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HUDSON CITY SCHOOL DISTRICT
SUMMIT COUNTY, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2015

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 2015, 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 has invested funds in STAR Ohio during fiscal year 2015. 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,
but does operate in a manner consistent with Rule 2a7 of the Investment Company Act of 1940.
Investments in STAR Ohio are valued at STAR Ohio’s shares price which is the price the investment
could be sold for on June 30, 2015.

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 2015 amounted to $37,808, which includes $10,802 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.

G. Inventory

On government-wide and fund financial statements, purchased inventories are presented at the lower of
cost or market and donated commodities are presented at their entitlement value. Inventories are
recorded on a first-in, first-out basis and are expended/expensed when used. Inventories are accounted
for using the consumption method.

On the fund financial statements, reported material and supplies inventory is equally offset by a
nonspendable fund balance in the governmental funds which indicates that it does not constitute
available spendable resources even though it is a component of net current assets.

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