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City of Redwood City
<br />Notes to the Basic Financial Statements
<br />For the fiscal year ended June 30, 2017
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<br />NOTE 2 – CASH AND INVESTMENTS (CONTINUED)
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<br />A. Cash and Deposits, Continued
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<br />All cash deposits in banks are fully insured or collateralized. California state law requires that public
<br />fund deposits be collateralized by either government securities with a value equal to 110% of the
<br />deposits or first trust deed mortgage notes having a value equal to 150%. Per state law each institution
<br />must use a third party (which may be the institution’s trust department) to hold the pledged collateral in
<br />a pool to secure all the institution’s public fund deposits. The code states that collateral pledged in this
<br />manner shall have the effect of perfecting a security interest in such collateral superior to those of a
<br />general creditor. Thus, collateral for cash is considered to be held in the City’s name. Banks and savings
<br />and loans in California are subject to state‐mandated reporting requirements to ensure that the
<br />required levels of control are maintained. The City may waive collateral requirements for deposits,
<br />which are fully insured with each financial institution up to $250,000 by the Federal Deposit Insurance
<br />Corporation (FDIC).
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<br />Cash balances from all funds are combined and invested to the extent possible pursuant to the City
<br />Council approved investment policy and guidelines and state government code. The earnings from these
<br />investments are allocated monthly to each fund based on an average of monthly opening and closing
<br />balances of cash and investments. Investments are stated at fair value. All enterprise fund investments
<br />are considered to be liquid investments for cash flow purposes.
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<br />Interest Rate Risk. As a means of limiting its exposure to fair value losses arising from rising interest
<br />rates, the City’s investment policy provides that final maturities of securities cannot exceed three years.
<br />Specific maturities of investments depend on liquidity needs.
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<br />B. Investments
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<br />As of June 30, 2017, the City had the following investments by maturity:
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<br />Cash and Investments Total 1 year or Less 1 ‐ 2 years 2‐ 3 years 5 years or More
<br />County of San Mateo Investment Pool 45,476,002 45,476,002
<br />California Local Agency Investment Fund 77,966,510 77,966,510
<br />U.S. Agencies, Securities, and Corporate Notes:
<br />Federal Agency Securities 65,807,602 2,992,140 35,822,700 15,167,205 11,825,557
<br />U.S. Treasury Notes 58,483,915 2,962,803 55,521,112
<br />Corporate Notes 10,407,496 4,910,136 590,413 4,906,947
<br />Bank Acceptance 4,732,460 4,732,460
<br />Money Market 105,369 105,369
<br />Total 262,979,354$ 136,182,617$ 39,375,916$ 75,595,264$ 11,825,557$
<br />Investment Maturities (in years)
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<br />6.1.E. - Page 69
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