Credit criteria analysis of U.S. Government securities is not required, since credit quality is inherent in the security. There will be no specific portfolio limitations of this type of security.

As with U.S. Treasury securities, it is not necessary to specify credit criteria for U.S. Federal Agency securities, since credit quality is inherent in the instruments. The Authority will have no specific limitations on federal agency securities, other than mortgage-backed securities, although a balanced diversification among the various government entities is recommended.

Purchases of mortgage-backed securities will be made in government agency-issued pools or pools rated no less than “AAA.” Diversification will be sought through the purchase of pools in different geographic locations. Performance of the mortgage-backed securities portfolio will be monitored on a quarterly basis.

Municipal securities must be rated A or higher at the time of purchase. In-state municipal securities, which are non-rated, will only be purchased after the creditworthiness of the issuer has been established. Out-of-state non-rated bonds will not be purchased.

A concentration of holdings to one entity, one geographic area, or one local government subdivision should be avoided. If any municipal bond is downgraded below Baa prior to maturity, the bond will be targeted for sale and will be sold as soon as reasonably possible, in light of market conditions. Downgraded bonds should be brought to the attention of the Investment Committee.

Unsecured investments in domestic certificates of deposit will be limited to a maximum of $100,000 and will be permitted only in institutions with FDIC or NCUA (applicable to credit union deposits) insurance coverage. Any amounts above this level will require collateral equal to the excess portion. To minimize the risk of loss of interest, monthly payment of interest will be obtained whenever possible. Except under special circumstances, certificates of deposit will not be purchased from an institution with a net worth to asset ratio which is below regulatory minimums. If the financial condition of an institution deteriorates to below the minimum requirements during the term of a current investment, the deposit will be redeemed at maturity.

Investments in Money Market Funds will be used in conjunction with Certificates of Deposits to ensure the Authority maintains a sufficient level of liquidity.