village of wellington, florida

NOTE 2. DEPOSITS AND INVESTMENTS (Continued)The Village’s cash and cash equivalents include cash on hand, time and demand deposits, cash held with afiscal agent and money market mutual funds. The Village maintains a cash and investment pool that isavailable for use by all funds. Interest earned on pooled cash and investments is allocated to each of thefunds based on the fund’s average equity balance. Cash and cash equivalents at September 30, 2009,include petty cash of $3,675, deposits with financial institutions with a carrying value of $19,762,213 anda bank balance of $21,629,205, cash held with a fiscal agent of $1,199,822 and U.S. Government moneymarket mutual funds with a carrying value of $17,798,266.All of the Village’s bank deposits are held in qualified public depositories pursuant to State of FloridaStatutes, Chapter 280, “Florida Security for Public Deposits Act”. Under the Act, every qualified publicdepository shall deposit with the Treasurer eligible collateral of the depository to be held subject to his orher order. The Treasurer, by rule, shall establish minimum required collateral pledging levels. Thepledging level may range from 25% to 125% of the average monthly balance of public depositsdepending upon the depository’s financial condition and establishment period. All collateral must bedeposited with an approved financial institution. Any losses to public depositors are covered by applicabledeposit insurance, sale of securities pledged as collateral and, if necessary, assessments against otherqualified public depositories of the same type as the depository in default. The money market mutual funddeposits are uninsured and uncollateralized.The State Board of Administration administers Florida PRIME pursuant to Ch. 19-7 of the FloridaAdministrative Code. These rules provide guidance and establish the general operating procedures forthe administration of Florida PRIME. Additionally, the State of Florida Office of the Auditor Generalperforms the operational audit of the activities and investments of the State Board of Administration.The fair value of the position in the external investment pool is the same as the value of the pool shares.Florida PRIME is not a registrant with the Securities and Exchange Commission (SEC); however, theBoard has adopted operating procedures consistent with the requirements for a 2a-7 fund. Theseinvestments are valued using the pooled share price.On November 29, 2007, the Board of Trustees of the State Board of Administration (SBA) closed theLGIP to all redemptions by participants in response to substantial withdrawals from the Pool over the twopreceding weeks that severely reduced the overall liquidity of the LGIP. On December 4, 2007, the Boardof Trustees approved a restructuring plan for the LGIP.The restructuring divided the LGIP into two separate pools, Florida PRIME and Fund B representingapproximately 86% and 14%, respectively, of the original LGIP assets. Florida PRIME was designated asthe ongoing fund consisting of only short-term, money market assets of the highest quality. On December6, 2007, Florida PRIME re-opened to accept new deposits from participants and allow restrictedwithdrawals. Fund B retained all securities from the original LGIP that had defaulted, were in default orhad extended payment terms or potentially elevated credit risk. Fund B is closed to deposits andwithdrawals and is generally expected to hold all assets to their ultimate maturity and to distribute funds toparticipants as they become available. The Fund B investment is recorded at fair value based on the netasset value of the Fund B assets reported by the SBA. At September 30, 2009, the Fund B investments hada net asset value of $359,477, approximating 55% of amortized cost.The ultimate realizable value and the date when Fund B investments will be available to the Village cannotbe determined at this time, however, it is the opinion of management, based upon consultation with theSBA, that the amount of loss, if any, and the limited availability of the funds will not adversely affect theservices provided by the Village. Additional information on the current status of Fund B may be obtainedfrom the State Board of Administration.38