Page 42 - BAA CAFR 2017

BIRMINGHAM AIRPORT AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS

NOTE 3 CASH AND CASH EQUIVALENTS AND INVESTMENTS (CONTINUED)

The Authority's investment policy is to match its investments with anticipated cash
flow requirements. Unless matched to a specific cash flow, the Authority will not
directly invest in securities maturing more than three years from the date of
purchase. However, unrestricted investments, the Revenue Bond Reserve Funds,
and Construction Bond Funds may be invested in securities exceeding three years
if the maturities of such investments are made to coincide as nearly as practicable
with the expected use of the funds.

NOTE 4 FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS
REPORTED AT FAIR VALUE

The Authority categorizes its fair value measurements within the fair value
hierarchy established by accounting principles generally accepted in the United
States of America. The hierarchy is based on the valuation inputs used to measure
fair value. Level 1 inputs consist of quoted market prices in active markets for
identical assets; Level 2 inputs consist of significant other observable inputs; Level
3 inputs consist of significant observable inputs. Certain items required to be
reported at their net asset value (NAV) are not subject to level disclosure.

Disclosures concerning financial instruments that are reported at fair value are
presented below. Fair value has been determined based on the Authority’s
assessment of available market information and appropriate valuation
methodologies. The following table summarized fair value disclosures and
measurements at June 30, 2017 and 2016:

Fair Value Measurements at Reporting Date Using

Prices in Active
Markets for Significant Other Significant
Type of Identical Assets Observable Inputs Unobservable Total Total
Investment (Level 1) (Level 2) Inputs (Level 3) 6/30/2017 6/30/2016

U.S. Treasury
Bills $ - $ 19,938,923 $ - $ 19,938,923 $ -
U.S. Government
T-Notes - 5,987,640 - 5,987,640 20,163,903
Total
investments at
fair value $ - $ 25,926,563 $ - $ 25,926,563 $ 20,163,903

The following methods were used to estimate fair value of each class of significant
financial instruments:

Investments – Fair value is estimated based upon quoted market prices, where
available, and on Level 2 inputs.

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