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PINEWOOD SPRINGS WATER DISTRICT <br /> NOTES TO FINANCIAL STATEMENTS <br /> December 31, 2011 and 2010 <br /> NOTE 2— CASH AND INVESTMENTS <br /> Cash Deposits. The Colorado Public Deposit Protection Act ("PDPA") requires that all <br /> units of local government deposit cash in eligible public depositories with eligibility <br /> determined by state regulators. Amounts on deposit in excess of federal insurance levels must <br /> be collateralized. The eligible collateral is determined by the PDPA, which allows the <br /> institution to create a single collateral pool for all public funds. The pool is to be maintained <br /> by another institution or held in trust for all the uninsured public deposits as a group. The <br /> market value of the collateral must be at least equal to the aggregate of the uninsured deposits. <br /> At December 31, 2011 and 2010, the District's cash deposits had a bank balance and a <br /> carrying balance as follows: <br /> 2011 2010 <br /> Carrying Bank Carrying Bank <br /> Balance Balance Balance Balance <br /> Insured deposits $ 26,153 $ 26,153 $ 19,810 $ 19,810 <br /> Deposits collateralized <br /> in single institution <br /> pools 154,562 154,562 127,219 127,219 <br /> $ 180,715 $ 180,715 $ 147,029 $ 147,029 <br /> During 2011, the District invested in the Colorado Government Liquid Asset Trust <br /> (COLOTRUST), an investment vehicle established for local government entities in Colorado <br /> to pool surplus funds. COLOTRUST operates similarly to a money market fund and each <br /> share is equal in value to $1. COLOTRUST is comprised of two funds: PRIME and PLUS+ <br /> which can invest in U.S. Treasury, government agencies, and in the highest-rate commercial <br /> paper. PRIME carries an AAAm rating from Standard and Poor's. PLUS+ holds an AAA <br /> rating from all three rating agencies: Standard and Poor's (AAAm), Fitch (AAAIV1+), and <br /> Moody's (Aaa). A designated custodial bank provides safekeeping and depository services to <br /> COLOTRUST in connection with the direct investment and withdrawal functions of <br /> COLOTRUST. Substantially all securities owned by COLOTRUST are held by the Federal <br /> Reserve Bank in the account maintained for the custodial bank. The COLOTRUST issues a <br /> publicly available fmancial report that includes financial statements. This report may be <br /> obtained at their website www.colotrust.com. <br /> Page 17 <br />