Page 62 - Hudson City Schools CAFR 2017

HUDSON CITY SCHOOL DISTRICT
SUMMIT COUNTY, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2017

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

Lapsing of Appropriations:

Unencumbered appropriations lapse at year end. Encumbered appropriations are carried forward to the
succeeding fiscal year and need not be reappropriated. Expenditures may not legally exceed budgeted
appropriations at the fund level.

F. Cash and Investments

To improve cash management, cash received by the District is pooled into central bank accounts.
Monies for all funds, including proprietary and fiduciary funds, are maintained in this pool. Individual
fund integrity is maintained through the District’s records. Each fund’s interest in the pool is presented
as “equity in pooled cash and investments” on the basic financial statements.

During fiscal year 2017, investments were limited to overnight repurchase agreements, non-negotiable
certificates of deposit and investments in the State Treasury Asset Reserve of Ohio (STAR Ohio).
Except for nonparticipating investment contracts, investments are reported at fair value, which is based
on quoted market prices. Nonparticipating investment contracts, such as repurchase agreements and
non-negotiable certificates of deposit, are reported at cost. The District’s investment in STAR Ohio is
an investment pool managed by the State Treasurer’s Office which allows governments within the
State to pool their funds for investment purposes. STAR Ohio is not registered with the SEC as an
investment company and is recognized as an external investment pool by the District. The District
measures their investment in STAR Ohio at the net asset value (NAV) per share provided by STAR
Ohio. The NAV per share is calculated on an amortized cost basis that provides a NAV per share that
approximates fair value.

For fiscal year 2017, there were no limitations or restrictions on any participant withdrawals due to
redemption notice periods, liquidity fees, or redemption gates. However, notice must be given 24 hours
in advance of all deposits and withdrawals exceeding $25 million. STAR Ohio reserves the right to
limit the transaction to $50 million, requiring the excess amount to be transacted the following
business day(s), but only to the $50 million limit. All accounts of the participant will be combined for
these purposes.

Under existing Ohio statutes all investment earnings are assigned to the general fund unless statutorily
required to be credited to a specific fund or the Board of Education has, by resolution, specified the
funds to receive an allocation of interest earnings. Interest revenue credited to the general fund during
fiscal year 2017 amounted to $303,765, which includes $47,370 assigned from other District funds.

For purposes of the statement of cash flows and for presentation on the basic financial statements,
investments purchased by the cash management pool and investments with original maturities of three
months or less at the time they are purchased by the District are considered to be cash equivalents.
Investments with an initial maturity of more than three months are reported as investments.

An analysis of the District’s investment account at fiscal year end is provided in Note 3.

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