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CITY OF EUGENE, OREGON
<br />Notes to Basic Financial Statements
<br />(4) Detailed Notes on All Funds, continued
<br /> (A) Equity in Pooled Cash and Investments, continued
<br />Investments, continued
<br />As of June 30, 2016, the City’s investments were rated as follows:
<br />Highest Rating From
<br />Moody's Investors Service or Standard & Poor's Corporation
<br />Investment typeTotalAaa/AAAAa/AAANot rated
<br />Corporate indebtedness$41,271,4242,982,83827,946,18010,342,4060
<br />Local government
<br /> investment pool29,070,66500029,070,665
<br />Municipal bonds18,196,7482,538,30814,971,692686,7480
<br />U.S. agency securities89,372,07574,443,3440014,928,731
<br />U.S. treasury securities30,325,18230,325,182000
<br />Total$208,236,094110,289,67242,917,87211,029,15443,999,396
<br />The Oregon State Treasurer maintains the Oregon Short Term Fund (OSTF), of which the Local Government
<br />Investment Pool (LGIP) is a part. Participation by local governments is voluntary. The State of Oregon investment
<br />policies are governed by statute and the Oregon Investment Council. In accordance with Oregon Statutes, funds are
<br />invested as a prudent investor would do, exercising reasonable care, skill and caution. The LGIP was created to offer
<br />a short-term investment alternative to Oregon local governments and it is not registered with the U.S. Securities and
<br />Exchange Commission. The investments are regulated by the OSTF and approved by the Oregon Investment
<br />Council (ORS 294.805 to 294.895). At June 30, 2016, the fair value of the City’s deposits with the LGIP approximates
<br />cost. The OSTF financial statements are available athttp://www.ost.state.or.us/.
<br />The LGIP’s portfolio concentration of credit risk at June 30, 2016 included: Corporate Notes (43.1%), U.S. Treasury
<br />and Agency Securities (29.4%), Asset Backed Securities (13.3%), Municipal Bonds (2.3%), Non-US Government
<br />Debt (4.7%), Commercial Paper (1.7%), Certificates of Deposits (5.1%), and cash (0.4%). The credit risk associated
<br />with the investments was: AAA rating (16.5%), AA rating (18.9%), A rating (35.4%), BBB rating (2.6%), and not rated
<br />(26.6%).
<br />Concentration of Credit Risk
<br />The City’s policy for investing in individual issuers varies depending on the type of investments. U.S. Government
<br />Agency Securities are restricted to no more than 25.0% for any one issuer. No more than 25.0% of the total portfolio
<br />of investments may be invested in a single issuer of bankers’ acceptances or repurchase agreements. Investments in
<br />commercial paper or corporate bonds may not exceed more than 35.0% of the portfolio and investments in any one
<br />issuer may not exceed 5.0% of the investment portfolio. Investments are limited to 5.0% per depository name and
<br />may not exceed more than 25.0% of the investment portfolio. The combined limit for each depository in certificates of
<br />deposits, bankers’ acceptances, and corporate indebtedness is 10.0%.
<br />Fair Value Measurements
<br />Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly
<br />transaction between market participants at the measurement date. Observable inputs are developed based on market
<br />data obtained from sources independent of the reporting entity. Unobservable inputs are developed based on the
<br />best information available about the assumptions market participants would use in pricing the asset. The
<br />classification of securities within the fair value hierarchy is based upon the activity level in the market for the security
<br />type and the inputs used to determine their fair value, as follows:
<br /> Level 1 – Unadjusted quoted prices for identical instruments in active markets.
<br /> Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments
<br />in markets that are not active; and model-derived valuations in which all significant inputs are
<br />observable.
<br /> Level 3 – Valuations derived from valuation techniques in which significant inputs are unobservable.
<br />As of June 30, 2016, the City’s investments, excluding the Local Government Investment Pool which is not in the
<br />leveling hierarchy are classified as Level 2.
<br />continued
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