05-22-2024 Council Packet - Laserfiche WebLink

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City of Little Canada, Minnesota Notes to the Financial Statements December 31, 2023 Note 1: Summary of Significant Accounting Policies (Continued) The Minnesota Municipal Money Market Fund is regulated by Minnesota statutes and the Board of Directors of the League of Minnesota Cities and is an external investment pool not registered with the Securities Exchange Commission (SEC) that follows the regulatory rules of the SEC. In accordance with GASB Statement No. 79, the City’s investment in this pool is valued at amortized cost, which approximates fair value. There are no restrictions or limitations on withdrawals from the 4M Liquid Asset Fund. Investments in the 4M Plus must be deposited for a minimum of 14 calendar days. Withdrawals prior to the 14-day restriction period will be subject to a penalty equal to seven days interest on the amount withdrawn. Seven days' notice of redemption is required for withdrawals of investments in the 4M Term Series withdrawn prior to the maturity date of that series. A penalty could be assessed as necessary to recoup the Series for any charges, losses, and other costs attributable to the early redemption. Financial statements of the 4M Fund can be obtained by contracting RBC Global Management at 100 South Fifth Street, Suite 2300, Minneapolis, MN 55402 -1240. Investment Policy The City’s investment policy incorporates Minnesota statutes as described above which reduces the City’s exposure to credit, custodial credit and interest rate risks. Specific risk information for the City is as follows: •Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Ratings are provided by various credit rating agencies and where applicable, indicate associated credit risk. Minnesota statutes and the City’s investment policy limit the City’s investments to the list above. •Custodial Credit Risk. Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. The City’s policy states all deposits must be collateralized in compliance with Minnesota Statutes 118A with all deposits being collateralized at 110% of deposits in excess of FDIC insurance. •Concentration of Credit Risk. Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. The City’s policy states all cash and cash equivalent assets in all City funds shall be diversified by maturity, issuer, and security type. No more than 5% of the overall portfolio be invested in securities of a single issue, except when backed with collateral. At December 31, 2023, the City had the following investments which individually comprise more than 5% of the City’s total investments: Percentage of Amount Invesments Minnesota Muncipal Money Market (4M Fund)4,745,448$ 26% •Interest Rate Risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. In accordance with its investment policy, the City’s investment policy states the City’s maximum term of investments will be 6 years unless disclosed in writing to the City Council. Additionally, the City will structure the investment portfolio so that security maturities match cash requirements for ongoing operations. This will avoid the need to sell securities on the open market prior to maturity. Statement of Cash Flows For the purpose of the Statement of Cash Flows, the City considers all highly liquid debt instruments with an original maturity from the time of purchase by the City of three months or less to be cash equivalents. 63