Financial Statement Presentation

As of June 30, 2017, the County’s cash and investments are reported in the financial statements as follows:

Primary government $ 25,412,239

Investment trust funds 26,656,851

Agency funds 3,155,327

Total Cash and Investments $ 55,224,417

As of June 30, 2017, the County’s cash and investments consisted of the following:

Cash:

Cash on hand $ 8,384

Deposits (less outstanding checks and other items) 4,743,131

Total Cash 4,751,515

Investments:

In Treasurer’s Pool 49,716,060

Total Investments in County Pool 49,716,060

Investments with fiscal agents 756,842

Total Investments 50,472,902

Total Cash and Investments $ 55,224,417

B. Cash

At year end, the carrying amount of the County’s cash deposits (including amount in checking accounts and money market accounts) was $4,743,131 and the bank balance was $3,998,826. The difference between the bank balance and the carrying amount represents outstanding checks and deposits in transit. In addition, the County had cash on hand of $8,384.

Custodial Credit Risk For Deposits - Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the County will not be able to recover its deposits or collateral securities that are in the possession of an outside party. The County’s investment policy requires that deposits in banks must meet the requirements of the California Government Code. Under this code, deposits of more than

$250,000 must be collateralized at 105 percent to 150 percent of the value of the deposit to guarantee the safety of the public funds. The first $250,000 of the County’s deposits are insured by the Federal Deposit Insurance Corporation (FDIC). Deposits more than the $250,000 insured amount are collateralized.

C. Investments

Pursuant to Section 53646 of the Government Code, the County prepares an investment policy annually and presents it to the Board of Supervisors for review and approval.

The investment policy provides the basis for the management of a prudent, conservative investment program.

Funds are invested to provide the maximum security of principal with secondary emphasis on achieving the highest return, while meeting daily cash flow needs. All investments are made in accordance with the Government Code and, in general, the investment policy is more restrictive than state law. Under the provisions of the County’s investment policy the County may invest or deposit in the following:

Local Agency Bonds

United States Treasury Notes, Bonds, Bills, or Certificates of Indebtedness California State Registered Warrants, Treasury Notes, and Bonds

Local Agency Obligations

Securities of the Federal Government or its Agencies Banker’s Acceptances

Commercial Paper

Negotiable Certificates of Deposit Local Agency Investment Fund (LAIF) Medium Term Corporate Notes

Repurchase Agreements Shares of Beneficial Interest

Interest Rate Risk - Interest rate risk is the risk of loss due to the fair value of an investment falling due to interest rates rising. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. To limit the exposure to fair value from increases in interest rates, the County’s investment policy limits investment maturities to a term appropriate to the need for funds so as to permit the County to meet all projected obligations. Any investments that mature more than five years from the date of purchase cannot occur without prior approval of the Board of Supervisors.

As of June 30, 2017, the County had the following investments, all of which had a maturity of five years or less:

Maturities

Investment Type

Interest

Rates 0-1 year 1-5 years Fair Value

Weighted Average Maturity (Years) Pooled Investments

Government Agencies 0.70-1.70% $ $ 23,997,156 $ 23,997,156 2.39

Negotiable CD’s 0.95-2.27% 8,832,000 8,832,000 3.37

CalTRUST Variable 6,428,050 6,428,050

Money Market Funds 0.01% 92,935 92,935

Local Agency Investment Fund

(LAIF) Variable 10,365,919 10,365,919

Total Pooled Investments 16,886,904 32,829,156 49,716,060 5.76

Investments Held by Fiscal Agents

Government Securities Variable 756,842 756,842

Total Investments Held by

Fiscal Agents 756,842 756,842

Total Investments $17,643,746 $ 32,829,156 $ 50,472,902 5.76

Credit Risk - Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The County’s investment policy sets specific parameters by the type of investment to be met at the time of purchase. Presented below is the minimum rating required by (where applicable) the California Government Code or the County’s investment policy, and the actual rating as of year end for each investment type.

Federal Home Loan Mortgage N/A AA+ Aaa 3.96%

Federal National Mortgage Assoc. N/A AA+ Aaa 25.74%

Federal Farm Credit Bank N/A AA+ Aaa 11.90%

Federal Home Loan Bank N/A AA+ Aaa 5.94%

Negotiable CD’s N/A Unrated Unrated 17.50%

CalTRUST N/A Unrated Unrated 12.74%

Money Market Funds N/A Unrated Unrated 0.18%

LAIF N/A Unrated Unrated 20.54%

Government Securities N/A Unrated Unrated 1.50%

Total 100%

C. Investments (Continued)

Custodial Credit Risk for Investments - Custodial credit risk for investments is the risk that, in the event of the failure of a depository financial institution, the County will not be able to recover its deposits or collateral securities that are in the possession of an outside party. To mitigate the custodial credit risk the County requires that all of its managed investments be held in the safekeeping by a third party bank trust department.

Concentration of Credit Risk - Concentration of credit risk is the risk of loss attributed to the magnitude of the County’s investment in a single issuer of securities. When investments are concentrated in one issuer, this concentration presents a heightened risk of potential loss. The County’s investment policy contains limitations on the amount that can be invested in any one issuer. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) at June 30, 2017, that represent 5 percent or more of total County investments are as follows:

Investment Type Amount Invested Percentage of

Investment

Federal National Mortgage Association 12,993,215 25.74%

Federal Farm Credit Bank 6,006,380 11.90%

Federal Home Loan Bank 2,997,561 5.94%