3.	Cash, Cash Equivalents and Marketable Securities

The following table summarizes the Company's investments in cash equivalents and marketable securities held by investment managers and overnight investments:

	September 30, 2011			December 31, 2010
	(in thousands)
Overnight Holdings
Money market funds (cash equivalents)	$	18,367		$	157,680
Investment Holdings
Money market funds (cash equivalents)		60,174			72,258
Marketable securities		55,394			43,367
		133,935			273,305
Cash held in demand accounts		105,194			31,295
Outstanding checks		(13,825	)		(26,404	)
Total cash, cash equivalents and marketable securities	$	225,304		$	278,196

Cash and cash equivalents	$	169,910		$	234,829
Marketable securities		55,394			43,367
	$	225,304		$	278,196

The Company's cash and overnight holdings fluctuate based on the timing of the client's payroll processing cycle. Included in the cash balance as of September 30, 2011 and December 31, 2010, are $93.1 million and $128.8 million, respectively, in funds associated with federal and state income tax withholdings, employment taxes and other payroll deductions, as well as $3.9 million and $8.1 million in client prepayments, respectively.

The Company accounts for its financial assets in accordance with Accounting Standard Codification (“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; and

Level 3 - significant unobservable inputs.

The following table summarizes the levels of fair value measurements of the Company's financial assets:

	Fair Value Measurements
	(in thousands)
	September 30, 2011		Level 1		Level 2		Level 3

Money market funds	$	78,541	$	78,541	$	-	$	-
Municipal bonds		55,394		––		55,394		-
Total	$	133,935	$	78,541	$	55,394	$	-

	Fair Value Measurements
	(in thousands)
		December 31, 2010	Level 1		Level 2		Level 3

Money market funds	$	229,938	$	229,938	$	-	$	-
Municipal bonds		43,367		-		43,367		-
Total	$	273,305	$	229,938	$	43,367	$	-

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. Valuation techniques used by the Company 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 table summarizes the Company's available-for-sale marketable securities as of September 30, 2011 and December 31, 2010:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
			(in thousands)
September 30, 2011:
Municipal bonds	$	55,304	$	125	$	(35	)	$	55,394

December 31, 2010:
Municipal bonds	$	43,330	$	63	$	(26	)	$	43,367

The Company utilizes specific identification to account for realized gains and losses recognized on sales of available-for-sale marketable securities. During the periods ended September 30, 2011 and 2010, the Company had no realized gains or losses recognized on sales of marketable securities.

As of September 30, 2011, the contractual maturities of the Company's marketable securities were as follows:

	Amortized Cost		Estimated Fair Value
	(in thousands)

Less than one year	$	31,601	$	31,640
One to five years		23,703		23,754
Total	$	55,304	$	55,394