FY 2013 Operating and Capital Budget - Metro Transit

Additional expenditure control tools utilized include purchase orders, procurement cards, and
work orders for project related expenditures, service contracts and labor contracts.
Monitoring tools utilized include budget reports by cost center, and quarterly performance
indicator reports.
Cash and Cash Equivalents
Metro pools all cash for investment purposes when most beneficial. Each fund has equity in
the pooled amount. Investment earnings are allocated to each individual fund on the basis of
their investment or equity in the pooled amount. Metro considers all highly liquid
investments readily convertible into cash with original maturities of three months or less to be
cash equivalents. Metro carries all cash equivalents at cost, which approximates fair value.
Investments Policies (Policy 30.040)
Funds of Metro shall be invested pursuant to the Board approved Investment Policy and
Investment Procedures and Trust Indentures.
Investments consist of U.S. Treasury and Agency securities, bankers' acceptances,
commercial paper, money market funds, repurchase agreements and certificates of deposits
with original maturities greater than three months. These investments are carried at fair value
unless their remaining maturity at the time of purchase is one year or less, in which case they
are carried at amortized cost. Metro determines fair value to be the amount at which financial
instruments could be exchanged in a current transaction between willing parties, at quoted
market prices. Also, certain money market investments having a remaining maturity of one
year or less at the time of purchase and non-negotiable certificates of deposit with redemption
terms that do not consider market rates are carried at amortized cost.
• Interest rate risk -- Interest rate risk is the risk that the fair value of an investment will
decline as interest rates increase, and if it is sold before its maturity a loss will result.
Metro’s investment policy specifies that all funds may be invested in maturities that match
anticipated obligations to a maximum of five years. The policy is not applicable to
restricted investments or collateral securities related to lease finance obligations or bond
indentures, for which investment maturities are generally matched to specific debt
amortization requirements. Due to the short duration of the majority of Metro’s non-lease
or bond related investments at June 30, 2011, interest rate risk is not significant to Metro.
• Credit risk -- Credit risk is the risk that the financial counterparty will fail to meet its
defined obligations. Metro’s investment policy authorizes the unlimited purchase of
direct obligations of the U.S. Government or its agencies, repurchase and reverse
repurchase agreements, commercial paper, banker’s acceptances, and money market
funds. Repurchase and reverse repurchase agreements are entered into only with preapproved
credit-worthy banks or dealers, and a written repurchase agreement is completed
for each bank or dealer. Metro’s investment policy limits investments in commercial
paper, negotiable (uncollateralized) certificates of deposit, and banker’s acceptances to the
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