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COUNTY OF HAWAII Notes to the Basic Financial Statements June 30,2007 Deferred Compensation Plan County employees are permitted to participate in a deferred compensation plan of the State of Hawaii,adopted pursuant to Internal Revenue Code(IRC)section 457. The plan permits eligible employees to defer a portion of their salary until future years by contributing to a fund managed by a plan administrator. The deferred compensation amounts are not available to employees until termination,retirement,death,or unforeseeable emergency. All plan assets are held in a trust fund to protect them from claims of general creditors and from diversion to any uses other than paying benefits to participants and beneficiaries. The County has no responsibility for loss due to the investment or failure of investment of funds and assets in the plans,but does have the duty of due care that would be required of an ordinary prudent investor. Therefore,in accordance with GASB Statement No.32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, deferred compensation plan assets are not reported in the accompanying basic financial statements. 14. COMPONENT UNIT DISCLOSURES Deposits and Investments At June 30,2007, cash,time certificates of deposit,money market funds,and repurchase agreements of$67,105,777,with bank balances of$69,446,242,were held by the County on behalf of the Department. These balances were fully insured or collateralized with securities held by the County's agent in the County's name. The deposits and investments include investments received by the Department that are refundable or restricted as to use,and is recorded as a restricted asset. Such funds amounted to$16,207,996 at June 30,2007. At June 30,2007,the Department's investment portfolio consists primarily of repurchase agreements,certificates of deposit, and a discounted note held by the County on behalf of the Department. Capital Assets The Department began operations as of January 1, 1950. At that date,the utility plant in service was transferred to the Department from the County at the cost of the utility plant assets acquired by the County for its water system from January 1, 1924 to December 31, 1949,less accumulated depreciation.Acquisitions prior to 1924 and acquisitions by gift or grant prior to 1950 are not included in utility plant. Additions to utility plant since January 1, 1950 are stated at original cost and include contributions by -76-