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<br />CITY OF ARDEN HILLS, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31, 2001 <br /> <br />Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY - CONTINUED <br /> <br />, <br /> <br />C. Deficit Fund Equity <br />The following funds had fund equity deficits at December 31,2001: <br /> <br />.' <br />, <br /> <br />Fund <br /> <br />Deficit <br /> <br />, <br /> <br />Special revenue <br />Economic Development Authority <br />Capital projects <br />Municipal Land and Buildings <br /> <br />$ <br /> <br />562,006 <br />107,323 <br /> <br />I <br /> <br />The deficits will be eliminated with future revenue sources and transfers from other funds. <br /> <br />I <br /> <br />Note 3: DETAILED NOTES ON ALL FUNDS AND ACCOUNTS <br /> <br />A. Deposits and Investments <br /> <br />Cash balances of the City's funds are combined (pooled) and invested to the extent available in various <br />investments authorized by Minnesota State Statutes. Each fund's portion of this pool (or pools) is displayed on <br />the [mancial statements as "cash and temporary investments". For purposes of identifying the risk of investing <br />public funds, the balances are categorized as follows: <br /> <br />I <br /> <br />I <br /> <br />Deposits <br /> <br />I <br /> <br />In accordance with Minnesota Statutes and as authorized by the Council, the City maintains deposits at those <br />depository banks, all of which are members of the Federal Reserve System. <br /> <br />Minnesota Statutes require that all City deposits be protected by insurance, surety boud or collateral. The mark. , <br />value of collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds (140 <br />percent in the case of mortgage notes pledged). <br /> <br />Authorized collateral includes the legal investments described below, as well as certain first mortgage notes, and I <br />certain other State or local government obligations, Minnesota Statutes require that securities pledged as <br />collateral be held in safekeeping by the City or in a [mancial institution other than that furnishing the collateral. <br />The City has deposits with a bank and a book value of$1,263,000 that are entirely covered with FDIC at I <br />December 31, 2001. <br /> <br />Investments <br /> <br />Investments are categorized into these three categories of credit risk: <br /> <br />, <br /> <br />1. Insured or registered, or securities held by the City or its agent in the City's name. <br /> <br />2. <br /> <br />Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the <br />City's name. <br /> <br />I <br /> <br />3. <br /> <br />Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but <br />not in the City's name. <br /> <br />I <br /> <br />I <br /> <br />.' <br />, <br /> <br />-16- <br /> <br />I <br />