Turlock City Council
November 18, 2025

107

CITY OF TURLOCK

COMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2024

Integrated
Waste
Asset Management Bicycle Sports
Forfeitures (AB939) Safety Facilities
ASSETS
Cash and investments 106,926 $ 1,397,728 $ 37,630 $ 38,872 $ Accounts receivable 6,519 - 17,336 2,217 Interest receivable - 11,469 - - Due from developers - - - - Loans receivable - - - - Prepaids - - - - Leases receivable - - - 214,577 Total Assets 113,445 $ 1,409,197 $ 54,966 $ 255,666 $

LIABILITIES
Accounts payable 2,222 $ 44,159 $ - $ 40,798$ Payroll payable - 2,026 - 14,621 Due to other funds - - - - Unearned revenue - - - - Deposits payable - - - - Total Liabilities 2,222 46,185 - 55,419

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - Related to leases - - - 200,247 Total Deferred Inflows of Resources - - - 200,247

FUND BALANCES
Nonspendable - - - - Restricted - 1,363,012 - - Committed 111,223 - 54,966 - Unassigned - - - - Total Fund Balances 111,223 1,363,012 54,966 - Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 113,445$ 1,409,197 $ 54,966 $ 255,666 $

SPECIAL REVENUE FUNDS

108

CITY OF TURLOCK
COMBINING BALANCE SHEET (Continued)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2024

Development
Animal Fees Impact Equipment NW Triangle
Forfeiture Fees Replacement Plan Fee
ASSETS
Cash and investments 33,843 $ 5,239,388 $ 7,477,448 $ 335,894 $ Accounts receivable - - 32,110 - Interest receivable - 46,394 - 3,043 Due from developers - - - - Loans receivable - - - - Prepaids - - 18,918 - Leases receivable - - - - Total Assets 33,843 $ 5,285,782 $ 7,528,476 $ 338,937 $

LIABILITIES
Accounts payable 66 $ 1,204 $ 115,111 $ - $ Payroll payable - - 1,453 - Due to other funds - - - - Unearned revenue - - - - Deposits payable - - - - Total Liabilities 66 1,204 116,564 -

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - Related to leases - - - - Total Deferred Inflows of Resources - - - -

FUND BALANCES
Nonspendable - - - - Restricted 33,777 - - - Committed - 5,284,578 7,411,912 338,937 Unassigned - - - - Total Fund Balances 33,777 5,284,578 7,411,912 338,937 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 33,843 $ 5,285,782 $ 7,528,476 $ 338,937 $

SPECIAL REVENUE FUNDS

109

CITY OF TURLOCK
COMBINING BALANCE SHEET (Continued)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2024

Lighting and
Landscaping Downtown Northeast
Development Assessment Assessment Turlock
Benefit Districts District CFD #2
ASSETS
Cash and investments 689,629 $ 22,858,246 $ 16,384 $ 60,528 $ Accounts receivable - 124,757 - 10,491 Interest receivable 6,242 212,481 - - Due from developers - - - - Loans receivable - - - - Prepaids - - - - Leases receivable - - - - Total Assets 695,871 $ 23,195,484 $ 16,384 $ 71,019 $

LIABILITIES
Accounts payable - $ 1,107,737$ - $ - $ Payroll payable - 18,296 - - Due to other funds - - - - Unearned revenue - - - - Deposits payable - - - - Total Liabilities - 1,126,033 - -

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - Related to leases - - - - Total Deferred Inflows of Resources - - - -

FUND BALANCES
Nonspendable - - - - Restricted - 22,069,451 16,384 71,019 Committed 695,871 - - - Unassigned - - - - Total Fund Balances 695,871 22,069,451 16,384 71,019 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 695,871$ 23,195,484 $ 16,384 $ 71,019 $

SPECIAL REVENUE FUNDS

110

CITY OF TURLOCK
COMBINING BALANCE SHEET (Continued)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2024

Stanislaus
State County
HOME Housing Housing
CDBG Program Stimulus Consortium
ASSETS
Cash and investments - $ 4,592,094$ 40,897 $ 497,739 $ Accounts receivable 214,188 - 3,873 5,633 Interest receivable - 44,175 - - Due from developers - - - - Loans receivable 4,698,494 3,562,845 5,500 9,498,099 Prepaids - - - - Leases receivable - - - - Total Assets 4,912,682 $ 8,199,114 $ 50,270 $ 10,001,471$

LIABILITIES
Accounts payable 57,669 $ 1,205 $ - $ 14,725$ Payroll payable 3,642 - - 913 Due to other funds 95,342 - - - Unearned revenue - - - - Deposits payable 3,600 - - 2,650 Total Liabilities 160,253 1,205 - 18,288

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 4,698,494 3,562,845 5,500 9,498,099 Related to leases - - - - Total Deferred Inflows of Resources 4,698,494 3,562,845 5,500 9,498,099

FUND BALANCES
Nonspendable - - - - Restricted 53,935 4,635,064 44,770 485,084 Committed - - - - Unassigned - - - - Total Fund Balances 53,935 4,635,064 44,770 485,084 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 4,912,682$ 8,199,114 $ 50,270 $ 10,001,471$

SPECIAL REVENUE FUNDS

111

CITY OF TURLOCK
COMBINING BALANCE SHEET (Continued)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2024

Grant Traffic
Funds Safety Home ARP ARPA
ASSETS
Cash and investments 722,725 $ 118,122 $ - $ 6,161,582$ Accounts receivable 509,173 - - 6 Interest receivable - - - - Due from developers - - - - Loans receivable - - - - Prepaids - - - - Leases receivable - - - - Total Assets 1,231,898 $ 118,122 $ - $ 6,161,588$

LIABILITIES
Accounts payable 17,955 $ 28 $ 6,517 $ 17,900 $ Payroll payable 813 - 1,826 7,747 Due to other funds 308,788 - 102,803 - Unearned revenue - - - 6,159,122 Deposits payable - - - - Total Liabilities 327,556 28 111,146 6,184,769

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - Related to leases - - - - Total Deferred Inflows of Resources - - - -

FUND BALANCES
Nonspendable - - - - Restricted 904,342 118,094 - - Committed - - - - Unassigned - - (111,146) (23,181) Total Fund Balances 904,342 118,094 (111,146) (23,181) Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 1,231,898$ 118,122 $ - $ 6,161,588$

SPECIAL REVENUE FUNDS

112

CITY OF TURLOCK
COMBINING BALANCE SHEET (Continued)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2024

Street
Capital Light
PLHA Facility Fees Improvement Installation
ASSETS
Cash and investments 308,128 $ 16,907,284 $ 5,934,052 $ 153,979 $ Accounts receivable - - 1,000 - Interest receivable 1,890 152,102 63,266 1,394 Due from developers - 267,243 - - Loans receivable - - - - Prepaids - - - - Leases receivable - - - - Total Assets 310,018 $ 17,326,629 $ 5,998,318 $ 155,373 $

LIABILITIES
Accounts payable 2,352 $ 110,931 $ 610,120 $ - $ Payroll payable - - - - Due to other funds - - - - Unearned revenue - - - - Deposits payable - - - - Total Liabilities 2,352 110,931 610,120 -

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - Related to leases - - - - Total Deferred Inflows of Resources - - - -

FUND BALANCES
Nonspendable - 267,243 - - Restricted 307,666 16,948,455 - - Committed - - 5,388,198 155,373 Unassigned - - - - Total Fund Balances 307,666 17,215,698 5,388,198 155,373 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 310,018$ 17,326,629 $ 5,998,318 $ 155,373 $

CAPITAL PROJECTS FUNDSSPECIAL REVENUE FUNDS

113

CITY OF TURLOCK
COMBINING BALANCE SHEET (Continued)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2024

Turlock
Downtown North North East Regional
Improvement Turlock Turlock Industrial
Project Master Plan Master Plan Park
ASSETS
Cash and investments 234,737 $ 2,287,144 $ 3,878,611 $ 2,517,351 $ Accounts receivable - - - - Interest receivable - 20,714 35,074 22,711 Due from developers - - - - Loans receivable - - - - Prepaids - - - - Leases receivable - - - - Total Assets 234,737 $ 2,307,858 $ 3,913,685 $ 2,540,062 $

LIABILITIES
Accounts payable - $ - $ - $ - $ Payroll payable - - - - Due to other funds - - - - Unearned revenue - - - - Deposits payable - - - - Total Liabilities - - - -

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - - - Related to leases - - - - Total Deferred Inflows of Resources - - - -

FUND BALANCES
Nonspendable - - - - Restricted - - - - Committed 234,737 2,307,858 3,913,685 2,540,062 Unassigned - - - - Total Fund Balances 234,737 2,307,858 3,913,685 2,540,062 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 234,737$ 2,307,858 $ 3,913,685 $ 2,540,062 $

CAPITAL PROJECTS FUNDS

114

CITY OF TURLOCK
COMBINING BALANCE SHEET (Continued)

NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2024

Total
East Nonmajor
Tuolumne Governmental
Master Plan Airport Funds
ASSETS
Cash and investments 8,884 $ 95,105 $ 82,750,950$ Accounts receivable - 10,000 937,303 Interest receivable - - 620,955 Due from developers - - 267,243 Loans receivable - - 17,764,938 Prepaids - - 18,918 Leases receivable - - 214,577 Total Assets 8,884 $ 105,105 $ 102,574,884$

LIABILITIES
Accounts payable - $ - $ 2,150,699$ Payroll payable - - 51,337 Due to other funds - - 506,933 Unearned revenue - - 6,159,122 Deposits payable - - 6,250 Total Liabilities - - 8,874,341

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue - - 17,764,938 Related to leases - - 200,247 Total Deferred Inflows of Resources - - 17,965,185

FUND BALANCES
Nonspendable - - 267,243 Restricted - - 47,051,053 Committed 8,884 105,105 28,551,389 Unassigned - - (134,327) Total Fund Balances 8,884 105,105 75,735,358 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances 8,884 $ 105,105 $ 102,574,884$

CAPITAL PROJECTS FUNDS

115

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES

NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2024

Integrated
Waste
Asset Management Bicycle Sports
Forfeitures (AB939) Safety Facilities

REVENUES
Taxes and assessments - $ - $ - $ - $ Licenses and permits - - 17,459 - Use of money and property (403) 30,938 (142) 3,024 Intergovernmental 36,495 206,364 - - Charges for current services - - - 231,071 Other revenue - - - - Total Revenues 36,092 237,302 17,317 234,095

EXPENDITURES
Current:

General government - 169,545 - - Public safety 40,591 - 4,826 - Public ways and facilities/transportation - (2,511) - - Parks and recreation - - - 938,389 Community development - - - - Capital outlay - - - - Total Expenditures 40,591 167,034 4,826 938,389

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (4,499) 70,268 12,491 (704,294)

OTHER FINANCING SOURCES (USES)
Contributions of capital assets - - - - Proceeds from sale of property - - - 740 Transfers in - - - 728,974 Transfers (out) - - - (25,420) Total Other Financing Sources (Uses) - - - 704,294 NET CHANGE IN FUND BALANCES (4,499) 70,268 12,491 - BEGINNING FUND BALANCES 115,722 1,292,744 42,475 - ENDING FUND BALANCES 111,223 $ 1,363,012 $ 54,966 $ - $

SPECIAL REVENUE FUNDS

116

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES (Continued)

NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2024

Development
Animal Fees Impact Equipment NW Triangle
Forfeiture Fees Replacement Plan Fee

REVENUES
Taxes and assessments - $ - $ 72,478$ - $ Licenses and permits - - - - Use of money and property (127) 213,395 (28,161) 8,350 Intergovernmental - - 4,693 - Charges for current services 14,120 224,898 329,314 5,691 Other revenue - - 27,638 - Total Revenues 13,993 438,293 405,962 14,041

EXPENDITURES
Current:

General government - - 341,926 - Public safety 11,325 - 661,654 - Public ways and facilities/transportation - 17,084 3,100 840 Parks and recreation - - 2,067 - Community development - - 125,977 - Capital outlay - - 65,953 - Total Expenditures 11,325 17,084 1,200,677 840

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 2,668 421,209 (794,715) 13,201

OTHER FINANCING SOURCES (USES)
Contributions of capital assets - - - - Proceeds from sale of property - - 3,507 - Transfers in - - 1,279,424 - Transfers (out) - - (40,000) - Total Other Financing Sources (Uses) - - 1,242,931 - NET CHANGE IN FUND BALANCES 2,668 421,209 448,216 13,201 BEGINNING FUND BALANCES 31,109 4,863,369 6,963,696 325,736 ENDING FUND BALANCES 33,777 $ 5,284,578 $ 7,411,912 $ 338,937 $

SPECIAL REVENUE FUNDS

117

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES (Continued)

NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2024

Lighting and
Landscaping Downtown Northeast
Development Assessment Assessment Turlock
Benefit Districts District CFD #2

REVENUES
Taxes and assessments - $ 4,495,785$ - $ 1,137,389$ Licenses and permits - - - - Use of money and property 17,275 976,962 (62) 934 Intergovernmental - - - - Charges for current services - - - - Other revenue - 1,596 - - Total Revenues 17,275 5,474,343 (62) 1,138,323

EXPENDITURES
Current:

General government - - - 34,581 Public safety - - - - Public ways and facilities/transportation - 4,748,959 - - Parks and recreation - 13,319 - - Community development - - - - Capital outlay - - - - Total Expenditures - 4,762,278 - 34,581

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 17,275 712,065 (62) 1,103,742

OTHER FINANCING SOURCES (USES)
Contributions of capital assets - - - - Proceeds from sale of property - 355 - - Transfers in - - - - Transfers (out) - (41,663) - (1,108,274) Total Other Financing Sources (Uses) - (41,308) - (1,108,274) NET CHANGE IN FUND BALANCES 17,275 670,757 (62) (4,532) BEGINNING FUND BALANCES 678,596 21,398,694 16,446 75,551 ENDING FUND BALANCES 695,871 $ 22,069,451 $ 16,384 $ 71,019 $

SPECIAL REVENUE FUNDS

118

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES (Continued)

NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2024

Stanislaus
State County
HOME Housing Housing
CDBG Program Stimulus Consortium

REVENUES
Taxes and assessments - $ - $ - $ - $ Licenses and permits - - - - Use of money and property - 124,158 (154) (1,870) Intergovernmental 331,945 14,578 8,359 - Charges for current services 55,292 - - 16,205 Other revenue 261,353 38,762 - 134,491 Total Revenues 648,590 177,498 8,205 148,826

EXPENDITURES
Current:

General government - - - - Public safety - - - - Public ways and facilities/transportation - - - - Parks and recreation - - - - Community development 767,783 4,351 4,486 158,148 Capital outlay - - - - Total Expenditures 767,783 4,351 4,486 158,148

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (119,193) 173,147 3,719 (9,322)

OTHER FINANCING SOURCES (USES)
Contributions of capital assets - - - - Proceeds from sale of property 130 - - - Transfers in - - - - Transfers (out) (1,394) - - - Total Other Financing Sources (Uses) (1,264) - - - NET CHANGE IN FUND BALANCES (120,457) 173,147 3,719 (9,322) BEGINNING FUND BALANCES 174,392 4,461,917 41,051 494,406 ENDING FUND BALANCES 53,935 $ 4,635,064 $ 44,770 $ 485,084 $

SPECIAL REVENUE FUNDS

119

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES (Continued)

NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2024

Grant Traffic
Funds Safety Home ARP ARPA

REVENUES
Taxes and assessments - $ - $ - $ - $ Licenses and permits - - - - Use of money and property (1,334) (445) - (23,181) Intergovernmental 2,109,279 - - 5,930,076 Charges for current services 13,046 52,600 - - Other revenue 28,154 - - - Total Revenues 2,149,145 52,155 - 5,906,895

EXPENDITURES
Current:

General government - - - 1,820,721 Public safety 680,081 34,076 - 94,200 Public ways and facilities/transportation - - - 94,286 Parks and recreation 749,619 - - 134,955 Community development 158,971 - 111,000 - Capital outlay 526,480 - - - Total Expenditures 2,115,151 34,076 111,000 2,144,162

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 33,994 18,079 (111,000) 3,762,733

OTHER FINANCING SOURCES (USES)
Contributions of capital assets - - - - Proceeds from sale of property - - - - Transfers in 395,485 - - - Transfers (out) (281,041) - - (1,173,233) Total Other Financing Sources (Uses) 114,444 - - (1,173,233) NET CHANGE IN FUND BALANCES 148,438 18,079 (111,000) 2,589,500 BEGINNING FUND BALANCES 755,904 100,015 (146) (2,612,681) ENDING FUND BALANCES 904,342 $ 118,094 $ (111,146) $ (23,181) $

SPECIAL REVENUE FUNDS

120

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES (Continued)

NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2024

Street
Capital Light
PLHA Facility Fees Improvement Installation

REVENUES
Taxes and assessments - $ - $ - $ - $ Licenses and permits - - 24,391 - Use of money and property 1,551 678,996 321,103 3,857 Intergovernmental 309,854 - - - Charges for current services - 2,149,689 - - Other revenue - - - - Total Revenues 311,405 2,828,685 345,494 3,857

EXPENDITURES
Current:

General government - 16,105 - - Public safety - 1,259 - - Public ways and facilities/transportation - 4,276 37,002 - Parks and recreation - - - - Community development 3,739 765 - - Capital outlay - 1,325,122 4,054,908 - Total Expenditures 3,739 1,347,527 4,091,910 -

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 307,666 1,481,158 (3,746,416) 3,857

OTHER FINANCING SOURCES (USES)
Contributions of capital assets - 1,159,049 - - Proceeds from sale of property - - - - Transfers in - - 3,285,345 - Transfers (out) - - - - Total Other Financing Sources (Uses) - 1,159,049 3,285,345 - NET CHANGE IN FUND BALANCES 307,666 2,640,207 (461,071) 3,857 BEGINNING FUND BALANCES - 14,575,491 5,849,269 151,516 ENDING FUND BALANCES 307,666 $ 17,215,698 $ 5,388,198 $ 155,373 $

CAPITAL PROJECTS FUNDSSPECIAL REVENUE FUNDS

121

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES (Continued)

NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2024

Turlock
Downtown North North East Regional
Improvement Turlock Turlock Industrial
Project Master Plan Master Plan Park

REVENUES
Taxes and assessments - $ - $ - $ - $ Licenses and permits - - - - Use of money and property (884) 57,327 165,245 62,586 Intergovernmental - - - - Charges for current services - - 107,140 279,095 Other revenue - - - - Total Revenues (884) 57,327 272,385 341,681

EXPENDITURES
Current:

General government - - - - Public safety - - - - Public ways and facilities/transportation 318 1,468 3,894 631 Parks and recreation - - - - Community development - - - - Capital outlay - - - - Total Expenditures 318 1,468 3,894 631

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (1,202) 55,859 268,491 341,050

OTHER FINANCING SOURCES (USES)
Contributions of capital assets - - - - Proceeds from sale of property - - - - Transfers in - - - - Transfers (out) - - - - Total Other Financing Sources (Uses) - - - - NET CHANGE IN FUND BALANCES (1,202) 55,859 268,491 341,050 BEGINNING FUND BALANCES 235,939 2,251,999 3,645,194 2,199,012 ENDING FUND BALANCES 234,737 $ 2,307,858 $ 3,913,685 $ 2,540,062 $

CAPITAL PROJECTS FUNDS

122

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES (Continued)

NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2024

Total
East Nonmajor
Tuolumne Governmental
Master Plan Airport Funds

REVENUES
Taxes and assessments - $ - $ 5,705,652$ Licenses and permits - - 41,850 Use of money and property (33) (358) 2,608,547 Intergovernmental - 20,000 8,971,643 Charges for current services 3,048 - 3,481,209 Other revenue - 52,857 544,851 Total Revenues 3,015 72,499 21,353,752

EXPENDITURES
Current:

General government - - 2,382,878 Public safety - - 1,528,012 Public ways and facilities/transportation 631 4,142 4,914,120 Parks and recreation - - 1,838,349 Community development - - 1,335,220 Capital outlay - - 5,972,463 Total Expenditures 631 4,142 17,971,042

EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 2,384 68,357 3,382,710

OTHER FINANCING SOURCES (USES)
Contributions of capital assets - - 1,159,049 Proceeds from sale of property - - 4,732 Transfers in - - 5,689,228 Transfers (out) - (10,000) (2,681,025) Total Other Financing Sources (Uses) - (10,000) 4,171,984 NET CHANGE IN FUND BALANCES 2,384 58,357 7,554,694 BEGINNING FUND BALANCES 6,500 46,748 68,180,664 ENDING FUND BALANCES 8,884 $ 105,105 $ 75,735,358 $

CAPITAL PROJECTS FUNDS

123

INTERNAL SERVICE FUNDS

Internal Service Funds are used to finance and account for serv ices or activities performed by one City department for the benefit of other City departments on a cost reimbursement basis.

The concept of major funds in accounting principles generally a ccepted in the United States of America does not apply to Internal Service Funds because, in general, t hey do not do business with outside parties. Accounting principles generally accepted in the United States of America require that, for the Statement of Activities, the net r evenues or expenses of each i nternal service fund be eliminated by netting them against the operations of the City department(s) w hich benefit(s) from the services the internal service fund provides. The Balance Sheet items are consolidated with the Governmental Funds in the Statement of Net Position.

The activities of Internal Service funds continue to be present ed separately in the Fund Financial Statements.

Equipment Pool
This fund accounts for repair and maintenance activities for al l City vehicles and large equipment as well as monies set aside for the replacement of vehicles used by City departments.

Self-Insurance
The Self-Insurance Fund accounts for the activities of the City ’s risk management and workers’ compensation, property/liability, and health (medical, dental, and vision) insurance programs.

Information Technology
This fund accounts for the costs incurred to maintain and enhan ce the City’s information technology systems.

124

CITY OF TURLOCK

COMBINING STATEMENT OF NET POSITION

INTERNAL SERVICE FUNDS
JUNE 30, 2024

Equipment Self- Information
Pool Insurance Technology Total
ASSETS
Current assets:

Cash and investments 10,283,726 $ 10,428,886 $ 1,114,245 $ 21,826,857 $ Accounts receivable 84,372 657,338 - 741,710 Interest receivable 8,255 93,301 - 101,556 Total current assets 10,376,353 11,179,525 1,114,245 22,670,123 Noncurrent assets:

Capital assets not being depreciated 14,364 - - 14,364 Capital assets being depreciated (net) 3,881,729 - 14,714 3,896,443 Total noncurrent assets 3,896,093 - 14,714 3,910,807 Total Assets 14,272,446 11,179,525 1,128,959 26,580,930

DEFERRED OUTFLOWS OF RESOURCES
Related to pensions 301,843 - 541,776 843,619 Related to OPEB 22,255 - 39,448 61,703 Total Deferred Outflows of Resources 324,098 - 581,224 905,322

LIABILITIES
Current liabilities:

Accounts payable 27,537 1,218,706 71,901 1,318,144 Payroll payable 17,013 - 34,277 51,290 Claims liability - 285,654 - 285,654 Compensated absences 8,773 - 18,821 27,594 Total current liabilities 53,323 1,504,360 124,999 1,682,682 Long-term liabilities:

Claims liability - 2,795,718 - 2,795,718 Compensated absences 35,090 - 75,284 110,374 Total OPEB liability 106,467 - 188,712 295,179 Net pension liability 1,070,639 - 1,921,683 2,992,322 Total long-term liabilities 1,212,196 2,795,718 2,185,679 6,193,593 Total Liabilities 1,265,519 4,300,078 2,310,678 7,876,275

DEFERRED INFLOWS OF RESOURCES
Related to pensions 22,436 - 40,270 62,706 Related to OPEB 155,317 - 275,308 430,625 Total Deferred Inflows of Resources 177,753 - 315,578 493,331

NET POSITION
Net investment in capital assets 3,896,093 - 14,714 3,910,807 Unrestricted 9,257,179 6,879,447 (930,787) 15,205,839 Total Net Position 13,153,272 $ 6,879,447 $ (916,073) $ 19,116,646 $

125

CITY OF TURLOCK

COMBINING STATEMENT OF REVENUES, EXPENSES,

AND CHANGES IN FUND NET POSITION

INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2024

Equipment Self- Information
Pool Insurance Technology Total

OPERATING REVENUES
Charges for services 627,376 $ 10,709,502$ 2,219,194 $ 13,556,072 $ Other income 189 569,336 - 569,525 Total Operating Revenues 627,565 11,278,838 2,219,194 14,125,597

OPERATING EXPENSES
Salaries, benefits, and insurance 586,836 12,040,282 1,416,042 14,043,160 Contractual 174,312 76,587 472,581 723,480 Supplies and maintenance 151,276 - 17,302 168,578 Utilities 30,725 - 18,502 49,227 Fleet expense 18,825 - 4,262 23,087 Depreciation and amortization 923,026 - 4,106 927,132 Other expenses 9,598 5,179 73,664 88,441 Total Operating Expenses 1,894,598 12,122,048 2,006,459 16,023,105 Operating Loss (1,267,033) (843,210) 212,735 (1,897,508)

NONOPERATING REVENUES (EXPENSES)
Interest income (loss) (10,423) 418,293 (4,045) 403,825 Gain on disposal of capital assets 153,178 - 150 153,328 Total Nonoperating Revenues (Expenses) 142,755 418,293 (3,895) 557,153 Income (Loss) Before
Contributions and Transfers (1,124,278) (424,917) 208,840 (1,340,355) Transfers in 2,546,588 - - 2,546,588 Transfers (out) (2,328) - (30,000) (32,328) Total Contributions and Transfers 2,544,260 - (30,000) 2,514,260 Change in Net Position 1,419,982 (424,917) 178,840 1,173,905 NET POSITION - BEGINNING 11,733,290 7,304,364 (1,094,913) 17,942,741 NET POSITION - ENDING 13,153,272 $ 6,879,447 $ (916,073) $ 19,116,646 $

126

CITY OF TURLOCK

COMBINING STATEMENT OF CASH FLOWS

INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2024

Equipment Self- Information
Pool Insurance Technology Total

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 544,765 $ 10,583,295$ 2,219,194 $ 13,347,254 $ Payments to suppliers (468,949) 1,062,221 (533,140) 60,132 Payments to employees and benefits (586,516) (12,040,282) (1,418,033) (14,044,831) Other 189 569,336 - 569,525 Net Cash Flows from Operating Activities (510,511) 174,570 268,021 (67,920)

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Interfund receipts (payments) 426,650 - - 426,650 Transfers in 2,546,588 - - 2,546,588 Transfers out (2,328) - (30,000) (32,328) Net Cash Flows from Noncapital Financing Activities 2,970,910 - (30,000) 2,940,910

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Acquisition of capital assets, net (1,384,922) - - (1,384,922) Proceeds from sale of capital assets 153,178 - 150 153,328 Net Cash Flows from Capital and Related
Financing Activities (1,231,744) - 150 (1,231,594)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest (14,767) 364,977 (4,045) 346,165 Net Cash Flows from Investing Activities (14,767) 364,977 (4,045) 346,165 Net Cash Flows 1,213,888 539,547 234,126 1,987,561 Cash and Investments at Beginning of Period 9,069,838 9,889,339 880,119 19,839,296 Cash and Investments at End of Period 10,283,726 $ 10,428,886 $ 1,114,245 $ 21,826,857 $ Reconciliation of Operating Income (Loss) to Net Cash Flows from Operating Activities:

Operating income (loss) (1,267,033) $ (843,210) $ 212,735 $ (1,897,508)$ Adjustments to reconcile operating income (loss) to net cash flows from operating activities:

Depreciation and amortization 923,026 - 4,106 927,132 Change in assets and liabilities:

Accounts receivable (82,611) (126,207) - (208,818) Accounts payable (84,213) 578,667 53,171 547,625 Payroll payable 6,577 - 9,874 16,451 Compensated absences 6,741 - 15,200 21,941 Claims liability - 565,320 - 565,320 Deferred outflows/inflows and total OPEB liability 19,670 - (39,162) (19,492) Deferred outflows/inflows and net pension liability (32,668) - 12,097 (20,571) Net Cash Flows from Operating Activities (510,511) $ 174,570 $ 268,021 $ (67,920) $

127

CUSTODIAL FUNDS

Custodial funds are used to account for assets held by the City as an agent for individuals, private organizations, and other governments. The financial activities of these funds are excluded from the Government-Wide Financial Statem ents, but are presented in a se parate Fiduciary Fund Financial Statement. For the City of Turlock, the following agent activit ies are accounted for within the Custodial Funds:

Northwest Triangle Mello Roos Assessment District
This district was established as a funding mechanism to partial ly pay for the infrastructure improvements installed in the Monte Vista Cros sings shopping area. These imp rovements were in part funded with the proceeds of a bond issuance which is being retired through annu al assessments to the owners of the parcels within the district’s boundaries.

Turlock Property and Business Improvement District (PBID) #2 This is a successor district to one originally established to f und maintenance efforts in downtown Turlock.

The current district was established in June 2003 via a vote of the affected property owners. The district has a ten year life and extended annually, through annual asses sments, funds prescribed maintenance efforts within the district’s boundaries as well as promotional activities for the downtown area.

128

CITY OF TURLOCK

COMBINING STATEMENT OF FIDUCIARY NET POSITION

CUSTODIAL FUNDS
JUNE 30, 2024

Northwest Turlock
Triangle Property and
Mello Roos Business
Assessment Improvement
District District #2 Total
ASSETS
Cash and investments 334,313 $ 69,057 $ 403,370 $ Cash and investments with fiscal agent 112,253 - 112,253 Accounts receivable 10,402 15,287 25,689 Interest receivable 2,909 - 2,909 Total Assets 459,877 84,344 544,221

LIABILITIES
Accounts payable - 16,407 16,407 Total Liabilities - 16,407 16,407

NET POSITION
Restricted for:

Other organizations 459,877 67,937 527,814 Total Net Position 459,877 $ 67,937 $ 527,814 $

129

CITY OF TURLOCK

COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

CUSTODIAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2024

Northwest Turlock
Triangle Property and
Mello Roos Business
Assessment Improvement
District District #2 Total

ADDITIONS
Assessments 277,582 $ 204,694 $ 482,276 $ Net investment income (loss) 12,348 (260) 12,088 Total Additions 289,930 204,434 494,364

DEDUCTIONS
Administration expense 26,966 - 26,966 Recipient payments - 203,691 203,691 Payments to bondholders 260,876 - 260,876 Total Deductions 287,842 203,691 491,533 NET CHANGE IN NET POSITION 2,088 743 2,831

NET POSITION
Beginning of year 457,789 67,194 524,983 End of year 459,877 $ 67,937 $ 527,814 $

130
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CITY OF TURLOCK, CALIFORNIA

SINGLE AUDIT REPORTS

FOR THE YEAR ENDED
JUNE 30, 2024

CITY OF TURLOCK, CALIFORNIA

SINGLE AUDIT REPORTS
FOR THE YEAR ENDED JUNE 30, 2024

TABLE OF CONTENTS

Page

Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ................................. 1

Independent Auditor’s Report on Compliance for Each Major Federal Program and on Internal Control over Compliance Required by the Uniform Guidance ................................ 3

Schedule of Expenditures of Federal Awards .................................................................................... 6

Notes to Schedule of Expenditures of Federal Awards ..................................................................... 8

Schedule of Findings and Questioned Costs ..................................................................................... 9

1 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Honorable Members of the City Council
City of Turlock, California

We have audited, in accordance with the auditing standards gene rally accepted in the United States of America and the standards applicable to financial audits contai ned in Government Auditing Standards issued by the Comptroller General of the United States, the fin ancial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Turlock, California (the City), as of and for the y ear ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated September 22, 2025.

Report on Internal Control Over Financial Reporting

In planning and performing our audit of the financial statement s, we considered the City’s internal control over financial reporting (internal control) as a basis for desi gning audit procedures that are appropriate in the circumstances for the purpo se of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Ci ty’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allo w management or employees, in the normal course of performing the ir assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that the re is a reasonable possibility that a material misstatement of the City’s financial statements will not be pre vented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combinati on of deficiencies, in internal control that is less severe than a material weakness, yet important eno ugh to merit attention by those charged with governance.

Our consideration of internal c ontrol was for the limited purpo se described in the first paragraph of this section and was not designed to i dentify all deficiencies in in ternal control that might be material weaknesses or significant deficiencies. Given these limitations , during our audit we did not identify any deficiencies in internal control that we consider to be materia l weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.

Report on Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Cit y’s financial statements are free from material misstatement, we performed tests of its compliance wit h certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on complian ce with those provisions was not an

2 objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that a re required to be reported under Government Auditing Standards.

City’s Response to Findings

Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the findings identified in our audit and described in our se parately issued Memorandum on Internal Control dated September 22, 2025, which is an integral part of our audit and should be read in conjunction with this report. The City’s response was not subje cted to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Acc ordingly, this report is not suitable for any other purpose.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
September 22, 2025

3 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR

EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL

OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

To the Honorable Members of the City Council
City of Turlock, California

Report on Compliance for Each Major Federal Program

Opinion on Each Major Federal Program

We have audited the City of Turlock’s (the City) compliance wit h the types of compliance requirements identified as subject to audit in the U.S. Office of Management and Budget (OMB) Compliance Supplement that could have a direct and material effect on each of the Ci ty’s major federal programs for the year ended June 30, 2024. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

In our opinion, the City complied, in all material respects, wi th the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs identified in the summary of auditor’s results section of the a ccompanying schedule of findings and questioned costs for the year ended June 30, 2024.

Basis for Opinion on Each Major Federal Program

We conducted our audit of compliance in accordance with auditin g standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and t he audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).

Our responsibilities under those standards
and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of the City and to meet our o ther ethical responsibilities, in accordance with 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 opinion on compliance for each major federal program. Our audit does not provide a legal deter mination of the City’s compliance with the compliance requirements referred to above.

Responsibilities of Management for Compliance

Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control o ver compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s federal programs.

4 Auditor’s Responsibilities for the Audit of Compliance

Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. 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 auditing standards generally accept ed in the United States of A merica, Government Auditing Standards, and the Uniform Guidance will always detect material noncomplia nce when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepre sentations, or the override of internal control. Noncompliance with the compliance requirements referre d to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City ’s compliance with the requirements of each major federal program as a whole.

In performing an audit in accordance with auditing standards ge nerally accepted in the United States of America, Government Auditing Standards, and the Uniform Guidance, we:

• Exercise professional judgment and maintain professional skept icism throughout the audit. • Identify and assess the risks of material noncompliance, wheth er 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 City’s compl iance with the compliance requirements referred to above and performing such other proced ures as we considered necessary in the circumstances.
• Obtain an understanding of the Ci ty’s internal control over co mpliance relevant to the audit in order to design audit procedures that are appropriate in the ci rcumstances and to test and report on internal control over compliance in accordance with the Unif orm Guidance, but not for the purpose of expressing an opinion on the effectiveness of the Ci ty’s internal control over compliance. Accordingly, no such opinion is expressed.

We are required to communicate with those charged with governan ce regarding, among other matters, the planned scope and timing of the audit and any significant d eficiencies and material weaknesses in internal control over compliance that we identified during the audit.

Report on Internal Control over Compliance

A deficiency in internal control over compliance exists when the design or o peration of a control over compliance does not allow management or employees, in the norma l course of performing their assigned functions, to prevent, or detect and correct, noncompliance wit h a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance i s a deficiency, or a combination of deficiencies, in internal contr ol over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important eno ugh to merit attention by those charged with governance.

Our consideration of internal cont rol over compliance was for t he limited purpose described in the Auditor’s Responsibilities for t he Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these l imitations, during our audit we did not identify any deficiencies in internal control over compliance t hat we consider to be material weaknesses, as defined above. However, material weaknesses or significant d eficiencies in internal control over compliance may exist that were not identified.

5 Our audit was not designed for the purpose of expressing an opi nion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance

We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate rema ining fund information of the City, as of and for the year ended June 30, 2024, and the related notes to the financial statements, wh ich collectively comprise the City’s basic financial statements. We issued our report thereon dated Septem ber 22, 2025, which contained unmodified opinions on those financial statements. Our audit wa s conducted for the purpose of forming opinions on the financial statement s that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is pres ented for purposes of additional analysis as required by the Uniform Guidance and is not a requi red part of the basic financial statements.

Such information is the responsibility of management and was de rived from and relates directly to the underlying accounting and other records used to prepare the bas ic financial statements. The information has been subjected to the auditing procedures applied in the au dit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financia l statements or to the basic financial statements themselves, and other additional procedures in accor dance with auditing standards generally accepted in the United States of America. In our opinion, the s chedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
September 22, 2025

The accompanying notes are an integral part of this schedule. 6 CITY OF TURLOCK, CALIFORNIA

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2024

Federal Grantor/ Assistance Pass-Throu gh
Pass-Through Grantor/ Listin g Grant Identifying Passed Through Federal Program Title Number Number to Subrecipients Expenditures U.S. Department of Housing and Urban Development:

Direct Programs:

Community Development Block Grants/State's Program
Program Expenditures 14.228 - $ 346,697$ Program Expenditures (Program Income) 14.228 131,746 291,208 Program Subtotal 131,746 637,905
HOME Investment Partnerships Program
Program Expenditures 14.239 - 120,946 Program Subtotal - 120,946
Total U.S. Department of Housing and Urban Development 131,746 758,851 U.S. Department of Justice:

Direct Programs:

Public Safety Partnership and Community Policing Grants 16.710 - 119,319 Total U.S. Department of Justice - 119,319 U.S. Department of Transportation:

Direct Programs:

Federal Transit Cluster (Note 4)
Federal Transit - Formula Grants
(Urbanized Area Formula Program) 20.507 - 3,209,174 Cluster Subtotal - 3,209,174
Passed through California Department of Transportation:

Highway Planning and Construction (Federal-Aid Highway Program) Congestion Mitigation and Air Quality Improvement
Program (CMAQ) 20.205 CML-5165 - 24,083 Surface Transportation Program (STP) 20.205 RSTP-5165 - 653,698 Program Subtotal - 677,781
Passed through State of California Office of Traffic Safety:

Highway Safety Cluster
State and Community Highway Safety
Selective Traffic Enforcement Program (STEP) 20.600 PT23185 - 3,457 Selective Traffic Enforcement Program (STEP) 20.600 PT24207 - 11,556 Cluster Subtotal - 15,013
Minimum Penalties for Repeat Offenders for
Driving While Intoxicated 20.608 PT23185 - 12,892 Minimum Penalties for Repeat Offenders for
Driving While Intoxicated 20.608 PT24207 - 4,893 Program Subtotal - 17,785
Total U.S. Department of Transportation - 3,919,753

The accompanying notes are an integral part of this schedule. 7 CITY OF TURLOCK, CALIFORNIA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
FOR THE YEAR ENDED JUNE 30, 2024

Federal Grantor/ Assistance Pass-Throu gh
Pass-Through Grantor/ Listing Grant Identifying Passed Through Federal Program Title Numbe r Number to Subrecipients Ex penditures U.S. Department of Treasury
Direct Program:

COVID-19: Coronavirus State and Local
Fiscal Recovery Funds 21.027 - 5,561,843 Passed through California State Water Resources Control Board COVID-19: Coronavirus State and Local
Fiscal Recovery Funds 21.027 266737 - 368,233 Total U.S. Department of Treasury - 5,930,076 Total Expenditures of Federal Awards 131,746$ 10,727,999$

8 CITY OF TURLOCK, CALIFORNIA

NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2024

NOTE 1 – REPORTING ENTITY

The Schedule of Expenditure of Federal Awards (the Schedule) includes expenditures of federal awards for the City of Turlock, Californi a, (the City) and its component u nits as disclosed in the notes to the Basic Financial Statements.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements, regardless of the mea surement focus applied. All governmental funds are accounted for using the modified accrual basis of accounting. All proprietary funds and fiduciary funds are accounted for using the accrual basis of accounting. Expenditures of federal awards reported on the Schedule are recognized when incurred.

NOTE 3 – INDIRECT COST ELECTION

The City has elected not to use the 10% de minimis indirect cos t rate allowed under the Uniform Guidance.

9 CITY OF TURLOCK, CALIFORNIA

SCHEDULE OF FINDINGS AND QUESTIONED COSTS
JUNE 30, 2024

SECTION I – SUMMARY OF AUDITOR’S RESULTS

Financial Statements:

Type of auditor's report issued Unmodified

Internal control over financial reporting:
• Material weakness (es) identified? Yes X No
• S ignificant deficiencies identified
not considered to be material weaknesses? Yes X No

Noncompliance material to financial statements noted? Yes X No

Federal Awards:

Internal control over major programs:
• Material weakness (es) identified? Yes X No
• S ignificant deficiencies identified
not considered to be material weaknesses? Yes X No

Type of auditor's report issued on compliance for
major programs: Unmodified

Any audit findings disclosed that are required to be

reported in accordance with the Uniform Guidance,
under 2 CFR §200.516? Yes X No

Identification of major programs:

Assistance Listing
Number(s) Name of Federal Program or Cluster

21.027

COVID-19: Coronavirus State and Local Fiscal Recovery Funds

Dollar threshold used to distinguish between Type A
and Type B programs: $750,000

Auditee qualified as low-risk auditee? Yes X No

SECTION II – FINANCIAL STATEMENT FINDINGS

None.

SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

None.

10 SECTION IV – STATUS OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

Finding Reference Number: SA2023-001 – Suspension and Debarmen t for Contracts and Subcontracts

Assistance Listing Numbers: 21.027
Assistance Listing Title: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of Treasury
Pass Through Entity: California State Water Resources Control Board Federal Award Identification Number: SLFRP4371 – 266737

Criteria: The Award Terms and Conditions in the City of Turlock’s (the Ci ty) Coronavirus Local Fiscal Recovery Funds Agreement with the U.S. Department of the Treasu ry requires that the City comply with Office of Management and Budget (OMB) Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), 2 CFR Part 180, including the requ irement to include a term or condition in all lower tier covered transactions (contracts and subcontracts described in 2 CFR Part 180, subpart B) that the award is subject to 2 CFR Part 180 and Treasury’s implementing regulation at 31 CFR Part 19. In addition, the OMB Compliance Supplement requires that prior to entering into subawards and contracts with award funds, recipients must verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded pursuant to 31 CFR Section 19.300.

Condition: During the 2021 audit, the auditor selected 19 transactions for testing that included six different vendors where the City did not verify that the vendor s were not suspended, debarred, or otherwise excluded prior to entering into the agreements. The a uditor verified that C ity staff determined that as of April 8, 2024, none of the six vendors were on the e xclusions list on SAM.gov. The City subsequently has drafted an updated citywide procurement policy that includes the requirement to be compliant with 2 CFR Part 180 and was expected to be approved i n March 2024 as part of the City’s corrective action plan. In conjunction with the updated procure ment policy, the purchasing department of the City will check for suspension and debarment for contracts and subcontracts as part of the request for proposal process and notify all departments to check vendors wh en utilizing Federal funds. However, the updated citywide procurement policy has not been approved as of January 29, 2025.

Cause: The delay in approving the updated citywide procurement policy was due to staff turnover issues.

Identification as a Repeat Finding: Yes, since 2021.

Effect: The City is not in compliance with the grant Award Terms and Conditions.

Recommendation: The City should approve and implement the updated citywide pro curement policy in accordance with the corrective action plan.

Current Year Status: The Procurement Policy has been finalized and will be presented by Management for approval at the City Council meeting on November 18, 2025.

CITY OF TURLOCK

MEMORANDUM ON INTERNAL CONTROL

FOR THE YEAR ENDED JUNE 30, 2024

CITY OF TURLOCK

MEMORANDUM ON INTERNAL CONTROL
FOR THE YEAR ENDED JUNE 30, 2024

Table of Contents

Page

Memorandum on Internal Control .................................................................................................. 1

Schedule of Material Weaknesses ..................................................................................................... 2

Schedule of Other Matters ................................................................................................................. 3

Status of Prior Year Material Weaknesses ........................................................................................ 5

1 MEMORANDUM ON INTERNAL CONTROL

To the City Council of the
City of Turlock, California

In planning and performing our audit of the basic financial statements of the City of Turlock (the City) as of and for the year ended June 30, 2024, in accordance with auditi ng standards generally accepted in the United States of America, we cons idered the City’s system of in ternal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combi nation of deficiencies, in internal control, such that ther e is a reasonable possibility t hat a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.

Our consideration of internal c ontrol was for the limited purpo se described in the first paragraph and was not designed to identify all deficiencies in internal control t hat might be material weaknesses. Given these limitations during our audit, we did not identify any deficienc ies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Government Auditing Standards require the auditor to perform limited procedures on the City’s response to the findings identified in our audit and described in the accompanying Schedule of Material Weaknesses.

The City’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.

This communication is intended solely for the information and use of management, the City Council, others within the City, and agencies and pass-through entities requiri ng compliance with Government Auditing Standards and is not intended to be, and should not be, used by anyone other than these specified parties.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
September 22, 2025

2 CITY OF TURLOCK

MEMORANDUM ON INTERNAL CONTROL

SCHEDULE OF MATERIAL WEAKNESSES

None.

3 CITY OF TURLOCK

MEMORANDUM ON INTERNAL CONTROL

SCHEDULE OF OTHER MATTERS

NEW GASB PRONOUNCEMENTS OR PRONOUNCEMENTS NOT YET EFFECTIVE

The following comment represents new pronouncements taking affect in the next two years. We cite them here to keep you informed of developments:

EFFECTIVE FISCAL YEARS 2022, 2023, and 2024:

GASB Statement No. 99, Omnibus 2022

The objectives of this statement are to enhance comparability in accounting and financial reporting and to improve the consistency of author itative literature by addressi ng (1) practice issues that have been identified during implementation and application of certain GAS B Statements and (2) accounting and financial reporting for financial guarantees. The practice issues addressed by this statement are as follows:

• Classification and reporting of derivative instruments within the scope of Statement No. 53, Accounting and Financial Reporting for Derivative Instruments , that do not meet the definition of either an investment derivative instrument or a hedging derivative instrument. • Clarification of provisions in Statement No. 87, Leases, as amended, related to the determination of the lease term, classification of a lease as a short-term lease, re cognition and measurement of a lease liability and a lease asset, and identification of lease incentives. • Clarification of provisions in Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements (PPPs) , related to (a) the determination of the public-private and public-public partnership (PPP) term and (b) recognition and me asurement of installment payments and the transfer of the underlying PPP asset.
• Clarification of provisi ons in Statement No. 96, Subscription-Based Information Technology Arrangements, related to the subscription-based information technology arra ngement (SBITA) term, classification of an SBITA as a short-term SBITA, and recognition and measurement of a subscription liability.
• Extension of the period during which the London Interbank Offer ed Rate (LIBOR) is considered an appropriate benchmark interest rate for the qualitative evaluation of the effectiveness of an interest rate swap that hedges the interest rate risk of taxable debt. • Accounting for the distribution of benefits as part of the Supp lemental Nutrition Assistance Program (SNAP).
• Disclosures related to nonmonetary transactions.
• Pledges of future revenues when resources are not received by the pledging government. • Clarification of provisions in Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments , as amended, related to the focus of the government-wide financial statements.
• Terminology updates related to certain provisions of Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. • Terminology used in Statement No. 53 to refer to resource flows statements.

The requirements of this statem ent are effective for the variou s topics over fiscal years 2022, 2023, and 2024. Earlier application is encouraged and is permitted by individual topic.

4 EFFECTIVE FISCAL YEAR 2023/24:

GASB Statement No. 100 – Accounting Changes and Error Corrections—an Amendment of GASB Statement No. 62

The primary objective of this statement is to enhance accountin g and financial reporting requirements for accounting changes and error corrections to provide more unders tandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability.

Furthermore, this statement addresses how information that is affected by a change in accounting principle or error correction should be pr esented in required supplementa ry information (RSI) and supplementary information (SI). For periods that are earlier than those inclu ded in the basic financial statements, information presented in RSI or SI should be restated for error corrections, if practicable, but not for changes in accounting principles.

EFFECTIVE FISCAL YEAR 2024/25:

GASB Statement No. 101 – Compensated Absences

The objective of this statement is to better meet the informati on needs of financial statement users by updating the recognition and measurement guidance for compensat ed absences. That objective is achieved by aligning the recognition and measurement guidance u nder a unified model and by amending certain previously required disclosures.

GASB Statement No. 102 – Certain Risk Disclosures

State and local governments face a variety of risks that could negatively affect the level of service they provide or their ability to meet obligations as they come due. Although governments are required to disclose information about their exposure to some of those risks, essent ial information about other risks that are prevalent among state and local governments is not routinely disclosed because it is not explicitly required.

The objective of this statement is to provide users of governme nt financial statements with essential information about risks related to a government’s vulnerabilities due to certain concentrations or constraints.

EFFECTIVE FISCAL YEAR 2025/26:

GASB Statement No. 103 – Financial Reporting Model Improvements

The objective of this statement is to improve key components of the financial reporting model to enhance its effectiveness in providing information that is essential for decision making and assessing a government’s accountability. This statement also addresses certain application issues.

GASB Statement No. 104 – Disclosure of Certain Capital Assets

State and local governments are required to provide detailed information about capital assets in the notes to financial statements. Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments , requires certain information regarding capital assets to be presented by major class. The objective of this statement is to provide users of government financial statements with essential information about certain types of capital assets.

This statement also requires additional disclosures for capital assets held for sale. A capital asset is a capital asset held for sale if (a) the government has decided to pursue the sale of the capital asset and (b) it is probable that the sale w ill be finalized within one year of the financial statement date. Governments should consider relevant factors to evaluate the likelihood of the capital asset being sold within the established time frame. This statement requires that capital assets held for sale be evaluated each reporting period. Governments should disclose (1) the ending balance of c apital assets held for sale, with separate disclosure for historical cost and accumulated depreciation by major class of asset, and (2) the carrying amount of debt for which the capital assets held for sale are p ledged as collateral for each major class of asset.

5 CITY OF TURLOCK

MEMORANDUM ON INTERNAL CONTROL

STATUS OF PRIOR YEAR MATERIAL WEAKNESSES

2023-001 Improper Revenue Recognition

In accordance with the Governmental Accounting Standards Board (GASB) Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions , revenue should be recognized when eligibility requirements, including time requirements, are met. Resources t ransmitted before the eligibility requirements are met should be reported as deferred revenues by the recipients, with certain exceptions.

The City of Turlock (the City) received American Rescue Plan Ac t (ARPA) funds prior to meeting the eligibility requirements that wer e properly recorded as Deferre d Revenue. However, in fiscal year 2023 some of these funds were improperly reclassed from Deferred Rev enue to Revenue in the amount of $2,612,681.

The misclassification of revenue from deferred revenue occurred due to a change in the process of how items are deemed as expensed w hen moved from the fund. Staff to ok the transfer of the $2,612,861 as reimbursement for expenses incurred in the project fund, however in this isolated case, the funds were only transferred to the project fund and not yet expended.

Overstated revenue from ARPA funds lead to an artificially created increase in net income (change in fund balance). This also resulted in inflated total revenues and fund balances.

The City must implement the following procedures to ensure proper revenue recognition:

1. Ensure no single individual has control over recording, appr oval, and reconciling revenue transactions.

2. Require dual authorization for revenue recognition, especial ly for large or complex transactions.

3. Implement tracking mechanisms to confirm grant eligibility requirements are met before revenue is recognized in compliance with GASB Statement No. 33.

4. Maintain proper documentation for each grant revenue source to support revenue recognized on financial statements.

5. If available, use specialized grant tracking systems to ensu re grant funds are recognized only after eligibility requirements are met.

Management’s Response:

Management acknowledges and agrees with the finding and further has developed the following procedure to ensure that this does not occur again. The City will now su bmit all council agenda items that transfer funds from the ARPA fund that are being done as project funding appropriations before expenditures are incurred to the Principal Account in charge of grant reporting to ensure that those items are not misclassified as revenue.

Current Year Status:

Implemented.

2022-001 Timely and Accurate Year-End Close

As noted in prior year comment 2021-001, the year-end financial closing and preparation of the general ledger data should be completed timely and accurately. In addit ion, organizations should have a contingency plan in the event of staff turnover. Part of this p lan is ensuring there are staff resources available on short notice to fill in key functions. In the Fina nce Department, these resources need to be in place throughout the fiscal year to ensure accounting functions continue and allow time for analysis of account balances and activities.

6 During fiscal year 2021-22, the City experienced significant staff shortages due to staff departures and long- term leaves of absence that continued from fiscal year 2020-21. This put a strain on the City’s ability to maintain good internal controls, and to produce accurate and ti mely financial data. As a result, the year- end audit was adversely affected. The trial balance we received from the City for the audit was submitted to us in September 2023, which had been delayed due to the leng th of time it took to complete the fiscal year 2020-21 audit. In addition, during the audit, we discovere d and/or City staff proposed eighteen additional post-closing journal entries, including a number of material post-closing adjustment entries for audit for areas including fiscal agent cash and investments, lo ng-term debt refunding and issuance transactions, unearned revenue, as well as a restatement that affected utility revenue.

The above condition delayed the completion of the year-end closing process, which increased the risk that material errors or misstatements may go undetected by staff and corrections may not be made in a timely manner. Audit effort was substantially increased in response to these increased risks.

The City should analyze staff resources to determine what plans can or should be made to ensure that the financial data is processed properly and timely during staffing transitions. In addition, the City must develop procedures to ensure that accounts are analyzed throughout the fiscal year and after the year-end close to ensure that additional closing entries are not required prior to providing the general ledger for audit.

Current Year Status:

The City of Turlock has made significant improvement in timely and accurate year-end closing for the fiscal year 2022-2023 and fiscal year 2023-2024. As a result, the fisc al year 2022-2023 and fiscal year 2023- 2024 reports have been completed much sooner than the fiscal ye ar 2021-2022 reports. The City’s management is fully aware of the situation and will continue to improve in this area.

To the Honorable Members of the City Council
City of Turlock, California

We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Turlock (the City) as of and for the year ended June 30, 2024. Professional standards require that w e provide you with information about our responsibilities under auditing standards generally accepted in the United States of America, Government Auditing Standards, and the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated June 1, 2025.

Professional standards also require that we communicate to you the following information related to our audit.

Significant Audit Findings

Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropri ate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. During the year ended June 30, 2024, the City adopted Governmental Accounting Standards Board (GASB) Statement No. 99, Omnibus 2022, and GASB Statement No. 100, Accounting Changes and Error Corrections – an Amendment of GASB Statement No. 62. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensu s. All significant transactions have been recognized in the financial statements in the proper period.

Accounting estimates are an integral part of the financial stat ements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly se nsitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:

Management’s estimates used in establishing the fair value for investments, the useful lives of capital assets, the accrued compensated absences, the self-insu rance liability, the net pension liability and related deferred ou tflows and inflows of resource s, the net other post-employment benefit liabilities and related def erred outflows and inflows o f resources, and discount rate for the purpose of calculating the right-to-use lease and subscription- based information technology arrangement (SBITA) assets and t he related liabilities. We eval uated the key factors and assumptions used to develop these estimates in determining that they are reasonable in relation to the financial statements taken as a whole.

Certain financial statement disclosures are particularly sensit ive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were:

• Note 9 – Pension Plans
• Note 10 – Post-Employm ent Healthcare Benefits
• Note 13 – Commitments and Contingencies

The financial statement disclosures are neutral, consistent, and clear.

Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with mana gement in performing and completing our audit.

Corrected and Uncorrected Misstatements

Professional standards require u s to accumulate all known and l ikely misstatements identified during the audit, other than those that are clearly trivial, and communica te them to the appropriate level of management. We detected no such misstatements during our audit.

Disagreements with Management

For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such dis agreements arose during the course of our audit.

Management Representations

We have requested certain representations from management that are included in the management representation letter dated September 22, 2025.

Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain sit uations. If a consultation involves application of an accounting principle to City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine t hat the consultant has all the r elevant facts. To our knowledge, there were no such consultations with other accountants.

Other Audit Findings or Issues
We generally discuss a variety of matters, including the applic ation of accounting principles and auditing standards, with management each year prior to retention as City ’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

Other Matters

We applied certain limited procedures to the Management’s and Discussion Analysis, Schedule of Changes in the Net Pension Liability and Related Ratios – Miscellaneous Agent Multiple-Employer Defined Benefit Pension Plan, Schedule of the City’s Proportionate Share of the Net Pension Liability – Safety Plan – Cost- Sharing Multiple-Employer Defined Benefit Pension Plan, Schedules of the City’s Pension Contributions, and Schedule of Changes in the City’s Total Other Post-Employment B enefits (OPEB) Liability and Related Ratios, which are required supplementary information (RSI) that supplement the basic financial statements.

Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI.

We were engaged to report on the combining and individual nonma jor fund financial statements and schedules, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evalua ted the form, content, and methods of preparing the information to determine that the information com plies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the un derlying accounting records used to prepare the financial statements or to the financial statements themselves.

Restriction on Use

This information is intended solely for the information and use of the City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
September 22, 2025

INDEPENDENT ACCOUNTANT’S REPORT

ON APPLYING AGREED-UPON PROCEDURES

To the Honorable Mayor and Members of the City Council
City of Turlock, California

We have performed the procedures enumerated below on the Approp riations Limit Worksheet (Worksheet) of the City of Turlo ck, California, (the City) in d etermining the City’s compliance with the requirements of Section 1.5 of Article XIII-B of the California Constitution for the fiscal year ended June 30, 2024. The City’s management is responsible for the Worksheet.

The City has agreed to and acknowledged that the procedures per formed are appropriate to meet the intended purpose of these procedu res, which were suggested by t he league of California Cities and presented in their Article XIII-B Appropriations Limitation Uni form Guidelines, performed solely to assist you in meeting the r equirements of Section 1.5 of Article XIII- B of the California Constitution. This report may not be suitable for any other purpose. The procedures perfo rmed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.

The procedures and associated results are as follows:

A. We obtained the Worksheet (Exhibit A to the Resolution) and determined that the 2023-2024 Appropriations Limit of $74,813,761 and annual adjustment facto rs were adopted by the Resolution of the City Council. We also determined that the pop ulation and inflation options were selected by a recorded vote of the City Council.

B. We recomputed the 2023-2024 Appropriations Limit by multiply ing the 2022-2023 Prior Year Appropriations Limit by the Tota l Growth Factor. We recomputed the Total Growth Factor by multiplying the population option by the inflation option.

C. For the Worksheet, we agreed the Per Capita Income Factor an d County Population Factor to California State Department of Finance Worksheets. The Workshee t did not include the City Population Factor.

We were engaged by the City to perform this agreed-upon procedu res engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to, and did not, conduc t an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the Appropriations Limit Worksheet. Accordingly, we do not expr ess such an opinion or conclusion. Had we performed additional procedures, other matters might have co me to our attention that would have been reported to you.

We are required to be independent of the City of Turlock and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.

This report is intended solely for the information and use of m anagement and the City Council and is not intended to be, and should not be, used by anyone other than those specified parties.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
October 2, 2025

TURLOCK PUBLIC FINANCING AUTHORITY

BASIC FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITOR’S REPORT

FOR THE FISCAL YEAR ENDED
JUNE 30, 2024

TURLOCK PUBLIC FINANCING AUTHORITY
JUNE 30, 2024

TABLE OF CONTENTS

Page

Financial Section:

Independent Auditor’s Report ............................................................................................................... 1

Basic Financial Statements:

Government-Wide Financial Statements:

Statement of N et Position ............................................................................................................... 5

Statement of Activities ...................................... .............................................................................. 6

Fund Financial Statements:

Proprietary Fund Financial Statements:

Statement of N et Position ............................................................................................................... 8

Statement of Revenues, Expense s, and Changes in Fund Net Position ....................................... 9

Statement of C ash Flows ............................................................................................................... 10

Notes to the Basic Financial Statements ...................... .................................................................. 11

Other Report:

Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards........................................................ 17

FINANCIAL SECTION

1 INDEPENDENT AUDITOR’S REPORT

Honorable Members of the Board of Directors
Turlock Public Financing Authority
Turlock, California

Report on the Audit of the Financial Statements

Opinions

We have audited the accompanying financial statements of the bu siness-type activities and the major fund of the Turlock Public Finan cing Authority (the Authority), a component unit of the City of Turlock, California (the City), as of and for the fiscal year ended June 30, 2024, and the related notes to the basic financial statements, which collectively comprise the Authority’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above pres ent fairly, in all material aspects, the respective financial position of the business-type activities and the major fund of the Authority, as of June 30, 2024, and the respective changes in financial position and, where applicable, cash flows thereof for the fiscal year then ended in accordance with accounting princi ples generally accepted in the United States of America.

Basis for Opinions

We conducted our audit in accordance with auditing standards ge nerally accepted in the United States of America and the standards applicable to financial audits contai ned in Government Auditing Standards , issued by the Comptroller Genera l of the United States. Our res ponsibilities under those standards are further described in the Auditor’s Responsibilities for the Aud it of the Financial Statements section of our report. We are required to be independent of the Authority and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating t o 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 presenta tion of the financial statements in accordance with accounting prin ciples generally accepted in the United States of America; and for the design, implementation, and maintenance of internal control rel evant to the preparation and fair presentation of financial statem ents that are free from materia l 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 dou bt about the Authority’s ability to continue as a going concern for twelve months beyond the financial state ment date, including any currently known information that may raise substantial doubt shortly thereafter.

2 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 acc ordance with auditing standards generally accepted in the United States of America 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 cont rol. Misstatements are considered material if there is a substantial likelihood that, individually or in t he aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with auditing standards ge nerally accepted in the United States of America and Government Auditing Standards, we:

• Exercise professional judgment and maintain professional skept icism 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 respons ive to those risks. Such procedures include examining, on a test basis, evidence regardi ng the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the au dit in order to design audit procedures that are appropriate in the circumstances, but not f or the purpose of expressing an opinion on the effectiveness of the City’s internal control rel ating to the Authority. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and t he reasonableness of significant accounting estimates made by management, as well as evaluate th e overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or eve nts, considered in the aggregate, that raise substantial doubt about the Authority’s ability to c ontinue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governan ce regarding, among other matters, the planned scope and timing of the audit, significant audit fi ndings, and certain internal control-related matters that we identified during the audit.

Emphasis of a Matter
As discussed in Note 1, the component unit financial statements present only the Authority and are not intended to present fairly the financial position and the resul ts of operations of the City of Turlock in accordance with accounting principles generally accepted in the United States of America.

Required Supplementary Information

Management has omitted the Management’s Discussion and Analysis that accounting principles generally accepted in the United States of America require to be presente d to supplement the basic financial statements. Such missing inform ation, although not a part of t he basic financial statements, is required by the Governmental Accounting Standards Board, who considers i t to be an essential part of financial reporting for placing the basic financial statements in an appr opriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.

3 Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 5, 2025, on our consideration of the City’s internal control over financial reporting relating to the Authority and on our tests of its compliance with certain provisions of l aws, regulations, contracts, and grant agreements and other matters. The purpose of that report is sol ely to describe the scope of our testing of internal control over financial reporting and compliance and th e results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance relating to the Authority. That report is an integral part of a n audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial repo rting and compliance relating to the Authority.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
November 5, 2025

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTS

4 TURLOCK PUBLIC FINANCING AUTHORITY

STATEMENT OF NET POSITION

AND STATEMENT OF ACTIVITIES

The Statement of Net Position and the Statement of Activities s ummarize the Authority’s entire financial activities and financial position. They are prepared on the sam e basis as is used by most businesses, which means they include all the Authority’s assets, all its de ferred inflows/outflows of resources and all its liabilities, as well as all its revenues and expenses.

The Statement of Net Position reports the difference between th e Authority’s total assets and deferred outflows of resources and the Authority’s total liabilities and deferred inflows of resources, including all the Authority’s long-term debt. The Statement of Net Position summa rizes the financial position of all the Authority’s activities in a single column.

The Statement of Activities repo rts increases and decreases in the Authority’s net position. It is also prepared on the full accrual basis, which means it includes all the Authority’s revenues and all its expenses, regardless of when cash changes hands.

See accompanying notes to the basic financial statements. 5 TURLOCK PUBLIC FINANCING AUTHORITY

STATEMENT OF NET POSITION
JUNE 30, 2024

Business-Type
Activities
ASSETS
Investments with fiscal agent (Note 2) 3,035 $
Interest receivable 249,706
Leases receivable (Note 3) 19,139,354
Total Current Assets 19,392,095

LIABILITIES
Interest payable 249,706
Long-term debt (Note 4):

Due within one year 880,000
Due in more than one year 18,262,389
Total Liabilities 19,392,095
NET POSITION (Note 5)
Restricted -
Total Net Position -$

See accompanying notes to the basic financial statements. 6 TURLOCK PUBLIC FINANCING AUTHORITY

STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED JUNE 30, 2024

Program Net (Expense)
Revenues Revenue and
Charges for Changes in
Functions/Programs Expenses Services Position
Business-Type Activities:

Water 787,460 $ 784,618 $ (2,842) $ Total 787,460 $ 784,618 $ (2,842)
General Revenues:

Interest income 2,842
Total general revenues 2,842
Change in net position -
Net position:

Beginning of year -
End of year -$

FUND FINANCIAL STATEMENTS

7 TURLOCK PUBLIC FINANCING AUTHORITY

FUND FINANCIAL STATEMENTS

Major funds are defined generally as having significant activities or balances in the current year. All of the Authority’s funds are major funds.

See accompanying notes to the basic financial statements. 8 TURLOCK PUBLIC FINANCING AUTHORITY

PROPRIETARY FUNDS

STATEMENT OF NET POSITION
JUNE 30, 2024

2017
Water Bonds Total
ASSETS
Investments with fiscal agent (Note 2) 3,035 $ 3,035 $ Interest receivable 249,706 249,706
Leases receivable (Note 3) 19,139,354 19,139,354
Total Assets 19,392,095 19,392,095

LIABILITIES
Current liabilities:

Interest payable 249,706 249,706
Bonds payable (Note 4) 880,000 880,000
Total Current Liabilities 1,129,706 1,129,706
Long-term liabilities:

Bonds payable (Note 4) 18,262,389 18,262,389
Total Liabilities 19,392,095 19,392,095
NET POSITION (Note 5)
Restricted - -
Total Net Position - $ - $

See accompanying notes to the basic financial statements. 9 TURLOCK PUBLIC FINANCING AUTHORITY

PROPRIETARY FUNDS

STATEMENT OF REVENUES, EXPENSES,

AND CHANGES IN FUND NET POSITION
FOR THE FISCAL YEAR ENDED JUNE 30, 2024

2017
Water Bonds Total

OPERATING REVENUES
Lease revenue 784,618 $ 784,618 $
Total Operating Revenues 784,618 784,618

OPERATING EXPENSES
Interest expense 787,460 787,460
Total Operating Expenses 787,460 787,460
Operating (Loss) (2,842) (2,842)

NONOPERATING REVENUES (EXPENSES)
Interest income 2,842 2,842
Total Nonoperating Revenues (Expenses) 2,842 2,842 Change in net position - -

BEGINNING NET POSITION - -
ENDING NET POSITION - $ - $

See accompanying notes to the basic financial statements. 10 TURLOCK PUBLIC FINANCING AUTHORITY

PROPRIETARY FUNDS

STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED JUNE 30, 2024

2017
Water Bonds Total

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from City of Turlock 1,793,279 $ 1,793,279 $ Long-term debt payment - interest (958,089) (958,089) Cash Flows from Operating Activities 835,190 835,190

CASH FLOWS FROM NONCAPITAL AND

RELATED FINANCING ACTIVITIES
Payment to bond escrow agent -
Long-term debt payment - principal (835,000) (835,000) Cash Flows from Noncapital and
Related Financing Activities (835,000) (835,000)

CASH FLOWS FROM INVESTING ACTIVITIES
Interest 2,842 2,842
Cash Flows from Investing Activities 2,842 2,842 Net Cash Flows 3,032 3,032
Cash and Investments at Beginning of Year 3 3 Cash and Investments at End of Year 3,035$ 3,035 $ Reconciliation of Operating Income to Cash Flows
from Operating Activities:

Operating loss (2,842) $ (2,842) $
Amortization of bond premium (156,901) (156,901) Change in assets and liabilities:

Interest receivable 13,728 13,728
Interest payable (13,728) (13,728)
Leases receivable 994,933 994,933
Cash Flows from Operating Activities 835,190 $ 835,190 $ NONCASH TRANSACTIONS:

Amortization of bond premium 156,901 $ 156,901 $

NOTES TO BASIC FINANCIAL STATEMENTS

11 TURLOCK PUBLIC FINANCING AUTHORITY

NOTES TO THE BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2024

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Organization and Purpose

The Turlock Public Financing Authority (the Authority) is a separate government entity whose purpose is to assist with the financing or refinancing of certain publi c capital improvements within the City of Turlock, California (the City). The Authority has the power to purchase bonds issued by any local agency at public or negotiated sale and may sell such bonds to public or private purchasers at public or negotiated sale. The Authority is controlled by the City and has the same governing body as the City, which also performs all accounting and administrative fun ctions for the Authority. The Authority was created on December 15, 1998, pursuant to Article 1, Chapte r 5, of Division 7 of Title 1 of the Government Code of the State of California as a Joint Powers Au thority between the City and the former Turlock Redevelopment Agency.

The Authority is an integral part of the City, and the accompan ying financial statements are included as a component of the basic financial statements prepared by th e City. A component unit is a separate governmental unit, agency, or nonprofit corporation wh ich, when combined with all other component units, constitutes the reporting entity as defined in the City’s basic financial statements.

The component unit financial statements present only the Author ity and are not intended to present fairly the financial position and the results of operations of the City of Turlock in accordance with accounting principles generally accepted in the United States of America.

B. Basis of Presentation

The Authority’s Basic Component Unit Financial Statements are p repared in conformity with accounting principles generally accepted in the United States o f America. The Governmental Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America.

These standards require that the financial statements described below be presented.

Authority-Wide Statements

The Statement of Net Position and the Statement of Activities i nclude the financial activities of the overall Authority government. Eliminations have been made to mi nimize the double counting of internal activities.

The Statement of Activities presents a comparison between direc t expenses and program revenues for each function of the Authorit y’s governmental and business- type activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restricted to meeting the operational needs of a particular program and (c) fees, grants, and contributions that are restricted to financing the acquisition or construction of capital assets. Re venues that are not classified as program revenues, including interest income, are presented as general revenues.

The Authority-wide financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are re corded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.

12 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

B. Basis of Presentation (Continued)

Fund Financial Statements

The fund financial statements provide information about the Aut hority’s funds. Separate statements for each proprietary fund are presented. The emphasis of fund f inancial statements is on major individual governmental and enter prise funds, each of which is displayed in a separate column. The Authority considers all its funds to be major funds.

Proprietary Fund Financial Statements – Proprietary fund financial statements include a Statement of Net Position; a Statement of Revenues, Expenses, and Changes in Fund Net Position; and a Statement of Cash Flows. Proprie tary funds are accounted for us ing the economic resources measurement focus and the full ac crual basis of accounting. Acc ordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement o f Net Position. The Statement of Revenues, Expenses, and Changes in Fund Net Position presents i ncreases (revenues) and decreases (expenses) in total net position.

Operating revenues in the propri etary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as nono perating revenues. Operating expenses are those expenses that are essential to the primary o perations of the fund. All other expenses are reported as non-operating expenses.

C. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measu rement date. The Authority categorizes its fair value measurements within the fair value h ierarchy established by accounting principles generally accepted in the United States of America. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value i nto three levels based on the extent to which inputs used in measuring fair value are observable in the market.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are inputs – other than quoted prices included w ithin Level 1 – that are observable for an asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for an asset or liability.

If the fair value of an asset or liability is measured using in puts from more than one level of the fair value hierarchy, the measurement is considered to be based on t he lowest priority level input that is significant to the entire measurement.

D. Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estima tes and assumptions that affect the reported amounts of assets an d liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of re venues and expenses during the reporting period. Actual results could differ from those estimates.

NOTE 2 – INVESTMENTS HELD BY FISCAL AGENT

The Authority invests in individual investments and in investme nt pools. Individual investments are evidenced by specific identifiable pieces of paper called securities instruments, or by an electronic entry registering the owner in the records of the institution issuing the security, called the book entry system.

13 NOTE 2 – INVESTMENTS HELD BY FISCAL AGENT (Continued)

The Authority’s investments are carried at fair value, as requi red by accounting principles generally accepted in the United States of America. The Authority adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, and it includ es the effects of these adjustments in income for that fiscal year.

In accordance with accounting principles generally accepted in the United States of America, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost.

All other investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available.

A. Investments Authorized by Debt Agreements

In accordance with the Lease Revenue Bond Indentures of Trust, a Trustee holds the portion of bond proceeds established as reserves for debt service on these bond s. The California Government Code requires these funds to be invested in accordance with bond ind entures or State statutes. The table below identifies the investment types and their minimum credit ratings that are authorized for investments held by trustee and certain provisions of these deb t agreements. The bond indentures contain no limitations for the maximum investment in any one is suer or the maximum percentage of the portfolio that may be invested in any one investment type.

Authorized Investment Type
Maximum
Maturity
Minimum
Credit
Quality
Maximum
Percentage
of Portfolio
U.S. Treasury Notes, Bonds, and/or Bills 5 years N/A No maximum U.S. Government Sponsored Securities 5 years N/A No maximum State Obligations N/A A No maximum
Pre-refunded Municipal Obligations N/A AAA No maximum
Certificates of Deposit 30 days A-1 No maximum
Bankers' Acceptances 30 days A-1 No maximum
Commercial Paper 270 days A-1+ No maximum
State Local Agency Investment Fund N/A N/A LAIF limits
Repurchase Agreements 270 days A No maximum
Guaranteed Investment Contracts N/A AAA No maximum
Money Market Funds N/A Aam or Aam-G No maximum
Corporate Notes N/A
Two highest
rating categories No maximum
Negotiable Certificates of Deposit N/A N/A No maximum

B. Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment , the greater the sensitivity of its fair value to changes in market interest rates.

Information about the sensitivity of the fair values of the Aut hority’s investments to market interest rate fluctuations is provided by the following table that shows the distribution of the Authority’s investments by maturity:

12 Months
Investment Type or Less
Held by Fiscal Agent:

Money Market Mutual Funds (U.S. Securities) 3,035 $
3,035$

14 NOTE 2 – INVESTMENTS HELD BY FISCAL AGENT (Continued)

C. Credit Risk

Credit risk is the risk that an issuer of an investment will no t fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The actual rating as of June 30, 2024, for the Money Market Mutual Funds was AAAm as provided by Standard & Poor’s investment rating system. Money market mutual funds are available for withdrawal on demand.

D. Fair Value Hierarchy

The Authority categorizes its fair value measurements within th e fair value hierarchy established by generally accepted accounting principles. The hierarchy is base d on the valuation inputs used to measure fair value of the assets. Level 1 inputs are quoted pri ces in an active market for identical assets; Level 2 inputs are signi ficant other observable inputs; and Level 3 inputs are significant unobservable inputs.

The Authority’s investment in money market funds is measured at amortized cost as of June 30, 2024.

NOTE 3 – LEASES RECEIVABLE FROM THE CITY OF TURLOCK

The Authority has recorded leases receivable pursuant to the le ase agreements between the Authority and the City in relation to the bonded indebtedness. The leases receivable along with investments held by fiscal agents secure the repayment of the different debt issues . The lease revenue is equal to the Authority’s debt service requirements and is used for that purpose. At June 30, 2024, the lease receivable was $19,139,354.

NOTE 4 – LONG-TERM DEBT

A. Current Year Activity

Following is a summary of the Authority’s long-term debt transa ctions during the fiscal year ended June 30, 2024:

Original Issue Balance Balance Current More Than
Amount June 30, 2023 Retirements June 30, 2024 Portion One Year Business-Type Activities Debt:

Revenue Bonds:
2017 Water 22,405,000 $ 17,820,000 $ (835,000) $ 16,985,000 $ 880,000 $ 16,105,000$ Add: Unamortized bond premium - 2,314,290 (156,901) 2,157,389 2,157,389 Total Business Type Activities 22,405,000$ 20,134,290 $ (991,901) $ 19,142,389 $ 880,000 $ 18,262,389$

B. 2017 Water Revenue Refunding Bonds

In June 2017, the Authority issued $22,405,000 in Water Revenue Bonds Series 2017 to finance improvements to the Water System, to advance refund the series 2008 Water Revenue Bonds and to pay costs of issuance of the 2017 Water Revenue Refunding Bonds . The defeased 2008 Water Revenue Bonds were called on April 30, 2018. The 2017 B Water R evenue Refunding Bonds, which carry coupon interest rates ranging from 4.00% - 5.25%, have se mi-annual principal and interest payments on the first of March through March 2038. Events of de fault on the 2017 Water Revenue Refunding Bonds include failure to make any debt service paymen t by the due date or failure to perform the other agreements or covenants required in the Maste r Installment Purchase Agreement (MIPA) between the Authority and the City not cured within sixt y days of notice to the City, which would accelerate repayment of the bonds. The Authority can prep ay the bonds at any time by paying the prescribed prepayment premium as set forth in the bond documents.

15 NOTE 4 – LONG-TERM DEBT (Continued)

B. 2017 Water Revenue Refunding Bonds (Continued)

The annual debt service requirements are as follows:

Year Ending
June 30 Principal Interest Total
2025 880,000$ 759,437 $ 1,639,437 $
2026 920,000 715,437 1,635,437
2027 970,000 669,437 1,639,437
2028 1,015,000 620,937 1,635,937
2029 1,070,000 570,187 1,640,187
2030-2034 6,190,000 1,996,563 8,186,563
2035-2038 5,940,000 605,600 6,545,600 Total 16,985,000$ 5,937,598 $ 22,922,598 $

On April 12, 2023, S&P Global Ratings withdrew its ratings on t he bonds due to the City’s delay in issuing the audited financial statements.

C. Bond Issuance Costs, Original Is sue Discounts and Premiums and Deferred Charge on Refunding

For proprietary fund types, bond premiums and discounts are def erred and amortized over the life of the bonds using the effective interest method. Bonds payable ar e reported net of the applicable bond premium or discount. Any differences between proprietary refund ed debt and the debt issued to refund it, called a gain or loss on refunding, is amortized ove r the remaining life of either the refunded debt or the refunding debt, whichever is shorter. The gain or l oss on refunding is reported as a deferred inflow or outflow of resources, as applicable. Bond is suance costs, other than prepaid insurance, are expensed in the year incurred.

D. Pledged Revenues

The 2017 Water Revenue Refunding Bonds are secured by a pledge of lease revenues from the City of Turlock. The approximate amount of pledged revenues is the remaining debt service on the bonds, totaling $22,922,598 as of June 30, 2024. The pledge extends fo r the life of the bonds, until final maturity in 2038. For the year ended June 30, 2024, pledged lea se revenues recognized were $784,618, and principal and interest payments were $1,636,188.

NOTE 5 – NET POSITION

Net position is measured on the full accrual basis and is the e xcess of all assets and deferred outflows of resources over all liabilities an d deferred inflows of resource s. Net position is divided into two captions.

These captions apply only to net position, which is determined only for proprietary funds and at the Authority-wide level, and are described below:

Restricted for Debt Service – This amount represents funds required by bond covenants to be held by the Authority’s third-party trustee for future debt service payments.

Restricted for Capital Projects – This amount represents the un expended portion of debt which was issued to finance capital improvement projects.

16 NOTE 6 – SUBSEQUENT EVENTS

The Authority’s management has evaluated all events and transactions that occurred after June 30, 2024, and through November 5, 2025, the date the basic financial stat ements and accompanying notes to the basic financial statements were available to be issued. During this period, no events or transactions occurred that would require adjustment of the basic financial s tatements or disclosure in the accompanying notes.

OTHER REPORT

17 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Honorable Members of the Board of Directors
Turlock Public Financing Authority
Turlock, California

We have audited, in accordance with the auditing standards gene rally accepted in the United States of America and the standards applicable to financial audits contai ned in Government Auditing Standards issued by the Comptroller General of the United States, the fin ancial statements of the business-type activities and the major fund of the Turlock Public Financing Authority (the Authority), a component unit of the City of Turlock, California (the City), as of and for the fiscal year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements, and have issued our report thereon dated November 5, 2025.

Report on Internal Control Over Financial Reporting

In planning and performing our audit of the basic financial sta tements, we considered the City’s internal control over financial reporting (internal control) relating to the Authority as a basis for designing audit procedures that are appropriate in the circumstances for the pu rpose of expressing our opinions on the financial statements, but not f or the purpose of expressing an opinion on the effectiveness of the City’s internal control relating to the Authority. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control relating to the Authority.

A deficiency in internal control exists when the design or oper ation of a control does not allo w management or employees, in the normal course of performing the ir assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that the re is a reasonable possi bility that a material misstatement of the Authority’s basic financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet impor tant enough to merit attention by those charged with governance.

Our consideration of internal c ontrol was for the limited purpo se described in the first paragraph of this section and was not designed to i dentify all deficiencies in in ternal control that might be material weaknesses or significant deficie ncies. Given these limitation s, during our audit we did not identify any deficiencies in internal control that we consider to be materia l weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.

18 Report on Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Aut hority’s basic financial statements are free from material misstatement, we performed tests of the City ’s compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncomplian ce with which could have a direct and material effect on the basic financial statements. However, pr oviding an opinion on compliance with those provisions was not an objective of our audit and, accordi ngly, we do not express such an opinion.

The results of our tests disclosed no instances of noncomplianc e or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Authority’s internal control or on compliance. This report is an integral part of a n audit performed in accordance with Government Auditing Standards in considering the Authority’s internal control and compliance .

Accordingly, this communication is not suitable for any other purpose.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
November 5, 2025

Honorable Members of the Board of Directors
Turlock Public Financing Authority
Turlock, California

We have audited the basic financial statements of the business- type activities and the major fund of the Turlock Public Financing Author ity (the Authority) as of and fo r the year ended June 30, 2024.

Professional standards require that we provide you with informa tion about our responsibilities under auditing standards generally accepted in the United States of A merica and Government Auditing Standards, as well as certain information related to the planned scope a nd timing of our audit. We have communicated such information in our letter to you dated November 5, 2025. Professional standards also require that we communicate to you the following information related to our audit.

Significant Audit Matters

Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropri ate accounting policies. The significant accounting policies used by the Authority are described in Note 1 to the financial statements. During the year ended June 30, 2024, the Au thority adopted Governmental Ac counting Standards Board (GASB) Statement No. 99, Omnibus 2022 , and GASB Statement No. 100, Accounting Changes and Error Corrections – an Amendment of GASB Statement No. 62 . We noted no transactions entered into by the Authority during the year for which there is a lack of authorit ative guidance or consensus. All significant transactions have been recognized in the basic financial statements in the proper period.

The financial statement disclosures are neutral, consistent, and clear.

Difficulties Encountered in Performing the Audit

We encountered no significant difficulties in dealing with mana gement in performing and completing our audit.

Corrected and Uncorrected Misstatements

Professional standards require u s to accumulate all known and l ikely misstatements identified during the audit, other than those that are clearly trivial, and communica te them to the appropriate level of management. We identified no such misstatements during our audit.

Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, t hat could be significant to the basic financial statements or the auditor’s report. We are pleased to report th at no such disagreements arose during the course of our audit.

Management Representations

We have requested certain representations from management that are included in the management representation letter dated November 5, 2025.

Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain sit uations. If a consultation involves application of an accounting principle to the Authority’s basic financial s tatements or a determination of the type of

auditor’s opinion that may be expr essed on those statements, ou r professional standards require the consulting accountant to check with us to determine that the co nsultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Other Audit Findings or Issues
We generally discuss a variety of matters, including the applic ation of accounting principles and auditing standards, with management each year prior to retention as the Authority’s auditors. However, these discussions occurred in the normal course of our professional r elationship and our responses were not a condition to our retention.

Restriction on Use

This information is intended solely for the information and use of the Board of Directors and Management of the Turlock Public Financing Authority, as well as the City Council and management of the City of Turlock, and is not intended to be, and should not be, used by anyone other than these specified parties.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
November 5, 2025

CITY OF TURLOCK

TRANSPORTATION DEVELOPMENT ACT FUNDS

FINANCIAL STATEMENTS

FOR THE FISCAL YEARS ENDED
JUNE 30, 2024 AND 2023

CITY OF TURLOCK

TRANSPORTATION DEVELOPMENT ACT FUNDS

FOR THE FISCAL YEARS ENDED
JUNE 30, 2024 AND 2023

TABLE OF CONTENTS

Page

Independent Auditor’s Report ............................................................................................................ 1

Basic Financial Statements

Balance Sheets – Streets Special Revenue Fund ............................................................................. 4

Statements of Revenues, Expenditures, and Changes in Fund Balance – Streets Special Revenue Fund ........................................................................................................ 5

Statements of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Streets Special Revenue Fund ....................................................................... 6

Statements of Net Position – Transportation Enterprise Fund .......................................................... 8

Statements of Revenues, Expenses, and Changes in Fund Net Position – Transportation Enterprise Fund ....................................................................................................... 9

Statements of Cash Flows – Transportation Enterprise Fund ........................................................... 10

Notes to Basic Financial Statements ................................................................................................. 11

Other Reports

Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance with the Transportation Development Act and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards ...................................................................................................... 19

Independent Auditor’s Report on Compliance for TDA Program Funds and on Internal Control Over Compliance in Accordance With Sections 6666 and 6667 of the Rules and Regulations of the California Administrative Code in the Transportation Development Act Statutes and Administrative Code for 1987 and the Allocation Instructions and Resolutions of the Stanislaus Council of Governments .......... 21

Schedule of Findings and Responses ............................................................................................... 24

Status of Prior Year Findings and Responses ................................................................................... 25

1 INDEPENDENT AUDITOR’S REPORT

To the Honorable Members of the City Council
of the City of Turlock
Turlock, California

Report on the Audit of the Financial Statements

Opinions

We have audited the accompanying financial statements of the Tr ansportation Development Act Funds (TDA Funds) which are included in the Streets Special Revenue F und and the Transportation Enterprise Fund of the City of Turlock (City), California, as of and for the fiscal years ended June 30, 2024 and 2023, and the related notes to the basic financial statements, which collectively comprise the TDA Funds’ basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above pres ent fairly, in all material respects, the respective financial position of the TDA Funds as of June 30, 2024 and 2023, and the respective changes in financial position, and, where applicable, cash flows thereo f, and the respective budgetary comparison for the Streets Special Revenue Fund, for the fiscal years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions

We conducted our audits in accordance with auditing standards g enerally accepted in the United States of America and the standards applicable to financial audits con tained in Government Auditing Standards, issued by the Comptroller Genera l of the United States. Our res ponsibilities under those standards are further described in the Auditor’s Responsibilities for the Aud it of the Financial Statements section of our report. We are required to be independent of the City and to me et 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.

Emphasis of a Matter

As discussed in Note 1, these fi nancial statements present only the TDA Funds and do not purport to, and do not, present fairly the financial position of the City a s of June 30, 2024 and 2023, the changes in its financial position, or, where applicable, its cash flows fo r the fiscal years then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presenta tion of the financial statements in accordance with accounting prin ciples generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control rel evant to the preparation and fair presentation of financial statem ents that are free from materia l misstatement, whether due to fraud or error.

2 In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial dou bt about the TDA Funds’ ability to continue as a going concern for twelve months beyond the financial state ment 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 acc ordance with auditing standards generally accepted in the United States of America 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 cont rol. Misstatements are considered material if there is a substantial likelihood that, individually or in t he aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with auditing standards ge nerally accepted in the United States of America and Government Auditing Standards, we:

• Exercise professional judgment and maintain professional skept icism 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 respons ive to those risks. Such procedures include examining, on a test basis, evidence regardi ng the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the au dit in order to design audit procedures that are appropriate in the circumstances, but not f or the purpose of expressing an opinion on the effectiveness of the City’s internal control rel ating to the TDA Funds. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and t he reasonableness of significant accounting estimates made by management, as well as evaluate th e overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or eve nts, considered in the aggregate, that raise substantial doubt about the TDA Funds’ ability to co ntinue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governan ce regarding, among other matters, the planned scope and timing of the audit, significant audit fi ndings, and certain internal control-related matters that we identified during the audit.

Required Supplementary Information

Management has omitted the Managem ent’s Discussion and Analysis , the Schedule of the City Transportation Enterprise Fund’s Proportionate Share of the Cit y’s Net Pension Liability, the Schedule of Pension Contributions, and Schedule of Changes in Total Other P ost-Employment Benefit (OPEB) Liability and Related Ratios that accounting principles general ly accepted in the United States of America require to be presented to supplement the basic financial state ments. Such missing information, although not a part of the basic financial statements, is required by th e Governmental Accounting Standards Board who considers it to be an essent ial part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Ou r opinion on the basic financial statements is not affected by this missing information.

3 Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 5, 2025, on our consideration of the City’s internal control over financial reporting relating to the TDA Funds and on our tests of its compliance with certain provisions of l aws, 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 relati ng to the TDA Funds and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance relating to the TDA Funds. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance relating to the TDA Funds.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
November 5, 2025

See accompanying notes to the financial statements.
4 CITY OF TURLOCK

TRANSPORTATION DEVELOPMENT ACT FUNDS

STREETS SPECIAL REVENUE FUND

BALANCE SHEETS
JUNE 30, 2024 AND 2023

2024 2023
ASSETS
Cash and investments (Note 2) 1,052,905 $ 933,844 $ Interest receivable 9,466 3,354
TOTAL ASSETS 1,062,371 $ 937,198 $

LIABILITIES
Accounts and salaries payable 140,943 $ 5,296 $ Deposits payable - 256
TOTAL LIABILITIES 140,943 5,552
FUND BALANCE (Note 5)
Restricted 921,428 931,646
TOTAL FUND BALANCE 921,428 931,646
TOTAL LIABILITIES AND FUND BALANCE 1,062,371$ 937,198 $

See accompanying notes to the financial statements.
5 CITY OF TURLOCK

TRANSPORTATION DEVELOPMENT ACT FUNDS

STREETS SPECIAL REVENUE FUND

STATEMENTS OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCE
FOR THE FISCAL YEARS ENDED JUNE 30, 2024 AND 2023

2024 2023

REVENUES
Charges for services 23,767 $ 40,380 $
Interest income and other 45,765 10,920
TOTAL REVENUES 69,532 51,300

EXPENDITURES
Public ways and facilities/transportation 854,818 542,836 Capital outlay 49,932 -
TOTAL EXPENDITURES 904,750 542,836
Deficiency of Revenues under Expenditures (835,218) (491,536)

OTHER FINANCING SOURCES
Transfers in from other City funds 825,000 770,000 Total Other Financing Sources 825,000 770,000 Net Change in Fund Balance (10,218) 278,464 Fund Balance, Beginning of Year 931,646 653,182 Fund Balance, End of Year 921,428$ 931,646 $

See accompanying notes to the financial statements.
6 CITY OF TURLOCK

TRANSPORTATION DEVELOPMENT ACT FUNDS

STREETS SPECIAL REVENUE FUND

STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2024

Original Final Actual
Variance with
Final Budget

REVENUES
Charges for services 41,700 $ 41,700 $ 23,767 $ (17,933) $ Intergovernmental 55,000 55,000 - (55,000) Interest income and other 8,500 8,500 45,765 37,265 TOTAL REVENUES 105,200 105,200 69,532 (35,668)

EXPENDITURES
Public ways and facilities/transportation 830,662 855,662 854,818 844 Capital outlay 205,000 205,000 49,932 155,068 TOTAL EXPENDITURES 1,035,662 1,060,662 904,750 155,912 Deficiency of revenue under expenditures (930,462) (955,462) (835,218) 120,244

OTHER FINANCING SOURCES
Transfers in from other City funds 825,000 825,000 825,000 - Total other financing sources 825,000 825,000 825,000 - Net change in fund balance (105,462) $ (130,462) $ (10,218) 120,244 $ Fund balance, beginning of year 931,646
Fund balance, end of year 921,428$
Budgeted Amounts

See accompanying notes to the financial statements.
7 CITY OF TURLOCK

TRANSPORTATION DEVELOPMENT ACT FUNDS

STREETS SPECIAL REVENUE FUND

STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE – BUDGET AND ACTUAL
FOR THE FISCAL YEAR ENDED JUNE 30, 2023

Original Final Actual
Variance with
Final Budget

REVENUES
Charges for services 41,200 $ 41,200 $ 40,380 $ (820) $ Intergovernmental 100,000 100,000 - (100,000) Interest income and other - - 10,920 10,920 TOTAL REVENUES 141,200 141,200 51,300 (89,900)

EXPENDITURES
Public ways and facilities/transportation 875,266 875,266 542,836 332,430 Capital outlay 250,000 250,000 - 250,000 TOTAL EXPENDITURES 1,125,266 1,125,266 542,836 582,430 Deficiency of revenue under expenditures (984,066) (984,066) (491,536) 492,530

OTHER FINANCING SOURCES
Transfers in from other City funds 770,000 770,000 770,000 - Total other financing sources 770,000 770,000 770,000 - Net change in fund balance (214,066) $ (214,066) $ 278,464 492,530 $ Fund balance, beginning of year 653,182
Fund balance, end of year 931,646 $
Budgeted Amounts

See accompanying notes to the financial statements.
8 CITY OF TURLOCK

TRANSPORTATION DEVELOPMENT ACT FUNDS

TRANSPORTATION ENTERPRISE FUND

STATEMENTS OF NET POSITION
JUNE 30, 2024 AND 2023

2024 2023
ASSETS
Current assets
Cash and investments (Note 2) 3,196,632 $ 915,733 $ Accounts receivable, grants 6,602,784 5,790,531 Accounts receivable, other - 2,945 Interest receivable 22,672 4,622
Prepaids 33,728 -
Total Current Assets 9,855,816 6,713,831
Noncurrent assets
Capital assets (Note 3)
Capital assets not being depreciated 4,073,098 4,052,289 Capital assets being depreciated (net) 13,833,198 14,837,149 Right-to-use subscription assets (net) 162,140 - Total Noncurrent Assets 18,068,436 18,889,438
Total Assets 27,924,252 25,603,269

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows related to pensions (Note 8) 417,233 464,865 Deferred outflows related to OPEB (Note 9) 30,868 32,221 Total Deferred Outflows of Resources 448,101 497,086

LIABILITIES
Current liabilities
Accounts payable and accruals 340,236 271,317 Salaries payable 27,486 17,030
Unearned revenue (Note 4) 8,652,415 5,593,234
Compensated absences - due in one year 17,293 16,468 IT subscription liability (Note 12) 33,554 - Total Current Liabilities 9,070,984 5,898,049
Long-term liabilities
Compensated absences 69,172 65,874
Net pension liability (Note 8) 1,479,930 1,504,232 Total OPEB liability (Note 9) 147,665 148,313 IT subscription liability (Note 12) 74,276 - Total Long-Term Liabilities 1,771,043 1,718,419 Total Liabilities 10,842,027 7,616,468

DEFERRED INFLOWS OF RESOURCES
Deferred inflows related to pensions (Note 8) 31,013 75,737 Deferred inflows related to OPEB (Note 9) 215,426 212,188 Total Deferred Inflows of Resources 246,439 287,925 NET POSITION (Note 5)
Net investment in capital assets 17,960,606 18,889,438 Unrestricted (676,719) (693,476)
Total Net Position 17,283,887 $ 18,195,962 $

See accompanying notes to the financial statements.
9 CITY OF TURLOCK

TRANSPORTATION DEVELOPMENT ACT FUNDS

TRANSPORTATION ENTERPRISE FUND

STATEMENTS OF REVENUES, EXPENSES,

AND CHANGES IN FUND NET POSITION
FOR THE FISCAL YEARS ENDED JUNE 30, 2024 AND 2023

2024 2023

OPERATING REVENUES
Charges for services 163,781 $ 160,951 $
Other income 11,175 22,213
Total Operating Revenues 174,956 183,164

OPERATING EXPENSES
Salaries, benefits, and insurance 1,176,659 864,502 Contractual 2,764,996 2,547,519
Supplies and maintenance 442,880 404,374
Utilities 33,840 38,090
Fleet expense 327,048 300,694
Depreciation (Note 3) 1,062,038 1,172,688
Other expenses 90,902 158,976
Total Operating Expenses 5,898,363 5,486,843
Operating Loss (5,723,407) (5,303,679)

NONOPERATING REVENUES (EXPENSES)
Operating grants 4,367,252 3,922,939
Income (loss) from retirement of capital assets 391 (223,888) Investment income 31,174 14,565
Interest expense (1,458) -
Total Nonoperating Revenues (Expenses) 4,397,359 3,713,616 LOSS BEFORE CAPITAL GRANTS AND TRANSFERS (1,326,048) (1,590,063) Capital grants 80,053 58,217
Transfers in from other City funds 411,925 388,382 Transfers out to other City funds (78,005) (75,160) Net Capital Grants and Transfers 413,973 371,439 Change in Net Position (912,075) (1,218,624)
Net Position - Beginning 18,195,962 19,414,586
Net Position - Ending 17,283,887 $ 18,195,962 $

See accompanying notes to the financial statements.
10 CITY OF TURLOCK

TRANSPORTATION DEVELOPMENT ACT FUNDS

TRANSPORTATION ENTERPRISE FUND

STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED JUNE 30, 2024 AND 2023

2024 2023

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 177,901 $ 181,085 $
Payments to suppliers (3,624,475) (4,121,494)
Payments to employees (1,179,531) (975,575)
Net Cash Flows from Operating Activities (4,626,105) (4,915,984)

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES
Transfers in 411,925 388,382
Transfers out (78,005) (75,160)
Intergovernmental receipts - operations 8,290,811 3,922,939 Net Cash Flows from Noncapital Financing Activities 8,624,731 4,236,161

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Intergovernmental receipts - capital program (1,596,578) 734,791 Purchases of capital assets (74,263) (55,639) Proceeds from sale of capital assets 391 - IT subscription assets - principal (58,943) - IT subscription assets - interest (1,458) - Net Cash Flows from Capital and Related Financing Activities (1, 730,851) 679,152

CASH FLOWS FROM INVESTING ACTIVITIES
Investment income 13,124 11,471
Net Cash Flows from Investing Activities 13,124 11,471 Net Cash Flows 2,280,899 10,800

CASH AND INVESTMENTS
Beginning of Year 915,733 904,933
End of Year 3,196,632 $ 915,733 $

RECONCILIATION OF OPERATING LOSS TO NET CASH
FLOWS FROM OPERATING ACTIVITIES:

Operating loss (5,723,407) $ (5,303,679) $
Adjustments to reconcile operating loss to net cash
flows from operating activities:

Depreciation 1,062,038 1,172,688
Changes in assets and liabilities:

Accounts receivable 2,945 (2,079)
Prepaids (33,728) -
Accountants payable 68,919 (671,841)
Salaries payable 10,456 (169)
Compensated absences 4,123 11,424
Deferred outflows/inflows related to total OPEB liability (21,39 4) (112,204) Deferred outflows/inflows related to net pension liability 3,943 (10,124) Net Cash Flows from Operating Activities (4,626,105) $ (4,915,984) $

NONCASH TRANSACTIONS
Retirement of capital assets - $ (223,888)$ Acquisition of right-to-use subscription assets 166,773 - Total Noncash Capital and Related Financing Activities 166,773 $ (223,888) $

11 CITY OF TURLOCK

TRANSPORTATION DEVELOPMENT ACT FUNDS

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE FISCAL YEARS ENDED JUNE 30, 2024 AND 2023

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. The Reporting Entity

The financial statements of the Transportation Development Act (TDA) Funds are intended to present the financial position, changes in financial position, and cash f l o w s f o r o n l y t h o s e t r a n s a c t i o n s attributable to the Streets Special Revenue Fund and the Transp ortation Enterprise Fund (TDA Funds) administered and disbursed by the City of Turlock, California (City).

The accounting policies of the TDA Funds of the City are in con formity with accounting principles generally accepted in the United States of America (GAAP) appli cable to governmental units. The Governmental Accounting Standards B oard (GASB) is the accepted standard-setting body for establishing accounting principles. The following is a summary of the more significant accounting policies.

B. Fund Accounting

The operations of the TDA Funds are accounted for in separate s ets of self-balancing accounts that comprise their assets, deferred outflows of resources, liabilit ies, deferred inflows of resources, fund balance or net position, revenues, and expenditures or expenses . Governmental resources are allocated to and for individual funds based upon the purpose fo r which they are to be spent and the means by which spending activities are controlled. The TDA Fund s are presented in the accompanying financial statements as follows

Governmental Fund Type

Streets Special Revenue Fund – The Streets Special Revenue Fund is used to account for the City’s share of the TDA allocations that are legally restricted for st reet maintenance and capital improvements.

Proprietary Fund Type

Transportation Enterprise Fund – The Transportation Enterprise Fund is used to account for the operation and management of the City’s transit operations. TDA and Federal Transit Administration (FTA) allocations for transit operations are accounted for in this fund

C. Basis of Accounting and Measurement Focus

Streets Special Revenue Fund

The Streets Special Revenue Fund’s financial statements include a Balance Sheet and a Statement of Revenue, Expenditures, and Changes in Fund Balance. The Spec ial Revenue Fund is accounted for on a spending or current financial resources measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and deferred outflows of resources, and current liabilities and deferred inflows of resource s, are included on the Balance Sheet. The Statement of Revenues, Expenditures, and Changes in Fund Balance presents increases (r evenues and other financing sources) and decreases (expenditures and other financing uses) in fund balance. Under the modified accrual basis of accounting, rev enues are recognized in the acc ounting period in which they become both measurable and available to finance expenditures of the cu rrent period. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City’s accrual period is generally 90 days after the fiscal year end. Expenditures are generally recognized under the modified accrual basis of ac counting when the related fund liability is incurred.

12 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

C. Basis of Accounting and M easurement Focus (Continued)

Streets Special Revenue Fund (Continued)

The Streets Special Revenue Fund is used to account for the Cit y’s share of the TDA allocations that are legally restricted for street maintenance and projects supp orting bicycle and pedestrian activity adjacent to and on City streets/roads (non-motorized). In addit ion, this fund accounts for user fees collected related to permitted trenching activity and transport ation permits within the City streets/roads and related right-of-way.

Transportation Enterprise Fund

The Transportation Enterprise Fund financial statements include a Statement of Net Position; a Statement of Revenues, Expenses, and Changes in Fund Net Positi on; and a Statement of Cash Flows.

The Transportation Enterprise Fund is accounted for using the e conomic resources measurement focus and the accrual basis of accounting. Accordingly, all ass ets, deferred outflows of resources, liabilities, and deferred inflow s of resources ( whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses, and Change in Fund Net Position presents increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in w hich they are earned while expenses are recognized in the period in which the liability is incurred.

The Transportation Enterprise Fund is used to account for the o peration and management of the City’s transit operations. TDA and FTA allocations for transit operations and capital projects are accounted for in this fund.

Operating revenues in the Transportation Enterprise Fund includ e fare, Measure L Transit, and other revenues generated from the pr imary operations of the fund, exc luding grants. All other revenues, including operating grants, are reported as nonoperating revenu es. Operating expenses are those expenses that are essential to the primary operations of the fu nd. All other expenses are reported as nonoperating expenses

D. Deferred Inflows and De ferred Outflows of Resources

In addition to assets, the statem ent of net position or balance sheet reports a separate section for deferred outflows of resources. This separate financial stateme nt element, deferred outflows of resources, represents a consum ption of net assets or fund balan ce that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then.

In addition to liabilities, the statement of net position or ba lance sheet reports a separate section for deferred inflows of resources. Th is separate financial statemen t element, deferred inflows of resources, represents an acquisition of net assets or fund bala nce that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.

E. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The City categorizes its fair value measurements within the fair value hierarchy established by GAAP. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

13 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

E. Fair Value Measurements (Continued)

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are inputs – other than quoted prices included w ithin Level 1 – that are observable for an asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for an asset or liability.

If the fair value of an asset or liability is measured using in puts from more than one level of the fair value hierarchy, the measurement is considered to be based on t he lowest priority level input that is significant to the entire measurement.

F. Cash Equivalents

For purposes of the Statement of Cash Flows, cash equivalents a re defined as investments with original maturities of 90 days or less, which are readily conve rtible to known amounts of cash. The City considers all pooled cash and investments (consisting of c ash and investments and restricted cash and investments) held by the City as cash and cash equival ents because the pool is used essentially as a demand deposit account from the standpoint of the funds. The City also considers all non-pooled cash and investments (c onsisting of funds with fisca l agents) as cash and cash equivalents, because investments meet the criteria for cash equivalents defined above.

G. Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

NOTE 2 – CASH AND INVESTMENTS

The TDA Funds participate in the City’s cash and investment poo l. The City pools surplus cash from all sources and all funds, except cash with fiscal agents, so that it can be invested at the maximum yield, consistent with safety and liquidity. Investment income is allo cated among funds on the basis of the average month-end cash and investment balances in these funds. As of June 30, 2024 and 2023, the TDA Funds had cash and investment balances of $4,249,537 and $1,849,577, respectively.

Investments Authorized by the California Government Code and the City’s Investment Policy

The City’s Investment Policy and the California Government Code permit the following investments, provided the credit ratings of the issuers are acceptable and approved percentages and maturities are not exceeded. The table below also id entifies certain provisions of the California Government Code, or the Investment Policy if more restrictive, that address interest rate risk, credit risk, and concentration of credit risk.

The City’s investment policy authorizes the following investments.

14 NOTE 2 – CASH AND INVESTMENTS (Continued)

Investments Authorized by the California Government Code and the City’s Investment Policy (Continued)

Minimum Maximum Maximum
Maximum Credit Percentage Investment
Authorized Investment Type Maturity Quality of Portfolio In One Is suer U.S. Treasury Notes, Bonds, and/or Bills 5 years A Unlimited N/A U.S. Government Agency Securities 5 years A Unlimited 25% Negotiable Certificates of Deposit 5 years N/A 30% N/A
Certificates of Deposit 5 years A Unlimited N/A
Bankers' Acceptances 180 days A 40% 30%
Commercial Paper 270 days A-1 or Higher 25% 10%
State of California Local Agency
Investment Fund (LAIF) N/A N/A
Equal to maximum
limit set by LAIF N/A
Repurchase Agreement 1 year N/A Unlimited N/A
Money Market and Mutual Funds N/A A 20% N/A
Corporate Notes 5 years AA 30% N/A

Fair Value Hierarchy

The TDA Funds categorizes its fair value measurements within th e fair value hierarchy established by GAAP. The hierarchy is based on the valuation inputs used to me asure fair value of the assets. Level 1 inputs are quoted prices in an active market for identical asse ts; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.

The TDA Funds’ investment in the City’s investment pool is not subject to the fair value hierarchy.

NOTE 3 – CAPITAL ASSETS

Capital assets acquired by the Streets Special Revenue Fund are recorded as expenditures in the special revenue fund and capitalized at cost and recorded as part of th e City’s Statement of Net Position in the government-wide financial statements. The costs of infrastructu re (roads, curbs, gutters, streets, bridges, sidewalks, drainage systems, right-of-ways, and land related to such assets) are recorded as expenditures in the special revenue fund and are also capitaliz ed and recorded in the City’s Statement of Net Position in the government-wide financial statements. These infrastructure assets become the property of the City and are maintained by the City.

Capital assets acquired by the Transportation Enterprise Fund a re recorded at cost in the Transportation Enterprise Fund and are depreciated using the straight-line method over estimated useful lives. Operating expenses include depreciation on all depreciable capital assets. Repairs and maintenance are charged to expense when the services are rendered.

City policy has set the capitalization thresholds for reporting capital assets at the following:

General Capital Assets $10,000
Infrastructure Capital Assets 50,000

Depreciation has been provided on a straight-line basis over the following useful lives:

Years
Land Improvements and Infrastructure 25-60
Buildings 30-50
Furniture and Equipment 5-10
Vehicles 5-10

15 NOTE 3 – CAPITAL ASSETS (Continued)

Transportation Enterprise Fund

The following is a summary of capital assets for the Transportation Enterprise Fund at June 30, 2024 and 2023:

June 30, 2023 Additions
Retirements/
Adjustments Transfers June 30, 2024
Capital assets not being depreciated/amortized:

Land 3,382,459 $ - $ - $ - $ 3,382,459$ Construction in progress 669,830 20,809 - - 690,639 Total capital assets not being
depreciated/amortized: 4,052,289 20,809 - - 4,073,098 Capital assets being depreciated/amortized:

Land improvements 2,559,491 - - - 2,559,491 Buildings 9,207,507 - - - 9,207,507 Furniture and equipment 1,533,789 37,811 - - 1,571,600 Vehicles 8,219,703 15,643 - - 8,235,346 Infrastructure 231,051 - - - 231,051 Right-to-use subscription assets - 166,773 - - 166,773 Total capital assets being
depreciated/amortized: 21,751,541 220,227 - - 21,971,768 Less accumulated depreciation/amortization for:

Land improvements (761,708) (86,539) - - (848,247) Buildings (1,763,675) (304,693) - - (2,068,368) Furniture and equipment (908,543) (81,824) - - (990,367) Vehicles (3,449,980) (580,498) - - (4,030,478) Infrastructure (30,486) (3,851) - - (34,337) Right-to-use subscription assets - (4,633) - - (4,633) Total accumulated depreciation/amortization (6,914,392) (1,062,038) - - (7,976,430) Net capital assets being depreciated/amortized 14,837,149 (841,811) - - 13,995,338 Capital assets, net 18,889,438 $ (821,002) $ - $ - $ 18,068,436$

June 30, 2022 Additions
Retirements/
Adjustments Transfers June 30, 2023
Capital assets not being depreciated:

Land 3,382,459 $ - $ - $ - $ 3,382,459$ Construction in progress 853,323 40,396 (223,889) - 669,830 Total capital assets not being depreciated: 4,235,782 40,396 (223,889) - 4,052,289 Capital assets being depreciated:

Land improvements 2,559,491 - - - 2,559,491 Buildings 9,207,507 - - - 9,207,507 Furniture and equipment 1,533,789 - - - 1,533,789 Vehicles 8,204,459 15,244 - - 8,219,703 Infrastructure 231,051 - - - 231,051 Total capital assets being depreciated: 21,736,297 15,244 - - 21,751,541 Less accumulated depreciation for:

Land improvements (675,169) (86,539) - - (761,708) Buildings (1,458,982) (304,693) - - (1,763,675) Furniture and equipment (812,624) (95,919) - - (908,543) Vehicles (2,768,293) (681,687) - - (3,449,980) Infrastructure (26,636) (3,850) - - (30,486) Total accumulated depreciation (5,741,704) (1,172,688) - - (6,914,392) Net capital assets being depreciated 15,994,593 (1,157,444) - - 14,837,149 Capital assets, net 20,230,375 $ (1,117,048) $ (223,889) $ - $ 18,889,438$

16 NOTE 4 – UNEARNED REVENUE – CAPITAL PROGRAMS

The TDA Funds received grants from the Local Transportation Fund and State Transit Assistance Fund in advance of costs being incurred. As of June 30, 2024 and 2023, unearned revenue related to those programs is as follows:

2024 2023
Transportation Enterprise Fund:

State Transit Assistance Fund and Local Transportation Fund 8,65 2,415$ 5,593,234 $

Included in the Transportation Enterprise Fund’s unearned reven ue balance is State of Good Repair (SGR) funding in the amount of $411,941 and $409,917 for the fi scal years ended June 30, 2024 and 2023, respectively.

NOTE 5 – NET POSITION AND FUND BALANCES

A. Net Position

Net position is the excess of all assets and deferred outflows of resources over all liabilities and deferred inflows of resources. Net position for the TDA Funds i s divided into three categories. These captions apply only to net position, which is determined only f or proprietary funds and at the government-wide level, and are described below:

Net Investment in Capital Assets describes the portion of net pos ition that is represented by t he current netbook value of the capital assets, less depreciation/ amortization and the outstanding balance of any debt issued to finance these assets.

Restricted describes the portion of net position that is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, l aws, or other restrictions which the City cannot unilaterally alter.

Unrestricted describes the portion of net position that does not meet the d efinition of “net investment in capital assets” or “restricted net position.”

B. Fund Balances

Governmental fund balance represe nts the net current assets of each fund. Net current assets generally represent a fund’s cash, receivables, and deferred ou tflows of resources, less its liabilities and deferred inflows of resources.

The Streets Special Revenue Fund ’s fund balance is classified b ased on spending constraints imposed on the use of resources. The use of the funds accounted for in these statements is restricted by law; therefore, these funds will never have committed or ass igned balances. Each category in the following hierarchy is ranked according to the degree of spending constraint:

Nonspendable represents balances set aside to indicate items do not represe nt available, spendable resources even though they are a component of assets. Assets not expected to be converted to cash, such as prepaids, notes receivable, and property held for resal e are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed, or assigned, then nonspendable amounts are required to be presented as a component of the applicable category.

Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resourc es to be used only for a specific purpose. Encumbrances and nonspendable amounts subject to restr ictions are included along with spendable resources.

17 NOTE 5 – NET POSITION AND FUND BALANCES (Continued)

B. Fund Balances Continued)

Committed fund balances have constraints imposed by resolution of the Ci ty Council which may be altered only by formal action of the City Council. Encumbrances and nonspendable amounts subject to council commitments are included along with spendable resources.

Assigned fund balances are amounts constrained by the City’s intent to be used for a specific purpose but are neither restricted nor committed. Intent is exp r e s s e d b y t h e C i t y C o u n c i l o r i t s designee and may be changed at the discretion of the City Counc il or its designee, the City Manager.

This category includes encumbrances; nonspendables, when it is the City’s intent to use proceeds or collections for a specific purpose; and residual fund balances, if any, of Special Revenue and Capital Projects which have not been restricted or committed.

Unassigned fund balance represents residual amounts that have not been re stricted, committed, or assigned. This includes the residual General Fund balance and r esidual fund deficits, if any, of other governmental funds.

NOTE 6 – TRANSPORTATION DEVELOPMENT ACT

The State of California established the TDA to provide funds fo r public transportation. The funds are administered by the Stanislaus Council of Governments (StanCOG) . The TDA created a Local Transportation Fund in each county for the transportation purpo ses specified in the Transportation Development Act Statutes and Administrative Code. Revenues of t he Local Transportation Fund are derived from a 1/4 of one percent sales tax rate levied in each county.

NOTE 7 – RISK MANAGEMENT

The TDA Funds are exposed to various risks of loss related to t orts; theft of, damage to, and destruction of assets; and natural disaster. The TDA Funds participate in t he Central San Joaquin Valley Risk Management Authority (CSJVRMA), as a part of the City. The purp ose of CSJVRMA is to spread the adverse effect of losses among the members and to purchase exce ss insurance as a group, thereby reducing its expense. The funds, through cost allocation from t he City, contribute their pro rata share of anticipated losses to pools administered by CSJVRMA. More infor mation regarding the City’s risk management program can be found in the basic financial statements of the City of Turlock.

NOTE 8 – PENSION PLAN

Personnel costs accounted for under TDA and FTA funding include costs associated with the City’s pension benefit plan. The costs attributed to TDA and FTA fundi ng are part of the City’s Miscellaneous Plan, an Agent-Multiple Employer Plan administered by the Calif ornia Public Employees’ Retirement System (CalPERS), and are allocated to the TDA Funds in the sam e manner as they are allocated to other City funds which have personnel expenditures. More information regarding the plan can be found in the basic financial statements for the City of Turlock.

NOTE 9 – OTHER EMPLOYEE BENEFITS

Personnel costs accounted for under TDA and FTA funding include costs associated with the City’s compensated absences and retiree healthcare benefit plans. The costs attributed to TDA and FTA funding are part of the City-wide plans and are allocated to th e TDA Funds in the same manner as they are allocated to other City funds which have personnel expendit ures. More information regarding these plans can be found in the basic financial statements for the City of Turlock.

18 NOTE 10 – MAJOR CONTRACTOR

On March 26, 2024, the City entered into a new contract agreeme nt with Storer Transit Systems to operate and maintain the DART and BLAST programs. The term is f rom July 1, 2024, to June 30, 2029, with an option to extend for an additional two, one-year terms, on the same terms and conditions. Storer Transit Systems is paid monthly based on a fixed fee plus a fee calculated at a fixed rate per vehicle multiplied by the number of service hours. Expenses incurred under this contract amounted to $2,280,610 and $2,149,275 for the fiscal years ended June 30, 2024 and 2023, respectively.

NOTE 11 – CONTINGENT LIABILITIES

The City receives FTA monies for the purchase of buses, constru ction of related main tenance facilities, and for partial funding of its t ransit operations. State and fe deral grants received by the City for specific purposes are subject to review and audit by the grantor agencie s. Such audits could lead to request for reimbursement for expenditures disallowed under the terms of th e grants. The amount, if any, of expenditures that may be disallowed by the granting agencies ca nnot be determined at this time, although the City expects such amounts, if any, to be immaterial.

NOTE 12 – SUBSCRIPTIONS

The City has adopted GASB Statement No. 96 which introduced cha nges in the recognition, measurement, and reporting of Subscription-Based Information Te chnology Arrangements (SBITA). The City identified one SBITA for a Transit Data Tracking applicati on with a term of three years. The value of the SBITA asset as of June 30, 2 024, was $166,773 and had accum ulated amortization of $4,633. As of June 30, 2024, the value of SBITA liability was $107,830.

The future principal and interest payments for SBITA as of June 30, 2024, were as follows:

For the Fiscal Year
Ending June 30, Principal Interest
2025 33,554 $ 7,257 $
2026 38,389 4,463
2027 35,887 1,299
Total 107,830 $ 13,019 $

NOTE 13 – SUBSEQUENT EVENTS

The TDA Funds’ management has evaluated all events and transact ions that occurred after June 30, 2024, and through November 5, 2025, the date the basic financial statements and accompanying notes to the basic financial statements were available to be issued. Du ring this period, no events or transactions occurred that would require adjustment of the basic financial s tatements or disclosure in the accompanying notes.

19 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE WITH THE

TRANSPORTATION DEVELOPMENT ACT AND OTHER MATTERS BASED

ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED

IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Honorable Members of the City Council
of the City of Turlock
Turlock, California

We have audited, in accordance with the auditing standards gene rally accepted in the United States of America and the standards applicable to financial audits contai ned in Government Auditing Standards issued by the Comptroller General of the United States, the fin ancial statements of the Transportation Development Act Funds (TDA Funds) which are included in the Str eets Special Revenue Fund and the Transportation Enterprise Fund of the City of Turlock (City), C alifornia, as of and for the fiscal year ended June 30, 2024, and the related notes to the basic financial sta tements, which collectively comprise the TDA Funds’ basic financial statements, and have issued our report thereon dated November 5, 2025.

Report on Internal Control over Financial Reporting

In planning and performing our audit of the financial statement s, we considered the City’s internal control over financial reporting (internal control) relating to the TDA Funds as a basis for designing audit procedures that are appropriate in the circumstances for the pu rpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control relating to the TDA Funds. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control relating to the TDA Funds.

A deficiency in internal control exists when the design or operation of a control does not allo w management or employees, in the normal course of performing the ir assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that the re is a reasonable possibility that a material misstatement of the entity’s financial statements will not be p revented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combinati on of deficiencies, in internal control that is less severe than a material weakness, yet important eno ugh to merit attention by those charged with governance.

Our consideration of internal c ontrol was for the limited purpo se described in the first paragraph of this section and was not designed to i dentify all deficiencies in in ternal control that might be material weaknesses or significant deficiencies. Given these limitations , during our audit we did not identify any deficiencies in internal control that we consider to be materia l weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.

20 Report on Compliance and Other Matters

As part of obtaining reasonable assurance about whether the TDA Funds’ financial statements are free from material misstatement, we p erformed tests of the City’s co mpliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. Our audit was further made to determine that TDA funds allocated to and received by the City were expended in conformance with appl icable statutes, rules, and regulations of the Transportation Development Act and the allocation instru ctions and resolutions of the Stanislaus Council of Governments (StanCOG) as required by Sections 6666 a nd 6667 of Title 21 of the California Code of Regulations. However, providing an opinion on complianc e with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying Schedule of Finding s and Responses as item TDA2024-01.

City’s Response to Findings

Government Auditing Standards require the auditor to perform limited procedures on the City’s response to the findings identified in our audit and described in the ac companying Schedule of Findings and Responses. The City’s response was not subjected to the other a uditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance relating to the TDA Funds. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance relating to the TDA Funds. Accordingly, this communication is not suitable for any other purpose.

This report is intended solely for the information and use of S tanCOG, management, the City Council, others within the City, and federal awarding agencies and pass-through entities and is not intended to be, and should not be, used by anyone other than these specified pa rties; however, this restriction is not intended to limit the distribution of this report, which is a matter of public record.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
November 5, 2025

21 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR TDA PROGRAM

FUNDS AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH SECTIONS 6666 AND 6667 OF THE RULES AND REGULATIONS OF THE

CALIFORNIA ADMINISTRATIVE CODE IN THE TRANSPORTATION DEVELOPMENT ACT STATUTES AND ADMINISTRATIVE CODE FOR 1987 AND THE ALLOCATION

INSTRUCTIONS AND RESOLUTIONS OF THE STANISLAUS COUNCIL OF GOVERNMENTS

To the Honorable Members of the City Council
of the City of Turlock
Turlock, California

Report on Compliance for Transportation Development Act (TDA) Funds

Opinion on Compliance for TDA Funds

We have audited the City of Turlock, California’s (City) compli ance relating to the Streets Special Revenue Fund and the Transportation Enterprise Fund (TDA Funds) with the types of compliance requirements described in Sections 6666 and 6667 of the Rules a nd Regulations of the California Administrative Code in the Transportation Development Act Statu tes and Administrative Code for 1987 (the Act) and the allocation instructions and resolutions of th e Stanislaus Council of Governments (StanCOG) that could have a direct and material effect on the T DA Funds for the fiscal year ended June 30, 2024.

In our opinion, the City complied, in all material respects, wi th the types of compliance requirements referred to above that could have a direct and material effect on the TDA Funds for the fiscal year ended June 30, 2024.

Basis for Opinion on Compliance

We conducted our audit of compliance in accordance with auditin g standards generally accepted in the United States of America (GAAS) ; the standards applicable to fi nancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States ( Government Auditing Standards); the Act; and the allocation instructions and resolutions of StanCOG. Our responsibilities under those standards are further described in the Auditor’s Re sponsibilities for the Audit of Compliance section of our report.

We are required to be independent of the City and to meet our o ther ethical responsibilities, in accordance with 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 opinion on compliance for the City relating to the TDA Funds. Our audit does not provide a legal d etermination of the City’s compliance with the compliance requirements referred to above relating to the TDA Funds.

22 Responsibilities of Management for Compliance

Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control o ver compliance with the requirements of laws, statutes, regulations, rule s, and provisions of contracts or grant agreements applicable to the TDA Funds.

Auditor’s Responsibilities for the Audit of Compliance

Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance relating to the TDA Funds base d on our audit. Reasonable assurance is a high level of assurance but i s not absolute assurance and the refore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, requirements of the Act, and the allocation instructions and reso lutions of StanCOG will always detect material noncompliance when it exists. The risk of not detecting material noncompliance result ing from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compli ance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of the TDA Funds as a whole.

In performing an audit in accordance with GAAS, Government Auditing Standards, the Act, and the allocation instructions and resolutions of StanCOG, we:

• Exercise professional judgment and maintain professional skept icism throughout the audit. • Identify and assess the risks of material noncompliance, wheth er 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 City’s compl iance with the compliance requirements referred to above relating to the TDA Funds and pe rforming such other procedures as we considered necessary in the circumstances.
• Obtain an understanding of the Ci ty’s internal control over co mpliance relevant to the audit in order to design audit procedures that are appropriate in the ci rcumstances and to test and report on internal control over compliance in accordance with the requ irements referred to above, but not for the purpose of expressing an opinion on the effectivene ss of the City’s internal control over compliance relating to the TDA Funds. Accordingly, no such opinion is expressed.

We are required to communicate with those charged with governan ce regarding, among other matters, the planned scope and timing of the audit and any significant d eficiencies and material weaknesses in internal control over compliance that we identified during the audit.

Other Matters

The results of our auditing procedures disclosed instances of n oncompliance which are required to be reported in accordance with the compliance requirements referre d to above and which are described in the accompanying Schedule of Findings and Responses as item TDA 2024-01. Our opinion on the City’s compliance relating to the TDA Funds is not modified with respect to these matters.

Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the noncompliance findings identified in our compliance audi t and described in the accompanying Schedule of Findings and Responses. The City’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.

Report on Internal Control Over Compliance

A deficiency in internal control over compliance exists when th e design or operation of a control over compliance does not allow management or employees, in the norma l course of performing their assigned functions, to prevent, or detect and correct, noncompliance wit h a type of compliance requirement of the

23 TDA Funds on a timely basis. A m aterial weakness in internal co ntrol over compliance is a deficiency, or a combination of deficiencies, in internal control over complia nce, such that there is a reasonable possibility that material noncompliance with a type of complian ce requirement of the TDA Funds will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, i n internal control over compliance with a type of compliance requirement of the TDA Funds that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal cont rol over compliance was for t he limited purpose described in the Auditor’s Responsibilities for t he Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these l imitations, during our audit we did not identify any deficiencies in internal control over compliance t hat we consider to be material weaknesses, as defined above. However, material weaknesses or significant d eficiencies in internal control over compliance may exist that were not identified.

Our audit was not designed for the purpose of expressing an opi nion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.

Purpose of this Report

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Act and the allocation instructions and resolutions of StanCOG. Accordingly, this report is not suitable for any other purpose.

This report is intended solely for the information and use of S tanCOG, management, the City Council, others within the City, and feder al awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified par ties; however, this restriction is not intended to limit the distribution of this report, which is a matter of public record.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
November 5, 2025

24 CITY OF TURLOCK

TRANSPORTATION DEVELOPMENT ACT FUNDS

SCHEDULE OF FINDINGS AND RESPONSES
FOR THE FISCAL YEAR ENDED JUNE 30, 2024

TDA2024-01 – Late Filing of Required Financial Reports

Criteria: The Transportation Development Act (TDA) Funds are subject to a nnual reporting requirements as follows:

• California Code of Regulations (CCR) § 6663, Entities Responsible for Fiscal and Performance Audits of Claimants, requires that a copy of the annual audit report be sent to the State Controller.

• CCR § 6664, Fiscal and Compliance Audits of All Claimants, requ ires that in accordance with Public Utilities Code Section 99245, the annual audit report be submitted within 180 days after the end of the fiscal year, except that the Stanislaus Council of Governments (StanCOG) may grant an extension of up to 90 days as it deems necessary.

• CCR § 6665, State Controller Re ports, requires that the annual Streets Report be filed with the State Controller on or before October 1 or within 90 days after the close of the fiscal year.

Condition: Although the City of Turlock (the City) received an extension f rom StanCOG moving the reporting deadline to March 31, 2025, the annual audit report w as not filed with StanCOG until November 2025. City staff cannot find documentation of when the report w as filed with the State Controller’s Office.

In addition, the 2024 annual Streets Report was not filed with the State Controller’s Office before its due date.

Cause: We understand that staff turnover led to delays in the general ledger closing process, which impacted the timely filing of the reports.

Effect: The City is not in compliance with the annual reporting require ments of the California Code of Regulations for the TDA Funds.

Recommendation: The City should develop procedures to ensure the annual audit r eport and annual Streets Report are filed with S tanCOG and the State Controller’ s Office prior to the annual reporting deadlines.

Management’s Response: Management acknowledges the auditor’s finding and, in order to address the issue, management has developed an estimated timeline to ge t the City of Turlock’s Financial Reporting completed and up to date for remaining outstanding reporting cycles of the TDA:

• The Fiscal Year 2023-2024 report is estimated to be completed b y the end of November 2025, pending the auditor’s availability.

The City is expected to submit its Fiscal Year 2024-2025 report prior to the required submission deadline.

25 CITY OF TURLOCK

TRANSPORTATION DEVELOPMENT ACT FUNDS

STATUS OF PRIOR YEAR FINDINGS AND RESPONSES
FOR THE FISCAL YEAR ENDED JUNE 30, 2024

TDA2023-01 – Late Filing of Required Financial Reports

Criteria: The Transportation Development Act (TDA) Funds are subject to a nnual reporting requirements as follows:

• California Code of Regulations (CCR) § 6663, Entities Responsible for Fiscal and Performance Audits of Claimants, requires that a copy of the annual audit report be sent to the State Controller.

• CCR § 6664, Fiscal and Compliance Audits of All Claimants, requ ires that in accordance with Public Utilities Code Section 99245, the annual audit report be submitted within 180 days after the end of the fiscal year, except that the Stanislaus Council of Governments (StanCOG) may grant an extension of up to 90 days as it deems necessary.

• CCR § 6665, State Controller Re ports, requires that the annual Streets Report be filed with the State Controller on or before October 1 or within 90 days after the close of the fiscal year.

Condition: Although the City of Turlock (the City) received an extension f rom StanCOG moving the reporting deadline to March 31, 2024, the annual audit report w as not filed with StanCOG until 2025. City staff cannot find documentation of when the report was filed with the State Controller’s Office. In addition, the 2023 annual Streets Report was not filed with the State Controller’s Office before its due date.

Cause: We understand that staff turnover led to delays in the general ledger closing process, which impacted the timely filing of the reports.

Effect: The City is not in compliance with the annual reporting require ments of the California Code of Regulations for the TDA Funds.

Recommendation: The City should develop procedures to ensure the annual audit r eport and annual Streets Report are filed with S tanCOG and the State Controller’ s Office prior to the annual reporting deadlines.

Management’s Response: Management acknowledges the auditor’s finding and, in order to address the issue, management has developed an estimated timeline to ge t the City of Turlock’s Financial Reporting completed and up to date for remaining outstanding reporting cycles of the TDA:

• The Fiscal Year 2022-2023 report is estimated to be completed b y the end of March 2025, per the auditor’s stated current availability and estimated date of com pletion. However, the City of Turlock is prepared to start sooner on the audit should the auditor become available sooner.

• The Fiscal Year 2023-2024 report is estimated to be completed b y the end of November 2025, pending the auditor’s availability.

The City is expected to submit its Fiscal Year 2024-2025 report prior to the required submission deadline.

Current Year Status: See finding TDA2024-01.

To the Honorable Members of the City Council
of the City of Turlock
Turlock, California

We have audited the basic financial statements of the Transport ation Development Act (TDA) Funds which are included in the Street Special Revenue Fund and the T ransportation Enterprise Fund of the City of Turlock, California (the City), for the fiscal year end ed June 30, 2024. Professional standards require that we provide you with information about our responsi bilities under auditing standards generally accepted in the United States of America and Government Auditing Standards , as well as certain information related to the planned scope and timing of our audi t. We have communicated such information in our letter to you dated June 1, 2025. Profession al standards also require that we communicate to you the following information related to our audit.

Significant Audit Matters

Qualitative Aspects of Accounting Practices

Management is responsible for the selection and use of appropri ate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. During the year ended June 30, 2024, the Authority adopted Governmental Account ing Standards Board (GASB) Statement No. 99, Omnibus 2022 , and GASB Statement No. 100, Accounting Changes and Error Corrections – an Amendment of GASB Statement No. 62 . We noted no transactions entered into by the City during the fiscal year for which there is a lack of author itative guidance or consen sus. All significant transactions have been recognized in the basic financial statements in the proper period.

Accounting estimates are an integral part of the basic financia l statements prepared by management and are based on management’s knowledge and experience about past a nd current events and assumptions about future events. Certain acc ounting estimates are particula rly sensitive because of their significance to the basic financial statement s and because of the possibilit y that future events affecting them may differ significantly from those expected. The most sensitive es timates affecting the TDA Funds’ basic financial statements were:

Management’s estimates used in establishing the fair value for investments, the useful lives of capital assets, the accrued compensated absences, the self-insu rance liability, the net pension liability and related deferred outflows and inflows of resource s, the net other post-employment benefit liabilities and related deferred outflows and inflows of resources, and discount rate for the purpose of calculating the right -to-use lease and SBITA assets and the related liabilities. We evaluated the key factors and assumptions used to develop these estimates in determining that they are reasonable in relation to the financial statements taken as a whole.

The financial statement disclosures are neutral, consistent, and clear.

Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with mana gement in performing and completing our audit.

Corrected and Uncorrected Misstatements
Professional standards require u s to accumulate all known and l ikely misstatements identified during the audit, other than those that are clearly trivial, and communica te them to the appropriate level of management. No such misstatements were identified.

Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not res olved to our satisfaction, t hat could be significant to the basic financial statements or the auditor’s report. We are pleased to report th at no such disagreements arose during the course of our audit.

Management Representations
We have requested certain representations from management that are included in the management representation letter dated November 5, 2025.

Management Consultations with Other Independent Accountants

In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain sit uations. If a consultation involves application of an accounting principle to the TDA Funds’ basic financial st atements or a determination of the type of auditor’s opinion that may be expr essed on those statements, ou r professional standards require the consulting accountant to check with us to determine that the co nsultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Other Audit Findings or Issues

We generally discuss a variety of matters, including the applic ation of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional r elationship and our responses were not a condition to our retention.

Restriction on Use

This information is intended solely for the information and use of the City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.

BROWN ARMSTRONG

ACCOUNTANCY CORPORATION

Bakersfield, California
November 5, 2025

City Council Staff Report
November 18, 2025

From: Nick Showalter, Information Technology Director
Prepared by: Nick Showalter, Information Technology Director Agendized by: Susan E. Borrego, Interim City Manager

1. ACTION RECOMMENDED:

Motion: Approving an Agreement with Solid Networks Inc. for the purchase of co-managed project support and professional services for Microsoft 365, including the configuration development, migration of email, and lifecycle management, for an initial three (3) year term of $186,000 (including a ten percent contingency) to continue on a month-to-month renewal thereafter, expensed from Fund 501 "Information Technology."

2. NARRATIVE:

Staff are requesting the approval of an agreement to purchase co-managed project support and professional services for Microsoft 365 from Solid Networks that will aid the Information Technology department in configuring, migrating, and managing the lifecycle of Microsoft 365 cloud productivity application services for an initial term of three (3) years, which includes a ten percent (10%) contingency for scalability if additional fees are incurred for user license or environment increases. This agreement will continue on a month-to-month renewal basis thereafter with the option to cancel.

The City's current productivity tools from Microsoft include the Office suite of software, which provides software for word processing (Microsoft Word), spreadsheets (Microsoft Excel), presentations (Microsoft PowerPoint), and email (Microsoft Outlook). Through the Microsoft 365 platform, the software is accessible on individual computers and can also be made available online within the Microsoft cloud. City staff who utilize the full productivity software suite also use some of Microsoft 365's additional cloud product offerings, including Microsoft Teams for chat and video conferencing, Microsoft Forms for online forms, and OneDrive for secure cloud storage. One of the key benefits of Microsoft 365 is leveraging the productivity tools that integrate with Microsoft Outlook, the City's core email application. Many of Microsoft 365's cloud product offerings integrate extensively into Outlook, allowing for greater productivity and efficiency opportunities.

At this time, the City's email system that works with Outlook is not configured for Microsoft 365 because the email system is not in the cloud. The agreement with Solid Networks will aid in preparing the configurations needed to bring email to the cloud, which will allow for Outlook to more heavily integrate with the Microsoft 365 productivity tools. In addition, multiple layers of cybersecurity services are currently in place for email. Solid Networks has the background knowledge, professional expertise, and desired cybersecurity certifications needed to integrate the City's existing cybersecurity services with the Microsoft cloud email offerings in Microsoft 365. The agreement with Solid Networks will aid the Information Technology department not only in the email migration project and integrating with cybersecurity services, but it also includes lifecycle management services, where Solid Networks will keep the City updated with major developments in Microsoft's cloud

Agenda Staff Report
11/18/2025

technologies and provide best practices and standardizations on cybersecurity and operations.

3. FISCAL IMPACT / BUDGET AMENDMENT:

The purchase of the co-managed project support and professional services for Microsoft 365 from Solid Networks will be expensed from Fund 501 "Information Technology" out of the account 501-10-130.43060_000 - Contract Services General for a total of $186,000 for the initial three (3) years of the agreement. The contract agreement is a monthly rate of $4,690.

For the initial three years, the agreement total is $168,840, along with a ten percent (10%) contingency is approximately $186,000. The contingency is included to cover fees associated if additional users are licensed or Microsoft 365 environment grows. The agreement will continue on a month-to-month renewal basis until one month cancellation notice is provided to Solid Networks. Solid Networks may increase the month-to-month renewal once per calendar year and will provide 30-day written notice if the value exceeds five percent (5%) of the prior year.

Under Turlock Municipal Code section 2-7-08 (b) (3), "bidding procedures are not required within the following circumstances regardless of the amount involved: contracts involving the obtaining of professional or specialized skill, such as, but not limited to, services rendered by attorneys, engineers, accountants, and specialized consultants."

4. ENVIRONMENTAL DETERMINATION:

This action is not a project under the California Environmental Quality Act (CEQA) in accordance with Section 15378(b)(5) of the CEQA Guidelines. The renewal involves administrative activities that will not result in direct or indirect physical changes in the environment.

5. ATTACHMENTS:

1. Exhibit A - Solid Networks M365 3 Year Agreement

2. Addendum - City of Turlock and SNI

City of Turlock
3-Year SolidCare Co-Managed Support for M365
Quote #009386
We have prepared a quote for you
Prepared for:

Version v3
[email protected]
Susan Borrego
Mark Ricci

1.209.338.1424
[email protected]
Solid Networks

Statement of Work

STATEMENT OF WORK
This Statement of Work (“SOW”) is governed under the Master Service Agreement (the “Agreement”) between Solid Networks, Inc. (“we”, “us”, “our” or “SNI”), and you (“you”, “your” or “Client”), the entity who accepts the order to which this SOW is attached (the “Order”). This SOW is effective as of the date on which you accepted the Order (“Effective Date”).

We will provide you with the services described in the Order and those described below (collectively, the “Services”). Services that are not specifically described in the Order and this SOW will be out of scope and will not be provided to you unless otherwise agreed to by us in writing.

Services described in this Statement of Work that are NOT included in the original Order shall be governed by this SOW when those services are added by mutual agreement. (From this point forward, the Order and this SOW will be collectively referred to as this “SOW”).

1. SCOPE OF SERVICES
Onboarding Services
Where applicable, we will perform the following services during onboarding or over the period of the Agreement under this SOW:

Uninstall and replace as necessary selected monitoring/management tools or other software installed by previous IT consultants.

Compile a full inventory of all protected servers, workstations, and laptops.

Uninstall and replace as necessary any previous virus protection and install our managed antivirus application.

Install remote support access application on each managed device to enable remote support.

Configure patch management application and check for missing security updates.

Monitor for unsafe or unnecessary applications and uninstall as required.

Optimize device performance including disk cleanup, antivirus, and spyware scans.

Review firewall configuration and other network infrastructure devices.

Review status of battery backup protection on all devices.

Monitor and assess network stability to assure effective device connectivity to their file server.

Review and document current server licensing & configuration status.

Determine existing backup strategy and status; prepare backup options for consideration.

Review password policies. Support user and device password conformance.

As applicable, make recommendations for changes that should be considered to the managed environment.

If deficiencies are discovered during the onboarding process, we will bring those issues to your attention and discuss their impact on our ability to provision our monthly managed services. Please note, unless otherwise expressly stated in this SOW, onboarding-related services do not include the remediation of any issues, errors, or deficiencies (“Issues”), and we cannot guarantee that all Issues will be detected during the onboarding process.

Ongoing / Recurring Services
Upon the completion of onboarding services (if any), we will provide the managed services listed in the Order and the services described below on an ongoing basis during the term of this SOW.

Data Backup
SNI’s backup and disaster recovery (BDR) services include:

Managed backup of qualified servers listed in the Order:
24/7 monitoring of backup system, including offsite backup, offsite replication, and an onsite backup appliance (“Backup Appliance”)
Troubleshooting and remediation of failed backup disks
Preventive maintenance and management of imaging software used for backup.

Monitoring of backup successes and failures
Data integrity checking on each backup iteration.

Workstations requiring backup must be specifically identified in the Order.

Backed-Up Servers / Workstations: See Order for servers/workstations that will be backed up.

Note: Data on equipment that is not specifically listed in the Order will not be backed up.

Storage Limitation: You will be allocated the storage space for backup and recovery purposes as listed in the Order. Any space required or that you request beyond this amount will be provided to you at the then current price per block.

Backup Frequency: On-site backups will occur hourly; offsite backups will occur nightly 7 days a week unless system limitations require changes to the schedule.

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Backup Data Security: All backed up data is encrypted in transit and at rest. All facilities housing backed up data implement physical security controls and logs, including security cameras, and have multiple internet connections with failover capabilities.

Backup Retention: SNI only guarantees retrieval of the most recent successful recovery point sent to the backup appliance in a local recovery situation. SNI only guarantees retrieval of archived data successfully sent to the off-site data center in the prior calendar day.

License Grant
Where Backup Appliances are embedded with proprietary software (“BDR Software”), SNI hereby grants you a non-exclusive, royalty free, non- transferable license, during the term of this SOW, to use the BDR Software in conjunction with the BDR-related services provided by SNI. Client shall not reverse engineer, de-compile or otherwise use the BDR Software in any manner not specifically authorized by SNI.

Data Recovery Services
If you require data recovery services, contact SNI Service Desk to coordinate. Upon your payment of the applicable fees (described below), we will make your backed up data available to you in a hosted, virtual environment. Your access to the backed-up data will continue for a period of two (2) weeks; extended access time is available as described in the Fees section, below.

Locations Covered by Services
Services will be provided remotely unless, in our discretion, we determine that an onsite visit is required. Onsite visits will be scheduled in accordance with the priority assigned to the issue (see below) and are subject to technician availability. Unless we agree otherwise, all onsite Services will be provided at your primary office location listed in the Order.

Managed Equipment / Hardware / Software
The Services will be applied to the equipment listed in the Order (“Covered Hardware”) and will apply to the software listed in the Order (“Supported Software”) provided that all Supported Software must, at all times, be properly licensed, and under a maintenance and support agreement from the Supported Software’s manufacturer. In this SOW, Covered Hardware and Supported Software will be referred to as the “Environment.”

2. Term; Continuation
The services shall continue for a minimum term as stated in the Order Executive Summary. The Services will commence, and billing will begin, on the date indicated in the Order (“Commencement Date”). We reserve the right to delay the Commencement Date until all onboarding/transition services (if any) are completed, and all deficiencies / revisions identified in the onboarding process (if any) are addressed or remediated to SNI’s satisfaction.

Absent a renewal agreement or notice of intent to discontinue Services at least one (1) month prior to expiration, month-to-month billing will continue thereafter at then-current pricing, cancelable by either party for any reason upon the provision of one (1) month prior written notice.

3. Assumptions / Minimum Requirements / Exclusions
The scheduling, fees and provision of the Services are based upon the following assumptions and minimum requirements:

All equipment with Microsoft Windows® operating systems must be running then-currently supported versions of such software and have all of the latest Microsoft service packs and critical updates installed. You agree to facilitate required version updates when requested.

All software must be genuine, licensed and vendor supported.

All operating systems must be protected by licensed and up-to-date virus protection software.

As applicable, the Environment must have a currently licensed, vendor-supported server-based backup solution that can be monitored.

All wireless data traffic in the environment must be securely encrypted.

For effective monitoring, there must be an outside static IP address assigned to a network device.

All servers must be connected to working UPS devices. Designated cable modem, firewall, and core switches may also require UPS devices.

Recovery coverage assumes data integrity of the backups or the data stored on the backup devices. We do not guarantee the integrity of the original data, nor their backups or the data stored on the backup devices. Server restoration will be to the point of the last successful backup.

You must provide all software installation media and key codes in the event of a failure.

Any costs required to bring the Environment up to these minimum standards are not included in this SOW.

You must provide us with exclusive administrative privileges to the Environment.

You must not affix or install any accessory, addition, upgrade, equipment or device on to the firewall, server, or backup appliances (other than electronic data) unless expressly approved in writing by us.

Any exceptions will be clearly stated in the Order Executive Summary.

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Exclusions. Services that are not expressly described in this SOW will be out of scope and will not be provided to you unless otherwise agreed, in writing, by SNI. Without limiting the foregoing, the following services are expressly excluded under this SOW, and if required to be performed, must be agreed upon by SNI via mutually signed proposal:

Major projects, i.e. major hardware (network, systems, endpoint) refresh, replacement, additions, reconfigurations in hardware or software.

Customization of third-party applications, or programming of any kind.

Support for operating systems, applications, or hardware no longer supported by the manufacturer.

Data/voice wiring or cabling services of any kind.

Battery backup replacement.

Equipment relocation.

Upgrading the Environment up to the Minimum Requirements (unless otherwise noted in “Scope of Services” above) Repairs to hardware or any supported equipment or software, or the costs to acquire parts or equipment, or shipping charges of any kind.

Errors or omissions in quoting, ordering, or billing in scoping or provisioning products and/or services. SNI may, at its sole discretion, cancel and re-issue transactional correspondence to correct such errors and/or omissions.

4. Service Levels
Automated monitoring is provided on an ongoing (i.e., 24x7x365) basis.

Response, repair, and/or remediation services (as applicable) will be provided only during business hours unless otherwise specifically stated in the Order. We will respond to problems, errors or interruptions in the provision of the Services in the timeframe(s) described below. Severity levels will be determined by SNI in our reasonable discretion. All remediation services will initially be attempted remotely.

SNI will provide onsite service only if remote remediation is ineffective and, under all circumstances, only if covered under your Service Agreement.

Trouble / Severity Managed ?Service Response
Critical problem: Service not available (all users and functions unavailable) Response within four (4) hours after notification.

Significant degradation of service (large number of users or business critical functions affected) Response within eight (8) hours after notification.

Limited degradation of service (limited number of users or functions affected, business process can continue). Response within twenty-four (24) business hours after notification.

Small service degradation (business process can continue, one user affected). Response to requested schedule, as available. No service level agreement.

Note: All Response time frames are calculated as of the time that you notify SNI of the applicable issue/problem through SNI’s designated support portal, help desk, or by telephone at the telephone number listed in the Order. Notifications received in any manner other than described herein may result in a delay in the provision of remediation efforts. Ticket triage time target is .2 hours (12 minutes) during business hours. SLA target is 90+% achievement.

5. Fees
The fees for the Services will be as indicated in the Order. Initially, you will be charged the monthly fees indicated in the Order. Thereafter, if the amount of Covered Hardware or Supported Software changes, or if the number of authorized users accessing the Environment changes, then you agree that the fees will be automatically and immediately modified to accommodate those changes. Under no circumstances will the number of authorized users, or the quantity of Covered Hardware or Supported Software drop below the amounts initially indicated in this SOW without our consent.

In addition, we reserve the right to increase our monthly recurring and data recovery fees; provided, however, we will not do so more than once per calendar year. If an increase is more than five percent (5%) of the fees charged for the Services in the prior calendar year, then you will be provided with a thirty (30) day opportunity to terminate this SOW by providing us with written notice of termination. Your continued acceptance or use of the services after this thirty (30) day period will indicate your acceptance of the increased fees.

Page: 4 of 11Quote#009386 v3

6. Removal of Software Agents; Return of Firewall & Backup Appliances Unless we expressly direct you to do so, you will not remove or disable, or attempt to remove or disable, any software agents that we installed in the Environment. Doing so without our guidance may make it difficult or impracticable to remove the software agents, which could result in network vulnerabilities and/or the continuation of license fees for the software agents for which you will be responsible, and/or the requirement that we remediate the situation under a separate statement of work. In the event of an approved removal, depending on the particular software agent and the costs of removal, we may elect to keep the software agent in the Environment but in a dormant and/or unused state.

Within ten (10) days after being directed to do so, you will remove, package and ship, at your expense and in a commercially reasonable manner, all hardware, equipment, and accessories provided to you by SNI that were used in the provision of the Services. If you fail to timely return all equipment to us, or if the equipment is returned to us damaged (normal wear and tear excepted), then we will have the right to charge you, and you hereby agree to pay, the replacement value of all such unreturned or damaged equipment.

7. Additional Terms
Monitoring Services; Alert Services
Unless otherwise indicated in this SOW, all monitoring and alert-type services are limited to detection and notification functionalities only. These functionalities are guided by Client-designated policies, which may be modified by you as necessary or desired from time to time. Initially, the policies will be set to a baseline standard as determined by SNI; however, you are advised to establish and/or modify the policies that correspond to your specific monitoring and notification needs.

Remediation
Unless otherwise provided in this SOW, remediation services will be provided in accordance with the recommended practices of the managed services industry. You understand and agree that remediation services are not intended to be, and will not be, a warranty or guarantee of the functionality of the Environment, or a service plan for the repair of any particular piece of managed hardware or software.

Modification of Environment
Changes made to the Environment without our prior authorization or knowledge may have a substantial, negative impact on the provision and effectiveness of the Services, and may impact the fees charged under this SOW. You agree to refrain from moving, modifying, or otherwise altering any portion of the Environment without our prior knowledge and consent. For example, you agree to refrain from adding or removing hardware from the Environment, installing applications on the Environment, or modifying the configuration or log files of the Environment without our prior knowledge and consent.

Anti-Virus; Anti-Malware
Our anti-virus / anti-malware solution will generally protect the Environment from becoming infected with new viruses and malware (“Viruses”); however, Viruses that exist in the Environment at the time that the security solution is implemented may not be capable of being removed without additional services, for which a charge may be incurred. We do not warrant or guarantee that all Viruses and malware will be capable of being detected, avoided, or removed, or that any data erased, corrupted, or encrypted by malware will be recoverable. In order to improve security awareness, you agree that SNI or its designated third-party affiliate may transfer information about the results of processed files, information used for URL reputation determination, security risk tracking, and statistics for protection against spam and malware. Any information obtained in this manner does not and will not contain any personal or confidential information.

Breach/Cyber Security Incident Recovery
Unless otherwise expressly stated in this SOW, the scope of this SOW does not include the remediation and/or recovery from a Security Incident (defined below). Such services, if requested by you, must be handled under a separate statement of work. Given the varied number of possible Security Incidents, we cannot and do not warrant or guarantee (i) the amount of time required to remediate the effects of a Security Incident (or that recovery will be possible under all circumstances), or (ii) that all data impacted by the incident will be recoverable. For the purposes of this paragraph, a Security Incident means any unauthorized or impermissible access to or use of the Environment, or any unauthorized or impermissible disclosure of your confidential information (such as user names, passwords, etc.), that (i) compromises the security or privacy of the information or applications in, or the structure or integrity of, the Environment, or (ii) prevents normal access to the Environment, or impedes or disrupts the normal functions of the Environment.

Environmental Factors
Exposure to environmental factors, such as water, heat, cold, or varying lighting conditions, may cause installed equipment to malfunction.

Unless expressly stated in this SOW, we do not warrant or guarantee that installed equipment will operate error-free or in an uninterrupted manner, or that any video or audio equipment will clearly capture and/or record the details of events occurring at or near such equipment under all circumstances.

Page: 5 of 11Quote#009386 v3

Fair Usage Policy
Our Fair Usage Policy (“FUP”) applies to all services in this SOW that are described or designated as “unlimited.” An “unlimited” service designation means that, subject to the terms of this FUP, you may use the service as reasonably necessary for you to enjoy the use and benefit of the service without incurring additional time-based or usage-based costs. However, unless expressly stated otherwise in this SOW, all unlimited services are provided during our normal business hours only and are subject to our technicians’ availability, which cannot always be guaranteed. In addition, we reserve the right to assign our technicians as we deem necessary to handle issues that are more urgent, critical, or pressing than the request(s) or issue(s) reported by you. Consistent with this FUP, you agree to refrain from (i) creating urgent support tickets for non-urgent or non-critical issues, (ii) requesting excessive support services that are inconsistent with normal usage patterns in the industry (e.g., requesting support in lieu of training), (iii) requesting support or services that are intended to interfere, or may likely interfere, with our ability to provide our services to our other customers, or (iv) opening tickets for services that are outside the scope of this SOW (e.g., opening tickets for project work, break/fix work, etc.).

Microsoft New Commerce Experience (NCE) O365 / Email
You are solely responsible for the security, confidentiality and integrity of all email and the content of all email, received, transmitted or stored through the email service that is under your control (“Email”). You agree to refrain from uploading, posting, transmitting or distributing (or permitting any of your authorized users of the Email to upload, post, transmit or distribute) any prohibited content, which is generally content that (i) is obscene, illegal, or intended to advocate or induce the violation of any law, rule or regulation, or (ii) violates the intellectual property rights or privacy rights of any third-party, or (iii) mischaracterizes you, and/or is intended to create a false identity or to otherwise attempt to mislead any person as to the identity or origin of any communication, or (iv) interferes or disrupts the services provided by SNI or the services of any third-party, or (v) contains Viruses, trojan horses or any other malicious code or programs, or (vi) is determined to violate any element of Microsoft’s terms and conditions, public regulation, or warranty conditions applicable to the licensing. In addition, you must not use the Email for the purpose of sending unsolicited commercial electronic messages (“SPAM”) in violation of any federal or state law. SNI reserves the right, but not the obligation, to suspend your access to the Email and/or all transactions occurring under your Email account if SNI believes, in its discretion, that your email account is being used in an improper or illegal manner.

SolidCare agreements for NCE licensing are auto-renewing commitments with Microsoft. Prior to the licensing renewal date SNI will coordinate a review of user counts for each NCE licensing type to determine the appropriate renewal quantity with Microsoft and complete the NCE licensing on your behalf. Within the license period, additional users may be added and the licensing increased. Monthly SolidCare billing will be adjusted automatically. Microsoft does not permit decreases to license quantity during the license period for NCE agreements. For month-to- month licensing at a higher per user fee, Microsoft does permit license count reductions at monthly intervals with corresponding billing in monthly SolidCare invoice. NCE price changes by Microsoft may incur corresponding change in billing per Section 5. “Fees” in this SoW.

Patch Management
We will keep all managed hardware and managed software current with critical patches and updates (“Patches”) as those Patches are released generally by the applicable manufacturers. Patches are developed by third-party vendors and, on rare occasions, may make the Environment, or portions of the Environment, unstable or cause the managed equipment or software to fail to function properly even when the Patches are installed correctly. We will not be responsible for any downtime or losses arising from or related to the installation or use of any Patch. We reserve the right, but not the obligation, to refrain from installing a Patch if we are aware of technical problems caused by a Patch, or we believe that a Patch may render the Environment, or any portion of the Environment, unstable.

Backup and Disaster Recovery (BDR) Services
All data transmitted over the Internet may be subject to malware and computer contaminants such as viruses, worms and trojan horses, as well as attempts by unauthorized users, such as hackers, to access or damage your data. Neither SNI nor its designated affiliates will be responsible for the outcome or results of such activities.

BDR services require a reliable, always-connected internet solution. Data backup and recovery time will depend on the speed and reliability of your internet connection. Internet and telecommunications outages will prevent the BDR services from operating correctly. In addition, all computer hardware is prone to failure due to equipment malfunction, telecommunication-related issues, etc., for which we will be held harmless.

Due to technology limitations, all computer hardware, including communications equipment, network servers and related equipment, has an error transaction rate that can be minimized, but not eliminated. SNI cannot and does not warrant that data corruption or loss will be avoided, and you agree that SNI shall be held harmless if such data corruption or loss occurs. You are strongly advised to keep a local backup of all of stored data to mitigate against the unintentional loss of data.

Procurement
Equipment and software procured by SNI on your behalf (“Procured Equipment”) may be covered by one or more manufacturer warranties, which will be passed through to you to the greatest extent possible. By procuring equipment or software for you, SNI does not make any warranties or representations regarding the quality, integrity, or usefulness of the Procured Equipment. Certain equipment or software, once purchased, may not be returnable or, in certain cases, may be subject to third-party return policies and/or re-stocking fees, all of which shall be your responsibility in the event that a return of the Procured Equipment is requested. SNI is not a warranty service or repair center. SNI will facilitate the return or warranty repair of Procured Equipment; however, you understand and agree that the return or warranty repair of Procured Equipment is governed by the terms of the warranties (if any) governing the applicable Procured Equipment, for which SNI will be held Page: 6 of 11Quote#009386 v3

harmless.

Business Review; IT Strategic Planning
Suggestions and advice rendered to you are provided in accordance with relevant industry practices, based on your specific needs and SNI’s opinion and knowledge of the relevant facts and circumstances. By rendering advice, or by suggesting a particular service or solution, SNI is not endorsing any particular manufacturer or service provider.

VCTO or VCIO Services
The advice and suggestions provided to us in our capacity as a virtual chief technology or information officer will be for your informational and/or educational purposes only. SNI will not hold an actual director or officer position in your company, and we will neither hold nor maintain any fiduciary relationship or position with you. Under no circumstances shall you list or place SNI on your corporate records or accounts.

Sample Policies, Procedures.

From time to time, we may provide you with sample (i.e., template) policies and procedures for use in connection with your business (“Sample Policies”). The Sample Policies are for your informational use only, and do not constitute or comprise legal or professional advice, and the policies are not intended to be a substitute for the advice of competent counsel. You should seek the advice of competent legal counsel prior to using or distributing the Sample Policies, in part or in whole, in any transaction. We do not warrant or guarantee that the Sample Policies are complete, accurate, or suitable for your (or your customers’) specific needs, or that you will reduce or avoid liability by utilizing the Sample Policies in your (or your customers’) business operations.

Penetration Testing; Vulnerability Assessment
You understand and agree that security devices, alarms or other security measures, both physical and virtual, may be tripped or activated during the penetration testing process, despite our efforts to avoid such occurrences. You will be solely responsible for notifying any monitoring company and all law enforcement authorities of the potential for “false alarms” due to the provision of the penetration testing services, and you agree to take all steps necessary to ensure that false alarms are not reported or treated as “real alarms” or credible threats against any person, place or property. Some alarms and advanced security measures, when activated, may cause the partial or complete shutdown of the Environment, causing substantial downtime and/or delay to your business activities. We will not be responsible for and will be held harmless and indemnified by you against any claims, costs, fees or expenses arising or resulting from (i) any response to the penetration testing services by any monitoring company or law enforcement authorities, or (ii) the partial or complete shutdown of the Environment by any alarm or security monitoring device.

Hardware as a Service (HaaS)
You will use all SNI-hosted or SNI-supplied equipment and hardware (collectively, “Infrastructure”) for your internal business purposes only. You shall not sublease, sublicense, rent or otherwise make the Infrastructure available to any third-party without our prior written consent. You agree to refrain from using the Infrastructure in a manner that unreasonably or materially interferes with our other hosted equipment or hardware, or in a manner that disrupts or which is likely to disrupt the services that we provide to our other clientele. We reserve the right to throttle or suspend your access and/or use of the Infrastructure if we believe, in our sole but reasonable judgment, that your use of the Infrastructure is violates the terms of this SOW or the Agreement.

Unsupported Configuration Elements Or Services
If you request a configuration element (hardware or software) or hosting service in a manner that is not customary at SNI , or that is in “end of life” or “end of support” status, we may designate the element or service as “unsupported,” “non-standard,” “best efforts,” “reasonable endeavor,” “one-off,” “EOL,” “end of support,” or with like term in the service description (an “Unsupported Service”). We make no representation or warranty whatsoever regarding any Unsupported Service, and you agree that we will not be liable for any loss or damage arising from the provision of an Unsupported Service. Deployment and service level guarantees shall not apply to any Unsupported Service.

Order Executive Summary
 Primary Service Address: 156 S Broadway, Turlock, CA 95380  Managed hardware and software counts are from client inventory  Agreement Commencement Date: Starts on the following month after signed approval.  24x7 Response for remediation services provided on an on-call basis  Urgent Support Contact: 209-338-1450
 Non-Urgent Support Contact: [email protected]  Agreement Term Options:
o 3YR with 100% project and onboarding discount
 Agreement Scaling: Additional devices or services may be added to this support agreement at any time during the term. Additional devices will be Page: 7 of 11Quote#009386 v3

charged the monthly support fee for the remainder of the agreement term which may be prepaid. These devices will be reviewed on a quarterly basis.

SolidCare Co-Managed Support Services for Microsoft 365 Recurring Qty Ext. Recurring S.AC301.MS.Cloud.

B
Co-Managed Services $4,690.00 1 $4,690.00
S.AC301.MS.Cloud.

B
Microsoft 365 Cloud Co-Management MSP Services 469
Scope of Services:

M365 Lifecycle Management – Our M365 co-managed services stays on top of major developments in Microsoft cloud technologies to help you leverage this ever- evolving platform. We ensure you're aware of new capabilities that could enhance your workflows and, when a feature is set to be decommissioned, advise you on what to transition to.

Best Practice / Standardization - Upon deciding to leverage technology inside your tenant, such as Conditional Access or Intune, SNI will provide guidance on best practice implementations for both operational and cybersecurity concerns. Includes Policy Monitoring Tool - Inforcer Secure Score Auditing – SNI will review your Microsoft security score and address organizational resistance against Microsoft recommendations License Management - Reviews of license utilization to help optimize cloud spend Tier-2 Support – As your M365 service escalation point, SNI will consistently be available to your team to diagnose and mitigate any cloud-related issues.

Microsoft Ticket Triage - Although SNI resolves a majority of service escalations in-house, we do also have the ability engage with Microsoft support directly on your behalf. (provided Solid supplies the licensing and/or is added as a valid authorized contact) Standard Compliance - SNI will regularly monitor and compare your 365 tenant configurations against Microsoft and SNI standards, maintain backups for quick recovery, and review historical configurations for easy restoration and ongoing compliance S.S608.SEC-ESB-
H
Co-Managed Security Bundle: Huntress Identity Protection $5.00 469 $2,345.00 S.S608.SEC-ESB-
H
Huntress Service 469
S.S625.O365Sec Essential Security: Managed Detection and Response - MDR for Microsoft 365 Environment
469
Promo Huntress Identity Protection Promo Credit for 12 Months ($5.00) 469 ($2,345.00) Recurring Subtotal $4,690.00
SolidCare Co-Managed M365 Onboarding Services Price Qty Ext. Price SNI-PS Professional Services - SolidCare Co-Managed M365 On-Boarding Services $4,000.00 1 $4,000.00 Subtotal $4,000.00
SolidCare Project Services for Co-Managed Clients Price Qty Ext. Price SNI-PS SolidCare Co-Managed Project Services - Microsoft Exchange Online Migration $10,500.00 1 $10,500.00 Solid Networks Scope of Work:
 Project kick-off, develop project plan and timeline, discuss results of pilot-phase, and discuss procedures for use in the migration phase  Moving mailboxes from on-premise Exchange to Microsoft 365 via Exchange hybrid mode using processes and procedures developed during the pilot project phase
 Tier 2 support during migration and post-migration for issues directly related to the migration Page: 8 of 11Quote#009386 v3

SolidCare Project Services for Co-Managed Clients Price Qty Ext. Price  No end-user support, all requests for support will be initiated through client IT staff  Migration validation testing against criteria developed during the pilot phase of the project  Bi-weekly project meetings to discuss progress and timeline  Assistance in identifying any devices using on-premises Exchange as a SMTP relay  Training client IT staff on mailbox migration and perform first 5 mailbox migrations collaboratively.  Assistance developing policies to migrate users from perpetually licensed versions of Office to latest version of Office licensed through M365 Client IT Responsibilities:
 Provide Tier - user support during and post-migration  Determine migration schedule
 Migration of mailboxes from on-premise to Exchange online  Purchasing the necessary Microsoft subscription licensing (See licensing options)  Compatibility verification, installation, and configuration of 3rd party Office 365 or email-integrated solutions (message archiving, unified messaging, electronic fax, etc.)
Project Notes:
 Environment size between 400-500 mailboxes
 Project includes installing and/or tuning Azure AD Sync  Project assumes no missing prerequisites for existing on-premise Active Directory or Exchange environment. Environment not yet assessed for compatibility. Any deficiencies requiring substantial foundational work (ie, more than 4 hours) will be quoted as a change order.  Required licensing to be ordered during project as separate quote.  Project to be complete within 90 days
SNI-PS SolidCare Co-Managed Project Services - Cisco DUO Jumpstart $2,000.00 1 $2,000.00 Scope of Work:
• Install DUO security authentication proxy service on server • Configure DUO service for Microsoft Windows Login, network and server IT administration, remote access • Provide client with administrative login and knowledge transfer services Note: Additional project fees may apply to configure advanced features such as AD Sync, Office365 integration, DUO Access Gateway Server, and additional SSO applications.

Requirements for advanced features can be assessed after basic setup and an additional scope of work would be provided.

Subtotal $12,500.00
3-Year Agreement Project Service Incentives Price Qty Ext. Price As an incentive for signing a three-year Microsoft 365 Managed Services Agreement (MSA), Solid Networks will provide the following one-time professional service engagements at no additional cost to the City of Turlock SNI-PS Professional Services - MS365 Onboarding Service Credit for 3YR Agreement Commit
($4,000.00) 1 ($4,000.00)
SNI-PS Professional Services - Microsoft Exchange Online Migration Service Credit for 3YR Agreement Commit
($10,500.00) 1 ($10,500.00)
SNI-PS Professional Services - Cisco DUO Jumpstart Service Credit for 3YR Agreement Commit
($2,000.00) 1 ($2,000.00)
Subtotal ($16,500.00)
Page: 9 of 11Quote#009386 v3

3-Year SolidCare Co-Managed Support for M365
Quote #: 009386
Version: 3 Updated: 10/29/2025 Expiration Date: 12/31/2025 Prepared by: Prepared for: Ship To:

Solid Networks City of Turlock City of Turlock
Mark Ricci

1.209.338.1424
[email protected]
156 S Broadway
Turlock, CA 95380
Susan Borrego
(209) 668-5540
[email protected]
156 S Broadway
Turlock, CA 95380
Susan Borrego
(209) 668-5540
[email protected]
Quote Summary
Description Amount
SolidCare Co-Managed M365 Onboarding Services $4,000.00 SolidCare Project Services for Co-Managed Clients $12,500.00 3-Year Agreement Project Service Incentives ($16,500.00) Total: $0.00
Recurring Expenses Summary
Description Amount
SolidCare Co-Managed Support Services for Microsoft 365 $4,690.00 Recurring Total: $4,690.00
Taxes, shipping, handling and other fees may apply. We reserve the right to cancel orders arising from pricing or other errors.

Solid Networks City of Turlock
Signature:

Name: Mark Ricci
Title: Account Manager
Date:

Signature:

Name: Susan Borrego
Title: Interim City Manager
Date:

Page: 10 of 11Quote#009386 v3

OFFSITE STAGING & CONFIGURATION AGREEMENT FOR QUOTE# 009386 v3 The Offsite Staging & Configuration Agreement (“Agreement”) is entered into upon approval of the Solid Networks Quote between (Quote listed customer “Client”) and Solid Networks [SNI].

Client wishes to purchase equipment from SNI which will be held, staged, or configured at a location other than the client premises.

The parties therefore enter into this agreement, on the following terms and conditions:

A. Provisions Related to Equipment Purchases.

1. Transfer of Title
All equipment purchased by client hereunder shall be deemed to have been delivered and title shall transfer to Client when received at the offsite location. The offsite location may be an office location of Client or a staging facility as indicated in the SHIP-TO location of the agreement.

2. Invoicing
Client may be invoiced for the equipment upon delivery to the offsite location.

Page: 11 of 11Quote#009386 v3

Solid Networks, Inc.

Master Services Agreement

The following terms and conditions govern our relationship with you and limit our liability for any services or products that we provide to you. Please read these terms carefully and keep a copy for your records.

SCOPE; SERVICES
a) Scope. This master services agreement (this “Agreement”) governs all services that Solid Networks, Inc., a California corporation with offices located at 5686 Pirrone Road, Salida, California 95368 (“us”, “our”, “we” or “SNI”), performs for, as well as any licenses or products that we sell or re-sell, to you (collectively, the “Services”). b) Quotes. The Services are not described in this Agreement; instead, you will be provided with an electronic quote, proposal, and/or order (“Quote”) that describe the Services through which you agree to purchase the Services from us. The Quote may have one or more statements of work (each a “SOW”) attached to it that further describe, summarize, and/or define the scope of the Services. By accepting the Quote, you agree to the terms of each SOW and the terms of this Agreement. If you do not agree to the terms of the SOW and this Agreement, then you should not accept the Quote. From this point forward in this Agreement, Quotes and SOWs will be collectively referred to as “SOW.” c) Conflict. If there is a material difference between the language in a SOW and the language in this Agreement, then the language of the SOW will control, except in situations involving warranties, limitations of liability, or termination of this Master Services Agreement. Under those limited circumstances, the terms of this Agreement will control unless the SOW expressly states that it is overriding the conflicting provisions of this Agreement.

GENERAL REQUIREMENTS
a) Environment. For the purposes of this Agreement, “ Environment” means, collectively, any computer network (cloud- based or otherwise) , computer system, peripheral or device (virtual or physical) installed, maintained, monitored , or operated by us pursuant to a SOW. To avoid a delay or negative impact on our provision of the Services, during the term of each SOW you agree to refrain from modifying or moving the Environment or installing software in the Environment, unless we expressly authorize such activity.
b) Requirements. At all times, all software on the Environment must be genuine and licensed, and you agree to provide us with proof of such licensing upon our request. If we require you to implement certain minimum hardware or software requirements in a SOW (“Minimum Requirements”), you agree to do so as an ongoing requirement of us providing our Services to you.
c) Updates. Patches and updates to hardware and software (“Updates”) are created and distributed by third parties —such as equipment or software manufacturers —and may be supplied to us from time to time for installation into the Environment. If required under a SOW, we will implement and follow the manufacturers’ recommendations for the installation of Updates; however, (i) we do not warrant or guarantee that any Update will perform properly, (ii) we will not be responsible for any downtime or losses arising from or related to the installation, use, or inability to use any Update, and (iii) we reserve the right, but not the obligations, to refrain from installing an Update until we have determined, in our reasonable discretion, that the Updates will be compatible with the configuration of the Environment and materially beneficial to the features or functionality of the affected software or hardware. d) Third Party Support. If, in our discretion, a hardware or software issue requires vendor or OEM support, we may contact the vendor or OEM (as applicable) on your behalf and invoice you for all fees and costs involved in that process. If the fees or costs are anticipated in advance or exceed $125, we will obtain your permission before incurring such expenses on your behalf unless exigent circumstances require otherwise. e) Advice; Instructions. From time to time, we may provide you with specific advice and directions related to the Services. (For example, our advice or directions may include upgrading the Environment’s server or hard drive capacity or replacing obsolete equipment.) You are strongly advised to promptly follow our advice which, depending on the situation, may require you to make additional purchases or investments in the Environment or the location in which the Environment is maintained, at your sole cost. We will not be responsible for any problems or issues (such as downtime or security-related issues) caused by your failure to promptly follow our advice. If, in our discretion, your failure to follow or implement our advice renders part or all of the Services economically or technically unreasonable to provide, then we may terminate the applicable SOW for cause by providing notice of termination to you. Unless specifically and expressly stated in a SOW, any services required to remediate issues caused by your failure to follow SNI’s advice or directions, or your unauthorized or unilateral modification of the Environment, as well as any services required to bring the Environment up to or maintain the Minimum Requirements, are out-of-scope and not covered under any SOW. f) Prioritization. All Services will be performed on a schedule, and in a prioritized manner, as we deem reasonable and necessary.

g) Authorized Contact(s). We will be entitled to rely on any directions or consent provided by your personnel or representatives who are authorized in a SOW to provide such directions or consent (“Authorized Contacts”). If no Authorized Contact is identified in an applicable SOW, then your Authorized Contact will be the person(s) (i) who signed this Agreement, (ii) who signed the applicable SOW, and/or (iii) who, given the totality of the circumstances, reasonably appears to have been given the authority by you to provide us with directions or consent. If you notify us in writing (e.g. by email), your change will take effect no later than three (3) business days after we receive your notice; and, if notice is given in person or by telephone, your change will take effect on the business day on which you provide us with your notice. h) Insurance. If you are supplied with SNI Equipment (defined below), you agree to acquire and maintain, at your sole cost, insurance for the full replacement value of that equipment. SNI must be listed as an additional insured on any policy acquired and maintained by you under this Agreement, and the policy will not be canceled or modified during the term of the applicable SOW without prior notification to SNI. Upon SNI’s request, you agree to provide proof of insurance to SNI, including proof of payment of any applicable premiums or other amounts due under the insurance policy.

FEES; PAYMENT
a) Fees. You agree to pay the fees, costs, and expenses described in each SOW. You are responsible for sales tax and any other taxes or governmental fees associated with the Services. If you qualify for a tax exemption, you must provide us with a valid certificate of exemption or other appropriate proof of exemption. You are also responsibl e for all freight, insurance, and taxes (including but not limited to import or export duties, sales, use, value add, and excise taxes). b) Schedule. All undisputed fees will be due and payable in advance of the provision of the Services . If applicable, recurring payments made by ACH will be deducted from your designated bank account on the first business day of the month in which the Services are to be provided , and, if applicable, your designated credit card will be charged on the first business day of the month in which the Services are to be provided. c) Nonpayment. Fees that remain unpaid for more than fifteen (15) days after the due date on the invoice will be subject to interest on the unpaid amount(s) until and including the date payment is received, at the lower of either 2% per month or the maximum allowable rate of interest permitted by applicable law . We reserve the right, but not the obligation, to suspend part or all of the Services without prior notice to you in the event that any portion of undisputed fees are not timely received by us, and monthly or recurring charges shall continue to accrue during any period of suspension. Notice of disputes related to fees must be received by us within sixty (60) days after the applicable Service is rendered or the date on which you pay an invoice, whichever is later; otherwise, you waive your right to dispute the fee thereafter. A re- activation fee may be charged to you if we suspend the Services due to your nonpayment. Time is of the essence in the performance of all payment obligations by you.

ACCESS
You hereby grant to SNI and its designated third party vendors the right to monitor, diagnose, manipulate, communicate with, retrieve information from, and otherwise access the Environment solely as necessary to enable us to provide the Services. It is your responsibility to secure, at your own cost and prior to the commencement of any Services, any necessary rights of entry, licenses (including software licenses) , permits or other permission s necessary for SNI to provide Services to the Environment and, if applicable, at your designated premises, both physically and virtually . Proper and safe environmental conditions must be provided and assured by you at all times. SNI shall not be required to engage in any activity or provide any Services under conditions that pose or may pose a safety or health concern to any personnel, or that would require extraordinary or non-industry standard efforts to achieve.

LIMITED WARRANTIES; LIMITATIONS OF LIABILITY
a) Hardware / Software Purchased Through SNI. All hardware, software, peripherals or accessories purchased through SNI (“Third Party Products”) are generally nonrefundable once the product is obtained from SNI’s third party provider or reseller. If you require a refund, then the third party provider’s or reseller’s return policies shall apply. We do not guarantee that purchased Third Party Products will be returnable, exchangeable, or that re-stocking fees can be avoided. You will be responsible for the payment of all re-stocking or return-related fees charged by the third party provider or reseller. We will use reasonable efforts to assign, transfer and facilitate all warranties (if any) and service level commitments (if any) for the Third Party Products to you, but will have no liability whatsoever for the quality, functionality or operability of any Third Party Products, and we will not be held liable as an insurer or guarantor of the performance, uptime or usefulness of any Third Party Products. All Third Party Products are provided “as is” and without any warranty whatsoever as between SNI and you (including but not limited to implied warranties). b) Liability Limitations. This paragraph limits the liabilities arising under this Agreement or any SOW and is a bargained-for and material part of our business relationship with you. You acknowledge and agree that SNI would not enter into any SOW or this Agreement unless SNI could rely on the limitations described in this paragraph. In no event shall either party be liable for any indirect, special, exemplary, consequential, or punitive damages, such as lost revenue, loss of profits (except for fees due and owing to SNI), savings, or other indirect or contingent event-based economic loss

arising out of or in connection with this A greement, any SOW, or the Services, or for any loss or interruption of data, technology or services, or for any breach hereof or for any damages caused by any delay in furnishing Services under this Agreement or any SOW, even if a party has been advised of the possibility of such damages; however, reasonable attorneys’ fees awarded to a prevailing party (as described below) shall not be limited by the foregoing limitation. Except for your payment obligations and your indemnification obligations described in this Agreement, a responsible party’s (“Responsible Party’s”) aggregate liability to the other party (“Aggrieved Party”) for damages from any and all claims or causes whatsoever, and regardless of the form of any such action(s), that arise from or relate to this Agreement (collectively, “Claims”), whether in contract, tort, indemnification, or negligence, shall be limited solely to the amount of the Aggrieved Party’s actual and direct damages, not to exceed the amount of fees paid by you (excluding hard costs for licenses, hardware, etc.) to SNI for the specific Service upon which the applic able claim(s) is/are based during the six (6) month period immediately prior to the date on which the cause of action accrued. The foregoing limitations shall not apply to the extent that the Claims are caused by a Responsible Party’s willful or intentional misconduct, or gross negligence. Similarly, a Responsible Party’s liability obligation shall be reduced to the extent that a Claim is caused by, or the result of, the Aggrieved Party’s willful or intentional misconduct, or gross negligence.

INDEMNIFICATION
Each party (an “Indemnifying Party”) agrees to indemnify, defend and hold the other party (an “Indemnified Party”) harmless from and against any and all losses, damages, costs, expenses or liabilities, including reasonable attorneys’ fees, (collectively, “Damages”) that arise from, or are related to, the Indemnifying Party’s breach of this Agreement. The Indemnified Party will have the right, but not the obligation, to control the intake, defense and disposition of any claim or cause of action for which indemnity may be sought under this section. The Indemnifying Party shall be permitted to have counsel of its choosi ng participate in the defense of the applicable claim(s); however, (i) such counsel shall be retained at the Indemnifying Party’ s sole cost, and (ii) the Indemnified Party’s counsel shall be the ultimate determiner of the strategy and defense of the claim(s) for which indemnity is provided. No claim for which indemnity is sought by an Indemnified Party will be settled without the Indemnifying Party’s prior written consent, which shall not be unreasonably delayed or withheld.

TERM; TERMINATION
a) Term. This Agreement begins on the earliest date on which you accept an Order and continues until terminated as described in this Agreement. Each SOW will have its own term and will be terminated only as provided herein, unless otherwise expressly stated in the applicable SOW. The termination of one SOW shall not, by itself, cause the termination of (or otherwise impact) this Agreement or the status or progress of any other SOW between the parties. b) Termination Without Cause. Unless otherwise agreed by the parties in writing or otherwise permitted under this Agreement, no party will terminate this Agreement without cause if, on the date of termination, a SOW is in progress. In addition, no party will terminate a SOW without cause prior to the SOW’s natural expiration date. Notwithstanding the foregoing, if SNI decides to cease providing a service to all of its customers generally, then SNI may terminate an applicable SOW (or the applicable portion of the SOW) without cause by providing no less than one hundred and twenty (120) days prior written notice to you. If you terminate a SOW without cause and without SNI’s consent, then you will be responsible for paying the termination fee described in the “Termination for Cause” section, below. If no SOW is in progress, then either party may terminate this Agreement without cause by providing the other party with five (5) days prior written notice. c) Termination For Cause. In the event that one party (a “Defaulting Party”) commits a material breach under a SOW or under this Agreement, the non-Defaulting Party will have the right, but not the obligation, to terminate immediately this Agreement or the relevant SOW (a “For Cause” termination) provided that (i) the non-Defaulting Party has notified the Defaulting Party of the specific details of the breach in writing, with the notice prominently displaying the heading “Notice of Breach”, and (ii) the Defaulting Party has not cured the default within twenty (20) days (ten (10) days for non -payment by Client) following receipt of written notice of breach from the non-Defaulting Party. If SNI terminates this Agreement or any SOW For Cause, or if you terminate any SOW without cause prior to such SOW’s expiration date, then SNI shall be entitled to receive, and you hereby agree to pay to us, all amounts that would have been paid to SNI had this Agreement or SOW (as applicable) remained in effect. If you terminate this Agreement or a SOW For Cause, then you will be responsible for paying only for those Services that were properly delivered and accepted by you up to the effective date of termination. d) Client Activity As A Basis for Termination. In the event that (i) any Client-supplied equipment, hardware or software, or any action undertaken by you, causes the Environment or any part of the Environment to malfunction consequently requiring remediation by SNI on three (3) occasions or more (“System Malfunction”), and if under those circumstances, you fail to remedy, repair or replace the System Malfunction as directed by us (or you fail to cease the activity causing the System Malfunction, as applicable), or (ii) you or any of your staff, personnel, contractors, or rep resentatives engage in any unacceptable act or behavior that renders it impracticable, imprudent, or unreasonable to provide the Services to you, then SNI will have the right, upon ten (10) days prior written notice to you, to terminate this Agreement or the applicable SOW For Cause or, at our discretion and if applicable, amend the applicable SOW to eliminate from coverage any System Malfunction or any equipment or software causing the System Malfunction.

e) Consent. You and we may mutually consent, in writing, to terminate a SOW or this Agreement at any time. f) Equipment / Software Removal. Upon termination of this Agreement or applicable SOW for any reason, you will provide us with access, during normal business hours, to your premises or any other locations at which SNI-owned equipment or software (collectively, “SNI Equipment”) is located to enable us to remove all SNI Equipment from the premises. If you fail or refuse to grant SNI access as described herein, or if any of the SNI Equipment is missing, broken or damaged (normal wear and tear excepted) or any of SNI-supplied software is missing, we will have the right to invoice you for, and you hereby agree to pay immediately, the full replacement value of any and all missing or damaged items. Certain services may require the installation of software agents in the Environment (“Software Agents”). You agree not to remove, disable, circumvent, or otherwise disrupt any Software Agents unless we explicitly direct you to do so. g) Transition; Deletion of Data. In the event that you request SNI’s assistance to transition away from our services, we will provide such assistance if (i) all fees due and owing to us are paid to us in full prior to SNI providing its assistance to you, and (ii) you agree to pay our then-current hourly rate for such assistance, with up-front amounts to be paid to us as we may require. For the purposes of clarity, it is understood and agr eed that the retrieval and provision of passwords, log files, administrative server information, or conversion of data are transition services, and are subject to the preceding requirements. Unless otherwise expressly stated in a SOW, we will have no obligation to store or maintain any Client data in our possession or control beyond fifteen (15) calendar days following the termination of this Agreement. We will be held harmless for, and indemnified by you against, any and all claims, costs, fees, or expenses incurred by either party that arise from, or are related to, our deletion of your data beyond the time frames described in this section.

RESPONSE; REPORTING
a) Response. We warrant and represent that we will provide the Services, and respond to any notification received by us of any error, outage, alarm or alert pertaining to the Environment, in the manner and within the time period(s) designated in an applicable SOW (“Response Time”), except for (i) those periods of time covered under the Onboarding Exception (defined below), or (ii) periods of delay caused by Client-Side Downtime (defined below), Vendor-Side Downtime (defined below) or (iii) periods in which we are required to suspend the Services to protect the security or integrity of the Environment or our equipment or network, or (iv) delays caused by a force majeure event. i) Scheduled Downtime. For the purposes of this Agreement, Scheduled Downtime will mean those hours, as determined by us but which will not occur between the hours of 8:00 AM and 5:00 PM Pacific Time, Monday through Friday without your authorization or unless exigent circumstances exist, during which time we will perform scheduled maintenance or adjustments to the Environment. We will use our best efforts to provide you with at least twenty-four (24) hours of notice prior to scheduling Scheduled Downtime. ii) Client-Side Downtime. We will not be responsible under any circumstances for any delays or deficiencies in the provision of, or access to, the Services to the extent that such delays or deficiencies are caused by your actions or omissions (“Client-Side Downtime”).
iii) Vendor-Side Downtime. We will not be responsible under any circumstances for any delays or deficiencies in the provision of, or access to, the Services to the extent that such delays or deficiencies are caused by third party service providers, third party licensors, or “upstream” service or product vendors. iv) Remedies; Limitations. Except for the Onboarding Exception, if we fail to meet our service level commitment in a given calendar month and if, under such circumstances, our failure is not due to your activities, omissions, or inactivity, then upon receiving your written request for credit, we will issue you a pro-rated credit in an amount equal to the period of time of the outage and/or service failure. All requests for credit must be made by you no later than forty-five (45) days after you either (i) report the outage or service failure to us, or (ii) if applicable, receive a monthly report showing the outage and/or failure. The remedies contained in this paragraph and in the “Term; Termination” section above are in lieu of (and are to the exclusion of) any and all other remedies that might otherwise be available to you for our failure to meet any service level commitment during the term of this Agreement. b) Onboarding Exception. You acknowledge and agree that for the first forty-five (45) days following the commencement date of a SOW, the Response Time commitments described in this Agreement will not apply to us, it being understood that there may be unanticipated downtime or delays due to our initial startup activities and/or familiarization with you (the “Onboarding Exception”).

CONFIDENTIALITY
a) Defined. For the purposes of this Agreement, Confidential Information means any and all non-public information provided to us by you, including but not limited to your customer data, customer lists, internal documents, and related information.

Confidential Information will not include information that: (i) has become part of the public domain through no act or omission of SNI, (ii) was developed independently by us, or (iii) is or was lawfully and independently provided to us prior to disclosure by you, from a third party who is not and was not subject to an obligation of confidentiality or otherwise prohibited from transmitting such information.

b) Use. We will keep your Confidential Information confidential and will not use or disclose such information to any third party for any purpose except (i) as expressly authorized by you in writing, or (ii) as needed to fulfill our obligations under this Agreement.
c) Due Care. We will exercise the same degree of care with respect to the Confidential Information we receive from you as we normally take to safeguard and preserve our own confidential and proprietary information, which in all cases will be at least a commercially reasonable level of care.
d) Compelled Disclosure. If we are legally compelled (whether by deposition, interrogatory, request for documents, subpoena, civil investigation, demand or similar process) to disclose any of the Confidential Information, we will immediately notify you in writing of such requirement so that you may seek a protective order or other appropriate remedy and/or waive our compliance with the provisions of this Section. We will use its best efforts, at your expense, to obtain or assist you in obtaining any such protective order. Failing the entry of a protective order or the receipt of a waiver hereunder, we may disclose, without liability hereunder, that portion (and only that portion) of the Confidential Information that we have been advised, by written opinion from our counsel, that we are legally compelled to disclose. e) Business Associate. If we enter into a business associate agreement (“BAA”) with you for the protection of personal health information, then the terms of the BAA will be read in conjunction with the terms of the confidentiality provisions of this Agreement. The terms that protect confidentiality most stringently shall govern, and conflicting privacy- or confidentiality- related terms shall be governed by the BAA.

ADDITIONAL TERMS; THIRD PARTY SERVICES
a) EULAs. Portions of the Services may require you to accept the terms of one or more third party end user license agreements (“EULAs”). If the acceptance of a EULA is required in order to provide the Services to you, then you hereby grant us permission to accept the EULA on your behalf. EULAs may contain service levels, warranties and/or liability limitations that are different than those contained in this Agreement. You agree to be bound by the terms of such EULAs and will look only to the applicable third party provider for the enforcement of the terms of such EULAs. If, while providing the Services, we are required to comply with a third-party EULA and the third party EULA is modified or amended, we reserve the right to modify or amend any applicable SOW with you to ensure our continued compliance with the terms of the third party EULA.
b) Third Party Services. Portions of the Services may be acquired from, or rely upon the services of, third party manufacturers or providers, such as data hosting services, help desk services, domain registration services, and data backup/recovery services (“Third Party Service”). Not all Third Party Services may be expressly identified as such in a SOW, and at all times we reserve the right to utilize the services of any third party provider or to change third party providers in our sole discretion as long as the change does not materially diminish the Services to be provided to you under a SOW. We will not be responsible, and will be held harmless by you, for the failure of any third-party provider or manufacturer to provide Third Party Services to SNI or to you.
c) Data Loss. Under no circumstances will we be responsible for any data lost , corrupted or rendered unreadable due to (i) communication and/or transmissions errors or related failures, (ii) equipment failures (including but not limited to silent hardware corruption-related issues), or (iii) our failure to backup or secure data from portions of the Environment that were not expressly designated in the applicable SOW as requiring backup or recovery services. Unless expressly stated in a SOW, we do not warrant or guarantee that any maintained storage device or functionality, data backup device or functionality, or load balancing functionality will operate in an error-free manner. d) BYOD. You hereby represent and warrant that we are authorized to access all devices, peripherals and/or computer processing units, including mobile devices (such as notebook computers, smart phones and tablet computers) that are connected to the Environment (collectively, “Devices”), regardless of whether such Devices are owned, leased or otherwise controlled by you. Unless otherwise stated in a SOW, Devices will not receive or benefit from the Services while the devices are detached from, or unconnected to, the Environment. Client is strongly advised to refrain from connecting Devices to the Environment where such devices are not previously known to us and are not expressly covered under a managed service plan from us (“Unknown Devices”). We will not be responsible for the diagnosis or remediation of any issues in the Environment caused by the connection or use of Unknown Devices in the Environment, and we will not be obligated to provide the Services to any Unknown Devices.
e) Equipment. Unless otherwise noted in a SOW or Order, all SNI Equipment is licensed to you, and is neither owned by you nor leased to you. Upon the expiration of an applicable SOW, your license to use the SNI Equipment shall immediately terminate, and thereafter all SNI Equipment must be returned to us immediately at your expense. All configurations on the SNI Equipment are our proprietary information and will not be circumvented, modified, or removed by you without our prior written consent.

OWNERSHIP