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Indian River County, Florida Clerk of the Circuit Court and Comptroller Notes To Financial Statements Year Ended September 30, 2011 NOTE 2 - CASH AND CASH EQUIVALENTS A. Deposits At September 30, 2011, the carrying value of the Clerk's deposits was $2,255,994, and the bank balance was $2,611,887. All deposits with financial institutions were 100% insured by federal depository insurance or by collateral provided by qualified public depositories to the State Treasurer in accordance with Section 280.01, Florida Statutes, also known as the Florida Security for Public Deposits Act. The Clerk's office follows the above state law (governing custodial credit risk) for cash deposits. Refer to the County -wide Note 4, Cash and Cash Equivalents, for definition of custodial credit risk. B. Investments The Clerk participated in the Local Government Surplus Funds Trust Fund, a money market fund classified as a "20 like fund" using the SEC investment requirements for 2a7 funds. The fund was established by Florida Statute 218.405 and is administered by the Florida State Board of Administration (SBA). In November 2007, this trust fund was frozen due to an unprecedented run on withdrawals and lack of market liquidity. The SBA subsequently established two separate pools: Pool A (now known as Florida PRIME Fund) and Pool B (now known as Fund B). Pool B securities included asset-backed commercial paper which was subject to sub -prime mortgage risk. As these Fund B assets are liquidated, funds are remitted to participants. At September 30, 2011, the SBA determined a negative fair market value adjustment of 24.32% was needed for the Fund B portfolio balance. At year end, the cash balance in Fund B was $24,370 with a fair market adjustment of $5,926; consequently, the net investment in Fund B is reported at $18,444. The Clerk also participated in the Florida Trust Day to Day Fund, part of the Florida Local Government Investment Trust Fund. The Day to Day fund is a money market product of various securities with an average maturity of 50 days. It was established by Florida Statute 163.01, is administered by the Florida Association of Court Clerks, and is marked to market daily. At year end, the Clerk maintained a balance of $3,738,002 in this trust fund. The Clerk's office elected not to adopt a formal investment policy and selected the alternative investment guidelines as provided by Florida Statutes subsection 17, 218.415 which specifically permitted these State authorized pools. This statute, the County -wide investment policy, and credit risks are explained in Note 4 of the County -wide financial statements. NOTE 3 — PENSION PLAN Florida Retirement System Plan Description: The Clerk's employees participate in the Florida Retirement System (FRS), a cost- sharing, multiple -employer public employee retirement system, administered by the Florida Department of Management Services. Effective July 1, 2011, the FRS became a contributory plan for all members, except DROP participants, whereby members contribute 3% and employers pay a rate based upon each member's employment class (regular class 4.91%, senior class 6.27%, and elected official class 11.14%). 302