BOROUGH OF RAMSEY BERGEN COUNTY, NEW JERSEY FINANCIAL STATEMENTS WITH SUPPLEMENTARY INFORMATION DECEMBER 31, 2017 AND 2016

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1 BERGEN COUNTY, NEW JERSEY FINANCIAL STATEMENTS WITH SUPPLEMENTARY INFORMATION

2 TABLE OF CONTENTS INTRODUCTORY SECTION Independent Auditor's Report FINANCIAL SECTION Current Fund Comparative Balance Sheets - Regulatory Basis Comparative Statements of Operations and Change in Fund Balance - Regulatory Basis Statement of Revenues - Regulatory Basis Statement of Appropriations - Regulatory Basis Trust Funds Comparative Balance Sheets - Regulatory Basis General Capital Fund Comparative Balance Sheets - Regulatory Basis Water-Sewer Utility Fund - Operating and Capital Funds Comparative Balance Sheets - Regulatory Basis Comparative Statements of Operations and Change in Fund Balance - Regulatory Basis Statement of Revenues - Regulatory Basis Statement of Appropriations - Regulatory Basis Swimming Pool Utility Fund - Operating and Capital Funds Comparative Balance Sheets - Regulatory Basis Comparative Statements of Operations and Change in Fund Balance - Regulatory Basis Statement of Revenues - Regulatory Basis Statement of Appropriations - Regulatory Basis Statement of Capital Fund Balance - Regulatory Basis General Fixed Assets Accounts Group Comparative Statement of General Fixed Assets Group of Accounts - Regulatory Basis NOTES TO THE FINANCIAL STATEMENTS Page 1-2 Exhibit A A-1 A-2 A-3 B C D D-1 D-2 D-3 E E-1 E-2 E-3 E-4 F 3-22

3 TABLE OF CONTENTS SUPPLEMENTARY DATA SECTION Current Fund Schedule of: Cash - Treasurer Petty Cash Change Funds Due from State of New Jersey for Senior Citizens' and Veterans' Deductions Taxes Receivable and Analysis of Property Tax Levy Tax Title Liens Foreclosed Property at Assessed Valuations Revenue Accounts Receivable Miscellaneous Receivable Due from Cafeteria Plan Road Opening Escrow Deposits Deferred Charges N.J.S.A. 40A:4-55- Special Emergency Interfunds Receivable/ (Payable) 2016 Appropriation Reserves Reserve for Encumbrances Accounts Payable Prepaid Revenue Prepaid Taxes Tax Overpayments Outside Tax Title Liens Payable Due to State ofnew Jersey- Construction Code Surcharge Fees Due to State of New Jersey- Marriage License Surcharge Fees Special Reserves Schedule of Emergency Note Payable Reserve for Tax Appeals Pending Reserve for Premiums on Bond Anticipation Notes Reserve for Revaluation County Taxes Payable Local School District Taxes Payable Federal and State Grant Fund Schedule of: Federal and State Grants Receivable Reserve for Federal and State Grants - Unappropriated Reserve for Federal and State Grants -Appropriated Due to Other Trust Fund Due from Current Fund Exhibit A-4 A-5 A-6 A-7 A-8 A-9 A-10 A-11 A-12 A-13 A- 14 A- 14a A- 15 A- 16 A-17 A- 18 A-19 A-20 A-21 A-22 A-23 A-24 A-25 A-26 A-27 A-28 A-28a A 29 A-30 A-31 A-32 A-33 A-34 A-35

4 TABLE OF CONTENTS Trust Funds Schedule of: Cash and Cash Equivalents - Animal Control Fund Interfunds Receivable /(Payable) - Animal Control Fund Due to I (from) the State of New Jersey-Animal Control Fund Reserve for Animal Control Fund Expenditures Cash and Cash Equivalents - Other Trust Fund Extra Duty Police Fees Receivable/ (Reserve) Other Trust Fund Performance Bond Receivable Interfunds Receivable/ (Payable) - Other Trust Fund Special Deposits - Other Trust Fund Special Funds - Other Trust Fund Due to Criminal Disposition & Review Collection Fund General Capital Fund Schedule of: Cash - Treasurer Cash and Cash Equivalents - Treasurer Deferred Charges to Future Taxation - Unfunded State and Federal Funds Receivable Due to Current Fund Capital Improvement Fund Improvement Authorizations Reserve for Payment of BANs Due from Water/Sewer Capital Fund Bond Anticipation Notes Down Payments on Improvements Encumbrance Payable Capital Reserves Bonds and Notes Authorized But Not Issued Reserve for Grants Receivable Water-Sewer Utility Fund - Operating and Capital Funds Water-Sewer Utility Fund- Operating Fund Schedule of: Cash and Cash Equivalents - Treasurer Interfunds Receivable/ (Payable) Consumer Accounts Receivable 2016 Appropriation Reserves Accounts Payable Reserve for Encumbrances Schedule of Deposits on Meters Reserve for Engineering Study Accrued Interest Payable Utility Overpayments Exhibit B-1 B-2 B-3 B-4 B-5 B-6 B-6a B-7 B-8 B-9 B-10 C-1 C-2 C-3 C-4 C-5 C-6 C-7 C-8 C-9 C-10 C- 11 C-12 C-13 C-14 C-15 D-4 D-5 D-6 D-7 D-8 D 8a D-9 D-10 D-11 D-1 la

5 TABLE OF CONTENTS Water-Sewer Utility Fund - Operating and Capital Funds (Continued) Water-Sewer Utility Fund- Capital Fund Schedule of: Fixed Capital Fixed Capital Authorized and Uncompleted Improvement Authorizations - Unfunded Capital Improvement Fund Reserve for Ammiization Deferred Reserve for Amortization Interfunds Receivable and Payable Bond Anticipation Notes Payable Bonds and Notes Authorized But Not Issued Schedule of NJ Environmental Infrastructure Trust Loan Receivable Schedule of NJ Environmental Infrastructure Trust Loan Payable Reserve for Capital Improvements Swimming Pool Utility Fund - Operating and Capital Funds Swimming Pool Utility Fund - Operating Fund Schedule of: Cash and Cash Equivalents - Treasurer Interfunds Receivable/ (Payable) 2016 Appropriation Reserves Encumbrance Payable Reserve for Capital Outlay and Improvements Swimming Pool Utility Fund - Capital Fund Analysis of Cash and Cash Equivalents Schedule of: Fixed Capital Interfund (Payable) Reserve for Improvements - Bathhouse and Grounds Capital Improvement Fund Reserve for Amortization General Fixed Assets Accounts Group Schedule of Changes in Fixed Assets by Class Schedule of Reserve for Fixed Assets Exhibit D-12 D-13 D-14 D-15 D- 16 D-17 D-18 D-19 D-20 D-21 D-22 D-23 E-5 E-6 E-7 E-8 E-9 E-10 E- 11 E-12 E-13 E-14 E-15 F-1 F-2 Schedules Related to Accounting and Reporting of Pensions (GASB 68) Schedule of Borough's Proportionate Share ofnet Pension Liability- PFRS & PERS Schedule of Borough's Contributions- PFRS & RERS Notes to Required Supplementary Information G-1 G-2 G-3

6 TABLE OF CONTENTS ACCOMPANYING INFORMATION Tax Rate Information Tax Levies and Collections Delinquent Taxes and Tax Title Liens Property Acquired by Tax Title Liens Liquidation Water-Sewer Utility Levies Swimming Pool Utility Levies Fund Balances Officials in Office and Surety Bonds Page Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ADDITIONAL INFORMATION RELATING TO FEDERAL AND STATE FINANCIAL ASSISTANCE PROGRAMS Schedule of Expenditures of Federal A wards Schedule of Expenditures of State Financial Assistance Notes to Schedules of Expenditures of Awards and Financial Assistance General Comments Schedule of Findings and Responses Summary Schedule of Prior Year Audit Comments and Recommendations Audit Comments and Recommendations Appreciation Schedule 1 Schedule

7 INTRODUCTORY SECTION

8 GARBARINI & CO. P.C. Certified Public Accountants L!Cf.NSf.D PUG UC scone /\C;GOUf's;T i\ntg 285 Division Ave & Route i 7 S. Carlstadt, NJ (201) 9: INDEPENDENT AUDITOR'S REPORT The Honorable Mayor and Members of the Borough Council Ramsey, New Jersey Report on the Financial Statements We have audited the accompanying comparative balance sheets -regulatory basis of various funds of the Borough of Ramsey, County of Bergen, State ofnew Jersey (the "Borough"), as of December 31, 2017 and 2016, and the related comparative statements of operations and changes in fund balance-regulatory basis for the year then ended, and the related statements of revenues and appropriations-regulatory basis, and comparative statement of general fixed assets group of accounts - regulatory basis for the year ended December 31, 2017, and the related notes to the financial statements, which collectively comprise the Borough's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements- regulatory basis (the "financial statements") in accordance with the financial reporting provisions of the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the "Division"). Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error_ Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and in compliance with audit requirements as prescribed by the Division. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error_ In making those risk assessments, the auditor considers internal control relevant to the Borough's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As described in Note I, the financial statements are prepared and presented by the Borough on the basis of the financial accounting and reporting principles and practices that demonstrate compliance with the regulatory basis of accounting and budget laws prescribed by the Division, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to meet the requirement of the State of New Jersey for municipal government entities. The effects on financial statements of the variances between the regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. -I-

9 Opinion on Regulatory Basis of Accounting In our opinion, the financial statements referred to above, present fairly, in all material respects, the accompanying comparative balance sheets - regulatory basis of the various funds of the Borough as of December 31, 20 I 7 and 2016, and the results of the comparative statements of operations and the changes in fund balance - regulatory basis of such funds for the years then ended, and the revenues and appropriations - regulatory basis of the various funds, and general fixed assets group of accounts for the year ended December 31, 2017, in accordance with accounting principles and practices prescribed by the Division as described in Note I. Other Matters Required Supplementary Information The Borough has omitted management's discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. A management discussion and analysis is not required by the financial accounting and reporting principles and practices prescribed by the Division, to supplement the financial statements and therefore it has not been presented by management. Our opinion on the basic financial statements is not affected by this missing information. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Borough's basic financial statements. The supplemental schedules and the schedules of expenditures of federal and state financial assistance are presented for the purposes of additional analysis as required by the Division, and are not a required part of the basic financial statements. The supplementary schedules and schedule of expenditures of federal awards and schedule of expenditures of state financial assistance are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole on the basis of accounting described in Note I. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 30, 2017 on our consideration of the Borough's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Borough's internal control over financial reporting and compliance. Paul W. Garbarini, CPA Registered Municipal Accountant No. 534 Garbarini & Co. P.C. Certified Public Accountants April 15,2018 Carlstadt, New Jersey - 2 -

10 FINANCIAL SECTION

11 CURRENT FUND

12 CURRENT FUND COMPARATIVE BALANCE SHEETS-REGULATORY BASIS A At December 31, ASSETS Current Fund: Cash and Cash Equivalents A-4 14,655, ,127, Change Fund A ,655, ,128, Due from State ofnj- Senior and Veterans Deductions A Receivable and Other Assets with Full Reserves: Delinquent Property Taxes Receivable A-8 519, , Tax Title Liens Receivable A-9 129, , Property Acquired for Taxes - Assessed Valuation A , , Revenue Accounts Receivable A-11 8, , Due from Cafeteria Plan A-13 20, , Interfund Receivable A-15 2, , Due from Outside Lienholder A Miscellaneous Receivables A-12 2, , A 804, , Deferred Charges and Other Assets: Special Emergency A-14a 62, , Due from Cafeteria Plan A-13 62, , Total Current Fund 15,522, ,236, Federal and State Grants Fund: Federal and State Grants Receivable: A-31 38, , Amount Due from Current Fund A , , Total Federal and State Grant Fund 446, , TOT AL ASSETS 15,968, ,624,160.21

13 BOROUGH 01 RAMSEY CURRENT FUND DECEMBER 31,2017 AND 2016 COMPARATIVE BALANCE SHEETS - REGULATORY BASIS A At December 31, LIABILITIES, RESERVES AND FUND BALANCE: Current Fund: Appropriation Reserves A-3, A-16 1,810, ,072, Due to State ofnj- Senior and Veterans Deductions A Interfunds Payable A , , Reserve for Encumbrances A , , Accounts Payable A-18 70, , Prepaid Revenues A-19 11, , Prepaid Taxes A-20 6,974, , Tax Overpayments A-21 2, Outside Tax Title Liens Payable A-22 2, Reserve for Amount Due to State ofnew Jersey: Construction Code Surcharge Fees A-23 8, , Marriage License Surcharge Fees A Special Reserves A , , Reserve for Road Opening Deposits A-14 3, , Reserve for Tax Appeals Pending A-27 Reserve for BAN Premiums A-28 63, , Reserve for Revaluation A-28a 2, , Emergency Note Payable A , County Taxes Payable A-29 40, , ,954, ,675, Reserve for Receivables A 804, , Fund Balance A-1 4,763, ,591, ,567, ,561, Total Liabilities, Reserves and Fund Balance - Current Fund 15,522, ,236, Federal and State Grant Fund: Unappropriated Reserves A-32 92, , Appropriation Reserves A , , Amount Due to Other Trust Fund A-34 78, , Total Federal and State Grant Fund 446, , TOTAL LIABILITIES, RESERVES AND FUND BALANCE 15,968, ,624,160.21

14 CURRENT FUND COMPARATIVE STATEMENTS OF OPERA TIO NS AND CHANGE IN FUND BALANCE - REGULATORY BA.SIS A-1 REVENUE AND OTHER INCOME REALIZED For the Years Ended December 31, Fund Balance Utilized A-2 2,650, ,050, Miscellaneous Revenue Anticipated A-2 3,633, ,533, Receipts from Current Taxes A-2 81,363, ,750, Receipts from Delinquent Taxes A-2 680, , Non-Budget Revenues A-2 420, , Other Credits to Income: Unexpended Balance of Appropriations A I, Canceled Tax Overpayments A ,18924 Canceled School Taxes A Excess Reserves in Animal License A-15 10, , Prior Year Interfunds Returned 77, Revenue Accounts Receivable Received A-II 7, , Unexpended Balance of Appropriation Reserves A-16 1,464, ,601, Total Income 90,308, ,700, Budgetary and Emergency Appropriations: Appropriations Within "CAPS" Salaries and Wages A-3 8,513, ,397, Other Expenses A-3 8,549, ,500, Deferred Charges and Statutory Expenditures A-3 2,121, ,202, Appropriations Excluded from "CAPS" Salaries and Wages A-3 705, , Other Expenses A-3 902, , Capital Improvements A-3 1,250, ,250, Debt Service A-3 1,296, ,209, Deferred Charges and Statutory Expenditures A-3 76, , County Taxes Paid on PILOT A-4 4, Miscellaneous Operational Charge A Prior Year Senior Citizens Deductions Disallowed A-7 1, Revenue Accounts Receivable Accrued A-II 8, , Lien Interest Paid Interfunds Advanced , County Taxes A-29 8,485, ,391, County Open Space Taxes A , , County Added/Omitted Taxes A-29 40, , Local District School Tax A-30 55,178, ,567, Total Expenditures 87,486, ,395,195.5 l Excess in Operations 2,822, ,305,0 I 0.44 Fund Balance, Beginning of Year A 4,591, ,336, Decreased by: 7,413, ,641, Utilized as Anticipated Revenue A-2 2,650, ,050, Fund Balance, End of Year A 4,763, ,591,134.70

15 CURRENT FUND STATEMENT OF REVENUES - REGULATORY BASIS A-2 Anticipated Excess or Budget Realized (Deficit) Surplus Anticipated A-I 2,650, ,650, Miscellaneous Revenues: LOCAL REVENUES Licenses Alcoholic Beverages 34, Other 45, Fees and Permits 50, Fines and Costs: Municipal Court 134, Interest and Costs on Taxes 120, Interest on Investments and Deposits 20, Anticipated Utility Operatiog Surplus 100, Uniform Fire Safety Act (c.383, P.L. 1983) Fees 165, Cable Franchise Fee 235, Municipal Occupancy Tax 175, Cell Tower Revenue 30, Recycling Revenue 15, Below 1,123, STATE AID WITHOUT OFFSETTING APPROPRIATIONS Energy Receipts Taxes 1,474, Total State Aid Without Offsetting Appropriations Below 1,474, , , , , , , , (3,943.97) I 14, (5,717.96) 60, , , , , , , , , , , , , ,214, , ,474, ,474, DEDICATED UNIFORM CONSTRUCTION CODE FEES OFFSET WITH APPROPRIATIONS Uniform Construction Code Fees Below 535, , (8,610 99) SPECIAL ITEMS OF REVENUE OFFSET WITH APPROPRIATIONS Distracted Driving Grant Recycling Tonnage Grant 45, Alcohol Education & Rehabilitation 3, Municipal Alliance on Alcoholism and Drug Abuse 9, Drive Sober Grant 3, NJDOCJ Body Armor Grant Fund 3, Drunk Driving Enforcement Fund 7, Clean Communities 34, Click it or-ticket Grant 1, NJSP Hazmat Planning Grant 6, EMMA Grant 5, Bergen County Cleanup Grant A , SPECIAL ITEMS OF REVENUE ANTICIPATED WITH PRIOR WRITTEN CONSENT Reserve for Payment of Bond Anticipation Notes- Arch & Carol 298, , , , , , , , , , , , , Total Miscellaneous Revenues A-I 3,550, ,633, , Receipts From Delinquent Taxes A-1, 8,9 530, , ,406.68

16 CURRENT l<'und STATEMENT OF REVENUES - REGULA TORY BASIS A-2 Anticipated Excess or Budget Realized (Deficit) Amt to be Raised by Taxes for Support of Municipal Budget Local Tax for Municipal Purposes Including Reserve for Uncollected Taxes and Minimum Tax A-8, Below 17,733, ,355, , BUDGET TOTALS NON BUDGET REVENUES Below 420, , TOT AL GENERAL REVENUES A-3 24,464, ,318, , ANALYSIS OF REALIZED REVENUE (Before Federal and Stale Grants) Local Revenues Stale Aid Without Offsetting Appropriations Above Above 1,214,336.2 I 1,474, Dedicated Uniform Construction Code Fees Reserve for Pmts of Bonds and Notes Above Above A-II 526, , ,513, Allocation of Current Tax Collections: Current Tax Revenue Less: Allocated to School and County Taxes Add: Appropriation for Uncollected Taxes Amount for Support of Municipal Budget Appropriations A-I A-8 A-3 Above 81,363, (64,058,201.02) 1,050, ,355, ANALYSIS OF NON-BUDGET REVENUE BAN Premiums Bid Specs 32, Bergen County Reimbursements- Snow 12, Community Development Grant- Hurricane Sandy 51, FEMA- 01/22/16 Snow Storm 86, Hazard Mitigation Grant- Hurricane Sandy 75, Inspection Fines Insurance Dividends/Reimbursements 11, Miscellaneous Miscellaneous Permits NSF Check Fees Photocopies, Duplicate Bills 1, Pmt in Lieu of Taxes 73, Police Towing Fees Ramsey Day Camp 59, Ramsey Day Booth 1, Ramsey Day Camp- Snack Bar Recycling Pails 1, Redemption Request Reimbursements 5, Sale of Borough Property 1, Senior & Vet Administration Fees 1, Soccer Squirts Void Magistrate Checks A-1,4, Above 420, Sec independent auditor's repoti and accompanying notes.

17 CURRENT FUND STATEMENT OF APPROPRIATIONS - REGULATORY BASIS A-3 Ex.e.enditures APPROPR!A TIONS Modified Bud et Bud1,_et Paid or Char1,_ed EXPENDED Reserved La.e.sed OPERATIONS - WITHIN "CAPS" GENERAL GOVERNMENT FUNCTIONS General Administration Salaries and Wages Other Expenses Mayor and Council Salaries and Wages Other Expenses Borough Clerk Salaries and Wages Other Expenses Financial Administration Salaries and Wages Other Expenses Audit Services Computer Maintenance Payroll Data Processing Collection of Taxes Salaries and Wages Other Expenses Assessment of Taxes Salaries and Wages Other Expenses Legal Services and Costs Other Expenses Engineering Services and Costs Salaries & Wages Other Expenses Insurance (N.J.SA40A:4-45.3(00)) General Liability/ Workers' Compensation Employee Group Health Net Employees Group Insurance LAND USE ADMINISTRATION: Municipal Land Use Law (NJSA 40A:55D-1) Planning Board Salaries and Wages Other Expenses Zoning Board Adjustment Other Expenses 151, , , , , , , , , , , , , , , , , , ,925, , , , , , , , , , , , , , , , , , , , , , ,925, , , , , , , , , , , , , , , , , , , , , ,834, , , , , , , , , , , , , , , , , , , , , , , , (Continued Next Page) Sec independent auditor's report and accompanying notes.

18 CURRENT FUND STATEMENT OF APPROPRIATIONS - REGULATORY BASIS A-3 ExE_enditures APPROPRIATIONS Modified Bud,;_et Bud,;_et Paid or Char_g_ed EXPENDED Reserved LaP.sed OPERATIONS WITHIN "CAPS" (cont'd) PUBLIC SAFETY FUNCTIONS: Police Salaries and Wages Other Expenses Emergency Management Services Salaries and Wages Other Expenses Volunteer Fire Dept. - Other Expenses First Aid Organization - Contribution Fire Dept. (Uniform Fire Safety Act c.383, PL 1938) Fire Protection Official Salaries and Wages Other Expenses Municipal Prosecutor Salaries and Wages Other Expenses Road Repair and Maintenance Salaries and Wages Other Expenses Road Resurfacing Sidewalk Reconstruction Snow Removal (NJSA 40A:4-62. I) 4,815, , , , , , , , , , , , , , , ,815, , , , , , , , , , , , , , , ,708, , , , , , , , , , , , , , , , , , , , , , , , , , , PUBLIC WORKS FUNCTIONS {cont'd): Shade Tree Commission Salaries and Wages Other Expenses Recycling Salaries and Wages Other Expenses Garbage and Trash Removal Contractual Public Buildings and Grounds Salaries and Wages Other Expenses Vehicle Maintenance Salaries and Wages Other Expenses 15, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , (Continued Next Page) Sec independent auditor's report and accompanying notes.

19 CURRENT FUND STATEMENT OF APPROPRIATIONS- REGULATORY BASIS A-3 Ex.E_enditures APPROPRJA TJONS Modified Bud_ et Bud_ et Paid or Chari,ed EXPENDED Reserved La.e_sed OPERATIONS WITHIN "CAPS" (Cont'd) HEALTH AND HUMAN SERVICES FUNCTIONS: Board of Health Salaries and Wages Other Expenses Services of Visiting Nurses Contractual Environmental Commission Salaries and Wages Other Expenses Dog and Cat Regulation Other Expenses Administration of Public Assistance Other Expenses West Bergen Mental Health Contractual Drug Abuse Program 95, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , PARKS AND RECREATION FUNCTIONS: Recreation Commission Salaries and Wages Other Expenses Contribution to Senior Citizen's Center (NJSA 40:48-96) Salaries and Wages Other Expenses Fine Arts Committee Other Expenses Ramsey Wind Symphony Other Expenses Contribution to Museum (NJSA 40: ) Parks Improvements 87, , , , , , , , , , , , , I 5, , , , , , , , , , , , OTHER COMMON OPERATING FUNCTIONS: Celebration of Public Events Other Expenses 70, , , , IT Support 75, , , , Municipal Court Salaries and Wages Other Expenses 152, , , , , , , , Public Defender Other Expenses 3, , , Purchase and Replacement of Department Equipment 275, , , , Alliance Drug Committee Other Expenses 7, , , (Continued Next Page)

20 CURRENT FUND DECEMBER 31,2017 AND 2016 STATEMENT OF APPROPRIATIONS - REGULATORY BASIS A-3 Ex.e.enditures APPROPRIATIONS Modified Budget Budget Paid or Charged EXPENDED Reserved Lap_sed OPERATIONS WITHIN "CAPS" (Cont'd) UNIFORM CONSTRUCTION CODE - (NJAC 5: ) Construction Code Officials Salaries and Wages Other Expenses 407, , , , , , , , UTILITY EXPENSES AND BULK PURCHASES: Electricity Street Lighting Natural Gas Telephone Gasoline Fire Hydrants Municipal Services Act (NJSA 40: et seq.) Other Expenses Sanitary Landfill Dumping Fees Other Expenses (B) Contingent 195, , , , , , , , , , , , , , , I 18, , , , , , , , , l 08, ,880.5] 18, , , , , , , , Total Operations Including Contingent within "CAPS" 17,063, ,062, ,615, ,446, Detail: Salaries and Wages Other Expenses A-I A-I 8,513, ,550, ,513, ,549, ,154, ,461, , ,088, (2) STATUTORY EXPENDITURES: Contribution to: Social Security System (OAS.I.) Police and Fireman's Retirerrient System ofn.j. Public Employees' Retirement Fund Retirement Fund Unemployment Compensation Defined Contribution Retired Plan (H-1) TOTAL GENERAL APPROPRIATIONS FOR MUNICIPAL PURPOSES WITHIN "CAPS" A-1 410, , , l 50, , , ,121, ,184, , , , , , ,121, ,184, , , , , , , ,047, ,662, , , , , ,521, (Continued Next Page) Sec independent auditor's report and accompanying notes.

21 CURRENT FUND STATEMENT OF APPROPRIATIONS - REGULATORY BASIS A-3 Ex_Eenditures APPROPRIATIONS Modified Bud_,!l_et Bud_ et Paid or Char_ ed EXPENDED Reserved Lap_sed (A) Operations - Excluded from "CAPS" GENERAL GOVER.1\/MENT Maintenance offree Public Library (C 82 & 541, PL 1985) Salaries and Wages Other Expenses 911 Regional Service 705, , , , , , , , , Statutory Expenditures: Reserve for Property Tax Appeals Storm water Management (NJSA 40:A (66) 277, , ,487, , , ,487, , ,197, , , , PUBLIC AND PRIVATE REVE1'1uES OFF-SET BY REVENUES Recycling Tonnage Grant Alcohol Education & Rehabilitation Click It or Ticket Grant Municipal Alliance on Alcoholism and Drug Abuse Bergen County Cleanup Grant Drive Sober Grant NJDOCJ Body Armor Grant Fund NJSP Hazmat Planning EMMA Grant 80, , , , , , , , , I 1, , , , , , , , , , , , , , , , I I 9, , Total Operations - Excluded from "CAPS" Detail: Salaries and Wages A-1 Other Expenses A-I 1,607, , , ,607, , , J..d.l.7.,7] , , , , (Continued Next Page) Sec independent auditor's report and accompanying notes.

22 CURRENT FUND DECEMBER 31,2017 AND 2016 STATEMENT OF APPROPRIATIONS - REGULATORY BASIS A-3 Ex.e_enditures APPROPRIATIONS Modified Bud et Bud et Paid or Char ed EXPENDED Reserved LaJJ.sed OPERATIONS EXCLUDED FROM "CAPS" (Cont'd) (C) Capital Improvement Fund - Excluded from "CAPS" Capital Improvement Fund A-I 1,250, ,250, ,250, ,250, ,250, ,250, (D) Municipal Debt Service Payment of Bond Anticipation Notes and Capital Notes Interest on Notes A-I 1,228, , ,296, ,228, , ,296, ,228, , ,296, (E) Deferred Charges Special Emergency Authorizations A-1 76, , , , , , (H-2) TOTAL GENERAL APPROPRIATIONS FOR MUNICIPAL PURPOSES - EXCLUDED FROM "CAPS" 4,229, ,230, ,940, , (L) Subtotal General Appropriations 23,414, ,414, ,603, ,810, (M) Reserve for Uncollected Taxes A-2 1,050, ,050, ,050, TOTAL GENERAL APPROPRIATIONS 24,464, ,464, ,653, ,810, A-2 A-2 Below A A-1 Cash Disbursements Cash Receipts Encumbrances Payable Non-cash Expenditure - Revaluation Non-cash Expenditure -Federal and State Grant Fund Non-cash Expenditure - Reserve for Uncollected Taxes A-4 A-4 A-17 A-14a A-15 A-2 21,899, (916,549.35) 424, , , ,050, Above 22,653, Sec independent auditor's report and accompanying notes.

23 TRUST FUNDS

24 TRUST FUNDS COMPARATIVE BALANCE SHEETS - REGULA TORY BASIS B ASSETS Animal Control Fund: Cash and Cash Equivalents Due from State of New Jersey Interfund Receivable Other Trust Fund: Cash and Cash Equivalents Escrow Receivable Interfund Receivable a 8-7 At December 31, , , , ,603, , , , , ,632, , TOT AL ASSETS 2,682, ,703, ,711, ,734, LIABILITIES AND RESERVES Animal Control Fund: Prepaid License Fees Interfund Payable Reserve for Dog License Expenditures Other Trust Fund: Due to Criminal Disposition and Review Collection Fund 8-10 Reserve for Extra Duty Police Fees 8-6 Interfund Payable 8-7 Special Deposits B-8 Reserve for Special Funds B-9 TOT AL LIABILITIES AND RESERVES , , , , , , ,163, ,682, ,703, , , , , , , ,305, ,711, ,734,081.37

25 GENERAL CAPITAL FUND

26 CAP IT AL J/UND COMPARATIVE BALANCE SHEETS - REGULATORY BASIS C ASSETS 2017 Cash C-l,2 3,648, Deferred Charges to Future Taxation: Unfunded C-3 7,605, Due from Current Fund C-5 Grants Receivable C-4 589, At December 31, ,566, ,833, , TOT AL ASSETS 11,843, ,288, LIABILITIES, RESERVE AND J/UND BALANCE Due to Water/Sewer Operating Fund D-5 Due to Water/Sewer Capital Fund C-9 1,016,!61.74 Due To Current Fund C-5 Capital Improvement Fund C-6 273, Improvement Authorizations: Funded C-7 754, Unfunded C-7 552, Encumbrance Payable C-12 l,341, Reserve for Payment of Bonds C-8 242, Bond Anticipation Notes C-10 7,605, Down Payments on Improvements C-1 l Reserve for Drainage Study C-13 51, Reserve for Sewer Planning C-13 4, Reserve for Grants Receivable C-15 1, ,038, , , ,484, , , ,858, , , , TOTAL LIABILITIES, RESERVE AND FUND BALANCE 11,843, ,288, There were bonds and notes authorized but not issued on December 31, 2017 and 2016 in the amount of0 and 975,000 respectively. (Exhibit C-14).

27 WATER-SEWER UTILITY FUND - OPERA TING AND CAPITAL FUNDS

28 WATER-SEWER UTILITY FUND COMPARATIVE BALANCE SHEETS- REGULATORY BASIS D At December 31, ASSETS Operating Fund: Cash and Cash Equivalents D-4 3,855, ,456, Interfunds Receivable D-5 385, , ,240, ,841, Receivables with Full Reserves: Consumer Accounts Receivable D-6 702, , Total Operating Fund 4,943, ,588, Capital Fund: Fixed Capital D-12 16,966, ,672, Fixed Capital Authorized and Uncompleted D-13 9,263, ,263, Interfunds Receivable D-18 1,016, ,038, NJ Environmental Infrastructure Trust Loan Receivable D-21 16, , Total Capital Fund 27,261, ,990, TOTAL ASSETS 32,204, ,579, LIABILITIES, RESERVES AND FUND BALANCE Operating Fund Liabilities: Appropriation Reserves D-3, D-7 1,482, , Accounts Payable D-8 56, Reserve for Encumbrances D-8a 668, , Prepaid Revenue D-4 1, Deposits on Meters D-9 1, , Reserve for Engineering Study D-10 1, , Accrued Interest Payable D-11 35, , Reserve for Overpayments D-lla 13, , ,203, ,253, Reserve for Receivables D-6 702, , Reserve for Capital Improvements D , ; Fund Balance D-1 1,923, ,872, Total Operating Fund 4,943, ,588, Capital Fund Liabilities: Improvement Authorizations - Unfunded D-14 2,354, ,377, Capital Improvement Fund D-15 51, , Reserve for Amortization D-16 16,119, ,826, Deferred Reserve for Amortization D-17 5,293, ,896, Interfunds Payable D , , Bond Anticipation Notes Payable D-19 1,955, ,255, NJ Environmental Infrastructure Trust Loan Payable D-22 1,107, ,204, Total Capital Fund 27,261, ,990, TOT AL LIABILITIES, RESERVES AND FUND BALANCE 32,204, ,579, Bonds and Notes Authorized But Not Issued D-20 1,817, ,817,650.00

29 WATER-SEWER UTILITY FUND - OPERA TING FUND YEARS ENDED COMPARATIVE STATEMENTS OF OPERATIONS AND CHANGE IN FUND BALANCE- REGULATORY BASIS D-1 REVENUE AND OTHER INCOME REALIZED December 31, Fund Balance Utilized D-2 1,255, ,255, Water-Sewer Rents D-2 7,447, ,612, Fire Hydrant Service D-2 58, , Miscellaneous Anticipated Revenues D-2 197, , Other Credits to Income: Unexpended Balance of Appropriations D-3 5, , Unexpended Balance of Appropriation Reserves D-7 471, , Cancelled Accounts Payable D-8 56, Cancelled Prior Year Encumbrances D-8a 275, Cancelled Prior Year Capital Reserve Balances D , EXPENDITURES 10,086, ,601, Budgetmy and Emergency Appropriations: Operating D-3 6,275, ,157, Capital Improvements D-3 1,961, ,200, Debt Service D-3 460, , Statutory Expenditures & Deferred Charges D-3 83, , ,780, ,780, Excess in Revenue 1,306, , Fund Balance, Beginning of Year D 1,872, ,305, Decreased by: Utilized by Water-Sewer Operating Budget D-2 1,255, ,255, Fund Balance, End of Year D 1,923, ,872,274.71

30 WATER-SEWER UTILITY FUND- OPERATING FUND YEAR ENDED DECEMBER 31, 2017 STATEMENT OF REVENUES - REGULATORY BASIS D-2 Budget Realized Excess or (Deficit) Operating Fund Balance Anticipated D-1 1,255, ,255, Water-Sewer Rents D-1, D-6 7,400, ,447, Fire Hydrant Service D-1, D-4 55, , Miscellaneous D-1, D-4 70, , , , , ,780, ,958, D-1 178,470.59

31 WATER-SEWER UTILITY FUND - OPERA TING FUND YEAR ENDED DECEMBER 31, 2017 STATEMENT OF APPROPRJATIONS-REGULATORY BASIS D-3 Modified Paid or Cancelled Appropriation Appropriation Budget Budget Charged Appropriations Reserve Lapsed Operating: Salaries and Wages 695, , , , Other Expenses 2,934, ,917, ,430, , Repairs and Replacements 165, , , , Northwest Bergen County Sewer Authority 2,260, ,260, ,254, , Allendale Interceptor 165, , , , Water Supply Agreement 73, , , , Total Operating D-1 6,292, I ,275, ,692, , Capital Improvements: Capital Outlay 1,961, ,961, ,067, , Total Capital Improvements D-1 1,961, ,961, ,067, , Debt Service: Payment of Loan Principal 97, , , , Payment of Bond Anticipation Notes 300, , , Loan - Interest 26, , , Bond Anticipation Note - Interest 20, , , Total Debt Service D-1 443, , , , Statutory Expenditures & Deferred Charges: Contribution to: Public Employees' Retirement System 20, , , Social Security System (OAS.I.) 60, , , , Unemployment Compensation Insurance 3, , , Total Statutory Expenditures D-1 83, , , , ,780, ,780, ,291, ,482, , D-1 D-1 Below D-1 D D-1 Cash Disbursements -Operating D-4 6,746, Cash Receipts- Budget Offsets D-4 (19,512.80) Encumbrance Payable D-8a 553, Reserve for Capital Improvements D-23 Accrued Interest D-11 11, Above 7,291,872.44

32 SWIMMING POOL UTILITY FUND - OPERA TING AND CAPITAL FUNDS

33 SWIMMING POOL UTILITY FUND COMPARATIVE BALANCE SHEET- REGULATORY BASIS E ASSETS Operating Fund: Cash and Cash Equivalents Interfund Receivables E-5 E-6 At December 31, , , Total Operating Fund 556, , Capital Fund: Cash and Cash Equivalents Fixed Capital Total Capital Fund E-10 E-11 1, , , , , , TOT AL ASSETS 1,497, ,448, LIABILITIES 1 RESERVES AND FUND BALANCE Operating Fund: Liabilities: Appropriation Reserves Interfunds Payable Encumbrance Payable Reserve for Capital Improvement Reserve for Capital Outlay E-3, E-7 E-6 E-8 E-9 E-9 144, , , , , , , , , , Fund Balance Total Operating Fund E-1 249, , , , Capital Fund: Liabilities: Interfunds Payable Reserve for Improvements - Bathhouse and Grounds Capital Improvement Fund Reserve for Amortization E-12 E-13 E-14 E , , , , Fund Balance Total Capital Fund E , , TOTAL LIABILITIES, RESERVES AND FUND BALANCE 1,497, ,448, See independent auditor's rep011 and accompanying notes.

34 SWIMMING POOL UTILITY FUND - OPERA TING FUND YEARS ENDED COMPARATIVE STATEMENTS OF OPERATIONS AND CHANGE IN FUND BALANCE - REGULATORY BASIS E-1 REVENUE AND OTHER INCOME REALIZED Fund Balance Utilized Membership Fees Refreshment Stand Office Miscellaneous Miscellaneous Anticipated Revenues Other Credits to Income: Unexpended Balance of Appropriation Reserves December 31, E-2 165, , E-2 448, , E-2 15, , E-2 14, , E-2 101, , E-7 16, , , , EXPENDITURES Budgetary and Emergency Appropriations: Operating Capital Outlay E-3 E-3 390, , , , Utility Budget Surplus to Current Fund Budget E-3 100, , Emergency Authorizations Statutory Expenditures E-3 E-3 17, , , E-3 633, , Excess/(Deficit) in Revenue 127, , Expenditures Included Above Which are by Statute Deferred Charges to Budget of Succeeding Year Emergency E Fund Balance, Beginning of Year E 286, , Decreased by: Utilized by Operating Budget E-2 165, , Fund Balance, End of Year E 249, , See independent auditor's repo1t and accompanying notes.

35 SWIMMING POOL UTILITY FUND - OPERATING FUND YEAR ENDED DECEMBER 31, 2017 STATEMENT OF REVENUES - REGULATORY BASIS E-2 Excess or Budget Realized (Deficit) Operating Fund Balance Anticipated E-1 165, , Membership Fees E-1, E-5 350, , , Refreshment Stand E-1, E-5 8, , , Office Miscellaneous E-1, Below 6, , , Rentals/ Guest Passes E-1, E-5 104, , (2,755.00) 633, , , Analysis of Miscellaneous Interest Earned on Investments 3, Other Office Misc 11, E-5 14, Due from Swimming Pool Capital Fund: Interest Earnings E Above 14,570.06

36 SWIMMING POOL UTILITY FUND - OPERA TING FUND YEAR ENDED DECEMBER 31, 2017 STATEMENT OF APPROPRIATIONS - REGULATORY BASIS E-3 Modified Paid or Appropriation Budget Budget Charged Reserve Operating: Salaries and Wages 210, , , , Other Expenses 180, , , , Total Operating E-1 390, , , , Capital Improvement Fund: Capital Improvements 10, , , Capital Improvements - Pool House 25, , , , Capital Improvements - Parking 90, , , Capital Outlay Total Capital Improvement Fund E-1 125, , , , Statuto1y Expenditures: Contribution to: Social Security System (O.A.S.I.) 17, , , , Unemployment Compensation Insurance Total Statutory Expenditures E-1 17, , ,347.1 I 2, Utility Budget Surplus to Current Fund Budget E-1 100, , , , , , , E-1 Below E Cash Disbursements E-5 476, Encumbrance Payable E-8 12, Above 488,334.33

37 SWIMMING POOL UTILITY FUND - CAPITAL FUND YEARS ENDED STATEMENT OF CAPITAL FUND BALANCE - REGULATORY BASIS E-4 Balance, December 31, 2016 E Balance, December 31, 2017 E

38 GENERAL FIXED ASSETS

39 GENERAL FIXED ASSETS ACCOUNT GROUP COMPARATIVE STATEMENT OF GENERAL FIXED ASSETS GROUP OF ACCOUNTS - REGULATORY BASIS F 2017 At December 31, 2016 ASSETS Land 41,478, Improvements 10,126, Machinery, Equipment and Other ** 14,308, ** F-1 65,913, ,478, ,126, ,814, ,419, RESERVE Reserve for Fixed Assets F-2 65,913, ,419, ** As per "Acclaim" - Fixed Asset Inventory

40 NOTES TO THE FINANCIAL STATEMENTS

41 NOTES TO FINANCIAL STATEMENTS I. Summary of Significant Accounting Policies The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The GASB Codification establishes seven fund types and two account groups to be used by governmental units when reporting financial position and results of operations in accordance with generally accepted accounting principles in the United States of America (GAAP). The financial statements of the Borough of Ramsey (the "Borough") have been prepared in conformity with accounting principles and practices prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the "Division") which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Such principles and practices are designed primarily for determining compliance with legal provisions and budgetary restrictions and as a means of reporting on the stewardship of public officials with respect to public funds. Under the modified accrual basis of accounting, the Borough accounts for its financial transactions through the following separate funds, which differ from the fund structure required by GAAP. A. Reporti11g E11tity The Borough operates under an elected Mayor/Council form of government. The Borough's major operations include public safety, road repair and maintenance, sanitation, fire protection, recreation and parks, health services, and general administrative services. GASB has issued Statement No. 14, which requires the financial reporting entity to include both the primary government and those component units for which the primary government is financially accountable. Financial accountability is defined as appointment of a voting majority of the component unit's board and either a) the ability to impose will by the primary government orb) the possibility that the component unit will provide a financial benefit to or impose a financial burden on the primary government. However, the municipalities in the State of New Jersey do not issue financial statements in accordance with GAAP, and thus, do not comply with all of the GASB pronouncements. The financial statements contained herein include only those boards, bodies, officers, or commissions as required by NJS 40A:5-5. Accordingly, the financial statements of the Borough do not include the Volunteer Fire Department, First Aid Organization or Public Library which are considered component units under GAAP. Complete financial statements of the above components can be obtained by contacting the Treasurer of the respective entity. B. Fu11d Accou11ting Fund accounting is designed to demonstrate legal compliance and to aid financial administration by segregating transactions related to certain Borough functions or activities. An account group, on the other hand, is designed to provide accountability for certain assets and liabilities that are not recorded in those Funds. The Borough has the following funds and account group: Current Fund- resources and expenditures for governmental operations of a general nature, including Federal and State grant funds. Trust fund - receipts, custodianship, and disbursements of funds in accordance with the purpose for which each reserve was created, and receipt and disbursement of funds that provide assistance to certain residents of the Borough pursuant to Title 44 of New Jersey Statutes. General Capital Fund - receipt and disbursement of funds for the acquisition of general capital facilities, other than those acquired in the Current Fund. Water-Sewer Operating and Capital Funds - account for the operation and acquisition of capital facilities of the water-sewer utility. Swimming Pool Operating and Capital Funds - account for the operations and acquisition of capital facilities of the swimming pool utility. Public Assistance Trust Funds - receipt and disbursement of funds that provide assistance to certain residents of the Borough pursuant to Title 44 of New Jersey Statutes. See independent auditor's report

42 NOTES TO FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) B. Fund Accounting (continued) General Fixed Assets - used to account for fixed assets required in general governmental operations. Budgets and Budgetary Accounting- An annual budget is required to be adopted and integrated into the accounting system to provide budgetary control over revenues and expenditures. Budget amounts presented in the accompanying financial statements represent amounts adopted by the Borough and approved by the State Division of Local Government Services, in accordance with N.J.S.A. 40A:4 et seq. Budgets are adopted on the same basis of accounting utilized for the preparation of the Borough's financial statements. C. Measurement Focus and Basis of Accounting The financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method of accounting, revenues, except for State/Federal Aid, are recognized when received and expenditures are recorded when incurred. The accounting principles and practices prescribed for municipalities by the Division differ in certain respects from GAAP applicable to local government units. The more significant differences are as follows: Property Tax Revenues - Real property taxes are assessed locally, based upon the assessed value of the property. The tax bill includes a levy for Municipal, County and School purposes. The bills are mailed annually in June for that calendar year's levy. Taxes are payable in four quarterly installments on February 1, May 1, August 1, and November I. The amounts of the first and second installments are determined as one quarter of the total tax levied against the property for the preceding year. The installment due the third and fourth quarters is determined by taking the current year levy less the amount previously charged for the first and second installments, with the remainder being divided equally. If unpaid on these dates, the amount due becomes delinquent and subject to interest at 8% per annum, or 18% on any delinquency amount in excess of 1,500. The school levy is turned over to the Board of Education as expenditures are incurred, and the balance, if any, must be transferred as of June 30, of each fiscal year. County taxes are paid quarterly on February 15, May 15, August 15 and November 15, to the County by the Borough. When unpaid taxes or any municipal lien, or part thereof, on real property, remains in arrears on April first in the year following the calendar year levy when the same became in arrears, the collector in the municipality shall subject to the provisions of the New Jersey Statutes enforce the lien by placing the property on a tax sale. Annual in rem tax foreclosure proceedings are instituted to enforce the tax collection or acquisition of title to the property by the Borough. In accordance with the accounting principles prescribed by the State of New Jersey, current and delinquent taxes are realized as revenue when collected. Since delinquent taxes and liens are fully reserved, no provision has been made to estimate that portion of the taxes receivable and tax title liens that are uncollectible. GAAP requires property tax revenues to be recognized in the accounting period when they become susceptible to accrual, reduced by an allowance for doubtful accounts. Miscellaneous Revenues - Miscellaneous revenues are recognized on a cash basis. Receivables for the miscellaneous items that are susceptible to accrual are recorded with offsetting reserves on the statement of financial position of the Borough's Current Fund and Swimming Pool Utility Fund. GAAP requires such revenues to be recognized in the accounting period when they become susceptible to accrual. Grant Revenues - Federal and State grants, entitlements or shared revenues received for purposes normally financed through the Current Fund, are recognized when anticipated in the Borough's budget. GAAP requires such revenues to be recognized in the accounting period when they become susceptible to accrual. Budgets and Budgetary Accounting - An annual budget is required to be adopted and integrated into the accounting system to provide budgetary control over revenues and expenditures for the Current Fund and Swimming Pool Utility Fund. The Borough is not required to adopt budgets for the following funds: Trust Funds General Capital Fund Public Assistance Fund Swimming Pool Capital Fund Water/Sewer Capital Fund See independent auditor's report

43 NOTES TO FINANCIAL STATEMENTS I. Summary of Significant Accounting Policies (Continued) C. Measurement Focus and Basis of Accounting (Continued) The governing body shall introduce and approve the annual budget not later than February 10, of the fiscal year. The budget shall be adopted not later than March 20, and prior to adoption must be ce1iified by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. The director of the Division of Local Government Services, with the approval of the Local Finance Board may extend the introduction and approval and adoption dates of the municipal budget. The budget is prepared by fund, function, activity and line item (salary or other expense) and includes information on the previous year. The legal level of control for appropriations is exercised at the individual line item level for all operating budgets adopted. Emergency appropriations, those made after the adoption of the budget and determination of the tax rate, may be authorized by the governing body of the municipality. During the last two months of the fiscal year, the governing body may, by a 2/3 vote, amend the budget through line item transfers. Management has no authority to amend the budget without the approval of the Governing Body. Expenditures may not legally exceed budgeted appropriations at the line item level. During 2017 and 2016, the Mayor and Council approved several budget transfers. Expenditures - Expenditures arc recorded in the "budgetary" basis of accounting. Generally, expenditures arc recorded when an amount is encumbered for goods or services through the issuance ofa purchase order in conjunction with an encumbrance accounting system. Outstanding encumbrances at December 31 are reported as a cash liability in the financial statements. Unexpended or uncommitted appropriations at December 31 are reported as expenditures through the establishment of appropriation reserves, unless canceled by the governing body. Except for unmaturcd interest on general long-term debt which should be recognized when due, GAAP requires expenditures, if measurable, to be recognized in the accounting period in which the fund liability is incurred. Encumbrances - Contractual orders outstanding at December 31 are reported as expenditures through the establishment of an encumbrance payable. Encumbrances do not constitute expenditures under GAAP. Appropriation Reserves - Appropriation Reserves arc available, until lapsed, at the close of the succeeding year to meet specific claims, commitments or contracts incurred during the preceding year. Lapsed appropriation reserves arc recorded as additions to income. Appropriation reserves do not exist under GAAP. Compensated Absences - Expenditures relating to obligations for unused vested accumulated vacation and sick pay arc not recorded until paid. GAAP requires that the amount that would normally be liquidated with expendable available financial resources be recorded as an expenditure in the operating funds and the remaining obligations be recorded as a long-term obligation. Property Acquired for Taxes - Property acquired for taxes is recorded in the Current Fund at the assessed valuation when such property was acquired and fully reserved. GAAP requires such property to be recorded in the General Fixed Assets Account Group at market value on the date of acquisition. lnterfunds - Intcrfund receivables in the Current Fund arc recorded with offsetting reserves, which arc created by charges to operations. Income is recognized in the year the receivables arc liquidated. Intcrfund receivables in the other funds arc not offset by reserves. GAAP does not require the establishment of an offsetting reserve. Inventories - The cost of inventories of supplies for all funds are recorded as expenditures at the time individual items are purchased. The costs of inventories are not included on the various statement of financial position. Cash and Investments - Cash includes amounts in demand deposits, as well as sh011-tcrm investments, with a maturity date within one year of the date acquired by the government. Investments arc stated at cost and arc limited by N.J.S.A. 40A:5-15. l(a). Deferred Charges to Future Taxation Funded and Unfunded - Upon the authorization of capital projects, the Borough establishes deferred charges for the costs of the capital projects to be raised by future taxation. Funded deferred charges relate to permanent debt issued, whereas unfunded deferred charges relate to temporary or nonfunding of the authorized cost of capital projects. According to N.J.S.A. 40A:2-4, the Borough may levy taxes on all taxable property within the local unit to repay the debt. Annually, the Borough raises the debt requirements for that particular year in the current budget. As the funds arc raised by taxation, the deferred charges arc reduced. Sec independent auditor's report

44 NOTES TO FINANCIAL STATEMENTS I. Summary of Significant Accounting Policies (Continued) C. Measurement Focus and Basis of Accounting (Continued) General Fixed Assets - N.J.A.C. 5: accounting for governmental fixed assets continues the requirement that all local units shall have and maintain a fixed assets accounting and reporting system that differs in certain respects from GAAP. The fixed assets accounting and rep01iing system shall establish and maintain a physical inventory of fixed assets of nonexpendable, tangible property as defined and limited by the U.S. Office of Management and Budget Circular 87, Cost Principals for State, Local and Indian Governments and shall place a value on all fixed assets whether constructed or acquired through purchase, grant, or gift. Fixed assets acquired after December 31, 1985 shall be valued on the basis of actual cost; prior to that time, they may be valued at cost or estimated historical cost. The fixed assets accounting and reporting system shall also have a subsidiary ledger, consisting of detailed property records for controlling additions, retirements and transfers of fixed assets and such ledger shall be maintained and reconciled periodically and at the end of every fiscal year with the general ledger control accounts for fixed assets. The system shall also provide property management standards for fixed assets that ensures that property records are maintained accurately, to reflect a description and source of the property, its ownership, the acquisition cost and date, the percentage of Federal participation in the acquisition, and the location, use and condition of the property. Property management staqdards for fixed assets shall also ensure that periodic physical inventories are taken and reconciled with property records, that a control system is provided with adequate safeguards against loss, damage, or theft of property and that property is adequately maintained to keep the property in good condition. A Statement of General Fixed Assets shall be in every annual audit report. Use of estimates - The preparation of financial statements requires management of the Borough to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from these estimates. Comparative Data - Comparative data for the prior year has been presented in the accompanying statements of financial position and statements of operations in order to provide an understanding of changes in the Borough's financial position and operations. However, comparative data have not been presented in all statements because their inclusion would make certain statements unduly complex and difficult to understand. D. Basic Financial Statements The GASB Codification also defines the financial statements of a governmental unit to be presented in the financial statements to be in accordance with GAAP. The Borough presents the financial statements listed in the table of contents, which are required by the Division, and which differ from the financial statements required by GAAP. In addition, the Division requires the financial statements listed in the table of contents to be referenced to the supplementary schedules. This practice differs from GAAP. 2. Cash and Cash Equivalents Custodial Credit Risk-Deposits. Custodial credit risk is the risk that in the event ofa bank failure, the government's deposits may not be returned to it. The Borough's policy is based on New Jersey Statutes requiring cash be deposited only in New Jersey based banking institutions that participate in New Jersey Governmental Depository Protection Act (GUDPA) or in qualified investments established in New Jersey Statutes 40A: 5-15.l(a) that are treated as cash equivalents. As of December 31, 2017 and 2016, 0 of the Borough's bank balance of24,954, and 18,395,678.27, respectively, was exposed to custodial credit risk. 3. Investments Interest Rate Risk. The Borough does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. However, New Jersey Statutes 40A: (a) limits the length of time for most investments to 397 days. Credit Risk. New Jersey Statutes 40A: 5-15.l(a) limits municipal investments to those specified in the Statutes. The type of allowable investments are Bonds of the United States of America or of the local unit or school districts of which the local unit is a part of: obligations offederal agencies not exceeding 397 days; government money market mutual funds; the State of New Jersey Cash Management Plan; local government investment pools; or repurchase of fully collateralized securities. See independent auditor's report

45 NOTES TO FINANCIAL STATEMENTS 3. Investments (Continued) Concentration of Credit Risk. The Borough places no limit on the amount the Borough may invest in any one issuer. As of December 31, 2017 and 2016, the Borough had no investments. 4. Property Taxes Receivable, Tax Title Liens In accordance with the accounting principles prescribed by the State of New Jersey, taxes receivable and tax title liens are realized as revenue when collected. Since delinquent taxes and liens are fully reserved, no provision has been made to estimate that portion of the taxes receivable and tax title liens that arc uncollectible. For the year ended December 31, 2017 and 2016, property taxes receivables were 519, and 575, respectively and tax title liens receivable were 129, and 164,123.62, respectively. 5. Municipal Debt The Local Bond Law, N.J.S.A. 40A:2, governs the issuance of bonds to finance general municipal and utility capital expenditures. All bonds arc retired in serial installments within the statutory period of usefulness. Bonds issued by the Borough arc general obligation bonds, backed by the full faith and credit of the Borough. Bond Anticipation Notes, which are issued to temporarily finance capital projects, must be paid off within ten years or retired by the issuance of bonds. A. Summary of Municipal Debt Issued General Capital Fund: Bonds and Notes Payable Water-Sewer Utility Capital Fund: Notes Payable Loans Payable Total Issued ,605,300 1,955,000 1,107,277 10,667, ,858,300 2,255,000 1,204,644 11,317, ,086,300 1,130,000 1,357,474 11,573,774 Total Authorized But Not Issued General Capital Fund: Bonds and Notes Payable Water-Sewer Utility Capital Fund: Bonds and Notes Payable Swim Pool Utility Capital Fund: Bonds and Notes Payable Total Authorized But Not Issued 1,817,650 1,817, ,000 1,817,650 2,792, ,000 1,817,650 2,463,650 Net Bonds and Notes Issued and Authorized But Not Issued 12,485,227 14,110,594 14,037,424 See independent auditor's report. -7-

46 NOTES TO FINANCIAL STATEMENTS 5. Municipal Debt (Continued) B. Summary of Statutory Debt Condition -Annual Statements The summarized statement of debt condition which follows is prepared in accordance with the required method of setting up the Annual Debt Statement and indicates a statutory net debt of.216 % and.414% on December 31, 2017 and 2016 respectively. The Equalized Valuation Basis of the Borough at December 31, 2017 and 2016 was 3,522,212,563 and 3,409,438,542, respectively Debt Authorized Gross Debt Deductions Net Debt Local School District 10,200,000 10,200,000 Water-Sewer Utility Capital Fund 4,879,927 4,879,927 General Capital Fund 7,605,300 22,685,227 15,079,927 7,605,300 7,605, Debt Authorized Gross Debt Deductions Net Debt Local School District 12,065,000 12,065,000 Water-Sewer Utility Capital Fund * 5,277,294 5,277,294 General Capital Fund 8,833,300 26,175,594 12,065,000 8,833,300 14,110,594 * The 2016 debt service for Water - Sewer was all included in the calculation of net debt as it was not self-liquidating. C. Borrowing Power Under N.J.S.A. 40A:2-6 as amended 3 1/2 % of Equalized Valuation Basis Net Debt Remaining Borrowing Power ,277,440 7,605, ,672, ,330,349 14,110, ,219,755 See independent auditor's report. - 8-

47 NOTES TO FINANCIAL STATEMENTS D. Bond Anticipation Notes Payable Bond Anticipation Notes payable at December 31, consisted of the following: Interest Final General Caeital Fund: Ordinance# Rate Maturity Date % 1/12/2018 1,723,300 1,863, % 1/12/2018 1,160,000 1,260, % 1/12/ , , % 6/8/2018 1,080,000 1,315, % 1/12/2018 2,000,000 2,150, % 1/12/ , , % 6/8/ ,000 7,605,300 7,584,300 Water-Sewer Caeital Fund: Ordinance# % 1/12/ , , % 1/12/ , , % 6/8/2018 1,225,000 1,325,000 1,955,000 2,255,000 E. Bonds Authorized but not Issued As of December 31, 2017 and 2016 the Borough of Ramsey had authorized but not issued bonds as follows: General Capital Fund Water-Sewer Utility Capital Fund 1,817, ,000 1,817,650 F. Loan Agreements The Borough issued subordinated bonds of 690,000 (Dated 11/08/07), 124,620 (Dated 06/26/08), and 95,625 (Dated 02/17 /l 0) to the New Jersey Environmental Infrastructure Trust (the "Infrastructure Trust") and a 673,610 (Dated 11/08/07), 124,620 (Dated 06/26/08), and 286,875 (Dated 02/17/10) subordinated bonds to the State of New Jersey pursuant to the Infrastructure Trust Program. The total loan payable as of December 31, 2017 and 2016 was 1,107, and 1,204,644.46, respectively. The bonds were issued for the construction of arsenic treatment systems at various wells and treatment facilities. The bonds issued to the Infrastructure Trust bear interest at a rate of 3.40% to 5.00%. The bonds issued through the State ofnew Jersey are non-interest bearing. The loan had been recorded on the balance sheet of the Water-Sewer Utility Fund as an accounts receivable with a corresponding account payable. The current receivable is 16,390 as of December 31, 2017 and See independent auditor's report. -9-

48 NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2017 AND Calculation of "Self-Liquidating Purpose" Per N.J.S.A. 40A:2-45 A. Water-Sewer Utility Cash Receipts from Fees, Rents or Other Charges 8,831, ,346, Deductions: Operating and Maintenance Cost 8,319, Debt Service per Water-Sewer Account 460, Total Deductions 8,780, ,435, , ,780, Excess (Deficit) in Revenue - Self Liquidating 51, Deficit Capitalized at 5% for Inclusion in Net Debt * 1,020, (433,995.19) * (8,679,903.80) * The 2016 debt service for Water - Sewer was all included in the calculation of net debt as it was not self-liquidating. B. Swim Pool Utility Cash Receipts from Fees, Rents or Other Charges 595, , Deductions: Operating and Maintenance Cost 533, Debt Service per Swim Pool Account Total Deductions 533, , , Excess(Deficit) in Revenue - Self Liquidating 62, Deficit Capitalized at 5% for Inclusion in Net Debt 1,258, (4,294.72) (85,894.40) 7. lnterfund Receivables and Payables Interfund receivables and payables at December 31, 2017 were as follows: Fund Type Current Fund Grant Fund Trust Fund Capital Fund Water-Sewer Fund Water-Sewer Capital Fund Swimming Pool Utility Fund Swimming Pool Capital Fund Receivables 2, , , , ,016, Payables 414, , , ,016, , I 1,892, ,892, See independent auditor's report

49 NOTES TO FINANCIAL ST A TEMENTS 8. Fund Balances Appropriated Fund balances at December 31, 2017 and 2016, which were appropriated and included as anticipated revenue in their own respective funds for the years ending December 31, 2017 and 2016, were as follows: Current Fund Water-Sewer Utility Operating Fund Swimming Pool Utility Operating Fund 2018 Budget 2,925, ,318, , Budget 2,650, ,255, , Property Tax Calendar Property tax revenues are collected in quarterly installments due February I, May I, August I and November I. Property taxes unpaid on April I of the year following their final due date are subject to tax sale in accordance with State statutes. The amount of tax levied includes not only the amount required in support of the Borough's annual budget, but also the amounts required in support of the budget of the entities that follow. Receivables for property taxes are recorded with offsetting reserves on the balance sheet of the Borough's Current Fund; accordingly, such amounts are not recorded as revenue until collected. GAAP requires such revenue to be recognized when they are available and measurable, reduced by an allowance for doubtful accounts. School Taxes The Borough is responsible for levying, collecting and remitting school taxes for the Board of Education. Operations are charged for the full amount required to be raised from taxation to operate the local school district. County Taxes The municipality is responsible for levying, collecting and remitting county taxes for the County of Bergen. Operations is charged for the amount due the County for the year, based upon the ratables required to be certified to the County Board of Taxation by January 10 of the current year. In addition, operations is charged for the County share of Added and Omitted Taxes certified to the County Board of Taxation by October 10 of the current year, and due to be paid to the County by February 15 of the following year. Prepaid Taxes Taxes collected in advance are recorded as cash liabilities in the financial statements and were 6,974, and 607, for the year ended December 31, 2017 and 2016, respectively. Reserve for U11collected Taxes The inclusion of the "Reserve for Uncollected Taxes" appropriation in the Borough's annual budget protects the Borough from taxes not paid currently. The Reserve, the minimum amount of which is determined on the percentage of collections experienced in the immediate preceding year, is required to provide assurance that cash collected in the current year will provide sufficient cash flow to meet expected obligations. A Reserve for Uncollected Taxes is not established under GAAP. 10. Pensions Substantially all Borough employees participate in the Public Employees Retirement System (PERS) and the Police and Fireman's Retirement System of New Jersey (PFRS). The PERS and PFRS systems are cost sharing multiple-employer contributory defined benefit plans, administered by the Division of Pensions in the Department of the Treasury, State of New Jersey. The PERS was established in January 1955 under provisions of N.J.S.A. 43: 15A and provides retirement, death, disability and medical benefits to certain qualifying Plan members and beneficiaries. Membership is mandatory to substantially all full time employees and vesting occurs after 8 to IO years of service. Employees who retire at or after age 55 are entitled to a retirement benefit generally determined to be 1155 th of the average annual compensation for the highest three fiscal years compensation for each year of membership during years of credible service. The PFRS was established in July 1944, under the provisions ofn.j.s.a. 43:16A to provide coverage to substantially all full time county and municipal police or firefighters and state police appointed after June 30, Membership is mandatory for such employees with vesting occurring after IO years of membership. Sec independent auditor's report

50 NOTES TO FINANCIAL ST A TEMENTS IO. Pensions (Continued) According to state law, all obligations of PERS and PFRS will be assumed by the State of New Jersey should the PERS and PFRS be terminated. The State of New Jersey issues publicly available financial reports that include the financial statements and required supplementary information of the PERS and PFRS. This report may be obtained by writing to the State of New Jersey, Department of the Treasury, Division of Pensions and Benefits, P.O. Box 295, Trenton, New Jersey Summa,y of Significant Accounting Policies -PERS and PFRS GASB 68, Accounting and Financial Reporting for Pensions, is effective beginning with the year ending June 30, The objective if this Statement is to improve accounting and financial reporting by state and local governments for pensions. It also improves information provided by state and local governmental employers about financial support for pensions that is provided by other entities. This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate to pensions that are provided through pension plans administered as trusts or equivalent arrangements that meet certain criteria. Amendments to and further clarification of GASB 68, include GASB 71, Pension Transition for Contributions Made Subsequent to the Measurement Date, GASB 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not Within the Scope of GASB Statement 68 and Amendments to Certain Provisions of GASB 67 and 68., and GASB 78, Pensions Provided Through Certain Multiple-Employer Defined Benefit Pension Plans. New Jersey municipalities and counties do not follow GAAP accounting principles and, as such, do not follow GASB requirements with respect to recording the net pension liability as a liability on their balance sheets. However, NJ.AC. 5: ( c )(2) requires municipalities and counties to disclose GASB 68 information in the Notes to the Financial Statements. Therefore, the following information with regards to GASB 68 is for disclosure purposes only. For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the PERS and additions to/deductions from PERS fiduciary net position have been determined on the same basis as they are reported by PERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Public Employees' Retirement System (PERS) The Public Employees' Retirement System (PERS) was established in January, 1955 under the provisions ofn.j.s.a. 43: 15A to provide retirement, death, disability and medical benefits to certain qualified members. The Public Employees' Retirement System is a cost-sharing multiple-employer plan. Membership is mandato1y for substantially all full time employees of the State or any county, municipality, school district or public agency provided the employee is not required to be a member of another State-administered retirement system or other state or local jurisdiction. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2017 and June 30, 2016, the Borough has disclosed a liability of 13,942,669 and 17,543,299, respectively, for its proportionate share of the net pension liability for reporting purposes only. The net pension liability was measured as of June 30, 2017, and the total pension liability to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2016, which was rolled forward to June 30, The total pension liability for the June 30, 2016 measurement date was determined by an actuarial valuation as of July 1, The Borough's proportion of the net pension liability is based on the ratio of the contributions as an individual employer to total contributions to the PERS during the years ended June 30, and At June 30, 2017, the Borough's proportion was %, which was an increase of.0007% from its proportion measured as of June 30, See independent auditor's report