $ 105,194 $ 655,816 $ 1,134,993 $ 63,702,982 $ — $ 246 $ — $ 12,132 $ 12,378 $ 10,434,677 — 425 — 1,256 1,681 5,330,534 — — — — — 75,932 — — — 1,982 1,982 7,389,808 — — — — — 25,256 — — — — — 338,109 — — — — — 525,829 — — — — — 1,043,997 — 671 — 15,370 16,041 25,164,142 — — — 2,851 2,851 758,687 — 671 — 18,221 18,892 25,922,829 — — — — — 16,235 335,528 37,784 105,194 533,265 1,011,771 34,651,012 — — — 104,330 104,330 3,027,014 — — — — — 85,892 335,528 37,784 105,194 637,595 1,116,101 37,780,153 $ 335,528 $ 38,455 $ 105,194 $ 655,816 $ 1,134,993 $ 63,702,982 (concluded) 249 State of California Annual Comprehensive Financial Report Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2025 (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............................................................... $ — $ — $ — $ 2,269,742 Sales and use taxes .................................................................. 1,111,163 — — — Motor vehicle excise taxes ......................................................... 9,071,534 — 87,633 63,786 Managed care organization enrollment tax................................... — 12,701,905 — — Other taxes............................................................................... — — 1,428 1,012,752 Intergovernmental ..................................................................... — 5,038,301 — — Licenses and permits................................................................. 7,138,131 1,570 895,455 14,854 Charges for services.................................................................. 156,183 49,794 51,203 2,819 Fees......................................................................................... 2,660,285 7,381,770 1,648,914 243,065 Penalties .................................................................................. 10,614 — 71,951 181 Investment and interest.............................................................. 516,077 95,304 113,965 107,220 Escheat.................................................................................... — — 93 — Other........................................................................................ 102,236 794,875 21,804 60,262 Total revenues .................................................................... 20,766,223 26,063,519 2,892,446 3,774,681 EXPENDITURES Current: General government.............................................................. 619,984 8,165 1,020,026 1,059,590 Education ............................................................................. 9,266 371,074 29,315 653 Health and human services .................................................... 4,641 24,553,036 721,379 4,043,393 Natural resources and environmental protection....................... 188,947 535 126,652 67,321 Businesses, consumer services, and housing .......................... 117,805 — 938,552 587,593 Transportation....................................................................... 18,198,087 — 8,905 — Corrections and rehabilitation ................................................. — — — 117,805 Capital outlay............................................................................ 101,790 — 23,127 — Debt service:............................................................................. Bond, commercial paper, and lease principal retirement............ 1,416,162 66,052 46,219 110,415 Interest and fiscal charges...................................................... 62,241 46,989 4,158 1,473 Total expenditures .............................................................. 20,718,923 25,045,851 2,918,333 5,988,243 Excess (deficiency) of revenues over (under) expenditures.... 47,300 1,017,668 (25,887) (2,213,562) OTHER FINANCING SOURCES (USES) General obligation bonds and commercial paper issued................ 1,343,370 437,615 — 1,058,365 Refunding debt issued ............................................................... 1,575,855 — — 90,965 Payment to refund/remarket long-term debt ................................. (465,136) — — (32,437) Premium on bonds issued.......................................................... 139,083 3,926 — 4,851 Long-term capital financing issued .............................................. 101,784 — 21,506 — Transfers in............................................................................... 5,031 305,195 96,626 728,840 Transfers out............................................................................. (2,296,834) (10,000) (55,634) (163,505) Total other financing sources (uses) ................................... 403,153 736,736 62,498 1,687,079 Net change in fund balances ............................................... 450,453 1,754,404 36,611 (526,483) Fund balances – beginning, as previously reported..................... 10,670,022 1,134,046 2,818,354 8,412,169 Error corrections........................................................................ 208 58,266 — — Change to or within the financial reporting entity........................... — 219,566 — — Fund balances – beginning, as restated ...................................... 10,670,230 1,411,878 2,818,354 8,412,169 Fund balances – ending............................................................... $ 11,120,683 $ 3,166,282 $ 2,854,965 $ 7,885,686 250 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 $ — $ — $ — $ — $ — $ 2,269,742 — 18,838,454 — — — 19,949,617 — — — — — 9,222,953 — — — — — 12,701,905 1,648,167 56,994 — — — 2,719,341 — — 836,104 — — 5,874,405 192 2,797,813 — — 145,854 10,993,869 (68) — 50,435 — 377,441 687,807 (75) — 638,714 — 1,523,311 14,095,984 — 155 191,423 — 226,963 501,287 26,857 34,165 93,026 11,815 191,029 1,189,458 — — 1,462 — 1 1,556 6,644 — 172,828 358,165 1,393,268 2,910,082 1,681,717 21,727,581 1,983,992 369,980 3,857,867 83,118,006 109,368 6,263,342 4,651,297 655 1,888,595 15,621,022 191,463 — — — 7,169 608,940 1,320,468 13,999,460 — — 1,253,919 45,896,296 111,811 — — — 93,495 588,761 855 875 165 — 47,925 1,693,770 23,315 1 — — 3,876 18,234,184 14,796 2,313,670 — — — 2,446,271 — — 3,164 — 5,906 133,987 14 — 42,100 237,495 33,391 1,951,848 23 — 20,511 139,552 5,951 280,898 1,772,113 22,577,348 4,717,237 377,702 3,340,227 87,455,977 (90,396) (849,767) (2,733,245) (7,722) 517,640 (4,337,971) — — — — — 2,839,350 — — — — — 1,666,820 — — — — — (497,573) — — — — — 147,860 — — 3,164 — 5,906 132,360 3 931,621 2,578,707 — 79,141 4,725,164 (45,252) — — — (176,100) (2,747,325) (45,249) 931,621 2,581,871 — (91,053) 6,266,656 (135,645) 81,854 (151,374) (7,722) 426,587 1,928,685 3,131,535 42,951 1,387,924 528,561 6,480,147 34,605,709 — — 1 — 720 59,195 (219,566) — — — (27,081) (27,081) 2,911,969 42,951 1,387,925 528,561 6,453,786 34,637,823 $ 2,776,324 $ 124,805 $ 1,236,551 $ 520,839 $ 6,880,373 $ 36,566,508 (continued) 251 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, 2025 (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 ......................................................................................... 6,281 — 6,281 Escheat ............................................................................................................... — — — Other................................................................................................................... — — — Total revenues ............................................................................................ 6,281 — 6,281 EXPENDITURES Current: General government ......................................................................................... 325 — 325 Education......................................................................................................... — — — Health and human services ............................................................................... — — — Natural resources and environmental protection .................................................. — — — Businesses, consumer services, and housing...................................................... — — — Transportation .................................................................................................. — — — Corrections and rehabilitation............................................................................. — — — Capital outlay ....................................................................................................... — — — Debt service: Bond, commercial paper, and lease principal retirement....................................... 82,585 739,571 822,156 Interest and fiscal charges................................................................................. 56,584 647,601 704,185 Total expenditures ...................................................................................... 139,494 1,387,172 1,526,666 Excess (deficiency) of revenues over (under) expenditures ............................ (133,213) (1,387,172) (1,520,385) OTHER FINANCING SOURCES (USES) General obligation bonds and commercial paper issued........................................... — — — Refunding debt issued........................................................................................... — — — Payment to refund/remarket long-term debt............................................................. — — — Premium on bonds issued ..................................................................................... — — — Long-term capital financing issued ......................................................................... — — — Transfers in.......................................................................................................... 139,505 1,387,172 1,526,677 Transfers out........................................................................................................ — — — Total other financing sources (uses)............................................................ 139,505 1,387,172 1,526,677 Net change in fund balances ....................................................................... 6,292 — 6,292 Fund balances – beginning, as previously reported................................................ 91,252 — 91,252 Error corrections................................................................................................... — — — Change to or within the financial reporting entity...................................................... — — — Fund balances – beginning, as restated.................................................................. 91,252 — 91,252 Fund balances – ending.......................................................................................... $ 97,544 $ — $ 97,544 252 Nonmajor Governmental Funds Capital Projects Total Higher Local Other Nonmajor Total Education Hospital Government Capital Capital Nonmajor Construction Construction Construction Projects Projects Governmental $ — $ — $ — $ — $ — $ 2,269,742 — — — — — 19,949,617 — — — — — 9,222,953 — — — — — 12,701,905 — — — — — 2,719,341 — — — — — 5,874,405 — — — — — 10,993,869 — — — — — 687,807 — — — — — 14,095,984 — — — — — 501,287 9,586 228 8,724 3,118 21,656 1,217,395 — — — — — 1,556 — — — 12,369 12,369 2,922,451 9,586 228 8,724 15,487 34,025 83,158,312 — 92,158 — — 92,158 15,713,505 — — 107,015 — 107,015 715,955 — — — — — 45,896,296 — — — 15,757 15,757 604,518 — — — 975 975 1,694,745 — — — — — 18,234,184 — — — — — 2,446,271 260,153 625 69 28,014 288,861 422,848 235,345 233,160 1,153,755 47,315 1,669,575 4,443,579 3,736 641 13,106 66 17,549 1,002,632 499,234 326,584 1,273,945 92,127 2,191,890 91,174,533 (489,648) (326,356) (1,265,221) (76,640) (2,157,865) (8,016,221) 285,775 202,435 115,145 164,685 768,040 3,607,390 276,205 68,695 954,880 — 1,299,780 2,966,600 (69,590) — — — (69,590) (567,163) 31,221 17,341 99,335 441 148,338 296,198 — — — — — 132,360 — — — 44,926 44,926 6,296,767 — — (818) — (818) (2,748,143) 523,611 288,471 1,168,542 210,052 2,190,676 9,984,009 33,963 (37,885) (96,679) 133,412 32,811 1,967,788 301,565 75,669 201,873 504,182 1,083,289 35,780,250 — — — 1 1 59,196 — — — — — (27,081) 301,565 75,669 201,873 504,183 1,083,290 35,812,365 $ 335,528 $ 37,784 $ 105,194 $ 637,595 $ 1,116,101 $ 37,780,153 (concluded) 253 State of California Annual Comprehensive Financial Report Budgetary Comparison Schedule Nonmajor Governmental Funds1 Year Ended June 30, 2025 (amounts in thousands) Budgeted Actual Variance with Amounts Amounts Final Budget REVENUES Cigarette and tobacco taxes .................................................................................. $ 252,307 $ 252,307 $ — Vehicle license fees ............................................................................................. 11,631,970 11,631,970 — Personal income tax ............................................................................................. 2,269,742 2,269,742 — Retail sales and use taxes ................................................................................... 18,904,135 18,904,135 — Other major taxes and licenses.............................................................................. 7,619,827 7,619,827 — Other revenues..................................................................................................... 210,678,923 210,678,923 — Total revenues ............................................................................................... 251,356,904 251,356,904 — EXPENDITURES Business, consumer services, and housing............................................................. 1,529,720 1,445,313 (84,407) Transportation ..................................................................................................... 20,711,257 18,870,877 (1,840,380) Natural resources and environmental protection ...................................................... 772,619 713,795 (58,824) Health and human services ................................................................................... 226,383,814 222,304,170 (4,079,644) Corrections and rehabilitation ................................................................................ 3,766 3,766 — Education............................................................................................................. 576,775 351,756 (225,019) General government: Tax relief ............................................................................................................. (696) (696) — Other general government ................................................................................... 11,553,989 11,075,439 (478,550) Total expenditures ......................................................................................... 261,531,244 254,764,420 (6,766,824) OTHER FINANCING SOURCES (USES) Transfers from other funds..................................................................................... — 68,586,982 — Transfers to other funds ....................................................................................... — (67,096,949) — Other additions..................................................................................................... — 2,517,941 — Total other financing sources (uses)............................................................... — 4,007,974 — Excess of revenues and other sources over expenditures and other uses .......... — 600,458 — Fund balances – beginning, restated ...................................................................... — 28,787,892 — Fund balances – ending.......................................................................................... $ — $ 29,388,350 $ — 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. 254 Internal Service Funds 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. 255 State of California Annual Comprehensive Financial Report Combining Statement of Net Position Internal Service Funds June 30, 2025 (amounts in thousands) Public Buildings Architecture Construction Revolving ASSETS Current assets: Cash and pooled investments ............................................................................................................... $ — $ 1,557,845 Restricted assets: ................................................................................................................................ Cash and pooled investments ........................................................................................................... 837,967 — Contracts and installments receivable.................................................................................................... 647,398 — Receivables (net)................................................................................................................................. — 1,212 Due from other funds............................................................................................................................ 213,882 43,207 Due from other governments................................................................................................................. — — Prepaid items ...................................................................................................................................... — 15,014 Inventories .......................................................................................................................................... — — Total current assets.......................................................................................................................... 1,699,247 1,617,278 Noncurrent assets: Restricted assets: Cash and pooled investments ........................................................................................................... 89,989 — Contracts and installments receivable.................................................................................................... 7,973,725 — Receivables (net)................................................................................................................................. — — Interfund receivables ............................................................................................................................ — — Loans receivable.................................................................................................................................. — — Long-term prepaid charges ................................................................................................................... 81 — Capital assets: Land ............................................................................................................................................... — — Buildings and other depreciable property............................................................................................ — 211 Intangible assets -amortizable .......................................................................................................... — — Less: accumulated depreciation/amortization...................................................................................... — (211) Construction/development in progress ............................................................................................... 2,828,069 — Total noncurrent assets .................................................................................................................... 10,891,864 — Total assets ................................................................................................................................ 12,591,111 1,617,278 DEFERRED OUTFLOWS OF RESOURCES.............................................................................................. 73,486 684 Total assets and deferred outflows of resources ..................................................................... $ 12,664,597 $ 1,617,962 256 Internal Service Funds Other Financial Technology Water Internal Service Prison Information Services Resources Service Revolving Industries Systems Revolving Revolving Programs Total $ 422,581 $ 375,667 $ 10,573 $ 90,983 $ 86,261 $ 1,099,299 $ 3,643,209 — — — — — — 837,967 — — — — — — 647,398 2,435 4,018 — 5,694 11,727 52,284 77,370 97,496 3,948 — 97,984 243,927 177,969 878,413 2,140 128 — 7,310 — 15,851 25,429 213,926 1,809 — 2,714 3,273 119 236,855 23,692 48,809 — — 783 17,046 90,330 762,270 434,379 10,573 204,685 345,971 1,362,568 6,436,971 — — — — — — 89,989 — — — — — — 7,973,725 1,385 — — — — 4,457 5,842 — — — 1,742 — 38,440 40,182 — — — 33 — 3,869 3,902 — — — — — — 81 — — — — — 2,080 2,080 183,872 231,194 2,977 148,939 35,540 77,939 680,672 206,263 14,837 349,281 41,743 12,176 131,936 756,236 (190,132) (189,341) (91,605) (141,900) (45,196) (137,705) (796,090) — 315 — — — 1,260 2,829,644 201,388 57,005 260,653 50,557 2,520 122,276 11,586,263 963,658 491,384 271,226 255,242 348,491 1,484,844 18,023,234 268,513 73,832 — 91,523 — 230,271 738,309 $ 1,232,171 $ 565,216 $ 271,226 $ 346,765 $ 348,491 $ 1,715,115 $ 18,761,543 (continued) 257 State of California Annual Comprehensive Financial Report Combining Statement of Net Position (continued) Internal Service Funds June 30, 2025 (amounts in thousands) Public Buildings Architecture Construction Revolving LIABILITIES Current liabilities: Accounts payable........................................................................................................................... $ 35,215 $ 16 Due to other funds.......................................................................................................................... 29,896 52,986 Due to other governments............................................................................................................... 15,602 — Revenues received in advance........................................................................................................ — 1,562,727 Deposits ........................................................................................................................................ — — Contracts and notes payable ........................................................................................................... — — Interest payable.............................................................................................................................. 109,364 — Current portion of long-term obligations............................................................................................ 682,189 197 Other current liabilities .................................................................................................................... 16,812 — Total current liabilities ................................................................................................................. 889,078 1,615,926 Noncurrent liabilities: Interfund payables.......................................................................................................................... 2,552,340 450 Compensated absences payable ..................................................................................................... — 325 Workers’ compensation benefits payable.......................................................................................... — 201 Lease liability ................................................................................................................................. — — Subscription liability ........................................................................................................................ — — Revenue bonds payable ................................................................................................................. 9,004,064 — Net other postemployment benefits liability ....................................................................................... — 632 Net pension liability......................................................................................................................... — 2,177 Other noncurrent liabilities............................................................................................................... — — Total noncurrent liabilities............................................................................................................ 11,556,404 3,785 Total liabilities....................................................................................................................... 12,445,482 1,619,711 DEFERRED INFLOWS OF RESOURCES............................................................................................ 74,829 127 Total liabilities and deferred inflows of resources .............................................................. 12,520,311 1,619,838 NET POSITION Net investment in capital assets....................................................................................................... — — Restricted – expendable: Construction .............................................................................................................................. 144,286 — Total expendable .................................................................................................................... 144,286 — Unrestricted ................................................................................................................................... — (1,876) Total net position (deficit)......................................................................................................... 144,286 (1,876) Total liabilities, deferred inflows of resources, and net position............................................ $ 12,664,597 $ 1,617,962 258 Internal Service Funds Other Financial Technology Water Internal Service Prison Information Services Resources Service Revolving Industries Systems Revolving Revolving Programs Total $ 40,714 $ 1,712 $ — $ 61,902 $ 39,196 $ 481,994 $ 660,749 62,380 13,433 — 752 1,332 632,543 793,322 5,394 — — 614 4,665 6,339 32,614 16,117 2,783 — — 2,537 74,771 1,658,935 1,149 — — — — — 1,149 261 — — 4,342 14,762 — 19,365 — — — — — — 109,364 71,227 4,224 — 24,263 — 56,623 838,723 13 12,307 — — 91 — 29,223 197,255 34,459 — 91,873 62,583 1,252,270 4,143,444 14,712 — — 307 298,150 — 2,865,959 83,057 17,008 — 27,277 — 68,883 196,550 26,255 21,969 — 56 — 1,544 50,025 134,574 — — 11,753 — 48,490 194,817 — — — 3,763 — 5,401 9,164 — — — — — — 9,004,064 768,039 260,309 — 274,355 — 474,226 1,777,561 495,307 72,001 — 101,946 — 534,631 1,206,062 — — — 3,563 708 — 4,271 1,521,944 371,287 — 423,020 298,858 1,133,175 15,308,473 1,719,199 405,746 — 514,893 361,441 2,385,445 19,451,917 135,051 56,554 — 49,158 — 87,036 402,755 1,854,250 462,300 — 564,051 361,441 2,472,481 19,854,672 200,004 57,005 260,652 25,544 — 58,163 601,368 — — — — — — 144,286 — — — — — — 144,286 (822,083) 45,911 10,574 (242,830) (12,950) (815,529) (1,838,783) (622,079) 102,916 271,226 (217,286) (12,950) (757,366) (1,093,129) $ 1,232,171 $ 565,216 $ 271,226 $ 346,765 $ 348,491 $ 1,715,115 $ 18,761,543 (concluded) 259 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, 2025 (amounts in thousands) Public Buildings Architecture Construction Revolving OPERATING REVENUES Services and sales.......................................................................................................................... $ — $ 534,050 Investment and interest ................................................................................................................... 52,316 — Rent .............................................................................................................................................. 325,226 — Total operating revenues .......................................................................................................... 377,542 534,050 OPERATING EXPENSES Personal services ........................................................................................................................... — 4,618 Supplies......................................................................................................................................... — — Services and charges...................................................................................................................... 7,735 531,520 Depreciation................................................................................................................................... — — Interest expense............................................................................................................................. 376,555 — Total operating expenses.......................................................................................................... 384,290 536,138 Operating income (loss) ........................................................................................................... (6,748) (2,088) NONOPERATING REVENUES (EXPENSES) Investment and interest income (loss)............................................................................................... — — Interest expense and fiscal charges.................................................................................................. — — Other............................................................................................................................................. 7,887 — Total nonoperating revenues (expenses) .................................................................................. 7,887 — Income (loss) before transfers .................................................................................................. 1,139 (2,088) Transfers in.................................................................................................................................... — — Transfers out.................................................................................................................................. — — Change in net position ............................................................................................................. 1,139 (2,088) Total net position (deficit) – beginning, as previously reported......................................................... 137,319 704 Error corrections............................................................................................................................. 5,828 — Changes in accounting principle....................................................................................................... — (492) Total net position (deficit) – beginning, as restated........................................................................... 143,147 212 Total net position (deficit) – ending................................................................................................... $ 144,286 $ (1,876) 260 Internal Service Funds Other Financial Technology Water Internal Service Prison Information Services Resources Service Revolving Industries Systems Revolving Revolving Programs Total $ 905,169 $ 316,686 $ — $ 642,540 $ 761,098 $ 1,695,255 $ 4,854,798 — — — — — — 52,316 950 — — — — 220 326,396 906,119 316,686 — 642,540 761,098 1,695,475 5,233,510 444,518 128,917 — 133,250 — 342,139 1,053,442 — 5,939 — — 19,591 — 25,530 509,219 212,355 (38) 451,451 735,185 1,084,795 3,532,222 32,475 25,062 28,876 20,146 3,252 24,870 134,681 — — — 511 — — 377,066 986,212 372,273 28,838 605,358 758,028 1,451,804 5,122,941 (80,093) (55,587) (28,838) 37,182 3,070 243,671 110,569 51 2,076 — 2,503 — 6,403 11,033 (2,916) 40 — (601) — (3,571) (7,048) — 3,741 — (1) — — 11,627 (2,865) 5,857 — 1,901 — 2,832 15,612 (82,958) (49,730) (28,838) 39,083 3,070 246,503 126,181 77,754 — 37,650 5,514 — 5,500 126,418 — — — (15,000) (1,692) (40,143) (56,835) (5,204) (49,730) 8,812 29,597 1,378 211,860 195,764 (569,623) 152,646 262,332 (242,228) (14,328) (909,631) (1,182,809) (850) — 82 1,607 — (297) 6,370 (46,402) — — (6,262) — (59,298) (112,454) (616,875) 152,646 262,414 (246,883) (14,328) (969,226) (1,288,893) $ (622,079) $ 102,916 $ 271,226 $ (217,286) $ (12,950) $ (757,366) $ (1,093,129) 261 State of California Annual Comprehensive Financial Report Combining Statement of Cash Flows Internal Service Funds Year Ended June 30, 2025 (amounts in thousands) Public Buildings Architecture Construction Revolving CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers ...................................................................................................................... $ 11,743 $ — Receipts from interfund services provided .............................................................................................. 929,768 388,145 Payments to suppliers .......................................................................................................................... (10,409) (531,519) Payments to employees........................................................................................................................ — (2,293) Payments for interfund services used..................................................................................................... — — Other receipts (payments)..................................................................................................................... (385,118) — Net cash provided by (used in) operating activities........................................................................ 545,984 (145,667) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Receipts from / (payment on) interfund receivables ................................................................................. — — Proceeds from / (payment on) loans and interfund borrowings ................................................................. (157,379) (294) Interest received .................................................................................................................................. — — Transfers in ......................................................................................................................................... 3,621 — Transfers out ....................................................................................................................................... — — Net cash provided by (used in) noncapital financing activities....................................................... (153,758) (294) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets .................................................................................................................. (1,075,262) — Proceeds from sale of capital assets...................................................................................................... — — Proceeds from long-term capital financing.............................................................................................. — — Payment on long-term capital financing.................................................................................................. — — Proceeds from revenue bonds............................................................................................................... 1,940,416 — Retirement of revenue bonds ................................................................................................................ (1,432,590) — Interest paid ........................................................................................................................................ — — Net cash used in capital and related financing activities ................................................................ (567,436) — CASH FLOWS FROM INVESTING ACTIVITIES Earnings on investments....................................................................................................................... — — Net cash provided by investing activities ....................................................................................... — — Net increase (decrease) in cash and pooled investments.................................................................. (175,210) (145,961) Cash and pooled investments – beginning............................................................................................. 1,103,166 1,703,806 Cash and pooled investments – ending.................................................................................................. $ 927,956 $ 1,557,845 262 Internal Service Funds Other Financial Technology Water Internal Service Prison Information Services Resources Service Revolving Industries Systems Revolving Revolving Programs Total $ — $ — $ — $ — $ — $ — $ 11,743 1,023,500 315,785 — 612,721 725,914 1,557,408 5,553,241 (564,998) (204,027) (2) (427,323) (760,831) (1,065,330) (3,564,439) (402,727) (134,096) — (143,188) — (366,873) (1,049,177) — (21,488) — — — (53,789) (75,277) 3,674 3,517 — (17,986) 897 3,599 (391,417) 59,449 (40,309) (2) 24,224 (34,020) 75,015 484,674 — (57) — (909) — 1,675 709 (2,184) — (37,650) (147) — — (197,654) — 40 — — — (14) 26 77,754 — 37,650 5,514 — 5,500 130,039 — — — (15,000) (1,692) (40,143) (56,835) 75,570 (17) — (10,542) (1,692) (32,982) (123,715) (107,418) (14,854) — (30,275) (804) (14,964) (1,243,577) 95,155 715 — 4,832 — 2,023 102,725 — — — 15,603 — 738 16,341 (17,423) — — — — (10,144) (27,567) — — — — — — 1,940,416 — — — — — — (1,432,590) (2,916) — — (601) — (3,557) (7,074) (32,602) (14,139) — (10,441) (804) (25,904) (651,326) 51 2,076 — 2,503 — 6,403 11,033 51 2,076 — 2,503 — 6,403 11,033 102,468 (52,389) (2) 5,744 (36,516) 22,532 (279,334) 320,113 428,056 10,575 85,239 122,777 1,076,767 4,850,499 $ 422,581 $ 375,667 $ 10,573 $ 90,983 $ 86,261 $ 1,099,299 $ 4,571,165 (continued) 263 State of California Annual Comprehensive Financial Report Combining Statement of Cash Flows (continued) Internal Service Funds Year Ended June 30, 2025 (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)............................................................................................................................ $ (6,748) $ (2,088) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation ........................................................................................................................................ — — Amortization of premiums and discounts ................................................................................................ (123,057) — Amortization of long-term prepaid charges.............................................................................................. 29 — Other .................................................................................................................................................. 5,730 — Change in account balances: Receivables..................................................................................................................................... — 1,390 Due from other funds........................................................................................................................ — (1,796) Due from other governments............................................................................................................. (5,241) — Prepaid items .................................................................................................................................. — — Inventories ...................................................................................................................................... — — Contracts and installments receivable................................................................................................ 624,949 — Leases receivable ............................................................................................................................ — — Deferred outflow of resources............................................................................................................ — (684) Accounts payable............................................................................................................................. (56) 1 Due to other funds............................................................................................................................ 42,157 (116,089) Due to other governments................................................................................................................. — — Contracts and notes payable............................................................................................................. — — Interest payable ............................................................................................................................... 3,673 — Revenues received in advance.......................................................................................................... 2,003 (29,410) Other current liabilities...................................................................................................................... 2,545 — Compensated absences payable....................................................................................................... — 30 Other noncurrent liabilities ................................................................................................................ — 2,852 Deferred inflow of resources.............................................................................................................. — 127 Total adjustments ......................................................................................................................... 552,732 (143,579) Net cash provided by (used in) operating activities................................................................................ $ 545,984 $ (145,667) Noncash investing, capital, and financing activities Change / transfer of capital assets..................................................................................................... 1,874,889 — Miscellaneous noncash activities transactions .................................................................................... — — 264 Internal Service Funds Other Financial Technology Water Internal Service Prison Information Services Resources Service Revolving Industries Systems Revolving Revolving Programs Total $ (80,093) $ (55,588) $ (28,838) $ 37,182 $ 3,069 $ 243,671 $ 110,567 32,475 25,062 28,876 20,146 3,252 24,870 134,681 — — — — — — (123,057) — — — — — — 29 — 3,517 — — — — 9,247 1,727 (1,818) — (1,261) (10,818) 8,863 (1,917) 121,228 1,445 — (30,927) (28,865) (121,306) (60,221) (326) 103 — (4,286) — 2,332 (7,418) (44,016) (720) — (2,077) 623 1,344 (44,846) 1,983 2,869 — — (79) 1,141 5,914 — — — — — — 624,949 — — — — — 165 165 40,778 4,111 — (1,287) — 65,616 108,534 (13,746) (2,921) (40) 26,716 (6,598) 16,980 20,336 (5,498) (3,253) — 2,368 4,306 (61,960) (137,969) 4,629 — — (836) 4,649 1,267 9,709 (633) — — (7,329) (1,486) — (9,448) — — — — — — 3,673 (76) (600) — — 194 (17,617) (45,506) 4 (921) — — 73 — 1,701 675 (572) — (4,378) — 1,363 (2,882) 40,473 6,067 — 6,125 (2,340) (54,489) (1,312) (40,135) (17,090) — (15,932) — (37,225) (110,255) 139,542 15,279 28,836 (12,958) (37,089) (168,656) 374,107 $ 59,449 $ (40,309) $ (2) $ 24,224 $ (34,020) $ 75,015 $ 484,674 (concluded) — — — — — — 1,874,889 — 40 — — — — 40 265 State of California Annual Comprehensive Financial Report This page intentionally left blank 266 Nonmajor Enterprise Funds 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. 267 State of California Annual Comprehensive Financial Report Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2025 (amounts in thousands) State Water Safe Drinking Pollution Control Water State Revolving Revolving ASSETS Current assets: Cash and pooled investments ............................................................................................................... $ 555,678 $ 184,969 Restricted assets: Cash and pooled investments ........................................................................................................... 293,570 53,468 Due from other governments............................................................................................................. 215,008 19,091 Receivables (net)................................................................................................................................. — 6,599 Due from other funds............................................................................................................................ 12,401 13,019 Due from other governments................................................................................................................. 57,464 50,985 Prepaid items ...................................................................................................................................... — — Inventories .......................................................................................................................................... — — Total current assets.......................................................................................................................... 1,134,121 328,131 Noncurrent assets: Restricted assets: Loans receivable.............................................................................................................................. 4,998,880 659,787 Investments............................................................................................................................................. — — Interfund receivables ................................................................................................................................ 1,668 — Loans receivable...................................................................................................................................... 1,140,721 1,733,980 Capital assets: Land ................................................................................................................................................... — — Buildings and other depreciable property................................................................................................ — — Intangible assets -amortizable .............................................................................................................. — — Less: accumulated depreciation/amortization.......................................................................................... — — Other noncurrent assets ........................................................................................................................... — — Total noncurrent assets ........................................................................................................................ 6,141,269 2,393,767 Total assets.................................................................................................................................... 7,275,390 2,721,898 DEFERRED OUTFLOWS OF RESOURCES.............................................................................................. — — Total assets and deferred outflows of resources......................................................................... $ 7,275,390 $ 2,721,898 268 Nonmajor Enterprise Funds Other Housing Electric Enterprise Loan Power Programs Total $ 359,244 $ 2,169 $ 256,284 $ 1,358,344 — 73,648 — 420,686 — — — 234,099 37,106 107,732 639 152,076 4,064 — 2,941 32,425 — — 143 108,592 — — 40 40 — — 8,610 8,610 400,414 183,549 268,657 2,314,872 — — — 5,658,667 15,115 — — 15,115 — — 2,093 3,761 1,100,547 — 54,140 4,029,388 444 — 829 1,273 16,260 — 11,249 27,509 — 872 24,596 25,468 (16,260) (194) (16,066) (32,520) 9,218 — — 9,218 1,125,324 678 76,841 9,737,879 1,525,738 184,227 345,498 12,052,751 4,077 4,791 12,738 21,606 $ 1,529,815 $ 189,018 $ 358,236 $ 12,074,357 (continued) 269 State of California Annual Comprehensive Financial Report Combining Statement of Net Position (continued) Nonmajor Enterprise Funds June 30, 2025 (amounts in thousands) State Water Safe Drinking Pollution Control Water State Revolving Revolving LIABILITIES Current liabilities: Accounts payable................................................................................................................................. $ — $ — Due to other funds................................................................................................................................ 3,205 10,987 Due to other governments..................................................................................................................... — — Revenues received in advance.............................................................................................................. — — Interest payable ................................................................................................................................... 17,910 636 Current portion of long-term obligations.................................................................................................. 115,438 7,657 Total current liabilities....................................................................................................................... 136,553 19,280 Noncurrent liabilities: Interfund payables................................................................................................................................ — — Compensated absences payable........................................................................................................... 1,935 6,510 Workers’ compensation benefits payable ............................................................................................... — — Lease liability....................................................................................................................................... — — Subscription liability.............................................................................................................................. — — General obligation bonds payable.......................................................................................................... — — Revenue bonds payable ....................................................................................................................... 1,562,479 48,790 Net other postemployment benefits liability............................................................................................. — — Net pension liability .............................................................................................................................. — — Other noncurrent liabilities .................................................................................................................... — — Total noncurrent liabilities ................................................................................................................. 1,564,414 55,300 Total liabilities............................................................................................................................. 1,700,967 74,580 DEFERRED INFLOWS OF RESOURCES ................................................................................................. — — Total liabilities and deferred inflows of resources.................................................................... 1,700,967 74,580 NET POSITION Net investment in capital assets ............................................................................................................ — — Restricted – expendable Debt service .................................................................................................................................... 293,570 — Security for revenue bonds ............................................................................................................... 3,518,061 — Other purposes................................................................................................................................ — 2,647,318 Total expendable .......................................................................................................................... 3,811,631 2,647,318 Unrestricted......................................................................................................................................... 1,762,792 — Total net position........................................................................................................................ 5,574,423 2,647,318 Total liabilities, deferred inflows of resources, and net position............................................... $ 7,275,390 $ 2,721,898 270 Nonmajor Enterprise Funds Other Housing Electric Enterprise Loan Power Programs Total $ — $ 35,639 $ 4,209 $ 39,848 1,175 — 680 16,047 147 — 1,359 1,506 — — 24 24 19,727 — — 38,273 24,445 298 5,780 153,618 45,494 35,937 12,052 249,316 — — 28,520 28,520 — 312 5,585 14,342 — — 4,496 4,496 — 459 16,006 16,465 — 24 — 24 900,922 — — 900,922 420,703 — — 2,031,972 7,178 5,971 27,794 40,943 10,802 4,660 22,836 38,298 3,727 — — 3,727 1,343,332 11,426 105,237 3,079,709 1,388,826 47,363 117,289 3,329,025 1,377 27,147 5,487 34,011 1,390,203 74,510 122,776 3,363,036 444 — 1,300 1,744 — — — 293,570 — — — 3,518,061 139,168 114,508 167,947 3,068,941 139,168 114,508 167,947 6,880,572 — — 66,213 1,829,005 139,612 114,508 235,460 8,711,321 $ 1,529,815 $ 189,018 $ 358,236 $ 12,074,357 (concluded) 271 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, 2025 (amounts in thousands) State Water Safe Drinking Pollution Control Water State Revolving Revolving OPERATING REVENUES Services and sales............................................................................................................................... $ 11,445 $ — Investment and interest ........................................................................................................................ 65,519 28,857 Other .................................................................................................................................................. — — Total operating revenues................................................................................................................ 76,964 28,857 OPERATING EXPENSES Personal services................................................................................................................................. 9,503 31,389 Supplies.............................................................................................................................................. — — Services and charges........................................................................................................................... 7,212 — Depreciation ........................................................................................................................................ — — Interest expense .................................................................................................................................. — — Other .................................................................................................................................................. 4,548 13,210 Total operating expenses............................................................................................................... 21,263 44,599 Operating income (loss)................................................................................................................. 55,701 (15,742) NONOPERATING REVENUES (EXPENSES) Donations and grants ........................................................................................................................... 329,503 235,382 Investment and interest income (loss).................................................................................................... 38,787 8,208 Interest expense and fiscal charges....................................................................................................... (53,389) (1,319) Other .................................................................................................................................................. — — Total nonoperating revenues (expenses)........................................................................................ 314,901 242,271 Income (loss) before capital contributions and transfers.................................................................... 370,602 226,529 Change in net position 370,602 226,529 Total net position – beginning, as previously reported........................................................................... 5,205,153 2,425,864 Changes in accounting principle............................................................................................................ (1,332) (5,075) Total net position (deficit) – beginning, as restated................................................................................ 5,203,821 2,420,789 Total net position – ending..................................................................................................................... $ 5,574,423 $ 2,647,318 272 Nonmajor Enterprise Funds Other Housing Electric Enterprise Loan Power Programs Total $ 2,322 $ 792 $ 117,955 $ 132,514 71,717 — 2,924 169,017 2,935 — 1,774 4,709 76,974 792 122,653 306,240 4,981 (399) 30,789 76,263 — — 76,784 76,784 16,778 6,048 21,984 52,022 — 178 2,605 2,783 39,960 — — 39,960 — — — 17,758 61,719 5,827 132,162 265,570 15,255 (5,035) (9,509) 40,670 — — — 564,885 — 2,788 6,159 55,942 — (1,000) (55) (55,763) 1,370 (4,954) 225 (3,359) 1,370 (3,166) 6,329 561,705 16,625 (8,201) (3,180) 602,375 16,625 (8,201) (3,180) 602,375 122,987 123,108 237,787 8,114,899 — (399) 853 (5,953) 122,987 122,709 238,640 8,108,946 $ 139,612 $ 114,508 $ 235,460 $ 8,711,321 273 State of California Annual Comprehensive Financial Report Combining Statement of Cash Flows Nonmajor Enterprise Funds Year Ended June 30, 2025 (amounts in thousands) State Water Safe Drinking Pollution Control Water State Revolving Revolving CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers/employers ...................................................................................................... $ 65,780 $ 28,631 Receipts from interfund services provided .............................................................................................. — — Payments to suppliers .......................................................................................................................... (19,721) — Payments to employees........................................................................................................................ — (41,638) Payments for interfund services used..................................................................................................... (37) — Other receipts (payments)..................................................................................................................... (452,869) (157,599) Net cash provided by (used in) operating activities........................................................................ (406,847) (170,606) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Receipts from / (payment on) notes receivable and leases receivable....................................................... 1,140 — Proceeds from / (payment on) loans and interfund borrowings ................................................................. — — Proceeds from general obligation bonds................................................................................................. — — Retirement of general obligation bonds .................................................................................................. — — Proceeds from revenue bonds............................................................................................................... — — Retirement of revenue bonds ................................................................................................................ (96,645) (6,395) Interest paid ........................................................................................................................................ (75,069) (2,830) Transfers in ......................................................................................................................................... — — Grants received ................................................................................................................................... 328,564 233,856 Net cash provided by (used in) noncapital financing activities....................................................... 157,990 224,631 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....................................................................................................................... 41,744 7,813 Net cash provided by (used in) investing activities......................................................................... 41,744 7,813 Net increase (decrease) in cash and pooled investments......................................................................... (207,113) 61,838 Cash and pooled investments – beginning............................................................................................. 1,056,361 176,599 Cash and pooled investments – ending.................................................................................................. $ 849,248 $ 238,437 274 Nonmajor Enterprise Funds Other Housing Electric Enterprise Loan Power Programs Total $ 169,691 $ — $ 17,880 $ 281,982 — 792 107,335 108,127 (21,886) (1,309) (112,776) (155,692) (4,981) (3,913) (25,112) (75,644) — — (467) (504) (285,929) 9,555 (4,498) (891,340) (143,105) 5,125 (17,638) (733,071) — — (1,816) (676) — — 800 800 300,000 — — 300,000 (35,385) — — (35,385) 80,000 — — 80,000 (36,140) — — (139,180) (32) — — (77,931) — — 223 223 — — — 562,420 308,443 — (793) 690,271 — — (2,248) (2,248) — — 352 352 — (215) (1,622) (1,837) — — (54) (54) — (215) (3,572) (3,787) (1,016) — — (1,016) — 2,785 6,159 58,501 (1,016) 2,785 6,159 57,485 164,322 7,695 (15,844) 10,898 194,922 68,122 272,128 1,768,132 $ 359,244 $ 75,817 $ 256,284 $ 1,779,030 (continued) 275 State of California Annual Comprehensive Financial Report Combining Statement of Cash Flows (continued) Nonmajor Enterprise Funds Year Ended June 30, 2025 (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)............................................................................................................................ $ 55,701 $ (15,742) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation ............................................................................................................................................ — — Provisions and allowances........................................................................................................................ — — Amortization of premiums and discounts .................................................................................................... — — Other ...................................................................................................................................................... (9,588) — Change in account balances: Receivables............................................................................................................................................. — — Due from other funds................................................................................................................................ (37) — Due from other governments..................................................................................................................... (1,444) (226) Prepaid items .......................................................................................................................................... — — Inventories .............................................................................................................................................. — — Leases receivable .................................................................................................................................... — — Other current assets................................................................................................................................. — — Loans receivable...................................................................................................................................... (453,021) (157,599) Deferred outflow of resources.................................................................................................................... — — Accounts payable..................................................................................................................................... — — Due to other funds.................................................................................................................................... 939 1,526 Due to other governments......................................................................................................................... — — Interest payable ....................................................................................................................................... — — Revenues received in advance.................................................................................................................. — — Compensated absences payable............................................................................................................... 603 1,435 Other noncurrent liabilities ........................................................................................................................ — — Deferred inflow of resources...................................................................................................................... — — Total adjustments..................................................................................................................................... (462,548) (154,864) Net cash provided by (used in) operating activities................................................................................ $ (406,847) $ (170,606) Noncash investing, capital, and financing activities Miscellaneous noncash activities........................................................................................................... $ — $ — 276 Nonmajor Enterprise Funds Other Housing Electric Enterprise Loan Power Programs Total $ 15,255 $ (5,035) $ (9,509) $ 40,670 — 178 2,605 2,783 (702) — — (702) (1,770) — — (1,770) 94 8,555 — (939) (5,783) — (48) (5,831) — — 2,570 2,533 — — (73) (1,743) — — (28) (28) — — 671 671 — — (13,260) (13,260) (1,540) — 1 (1,539) (139,366) — — (749,986) — 2,471 6,259 8,730 215 210 (3,357) (2,932) (1,554) — (399) 512 — — 1,336 1,336 (4,308) — — (4,308) — — (2) (2) — (399) (221) 1,418 (2,081) (799) (2,703) (5,583) (1,565) (56) (1,480) (3,101) (158,360) 10,160 (8,129) (773,741) $ (143,105) $ 5,125 $ (17,638) $ (733,071) (concluded) $ 3,406 $ — $ — $ 3,406 277 State of California Annual Comprehensive Financial Report This page intentionally left blank 278 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) 279 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. 280 Pension and Other Employee Benefit Trust Funds This page intentionally left blank 281 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, 2025 (amounts in thousands) Defined Benefit Public Employees' State Teachers' Judges’ Retirement Retirement Retirement ASSETS Cash and pooled investments................................................................................ $ 4,548,563 $ 315,522 $ 5,000 Investments, at fair value: Short-term........................................................................................................ 19,517,725 16,998,037 65,416 Equity securities ............................................................................................... 225,676,209 148,774,287 — Debt securities ................................................................................................. 187,124,506 57,731,782 — Real estate....................................................................................................... 74,476,098 43,438,843 — Securities lending collateral ............................................................................... 8,824,622 38,703,628 — Other............................................................................................................... 124,790,224 108,878,257 — Total investments .......................................................................................... 640,409,384 414,524,834 65,416 Receivables (net).................................................................................................. 53,565,956 6,669,338 1,211 Due from other funds ............................................................................................ 43,281 833 186 Due from other governments ................................................................................. — 119 — Loans receivable .................................................................................................. — 6,293,936 — Other assets......................................................................................................... 196,956 889,221 — Total assets .................................................................................................... 698,764,140 428,693,803 71,813 DEFERRED OUTFLOWS OF RESOURCES .............................................................. 174,929 139,537 802 Total assets and deferred outflows of resources ......................................... 698,939,069 428,833,340 72,615 LIABILITIES Accounts payable ................................................................................................. 12,118 6,888,945 280 Benefits payable................................................................................................... 2,925,698 2,174,267 — Securities lending obligations................................................................................. 26,113,443 38,734,051 — Loans payable...................................................................................................... — 6,251,450 — Other liabilities...................................................................................................... 106,791,758 4,375,089 7,791 Total liabilities ................................................................................................ 135,843,017 58,423,802 8,071 DEFERRED INFLOWS OF RESOURCES.................................................................. 120,251 229,348 543 Total liabilities and deferred inflows of resources........................................ 135,963,268 58,653,150 8,614 NET POSITION Restricted: Pension benefits................................................................................................... 562,975,801 370,180,190 64,001 Other postemployment benefits.............................................................................. — — — Deferred compensation participants ....................................................................... — — — Individuals, organizations, or other governments ..................................................... — — — Total net position............................................................................................ $ 562,975,801 $ 370,180,190 $ 64,001 282 Pension and Other Employee Benefit Trust Funds Defined Benefit Pension Plans OPEB Plan Other Pension Annuitants’ and Other Judges’ Legislators’ Health Care Deferred Employee Retirement II Retirement Coverage Compensation Benefit Trust Total $ 4,808 $ 2,003 $ 19,334 $ 24,462 $ 15,092 4,934,784 289 14 62,264 1,964,936 16,049 38,624,730 2,013,979 18,902 17,766,047 19,200,767 68,745 413,518,936 954,070 72,143 7,364,366 3,106,314 42,628 256,395,809 — — — — — 117,914,941 — — — — — 47,528,250 — — — 7,391,241 — 241,059,722 2,968,338 91,059 25,192,677 31,663,258 127,422 1,115,042,388 13,710 101 125,735 57,686 9,319 60,443,056 98 2 244 69 18 44,731 — — — — — 119 — — — 9,426 — 6,303,362 — — — 3 — 1,086,180 2,986,954 93,165 25,337,990 31,754,904 151,851 1,187,854,620 922 251 1,621 1,507 378 319,947 2,987,876 93,416 25,339,611 31,756,411 152,229 1,188,174,567 445 109 1,734 1,849 8,889 6,914,369 — 633 111,166 2,406 435 5,214,605 — — — — — 64,847,494 — — — — — 6,251,450 7,671 1,592 11,953 15,166 2,837 111,213,857 8,116 2,334 124,853 19,421 12,161 194,441,775 630 128 1,514 1,861 809 355,084 8,746 2,462 126,367 21,282 12,970 194,796,859 2,979,130 90,954 — — 126,976 936,417,052 — — 25,213,244 — — 25,213,244 — — — 31,735,129 — 31,735,129 — — — — 12,283 12,283 $ 2,979,130 $ 90,954 $ 25,213,244 $ 31,735,129 $ 139,259 $ 993,377,708 283 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, 2025 (amounts in thousands) Defined Benefit Public Employees' State Teachers' Judges' Retirement Retirement Retirement ADDITIONS Contributions: Employer ......................................................................................................... $ 23,421,228 $ 8,759,346 $ 218,682 Plan member.................................................................................................... 6,801,588 4,847,178 1,274 Non-employer................................................................................................... — 4,263,762 — Total contributions ......................................................................................... 30,222,816 17,870,286 219,956 Investment income: Net appreciation in fair value of investments........................................................ 54,961,815 23,925,016 — Interest, dividends, and other investment income................................................. 9,397,036 9,868,910 3,584 Less: investment expense ................................................................................. (2,878,396) (2,241,141) (8) Net investment income................................................................................... 61,480,455 31,552,785 3,576 Other................................................................................................................... 8,472 376,490 3,136 Total additions 91,711,743 49,799,561 226,668 DEDUCTIONS Distributions paid and payable to participants.......................................................... 34,602,108 19,912,609 211,739 Refunds of contributions........................................................................................ 393,145 147,829 — Administrative expense ......................................................................................... 363,655 259,297 2,562 Interest expense................................................................................................... — 317,312 — Payments to and for depositors.............................................................................. — — — Total deductions............................................................................................. 35,358,908 20,637,047 214,301 Change in net position ................................................................................... 56,352,835 29,162,514 12,367 Net position – beginning, as previously reported.................................................... 506,622,966 341,017,676 51,634 Net position – ending.............................................................................................. $ 562,975,801 $ 370,180,190 $ 64,001 284 Pension and Other Employee Benefit Trust Funds Defined Benefit Pension Plans OPEB Plan Other Pension Annuitants’ and Other Judges' Legislators' Health Care Deferred Employee Retirement II Retirement Coverage Compensation Benefit Trust Total $ 101,531 $ 75 $ 5,755,686 $ 4,266 $ 22,023 $ 38,282,837 45,898 — — 1,237,578 50,738 12,984,254 — — — — — 4,263,762 147,429 75 5,755,686 1,241,844 72,761 55,530,853 308,378 6,555 2,605,076 3,282,021 12,707 85,101,568 537 18 4,803 69,339 456 19,344,683 (1,435) (121) (10,225) (999) (113) (5,132,438) 307,480 6,452 2,599,654 3,350,361 13,050 99,313,813 — — 16,873 29,578 57 434,606 454,909 6,527 8,372,213 4,621,783 85,868 155,279,272 105,931 7,336 4,093,013 186,988 69,962 59,189,686 589 — — 2,396 — 543,959 2,909 712 6,786 31,687 636 668,244 — — — 2 1 317,315 — — 46,434 797,007 6,666 850,107 109,429 8,048 4,146,233 1,018,080 77,265 61,569,311 345,480 (1,521) 4,225,980 3,603,703 8,603 93,709,961 2,633,650 92,475 20,987,264 28,131,426 130,656 899,667,747 $ 2,979,130 $ 90,954 $ 25,213,244 $ 31,735,129 $ 139,259 $ 993,377,708 285 State of California Annual Comprehensive Financial Report This page intentionally left blank 286 Private Purpose Trust Funds 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 CalSavers Retirement Savings Trust Program Fund accounts for money received from California private employees to provide greater retirement savings in a convenient, voluntary, low-cost, and portable manner. 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. 287 State of California Annual Comprehensive Financial Report Combining Statement of Fiduciary Net Position Private Purpose Trust Funds June 30, 2025 (amounts in thousands) Calsavers Scholarshare Retirement Other Private Program Savings Trust Unclaimed Purpose Trust Fund Property Trust Total ASSETS Cash and pooled investments ................. $ 9,672 $ — $ 108,472 $ 34,207 $ 152,351 Investments, at fair value: Short-term ......................................... 312,614 — — — 312,614 Equity securities................................. 11,102,739 15,695 — 87,998 11,206,432 Debt securities................................... 3,238,151 2,251 — 48,276 3,288,678 Real estate........................................ 366,447 — — — 366,447 Other ................................................ 2,730,035 1,324,037 — 67,593 4,121,665 Total investments............................ 17,749,986 1,341,983 — 203,867 19,295,836 Receivables (net)................................... 3,488 26 3,107 1,475 8,096 Other assets.......................................... — — 428,501 98 428,599 Total assets...................................... 17,763,146 1,342,009 540,080 239,647 19,884,882 LIABILITIES Accounts payable................................... 14,448 322 2,030 4,102 20,902 Revenues received in advance................ — — — 6,473 6,473 Deposits................................................ — — 428,501 — 428,501 Total liabilities.................................. 14,448 322 430,531 10,575 455,876 NET POSITION Restricted for individuals, organizations, or other governments ........................... $ 17,748,698 $ 1,341,687 $ 109,549 $ 229,072 $ 19,429,006 288 Private Purpose Trust Funds Combining Statement of Changes in Fiduciary Net Position Private Purpose Trust Funds Year Ended June 30, 2025 (amounts in thousands) Calsavers Scholarshare Retirement Other Private Program Savings Trust Unclaimed Purpose Trust Fund Property Trust Total ADDITIONS Investment income: Net appreciation in fair value of investments.................................... $ — $ 121,997 $ — $ — $ 121,997 Interest, dividends, and other investment income.......................... 1,762,806 28,566 — 16,438 $ 1,807,810 Less: investment expense................... (3,365) (14,245) — — (17,610) Net investment income (loss)........... 1,759,441 136,318 — 16,438 1,912,197 Receipts from depositors ........................ 3,018,182 437,214 1,695,663 73,472 5,224,531 Total additions.............................. 4,777,623 573,532 1,695,663 89,910 7,136,728 DEDUCTIONS Administrative expense........................... — — — 1,010 1,010 Payments to and for depositors ............... 2,609,813 172,330 1,654,384 37,390 4,473,917 Total deductions ........................... 2,609,813 172,330 1,654,384 38,400 4,474,927 Change in net position ................. 2,167,810 401,202 41,279 51,510 2,661,801 Net position – beginning, as previously reported ................................................ 15,580,888 — 68,270 1,090,966 16,740,124 Change to or within the financial reporting entity................................................. — 940,485 — (913,404) 27,081 Net position – beginning, as restated ....... $ 15,580,888 $ 940,485 $ 68,270 $ 177,562 $ 16,767,205 Net position – ending ............................... $ 17,748,698 $ 1,341,687 $ 109,549 $ 229,072 $ 19,429,006 289 State of California Annual Comprehensive Financial Report This page intentionally left blank 290 Investment Trust Funds 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. 291 State of California Annual Comprehensive Financial Report Combining Statement of Fiduciary Net Position Investment Trust Funds June 30, 2025 (amounts in thousands) California Employers’ Local Agency Pension Investment Prefunding Trust Total ASSETS Cash and pooled investments................................................................................ $ 24,489,218 $ 683 $ 24,489,901 Investments, at fair value:...................................................................................... Short-term........................................................................................................ — 1,196 1,196 Equity securities ............................................................................................... — 148,826 148,826 Debt securities ................................................................................................. — 162,799 162,799 Total investments .......................................................................................... — 312,821 312,821 Receivables (net).................................................................................................. 262,197 41 262,238 Total assets .................................................................................................... 24,751,415 313,545 25,064,960 DEFERRED OUTFLOWS OF RESOURCES .............................................................. — 11 11 Total assets and deferred outflows of resources ......................................... 24,751,415 313,556 25,064,971 LIABILITIES Accounts payable ................................................................................................. 13 69 82 Due to other governments ..................................................................................... 261,735 — 261,735 Other liabilities...................................................................................................... — 103 103 Total liabilities ................................................................................................ 261,748 172 261,920 DEFERRED INFLOWS OF RESOURCES.................................................................. — 56 56 Total liabilities and deferred inflows of resources........................................ 261,748 228 261,976 NET POSITION Restricted: Pension and other postemployment benefits ........................................................... — 313,328 313,328 Pool participants................................................................................................... 24,489,667 — 24,489,667 Total net position............................................................................................ $ 24,489,667 $ 313,328 $ 24,802,995 292 Investment Trust Funds Combining Statement of Changes in Fiduciary Net Position Investment Trust Funds Year Ended June 30, 2025 (amounts in thousands) California Employers’ Local Agency Pension Investment Prefunding Trust Total ADDITIONS Contributions: Employer ......................................................................................................... $ — $ 54,238 $ 54,238 Total contributions ......................................................................................... — 54,238 54,238 Investment income: Net appreciation in fair value of investments........................................................ — 26,759 26,759 Interest, dividends, and other investment income................................................. 978,631 71 978,702 Less: investment expense ................................................................................. — (227) (227) Net investment income................................................................................... 978,631 26,603 1,005,234 Receipts from depositors................................................................................... 18,006,954 — 18,006,954 Other............................................................................................................... — 650 650 Total additions............................................................................................. 18,985,585 81,491 19,067,076 DEDUCTIONS Distributions paid and payable to participants...................................................... 976,310 — 976,310 Administrative expense ..................................................................................... 2,323 190 2,513 Payments to and for depositors.......................................................................... 15,491,516 31,105 15,522,621 Total deductions.......................................................................................... 16,470,149 31,295 16,501,444 Change in net position ................................................................................ 2,515,436 50,196 2,565,632 Net position – beginning, as previously reported.................................................... 21,974,231 263,132 22,237,363 Net position – ending.............................................................................................. $ 24,489,667 $ 313,328 $ 24,802,995 293 This page intentionally left blank 294 Nonmajor Component Units 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, 2024. 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. 295 State of California Annual Comprehensive Financial Report Combining Statement of Net Position Nonmajor Component Units June 30, 2025 (amounts in thousands) California State University Financing Auxiliary Authorities Organizations ASSETS Current assets: Cash and pooled investments ............................................................................................................... $ 13,811 $ 735,196 Investments......................................................................................................................................... — 955,738 Restricted assets: Cash and pooled investments ........................................................................................................... 1,170,672 — Investments..................................................................................................................................... 207,750 — Receivables (net)................................................................................................................................. 313,784 496,682 Due from primary government............................................................................................................... 80 — Prepaid items ...................................................................................................................................... — — Other current assets............................................................................................................................. — 46,280 Total current assets.......................................................................................................................... 1,706,097 2,233,896 Noncurrent assets: Restricted assets: Cash and pooled investments ........................................................................................................... — 33,858 Investments..................................................................................................................................... 242,096 — Investments......................................................................................................................................... — 3,643,275 Receivables (net)................................................................................................................................. — 692,676 Loans receivable.................................................................................................................................. 580,822 — Long-term prepaid charges ................................................................................................................... — — Capital assets: Land ............................................................................................................................................... — 178,931 Collections -nondepreciable ............................................................................................................. — 12,966 Buildings and other depreciable property............................................................................................ 9 1,480,657 Intangible assets -amortizable .......................................................................................................... — 347,170 Less: accumulated depreciation/amortization...................................................................................... (9) (809,937) Construction/development in progress ............................................................................................... — 65,240 Intangible assets -nonamortizable..................................................................................................... — 202 Other noncurrent assets ....................................................................................................................... — 60,670 Total noncurrent assets .................................................................................................................... 822,918 5,705,708 Total assets ................................................................................................................................ 2,529,015 7,939,604 DEFERRED OUTFLOWS OF RESOURCES.............................................................................................. 16,398 49,504 Total assets and deferred outflows of resources ..................................................................... $ 2,545,413 $ 7,989,108 296 Nonmajor Component Units District Other Agricultural Component Associations Units Total $ 181,241 $ 1,150,883 $ 2,081,131 — — 955,738 14,365 92,300 1,277,337 3,208 — 210,958 16,160 43,874 870,500 — — 80 1,266 648 1,914 4,710 — 50,990 220,950 1,287,705 5,448,648 — — 33,858 4,336 — 246,432 — 150,970 3,794,245 — 5,837 698,513 — — 580,822 — 89 89 34,507 5,247 218,685 — 435 13,401 872,182 478,278 2,831,126 — 3,924 351,094 (615,724) (74,553) (1,500,223) 61,734 53,512 180,486 — 116 318 — 11,150 71,820 357,035 635,005 7,520,666 577,985 1,922,710 12,969,314 37,710 20,620 124,232 $ 615,695 $ 1,943,330 $ 13,093,546 (continued) 297 State of California Annual Comprehensive Financial Report Combining Statement of Net Position (continued) Nonmajor Component Units June 30, 2025 (amounts in thousands) California State University Financing Auxiliary Authorities Organizations LIABILITIES Current liabilities: Accounts payable................................................................................................................................. $ 482,124 $ 175,381 Revenues received in advance.............................................................................................................. 1,496 187,052 Deposits.............................................................................................................................................. — — Contracts and notes payable................................................................................................................. — 60,912 Interest payable ................................................................................................................................... 2,529 — Current portion of long-term obligations.................................................................................................. 18,084 114,540 Other current liabilities.......................................................................................................................... 47,624 167,154 Total current liabilities....................................................................................................................... 551,857 705,039 Noncurrent liabilities: Compensated absences payable........................................................................................................... 592 12,253 Workers’ compensation benefits payable ............................................................................................... — 4,705 Loans payable ..................................................................................................................................... — — Commercial paper and other borrowings................................................................................................ — 121,400 Lease liability....................................................................................................................................... — 176,761 Subscription liability.............................................................................................................................. — 2,866 Revenue bonds payable ....................................................................................................................... 348,750 54,448 Net other postemployment benefits liability............................................................................................. 11,242 68,107 Net pension liability .............................................................................................................................. 10,402 119,617 Revenues received in advance.............................................................................................................. — — Other noncurrent liabilities .................................................................................................................... 127,733 663,232 Total noncurrent liabilities ................................................................................................................. 498,719 1,223,389 Total liabilities............................................................................................................................. 1,050,576 1,928,428 DEFERRED INFLOWS OF RESOURCES ................................................................................................. 3,326 453,151 Total liabilities and deferred inflows of resources ..................................................... 1,053,902 2,381,579 NET POSITION Net investment in capital assets ............................................................................................................ — 495,509 Restricted: Nonexpendable -endowments........................................................................................... — 2,153,510 Expendable: Endowments and gifts .................................................................................................... — — Education...................................................................................................................... — 1,774,148 Statute .......................................................................................................................... 1,486,228 — Other purposes.............................................................................................................. 5,167 — Total expendable ........................................................................................................ 1,491,395 1,774,148 Unrestricted......................................................................................................................................... 116 1,184,362 Total net position........................................................................................................................ 1,491,511 5,607,529 Total liabilities, deferred inflows of resources, and net position............................................... $ 2,545,413 $ 7,989,108 298 Nonmajor Component Units District Other Agricultural Component Associations Units Total $ 22,498 $ 936,725 $ 1,616,728 7,680 4,636 200,864 1,510 26 1,536 — — 60,912 396 — 2,925 2,149 5,823 140,596 5,253 192,183 412,214 39,486 1,139,393 2,435,775 7,861 6,605 27,311 — — 4,705 11,354 — 11,354 — — 121,400 — 130 176,891 — 695 3,561 30,257 422,390 855,845 17,167 63,464 159,980 89,935 49,508 269,462 17,360 — 17,360 23,301 21,857 836,123 197,235 564,649 2,483,992 236,721 1,704,042 4,919,767 28,465 48,583 533,525 265,186 1,752,625 5,453,292 298,804 59,915 854,228 — 31,349 2,184,859 — 45,785 45,785 — — 1,774,148 — — 1,486,228 22,731 59,364 87,262 22,731 105,149 3,393,423 28,974 (5,708) 1,207,744 350,509 190,705 7,640,254 $ 615,695 $ 1,943,330 $ 13,093,546 (concluded) 299 State of California Annual Comprehensive Financial Report Combining Statement of Activities Nonmajor Component Units Year Ended June 30, 2025 (amounts in thousands) California State University Financing Auxiliary Authorities Organizations OPERATING EXPENSES Personal services................................................................................................................................. $ 22,829 $ 562,389 Scholarships and fellowships ................................................................................................................ — 120,441 Supplies.............................................................................................................................................. — — Services and charges........................................................................................................................... 11,992 1,745,639 Depreciation ........................................................................................................................................ — 87,581 Interest expense .................................................................................................................................. 10,884 26,123 Other .................................................................................................................................................. — 83,410 Total operating expenses............................................................................................................... 45,705 2,625,583 PROGRAM REVENUES Charges for services ............................................................................................................................ 3,559 558,669 Operating grants and contributions ........................................................................................................ 268,634 1,106,663 Capital grants and contributions ............................................................................................................ — 28,695 Total program revenues ................................................................................................................. 272,193 1,694,027 Net revenues (expenses)............................................................................................................... 226,488 (931,556) GENERAL REVENUES Investment and interest income (loss).................................................................................................... 79,126 465,293 Other .................................................................................................................................................. 2,766 959,926 Total general revenues................................................................................................................... 81,892 1,425,219 Change in net position................................................................................................................... 308,380 493,663 Net position – beginning, as previously reported ................................................................................... 1,183,329 5,119,104 Error corrections .................................................................................................................................. — 3,896 Changes in accounting principle............................................................................................................ (198) (9,134) Net position – beginning, as restated ..................................................................................................... 1,183,131 5,113,866 Net position – ending ............................................................................................................................. $ 1,491,511 $ 5,607,529 300 Nonmajor Component Units District Other Agricultural Component Associations Units Total $ 140,554 $ 45,995 $ 771,767 — 6,943 127,384 — 22,814 22,814 173,051 35,316 1,965,998 24,011 9,650 121,242 1,604 20,588 59,199 (8,364) 7,146 82,192 330,856 148,452 3,150,596 322,776 74,146 959,150 — 32,589 1,407,886 — — 28,695 322,776 106,735 2,395,731 (8,080) (41,717) (754,865) 916 55,644 600,979 9,554 31,780 1,004,026 10,470 87,424 1,605,005 2,390 45,707 850,140 348,119 148,688 6,799,240 — — 3,896 — (3,690) (13,022) 348,119 144,998 6,790,114 $ 350,509 $ 190,705 $ 7,640,254 301 State of California Annual Comprehensive Financial Report This page intentionally left blank 302 Statistical Section This page intentionally left blank Statistical Section 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. 305 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) 20162 2017 2018 20193 Governmental activities Net investment in capital assets ............................................. $ 104,596,917 $ 107,042,274 $ 109,614,321 $ 112,279,950 Restricted – Expendable ....................................................... 29,060,971 33,832,232 35,053,202 41,371,805 Unrestricted1 ......................................................................... (168,542,861) (169,499,683) (213,316,033) (208,377,265) Total governmental activities net position (deficit) .................. $ (34,884,973) $ (28,625,177) $ (68,648,510) $ (54,725,510) Business-type activities Net investment in capital assets ............................................. $ 2,520,621 $ 2,295,270 $ 2,469,723 $ 2,534,257 Restricted – Nonexpendable .................................................. 8,653 1,746 1,708 1,693 Restricted – Expendable ....................................................... 5,750,634 6,307,218 12,083,737 12,945,567 Unrestricted ......................................................................... (3,707,406) (1,321,132) (16,464,573) (16,718,860) Total business-type activities net position (deficit).................. $ 4,572,502 $ 7,283,102 $ (1,909,405) $ (1,237,343) Primary government Net investment in capital assets ............................................. $ 107,117,538 $ 109,337,544 $ 112,084,044 $ 114,814,207 Restricted – Nonexpendable .................................................. 8,653 1,746 1,708 1,693 Restricted – Expendable ....................................................... 34,811,605 40,139,450 47,136,939 54,317,372 Unrestricted ......................................................................... (172,250,267) (170,820,815) (229,780,606) (225,096,125) Total primary government net position (deficit) ....................... $ (30,312,471) $ (21,342,075) $ (70,557,915) $ (55,962,853) 1Governmental 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. 2In 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. 3In 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. 4Prior-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. 306 Statistical Section 2020 2021 2022 2023 2024 20254 $ 116,773,259 $ 120,745,220 $ 125,862,983 $ 131,322,297 $ 134,088,866 $ 137,255,696 46,670,678 46,362,528 60,482,461 66,645,014 68,517,000 63,849,498 (207,968,523) (174,427,918) (221,863,616) (218,243,000) (168,171,253) (163,244,415) $ (44,524,586) $ (7,320,170) $ (35,518,172) $ (20,275,689) $ 34,434,613 $ 37,860,779 $ 2,907,066 $ 2,677,917 $ 3,340,905 $ 3,538,034 $ 3,867,059 $ 4,014,699 1,677 1,663 1,641 1,595 1,612 1,605 7,722,116 7,651,874 10,639,641 9,900,307 8,629,619 10,724,460 (20,948,611) (52,668,204) (33,212,073) (31,107,513) (32,289,060) (33,214,502) $ (10,317,752) $ (42,336,750) $ (19,229,886) $ (17,667,577) $ (19,790,770) $ (18,473,738) $ 119,680,325 $ 123,423,137 $ 129,203,888 $ 134,860,331 $ 137,955,925 $ 141,270,395 1,677 1,663 1,641 1,595 1,612 1,605 54,392,794 54,014,402 71,122,102 76,545,321 77,146,619 74,573,958 (228,917,134) (227,096,122) (255,075,689) (249,350,513) (200,460,313) (196,458,917) $ (54,842,338) $ (49,656,920) $ (54,748,058) $ (37,943,266) $ 14,643,843 $ 19,387,041 307 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) 2016 2017 20184 2019 Governmental activities Expenses General government ............................................................. $ 16,686,037 $ 17,400,482 $ 18,378,216 $ 17,900,629 Education ............................................................................ 65,467,497 67,377,805 70,280,444 75,643,779 Health and human services ................................................... 127,543,288 135,090,171 137,828,737 144,936,676 Natural resources and environmental protection ...................... 6,988,442 7,342,079 8,304,162 9,774,290 Business, consumer services, and housing ............................. 814,676 1,163,511 1,258,104 2,133,480 Transportation ...................................................................... 12,120,820 12,947,296 14,259,461 17,022,071 Corrections and rehabilitation ................................................ 11,875,294 13,086,499 14,921,295 15,153,502 Interest on long-term debt ..................................................... 4,231,581 4,191,283 4,154,485 3,995,597 Total expenses................................................................. 245,727,635 258,599,126 269,384,904 286,560,024 Program revenues Charges for services: General government .......................................................... 6,525,736 5,825,533 5,726,900 5,755,165 Education ......................................................................... 66,298 74,548 37,147 78,445 Health and human services ................................................ 10,630,859 11,638,503 12,968,379 13,874,296 Natural resources and environmental protection ................... 4,823,861 3,998,751 6,319,879 6,644,917 Business, consumer services, and housing .......................... 823,189 844,445 957,885 1,206,126 Transportation ................................................................... 4,532,300 4,611,244 6,053,140 7,093,122 Corrections and rehabilitation ............................................. 19,411 17,988 39,887 10,993 Operating grants/contributions ............................................... 86,628,827 89,497,290 87,812,627 94,501,862 Capital grants/contributions ................................................... 1,480,351 3,027,780 1,882,595 1,561,483 Total program revenues ................................................... 115,530,832 119,536,082 121,798,439 130,726,409 Total governmental activities net program expenses................... (130,196,803) (139,063,044) (147,586,465) (155,833,615) General revenues and other changes in net position General revenues: Personal income taxes .......................................................... 80,303,076 85,712,013 94,460,551 100,657,551 Sales and use taxes ............................................................. 39,121,061 38,726,332 39,784,494 41,006,121 Corporation taxes ................................................................. 9,213,173 11,128,198 12,608,756 14,625,724 Motor vehicle excise taxes1 .................................................... 5,028,589 4,878,953 6,680,858 7,632,365 Insurance taxes .................................................................... 4,203,885 2,719,489 2,754,056 2,734,068 Managed care organization enrollment tax2 ............................. — 2,282,313 2,397,531 2,562,919 Other taxes1.......................................................................... 2,158,874 2,574,456 3,573,848 3,790,987 Investment and interest ......................................................... 131,615 149,135 297,782 706,637 Escheat ............................................................................... 304,960 325,755 378,180 447,401 Gain (loss) on early extinguishment of debt3 ................................ 40,516 30,986 — — Transfers ................................................................................. (2,800,101) (3,083,437) (4,339,995) (3,930,906) Total general revenues and other changes in net position 137,705,648 145,444,193 158,596,061 170,232,867 Total governmental activities change in net position................... $ 7,508,845 $ 6,381,149 $ 11,009,596 $ 14,399,252 1Motor vehicle excise taxes, reported separately in fiscal year 2012 due to material increases, were included with “other taxes” in prior years. 2In 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. 3In 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. 4In fiscal year 2018, the Safe Drinking Water State Revolving Fund was reclassified from a governmental fund to an enterprise fund. 5In fiscal year 2023, Electric Power was reclassified from a major to a nonmajor enterprise fund. 308 Statistical Section 2020 2021 2022 2023 2024 2025 $ 23,489,012 $ 30,604,918 $ 38,760,471 $ 24,946,231 $ 30,364,857 $ 27,779,495 75,803,990 101,569,505 108,450,558 100,496,652 104,989,072 111,485,163 192,576,208 311,925,505 216,232,017 219,032,287 239,312,614 267,963,925 10,110,777 9,923,185 12,502,619 13,314,762 15,843,903 17,002,436 2,603,823 2,946,561 7,364,028 5,641,942 4,587,805 4,676,884 18,424,746 18,119,697 15,792,836 19,100,099 22,096,992 24,890,406 16,861,994 14,185,645 16,526,318 18,204,561 16,282,066 17,182,052 3,841,351 3,505,827 3,508,229 3,705,403 3,780,126 3,825,128 343,711,901 492,780,843 419,137,076 404,441,937 437,257,435 474,805,489 5,847,276 6,583,975 6,167,925 6,992,729 7,657,849 6,856,175 49,780 69,727 65,810 111,947 77,886 88,036 13,836,881 12,664,071 11,402,121 14,195,544 16,884,897 20,351,921 5,551,029 6,592,526 8,422,029 8,488,546 10,428,203 8,694,375 1,378,181 1,697,687 1,671,025 1,561,023 1,589,280 1,684,583 7,244,317 7,731,094 8,479,493 8,346,084 8,975,999 10,471,329 14,753 15,776 13,563 11,403 3,415 8,876 143,670,642 268,258,265 170,662,661 147,291,889 161,736,406 165,057,742 2,107,963 1,847,263 1,895,160 1,847,186 2,698,882 3,222,765 179,700,822 305,460,384 208,779,787 188,846,351 210,052,817 216,435,802 (164,011,079) (187,320,459) (210,357,289) (215,595,586) (227,204,618) (258,369,687) 108,308,455 132,042,516 126,058,884 114,593,854 116,314,391 136,914,382 40,703,239 45,905,984 52,328,196 53,471,988 53,239,701 53,631,984 13,180,402 32,108,028 35,850,573 36,685,982 37,466,478 42,314,846 7,876,545 7,942,519 8,453,232 8,654,176 9,266,839 9,466,839 3,161,634 3,156,992 3,516,612 3,720,620 3,964,555 4,278,061 1,031,357 2,318,011 2,584,077 3,478,815 10,451,644 12,701,905 3,789,610 3,827,360 4,402,939 3,667,941 3,802,735 3,651,215 690,169 140,329 788,612 2,596,512 3,286,074 3,290,200 614,394 640,226 660,143 876,112 848,305 969,528 — — 11,576 22,783 (3,911) — (5,963,068) (3,851,666) (5,465,790) (6,047,026) (4,265,059) (5,349,759) 173,392,737 224,230,299 229,189,054 221,721,757 234,371,752 261,869,201 $ 9,381,658 $ 36,909,840 $ 18,831,765 $ 6,126,171 $ 7,167,134 $ 3,499,514 (continued) 309 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) Business-type activities 2016 2017 20184 2019 Expenses Electric Power5.......................................................................... $ 728,000 $ 945,000 $ 952,000 $ 913,000 Water Resources ...................................................................... 1,086,650 1,223,340 1,221,866 1,199,823 State Lottery ............................................................................ 6,315,957 6,271,875 7,006,591 7,435,755 Unemployment Programs .......................................................... 11,458,966 11,907,623 12,133,531 13,229,332 California State University3 ......................................................... 7,199,277 8,001,396 9,806,114 9,779,084 State Water Pollution Control Revolving ..................................... 11,814 17,112 32,335 49,860 Safe Drinking Water State Revolving4 ......................................... — — 21,994 19,371 Housing Loan ........................................................................... 55,627 62,885 57,088 54,402 Other enterprise programs ......................................................... 84,188 75,397 96,078 109,113 Total expenses..................................................................... 26,940,479 28,504,628 31,327,597 32,789,740 Program revenues Charges for services: Electric Power5.......................................................................... 728,000 945,000 952,000 913,000 Water Resources ...................................................................... 1,086,650 1,223,340 1,221,866 1,172,134 State Lottery ............................................................................ 6,367,902 6,213,074 6,975,168 7,473,452 Unemployment Programs .......................................................... 13,866,028 14,437,094 15,594,045 14,039,030 California State University3 ......................................................... 3,172,154 3,224,919 3,387,420 3,529,083 State Water Pollution Control Revolving ..................................... 70,245 75,912 86,789 95,703 Safe Drinking Water State Revolving4 ......................................... — — 22,675 25,762 Housing Loan ........................................................................... 53,617 52,842 52,735 60,002 Other enterprise programs ......................................................... 82,029 93,177 86,911 106,687 Operating grants/contributions ....................................................... 1,764,962 1,805,406 2,132,665 2,125,362 Capital grants/contributions ........................................................... 66,914 61,027 — — Total program revenues........................................................... 27,258,501 28,131,791 30,512,274 29,540,215 Total business-type activities net program revenues (expenses) ........................................................................ 318,022 (372,837) (815,323) (3,249,525) Other changes in net position Transfers ................................................................................. 2,800,101 3,083,437 4,339,995 3,930,906 Total business-type activities change in net position ...................... 3,118,123 2,710,600 3,524,672 681,381 Total primary government change in net position ........................... $ 10,626,968 $ 9,091,749 $ 14,534,268 $ 15,080,633 310 Statistical Section 2020 2021 2022 2023 2024 2025 $ 905,115 $ 290,411 $ 36,239 $ — $ — $ — 1,184,458 1,157,325 1,233,036 1,460,049 1,623,577 1,557,452 6,665,062 8,452,743 8,885,370 9,291,352 9,361,888 8,997,179 23,622,023 55,737,215 14,965,703 15,533,539 18,212,170 21,370,913 10,592,814 10,391,177 10,778,052 10,877,952 11,867,582 12,923,303 45,288 41,466 35,334 46,948 62,530 74,652 25,007 23,570 24,608 28,052 34,364 45,918 53,656 54,540 45,316 50,682 52,440 61,719 148,450 88,903 165,655 152,586 124,407 143,999 43,241,873 76,237,350 36,169,313 37,441,160 41,338,958 45,175,135 903,000 406,588 124,467 — — — 1,155,001 1,125,002 1,295,670 1,531,195 1,657,882 1,581,506 6,735,321 8,395,767 8,785,557 9,250,527 9,345,359 9,004,421 12,564,665 23,903,289 16,288,566 15,303,547 15,701,364 21,672,895 3,323,307 3,236,482 3,199,357 3,977,056 4,569,374 4,802,019 87,110 73,790 69,695 83,654 106,134 115,751 29,717 26,457 27,377 30,890 36,017 37,065 61,990 51,953 45,820 53,383 66,925 78,344 105,874 107,929 130,837 136,636 142,389 132,617 2,593,383 3,103,175 4,010,488 2,797,050 3,325,619 3,702,658 — — — — — 835 27,559,368 40,430,432 33,977,834 33,163,938 34,951,063 41,128,111 (15,682,505) (35,806,918) (2,191,479) (4,277,222) (6,387,895) (4,047,024) 5,963,068 3,851,666 5,465,790 6,047,026 4,265,059 5,349,759 (9,719,437) (31,955,252) 3,274,311 1,769,804 (2,122,836) 1,302,735 $ (337,779) $ 4,954,588 $ 22,106,076 $ 7,895,975 $ 5,044,298 $ 4,802,249 (concluded) 311 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) 2016 2017 2018 2019 General Fund Reserved.............................................................................. $ — $ — $ — $ — Unreserved........................................................................... — — — — Nonspendable....................................................................... 75,939 103,903 559,644 1,180,575 Restricted ............................................................................. 4,044,911 7,429,825 9,807,729 14,834,597 Committed............................................................................ 68,102 180,755 171,020 1,787,142 Assigned .............................................................................. — — — — Unassigned........................................................................... (3,827,224) (1,904,097) 1,648,511 765,568 Total General Fund.................................................................. $ 361,728 $ 5,810,386 $ 12,186,904 $ 18,567,882 All other governmental funds Reserved.............................................................................. $ — $ — $ — $ — Unreserved, reported in: Special revenue funds ........................................................... — — — — Capital projects funds ............................................................ — — — — Nonspendable....................................................................... 11,188 20,172 69,868 12,760 Restricted ............................................................................. 24,885,166 26,233,389 25,051,548 26,329,109 Committed............................................................................ 5,652,478 5,847,879 7,897,362 9,994,978 Assigned .............................................................................. 14,622 12,033 26,346 19,247 Unassigned........................................................................... (1,037) (15,152) — — Total all other governmental funds .......................................... $ 30,562,417 $ 32,098,321 $ 33,045,124 $ 36,356,094 1Prior-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 2020 2021 2022 2023 2024 20251 $ — $ — $ — $ — $ — $ — — — — — — — 2,129,227 2,878,611 2,958,319 3,950,919 3,574,494 3,354,122 16,709,782 12,928,039 23,251,079 24,830,454 26,028,140 19,463,236 2,965,662 668,351 4,024,689 4,210,891 2,239,352 2,099,524 3,080,372 4,938,117 7,290,655 20,714,283 27,722,047 29,421,537 3,616,557 52,731,990 36,522,416 10,297,141 3,828,732 3,510,175 $ 28,501,600 $ 74,145,108 $ 74,047,158 $ 64,003,688 $ 63,392,765 $ 57,848,594 $ — $ — $ — $ — $ — $ — — — — — — — — — — — — — 13,702 10,238 39,130 95,021 41,829 16,235 29,796,900 33,282,001 37,132,326 41,637,363 42,352,134 44,241,974 10,066,141 10,160,675 12,949,069 16,158,684 18,784,979 20,327,838 49,868 45,543 63,457 77,937 82,390 85,892 (2,474,960) (8,822,239) (55,655,634) (46,430,334) (1,256,249) (421,062) $ 37,451,651 $ 34,676,218 $ (5,471,652) $ 11,538,671 $ 60,005,083 $ 64,250,877 313 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) 2016 2017 2018 2019 Revenues Personal income taxes .......................................................... $ 79,934,285 $ 85,737,905 $ 94,484,443 $ 96,801,076 Sales and use taxes ............................................................. 39,136,040 38,741,715 39,777,069 41,085,626 Corporation taxes ................................................................. 9,214,173 11,125,198 12,597,928 14,038,348 Motor vehicle excise taxes1 .................................................... 5,028,589 4,878,953 6,680,858 7,632,365 Insurance taxes .................................................................... 4,203,885 2,719,489 2,754,056 2,734,068 Managed care organization enrollment tax2 ............................. — 2,282,313 2,397,531 2,562,919 Other taxes1.......................................................................... 2,185,690 2,565,928 3,548,182 3,688,531 Intergovernmental ................................................................. 91,069,753 95,709,784 92,904,469 99,867,750 Licenses and permits ............................................................ 7,612,551 8,113,542 8,761,620 9,186,945 Charges for services ............................................................. 870,142 860,241 975,314 956,032 Fees and penalties ............................................................... 11,882,699 11,571,934 13,548,471 14,187,698 Investment and interest ......................................................... 232,285 318,502 607,418 1,321,143 Escheat ............................................................................... 305,394 327,614 382,793 448,756 Other ................................................................................... 4,049,789 2,934,157 5,318,739 5,594,587 Total revenues................................................................. 255,725,275 267,887,275 284,738,891 300,105,844 Expenditures General government ............................................................. 16,715,892 17,250,720 18,978,389 19,263,146 Education ............................................................................ 65,213,542 67,224,796 69,902,627 75,071,188 Health and human services ................................................... 127,201,314 134,372,094 138,018,275 144,543,589 Natural resources and environmental protection ...................... 6,278,363 6,712,838 7,987,878 9,069,777 Business, consumer services, and housing ............................. 1,130,213 1,103,694 1,189,365 2,013,409 Transportation ...................................................................... 14,814,829 15,007,639 17,169,040 17,893,338 Corrections and rehabilitation ................................................ 11,450,980 12,276,391 14,665,524 14,055,766 Capital outlay ....................................................................... 1,492,442 1,238,700 612,769 287,487 Debt service: Bond and commercial paper retirement .............................. 6,929,866 9,364,550 8,598,856 10,444,825 Interest and fiscal charges ................................................. 4,057,907 3,986,270 3,961,704 3,971,353 Total expenditures........................................................... 255,285,348 268,537,692 281,084,427 296,613,878 Excess (deficiency) of revenues over (under) expenditures ....... 439,927 (650,417) 3,654,464 3,491,966 Other financing sources (uses) General obligation bonds and commercial paper issued ........... 4,074,980 4,325,075 5,283,365 3,626,765 Revenue bonds issued .......................................................... — — — — Refunding/remarketing debt issued ........................................ 5,220,320 7,074,225 6,681,855 5,683,865 Payment to refund/remarket long-term debt ............................ (4,378,328) (3,038,281) (3,726,204) (411,340) Premium on bonds issued ..................................................... 1,037,920 1,309,254 1,036,320 1,003,337 Capital leases ...................................................................... 1,148,774 988,680 405,930 50,506 Transfers in .......................................................................... 4,385,123 4,586,199 4,266,596 4,414,250 Transfers out ........................................................................ (7,130,142) (7,551,627) (8,555,594) (8,298,095) Total other financing sources.......................................... 4,358,647 7,693,525 5,392,268 6,069,288 Total change in fund balance................................................... $ 4,798,574 $ 7,043,108 $ 9,046,732 $ 9,561,254 Debt service as a percentage of noncapital expenditures ............. 4.3 % 5.0 % 4.5 % 4.9 % 1Motor vehicle excise taxes, reported separately in fiscal year 2012 due to material increases, were included with “other taxes” in prior years. 2In 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. 314 Statistical Section 2020 2021 2022 2023 2024 2025 $ 111,831,167 $ 132,095,124 $ 125,914,865 $ 114,439,619 $ 116,485,890 $ 136,491,056 40,709,462 45,906,755 52,317,376 53,469,731 53,243,830 53,629,722 13,722,735 32,122,361 35,824,715 36,662,999 37,298,102 42,299,552 7,876,545 7,942,519 8,453,232 8,654,176 9,266,839 9,466,839 3,161,634 3,156,993 3,516,612 3,720,620 3,964,555 4,278,061 1,031,357 2,318,011 2,584,077 3,478,815 10,451,644 12,701,905 3,862,045 4,007,125 4,421,355 3,690,842 3,830,385 3,665,321 148,951,650 272,691,880 175,107,421 151,498,528 167,307,839 174,497,419 9,256,454 9,999,107 10,126,549 10,733,076 11,102,901 11,493,230 972,805 1,025,167 1,028,747 1,127,528 1,133,899 1,199,319 14,322,983 15,062,529 15,461,639 15,955,991 17,948,226 18,558,145 1,328,956 626,478 643,594 3,610,075 5,140,098 5,479,021 615,720 644,248 661,698 915,711 898,607 970,990 4,595,386 6,802,576 7,862,830 8,378,244 10,718,697 7,806,495 362,238,899 534,400,873 443,924,710 416,335,955 448,791,512 482,537,075 27,393,107 29,908,484 44,249,597 29,427,864 31,854,563 29,678,916 76,347,719 99,964,095 111,764,166 101,582,047 105,621,065 112,249,848 191,819,998 311,093,756 216,174,091 219,002,631 239,291,354 267,432,702 9,244,813 8,862,649 12,175,743 13,125,620 15,613,435 16,302,677 2,457,248 2,824,462 7,637,467 5,644,310 4,578,734 4,545,183 20,025,848 19,623,756 19,491,005 22,118,228 25,653,795 28,663,365 14,680,705 12,598,851 15,689,740 17,279,129 16,932,135 16,179,715 401,066 886,020 682,904 905,327 1,009,313 730,997 10,276,581 9,594,575 13,402,490 10,243,562 9,739,972 8,593,649 3,856,390 3,650,153 4,126,022 3,756,623 4,028,729 3,911,402 356,503,475 499,006,801 445,393,225 423,085,341 454,323,095 488,288,454 5,735,424 35,394,072 (1,468,515) (6,749,386) (5,531,583) (5,751,379) 5,085,590 5,051,305 4,552,690 6,822,625 6,033,760 4,810,965 500,000 450,000 1,050,000 — — — 4,384,895 3,657,445 10,011,411 3,701,890 3,511,780 3,741,215 — (428,395) (2,935,087) (37,408) — (787,525) 1,217,615 1,218,766 1,229,185 679,529 662,745 542,119 24,082 439,180 143,759 370,731 567,830 342,254 5,776,094 6,408,853 7,121,202 8,372,233 10,112,016 10,219,394 (11,731,486) (10,249,393) (12,547,219) (14,485,271) (14,379,065) (15,638,736) 5,256,790 6,547,761 8,625,941 5,424,329 6,509,066 3,229,686 $ 10,992,214 $ 41,941,833 $ 7,157,426 $ (1,325,057) $ 977,483 $ (2,521,693) 4.0 % 2.7 % 3.9 % 3.3 % 3.0 % 2.6 % 315 State of California Annual Comprehensive Financial Report This page intentionally left blank 316 Statistical Section 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 317 State of California Annual Comprehensive Financial Report Schedule of Revenue Base For the Past Ten Calendar Years (amounts in thousands) 2015 2016 2017 2018 Personal Income by Industry (items restated as footnoted)1 Farm earnings ...................................................................... $ 21,222,250 $ 18,646,282 $ 20,041,415 $ 15,669,285 Forestry, fishing, and other natural resources .......................... 9,216,947 9,898,303 10,176,211 10,765,747 Mining ................................................................................. 4,963,527 3,753,851 3,216,216 3,717,373 Construction and utilities ....................................................... 88,130,646 93,511,037 102,974,465 112,396,379 Manufacturing ...................................................................... 139,414,534 145,528,697 153,661,389 159,126,826 Wholesale trade ................................................................... 70,215,535 70,149,369 73,535,459 71,639,917 Retail trade .......................................................................... 84,898,965 84,819,197 87,143,887 90,173,648 Transportation and warehousing ............................................ 45,945,185 49,332,199 53,670,285 60,511,132 Information, finance, and insurance ........................................ 174,617,028 190,140,120 206,955,669 218,388,275 Real estate and rental and leasing ......................................... 51,762,077 54,244,467 55,830,864 60,774,043 Services .............................................................................. 552,135,538 574,579,377 604,183,727 640,289,889 Federal, civilian .................................................................... 27,477,720 28,337,175 29,073,247 30,340,685 Military ................................................................................. 14,952,018 16,333,621 16,101,002 15,238,777 State and local government ................................................... 212,528,644 223,593,750 230,997,705 237,580,482 Other2 .................................................................................. 566,525,160 593,930,254 612,061,700 643,820,394 Total personal income ............................................................ $ 2,064,005,774 $ 2,156,797,699 $ 2,259,623,241 $ 2,370,432,852 Average effective rate3............................................................... 6.1 % 6.0 % 5.9 % 6.1 % Source: Bureau of Economic Analysis, U.S. Department of Commerce 1Prior years were updated based on more current information. 2Other personal income includes dividends, interest, rental income, residence adjustment, government transfers for individuals, and deductions for social insurance. 3The total direct rate for personal income is not available. The average effective rate equals personal income tax revenue divided by adjusted gross income. 318 Statistical Section 2019 2020 2021 2022 2023 2024 $ 16,192,419 $ 19,232,309 $ 16,471,966 $ 18,234,034 $ 18,019,745 $ 21,781,364 11,259,948 12,689,471 12,444,904 12,840,052 13,948,047 14,377,173 3,427,607 2,838,847 2,645,644 3,290,871 3,188,003 3,281,445 120,231,080 117,968,369 121,987,442 128,532,688 131,740,311 138,364,578 161,840,234 171,293,684 183,662,517 184,853,928 189,260,453 191,610,641 72,711,508 73,699,658 76,812,628 83,358,125 86,624,274 89,205,592 92,151,049 93,759,221 103,418,355 105,612,087 109,166,261 111,882,753 70,688,682 69,688,753 83,398,091 87,500,562 89,390,349 95,124,226 229,810,102 252,425,088 297,624,275 277,698,908 285,903,926 308,879,138 69,547,739 72,019,823 77,713,341 71,383,466 71,716,323 74,302,303 680,198,035 679,729,084 763,711,842 810,533,046 845,595,844 899,371,414 30,890,265 33,016,293 33,628,940 34,900,835 37,328,194 39,523,559 15,560,927 16,624,100 17,932,558 17,813,959 18,641,999 20,015,917 245,254,988 254,577,628 263,233,270 268,138,994 289,115,086 311,587,305 679,511,487 857,804,363 913,293,468 859,767,063 931,555,069 1,005,753,211 $ 2,499,276,070 $ 2,727,366,691 $ 2,967,979,241 $ 2,964,458,618 $ 3,121,193,884 $ 3,325,060,619 6.0 % 6.5 % 6.5 % 6.0 % 5.7 % 6.2 % (continued) 319 State of California Annual Comprehensive Financial Report Schedule of Revenue Base (continued) For the Past Ten Calendar Years (amounts in thousands) 2015 2016 2017 2018 Taxable Sales by Industry Retail and Food Services: Motor vehicle and parts dealers ......................................... $ 80,346,595 $ 84,225,652 $ 86,983,280 $ 89,696,669 Furniture and home furnishings stores ................................ 12,169,888 12,790,041 13,035,340 13,578,685 Electronics and appliance stores ........................................ 16,349,542 17,120,030 17,170,671 17,520,474 Building materials, garden equipment, and supplies ............. 33,601,538 35,238,333 37,504,347 39,469,798 Food and beverage ........................................................... 27,134,034 27,678,056 28,799,044 29,697,424 Health and personal care stores ........................................ 12,364,559 13,163,569 13,669,415 14,384,602 Gasoline stations .............................................................. 48,203,175 43,273,182 47,434,923 54,302,232 Clothing and clothing accessories stores ............................ 38,438,074 39,698,156 40,206,581 42,233,560 Sporting goods, hobby, book, and music stores ................... 11,341,328 11,441,556 10,900,749 10,467,200 General merchandise stores .............................................. 53,119,200 53,032,357 54,684,182 56,416,293 Miscellaneous store retailers ............................................. 19,852,685 19,617,820 19,719,301 20,503,078 Nonstore retailers ............................................................. 9,531,606 11,717,407 13,599,808 15,663,789 Food services and drinking places ..................................... 73,889,708 78,494,623 82,355,474 85,226,197 All other outlets .................................................................... 202,290,021 206,365,477 211,760,378 217,675,199 Total taxable sales .................................................................. $ 638,631,953 $ 653,856,259 $ 677,823,493 $ 706,835,200 Direct sales tax rate 1................................................................. 6.50%² 6.50% 6.00% 6.00%³ Source: California Department of Tax and Fee Administration (CDTFA) 1The 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. 2Rate change was effective on January 1, 2013. 3Rate change was effective on January 1, 2017. 320 Statistical Section 2019 2020 2021 2022 2023 2024 $ 88,526,876 $ 87,847,344 $ 106,686,238 $ 108,863,945 $ 103,274,029 $ 100,974,064 13,427,029 13,626,241 16,375,319 16,004,779 14,101,249 13,544,401 16,999,111 16,926,013 19,232,973 18,833,052 17,469,866 17,611,351 40,313,948 45,966,216 50,775,894 51,775,096 49,231,753 48,583,641 30,216,432 32,042,780 33,308,785 34,725,455 34,700,617 35,042,086 15,160,891 15,622,747 17,397,455 17,653,263 17,179,020 16,209,504 54,141,178 38,345,721 56,231,375 71,264,403 63,541,643 59,802,626 43,130,842 32,500,749 47,599,716 49,393,086 48,703,455 49,169,939 10,407,608 10,110,131 11,776,823 11,389,486 10,803,928 10,491,441 58,066,003 57,003,022 66,201,633 69,575,648 67,343,669 67,482,859 20,952,870 20,863,193 24,996,467 26,319,225 25,631,272 25,210,420 20,276,518 53,383,005 60,520,452 64,329,865 69,166,754 71,839,172 89,403,960 63,665,386 87,700,329 102,862,887 108,416,494 111,592,269 231,733,635 218,853,973 263,908,719 308,785,176 306,331,191 302,727,188 $ 732,756,901 $ 706,756,521 $ 862,712,178 $ 951,775,366 $ 935,894,940 $ 930,280,961 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% (concluded) 321 State of California Annual Comprehensive Financial Report Schedule of Revenue Payers by Income Level/Industry For Calendar Years 2016 and 2024 Personal Income Tax Filers and Liability by Income Level1 2016 Number Percent Tax Percent of Filers of Total Liability2 of Total Under $ 50,000................................................ 9,755,695 58.8 % $ 1,509,949 2.1 % 50,000 to 99,999................................................ 3,574,352 21.6 6,119,371 8.6 100,000 to 149,999 .............................................. 1,475,206 8.9 7,079,762 9.9 150,000 to 199,999 .............................................. 709,674 4.3 6,097,561 8.5 200,000 to 299,999 .............................................. 558,663 3.4 8,039,257 11.3 300,000 to 399,999 .............................................. 206,184 1.2 4,802,525 6.7 400,000 to 499,999 .............................................. 97,265 0.6 3,194,414 4.5 500,000 to 599,999 .............................................. 54,106 0.3 2,295,079 3.2 600,000 to 699,999 .............................................. 34,242 0.2 1,788,843 2.5 700,000 to 799,999 .............................................. 23,556 0.1 1,477,139 2.1 800,000 to 899,999 .............................................. 15,838 0.1 1,171,187 1.6 900,000 to 999,999 .............................................. 12,182 0.1 1,032,173 1.4 1,000,000 to 1,999,999 ........................................... 43,561 0.3 5,775,297 8.1 2,000,000 to 2,999,999 ........................................... 10,807 0.1 2,825,340 4.0 3,000,000 to 3,999,999 ........................................... 4,702 — 1,811,273 2.5 4,000,000 to 4,999,999 ........................................... 2,629 — 1,342,549 1.9 $ 5,000,000 and over ............................................................ 7,479 — 15,036,922 21.1 Total .......................................................................................... 16,586,141 100.0 % $ 71,398,641 100.0 % 2024 Number Percent Tax Percent of Filers of Total Liability2 of Total Under $ 50,000................................................ 8,041,122 46.2 % $ 1,078,874 0.9 % 50,000 to 99,999................................................ 4,338,206 24.7 6,136,967 5.4 100,000 to 149,999 .............................................. 1,963,511 11.2 8,179,566 7.2 150,000 to 199,999 .............................................. 1,056,637 6.0 8,045,095 7.1 200,000 to 299,999 .............................................. 988,775 5.6 12,915,227 11.3 300,000 to 399,999 .............................................. 411,736 2.3 8,804,270 7.7 400,000 to 499,999 .............................................. 216,797 1.2 6,380,603 5.6 500,000 to 599,999 .............................................. 130,872 0.7 4,962,870 4.4 600,000 to 699,999 .............................................. 86,126 0.5 3,995,227 3.5 700,000 to 799,999 .............................................. 59,489 0.3 3,238,617 2.8 800,000 to 899,999 .............................................. 42,811 0.2 2,714,745 2.4 900,000 to 999,999 .............................................. 31,159 0.2 2,222,165 1.9 1,000,000 to 1,999,999 ........................................... 109,737 0.6 12,052,571 10.6 2,000,000 to 2,999,999 ........................................... 24,378 0.1 5,173,451 4.5 3,000,000 to 3,999,999 ........................................... 10,183 0.1 3,144,140 2.8 4,000,000 to 4,999,999 ........................................... 5,558 — 2,254,937 2.0 $ 5,000,000 and over ..................................................... 15,634 0.1 22,666,997 19.9 Total .......................................................................................... 17,532,731 100.0 % $ 113,966,322 100.0 % Source: California Franchise Tax Board 1For California resident tax returns. Calendar year 2024 is the most applicable recent year for which data is available. 2Amounts are in thousands. 322 Statistical Section For Calendar Years 2015 and 2024 Sales Tax Permits and Tax Liability by Industry 2015 Number Percent Tax Percent of Permits of Total Liability1 of Total Retail and Food Services: Motor vehicle and parts dealers .............................................. 35,346 3.2 % $ 5,222,529 12.6 % Furniture and home furnishings stores..................................... 20,830 1.9 791,043 1.9 Electronics and appliance stores............................................. 26,125 2.3 1,062,720 2.6 Building materials, garden equipment, and supplies.................. 18,339 1.6 2,184,100 5.3 Food and beverage ............................................................... 35,072 3.1 1,763,712 4.2 Health and personal care stores ............................................. 36,119 3.2 803,696 1.9 Gasoline stations................................................................... 10,045 0.9 3,133,206 7.5 Clothing and clothing accessories stores ................................. 104,645 9.4 2,498,475 6.0 Sporting goods, hobby, book, and music stores........................ 36,480 3.3 737,186 1.8 General merchandise stores................................................... 26,535 2.4 3,452,748 8.3 Miscellaneous store retailers .................................................. 188,910 16.9 1,290,425 3.1 Nonstore retailers.................................................................. 51,907 4.7 619,554 1.5 Food services and drinking places .......................................... 108,961 9.8 4,802,831 11.6 All other outlets ......................................................................... 415,252 37.3 13,148,851 31.7 Total........................................................................................ 1,114,566 100.0 % $ 41,511,076 100.0 % 2024 Number Percent Tax Percent of Permits of Total Liability1 of Total Retail and Food Services: Motor vehicle and parts dealers .............................................. 34,665 2.6 % $ 6,058,444 10.9 % Furniture and home furnishings stores..................................... 16,381 1.2 812,664 1.5 Electronics and appliance stores............................................. 17,522 1.3 1,056,681 1.9 Building materials, garden equipment, and supplies.................. 15,582 1.2 2,915,018 5.2 Food and beverage ............................................................... 39,197 2.9 2,102,525 3.8 Health and personal care stores ............................................. 44,166 3.3 972,570 1.7 Gasoline stations................................................................... 9,540 0.7 3,588,158 6.4 Clothing and clothing accessories stores ................................. 115,969 8.7 2,950,196 5.3 Sporting goods, hobby, book, and music stores........................ 32,885 2.5 629,486 1.1 General merchandise stores................................................... 37,243 2.8 4,048,972 7.3 Miscellaneous store retailers .................................................. 170,758 12.8 1,512,625 2.7 Nonstore retailers.................................................................. 70,429 5.3 4,310,350 7.7 Food services and drinking places .......................................... 135,653 10.2 6,695,536 12.0 All other outlets ......................................................................... 590,111 44.5 18,163,631 32.5 Total........................................................................................ 1,330,101 100.0 % $ 55,816,856 100.0 % Source: California Department of Tax and Fee Administration (CDTFA) 1Calculated by multiplying the taxable sales by industry shown on pages 322 and 323 by the direct sales tax rate. Amounts are in thousands. 323 State of California Annual Comprehensive Financial Report Schedule of Personal Income Tax Rates For Calendar Years 2015-2024 Married Filing Jointly and Surviving Spouse 2015 2016 2017 2018 Tax Rate1 Income Level Income Level Income Level Income Level 1.0 Up to $15,700 Up to $16,030 Up to $16,446 Up to $17,088 2.0 15,701 – 37,220 16,031 – 38,002 16,447 – 38,990 17,089 – 40,510 4.0 37,221 – 58,744 38,003 – 59,978 38,991 – 61,538 40,511 – 63,938 6.0 58,745 – 81,546 59,979 – 83,258 61,539 – 85,422 63,939 – 88,754 8.0 81,547 – 103,060 83,259 – 105,224 85,423 – 107,960 88,755 – 112,170 9.3 103,061 – 526,444 105,225 – 537,500 107,961 – 551,476 112,171 – 572,984 10.3 526,445 – 631,732 537,501 – 644,998 551,477 – 661,768 572,985 – 687,576 11.3 631,733 – 1,000,000 644,999 – 1,000,000 661,769 – 1,000,000 687,577 – 1,000,000 12.3 1,000,001 – 1,052,886 1,000,001 – 1,074,996 1,000,001 – 1,102,946 1,000,001 – 1,145,960 13.3 $1,052,887 and over $1,074,997 and over $1,102,947 and over $1,145,961 and over Single and Married Filing Separately 2015 2016 2017 2018 Tax Rate1 Income Level Income Level Income Level Income Level 1.0 Up to $7,850 Up to $8,015 Up to $8,223 Up to $8,544 2.0 7,851 – 18,610 8,016 – 19,001 8,224 – 19,495 8,545 – 20,255 4.0 18,611 – 29,372 19,002 – 29,989 19,496 – 30,769 20,256 – 31,969 6.0 29,373 – 40,773 29.990 – 41,629 30,770 – 42,711 31,970 – 44,377 8.0 40,774 – 51,530 41,630 – 52,612 42,712 – 53,980 44,378 – 56,085 9.3 51,531 – 263,222 52,613 – 268,750 53,981 – 275,738 56,086 – 286,492 10.3 263,223 – 315,866 268,751 – 322,499 275,739 – 330,884 286,493 – 343,788 11.3 315,867 – 526,443 322,500 – 537,498 330,885 – 551,473 343,789 – 572,980 12.3 526,444 – 1,000,000 537,499 – 1,000,000 551,474 – 1,000,000 572,981 – 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 2015 2016 2017 2018 Tax Rate1 Income Level Income Level Income Level Income Level 1.0 Up to $15,710 Up to $16,040 Up to $16,457 Up to $16,457 2.0 15,711 – 37,221 16,041 – 38,003 16,458 – 38,991 16,458 – 38,991 4.0 37,222 – 47,982 38,004 – 48,990 38,992 – 50,264 38,992 – 50,264 6.0 47,983 – 59,383 48,991 – 60,630 50,265 – 62,206 50,265 – 62,206 8.0 59,384 – 70,142 60,631 – 71,615 62,207 – 73,477 62,207 – 73,477 9.3 70,143 – 357,981 71,616 – 365,499 73,478 – 375,002 73,478– 375,002 10.3 357,982 – 429,578 365,500 – 438,599 375,003 – 450,003 375,003 – 450,003 11.3 429,579 – 715,962 438,600 – 730,997 450,004 – 750,003 450,004 – 750,003 12.3 715,963 – 1,000,000 730,998 – 1,000,000 750,004 – 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) 1FTB tax brackets are indexed to the California Consumer Price Index and are adjusted accordingly on a yearly basis. Average Effective Rate (amounts in thousands) 2015 2016 2017 2018 Personal income tax revenue1 ............... $ 76,879,115 $ 78,510,777 $ 84,253,851 $ 92,808,996 Adjusted gross income2 ........................ $ 1,265,341,200 $ 1,318,362,700 $ 1,430,332,000 $ 1,531,670,000 Average effective rate3 ......................... 6.1 % 6.0 % 5.9 % 6.1 % 1Personal income tax revenue is reported on a fiscal year basis. 2Source: California Franchise Tax Board. Fiscal year 2024 information reflects returns processed as of December 2025. 3The average effective rate equals personal income tax revenue divided by adjusted gross income. 324 Statistical Section Married Filing Jointly and Surviving Spouse 2019 2020 2021 2022 2023 2024 Income Level Income Level Income Level Income Level Income Level Income Level Up to $17,618 Up to $17,864 Up to $18,650 Up to $20,198 Up to $20,824 Up to $21,512 17,619 – 41,766 17,865 – 42,350 18,651 – 44,214 20,199 – 47,884 20,825 – 49,368 21,513 -50,998 41,767 – 65,920 42,351 – 66,842 44,215 – 69,784 47,885 – 75,576 49,369 – 77,918 50,999 -80,490 65,921 – 91,506 66,843 – 92,788 69,785 – 96,870 75,577 – 104,910 77,919 – 108,162 80,491 -111,732 91,507 – 115,648 92,789 – 117,268 96,871 – 122,428 104,911 – 132,590 108,163 – 136,700 111,733 -141,212 115,649 – 590,746 117,269 – 599,016 122,429 – 625,372 132,591 – 677,278 136,701 – 698,274 141,213 -721,318 590,747 – 708,890 599,017 – 718,814 625,373 – 750,442 677,279 – 812,728 698,275 – 837,922 721,319 -865,574 708,891 – 1,000,000 718,815 – 1,000,000 750,443 – 1,000,000 812,729 – 1,000,000 837,923 – 1,000,000 865,575 -1,000,000 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 1,000,001 -1,442,628 $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 1,442,629 and over Single and Married Filing Separately 2019 2020 2021 2022 2023 2024 Income Level Income Level Income Level Income Level Income Level Income Level Up to $8,809 Up to $8,932 Up to $9,325 Up to $10,099 Up to $10,412 Up to $10,756 8,810 – 20,883 8,933 – 21,175 9,326 – 22,107 10,099 – 23,942 10,413 – 24,684 10,757 -25,499 20,884 – 32,960 21,176 – 33,421 22,108 – 34,892 23,943 – 37,788 24,685 – 38,959 25,500 -40,245 32,961 – 45,753 33,422 – 46,394 34,893 – 48,435 37,789 – 52,455 38,960 – 54,081 40,246 -55,866 45,754 – 57,824 46,395 – 58,634 48,436 – 61,214 52,456 – 66,295 54,082 – 68,350 55,867 -70,606 57,825 – 295,373 58,635 – 295,508 61,215 – 312,686 66,296 – 338,639 68,351 – 349,137 70,607 -360,659 295,374 – 354,445 295,509 – 359,407 312,687 – 375,221 338,640 – 406,364 349,138 – 418,961 360,660 -432,787 354,446 – 590,742 359,408 – 599,012 375,222 – 625,369 406,365 – 677,275 418,962 – 698,271 432,788 -721,314 590,743 – 1,000,000 599,013 – 1,000,000 625,370 – 1,000,000 677,276 – 1,000,000 698,272 – 1,000,000 721,315 -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 2019 2020 2021 2022 2023 2024 Income Level Income Level Income Level Income Level Income Level Income Level Up to $17,629 Up to $17,876 Up to $18,663 Up to $20,212 Up to $20,839 Up to $21,527 17,630 – 41,768 17,877 – 42,353 18,664 – 44,217 20,213 – 47,887 20,840 – 49,371 21,528 -51,000 41,769 – 53,843 42,354 – 54,597 44,218 – 56,999 47,888 – 61,730 49,372 – 63,765 51,001 -65,744 53,844 – 66,636 54,598 – 67,569 57,000 – 70,542 61,731 – 76,397 63,765 – 78,765 65,745 -81,364 66,637 – 78,710 67,570 – 79,812 70,543 – 83,324 76,398 – 90,240 78,766 – 93,037 81,365 -96,107 78,711 – 401,705 79,813 – 407,329 83,325 – 425,251 90,241 – 460,547 93,038 – 474,824 96,108 -490,493 401,706 – 482,047 407,330 – 488,796 425,252 – 510,303 460,548 – 552,658 474,825 – 569,790 490,494 -588,593 482,048 – 803,410 488,797 – 814,658 510,304 – 850,503 552,659 – 921,095 569,791 – 949,649 588,594 -980,987 803,411 – 1,000,000 814,659 – 1,000,000 850,504 – 1,000,000 921,096 – 1,000,000 949,650 – 1,000,000 980,988 -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 2019 2020 2021 2022 2023 2024 $ 95,026,913 $ 110,352,220 $ 129,514,535 $ 112,736,701 $ 109,539,318 $ 132,909,772 $ 1,596,322,000 $ 1,693,751,000 $ 1,991,347,000 $ 1,883,047,000 $ 1,912,092,000 $ 2,141,281,000 6.0 % 6.5 % 6.5 % 6.0 % 5.7 % 6.2 % 325 State of California Annual Comprehensive Financial Report This page intentionally left blank 326 Statistical Section 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. 327 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) 2016 2017 2018 2019 Governmental activities General obligation bonds1 ...................................................... $ 79,043,295 $ 79,503,871 $ 79,663,028 $ 78,772,850 Revenue bonds .................................................................... 17,210,499 16,879,900 16,364,255 15,711,660 Certificates of participation and commercial paper2................... 771,215 1,158,080 859,695 1,032,760 Capital lease obligations5 ....................................................... 370,182 416,468 481,261 434,876 Lease Liability ...................................................................... — — — — Subscription Liability ............................................................. — — — — Total governmental activities................................................... 97,395,191 97,958,319 97,368,239 95,952,146 Business-type activities General obligation bonds1 ...................................................... 794,369 703,754 694,100 850,762 Revenue bonds .................................................................... 13,928,374 14,955,858 14,319,372 14,521,460 Commercial paper ................................................................ 47,416 147,765 749,877 799,643 Capital lease obligations5 ....................................................... 389,385 353,453 309,928 315,322 Lease Liability ...................................................................... — — — — Subscription Liability ............................................................. — — — — Total business-type activities .................................................. 15,159,544 16,160,830 16,073,277 16,487,187 Total primary government ....................................................... $ 112,554,735 $ 114,119,149 $ 113,441,516 $ 112,439,333 Debt as a percentage of personal income³................................... 5.4 % 5.2 % 4.9 % 4.7 % Amount of debt per capita⁴ ......................................................... $ 2,889 $ 2,909 $ 2,877 $ 2,844 Note: Details regarding the State's outstanding debt can be found in Notes 10, 13, 14, 16, and 17 of the financial statements. 1Beginning 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. 2All certificates of participation were retired in fiscal year 2016. 4Prior to fiscal year 2014, governmental activities reported a capital lease obligation to the Public Buildings Construction Fund. In fiscal year 2014, the fund was reclassified from an enterprise fund to an internal service fund and the governmental activities’ obligation and the fund’s net investment in direct financing leases were netted against each other within governmental activities. 3Ratio calculated using personal income data shown on pages 340 and 341 for the prior calendar year. 4Amount calculated using population data shown on pages 340 and 341 for the prior calendar year. 5Due to implementation of GASB 87, capital lease obligations are no longer reported. 328 Statistical Section 2020 2021 2022 2023 2024 2025 $ 78,883,746 $ 78,481,408 $ 77,346,130 $ 78,693,097 $ 79,487,028 $ 79,337,021 15,905,264 15,998,239 17,157,391 16,097,912 16,579,772 16,661,896 1,108,720 1,176,235 1,448,725 1,327,110 1,031,170 1,010,795 393,089 359,812 — — — — — — 2,659,291 2,513,875 2,925,099 2,650,957 — — 160,866 136,463 126,804 149,319 96,290,819 96,015,694 98,772,403 98,768,457 100,149,873 99,809,988 788,052 598,384 536,352 675,362 645,984 909,432 14,277,362 14,806,645 14,421,501 14,605,513 15,165,379 15,650,302 1,049,226 401,219 323,313 401,804 656,727 638,674 357,072 336,081 — — — — — — 332,851 358,448 525,824 561,923 — — 95,145 66,804 55,436 103,166 16,471,712 16,142,329 15,709,162 16,107,931 17,049,350 17,863,497 $ 112,762,531 $ 112,158,023 $ 114,481,565 $ 114,876,388 $ 117,199,223 $ 117,673,485 4.4 % 4.1 % 3.8 % 3.8 % 3.7 % 3.5 % $ 2,851 $ 2,839 $ 2,925 $ 2,942 $ 2,990 $ 2,984 329 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) 2016 2017 2018 2019 Net general bonded debt General obligation bonds1 ........................................................... $ 79,837,664 $ 79,503,871 $ 80,357,128 $ 79,623,612 Economic Recovery bonds ......................................................... — — — — Less: restricted debt service fund ............................................ — — — — Net Economic Recovery bonds2................................................... — — — — Net general bonded debt .............................................................. $ 79,837,664 $ 79,503,871 $ 80,357,128 $ 79,623,612 Net general bonded debt as a percentage of personal income3........... 3.8% 3.6% 3.5% 3.3% Amount of net general bonded debt per capita4 ................................. $ 2,049 $ 2,027 $ 2,038 $ 2,014 Note: Details regarding the State’s general bonded debt outstanding can be found in Note 16 of the financial statements 1Beginning 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. 2In 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. 3Ratio calculated using personal income data shown on pages 341 and 342 for the prior calendar year. 4Amount calculated using population data shown on pages 341 and 342 for the prior calendar year. 330 Statistical Section 2020 2021 2022 2023 2024 2025 $ 79,671,798 $ 79,079,792 $ 77,882,481 $ 79,368,459 $ 80,133,012 $ 80,246,453 — — — — — — — — — — — — — — — — — — $ 79,671,798 $ 79,079,792 $ 77,882,481 $ 79,368,459 $ 80,133,012 $ 80,246,453 3.1% 2.9% 2.6% 2.6% 2.5% 2.4% $ 2,015 $ 2,002 $ 1,990 $ 2,033 $ 2,044 $ 2,035 331 State of California Annual Comprehensive Financial Report Schedule of General Obligation Bonds Outstanding June 30, 2025 (amounts in thousands) Governmental activity Behavioral Health Infrastructure ....................................................................................................................................... $ 300,000 California Clean Water, Clean Air, Safe Neighborhood Parks, and Coastal Protection........................................................... 1,472,460 California Drought, Water, Parks, Climate, Coastal Protection, and Out Door Access For All ................................................. 1,714,325 California Library Construction and Renovation.................................................................................................................. 182,975 California Park and Recreational Facilities......................................................................................................................... 910 California Safe Drinking Water ......................................................................................................................................... 10,935 California Stem Cell Research, Treatments, and Cures ...................................................................................................... 1,961,875 California Wildlife, Coastal, and Park Land Conservation.................................................................................................... 12,530 Children’s Hospital ......................................................................................................................................................... 1,575,960 Class-Size Reduction Public Education Facilities ............................................................................................................... 2,531,240 Clean Air and Transportation Improvement........................................................................................................................ 174,440 Clean Water and Water Conservation............................................................................................................................... 485 Clean Water and Water Reclamation ................................................................................................................................ 2,385 County Correctional Facility Capital Expenditure and Youth Facility..................................................................................... 4,420 Disaster Preparedness and Flood Prevention .................................................................................................................... 2,702,250 Earthquake Safety and Public Buildings Rehabilitation ...................................................................................................... 1,475 Fish and Wildlife Habitat Enhancement............................................................................................................................. 1,700 Higher Education Facilities............................................................................................................................................... 39,830 Highway Safety, Traffic Reduction, Air Quality, and Port Security ........................................................................................ 12,341,970 Housing and Emergency Shelter ...................................................................................................................................... 847,110 Kindergarten-University Public Education Facilities ............................................................................................................ 27,127,200 New Prison Construction ................................................................................................................................................. 2,740 Public Education Facilities ............................................................................................................................................... 399,860 Safe, Clean, Reliable Water Supply .................................................................................................................................. 265,225 Safe Drinking Water, Clean Water, Watershed Protection, and Flood Protection................................................................... 816,415 Safe Drinking Water, Water Quality and Supply, Flood Control, River and Coastal Protection ................................................ 3,135,775 Safe Neighborhood Parks, Clean Water, Clean Air, and Coastal Protection.......................................................................... 815,245 Safe, Reliable High-Speed Passenger Train...................................................................................................................... 5,878,270 School Building and Earthquake....................................................................................................................................... 1,330 School Facilities.............................................................................................................................................................. 50,425 Seismic Retrofit............................................................................................................................................................... 473,565 State, Urban, and Coastal Park ........................................................................................................................................ 405 Veterans and Affordable Housing .................................................................................................................................... 1,464,710 Veterans Homes ............................................................................................................................................................. 29,455 Veterans Housing and Homeless Prevention..................................................................................................................... 279,540 Voting Modernization....................................................................................................................................................... 22,375 Water Conservation......................................................................................................................................................... 3,810 Water Conservation and Water Quality ............................................................................................................................. 4,655 Water Quality, Supply, and Infrastructure Improvement ...................................................................................................... 3,322,135 Water Security, Clean Drinking Water, Coastal and Beach Protection.................................................................................. 1,899,760 Total governmental activity ....................................................................................................................................... 71,872,170 Business-type activity Veterans’ Farm and Home Purchase ................................................................................................................................ 899,060 Total business-type activity....................................................................................................................................... 899,060 Total outstanding general obligation bonds........................................................................................................ 72,771,230 Unamortized bond premiums/discounts................................................................................................................................. 7,475,223 * Total general obligation bonds payable......................................................................................................................... $ 80,246,453 Source: California State Treasurer’s Office, except for SCO calculated amount denoted by * 332 Statistical Section This page intentionally left blank 333 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 Requirements3 Gross Operating Available for June 30 Revenue1 Expenses2 Debt Service Principal Interest Total Coverage Housing Loans 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 2025 76,974 21,759 55,215 36,140 14,351 50,491 1.09 Water Resources 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 80,051 297,198 2.10 2024 1,657,882 933,401 724,481 222,140 121,751 343,891 2.11 2025 1,581,506 927,004 654,502 237,409 75,644 313,053 2.09 Water Pollution 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 95,602 9,114 86,488 94,250 50,123 144,373 0.60 2025 104,306 14,051 90,255 96,645 53,389 150,034 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. 334 Statistical Section Schedule of Pledged Revenue Coverage (continued) For the Past Ten Fiscal Years (amounts in thousands) Net Revenue Debt Service Requirements3 Gross Operating Available for June 30 Revenue1 Expenses2 Debt Service Principal Interest Total Coverage Electric Power 2016 $ 728,000 $ (182,000) $ 910,000 $ 618,000 $ 268,000 $ 886,000 1.03 2017 945,000 (29,000) 974,000 669,000 253,000 922,000 1.06 2018 952,000 — 952,000 690,000 215,000 905,000 1.05 2019 923,000 (5,000) 928,000 719,000 175,000 894,000 1.04 2020 925,000 (11,000) 936,000 753,000 139,000 892,000 1.05 2021 299,000 (7,000) 306,000 970,000 109,000 1,079,000 0.28 2022 311,000 (140,000) 451,000 735,000 48,000 783,000 0.58 2023 1,000 (1) 1,001 — — — — 2024 1,000 (1) 1,001 — 1,001 1,001 1.00 2025 1,000 (399) 1,399 — 1,000 1,000 1.40 Public Buildings 2016 $ 413,807 $ 6,455 $ 407,352 $ 1,192,065 $ 452,796 $ 1,644,861 0.25 Construction 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 2025 377,542 7,735 369,807 1,432,590 376,555 1,809,145 0.20 California State 2016 $ 4,937,116 $ 6,672,956 $ (1,735,840) $ 114,585 $ 166,964 $ 281,549 (6.17) University 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 10,873,915 (3,653,103) 811,184 375,411 1,186,595 (3.08) 2025 7,939,792 11,837,970 (3,898,178) 968,242 419,731 1,387,973 (2.81) (continued) 335 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 Requirements3 Gross Operating Available for June 30 Revenue1 Expenses2 Debt Service Principal Interest Total Coverage Building 2016 $ 48,722 $ — $ 48,722 $ 19,815 $ 14,502 $ 34,317 1.42 Authorities 6 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 2016 $ 365,300 $ 586 $ 364,714 $ 70,535 $ 299,935 $ 370,470 0.98 Tobacco 2017 370,612 462 370,150 745,888 308,638 1,054,526 0.35 Securitization 2018 433,836 518 433,318 2,044,750 319,550 2,364,300 0.18 Corporation 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 2025 369,980 655 369,325 237,495 139,552 377,047 0.98 Grant 2016 $ 11,393 $ — $ 11,393 $ 8,970 $ 2,423 $ 11,393 1.00 Anticipation 2017 11,390 — 11,390 9,360 2,030 11,390 1.00 Revenue 2018 11,393 — 11,393 9,830 1,563 11,393 1.00 Vehicles 4,5 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) 336 Statistical Section 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 337 State of California Annual Comprehensive Financial Report Schedule of Demographic and Economic Indicators For the Past Ten Calendar Years 2015 2016 2017 2018 Population (in thousands)1 California.............................................................................. 38,966 39,223 39,424 39,536 % Change............................................................................. 0.9 % 0.7 % 0.5 % 0.3 % United States ........................................................................ 321,829 324,368 326,623 328,542 % Change............................................................................. 0.8 % 0.8 % 0.7 % 0.6 % Total personal income (in millions)1 California.............................................................................. $ 2,097,050 $ 2,191,138 $ 2,295,049 $ 2,411,055 % Change............................................................................. 6.2 % 4.5 % 4.7 % 5.1 % United States ........................................................................ $ 15,467,113 $ 15,884,741 $ 16,658,962 $ 17,514,402 % Change............................................................................. 5.1 % 2.7 % 4.9 % 5.1 % Per capita personal income1,2 California.............................................................................. $ 53,817 $ 55,863 $ 58,214 $ 60,984 % Change............................................................................. 5.3 % 3.8 % 4.2 % 4.8 % United States ....................................................................... $ 48,060 $ 48,971 $ 51,004 $ 53,309 % Change............................................................................. 4.2 % 1.9 % 4.2 % 4.5 % Labor force and employment (in thousands) California Civilian labor force................................................................. 18,996 19,099 19,319 19,534 Employed ............................................................................. 17,894 18,141 18,515 18,740 Unemployed ......................................................................... 1,102 957 804 794 Unemployment rate ............................................................... 5.8 % 5.0 % 4.2 % 4.1 % United States unemployment rate ........................................... 5.3 % 4.9 % 4.3 % 3.9 % 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: April 27, 2026 -new statistics for 2025; revised statistics for 2020-2024 1 Some prior years were updated based on more current information. 2 Calculated by dividing total personal income by population. 338 Statistical Section 2019 2020 2021 2022 2023 2024 39,548 39,502 39,143 39,041 39,199 39,431 — % (0.1) (0.9)% (0.3)% 0.4 % 0.6 % 330,233 331,527 332,049 333,271 336,807 340,111 0.5 % 0.4 % 0.2 % 0.4 % 1.1 % 1.0 % $ 2,537,951 $ 2,767,521 $ 3,013,677 $ 3,006,647 $ 3,166,135 $ 3,400,237 5.3 % 9.0 % 8.9 % (0.2)% 5.3 % 7.4 % $ 18,343,601 $ 19,609,985 $ 21,392,812 $ 21,820,248 $ 23,380,269 $ 24,897,613 4.7 % 6.9 % 9.1 % 2.0 % 7.1 % 6.5 % $ 64,174 $ 70,061 $ 76,991 $ 77,013 $ 80,771 $ 86,232 5.2 % 9.2 % 9.9 % — % 4.9 6.8 % $ 55,547 $ 59,150 $ 64,427 $ 65,473 $ 69,418 $ 73,204 4.2 % 6.5 % 8.9 % 1.6 % 6.0 % 5.5 % 18,743 18,920 19,234 19,240 19,510 19,771 16,104 17,367 18,445 18,325 18,577 18,741 2,640 1,553 789 914 933 1,030 14.1 % 8.2 % 4.1 % 4.8 % 4.8 % 5.2 % 3.7 % 8.1 % 5.3 % 3.6 % 3.6 % 4.0 % 339 State of California Annual Comprehensive Financial Report Schedule of Employment by Industry For Calendar Years 2015 and 2024 2015 2024 Percent of Percent of Total State Total State Employees Employment Employees Employment Industry Services ............................................................................... 7,353,300 44.5 % 8,694,300 47.4 % Government Federal................................................................................. 185,200 1.1 193,000 1.0 Military ................................................................................. 59,100 0.4 61,600 0.3 State and Local ..................................................................... 2,218,600 13.5 2,429,600 13.2 Retail trade ........................................................................... 1,648,300 10.0 1,585,500 8.6 Manufacturing ....................................................................... 1,281,700 7.8 1,249,800 6.8 Information, finance, and insurance ........................................ 1,022,700 6.2 1,031,600 5.6 Construction and utilities ........................................................ 790,800 4.8 981,000 5.3 Wholesale trade .................................................................... 691,100 4.2 657,800 3.6 Transportation and warehousing............................................. 502,000 3.0 767,700 4.2 Farming ............................................................................... 422,800 2.6 409,100 2.2 Real estate ......................................................................... 272,300 1.7 307,400 1.7 Natural resources and mining ............................................... 26,600 0.2 19,000 0.1 Total ....................................................................................... 16,474,500 100.0 % 18,387,400 100.0 % Source: Labor Market Information Division, California Employment Development Department 340 Statistical Section 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 341 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 2015 45,383 139,958 44,589 24,996 5,552 39,636 60,745 360,859 Natural Resources Business, Health and Consumer Corrections General and Human Environmental Services, and Government Education Services Protection and Housing Transportation Rehabilitation Total Fiscal Year 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 62,421 425,361 2025 53,974 181,644 51,308 35,969 60,658 8,046 43,076 434,675 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. 1Effective 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. 342 Statistical Section This page intentionally left blank 343 State of California Annual Comprehensive Financial Report Schedule of Operating Indicators by Function For the Past Ten Fiscal Years 2016 2017 2018 2019 General Government State Lottery Total revenue 1.................................................................. $ 6,276 $ 6,233 $ 6,966 $ 7,388 Allocation to Education Fund 1 ............................................ $ 1,563 $ 1,499 $ 1,665 $ 1,825 Judicial Council of California Supreme Court 2,9 Cases filed ................................................................... 8,090 7,325 6,825 6,896 Cases disposed ........................................................... 7,953 6,993 6,726 7,048 Courts of Appeal 9 Notices of appeal filed 3 Civil ......................................................................... 5,935 5,975 6,002 5,697 Criminal .................................................................... 6,714 5,593 5,221 5,577 Juvenile .................................................................... 3,025 3,029 3,068 3,332 Trial Courts 9 Total civil cases 4 Filings ...................................................................... 1,148,205 1,198,076 1,235,568 1,289,017 Dispositions .............................................................. 1,031,105 1,039,092 985,039 1,110,908 Department of Food and Agriculture Milk production (million lbs.) 5,9............................................ 40,469 39,798 40,404 40,595 Farm land (thousand acres) 5 ............................................. 24,800 24,500 24,300 24,300 Education Public Colleges and Universities Fall enrollment 9 Community Colleges ................................................. 1,674,798 1,681,195 1,681,514 1,659,399 California State University .......................................... 478,638 484,297 481,210 481,929 University of California ............................................... 270,112 278,996 286,271 285,216 K-12 Schools Fall enrollment 9 Public ....................................................................... 6,226,737 6,228,235 6,220,413 6,186,278 Private ..................................................................... 500,543 490,966 488,854 495,693 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 2025 is projected. N/A = Not Available 344 Statistical Section 2020 2021 2022 2023 2024 2025 $ 6,622 $ 8,418 $ 8,853 $ 9,239 $ 9,275 $ 8,933 $ 1,437 $ 1,863 $ 2,020 $ 2,257 $ 2,221 $ 1,887 6,485 6,542 5,680 5,490 4,944 5,991 6,354 6,314 5,776 5,764 4,825 5,605 5,144 4,769 5,390 5,904 6,316 6,524 6,286 4,546 4,321 6,665 7,952 6,515 2,818 3,223 3,916 3,689 3,504 3,249 1,112,225 989,249 1,019,879 1,114,331 886,644 1,414,605 996,977 572,540 602,481 605,058 619,621 982,614 41,311 41,861 41,800 40,902 40,283 40,950 24,300 24,300 24,200 23,800 23,700 40,288 1,459,960 1,355,658 1,386,854 1,517,943 1,315,733 271,215 485,550 477,466 457,992 454,640 461,612 471,451 285,862 294,662 294,309 295,573 299,407 301,093 6,163,001 6,002,523 5,852,544 5,837,690 5,837,700 5,806,221 488,984 471,653 498,486 516,571 501,650 494,464 (continued) 345 State of California Annual Comprehensive Financial Report Schedule of Operating Indicators by Function (continued) For the Past Ten Fiscal Years 2016 2017 2018 2019 Health and Human Services Department of Public Health Vital statistics Live births 5,10................................................................ 488,925 471,806 454,244 446,548 Department of Social Services Calfresh programs households (avg. per month) 2,130,583 2,032,818 1,979,526 1,782,500 Employment Development Department Number of employed 5,6,9 16,905,700 17,249,500 17,593,600 17,583,000 Resources Department of Fish and Wildlife Sport fishing licenses sold 5,9 2,508,490 2,502,863 2,498,077 2,371,800 Hunting licenses sold 5,9 2,143,146 2,143,026 2,113,888 2,043,323 California Energy Commission Electrical energy generation plus net imports (gigawatt hours) 290,797 292,115 285,884 278,177 Business, Consumer Services, and Housing Franchise Tax Board Personal Income Tax 9 Number of tax returns filed ......................................... 16,586,622 16,888,470 17,101,753 17,530,141 Taxable income 1 ........................................................ $ 1,159,688 $ 1,259,819 $ 1,357,636 $ 1,412,083 Total tax liability 1 ........................................................ $ 71,558 $ 79,999 $ 87,168 $ 90,071 Corporation Tax 5,9 Number of tax returns filed ......................................... 900,358 936,211 974,652 1,003,389 Income reported for taxation 1 ...................................... $ 129,452 $ 127,290 $ 172,954 $ 191,621 Total tax liability 1 ........................................................ $ 9,276 $ 8,822 $ 11,625 $ 13,861 Transportation California Highway Patrol Total number of DUI arrests 5 63,210 58,894 59,708 66,059 Department of Motor Vehicles Motor vehicle registration 5,9 34,721,195 35,391,347 35,707,821 36,423,657 License issued by age 5,7,9 Under age 18 ............................................................ 225,569 219,572 213,402 215,084 Between 18-80 .......................................................... 25,639,270 26,078,773 26,275,559 26,439,138 Over age 80 .............................................................. 619,807 659,530 647,831 650,998 Department of Transportation Highway center-line miles – rural 5,8,9 10,259 10,259 10,259 10,511 Highway center-line miles – urban 5,8,9 4,833 4,833 4,833 4,547 Correctional Programs Department of Corrections and Rehabilitation Division of Adult Institutions Institution population at December 31 each year .......... 129,415 130,263 127,709 124,027 Division of Juvenile Justice Institution population at June 30 each year .................. 690 638 629 720 346 Statistical Section 2020 2021 2022 2023 2024 2025 448,758 436,883 437,326 435,328 401,222 394,082 2,249,323 2,446,529 2,618,623 2,963,047 2,549,135 2,549,135 16,593,800 17,162,300 18,089,000 18,231,700 N/A N/A 2,780,352 2,713,545 2,430,559 2,477,182 2,230,443 2,186,907 2,404,425 2,387,932 2,066,134 2,129,959 1,867,070 1,686,636 274,254 281,001 288,010 N/A N/A N/A 18,381,491 17,978,845 17,475,057 N/A N/A N/A $ 1,519,003 $ 1,842,709 $ 1,690,307 N/A N/A N/A $ 103,753 $ 125,851 $ 97,583 N/A N/A N/A 1,048,599 1,063,592 1,109,201 N/A N/A N/A $ 168,413 $ 264,189 $ 255,955 N/A N/A N/A $ 15,174 $ 27,754 $ 26,430 N/A N/A N/A 55,692 60,271 57,244 58,764 N/A N/A 35,820,417 36,229,205 35,656,590 35,727,841 35,983,261 36,190,654 182,187 205,668 207,465 208,109 N/A N/A 26,063,084 26,560,379 26,763,045 26,802,930 N/A N/A 624,254 696,062 750,908 754,339 N/A N/A 10,458 10,430 N/A N/A N/A N/A 4,564 4,597 N/A N/A N/A N/A 95,432 99,729 91,385 94,188 91,358 90,592 782 677 558 N/A N/A N/A (concluded) 347 State of California Annual Comprehensive Financial Report Schedule of Capital Asset Statistics by Function For the Past Ten Fiscal Years 2016 2017 2018 2019 General Government Department of Food and Agriculture Vehicles and mobile equipment .......................................... 752 677 823 633 Square footage of structures (in thousands)......................... 455 462 384 384 Department of Justice Vehicles and mobile equipment .......................................... 484 511 509 495 Department of Military Vehicles and mobile equipment .......................................... 217 218 261 221 Square footage of structures (in thousands)......................... 3,965 3,954 3,770 3,268 Department of Veterans Affairs Veterans homes................................................................ 8 8 8 8 Vehicles and mobile equipment .......................................... 235 280 292 247 Square footage of structures (in thousands)......................... 2,541 2,552 2,552 2,536 Education California State University Vehicles and mobile equipment .......................................... 4,945 4,838 5,216 5,246 Campuses ........................................................................ 23 23 23 23 Square footage of structures (in thousands)......................... 75,292 75,786 76,227 76,969 Health and Human Services Department of Developmental Services Vehicles and mobile equipment .......................................... 640 559 616 600 Developmental centers ...................................................... 3 3 3 2 Square footage of structures (in thousands)......................... 3,664 3,664 3,595 3,578 Department of State Hospitals Vehicles and mobile equipment .......................................... 678 674 728 820 State hospitals .................................................................. 8 5 5 5 Square footage of structures (in thousands)......................... 6,445 5,944 5,944 6,425 Source: California Department of General Services (DGS). Note: This schedule presents data available as of June 30, 2025. 348 Statistical Section 2020 2021 2022 2023 2024 2025 780 752 672 672 639 625 384 394 394 394 394 396 485 549 536 536 503 548 241 212 212 212 222 218 3,254 3,253 3,217 3,191 3,168 3,155 8 8 8 8 8 8 276 279 278 278 282 283 2,541 2,541 2,541 2,524 2,524 2,524 5,397 5,447 5,434 5,467 5,569 5,571 23 23 23 23 23 23 78,447 79,572 80,271 81,973 83,383 83,439 490 418 392 392 340 352 2 2 2 2 6 6 2,321 2,321 2,321 2,321 2,321 2,298 969 900 973 973 924 961 5 5 5 5 5 5 6,433 6,478 6,485 6,485 6,888 6,822 (continued) 349 State of California Annual Comprehensive Financial Report Schedule of Capital Asset Statistics by Function (continued) For the Past Ten Fiscal Years 2016 2017 2018 2019 Resources Department of Fish and Wildlife Vehicles and mobile equipment .......................................... 3,104 3,126 2,970 3,266 Square footage of structures (in thousands)......................... 1,297 1,322 1,322 1,333 Department of Forestry and Fire Protection Vehicles and mobile equipment .......................................... 3,151 3,073 3,115 3,144 Square footage of structures (in thousands)......................... 3,666 3,677 3,640 3,626 Department of Parks and Recreation Vehicles and mobile equipment .......................................... 3,538 3,542 3,804 3,571 State Parks....................................................................... 280 280 280 280 Acres of state park land (in thousands)................................ 1,605 1,617 1,619 1,618 Square footage of structures (in thousands)......................... 6,790 7,363 7,360 7,544 State Lands Commission Vehicles and mobile equipment .......................................... 41 43 48 42 Acres of land (in thousands)............................................... 4,480 4,480 4,480 4,480 Business, Consumer Services, and Housing Department of Consumer Affairs Vehicles and mobile equipment .......................................... 588 596 600 622 Department of General Services Vehicles and mobile equipment .......................................... 4,697 4,476 4,465 4,552 Square footage of structures (in thousands)......................... 19,311 19,487 19,565 19,490 Transportation California Highway Patrol Vehicles and mobile equipment .......................................... 5,167 5,336 4,912 4,946 Square footage of structures (in thousands)......................... 1,211 1,191 1,182 1,199 Department of Motor Vehicles Vehicles and mobile equipment .......................................... 287 276 283 266 Square footage of structures (in thousands)......................... 1,780 1,777 1,785 1,785 Department of Transportation Vehicles and mobile equipment .......................................... 11,776 11,585 11,494 11,483 Square footage of structures (in thousands)......................... 7,968 7,960 7,933 8,074 Correctional Programs Department of Corrections and Rehabilitation Vehicles and mobile equipment .......................................... 5,291 8,079 7,571 7,139 Prisons and juvenile facilities.............................................. 39 40 39 39 Square footage of structures (in thousands)......................... 40,485 42,198 42,209 42,605 350 Statistical Section 2020 2021 2022 2023 2024 2025 3,334 3,392 3,167 3,167 3,187 3,253 1,333 1,333 1,334 1,333 1,314 1,338 3,090 3,681 3,608 3,608 3,745 3,268 3,654 3,765 3,762 3,775 3,747 3,810 3,794 3,835 3,878 3,878 3,947 3,982 280 279 280 280 280 280 1,641 1,360 1,643 1,643 1,642 1,642 7,554 7,558 7,429 7,224 7,316 7,238 43 44 43 43 40 35 4,480 4,480 4,480 4,480 4,480 4,480 671 614 612 612 590 576 4,664 4,838 4,838 4,876 4,440 4,435 20,267 20,285 22,017 22,031 23,565 23,516 4,807 5,656 5,362 5,362 5,654 5,988 1,301 1,302 1,308 1,308 1,292 1,292 314 308 314 314 321 299 1,785 1,785 1,785 1,785 1,812 1,812 11,449 11,416 11,303 11,303 11,957 12,474 8,096 8,365 8,402 8,783 8,998 8,968 7,312 7,632 8,356 8,356 8,098 7,886 39 38 37 33 31 31 42,936 42,932 42,932 42,940 42,603 42,281 (concluded) 351 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 Sally Masterson Randy Phan Jared Au Alexander Francisco Harpreet Khinda Adnan Muhammad Nickolaus Ponce-Sánchez Mark Awad Luis Gonzalez Dayne Lagazo Anh Nguyen Moses Reginalds Gisela Brock Meredith Hatai Garcia Nangcua Lee Heather Nguyen Xiaoqing Sun Nicole Caccam Yolandalynn Green Bing Leng Elizabeth Ocaranza Fatima Toure Rahul Chaudhary Mila Henwood, CPA Daniel Lopez Lijo Paul Tuyen Truong Janet Delorey Weixian Jiang Josey Lu Mauricio Perez Tayyaba Zeeshan Aqel Elhady Michael Kiarie Nia Mandlik, CPA Jessica Phan Financial Information Special Thanks Systems and Technology Garin Casaleggio Manager Supervisor Liliana Franco Andy Leung Ross Boyer Jihun Kim Staff Shivam Patel Megan Hang Sylvia Liu Justine Rulloda Jason Kronemeyer Thomas Wong Samantha Lam MALIA M. COHEN California State Controller’s Office State Accounting and Reporting Division P.O. Box 942850/Sacramento, CA 94250/916.445.2636 www.sco.ca.gov