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,
	2011			2010
	(in thousands)
Overnight holdings:
Money market funds (cash equivalents)	$	71,350		$	157,680
Investment holdings:
Money market funds (cash equivalents)		59,587			72,258
Marketable securities		56,987			43,367
		187,924			273,305
Cash held in demand accounts		113,968			31,295
Outstanding checks		(33,697	)		(26,404	)
Total cash, cash equivalents and marketable securities	$	268,195		$	278,196

Cash and cash equivalents	$	211,208		$	234,829
Marketable securities		56,987			43,367
	$	268,195		$	278,196

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, 2011 and December 31, 2010, are $150.8 million and $128.8 million, respectively, in withholdings associated with federal and state income taxes, employment taxes and other payroll deductions, as well as $10.4 million and $8.1 million, respectively, in client prepayments.

Insperity accounts for its 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,
	2011		Level 1		Level 2		Level 3

Money market funds	$	130,937	$	130,937	$	-	$	-
Municipal bonds		56,987		-		56,987		-
Total	$	187,924	$	130,937	$	56,987	$	-

	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 Insperity 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:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		Losses			Fair Value
			(in thousands)
December 31, 2011:

Municipal bonds	$	56,945	$	90	$	(48	)	$	56,987

December 31, 2010:

Municipal bonds	$	43,330	$	63	$	(26	)	$	43,367

For the years ended December 31, 2011, 2010 and 2009, we had no realized gains or losses recognized on sales of available-for-sales marketable securities.

As of December 31, 2011, the contractual maturities of our marketable securities were as follows:

	Amortized Cost		Estimated Fair Value
	(in thousands)

Less than one year	$	33,722	$	33,701
One to five years		23,223		23,286
Total	$	56,945	$	56,987