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4. INVESTMENTS

The District categorizes its fair value measurements within the fair market value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair market value of the asset.

Money market funds are held with Fidelity Institutional Government Money Market Fund and have no unfunded commitments and invests in U.S. dollar-denominated money market securities of domestic and foreign issuers, U.S. Government securities, and repurchase agreements. This fund does not institute liquidity fees or redemption rates.

Intergovernmental investment pool funds are held with Florida Prime and Florida Public Assets for Liquidity Management (FLPALM), which are valued based on amortized cost, and Florida Fixed Income Trust (FLFIT) which is value at net asset value. This fund has no unfunded commitments and allows unlimited daily redemptions and investments with a 1-day minimum holding period.

Investments at June 30, 2021 are shown below:

Fair Value Measurements Using

(1) Pension Trust Fund investments are separately disclosed in Note 19.

(2) Amount includes $103,692 held in Fiduciary Funds, allocated among various categories.

Interest Rate Risk

 Interest rate risk is the risk that changes in interest rates will adversely affect the fair market value of an investment. The District’s investment policy limits investments of operating funds to a maximum of eighteen months as a means of managing its exposure to fair value losses arising from an increase in interest rates. Investments of reserves, project funds, debt proceeds and other non-operating funds are limited to a maximum of five years with the average duration of all these funds as a whole not to exceed three years.

 Florida PRIME, FLPALM and FLFIT use a weighted average days to maturity (WAM). A portfolio’s WAM reflects the average maturity in days based on final maturity or reset date, in the case of floating rate instruments. WAM measures the sensitivity of the portfolio to interest rate changes.

 Florida PRIME, Chapter 218.409(8)(a), Florida Statutes, states that “The principal, and any part thereof, of each account constituting the trust fund is subject to payment at any time from the moneys in the trust fund. However, the Executive Director may, in good faith, on the occurrence of an event that has a material impact on liquidity or operations of the trust fund, for 48 hours limit contributions to or withdrawals from the trust fund to ensure that the Board can invest moneys entrusted to it in exercising its fiduciary responsibility. Such action must be immediately disclosed to all participants, the Trustees, the Joint Legislative Auditing Committee, the Investment Advisory Council, and the Participant Local Government Advisory Council. The Trustees shall convene an emergency meeting as soon as practicable from the time the Executive Director has instituted such measures and review the necessity of those measures. If the Trustees are unable to convene an emergency meeting before the expiration of the 48-hour moratorium on contributions and withdrawals, the moratorium may be extended by the Executive Director until the Trustees are able to meet to review the necessity for the moratorium. If the trustees agree with such measures, the Trustees shall vote to continue any such measures before the expiration of the time limit set, but in no case may the time limit set by the Trustees exceed 15 days.” As of June 30, 2021, there were no redemption fees or maximum transaction amounts, or any other requirements that serve to limit a participant’s daily access to 100 percent of their account value.

 FLPALM has daily liquidity with unlimited investments and redemptions. The fund has investments in Negotiable Certificates of Deposit, Commercial Paper, Repurchase Agreements, Bank Deposits, Bank Notes, Corporate Notes, Money Market Funds, Federal Agency Bonds/Notes, and US Treasury Notes. The investment advisor, on behalf of the fund, determines the net asset value of the shares at the close of each business day and monitors the difference between the amortized cost and fair market value. The Trustees of the fund can suspend the right of withdrawal or postpone the date of payment if the Trustees determine that there is an emergency the makes the sale of a Portfolio’s securities or determination of its net asset value not reasonably practical.

 FLFIT Cash Pool has daily liquidity with unlimited investments and redemptions. The fund has investments in Commercial Paper, Certificates of Deposit, Qualified Bank Deposits, FDIC Insured Deposits, Money Market Funds, Short-Term Bond Funds.

Credit Risk

 The District’s investment policy authorizes the following investments which are limited to credit quality ratings from nationally recognized rating agencies as follows:

 Florida PRIME when rated at least AAAm by Standard & Poor’s or the equivalent by another Nationally Recognized Statistical Rating Organization (NRSRO)

 United States Government Securities

 United States Government Agencies

 Federal Instrumentalities (United States Government Sponsored Enterprise (“GSE”)) limited to the Federal Farm Credit Bank (FFCB), Federal Home Loan Bank or its District banks (FHLB), Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (Freddie-Mac) including Federal Home Loan Mortgage Corporation participation certificates

 Interest Bearing Time Deposit or Savings Accounts

 Repurchase Agreements

 Commercial Paper of any United States company that is rated, at the time of purchase, Prime 1 by Moody’s and A-1 by Standards & Poor’s (prime commercial paper)

 Corporate Notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States that have a long-term debt rating, at the time of purchase, at a minimum single A category by any two NRSROs

 State and/or Local Government Taxable and/or Tax-Exempt Debt, general obligation and/or revenue bonds, rated at the time of purchase, at a minimum single A category by any two NRSROs for long-term debt, or rated at least MIG-1 by Moody’s or SP-1 by Standard & Poor’s for short-term debt

 Money Market Mutual Funds rated AAAm by Standard & Poor’s or the equivalent by another NRSRO

 Short Term Bonds rated AAA or better by Standards & Poor’s or the equivalent by another NRSRO

 Intergovernmental Investment Pools rated AAAm by Standard & Poor’s or the equivalent by another NRSRO

 The District’s investments in the State Board of Administration (SBA) Debt Service Accounts are to provide for debt service payments on bond debt issued by the State Board of Education for the benefit of the District. The District relies on policies developed by the SBA for managing interest rate and credit risk for this account.

 The Florida Fixed Income Trust was rated AAAf/S1+ by Standard & Poor’s.

 The District’s investments in Commercial Paper were rated A-1+ by Standard & Poor’s and P-1 by Moody’s.

 US Treasury Securities were rated Aaa by Moody’s and AA+ by Standard & Poor’s.

 The District’s investment in Government Sponsored Enterprise Securities was rated Aaa by Moody’s and/or AA+ by Standard & Poor’s.

 The District’s investments in State and Local Government Bonds had ratings from AA+ to AAA by Standard & Poor’s.

 The District’s investments in Corporate Notes had ratings from AA- by Standard & Poor’s and Aa2 by Moody’s..

 As of June 30, 2021, the District’s investment in Florida PRIME was rated AAAm by Standard & Poor’s.

 The Florida Public Assets for Liquidity Management fund is rated AAAm by Standard & Poor’s.

 The District’s investments in money market funds were rated AAAm by Standard & Poor’s.

 The District’s investment in the Florida FIT Cash Pool was rated AAAf/S1 by Standard & Poor’s.

 The District’s investment in the Florida FIT Enhanced Cash Pool was rated AAAf/S1 by Standard & Poor’s.

 The District’s investment int the Florida FIT Select Cash Pool was rated AAAf/S1 by Standard & Poor’s.

Custodial Credit Risk

 Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the District will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. Section 218.415(18), Florida Statutes, requires the District to earmark all investments and 1) if registered with the issuer or its agents, the investment must be immediately placed for safekeeping in a location that protects the governing body’s interest in the security; 2) if in book-entry form, the investment must be held for the credit of the governing body by a depository chartered by the Federal Government, the State, or any other state or territory of the United States which has a branch or principal place of business in this State, or by a national association organized and existing under the laws of the United States which is authorized to accept and execute trusts and which is doing business in this State, and must be kept by the

depository in an account separate and apart from the assets of the financial institution; or

3) if physically issued to the holder but not registered with the issuer or its agents, must be immediately placed for safekeeping in a secured vault.

 The District’s investment policy requires that all investment securities purchased by the District shall be held by third party custodians and be properly designated as an asset of the District. All investments, except for investments in money market funds and Local Government Investment Pools, were held in third-party custodial accounts in the District’s name.

Concentration of Credit Risk

 The District’s investment policy has established permitted investment sectors which are designed to reduce concentration of credit risk of the District’s investment portfolio.

Foreign Currency Risk

 The District’s investment policy does not allow for investments in foreign currency. Therefore, the District has no exposure to foreign currency risk.

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