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6.A. - Page 75 of 191 <br />CITY OF REDWOOD CITY <br />NOTES TO THE BASIC FINANCIAL STATEMENTS <br />For the Fiscal Year Ended June 30, 2019 <br />NOTE 2 — CASH AND INVESTMENTS (CONTINUED) <br />A. Cash and Deposits <br />The carrying amount of the City's cash and deposits, including restricted cash, was ($767,981) at June 30, <br />2019. Bank balances before reconciling items were $3,604,654 at June 30, 2019. Of the total bank balances, <br />$500,000 was insured or held by the City or its agent in the City's name. <br />All cash deposits in banks are fully insured or collateralized. California state law requires that public fund <br />deposits be collateralized by either government securities with a value equal to 110% of the deposits or first <br />trust deed mortgage notes having a value equal to 150%. Per state law each institution must use a third party <br />(which may be the institution's trust department) to hold the pledged collateral in a pool to secure all the <br />institution's public fund deposits. The code states that collateral pledged in this manner shall have the effect <br />of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for <br />cash is considered to be held in the City's name. Banks and savings and loans in California are subject to <br />state -mandated reporting requirements to ensure that the required levels of control are maintained. The City <br />may waive collateral requirements for deposits, which are fully insured with each financial institution up <br />to $250,000 by the Federal Deposit Insurance Corporation (FDIC). <br />Cash balances from all funds are combined and invested to the extent possible pursuant to the City Council <br />approved investment policy and guidelines and state government code. The earnings from these investments <br />are allocated monthly to each fund based on an average of monthly opening and closing balances of cash and <br />investments. Investments are stated at fair value. All enterprise fund investments are considered to be liquid <br />investments for cash flow purposes. <br />Interest Rate Risk. As a means of limiting its exposure to fair value losses arising from rising interest rates, <br />the City's investment policy provides that weighted average maturity of the general portfolio shall not exceed <br />three years. Specific maturities of investments depend on liquidity needs. <br />47 82 <br />