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City of Orono, Minnesota <br />Notes to the Financial Statements <br />December 31, 2020 <br />Note 1: Summary of Significant Accounting Policies (Continued) <br />D.Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position/Fund Balance <br />Deposits and Investments <br />Cash balances from all funds are combined and invested to the extent available in short term investments. Earnings from <br />the pooled investments are allocated to the individual funds based on the average monthly cash and investment balances <br />of the respective funds. The City’s cash and cash equivalents are considered to be cash on hand, demand deposits and <br />short-term investments. The proprietary funds’ portion in the government-wide cash and temporary investments pool is <br />considered to be cash and cash equivalents for purposes of the Statement of Cash Flows. <br />Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other <br />authorized investments. Earnings from such investments are allocated on the basis of applicable participation by each of <br />the funds. <br />The City may also invest idle funds as authorized by Minnesota statutes, as follows: <br />1.Direct obligations or obligations guaranteed by the United States or its agencies. <br />2.Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the <br />highest credit rating, rated in one of the two highest rating categories by a statistical rating agency, and have a <br />final maturity of thirteen months or less. <br />3.General obligations of a state or local government with taxing powers rated “A” or better; revenue obligations <br />rated “AA” or better. <br />4.General obligations of the Minnesota Housing Finance Agency rated “A” or better. <br />5.Obligation of a school district with an original maturity not exceeding 13 months and (i) rated in the highest <br />category by a national bond rating service or (ii) enrolled in the credit enhancement program pursuant to statute <br />section 126C.55. <br />6.Bankers’ acceptances of United States banks eligible for purchase by the Federal Reserve System. <br />7.Commercial paper issued by United States banks corporations or their Canadian subsidia ries, of highest quality <br />category by at least two nationally recognized rating agencies, and maturing in 270 days or less. <br />8.Repurchase or reverse repurchase agreements and securities lending agreements with financial institutions <br />qualified as a “depository” by the government entity, with banks that are members of the Federal Reserve System <br />with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to the Federal <br />Reserve Bank of New York, or certain Minnesota securities broker-dealers. <br />9.Guaranteed Investment Contracts (GIC’s) issued or guaranteed by a United States commercial bank, a domestic <br />branch of a foreign bank, a United States insurance company, or its Canadian subsidiary, whose similar debt <br />obligations were rated in one of the top two rating categories by a nationally recognized rating agency. <br />The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted <br />accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 <br />inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Leve l <br />3 inputs are significant unobservable inputs.