3) Restricted Assets Restricted assets were applicable to the following at June 30, 2007: Enterprise Fund: Customers deposits-water and sewer maintenance services
4) Cash and Investments
As of June 30, 2007, the City had cash and cash equivalents (book balances) totaling $22,810,280 (net of outstanding checks and deposit in transit) of which $8,462,024 is in interest-bearing demand deposits, $14,346,936 is in LAMP, and cash in hand of $1,320.
As of June 30, 2007, the City had investments totaling $12,648,400 which consist of United States Treasury obligations, obligations issued or guaranteed by the United States government or federal agencies. As of June 30, 2007, the weighty average maturity of the City's investment portfolio was 2.97
Under Louisiana Revised Statutes 39:2955, the City may deposit funds in demand deposit accounts, interest bearing demand deposit accounts, money market accounts, and time certificates of deposit with state banks, organized under Louisiana Law and National Banks having a principal offices in Louisiana. Under state law, these deposits (or the resulting bank balances) must be secured by federal deposit insurance or the pledge of securities owned by the fiscal agent bank. The market value of the pledged securities plus the federal deposit insurance must at all times equal the amount on deposit with the fiscal agent. These securities are held in the name of the pledging fiscal agent bank in a holding or custodial bank that is mutually acceptable to both parties.
Additionally, Louisiana statues allow the City to invest in United States Treasury obligations, obligations issued or guaranteed by the United States government or federal agencies, and mutual or trust funds register with the Securities and Exchange Commission which have underlying investments consisting solely of and limited to the United States government or its agencies.
In addition, local governments in Louisiana are authorized to invest in the Louisiana Asset Management Pool, Inc. (LAMP), a nonprofit corporation formed by an initiative of the State Treasurer and organized under the laws of the State of Louisiana, which operates a local government investment pool.
Interest Rate Risk. Interest Rate Risk is the risk that changes in the in interest rate will adversely affect the fair value of the investment. The City does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing
Custodial Credit Risk - Deposits.
In the case of deposits, this is the risk that in the event of bank
failure, the City's deposits may not be returned. As of June 30, 2007, the City had $8,953,293 in demand deposits (bank balances before outstandingchecks or deposits in transit). These deposits are secured from risk by $100,000 of federal deposit insuranceand $8,853,293 of pledged securities held by the custodial bank in the name of the fiscal agent bank. Even though the pledged securities are considered uncollateralized,Louisiana Revised Statute 39:1229 imposes a statutory requirement on the custodial bank to advertise and sell the pledged securities within 10 days of being notified by the district that the fiscal agent bank has failed to pay deposited funds upon demand.