Title: LIQUIDITY AND AVAILABILITY
Accounting Policies: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the School under programs of the federal governmental for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of operations of the School, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the School.
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance for all awards. Under these principles, certain types of expenditures are not allowable or are limited as to reimbursement.
De Minimis Rate Used: N
Rate Explanation: The School has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
Financial assets available for general expenditure are those without donor or other
restrictions limiting their use within one year of the consolidated statement of financial
position date. Financial assets available for general expenditures as of June 30, 2024 are as
follows:
Cash and Cash Equivalents $ 26,109,452
Accounts Receivable - Federal and State 4,290,621
Accounts Receivable - Other 514,716
Less: Net Assets with Donor Restrictions (603,280)
Total $ 30,311,509
As part of its liquidity management plan, the Organization monitors liquidity required and
cash flows to meet the operating needs on a monthly basis. The Organization structures
financial assets
Title: CONCENTRATION OF CREDIT RISK
Accounting Policies: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the School under programs of the federal governmental for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of operations of the School, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the School.
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance for all awards. Under these principles, certain types of expenditures are not allowable or are limited as to reimbursement.
De Minimis Rate Used: N
Rate Explanation: The School has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
The Organization maintains cash balances held in banks and revolving funds, which are
insured up to $250,000 by the Federal Depository Insurance Corporation (FDIC). At times,
cash in these accounts exceeds the insured amounts. The School has not experienced any
losses in such accounts and believes it is not exposed to any significant credit risk on its
cash and cash equivalents.
Title: PROPERTY, PLANT, AND EQUIPMENT
Accounting Policies: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the School under programs of the federal governmental for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of operations of the School, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the School.
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance for all awards. Under these principles, certain types of expenditures are not allowable or are limited as to reimbursement.
De Minimis Rate Used: N
Rate Explanation: The School has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
Property, plant, and equipment in the accompanying consolidated financial statements are
presented net of accumulated depreciation. Depreciation expense was $1,130,747 for the
year ended June 30, 2024.
Title: LONG-TERM DEBT
Accounting Policies: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the School under programs of the federal governmental for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of operations of the School, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the School.
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance for all awards. Under these principles, certain types of expenditures are not allowable or are limited as to reimbursement.
De Minimis Rate Used: N
Rate Explanation: The School has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
Bonds Payable
In August 2013, VSF LLC entered into a loan agreement with the California School Finance
Authority (CSFA) to acquire, refinance, construct, expand, and remodel the land and
facilities currently used as the Central City Value School and Downtown Value School
locations. The CSFA sold the California School Finance Authority School Finance Revenue
Bonds Series 2013 totaling $12,870,000 on behalf of the Organization. Central City Value
School and Downtown Value School both have 35-year leases for their facilities with the
Organization. Their quarterly rent payments cover the bond principal and interest payments.
The amounts are intercepted from each school’s state funding and remitted directly to a
third-party trustee. Interest rates for this bond begin at 5.9% and increase to 7.0% over the
life of the bond. In July 2023, the VSF LLC refinanced its debt and paid off this bond.
In August 2016, VSF LLC entered into a loan agreement with the California School Finance
Authority (CSFA) to acquire, refinance, construct, expand, and remodel the land and
facilities currently used as the University Prep Value School. The CSFA sold the California
School Finance Authority School Finance Revenue Bonds Series 2016 totaling $8,500,000
on behalf of the Organization. University Prep Value School has a 35-year lease for its
facilities with the Organization. The quarterly rent payments cover the bond principal and
interest payments. The amounts are intercepted from University Prep Value School’s state
funding and remitted directly to a third-party trustee. Interest rates for this bond begin at
5.9% and increase to 7.0% over the life of the bond.
In October 2020, VSF LLC entered into a loan agreement with the California School Finance
Authority (CSFA) to construct, expand and remodel the facilities currently used as the
Everest Value School. The CSFA sold the California School Finance Authority Revenue
Bonds Series 2020 totaling $9,145,000 on behalf of the Organization. Everest Value School
has a 36.5-year lease for its facilities with the Organization. The quarterly rent payments
cover the bond principal and interest payments. The amounts are intercepted from Everest
Value School’s state funding and remitted directly to a third-party trustee. Interest rates for
this bond begin at 3.25% end increase to 4.0% over the life of the bond. Bonds Payable (Continued)
In July 2023, VSF LLC obtained bond financing from the California School Finance Authority
in the amount of $11,810,000 (Series 2023A and Series 2023B) to refinance certain costs of
the acquisition, construction, improvement, equipping and furnishing of certain public charter
school facilities. Interest rates for this bond begin at 4.34% and increase to 7.25% over the
life of the bond and contain maturity dates ranging from July 1, 2025 to July 1, 2048.
The bonds payable are secured by substantially all of the assets of the Organization and a
deed of trust, assignment of rents, security agreement, and fixture filing on real property and
leasehold improvements. Central City Value School, Downtown Value School, and
University Prep Value School all have 35-year leases for their facilities with the
Organization. The bond agreement contains various covenants including, but not limited to,
the maintenance of a debt service coverage ratio and minimum cash reserve balances.
Costs associated with the issuance of bonds payable have been capitalized and are
reported as a reduction of the bonds payable on the statement of financial position. These
costs are amortized over the term of the bonds. Amortization of the issuance costs for the
year ended June 30, 2024 was $52,682. The mandatory redemption of the sinking fund
corresponds to the future repayment schedule of the bonds payable.
The future repayment schedule of the bonds payable at June 30, 2024 is as follows:
Title: GRANT FUNDS RESERVE
Accounting Policies: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the School under programs of the federal governmental for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of operations of the School, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the School.
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance for all awards. Under these principles, certain types of expenditures are not allowable or are limited as to reimbursement.
De Minimis Rate Used: N
Rate Explanation: The School has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
The grant funds reserve balance of $854,125 at June 30, 2024 represents the balance of
the credit enhancement grant received by the Organization under the Charter School
Facilities Credit Enhancement Grant Program and funded by a federal award from the U.S.
Department of Education to serve as credit enhancement for charter school facilities. The
proceeds from the grant are to be used only if the Organization does not have any other
legally available funds for debt service. The grant funds are to be returned to the U.S.
Department of Education upon the refinance or maturity of the bonds. There were no
amounts used from this grant during the year ended June 30, 2024.
Title: EMPLOYEE RETIREMENT
Accounting Policies: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the School under programs of the federal governmental for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of operations of the School, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the School.
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance for all awards. Under these principles, certain types of expenditures are not allowable or are limited as to reimbursement.
De Minimis Rate Used: N
Rate Explanation: The School has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
Multiemployer Defined Benefit Pension Plans
Qualified employees are covered under multiemployer defined benefit pension plans
maintained by agencies of the state of California.
The risks of participating in these multiemployer defined benefit pension plans are different
from single-employer plans because: (a) assets contributed to the multiemployer plan by
one employer may be used to provide benefits to employees of other participating
employers, (b) the required member, employer, and state contribution rates are set by the
California Legislature, and (c) if the School chooses to stop participating in the
multiemployer plan, it may be required to pay a withdrawal liability to the plan. The School
has no plans to withdraw from this multiemployer plan.
State Teachers’ Retirement System (STRS)
Plan Description
The School contributes to the State Teachers’ Retirement System (STRS), a cost-sharing
multiple-employer public employee retirement system defined benefit pension plan
administered by STRS. The plan provides retirement, disability and survivor benefits to
beneficiaries. Benefit provisions are established by state statutes, as legislatively amended,
within the State Teachers’ Retirement Law. According to the most recently available
Comprehensive Annual Financial Report and Actuarial Valuation Report for the year ended
June 30, 2023, total STRS plan net assets are $316.9 billion, the total actuarial present
value of accumulated plan benefits is $455 billion, contributions from all employers totaled
$7.738 billion, and the plan is 75.9% funded. The School did not contribute more than 5% of
the total contributions to the plan.
Copies of the STRS annual financial report may be obtained from STRS, 7667 Folsom
Boulevard, Sacramento, CA 95826 and www.calstrs.com.
Funding Policy
Active plan members hired before January 1, 2013 are required to contribute 10.25% of their
salary and those hired after are required to contribute 10.205% of their salary. The School is
required to contribute an actuarially determined rate. The actuarial methods and
assumptions used for determining the rate are those adopted by the STRS Teachers’
Retirement Board. The required employer contribution rate for the year ended June 30,
2024 was 19.10% of annual payroll. The contribution requirements of the plan members are
established and may be amended by state statute.
The School’s contributions to STRS for the past three years are as follows: Public Employees’ Retirement System (PERS)
Plan Description
The School contributes to the School Employer Pool under the California Public Employees’
Retirement System (CalPERS), a cost-sharing, multiemployer public employee retirement
system defined benefit pension plan administered by CalPERS. The plan provides
retirement and disability benefits, annual cost-of-living adjustments, and death benefits to
plan members and beneficiaries. Benefit provisions are established by State statutes, as
legislatively amended, within the Public Employees’ Retirement Law. According to the most
recently available Actuarial Valuation Report for the year ended June 30, 2023, the School
Employer Pool total plan assets are $84.3 billion, the present value of accumulated plan
benefits is $120.5 billion, contributions from all employers totaled $4.457 billion, and the plan
is 70% funded. The School did not contribute more than 5% of the total contributions to the
plan.
Copies of the CalPERS’ annual financial reports may be obtained from the CalPERS
Executive Office, 400 P Street, Sacramento, CA 95814, and www.calpers.ca.gov.
Funding Policy
Active plan members are required to contribute 8.0% of their salary for Public Employees'
Pension Reform Act (PEPRA) members and 7.0% of their salary for classic members. The
School is required to contribute an actuarially determined rate. The actuarial methods and
assumptions used for determining the rate are those adopted by the CalPERS Board of
Administration. The required employer contribution rate for year ended June 30, 2024 was
26.68%. The contribution requirements of the plan members are established and may be
amended by state statute.
Contributions to PERS
The School's contributions to PERS for each of the last three years are as follows:
Title: NET ASSETS WITH DONOR RESTRICTIONS
Accounting Policies: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the School under programs of the federal governmental for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of operations of the School, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the School.
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance for all awards. Under these principles, certain types of expenditures are not allowable or are limited as to reimbursement.
De Minimis Rate Used: N
Rate Explanation: The School has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
Net assets with donor restrictions consist of the following as of June 30, 2024:
Title: LEASES – ASC 842
Accounting Policies: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the School under programs of the federal governmental for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of operations of the School, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the School.
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance for all awards. Under these principles, certain types of expenditures are not allowable or are limited as to reimbursement.
De Minimis Rate Used: N
Rate Explanation: The School has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
The School leases school facilities, office facilities, and land from related and unrelated
parties. Additionally, VSF leases land and subleases it to the School under long-term, noncancelable
lease agreements. The leases expire at various dates through 2057 and provide
for renewal options ranging from 5 to 7 years. In the normal course of business, it is
expected that these leases will be renewed or replaced by similar leases. Certain facility
leases provide for increases in future minimum annual rental payments based on defined
increases in the Consumer Price Index, subject to certain minimum increases. Additionally,
the agreements generally require the Organization to pay real estate taxes, insurance, and
repairs. Some lease agreements also require the School to comply with certain covenants
and to maintain certain financial ratios. As of June 30, 2024, the School believes it was in
compliance with all ratios and covenants.
The following table provides quantitative information concerning the Organization’s leases
for the year ended June 30, 2024: The Organization classifies the total undiscounted lease payments that are due in the next
12 months as current. A maturity analysis of annual undiscounted cash flows for lease
liabilities as of June 30, 2024, is as follows:
Title: CONTINGENCIES, RISKS AND UNCERTAINTIES
Accounting Policies: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the School under programs of the federal governmental for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of operations of the School, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the School.
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance for all awards. Under these principles, certain types of expenditures are not allowable or are limited as to reimbursement.
De Minimis Rate Used: N
Rate Explanation: The School has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
The School has received state and federal funds for specific purposes that are subject to
review and audit by the grantor agencies. Although such audits could generate
disallowances under terms of the grants, it is believed that any required reimbursement
would not be material.
In the ordinary course of conducting its operations, the Organization may become involved
in various lawsuits. Some of these proceedings may result in judgments being assessed
against the School, which, from time to time, may have an impact on its consolidated
statement of activities or consolidated statement of financial position. The School has
insurance policies to protect against the risk of loss relating to any such lawsuits and
therefore believes there is no material risk of loss at this time.