comprehensive annual financial report - City of St. Petersburg

NOTE 6 – DEPOSITS AND INVESTMENTS
CITY OF ST. PETERSBURG, FL
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2010
The City maintains cash management accounts for its cash and cash equivalents in which each fund
and/or account or sub-account of a fund participates on a dollar equivalent and daily transaction basis.
Interest income for cash equivalents is distributed monthly based on a monthly average balance.
GASB Statement No. 40, “Deposit and Investment Risk Disclosures” requires governments to disclose
deposits and investments exposed to custodial credit risk. For deposits, this is the risk that, in the event of
the failure of a depository financial institution, a government may not be able to recover deposits nor be
able to recover collateral securities that are in the possession of an outside party.
At fiscal year end, the carrying amounts of the City’s deposits were $6,509,532 and the bank balances
were $6,655,115. Of the bank balances, $6,655,115 was insured by federal depository insurance. During
the past year Bank of America was a participant in the FDIC’s Transaction Account Guarantee Program,
which means all non-interest bearing transaction accounts were fully guaranteed by the FDIC for the
entire amount in the account.
On December 26, 2007, the City entered into a three year banking services agreement with Bank of
America. There are no compensating balances required to be maintained. There are no line of credit
commitments within the contract. The agreement requires payment monthly for all banking service costs.
Collected funds on the City’s three main accounts earned interest daily and are credited to the accounts
monthly. The City’s contract for merchant account processing service is with Bank of America. It
requires the processing of all VISA, Master Card and Discover Card charges which are deposited into the
City’s accounts on a daily basis. On April 30, 2010, the banking services contract was extended for an
additional one year period. The City also has an agreement with Bill 2 Pay, a division of Intuition
Systems, Inc. to act as provider of all lockbox services for collections on City Utility Bills.
As required by Florida Statutes, the City adopted an investment policy ordinance on January 4, 1996, that
authorizes the investment of surplus funds in investments including but not limited to investments
allowed by Florida Statute 218.415(17). The ordinance stipulates the establishment of a written
investment policy by city resolution. The ordinance requires that all investments shall be governed by the
“prudent person rule”. A series of approved resolutions since the adoption of the Investment Ordinance
have outlined the City’s total investments, diversification, investment objectives, delegation of authority,
required investment procedures, internal controls, selection of broker/dealers, payment, custody,
safekeeping, reporting requirements, and investment oversight. The policy establishes four portfolios to
identify cash flow requirements within the City as well as modifying interest rate and concentration risk.
The short term portfolio contains investments in approved government money market funds and other
authorized investments due within one year. The debt service portfolio contains short term funds
accumulated for periodic debt payments as well as any invested reserves and debt reserve investments
with a modified duration not exceeding 5 years. The two remaining portfolios are considered core
investment portfolios and as such contain investments with maturities that can be as long as 10 years
with a modified duration not exceeding 5 years. The policy was modified in 2006 to authorize $14
million of core investments to be invested with two outside money managers for the Parks Preservation
Fund.
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