Comprehensive Annual Financial Report (CAFR) - Johnson City

CITY OF JOHNSON CITY, TENNESSEENOTES TO THE FINANCIAL STATEMENTSFor the Fiscal Year Ended June 30, 20114. DETAILED NOTES ON ALL FUNDS (CONTINUED):A. Deposits and investments (continued)DepositsCustodial Credit Risk.The City's policy for custodial credit rate risk on deposits is to follow state guidelines.At year end, the City had $33,341 of cash on hand which has been included in cash and cashequivalents. The City's carrying amount of deposits was $62,234,110 and the bank balance was$64,843,698. Of the City's bank balance, $64,712,215 was covered by the State of TennesseeCollateral Pool, which is a multiple financial institution collateral pool, or by amounts insured bythe Federal Deposit Insurance Corporation (FDIC) and $89,598 was covered by the NationalCredit Union Share Insurance Fund. State statutes require collateral pledged by each financialinstitution to equal a certain percentage of the uninsured public deposits it holds. Members of thepool can be assessed if the collateral is inadequate to cover a loss. This is similar to depositoryinsurance. Of the remaining City balance, $41,885 represents cash in trust accounts which areinsured by the FDIC.In addition to the above deposits, the City has $3,705,236 on deposit with the State of Tennessee,which is held in the Local Government Investment Pool at June 30, 2011.The LGIP has been classified as Cash on Deposit with Stat~ of Tennessee since they are comprisedof short-term investments. The TN LGIP has not been rated by a nationally recognized statisticalrating organization.InvestmentsCustodial Credit Risk.The City's investment policy is to ensure the preservation of capital in the overall investmentportfolio. The City will emphasize the safety of capital first, maintain sufficient liquidity to meetobligations second, and gain the highest possible yield third. All investments made by the Citywill be in accordance with applicable state guidelines. The City does not allow for an investmentin securities maturing more than two years from the date of issue.57