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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 3 - DEPOSITS AND INVESTMENTS - (Continued)

Investments in stripped principal or interest obligations, reverse repurchase agreements and derivatives are
prohibited. The issuance of taxable notes for the purpose of arbitrage, the use of leverage and short selling
are also prohibited. An investment must mature within five years from the date of purchase unless matched
to a specific obligation or debt of the District, and must be purchased with the expectation that it will be
held to maturity. Investments may only be made through specified dealers and institutions. Payment for
investments may be made only upon delivery of the securities representing the investments to the Treasurer
or, if the securities are not represented by a certificate, upon receipt of confirmation of transfer from the
custodian.

A. Cash on Hand

At fiscal year end, the District had $1,300 in undeposited cash on hand which is included on the
financial statements of the District as part of “equity in pooled cash and investments”.

B. Deposits with Financial Institutions

At June 30, 2015, the carrying amount of all District deposits was $29,066,164, exclusive of the
$3,360,000 repurchase agreement included in investments below. Based on the criteria described in
GASB Statement No. 40, “Deposits and Investment Risk Disclosures”, as of June 30, 2015,
$26,430,188 of the District’s bank balance of $29,368,569 was exposed to custodial risk as discussed
below, while $2,938,381 was covered by the FDIC.

Custodial credit risk is the risk that, in the event of bank failure, the District’s deposits may not be
returned. All deposits are collateralized with eligible securities in amounts equal to at least 105% of
the carrying value of the deposits. Such collateral, as permitted by the Ohio Revised Code, is held in
single financial institution collateral pools at Federal Reserve Banks, or at member banks of the federal
reserve system, in the name of the respective depository bank and pledged as a pool of collateral
against all of the public deposits it holds or as specific collateral held at the Federal Reserve Bank in
the name of the District. The District has no deposit policy for custodial credit risk beyond the
requirements of State statute. Although the securities were held by the pledging institutions’ trust
department and all statutory requirements for the deposit of money had been followed, noncompliance
with federal requirements could potentially subject the District to a successful claim by the FDIC.

C. Investments

As of June 30, 2015, the District had the following investments, all of which have maturities of six
months or less:

Investment type Fair Value

Repurchase agreement $ 3,360,000
STAR Ohio 7,579

Total $ 3,367,579

The weighted average maturity of investments is one day.

Interest Rate Risk: As a means of limiting its exposure to fair value losses arising from rising interest
rates and according to State law, the District’s investment policy limits investment portfolio maturities
to five years or less, unless matched to a specific obligation or debt of the District.

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