The Commonwealth treasurer requires that all state funds be insured by the Federal Deposit Insurance Corporation (FDIC), collateralized by securities held by the cognizant Federal Reserve Bank, or invested in U.S. government obligations. The University's deposits with the Commonwealth treasurer are pooled with funds of other state agencies and then, in accordance with statutory limitations, placed in financial institutions or invested as the Commonwealth treasurer may determine, in the state's name. The University requires that balances on deposits with financial institutions to be insured by the FDIC or collateralized by securities held by the cognizant Federal Reserve Bank, in the University's name. Custodial credit risk for deposits is the risk that, in the event of a bank failure, the University's deposits may not be returned to the University. As a means of limiting its exposure to losses from custodial credit risk, the University's deposits and investments are held by the Commonwealth treasurer, collateralized by securities in the University's name, and insured by the FDIC or in the University's name. At June 30, 2024, the University had $1,317,013 held by trustee that are restricted for capital expenditures as described below in the certificates of participation section.
The carrying amount of cash in bank at June 30, 2024, was $2,928,569 as compared with the bank balance of $5,075,284. The difference is primarily caused by outstanding checks and items in transit. The University has cash held by the Commonwealth of Kentucky of $26,465,133 as of June 30, 2024. At June 30, 2024, the University had petty cash funds totaling $100 and deposits as reflected by bank balances as follows:
Total Cash Insured by FDIC $ 250,000
Cash Covered by Collateral Held by Third-Party Custodian 4,825,284
Total Unrestricted Cash and Cash Equivalents 5,075,284
Maintained by Commonwealth of Kentucky,
Collateral Held by the Commonwealth in the Commonwealth's Name, Restricted for Capital 26,465,133
Cash Held by Trustee for Certificates of Participation Project 1,317,013
Total $ 32,857,430
In August 2021, the University partnered with KeyBanc Capital Markets to issue Certificates of Participation (the Certificates), Series 2021 at par value of $49,190,000 at a net original issue premium of $8,815,924. The proceeds from the certificates will be used to finance the construction of a new residence hall on the University's campus. The Huntington National Bank serves as trustee for the agreement.
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