07 CAFR cover FINAL.p65 - WMATA.com

Washington Metropolitan Area Transit AuthorityFY 2007 Comprehensive Annual Financial ReportNotes to Basic Financial StatementsJune 30, 2007 and 2006(3) Cash, Deposits and Investments (Continued)Credit RiskThe Authority’s investments in repurchase agreements and issues of governmental agencies, which have theimplicit guarantee of the United States government, were, at the time of purchase, awarded the highest rating byone or more of the nationally recognized rating organizations: Standard and Poor’s, Moody’s Investor Service orFitch Ratings.Custodial Credit RiskIn the event of failure of the counterparty, the Authority will be able to recover the value of its investments orcollateral securities that are in the possession of an outside party. The Authority is not exposed to custodial riskbecause all securities are in the Authority’s name and held exclusively for the use of the Authority.(4) Contributions Receivable (including Jurisdictional Operating Subsidy)Since inception, the Authority has operated at a loss, which has been fully subsidized each year by theparticipating jurisdictions. For purposes of determining the current year’s operating loss to be funded by the localparticipating jurisdictions, the Authority calculates the results of transit operations on an agreed-upon basisdifferent from that reflected in the Statements of Revenues, Expenses and Changes in Net Assets, as follows atJune 30, 2007 and 2006 (in thousands):2007 2006Jurisdictional operating subsidy per financialstatements $ 589,639$ 546,132Add (deduct) operating costs (not) requiringcurrent funding:Preventive maintenance subsidy (20,700) (20,700)Prepaid pension cost adjustment 16,392 (14,514)Unrealized (loss) gain from investments (1,663) (5,096)Agreed-upon funding of employee vacationsliability and related taxes (3,999) 3,735Agreed-upon funding of claims forinjuries and damages (14,982) (38,042)Rail repairable parts 252 395Increase in prior year obligationsand commitments - 1,490Maximum fare assistance 4,870 4,695Operating expenses funded bycapital grants (88,883) (46,254)Jurisdictional operating subsidy -funding basis $ 480,926$ 431,84133