RVCC 2019 NECHE Self-Study

Investments Fair Value
Measurement
GASB Statement No. 72, Fair Value Measurement and Application, establishes a fair value
hierarchy for investments that prioritizes the inputs to valuation techniques used to measure fair
value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements
involving significant unobservable inputs (Level 3 measurements).
The three levels of the fair value hierarchy are as follows:
Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets at the
measurement date. The types of assets carried at Level 1 fair value generally are securities
listed in active markets. The Foundation has valued its investments, listed on national
exchanges, at the last sales price as of the day of the valuation.
Level 2: Inputs are based upon quoted prices for similar instruments in active markets, quoted
prices for identical or similar instruments in markets which are not active, and modelbased
valuation techniques for which all significant assumptions are observable in the
market or can be corroborated by observable market data for substantially the full term
of the asset of liability. The fair values are therefore determined using model-based
techniques that incorporate these inputs.
Level 3: Inputs are generally unobservable and typically reflect management’s estimates of
assumptions that market participants would use in pricing the asset or liability. The fair
values are therefore determined using model-based techniques that include discounted
cash flow models and similar techniques.
The inputs or methodology used for valuing investments are not necessarily an indication of the
risk associated with those investments.
CCSNH Investments
CCSNH operating investments consist of an investment in a short-term bond mutual fund. The fund
targets a dollar-weighted average maturity of 0.75 years or less and invests in U.S dollardenominated
money market and high-quality, investment-grade debt securities, primarily in the
financial service industry. The fund's investments in fixed-rate securities have a maximum maturity
of two years and investments in floating-rate securities have a maximum maturity of three years.
Long-term investments include the UNIQUE endowment funds assets and other unrestricted
investments. The State Uniform Prudent Management of Institutional Funds Act (the Act) requires
the preservation of the original gift (corpus value) of the donor-restricted endowment funds absent
explicit donor stipulations to the contrary. The System classifies as permanently restricted net
position: (1) the original value of gifts donated to the permanent endowment, (2) the original value
of subsequent gifts to the permanent endowment, and (3) accumulations to the permanent
endowment made in accordance with the direction of the applicable donor gift instrument at the
time the accumulation is added to the fund.
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