Acton-Boxborough Regional School District Notes to Basic Financial Statements Year Ended June 30, 2024
Credit Risk
Credit risk is the risk than an issuer or other counterparty to a debt security will not fulfill its obligation. The District’s policy to mitigate credit risk allows for unlimited investments in United States Treasury and United States Government Agency obligations. Regarding other investments, the District will only purchase investment grade securities, with a high concentration in securities rated A or better, as identified by the Massachusetts legal list of investments. The District may invest in the Massachusetts Municipal Depository Trust (MMDT) with no limit to the amount of funds placed in the fund.
Government Sponsored Enterprises
Corporate Bonds
Bond Mutual Funds
Quality Rating
AA+…............. $ AA…............... A+…................ A...................... A-…................. BBB…............. B…..................
18,818$
- $ 451,283
- - - - - -
-
208,331 1,384,111
14,008 31,835 14,519 29,046
- - -
-
87,265
Total………… $
18,818$ 89,408 $ 2,130,990
Custodial Credit Risk – Investments
For an investment, this is the risk that, in the event of a failure by the counterparty, the District will not be able to recover the value of its investments or collateral security that are in the possession of an outside party. The District’s policy to mitigate custodial credit risk requires review of the financial institution’s financial statements and the background of the brokerage house and broker/dealer (Advisor). The intent of this qualification is to limit the District’s exposure to only those institutions with a proven financial strength, capital adequacy of the firm, and overall affirmative reputation in the municipal industry. Further, all securities not held directly by the District will be held in the District’s name and tax identification number by a third-party custodian approved by the Treasurer and evidenced by safekeeping receipts showing individual CUSIP numbers for each security.
Interest Rate Risk
For an investment this is the risk that changes in interest rates of debt securities will adversely affect the fair value of an investment. The District’s policy to mitigate interest rate risk is to manage the duration of investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates.
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