RFP_26-4842_ATTACHMENT_D_-_SIFA_Audit_Report_06-30-2025.pdf

SCHOOLS INFRASTRUCTURE FINANCING AGENCY

FINANCIAL STATEMENTS AND

INDEPENDENT AUDITOR'S REPORT

JUNE 30, 2025

RFP #26-4842

ATTACHMENT D

TABLE OF CONTENTS

INDEPENDENT AUDITOR'S REPORT 3

MANAGEMENT DISCUSSION AND ANALYSIS 6

BASIC FINANCIAL STATEMENTS

GOVERNMENT – WIDE FINANCIAL STATEMENTS

STATEMENT OF NET POSITION JUNE 30, 2025 12

STATEMENT OF ACTIVITIES FOR THE YEAR ENDED

JUNE 30, 2025 13

FUND FINANCIAL STATEMENTS

BALANCE SHEET – GOVERNMENTAL FUNDS JUNE 30, 2025 14

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE GOVERNMENT – WIDE STATEMENT OF NET POSITION

JUNE 30, 2025 15

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND

BALANCES – ALL GOVERNMENTAL FUND TYPES, YEAR END JUNE 30, 2025 16

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUND TYPES

TO THE STATEMENT OF ACTIVITIES, FOR THE YEAR ENDED JUNE 30, 2025 17

NOTES TO FINANCIAL STATEMENTS 18

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL

REPORTING AND ON COMLIANCE AND OTHER MATTERS BASED ON

AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE

WITH GOVERNMENT AUDITING STANDARDS 30

Corporate HQ: 39 N. Washington St., Suite A, Sonora, CA 95370 Phone: (209)588-8760 Fax: (209) 288-2142

Modesto office: 1015 14th Street, Modesto, CA 95354 Phone: (209) 529-4060 Fax: (209) 529-2948 www.HawksCPA.com

__________ Hawks & Associates CPAs , Inc_ __ _______

● think BOLDLY ● plan CAREFULLY ● execute PRECISELY ●

Member, American Institute of Certified Public Accountants, California Society of Certified Public Accountants

Association of Certified Fraud Examiners National Association of Certified Valuators and Analysts

INDEPENDENT AUDITOR'S REPORT

Governing Board Schools Infrastructure Financing Agency Modesto, California

Opinions

We have audited the accompanying financial statements of the governmental activities and each major fund, of the Schools Infrastructure Financing Agency as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the Agency’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund, of the Agency, 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.

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. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.

We are required to be independent of the Agency, 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 audit opinions.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the 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 Agency’s ability to continue as a going concern for twelve 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, 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 Agency’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 Agency’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 on pages 6 through 11 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 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.

Management has omitted the budgetary comparison schedules that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, 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. Our opinions on the basic financial statements are not affected by this missing information.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 20, 2025 on our consideration of the Schools Infrastructure Financing Agency’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 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 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 Schools Infrastructure Financing Agency’s internal control over financial reporting and compliance.

Modesto, California November 20, 2025

Schools Infrastructure Financing Agency c/o Modesto City Schools

426 Locust Street Modesto, CA 95351-2631

(209) 574-1610 FAX (209) 574-1564

George Rawe, President Member Agencies:

Abel Maestas, Vice President Duane A. Wolterstorff, Secretary Sylvan Union School District Lizett Aguilar, Clerk Modesto High School District Nathalie Wells, Treasurer Stanislaus Union School District Maria Rodriguez, Controller

MANAGEMENT DISCUSSION AND ANALYSIS

Fiscal Year Ended June 30, 2025

This annual report consists of three parts—management’s discussion and analysis (this section), the basic financial statements, and required supplementary information.

This discussion and analysis of the financial performance of the Schools Infrastructure Financing Agency (“SIFA”) provides an overview of the Agency’s financial activities for the fiscal year ended June 30, 2025. It is management’s view of the Agency’s financial condition. It should be read in conjunction with the Independent Auditor’s Report, the basic financial statements and the accompanying notes to those financial statements.

OVERVIEW OF THE FINANCIAL STATEMENTS

The basic financial statements include two kinds of statements that present different views of the Agency:

The first two statements are Agency-wide financial statements that provide both short-term and long-term information about the Agency’s overall financial status. Because these statements include all Agency funds, it should be noted that certain inter-fund and other types of transactions that net to zero have been eliminated so that Agency-wide revenues and expenditures are not artificially inflated.

The remaining statements are fund-level financial statements that focus on individual parts of the Agency, reporting the Agency’s operations in more detail than the Agency-wide statements.

These two kinds of statements report the Agency’s net position and changes in position. Net position is the difference between assets plus deferred outflows and liabilities plus deferred inflows, which is one way to measure the Agency’s financial health. Generally, over time, increases or decreases in the Agency’s net position are one indicator of whether its financial health is improving or deteriorating.

However, it must be noted that this Agency is a financing agency and does not own any capital items, but instead purchases those capital assets for members of the Joint Powers Authority and hands the assets over to them. Therefore, this Agency will have a negative net position.

The financial statements also include notes that explain some of the information in the statements. These notes are considered to be an integral part of the financial statements and should be considered with them when looking at the Agency’s financial picture.

The financial statements would be followed by a section of required supplementary information but the Agency has no required supplementary information.

In the Agency-wide financial statements the Agency’s activities are shown as Governmental activities. The Agency has no funds that are classified as Business-type or fiduciary activities.

The fund financial statements provide more detailed information about the Agency’s most significant funds—not the Agency as a whole. The Agency only has funds that would be categorized as governmental fund types.

FINANCIAL ANALYSIS OF THE AGENCY AS A WHOLE

The Agency completed the year with its funds reporting a combined fund balance of $13.86 million, an increase of $1.29 million or 10.23% from last year’s ending fund balance.

Table 1 – Ending Fund Balances

Governmental Fund Type

Ending Balance 06/30/24 06/30/25

CFD 1994-1

Capital Projects $ 1,027,568 $ 1,075,830 Debt Service 4,784 1,497

CFD 1997-1

Capital Projects 3,998,140 4,429,019 Debt Service 779,463 837,529

CFD 1998-1

Capital Projects 5,969,236 6,706,337 Debt Service 790,097 804,999

Total Fund Balances $ 12,569,288 $ 13,855,211

The increase in Total Fund Balances is the result of increased one-time special tax collections and annual special tax collections in excess of debt service payments and administrative costs.

Net Position. Net Position is shown in Table 2 and represents the portion of total assets actually owned free and clear by the Agency. The Agency’s primary asset is cash with fiscal agent. The Agency had a positive Net Position value for the year ending June 30, 2025 of $3.90 million. This figure represents the amount the Agency would have as cash if all operations were ceased and receivables were collected.

Table 2 – Statement of Net Position at June 30, 2025

CFD 1994-1 CFD 1997-1 CFD 1998-1 Total

Assets

Cash with Fiscal Agent $ 1,080,918 $ 5,289,566 $ 7,525,319 $ 13,895,803

Receivables 1,742 23,543 15,160 40,445

Due To (From) Other CFDs - - - -

Prepaid Bond Insurance Costs - 44,299 26,885 71,184

Total Assets $ 1,082,660 $ 5,357,408 $ 7,567,364 $ 14,007,432

Liabilities

Current Liabilities

Accounts Payable $ 5,088 $ 29,742 $ 20,309 $ 55,139

Interest Payable - 85,838 52,125 137,963

Bonds Payable - 450,000 270,000 720,000

Noncurrent Liabilities

Bonds Payable - 5,720,000 3,475,000 9,915,000

Total Liabilities 5,088 6,285,580 3,817,434 10,108,102

Net Position

Unrestricted 1,077,572 (928,172) 3,749,930 3,899,330

Total Liabilities and Net Position $ 1,082,660 $ 5,357,408 $ 7,567,364 $ 14,007,432

Table 3 – Change in Net Position

06/30/24

06/30/25

$ Change

Assets

Cash with Fiscal Agent $ 12,630,564 $ 13,895,803 $ 1,265,239

Receivables 41,829 40,445 (1,384)

Prepaid Bond Insurance Costs 79,093 71,184 (7,909)

Total Assets $ 12,751,486 $ 14,007,432 $ 1,255,946

Liabilities

Current Liabilities

Accounts Payable $ 75,753 $ 55,139 $ (20,614)

Interest Payable 149,046 137,963 (11,083)

Bonds Payable 665,000 720,000 55,000

Noncurrent Liabilities

Bonds Payable 9,915,000 9,195,000 (720,000)

Total Liabilities 10,804,799 10,108,102 (696,697)

Net Position

Unrestricted amount 1,946,687 3,899,330 1,952,643

Total Liabilities and Net Position $ 12,751,486 $ 14,007,432 $ 1,255,946

Changes in net position. As noted previously, the Agency owns no capital assets. The possible expenses for the Agency will be facilities acquisition and construction costs for member agencies, administrative costs, and debt service interest and other charges. Revenues are generally generated from an annual tax levy, one-time special tax levies, annexation fees, and earnings on cash and investments but can also be generated by State funding for new construction.

Table 3 shows the Agency’s net position value increased by $1.95 million over the year, indicating expenses for facilities acquisition and construction for member agencies, debt service expenses and administrative costs were less than revenues during the year. This is illustrated in Table 4.

Table 4 – Statement of Activities

06/30/24 06/30/25 $ Change

Program Expenses

Facilities Acquisition and Construction Services for Other Governmental Entities $ 0 $ 0 $ 0

Administrative 107,411 85,628 (21,783)

Interest on Long-Term Debt 452,221 419,429 (32,792)

Total Program Expenses 559,632 505,057 (54,575)

General Revenues

Special Taxes 2,407,315 1,879,713 (527,602)

Interest Income 585,441 577,987 (7,454)

Total General Revenues 2,992,756 2,457,700 (535,056)

Change in Net Position $ 2,433,124 $ 1,952,643 $ (480,481)

Table 4 shows a decrease of $480,481 in Change in Net Position between fiscal years ended June 30, 2024 and 2025. The decrease in Interest on Long-Term Debt is evidence of making the annual principal payment on the outstanding bonds – lower remaining principal balance results in lower interest payments. The decrease in Special Taxes is primarily the result of reduced collections of one-time special taxes in CFD 1997-1. The decrease in Interest Income is evidence of a decrease in interest rates on cash and investments.

FINANCIAL ANALYSIS OF THE AGENCY’S FUNDS

The Agency’s funds are normally divided into two categories for financial statement representation purposes – major funds and non-major funds. The major funds are the CFD Surplus Fund for CFDs 1994-1, 1997-1 and 1998-1, which funds capital projects on a “pay as you go” basis from collection of the one-time special tax levies and the annual tax levy; the Expense Fund for CFDs 1994-1, 1997-1 and 1998-1, which finance administrative activity from the annual tax levy; and the Redemption Fund for CFDs 1994-1, 1997-1 and 1998-1, which is used for collections of the annual tax levy to fund debt service payments. No funds are non-major funds.

All funds have a positive ending fund balance and an annual analysis is made to determine the tax rate for all three CFDs in each succeeding year.

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

By its very nature, this Agency has no capital assets. The Agency spent no expenditures on capital assets for its member agencies during the fiscal year ending June 30, 2025. During fiscal year 2025/26, member agencies, Stanislaus Union School District and Sylvan Union School District, have plans for expenditures towards their final capital asset projects in CFD 1997-1 and CFD 1998-1 respectively.

Long-Term Debt

At June 30, 2025, the Agency had $9.2 million in long-term debt outstanding which was decreased by $665,000 during the year which represents the amount of debt retired during the fiscal year 2024/25.

On July 10, 2025, the Agency issued new debt for CFD 1997-1.

FACTORS BEARING ON THE AGENCY’S FINANCIAL FUTURE

The housing market and the economy in the Greater Modesto area and in California had experienced a significant downturn in the past but are seeing improvements. The Agency has seen a decline in the tax delinquency rate since fiscal year 2007/08 and a steady lower tax delinquency rate over the last few years. The Agency’s annual tax delinquency rate was 5.98% for fiscal year 2007/08, 4.11% for 2008/09, 2.47% for 2009/10, 1.52% for 2010/11, 1.05% for 2011/12, 0.51% for 2012/13, 0.61% for 2013/14, 0.51% for 2014/15, 0.52% for 2015/16, 0.38% for 2016/17, 0.50% for 2017/18, 0.46% for 2018/19, 0.57% for 2019/20, 0.60% for 2020/21, 0.38% for 2021/22, 0.69% for 2022/23, 0.89% for 2023/24 and 0.72% for 2024/25. However, a significant increase in the annual tax delinquency rate in future years could have a financial impact on the Agency.

All projects for CFD 1994-1 have been completed. After analysis of revenues and expenditures, including an assumption of a 10% tax delinquency rate, by the Agency’s special tax consultant and staff, the Agency’s Board approved, in June 2011, to hold the annual special tax rate per unit at the fiscal year 2009/10 rate level for fiscal year 2011/12 and all future tax levies for CFD 1994-1. The Agency’s Board also approved its intent for 23 years to be the maximum number of years of taxation per parcel for CFD 1994-1.

On July 15, 2014, the Agency refinanced their 2004 Tax Revenue Bonds. The 2014 refinancing resulted in a net present value savings percentage of 18.26% for the Agency. The 2014 refinancing allowed CFD 1994-1 to lower its annual tax rates by 37% for fiscal year 2014/15 and future years.

On September 1, 2020, the Agency paid off $4,855,000 of the $5,340,000 outstanding SIFA CFD1994-1 2014 bonds. As a result of this action, SIFA CFD 1994-1 taxpayers who entered the tax rolls in FY 2009/2010 and earlier were removed from the annual tax levy, starting in FY 2020/21.

On August 11, 2021, the Agency approved the annual tax levy, for Property Tax Year 2021/22, for CFD 1997-1 and CFD 1998-1. There is no longer a need for an annual tax levy in CFD 1994-1.

On September 1, 2022, the Agency paid off $485,000 of the $485,000 outstanding SIFA CFD1994-1 2014 bonds. As a result of this action, SIFA CFD 1994-1 bonds have been paid in full.

On August 14, 2024, the Agency Board approved Resolution 24/25-04 Determining the Cessation of the Special Tax Levy for CFD 1994-1 and First Reading of Ordinance 24/25-01, Making Certain Determinations and Dissolving Community Facilities District No. 1994-1.

On September 11, 2024, the Agency Board approved the Second and Final Reading of Ordinance 24/25-01, Making Certain Determinations and Dissolving Community Facilities District No. 1994-1.

On November 13, 2024, the Stanislaus County Recorder’s Office received the notarized listing of residential lots in CFD 1994-1 to begin the process of releasing the levy connected to SIFA for each residential lot.

There are still outstanding projects for CFDs 1997-1 and 1998-1. The annual special tax rate per unit is being increased 2% annually, as permitted by the Agency’s Rate & Method of Apportionment, to provide funding for the outstanding projects.

On July 10, 2025, the Agency issued new debt for CFD 1997-1 to help fund the construction of the outstanding project in CFD 1997-1.

At the time these financial statements were prepared and audited, the Agency was not aware of any other circumstances that could significantly affect its financial health in the future.

CONTACTING THE AGENCY’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the Agency’s finances and to demonstrate the Agency’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact Office of Controller, Schools Infrastructure Financing Agency, c/o Modesto City Schools, 1311 Woodland Avenue, Suite C, Modesto, CA 95351-1221 or (209) 574-8497.

STATEMENT OF NET POSITION

JUNE 30, 2025

Governmental Activities

ASSETS

Current Assets:

Cash with Fiscal Agent 13,895,803$ Special Tax Revenue Receivables 40,445

Total Current Assets 13,936,248

Prepaid Bond Insurance Costs 71,184

Total Assets 14,007,432$

LIABILITIES AND NET POSITION

Current Liabilities:

Accounts Payable 2,000$ Accounts Payable - Related Parties 53,139 Interest Payable 137,963 Bonds Payable 720,000

Total Current Liabilities 913,102

Noncurrent Liabilities:

Bonds Payable 9,195,000

Total Liabilities 10,108,102

Net Position

Unrestricted 3,899,330

Total Liabilities and Net Position 14,007,432$

The accompanying notes are an integral part of these financial statements.

STATEMENT OF ACTIVITIES

YEAR ENDED JUNE 30, 2025

Governmental Activities

Program Expenses:

Facilities Acquisition and Construction Services for Other Governmental Entities -$

Administrative 85,628 Interest on Long-Term Debt 419,429

Total Program Expenses 505,057

General Revenues:

Special Tax 1,879,713 Interest Income 577,987

Total General Revenues 2,457,700

Change in Net Position 1,952,643

Net Position July 1, 2024 1,946,687

Net Position June 30, 2025 3,899,330$

The accompanying notes are an integral part of these financial statements.

CFD 1994-1

Community

Facilities

District

Surplus Fund

CFD 1997-1

Community

Facilities

District

Surplus Fund

CFD 1998-1

Community

Facilities

District

Surplus Fund

CFD 1994-1

Expense Fund

CFD 1997-1

Expense Fund

CFD 1998-1

Expense Fund

CFD 1994-1

Redemption

Fund

CFD 1997-1

Redemption

Fund

CFD 1998-1

Redemption

Fund Total

ASSETS

Current Assets:

Cash with Fiscal Agent 1,011,189$ 4,434,358$ 6,697,905$ 69,729$ 24,403$ 28,741$ -$ 830,805$ 798,673$ 13,895,803$ Special Tax Revenue Receivables - - - - - - 1,742 23,543 15,160 40,445 Due From Other Funds - (47,000) - - 47,000 - - - - -

Total Assets 1,011,189$ 4,387,358$ 6,697,905$ 69,729$ 71,403$ 28,741$ 1,742$ 854,348$ 813,833$ 13,936,248$

LIABILITIES AND FUND BALANCE

Current Liabilities:

Accounts Payable -$ -$ -$ -$ 1,025$ 975$ -$ -$ -$ 2,000$ Accounts Payable - Related Parties - - - 5,088 28,717 19,334 - - - 53,139 Deferred Revenue - - - - - - 245 16,819 8,834 25,898 Due to Other Funds - - - - - - - - - -

Total Current Liabilities - - - 5,088 29,742 20,309 245 16,819 8,834 81,037

Fund Balance:

Restricted - - - - - - 1,497 837,529 804,999 1,644,025 Assigned 1,011,189 4,387,358 6,697,905 64,641 41,661 8,432 - - - 12,211,186

Total Fund Balance 1,011,189 4,387,358 6,697,905 64,641 41,661 8,432 1,497 837,529 804,999 13,855,211

Total Liabilities and Fund Balance 1,011,189$ 4,387,358$ 6,697,905$ 69,729$ 71,403$ 28,741$ 1,742$ 854,348$ 813,833$ 13,936,248$

Capital Projects Funds Debt Service Funds

SCHOOLS INFRASTRUCTURE FINANCING AGENCY

BALANCE SHEET

MAJOR GOVERNMENTAL FUNDS

JUNE 30, 2025

The accompanying notes are an integral part of these financial statements.

CFD 1994-1

Community

Facilities

District

Surplus Fund

CFD 1997-1

Community

Facilities

District

Surplus Fund

CFD 1998-1

Community

Facilities

District

Surplus Fund

CFD 1994-1

Expense Fund

CFD 1997-1

Expense Fund

CFD 1998-1

Expense Fund

CFD 1994-1

Redemption

Fund

CFD 1997-1

Redemption

Fund

CFD 1998-1

Redemption

Fund Total

REVENUES

Special Tax Revenues -$ 39,545$ -$ -$ -$ -$ 1,497$ 960,964$ 879,160$ 1,881,166$ Interest Revenue 47,664 203,812 308,487 2,856 1,516 1,596 428 6,731 4,897 577,987 5,519

Total Revenues 47,664 243,357 308,487 2,856 1,516 1,596 1,925 967,695 884,057 2,459,153

EXPENDITURES

Current:

General Government - - - 7,470 40,735 29,512 - - - 77,717 Intergovernmental:

Facility Construction Costs - - - - - - - - - -

Debt Service Principal Retirement - - - - - - - 415,000 250,000 665,000 Interest and Fiscal Agent Fees - - - - - - - 267,888 162,625 430,513

Total Expenditures - - - 7,470 40,735 29,512 - 682,888 412,625 1,173,230

Other Financing Sources (Uses) Transfers In 5,212 226,339 456,136 - 47,402 394 - - - 735,483 Transfers Out - (47,000) - - - - (5,212) (226,741) (456,530) (735,483)

Net Other Sources (Uses) 5,212 179,339 456,136 - 47,402 394 (5,212) (226,741) (456,530) -

Excess of Revenues Over (Under) Expenditures 52,876 422,696 764,623 (4,614) 8,183 (27,522) (3,287) 58,066 14,902 1,285,923

Fund Balance July 1, 2024 958,313 3,964,662 5,933,282 69,255 33,478 35,954 4,784 779,463 790,097 12,569,288

Fund Balance June 30, 2025 1,011,189$ 4,387,358$ 6,697,905$ 64,641$ 41,661$ 8,432$ 1,497$ 837,529$ 804,999$ 13,855,211$

Debt Service Funds

ALL MAJOR GOVERNMENTAL FUND TYPES

YEAR ENDED JUNE 30, 2025

Capital Projects Funds

SCHOOLS INFRASTRUCTURE FINANCING AGENCY

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

The accompanying notes are an integral part of these financial statements.

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE GOVERNMENT-WIDE STATEMENT OF NET POSITION

JUNE 30, 2025

TOTAL FUND BALANCES - TOTAL GOVERNMENTAL FUNDS 13,855,211$

Amounts reported for governmental activities in the statement of net assets are different because:

Bond debt increases long-term liabilities in the government-wide statement of net position. (9,915,000)

Accrued interest expense on long-term debt is reported in the government-wide statement of activities and changes in net position but does not require the use of current financial resources. Therefore, accrued interest expense is not reported as expenditures in governmental funds. (137,963)

Revenues are not recorded in the fund financial statement unless they are received within 60 days of year-end. 25,898

Bond insurance costs are recorded as a prepaid expenditure and amortized over the life of the bonds in the government-wide statement of net position. 71,184

NET POSITION OF GOVERNMENTAL ACTIVITIES 3,899,330$

The accompanying notes are an integral part of these financial statements.

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES OF GOVERNMENTAL FUND TYPES TO THE STATEMENT OF ACTIVITIES

YEAR ENDED JUNE 30, 2025

NET CHANGE IN TOTAL FUND BALANCES PER FUND FINANCIAL STATEMENTS 1,285,923$

Prior year revenues received in the current year are recorded in the fund financial statement but are a reduction to receivables in the governement-wide (1,454) statement of net assets.

Current year net repayment of bond principal is an expenditure in governmental funds but the repayment reduces long-term liabilities in the government-wide statement of net assets. 665,000

Current year payment of bond interest is recorded as an expenditure in the governmental funds, while accrued interest expense is recorded in the government-wide statement of activities and change in net assets. 11,083

Current year amortization of bond issuance costs is recognized in the government-wide statement of net assets. (7,909)

CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES 1,952,643$

The accompanying notes are an integral part of these financial statements.

NOTES TO FINANCIAL STATEMENTS

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

The Agency was created on October 11, 1994 pursuant to a Joint Powers Agreement (JPA) between the Modesto High School District and Sylvan Union School District for the purpose of forming a community facilities agency (CFD) under the provisions of the Mello-Roos Community Facility Act of 1982. On September 23, 1996, Stanislaus Union School District became a party and participant in the JPA. The Agency has established the Community Facilities Agency (CFD) Numbers 1994-1 (January 11, 1995), 1997-1 (September 10, 1997), and 1998-1 (May 13, 1998) for the purpose of collectively financing public facilities for each of the Agency's members. The agency has no employees or property and equipment, and its powers are limited to implementation of the Mello-Roos financing plan contemplated in the Joint Powers Agreement.

CFD 1994-1 is comprised of approximately 1,110 acres of non-contiguous parcels, in the northeastern portion of the city, in an area bordered by Claus Road on the east, East Briggsmore Avenue on the south, Oakdale Road on the west and Sylvan Avenue on the north, and approximately 190 acres in an area bordered by Oakdale Road on the east, Mable Avenue on the south, McHenry Avenue on the west and Claratina Avenue on the north. CFD 1994-1 is located within the areas served by Modesto HSD and Sylvan USD.

CFD 1997-1 is comprised of approximately 456 acres of non-contiguous parcels, in the northern portion of the city, in an area bordered by Tully Road on the east, Snyder Avenue on the south, Dale Road on the west and Bangs Avenue on the north. CFD 1997-1 is located within the areas served by Modesto HSD and Stanislaus USD. CFD 1998-1 is comprised of approximately 411 acres of non-contiguous parcels in the eastern portion of the city of Riverbank, in an area bordered by the MID Main Canal on the north and east, Claribel Road on the south, and Oakdale Road on the west. CFD 1998-1 is located within the areas served by Modesto HSD and Sylvan USD.

The Resolution of Intent for each CFD has established the following list of initial authorized facilities. If additional housing units are added or annexations to a CFD from outside the initial CFD area create the need for additional facilities and generate sufficient one-time and annual tax revenue to pay for them, additional facilities are also authorized.

CFD No. 1994-1 Sylvan Union School District Freedom Elementary School Entire Mary Ann Sanders Elementary School Entire Elementary School #10 Cancelled Daniel J. Savage Middle School Portion Modesto High School District James C. Enochs High School Portion Pedestrian Overcrossing near James C. Enochs

High School Portion

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

CFD No. 1997-1 Stanislaus Union School District Mary Lou Dieterich Elementary School Entire Elementary School #7 Portion Prescott Senior Elementary School – 300-Student

Expansion Entire

Modesto High School District James C. Enochs High School Portion

CFD No. 1998-1 Sylvan Union School District Crossroads Elementary School Portion Middle School #4 Portion Modesto High School District James C. Enochs High School Portion

The Agency and its Community Facilities Districts Number 1994-1, 1997-1 and 1998-1 are controlled by a governing board consisting of seven members: two members from the Modesto High School District, two members from the Sylvan Union School District, two members from the Stanislaus Union School District, and one "at large" member from the community. All such members, with the exception of the "at large" member, are independently elected to the governing board of their respective member entities. The "at large" member from the community is appointed by the other members of the board.

The officers of the Agency include a president and vice-president of the governing board and a treasurer, controller, clerk and secretary. The board elects its president and vice-president from among its members for a one-year term. The treasurer, controller, clerk and secretary are appointed by the board and serve at its pleasure. These officers need not be members of the board.

Oversight responsibility, the ability to conduct independent financial affairs, issue debt instruments, approve budgets, sign contracts, levy taxes, and otherwise influence operations, and account for fiscal matters, is exercised by the Agency's governing board.

Accordingly, the Agency is considered to be a separate reporting entity for financial reporting purposes and the accompanying financial statements reflect only the assets, liabilities, fund balances, revenues and expenditures of the Agency.

B. Measurement Focus, Basis of Accounting and Financial Statement Presentation

The accounts of the Agency are organized on the basis of funds that are considered a separate set of self-balancing accounts that are comprised of its assets, liabilities, fund balances, revenues and expenditures.

The funds are further segregated into separate sets of self-balancing accounts for each CFD, that are comprised of the CFD’s distinct assets, liabilities, fund balances, revenues and expenditures. Financial resources are allocated to account for individual funds based upon the purposes for which they are to be spent and the provisions of the bond resolution.

Debt Service Fund – The debt service funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs. The debt service fund includes the redemption account used to account for special tax collections and the payment of bond interest and principal, and the escrow interest account for monies set aside from bond proceeds to pay bond interest. The Agency has purchased a municipal bond debt service reserve insurance policy in lieu of setting aside monies in the reserve account.

Capital Projects Fund – The capital projects fund is used to account for financial resources to be used by member entities to acquire or construct major capital facilities. The capital projects fund includes the Agency's construction accounts used to account for bond proceeds distributed to member entities for facilities acquisition and construction, the expense account used to pay related administrative expenses and the Community Facilities District account used to account for funds to help pay the costs of the facilities.

The Agency has implemented GASB Statement No. 54, “Fund Balance Reporting and Governmental Fund Type Definitions.” This Statement provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government’s fund balances more transparent. In the fund financial statements, governmental funds report the following classifications of fund balances:

Restricted fund balance – amounts that can be spent only for specific purposes because of restrictions from external sources (creditors, laws of other governments etc.) or constitutional provisions or enabling legislation. The Agency Debt Service Funds are restricted by the Trustee Agreement.

Assigned fund balance – amounts that do not meet the criteria to be classified as restricted or committed but that are intended to be used for specific purposes. The Agency’s board is the highest level of decision making authority for the agency. Under the board adopted policy the controller may assign funds for specific purposes. The Capital Project Funds have assigned balances.

It is the Agency’s policy to first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted resources are available; and to first apply committed, then assigned, then unassigned amounts when an expenditure is incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used.

Government-Wide Financial Statements

The Agency’s Government-Wide Financial Statements include a Statement of Net Position and a Statement of Activities and Changes in Net Position. These statements present a summary of governmental-type activities for the Agency. Fiduciary funds and fiduciary component units, if any, are excluded from the Government-Wide Financial Statements.

These statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the Agency’s assets and liabilities are included in the accompanying Statement of Net Position. The statement of activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment Inter-fund and other internal activity, if any, is eliminated by offsetting entries in the Government-Wide Financial Statements.

The Agency applies all applicable GASB pronouncements (including all NCGA Statements and Interpretations currently in effect) as well as following the Financial Accounting Standards Board (FASB) Accounting Standards Codification except when it conflicts with or contradicts GASB pronouncements.

Governmental Funds/Financial Statements

Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds.

An accompanying schedule is presented to reconcile and explain the differences in governmental fund balances as presented in these statements to the net position presented in the Government-Wide Financial Statements. The Agency has presented all major funds that met the applicable criteria.

All governmental funds are accounted for on a spending or "current financial resources" measurement focus. This means that only current assets and current liabilities are generally included in their balance sheets. Their reported fund balance is considered a measure of available spendable resources. Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of available spendable resources during a period. To be considered available, revenues must be received within 60 days of year-end.

All governmental funds are accounted for using the modified accrual basis of accounting.

Their revenues are recognized when they become measurable and available to finance expenditures of the current fiscal period; taxes and interest on investments are revenues susceptible to accrual. Expenditures are recognized when the related fund liability is incurred. An exception to this rule is principal and interest on general long-term debt which is recognized when due.

Interfund transfers within each CFD are made for the purpose of transferring funds from the receiving fund to the expending fund. The Interfund balances outstanding at June 30, 2025, if any, reflect balances that have not yet been transferred.

C. Intergovernmental Expenditures

Facilities acquired or constructed with capital projects funds are the property of (and are under the ownership control of) the member entities party to the Joint Powers Agreement.

Accordingly, such expenditures are not capitalized as general fixed assets by the Agency, nor recorded as capital outlay expenditures. Instead, the Agency follows the practice of recording such uses of funds as intergovernmental expenditures. Each member entity administers the actual acquisition and construction of its own facilities, and is responsible for the payment of project vendors, contractors and costs.

D. Budgetary Policies

Under GASBS No. 34, budgetary comparison information is required to be presented for the general fund and each major special revenue fund with a legally adopted budget. The Agency is not legally required to adopt a budget for the general fund. Therefore, budget comparison information is not included in the Agency’s financial statements.

Formal budgetary policies are not employed by the Agency because effective budgetary control is alternatively achieved through the Resolution of Formation. Accordingly, encumbrance accounting, a method wherein purchase orders, contracts and other commitments for the expenditure of funds are recorded in order to reserve appropriations, is not used.

E. Risk Management

Since the Agency does not own any non-financial assets and does not have any employees, the Agency believes it is not exposed to most types of routine risks of loss such as those due to torts; asset theft or damage; employee injuries; and natural disasters.

Risk exposures that may exist in connection with activities of the Agency on behalf of the member Agencies, and in connection with activities of the member Agencies that are financed by the Agency, are addressed by the respective member Agency's risk management policy. The Agency believes its exposure to risks of loss due to business interruption and errors or omissions is insignificant and, accordingly, no provisions for such losses are made. The Agency has purchased Municipal Bond Insurance and Municipal Bond Debt Service Reserve Insurance policies in connection with bond issues outstanding.

F. Due to and Due from Other Funds

Interfund receivables and payables arise from interfund transactions and are recorded by all funds affected in the period in which transactions are executed. The balances result from the time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur, transactions are recorded in the accounting system, and payments between funds are made.

NOTE 2 CASH AND INVESTMENTS

Deposits and investments of the Agency are made at the direction of the governing board and include deposits and investments authorized to be made in accordance with the California Government Code. Under Section 53601 of the code, governmental agencies may invest in securities of the U.S. Government or its agencies, Small Business Administration loans, negotiable certificates of deposit, bankers’ acceptances, commercial paper, local agency investment funds, repurchase agreements, reverse repurchase agreements and certain mutual funds. In the unlikely event that all deposits and investments became worthless, the total recognized loss for fiscal year ended June 30, 2025 would be $12,630,563.

Deposits and investments of the Agency are summarized below. All deposits and investments are held by the Agency’s fiscal agent for safekeeping in separate accounts in the name of the Agency. The fiscal agent has invested funds with California Asset Management Program.

Description of Deposit

Carrying Amount

Market Value

Capital Projects Funds:

California Asset Management Program - CAMP Pool $ 12,266,325 $ 12,266,325

Debt Service Funds:

U.S. Bank Money Market 1,629,478 1,629,478

Total June 30, 2025 $ 13,895,803 $ 13,895,803

All deposits are presented at fair value as of the balance sheet date. The Agency’s deposits are categorized as to whether securities are: (1) insured or registered in the name of the group or held by the group or its agent in the group’s name; (2) uninsured and unregistered and held by the broker’s or dealer’s trust department or agent in the group’s name; or (3) uninsured and unregistered and held by the broker or dealer, its trust department, or its agent but not held in the group's name.

The Agency's deposits are categorized below to give an indication of the level of risk assumed by the Agency. "Uncategorized" includes investments in pools managed by other governments or in mutual funds or money market funds. California Asset Management Program is rated AAAm by Standard & Poor’s. The Pool is managed to maintain a dollar-weighted average portfolio maturity of 90 days or less.

Deposit Uncategorized

California Asset Management Program - CAMP Pool U.S. Bank Money Market

$ 12,266,325 1,629,478

Total 06/30/2025 $ 13,895,803

NOTE 2 CASH AND INVESTMENTS (Continued)

The Agency may invest in various government-guaranteed mortgage-backed securities in part to maximize yields and in part to hedge against a rise in interest rates. These securities are based on cash flow from interest payments on underlying mortgages.

Therefore, they are sensitive to prepayments by mortgagees, which may result from a decline in interest rates. For example, if interest rates decline and homeowners refinance mortgages, thereby prepaying the mortgages underlying these securities, the cash flow from interest payments is reduced and the value of these securities declines.

Likewise, if homeowners pay on mortgages longer than anticipated, the cash flow is greater and the return on the initial investment would be higher than anticipated. These securities are also potentially sensitive to valuation of the underlying mortgaged assets.

Government guarantees mitigate certain risks on these investments. As of June 30, 2025, the Agency had no investments of this type.

NOTE 3 GENERAL LONG-TERM DEBT

The Agency is authorized within certain conditions to issue special tax bonds in the total amount of $105 million to pay the costs of acquisition and construction of the identified public school facilities. As of June 30, 2025, the Agency has issued a maximum of $38,660,000 in bonds. The bonds are the obligation of the Agency by and through its three Community Facilities Districts: CFD 1994-1, CFD 1997-1, and CFD 1998-1 through the purchase of local obligations of each CFD. The bonds are payable from proceeds of an annual special tax to be levied and collected from the assessable property within each

CFD.

The outstanding special tax bond debt issued by the Schools Infrastructure Financing Agency as of June 30, 2025 is:

Date of Issue

Interest Rate

Maturity Date

Amount of Original Issue

Series 2014 07-15-14 3.0% – 5.0% 09-01-34 $24,040,000

Activity for the fiscal year ended June 30, 2025:

Outstanding Balance at 06/30/24

Issued During

Current Year

Principal

Repayments

Outstanding Balance at 06/30/25

Series 2014 $ 10,580,000 $ - $ (665,000) $ 9,915,000

Total of all bonds $ 10,580,000 $ -

$ (665,000) $ 9,915,000

Less: Current Portion

(720,000)

Long-Term Debt

$ 9,195,000

NOTE 4 SPECIAL TAX BONDS, SERIES 2014

The second issue of bonds, Special Tax Revenue Refunding Bonds, Series 2014, was sold on July 15, 2014. Standard & Poor’s assigned the Series 2014 bonds the rating of “A” before insurance. The Bonds maturing on September 1, 2020 through 2034 are insured by Assured Guaranty Municipal Corp. and Standard & Poor’s has assigned a rating of “AA” for the insured bonds. The Series 2014 bonds in the aggregate principal amount of $24,040,000 were issued to provide funds to pay costs of refunding the prior bond issue:

Refunding of Series 2004 Bonds on September 1, 2014, at 100% plus accrued interest.

The refunding will save approximately $6.77 million in future debt service costs at net present value on the date of the bond issue, an economic gain. The difference in cash flow required to service the old debt and that required to service the new debt and complete the refunding is a reduction of $29.5 million. A gain on extinguishment in the amount of $1,005,214 was recognized in the Statement of Activities for the year of refunding.

The proceeds were distributed as follows to accounts established within the fiscal agent for purposes of administering the proceeds:

CFD 1994-1 CFD 1997-1 CFD 1998-1 Total Cost of Issuance Account $ 151,286 $ 175,796 $ 106,709 $ 433,791 Escrow Account 10,445,286 9,319,038 5,661,599 25,425,923 Underwriter’s Discount 76,520 72,040 43,760 192,320 Proceeds from Bond Issue

10,673,092 9,566,874 5,812,068 26,052,034

Original Issue Premium (1,108,092) (561,874) (342,068) (2,012,034)

Par Amount of Bonds $ 9,565,000 $ 9,005,000 $ 5,470,000 $24,040,000

Principal on the bonds is due September 1 of each year. Interest on the bonds is due March 1 and September 1 of each year.

NOTE 4 SPECIAL TAX BONDS, SERIES 2014 (Continued)

Future debt service requirements for each CFD for years ended June 30:

Fiscal

Year End Principal Interest Total

2026 450,000$ 250,763$ 700,763$ 2027 475,000 235,106 710,106 2028 505,000 213,575 718,575 2029 545,000 187,325 732,325 2030 590,000 158,950 748,950

2031-2035 3,605,000 378,100 3,983,100

Total 1997-1 6,170,000$ 1,423,819$ 7,593,819$

Fiscal Year End Principal Interest Total

2026 270,000$ 152,325$ 422,325$ 2027 290,000 142,838…