

2.	Cash, Cash Equivalents and Marketable Securities

The following table summarizes our investments in cash equivalents and marketable securities held by investment managers and overnight investments:



	December 31,
	2014			2013
	(in thousands)
Overnight holdings:
Money market funds (cash equivalents)	$	271,840		$	192,040
Investment holdings:
Money market funds (cash equivalents)	14,125			42,913
Marketable securities	28,631			46,340
	314,596			281,293
Cash held in demand accounts	20,369			23,054
Outstanding checks	(29,878		)	(32,252		)
Total cash, cash equivalents and marketable securities	$	305,087		$	272,095

Cash and cash equivalents	$	276,456		$	225,755
Marketable securities	28,631			46,340
	$	305,087		$	272,095

Our cash and overnight holdings fluctuate based on the timing of the client’s payroll processing cycle. Included in the cash balance as of December 31, 2014 and December 31, 2013, are $152.1 million and $143.0 million, respectively, in withholdings associated with federal and state income taxes, employment taxes and other payroll deductions, as well as $87.9 million and $24.5 million, respectively, in client prepayments.

We account for our financial assets in accordance with ASC 820, Fair Value Measurement. This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The fair value measurement disclosures are grouped into three levels based on valuation factors:


•	Level 1 - quoted prices in active markets using identical assets


•	Level 2 - significant other observable inputs, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other observable inputs


•	Level 3 - significant unobservable inputs

The following tables summarize the levels of fair value measurements of our financial assets:



	Fair Value Measurements
			(in thousands)
	December 31, 2014		Level 1		Level 2		Level 3
Money market funds	$	285,965	$	285,965	$	—	$	—
Municipal bonds	28,631		—		28,631		—
Total	$	314,596	$	285,965	$	28,631	$	—



	Fair Value Measurements
			(in thousands)
	December 31, 2013		Level 1		Level 2		Level 3
Money market funds	$	234,953	$	234,953	$	—	$	—
Municipal bonds	46,340		—		46,340		—
Total	$	281,293	$	234,953	$	46,340	$	—

The municipal bond securities valued as Level 2 investments are primarily pre-refunded municipal bonds that are secured by escrow funds containing U.S. Government securities. Our valuation techniques used to measure fair value for these securities during the period consisted primarily of third party pricing services that utilized actual market data such as trades of comparable bond issues, broker/dealer quotations for the same or similar investments in active markets and other observable inputs.

The following is a summary of our available-for-sale marketable securities:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
			(in thousands)
December 31, 2014
Municipal bonds	$	28,626	$	16	$	(11	)	$	28,631

December 31, 2013
Municipal bonds	$	46,290	$	51	$	(1	)	$	46,340

As of December 31, 2014, the contractual maturities of our marketable securities were as follows:



	Amortized Cost		Estimated Fair Value
	(in thousands)
Less than one year	$	12,728	$	12,737
One to five years	15,898		15,894
Total	$	28,626	$	28,631