U.S. Department of Commerce

Federal, State, and Local Governments
Government Finance and Employment Classification Manual
Chapter 10 - Cash and Security Holdings
 
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Contents and Abstract:

10.1 Cash and Security Holdings Definition
10.11 Assets Outside of Census Bureau Definition
10.12 Major Classification Changes with Fiscal Year 1987-88 Data

10.2 Types of Cash and Securities Covered

10.3 Purpose of Holdings of Cash and Securities
10.31 Insurance Trust Funds
10.32 Other Than Insurance Trust Funds
10.33 Additional Notes Regarding Offsets to Debt Category

10.4 Pooled Investments

Chart:

10-A Examples of Assets Included and Excluded from Census Bureau Definition of Cash and Securities

Description Sheet:

Description of Cash and Securities Categories

Befitting their position as important fiscal entities, governments are major holders of cash and securities, including excess money on hand as well as purposeful investments for future earnings. This area, too, has grown increasingly complex over the last decade or so. As a result, the Census Bureau instituted major changes to its classification system, effective with fiscal year 1987-88 data.

Governments' balance sheets contain a wide variety of assets; however, only those that are cash and investment securities are included in Census Bureau statistics. Moreover, this category applies solely to state and local governments. Although the Federal Government holds large amounts of cash and investments, no comparable statistics are collected on them (much of which consists of its own securities).

10.1 Cash and Security Holdings Definition

The title of this category, cash and security holdings, is self-defining. Examples to supplement this definition include cash on hand, demand or time deposits, savings accounts, government and private securities (bonds, notes, mortgages, corporate stocks, etc.), and loans and other credit paper held by government loan and investment funds. Chart 10-A has a lengthy list of specific assets that fall within (and outside) the scope of this category.

This definition includes cash and security holdings of not only the general government but also those of all autonomous agencies, boards, commissions, or other organizations categorized as dependent on the government concerned (see Chapter 3). Stated in terms of the accounting procedures from which these data originate, this category covers cash and security holdings of all accounting funds of a government other than intragovernmental service (revolving), agency, and private trust funds.

The value of cash and securities is reported as of the last day of the government's fiscal year. Along with debt outstanding, this is the only finance data to represent fiscal condition at a specific point in time (rather than financial activity during the fiscal year).

Effective with fiscal year 1987-88 finance data, cash and security holdings are classified according to the purpose for which they are held. For public employee retirement systems and unemployment compensation funds, these data are categorized further by the type of cash or security involved.

10.11 Assets Outside of Census Bureau Definition

Unlike the other three major types of finance data collected by the Census Bureau, the Bureau's concept of cash and security holdings is an exclusive one, limited to the most fluid types of assets governments own.

The following types of assets are excluded from Census Bureau statistics on governments:

  • Real property, land, buildings, improvements, machinery, equipment, and other fixed assets (see Note 1).
  • Construction in progress.
  • Materials, supplies, and inventories.
  • Accounts receivables, taxes receivables, special assessment receivables, interfund receivables, tax liens, advances to other funds, and other such monies owed to a government.
  • Unamortized premiums on investments.
  • Prepaid or deferred expenses.
  • Goods or commodities held for resale (e.g., of liquor stores or utilities).
  • Intangible assets.
  • Assets held by private trust funds or by funds representing agency transactions (e.g., withholdings of employee Social Security taxes).

10.12 Major Classification Changes with Fiscal Year 1987-88 Data

Because of the growing complexity of government cash and investment management practices (particularly pooled investment funds, described below in Section 10.4), the Bureau found the classification of cash and securities by the type of cash or security held becomingly increasingly difficult to obtain. Consequently, nearly all categories relating to the type of cash or security held by a government were consolidated, effective with fiscal year 1987-88 data. The only exceptions were cash and security holdings of government-administered public employee retirement systems and unemployment compensation systems.

This consolidation of categories is summarized by the following:

 
Purpose of Holding Old Codes New Codes
 
Insurance Trust Systems:
 
Public Employee Retirement (see Note 2) X33, X30 X30
X35, X44 X44
Unemployment Compensation (No Changes) -
Workers' Compensation Y21, Y30, Y33, Y35, Y44 Y21
Other Insurance Trusts Y61, Y70, Y73, Y75, Y84 Y61
 
Other Than Insurance Trusts:
 
Offsets to Debt W01, W10, W13, W15, W24 W01
Bond Funds W31, W40, W43, W45, W54 W31
All Other Funds W61, W70, W73, W75, W84 W61
 

A classification change in the debt area had an important effect on cash and security data. The amount of Public Debt for Private Purposes (code 44T) outstanding at the end of the fiscal year is recorded as an Offset to Debt (code W01). Before fiscal year 1987-88 data, this treatment was limited to mortgage revenue debt.

10.2 Types of Cash and Securities Covered

The data which the Census Bureau reports in these categories consist of two major types: cash and deposits, a single item group, and securities. Listed below are the various items that make up these groups. Except for public employee retirement systems, the Bureau no longer makes any effort to identify them separately. For a detailed definition, see the public employee retirement systems section in the Description Sheets that follow this narrative.

Cash and Short-Term Deposits
 
Securities: Federal Government Securities
  Federal Agency Securities
  State and Local Government Securities
  Corporate Bonds
  Corporate Stocks
  Mortgages Held Directly (by a government as an investment)
  All Other Securities, N.E.C.
 

Traditionally, the Census Bureau measured and reported investment securities at their book value (less any discounts), not at their current market value or par (face) value. (Any profit or loss on their sale is reported as a revenue or expenditure). However, in the 1997 Census of Governments and in subsequent annual surveys, there was a revision to this treatment for the large holding of public employment retirement systems. For these systems, two additional categories were added to the classification system to measure the holdings of corporate stocks (equity funds, Z78) and corporate bonds (Z77). These additions were needed to keep pace with industry accounting standards.

These additional categories apply to the special exhibit statistics on Employee Retirement Systems. They are not included in the regular statistics on government finances.

10.3 Purpose of Holdings of Cash and Securities

The major classification of cash and securities is according to the purpose for which they are held. Their purpose is divided into two major groups: Insurance Trust Funds and Other Than Insurance Trust Funds.

10.31 Insurance Trust Funds

A major function of insurance trust systems is the accumulation of assets to pay for future benefits. Consequently, this group accounts for the largest share of cash and securities held by governments. It is divided into these categories:

Public Employee Retirement Systems
Unemployment Compensation Systems(see
Note 3)
Workers' Compensation Systems
Other Insurance Trusts Systems

See the Description Sheets for a more detailed definition of these categories. Chapter 11 contains a formal definition of an insurance trust system.

10.32 Other Than Insurance Trust Funds

Cash and securities held by funds of a government other than insurance trusts are classified into one of three categories:

Offsets to Debts (Debt Service or Sinking Funds)
Bond Funds
All Other Funds

See the Description Sheet for a more detailed definition of these categories.

10.33 Additional Notes Regarding Offsets to Debt Category

The category for offsets to debt deserves additional explanation.

First, in addition to cash and securities to pay debt service on long-term debt, it includes an amount equal to all the long-term debt outstanding for Public Debt for Private Purposes (code 44T). The rationale for this treatment is the fact that the proceeds from this type of indebtedness are not expended by a government but are turned over to the private sector for whatever purpose it was sold. The offset recorded as an asset, therefore, represents the obligation of the private organization to repay the government for its debt service costs. This offset is reduced as the debt creating it is retired.

Second, for state governments and the largest city and county governments whose data are compiled specially by the Census Bureau, Offsets to Debt is subdivided into two categories:

  • Offsets to full-faith and credit long-term debt (Code 71W)
  • Offsets to nonguaranteed long-term debt (Code 74W)
These two categories are used to separate Net Long-Term Debt Outstanding between full-faith and credit and nonguaranteed (see
Section 9.53).

10.4 Pooled Investments

To the extent possible, all cash and securities of pooled investment funds are assigned according the purpose of the fund holding "shares" in it.

A growing phenomenon in government cash and investment management is the pooling of investments. Rather than have each accounting fund of a government invest its own surplus cash, a government creates a large "pool" of money based on shares "owned" by the other funds. The larger amount of money involved allows the government to earn a higher rate of return than each fund could receive by itself. On the other hand, this practice has made the collection of data on cash and security holdings more difficult.


  1. The retirement survey collects data on real property holdings using special exhibit codes; see Chapter 11 for details. citation.
  2. These categories have been preserved as special exhibit statistics; see Chapter 11. citation.
  3. Although the Federal-state cooperative unemployment compensation trust fund is administered by the Federal Government, the account of each state (and the District of Columbia) is reported with the latter's cash and security holdings. citation.

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Source: U.S. Census Bureau, Governments Division
Created: November 16 2000
Last revised: October 31 2011