TOWNSHIP OF EDISON COUNTY OF MIDDLESEX NEW JERSEY

Transcription

1 TOWNSHIP OF EDISON COUNTY OF MIDDLESEX NEW JERSEY FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA AND INFORMATION FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 WITH REPORT OF INDEPENDENT AUDITORS HODULIK & MORRISON, P.A. CERTIFIED PUBLIC ACCOUNTANTS REGISTERED MUNICIPAL ACCOUNTANTS HIGHLAND PARK, N.J.

2 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY TABLE OF CONTENTS PAGE(S) PART I Independent Auditor's Report FINANCIAL STATEMENTS A A- 1 A-2 A-3 B B-1 c C-1 D D- 1 D-2 D-3 D-4 E E- 1 E-2 E- 3 E- 4 F G Current Fund - Balance Sheet - Regulatory Basis - December 3 1, 2016 Current Fund - Statement of Operations and Change in Fund Balance - Regulatory Basis Current Fund - Statement of Revenues - Regulatory Basis Current Fund - Statement of Expenditures - Regulatory Basis Trust Fund - Balance Sheet - Regulatory Basis - December 31, 2016 Assessment Trust Fund - Statement of Fund Balance - Regulatory Basis General Capital Fund - Balance Sheet - Regulatory Basis - December 31, 2016 General Capital Fund - Statement of Change in Fund Balance - Regulatory Basis Water Utility Fund - Balance Sheet - Regulatory Basis - December 31, 2016 Water Utility Operating Fund - Statement of Operations and Changes in Fund Balance - Regulatory Basis Water Utility Capital Fund - Statement of Fund Balance - Regulatory Basis Water Utility Operating Fund - Statement of Revenues Water Utility Operating Fund - Statement of Expenditures Sewer Utility Fund - Balance Sheet - Regulatory Basis - December 31, 2016 Sewer Utility Operating Fund - Statement of Operations and Change in Fund Balance - Regulatory Basis Sewer Utility Operating Fund - Statement of Change in Fund Balance Sewer Utility Operating Fund - Statement of Revenues - Regulatory Basis Sewer Utility Operating Fund - Statement of Expenditures - Regulatory Basis Public Assistance - Comparative Balance Sheet - Regulatory Basis - December 31, 2016 and December 31, 2015 Statement of Governmental Fixed Assets NOTES TO FINANCIAL ST A TEMENTS PART II - REQUIRED SUPPLEMENT ARY INFORMATION Sch. 1 Schedule of the Township's Share of the Net Pension Liability (PERS) Sch. 2 Schedule of the Township's Contributions (PERS) Sch. 3 Schedule of the Township's Share of the Net Pension Liability (PFRS) Sch. 4 Schedule of the Township's Contributions (PFRS) Notes to Required Supplementary Pension Information

3 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY TABLE OF CONTENTS PAGE(S) PART III - SINGLE AUDIT SECTION 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 Independent Auditor's Report on Compliance for Each Major Program; Report on Internal Control Over Compliance and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance SCHEDULE OF EXPENDITURES OF FEDERAL AW ARDS Sch. A Schedule of Expenditures of Federal Awards 103 Notes to the Schedule of Expenditures of Federal Awards 104 Sch. C Sch. D Schedule of Findings and Questioned Costs Summary Schedule of Prior Findings PART IV - SUPPLEMENT ARY SCHEDULES Current Fund A-4 A-5 A-6 A-7 A-8 A-9 A-10 A-11 A-12 A-13 A-14 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 Schedule of Current Fund Cash and Investments Schedule of Change Funds Schedule of Due from State of New Jersey - Senior Citizens and Veterans Deductions per Ch. 73, P.L Schedule of Taxes Receivable and Analysis of Property Tax Levy Schedule of Tax Title Liens Schedule of Property Acquired for Taxes at Assessed Valuation Schedule of Revenue Accounts Receivable Schedule of Prepaid Taxes Schedule of Interfunds Receivable Schedule of Interfunds Payable Schedule of Changes in Various Payable and Reserves Schedule of 2015 Appropriation Reserves Schedule of Tax Overpayments Schedule of Reserve for Tax Appeals Schedule of Reserve for Encumbrances Schedule of Reserve for Special Garbage District Schedule of Special Emergency Note Schedule of Taxes Payable Schedule of Deferred Charges Schedule of Due from Current Fund - State and Federal Grants Fund Schedule of State and Federal Grants Receivable Schedule of Reserve for State and Federal Grants - Appropriated Schedule of Reserve for State and Federal Grants - Unappropriated Schedule of Unallocated Receipts - State and Federal Grants Fund

4 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY TABLE OF CONTENTS PAGE(S) Trust Fund 138 B-2 B-3 B-4 B-5 B-6 B-7 B-8 B-9 B-10 B-11 B-12 B-13 B-14 B-15 B-16 B-17 B-18 Schedule of Trust Cash and Investments - Treasurer Schedule of Trust Cash - Collector Analysis of Assessment Trust Cash and Investments Schedule of Assessment Lien Interest and Costs Schedule of Assessment Liens Schedule of Due from Dog Registrar - Animal Control Fund Schedule of Accounts Receivable Schedule of Reserve for Open Space Schedule of Reserve for Assessments, Liens and Interest and Costs Assessment Trust Fund Schedule of Due to State of New Jersey - Animal Control Fund Schedule of Reserve for Encumbrances - Animal Control Fund Schedule of Reserve for Animal Control Expenditures - Animal Control Fund Schedule of Other Escrow Funds - Trust-Other Fund Schedule of Other Reserves - Trust-Other Fund Schedule of Changes in Various Reserves Schedule of Interfunds Receivable Schedule of Interfunds Payable General Capital Fund 155 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 C-16 C-17 C-18 C-19 Schedule of General Capital Cash and Investments - Treasurer Analysis of General Capital Cash and Investments Schedule of Accounts Receivable - Edison Free Public Library Schedule of Interfunds Payable Schedule of Deferred Charges to Future Taxation - Funded Schedule of Deferred Charges to Future Taxation - Unfunded Schedule of Improvement Authorizations Schedule of Bond Anticipation Notes Schedule of Capital Improvement Fund Schedule of Infrastructure Schedule of Serial Bonds - General Capital Fund Schedule of Green Trust Program Loans Payable Schedule of Reserve for Grants Receivable Schedule of Due from Various Grantor Agencies Schedule of Reserve for Acquisition of Property for/and Construction of Parking Facilities Schedule of Reserve for Payment of Debt Service Costs Schedule of Insurance Proceeds Receivable Schedule of Bonds and Notes Authorized but not Issued

5 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY TABLE OF CONTENTS PAGE(S) Water Utility Fund 170 D-5 D-6 D-7 D-8 D-9 D-10 D-11 D-12 D-13 D-14 Schedule of Water Utility Cash and Investments - Treasurer Analysis of Water Utility Capital Cash and Investments Schedule of Reserve for Amortization - Water Utility Capital Fund Schedule of Due to/from Water Utility Operating Fund - Water Utility Capital Fund Schedule of Due to Current Fund - Water Utility Operating Fund Schedule of Due to Water Utility Capital Fund- Water Utility Operating Fund Schedule of Fixed Capital - Water Utility Capital Fund Schedule of Deferred Reserve for Amortization - Water Utility Capital Fund Schedule of Accrued Interest on Bonds and Notes - Water Utility Operating Fund Schedule of Serial Bonds - Water Utility Capital Fund Sewer Utility Fund 178 E- 5 E-6 E- 7 E- 8 E-9 E-10 E-11 E-12 E-13 E-14 E-15 E-16 E-17 E-18 E-19 E-20 E-21 E-22 E-23 E-24 E-25 E-26 Schedule of Sewer Utility Operating Cash and Investments - Treasurer Schedule of Sewer Utility Cash - Collector Schedule of Sewer Rents Receivable Schedule of Sewer Rent Liens Schedule of Interfunds Receivable/Payable Schedule of Serial Bonds - Sewer Utility Capital Fund Schedule of Fixed Capital Schedule of Due to Sewer Utility Operating Fund Schedule of Fixed Capital Authorized and Uncompleted - Sewer Utility Capital Fund Schedule of Bond Anticipation Notes Schedule of Reserve for MCIA Lease Purchase Payable Schedule of Sewer Rent Overpayments Schedule of Reserve for Sewer Lien Foreclosures Schedule of Accounts Payable Schedule of 2015 Appropriation Reserves - Sewer Utility Operating Fund Schedule of Accrued Interest on Bonds and Notes Schedule oflmprovement Authorizations -Sewer Utility Capital Fund Schedule of Capital Improvement Fund Schedule of Reserve for Amortization Schedule of Deferred Reserve for Amortization Schedule of Down Payments on Improvements Schedule of Bonds and Notes Authorized but not Issued Public Assistance Fund 196 F- 1 F-2 F- 3 F- 4 Schedule of Public Assistance Cash and Investments - Treasurer Public Assistance Fund - Schedule of Revenues Public Assistance Fund - Schedule of Expenditures Schedule of Reserve for Public Assistance

6 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY TABLE OF CONTENTS PAGE(S) PART V - SUPPLEMENTARY DATA Length of Service Award Program (LOSAP) - (Unaudited) Independent Accountant's Review Report Exh. A Schedule of Length of Service Award Program (LOSAP) - (Unaudited) - Statement of Assets, Liabilities and Net Assets Exh. B Schedule of Length of Service Award Program (LOSAP)- (Unaudited) Statement of Revenues, Expenses and Other Changes in Net Assets Notes to Financials Statements - Length of Service Award Program (LOSAP) Other Supplementary Data Combined Balance Sheet - All Funds for the Year Ending December 31, 2016 Comparative Statement of Operations - Change in Fund Balance - Current Fund Comparative Statement of Operations - Change in Fund Balance - Sewer Utility Fund Comparative Schedule of Tax Rate Information Comparison of Tax Levies and Collection Currently Delinquent Taxes and Tax Title Liens Property Acquired for Tax Title Lien Liquidation Comparison of Sewer Utility Levies and Collections Comparative Schedule of Fund Balances Required Supplementary Information - Postemployment Health Benefits Officials in Office and Surety Bonds PART VI - GENERAL COMMENTS AND RECOMMENDATIONS General Comments Recommendations Acknowledgement

7 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY PART I INDEPENDENT AUDITOR'S REPORT FINANCIAL STATEMENTS - REGULATORY BASIS - 1 -

8 HODULIK & MORRISON, P.A. CERTIFIED PUBLIC ACCOUNT ANTS REGISTERED MUNICIPAL ACCOUNTANTS PUBLIC SCHOOL ACCOUNTANTS 1102 RARITAN A VENUE, P.0. BOX 1450 HIGHLAND PARK, NJ (732) (732) (FAX) ANDREW G. HODULIK, CPA, RMA, PSA ROBERTS. MORRISON, CPA, RMA, PSA MEMBERS OF: AMERICAN INSTITUTE OF CPA'S NEW JERSEY SOCIETY OF CPA'S REGISTERED MUNICIPAL ACCOUNTANTS OF N.J. INDEPENDENT AUDITOR'S REPORT Honorable Mayor and Members of the Municipal Council Township of Edison Middlesex County, New Jersey Report on the Financial Statements We have audited the accompanying balance sheets - regulatory basis of the various funds and governmental fixed assets of the Township of Edison, County of Middlesex, New Jersey, as of and for the years ended December 31, 2016 and 2015, and the statements of operations and changes in fund balance - regulatory basis for the years then ended, and the related statements of revenues - regulatory basis and statements of expenditures - regulatory basis of the various funds and the governmental fixed assets for the year ended Decem her 31, 2016, and the related notes to the financial statements, which collectively comprise the basic financial statements of the Township, 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 in accordance with the financial reporting provisions of the Division of Local Government Services, Department of Community Affairs, State of New Jersey. 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 error or fraud. Auditor's Responsibility Our responsibility is to express an opinion 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 the audit requirements prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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 entity's preparation and 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

9 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As described in Note 2, these financial statements were prepared in conformity with accounting practices prescribed or permitted by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, United States of America, that demonstrate compliance with the modified accrual basis, with certain exceptions, and the budget laws of New Jersey, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. These prescribed principles 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. Accordingly, the accompanying financial statements - regulatory basis are not intended to present financial position and results of operations in accordance with accounting principles generally accepted in the United States of America. The effect on the financial statements of the differences between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the "Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles" paragraph, the financial statements referred to in the first paragraph do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial positions of the Township of Edison, County of Middlesex, New Jersey, as of December 31, 2016, the changes in its financial position, or, where applicable, its cash flows for the year then ended. Opinion on Regulatory Basis of Accounting In our opinion, the financial statements - regulatory basis referred to above present fairly, in all material respects, the financial position - regulatory basis of the various funds and governmental fixed assets of the Township of Edison, County of Middlesex, New Jersey as of December 31, 2016 and 2015 and the related statements of operations and changes in fund balance - regulatory basis for the year then ended and the related statements of revenues - regulatory basis and statements of expenditures - regulatory basis of the various funds for the year ended December 31, 2016, on the basis of accounting described in Note 2. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that certain information, including the Notes thereto, (Required Supplementary Information - Part II), as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements is required by the Governmental Accounting Standards Board and is prescribed by the Division of Local Government Services, 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. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquires, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance

10 Other Information Our audit was made for the purpose of forming an opinion on the financial statements of the Township of Edison, County of Middlesex, New Jersey. The information included in Part IV - Supplementary Schedules and Part V - Supplementary Data, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the financial statements of the Township of Edison, County of Middlesex, New Jersey. The information included in Part III - the accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and is also not a required part of the financial statements. The Part III - the schedules of expenditures of federal awards and the Part IV - Supplementary Schedules 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. The information has been subjected to 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 - regulatory basis taken as a whole. The schedules and information contained in Part V - Supplementary Data have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Regulations The financial statements referred to above include the assets and liabilities of the Township's Length of Service Award Program (LOSAP), which, by regulation, is subject to an accountant's review report. The Length of Service Award Program is included in the Trust Fund. The Independent Accountant's Review Report for the LOSAP is included in Part IV - Supplementary Data as listed in the table of contents. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated June 30, 2017 on our consideration of the Township of Edison's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants 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 m considering the Township of Edison's internal control over financial reporting and compliance. HODULIK & MORRISON, P.A. Certified Public Accountants ~~ Robert S. Morrison Registered Municipal Accountant No. 412 Highland Park, New Jersey June 30,

11 FINANCIAL STATEMENTS - REGULATORY BASIS -5-

12 TOWNSHIP OF EDISON MIDDLESEX COUNTY. NEW JERSEY Exhibit-A CURRENT FUND BALANCE SHEET - REGULATORY BASIS DECEMBER 31, 2016 AND 2015 BALANCE BALANCE LIABILITIES, RESERVES BALANCE BALANCE ASSETS REF. DEC. 31, 2016 DEC. 31, 2015 AND FUND BALANCE REF. DEC.3_L_2frl6 DEC. 3L 2015 Cash and Investments - Treasurer A-4 $ 38,585, $ 39,262, Liabilities: Cash - Change Fund A Appropriation Reserves A-3.A-15 $ 5,368, $ 7,094, Due to State ofn.j. per Ch. 20, P.L A-6 5, ,586, ,262, Prepaid Taxes A-11 2,423, , 116, Various Payables A , , Receivables With Offsetting Reserves: Various Reserves A-14 2,205, ,021, Real Estate Taxes Receivable A-7 17, , Tax Overpayments A , , Tax Title Liens A-8 1,108, , Reserve for Tax Appeals A-17 2,562, ,968, Property Acquired for Taxes (At Reserve for Encumbrances A-18 1,834, ,884, Assessed Valuation) A-9 3,984, ,984, Reserve for Special Garbage District A-19 4,002, ,555, Revenue Accounts Receivable A , , Special Emergency Note A , , Interfunds Receivable A , Local District School Taxes Payable A-21 9,441, ,441, \ Interfunds Payable A-13 _Ll79, ,145, ,526, ,452, ,598, ,526, Deferred Charges: Emergency Appropriation A-22 1,205, Reserve for Receivables Reserve 5,526,352. l 0 5,452, Special Emergency Appropriation A-22 2_,857, l,q_48,400.00m Fund Balance A-1!M44, ,989, , ,253, Total Regular Fund 46,969, ,968, Total Regular Fund 46,969, ,968, State and Federal Grant Fund: State and Federal Grant Fund: Grants Receivable A , ,397, Reserve for State and Federal Grants: Due from Current Fund A-23 1,579, Appropriated A-25 2,445, ,429, Unappropriated A-26 5, Total State and Federal Grant Fund 2,531, ,543, Reserve for Encumbrances A-18 79, , Unallocated Receipts A-27 I I Total State and Federal Grant Fund 2,531, ,543, Note: See Notes to Financial Statements $ 49,501, = $ 51,512, $ 49,501, $ 51,512,358.58

13 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY Exhibit - A-1 Page 1 of 2 CURRENT FUND STATEMENT OF OPERATIONS AND CHANGE IN FUND BALANCE REGULATORY BASIS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 REVENUE AND OTHER INCOME REF Fund Balance Utilized Miscellaneous Revenue Anticipated Receipts from Delinquent Taxes Receipts from Current Taxes Non-Budget Revenue Other Credits to Income: Grants Canceled (Net) Unexpend. Balance of Approp. Reserves Interfund Loans Returned (Net) Total Revenues EXPENDITURES A-2 $ 3,736, $ A-2 36,038, A-2 15, A-2 367,148, A-2 547, A-13 A-15 A-12 3,443, ,936, ,000, ,212, , ,506, , ,493, , , 176: Budget and Emergency Appropiations: Operations: Salaries and Wages Other Expenses Capital Improvements Municipal Debt Service Def. Charges and Regulatory Expend. Special District Taxes Local District School Tax County Tax Cty. Share of Added and Omitted Taxes Refund of Prior Year Revenues Senior Citizen and Veteran Deduction Disallowed Prior Year Accounts Payable A-3 A-3 A-3 A-3 A-3 A-19 A-21 A-21 A-21 A-4 A-6 A-14 $ 56,636, $ 44,312, , ,047, ,875, ,775, ,185, ,343, , , , ,823, ,753, , ,009, ,054, ,315, , 182, ,103, , , Total Expenditures 405, 175: :336, Excess in Revenues 5,761, ,839,

14 TOWNSHIP OF EDISON MIDDLESEX COUNTY. NEW JERSEY Exhibit - A-1 Page 2 of2 CURRENT FUND STATEMENT OF OPERATIONS AND CHANGE IN FUND BALANCE REGULATORY BASIS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 REF Excess in Revenues (brought forward) $ 5,761, $ 2,839, Add: Expenditures Included Above Which are by Statute Deferred Charges to Succeeding Years A ,419, Excess to Fund Balance 6,591, ,258, FUND BALANCE Balance - December 31 A 7,989, ,731, ,580, ,989, Decreased by: Utilized as Anticipated Revenue A-2 3,736, ,000, Balance - December 31 A $ , $ 7, Note: See Notes to Financial Statements -8-

15 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY Exhibit A- 2 Page 1 of3 CURRENT FUND STATEMENT OF REVENUES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 3L2016 ANTICIPATED 2016 N.J.S.A. BUDGET 40A:4-87 REALIZED EXCESS OR (DEFICIT) Surplus Anticipated A-1 $ $ Total Surplus Anticipated $ $ Miscellaneous Revenues: Licenses: Alcoholic Beverages A , Other A , Fees and Permits: Other A-10 1,219, Fines and Costs: Municipal Court A , Interest and Costs on Taxes A-IO 410, Interest on Investments and Deposits A-2 200, Latchkey Program Fees A-10 1,825, Cable TV Franchise Fee A , Trailer Court Fees A-10 10, False Alarm Fees A , Host Community Benefits A , Railroad Station Rent A , JFK Reimbursement for Dispatch Services A , JFK Building Lease Payment A-10 63, Energy Receipts Tax A-10 16,042, Garden State Trust Fund A-10 15, Construction Code Fees A-10 3,934, Uniform Fire Safety Act -Life Hazard Use Fees A , Municipal Hotel Tax A-10 1,048, Attorney General's Body Worn Camera (BWC) Assistance Prog. A-24 62, Body Armor Fund A-24 15, CJ Joint Insurance Fund - Safety Incentive A-24 2, Clean Communities Program A , Click It or Ticket A-24 5, Drive Sober or Get Pulled Over/Labor Day A-24 5, H MartGrant A-24 10, JP Morgan Fire Prevention Grant A-24 2, Municipal Alliance on Alcohol and Drug Abuse A-24 77, Middlesex County Improvement Authority Recycling Grant A-24 46, Recycling Tonnage Grant A , Middlesex County Art Grant A-24 6, Middlesex County Gateway to Theater Row A Middlesex County Nutritional Program A-24 6, NJ Dept of Health - Hepatitis Grant A-24 1, NJ DOT Municipal Aid Talmadge Rd Resurfacing Phase II A , , , , 178, , , , ,921, , , , , , , , ,042, , ,783, , ,083, , , , , , , , , , , , , , , , , , ( 40,585.15) (17,546.28) 95, , (8,666.00) (29,820.00) 16, (5,460.99) 848, , ,

16 TOWNSHIP OF EDISON MIDDLESEX COUNTY. NEW JERSEY Exhibit A- 2 Page 2 of3 CURRENT FUND STATEMENT OF REVENUES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2016 ANTICIPATED 2016 N.J.S.A. BUDGET 40A:4-87 REALIZED EXCESS OR (DEFICIT) Miscellaneous Revenues: (Cont'd.) Walmart Grant Payment in lieu of Taxes - Tax Exempt Property Edison Water Company - Contractual Cell Tower Rents - Verizon Sale of Liquor License Community Contribution Interfund - Trust Other - Washington Avenue Apartments Reserve for Payment of Debt Service General Capital Fund Balance/Note Sale Premium FEMA Reimbursement for January Snow Storm Cancelled Funded Capital Ordinances Interfund - Sewer Utility/MCIA Reserve Police Off-Duty Administration Fees - Due from Trust A-24 $ 1, $ A , A , A-10 79, A , A , Reserve 492, A , A-IO 643, A , A-10 2,436, A , A-IO $ 1, , , , , , , , , ,436, , $ (10,569.54) 19, , , , (300,000.00) Total Miscellaneous Revenues A Receipts from Delinquent Taxes A-1, A (29,874.24) Subtotal General Revenues 38,380, Amount to be Raised by Taxation for Support of Municipal Budget: Local Tax for Mun. Purposes Minimum Library Tax A-7 84,457, A ,069, ,612, Total Amount to be Raised by Taxes for Support of Municipal Budget A Total Budget Revenues 128,059, , ,082, ,527, Non-Budget Revenues A-1, A GRAND TOTALS $ $ $ $ Ref. A-3 A-3 A-1-10-

17 TOWNSHIP OF EDISON MIDDLESEX COUNTY. NEW JERSEY Exhibit- A-2 Page 3of3 ANALYSIS OF REALIZED REVENUES CURRENT FUND STATEMENT OF REVENUES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2016 Receipts from Delinquent Taxes: Delinquent Tax Collections Tax Title Lien Collections A-7 A-8 $ 11, Allocation of Current Tax Collections: 2016 Cash Collections Prepaid Taxes Applied Overpayments Applied State Share for Sr. Citizen and Veteran Deductions Allocated to: School, County, and Special District Taxes Add: Res. for Uncollected Taxes A-2 A-7 A-7 A-7 A-7 A-1 A-19,A-21 A-3 $ 15, ======== $ 363,857, ,116, , ,148, ,508, ,639, ,651, A-2 $ 91,291: Interest on Investments and Deposits: Revenue Accounts Receivable-Treasurer Due from Water Operating Fund A-10 A-12 $ 295, A-2 $ ======== Note: See Notes to Financial Statements -11-

18 TOWNSHIP OF EDISON Exhibit- A- 3 MIDDLESEX COUNTY. NEW JERSEY Page 1 of9 CURRENT FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2016 Operations Within "CAPS" BUDGET EXPENDED UNEXPENDED 2016 AFTER PAID OR BALANCE BUDGET MODIFICATION CHARGED ENCUMBERED RESERVED CANCELLED GENERAL GOVERNMENT Office of the Mayor Salaries and Wages $ 39, $ 39, $ 39, $ $ - Other Expenses 2, , (954.93) - 3, $ Municipal Council Salaries and Wages 77, , , Other Expenses 7, , (6,039.96) - 13, Office of the Township Clerk Salaries and Wages 159, , , , Other Expenses 115, , , , , N DEPARTMENT OF ADMINISTRATION Office of the Business Administrator Salaries and Wages Administration 423, , , Communications 105, , , Other Expenses Administration 25, , , , , Communications 51, , , , , Division of Central Purchases Salaries and Wages 178, , , Other Expenses: Postage 91, , , , , Centralized Stores 62, , , , , Division of Personnel Salaries and Wages 130, , Other Expenses 9, , , , DEPARTMENT OF LAW Office of the Director Salaries and Wages 44, , , Other Expenses 740, , , , ,289.61

19 TOWNSHIP OF EDISON Exhibit - A- 3 MIDDLESEX COUNTY, NEW JERSEY Page 2 of9 CURRENT FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER31, 2016 Operations Within "CAPS" BUDGET EXPENDED UNEXPENDED 2016 AFTER PAID OR BALANCE BUDGET MODIFICATION CHARGED ENCUMBERED RESERVED CANCELLED DEPARTMENT OF FINANCE... C;J Office of the Director Salaries and Wages $ 7, $ 7, $ 7, $ - $ - $ Other Expenses 167, , , , , Other Expenses -Audit Services 72, , , Division of Accounts and Controls Salaries and Wages 43, , , , Other Expenses 130, , , , Other Expenses - Data Processing 47, , , , Division of Custody and Disbursements Salaries and Wages 140, , , , Other Expenses 1, , (582.20) - 1, Division of Tax Collections Salaries and Wages 198, , , Other Expenses 27, , , , , Division of Assessment Salaries and Wages 191, , , Other Expenses 166, , , , , DEPARTMENT OF RECREATION & PARKS Division of Recreation Salaries and Wages 1,509, ,509, ,458, , Other Expenses 560, , , , , Division of Public Buildings Other Expenses: Telephones 250, , , , , Heat, Light and Power 946, , , , , Division of Parks Salaries and Wages 788, , , Other Expenses 80, , , , ,963.86

20 TOWNSHIP OF EDISON Exhibit - A- 3 MIDDLESEX COUNTY. NEW JERSEY Page 3 of9 CURRENT FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER Operations Within "CAPS" BUDGET EXPENDED UNEXPENDED 2016 AFTER PAID OR BALANCE BUDGET MODIFICATION CHARGED ENCUMBERED RESERVED CANCELLED DEPARTMENT OF HEALTH AND HUMAN RESOURCES Division of Health Salaries and Wages $ 1,429, $ 1,429, $ l,391, $ - $ 38, $ Other Expenses 126, , , , Division of Senior Citizen Services Salaries and Wages 335, , , Other Expenses 38, , , , , Division of Police Salaries and Wages: Police 23,934, ,934, ,491, , f--' ;j::. Emergency Dispatch ,029, ,029, ,785, , Police Vehicle Maintenance 202, , , , Other Expenses: Police 906, , , , , Emergency Dispatch , , , , , Police Vehicle Maintenance 230, , , , , Uniform Fire Safety Act Salaries and Expenses 303, , , , Other Expenses 114, , , , , Division of Fire Salaries and Wages Fire 17,054,ll ,054, ,054, Other Expenses: Fire 998, , , , , Fire Hydrant Service 1,509, ,509, l,348, , , Aid to Volunteer Fire Companies 110, , ,

21 Operations Within "CAPS" DEPARTMENT OF PUBLIC WORKS TOWNSHIP OF EDISON Exhibit - A- 3 MIDDLESEX COUNTY, NEW JERSEY Page 4 of9 CURRENT FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2016 BUDGET EXPENDED UNEXPENDED 2016 AFTER PAID OR BALANCE BUDGET MODIFICATION CHARGED ENCUMBERED RESERVED CANCELLED Office of the Director Salaries and Wages: Municipal Garage $ 791, $ 791, $ 734, $ - $ 56, $ Other Expenses: Municipal Garage 95, , , , , Fuels & Lubricants for Municipally 825, , , , , Street Lighting 1,100, , 100, , , Division of Streets Salaries and Wages 1,224, ,224, ,002, , Other Expenses 324, , , , , Division of Public Buildings """" Salaries and Wages 1,357, ,357, ,277, , CJl - Other Expenses 227, , , , Division of Sanitation Salaries and Wages: Street Cleaning and Refuse and Garbage Collection 981, , , Other Expenses: Street Cleaning and Refuse and Garbage Collection 61, , , , Public Defender (P.L. 1997,c.256) Salaries and Wages 29, , , Other Expenses 2, , , DEPARTMENT OF COMMUNITY DEVELOPMENT Salaries and Wages: Division of Planning and Zoning 259, , , , Rent Control Board 15, , , Division of Engineering 464, , , , Other Expenses: Division of Planning and Zoning 101, , , , , Planning Board 25, , , , , Zoning Board Adjustment 25, , , , Rent Control Board 1, , , Environmental Commission Division of Engineering 157, , , , ,709.46

22 TOWNSHIP OF EDISON Exhibit - A- 3 MIDDLESEX COUNTY. NEW JERSEY Page 5 of9 CURRENT FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER Operations Within "CAPS" BUDGET EXPENDED UNEXPENDED 2016 AFTER PAID OR BALANCE BUDGET MODIFICATION CHARGED ENCUMBERED RESERVED CANCELLED UNCLASSIFIED Insurance: Group Insurance Plan for Employees $ 20,147, $ 20,147, $ 20,027, $ - $ 119, $ Other insurance and Surety bonds 3,200, ,200, ,151, , , First Aid Organizations-Aid and Maintenance Other Expenses 105, , , Emergency Management Services Other Expenses 15, , , , , Ethics Commission 2, , , Reserve for Tax Appeals 2,000, ,000, ,000, I-' Condominium Services 160, , ' , Employees Unemployment Insurance 200, , , Celebration of Public Events 60, , , , , Accumulated Leave Compensation (Special Emergency - $830,000) 830, , Municipal Court Salaries and Wages 552, , , , Other Expenses 51, , , , , Uniform Construction Code Edison Constr. Enforcing Agency: Salaries and Wages 1,058, ,058, , , Other Expenses 323, , , , , Employee Health Benefit Waivers Salaries and Wages 577, , , , Total Operations Within "CAPS" 93,925, ,755, ,280, ,644, ,829, Contingent 50, , , , Total Operations Including Contingent Within "CAPS" 93,975, ,805, ,298, ,644, ,861, DETAIL: Salaries and Wages 56,636, ,636, ,984, ,652, Other Expenses 37,338, , 168, ,314, ,644, _3,209,022.61

23 TOWNSHIP OF EDISON Exhibit - A- 3 MIDDLESEX COUNTY, NEW JERSEY Page 6 of9 CURRENT FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 3 L 2016 BUDGET EXPENDED UNEXPENDED 2016 AFTER PAID OR BALANCE BUDGET MODIFICATION CHARGED ENCUMBERED RESERVED CANCELLED I I-' '-1 DEFERRED CHARGES AND STATUTORY EXPENDITURES MUNICIPAL WITHIN "CAPS" Deferred Charges Emergency - EMS Compensation $ 1,205, $ 1,205, $ 1,205, $ $ $ Projected Deficit - Water Utility Budget 89, , , Statutory Expenditures: Contribution to: Public Employment Retirement System 1,552, ,552, ,552, Social Security System (O.A.S.I.) 1,666, ,666, ,666, Police and Firemen's Retirement System ofn.j. 8,803, ,803, ,802, , DCRP Employer Contributions 16, , , , Total Deferred Charges and Statutory Expenditures Municipal Within "CAPS" 13,333, ,333, ,326, , Total General Appropriations for Municipal Purposes Within "CAPS" 107,309, ,139, ,624, ,644, ,869, Operations Excluded from "CAPS" OTHER OPERATIONS EXCLUDED FROM "CAPS" Maintenance of Free Public Library 5,221, ,221, ,633, , , Length of Service Award Program (LOS AP) Other Expenses 100, , Total Other Operations Excluded from "CAPS" 5,321, ,321, ,633, , ,246.16

24 TOWNSHIP OF EDISON Exhibit - A- 3 MIDDLESEX COUNTY, NEW JERSEY Page 7 of9 CURRENT FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2016 Operations Excluded from "CAPS" BUDGET EXPENDED UNEXPENDED 2016 AFTER PAID OR BALANCE BUDGET MODIFICATION CHARGED ENCUMBERED RESERVED CANCELLED STA TE AND FEDERAL PROGRAMS OFFSET BY REVENUES Attorney General's Body Worn Camera (BWC) Assistance Prog. $ $ 62, $ 62, $ - $ - $ Clean Communities Act 204, , Body Armor Fund 15, , CJ Joint Insurance Fund - Safety Incentive 2, , , Click It or Ticket 5, , Drive Sober or Get Pulled Over!Y ear End 5, , HMartGrant 10, , , JP Morgan Fire Prevention Grant 2, , , Middlesex County Arts Grant 6, , , I-' Cf) Middlesex County Gateway to Theater Row Middlesex County Nutritional Program 6, , , Middlesex County Recycling Tonnage Subsidy 46, , , Municipal Alliance on Alcoholism and Drug Abuse 96, , , NJ Dept of Health - Hepatitis 1, , , NJ DOT Municipal Aid Talmadge Rd Resurfacing Phase II 202, , Recycling Tonnage Grant 155, , , W almart Grant l l Total Public and Private Revenues Offset by Revenues , Total Operations Excluded from "CAPS" 5,649, ,144, ,455, , , DETAIL: Salaries and Wages Other Expenses 5,649, ,144, ,455, , ,246.16

25 TOWNSHIP OF EDISON Exhibit - A- 3 MIDDLESEX COUNTY. NEW JERSEY Page 8 of9 CURRENT FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER BUDGET EXPENDED UNEXPENDED 2016 AFTER PAID OR BALANCE BUDGET MODIFICATION CHARGED ENCUMBERED RESERVED CANCELLED CAPITAL IMPROVEMENTS - EXCLUDED FROM "CAPS" Capital Improvement Fund $ 750, $ $ $ $ $ Total Capital Improv. - Exel. from "CAPS" 750, , , Operations Excluded from "CAPS" MUNICIPAL DEBT SERVICE - EXCLUDED FROM "CAPS" I Payment of Bond Principal 4,717, ,717, ,717,861.55!--' \0 Interest on Bonds 1,879, ,879, ,772, , Interest on Notes 344, , , NJEIT Loan - Principal & Interest 215, , , , Total Mun. Debt Service - Exel. from "CAPS" 7,157, ,157, ,047, , DEFERRED CHARGES - MUNICIPAL EXCLUDED FROM "CAPS" Special Emergency Authorizations - 5 Years (N.J.S.A. 40A:4-55) 1,202, ,202, ,202, Deferred Charges to Future Taxation - Unfunded , Total Deferred Charges - Municipal Excluded from "CAPS" ,541, Total General Appropriations for Municipal Purposes Excluded from "CAPS" 19,098, , $ 18, 794, , llo Total General Appropriations excluded from "CAPS" 19,098, ,593, ,794, , , ll0, Subtotal General Appropriations 126,408, ,732, ,419, ,834, ,368, , Reserve for Uncollected Taxes 1,651, ,651, ,651, Total General Appropriations $ 128,059, $ 129,384, $ 122,071, $ 1,834, $ 5,368, $ 110,

26 TOWNSHIP OF EDISON MIDDLESEX COUNTY. NEW JERSEY Exhibit - A- 3 Page 9 of9 CURRENT FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER BUDGET 2016 AFTER PAID OR BUDGET MODIFICATION CHARGED EXPENDED ENCUMBERED RESERVED UNEXPENDED BALANCE CANCELLED Total General Appropriations (brought forward) $ 128,059, $ 129,384, $ 122,071, $ 1,834, $ 5,368, $ 110, Ref. A-1 A-1, A-18 A, A-1 Adopted Budget Approp. by N.J.S.A. 40A:4-87 Emergency Appropriation A-2 A-2 A-22 $ 128,059, , , $ 129,384, N 0 Reserve for Uncollected Taxes Disbursed Reserve for State and Federal Grants Appropriated Reserve for Tax Appeals Deferred Charges A-2 A-4 A-13 A-17 A-22 $ 1,651, ,370, , ,000, ,226, $ 122,071, Note: See Notes to Financial Statements

27 TOWNSHIP OF EDISON MIDDLESEX COUNTY. NEW JERSEY Exhibit- B Page 1 of2 TRUST FUND COMPARATIVE BALANCE SHEET-REGULATORYBASIS DECEMBER AND 2015 BALANCE BALANCE LIABILITIES, RESERVES BALANCE BALANCE ASSETS REF. DEC 31,2016 DEC 31,2015 AND FUND BALANCE REF. DEC DEC Assessment Fund: Assessment Fund: Assessment Liens B-6 $ $ Due to Current Fund B-18 $ 18, $ 18, Assessment Lien Interest and Costs B Res. for Assessments, Liens and Due from Trust Other B-17 20, Interest and Costs B Fund Balance B Total Assessment Fund 20, Total Assessment Fund N,... Animal Control Fund: Animal Control Fund: Cash and Investments - Treasurer B-2 176, , Due to State of New Jersey B Due to Current Fund B-18 2, Total Animal Control Fund 176, , Reserves For Encumbrances B , , Reserve for Animal Control B-13 71, , Total Animal Control Fund Trust-Other Fund: Trust-Other Fund: Cash and Investments - Treasurer B-2 22,094, ,093, Due to Assessment Trust B-18 20, , Due to Current Fund B-18 7, , Total Trust-Other Fund 22,094, ,093, Other Escrow Funds B , , Tax Sale Redemption Funds B-16 5,252, ,901, Reserve for: Open Space B-9 3,338, ,296, Off Duty Public Safety B , , Other Reserves B-15 12,393, ,162, Total Trust-Other Fund 22,094, ,093, Housing and Community Development Housing and Community Development Actof1974: Actofl974: Cash and Investments - Treasurer B-2 118, , Reserve for Expenditures - HUD B-16 1,069, , Accts. Receivable - U.S. Dept. of Reserve for Expenditures - HOPW A B , , Housing and Urban Develop. B-8 1,069, , Reserve for Encumbrances B-16 68, , Accts. Receivable - HOPW A B Due to Current Fund B-18 49, , Total Housing and Community Total Housing and Community Development Act of ,371, Development Act of ,371, ,235,190.13

28 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY Exhibit-B Page 2 of2 TRUST FUND COMPARATIVE BALANCE SHEET - REGULATORY BASIS DECEMBER AND2015 BALANCE BALANCE LIABILITIES, RESERVES BALANCE BALANCE ASSETS REF. DEC 31,2016 DEC 31,2015 AND FUND BALANCE DEC DEC REF. D.E.P. Landfill Closure Escrow Fund: D.E.P. Landfill Closure Escrow Fund: Cash and Investments - Treasurer B-2 $ $ Reserve for Landfill Closure Costs B-16 $ $ Total D.E.P. Landfill Closure Total D.E.P. Landfill Closure Escrow Fund Escrow Fund Edison Landfill Closure Trust - Local Edison Landfill Closure Trust - Local Cash and Investments - Treasurer B-2 1,804, ,500, Reserve for Landfill Closure Costs B-16 1,804, Total Edison Landfill Closure Trust - Local Total Edison Landfill Closure Trust - Local Trust - Local 1,804, ,500, Trust - Local 1,804, B.P.U. Landfill Closure Escrow Fund: B.P.U. Landfill Closure Escrow Fund: N Cash and Investments - Treasurer B-2 12,352, ,079, Reserve for Landfill Closure Costs B-16 12,352, ,079, Total B.P.U. Landfill Closure Total B.P.U. Landfill Closure Escrow Fund 12,352, ,079, Escrow Fund 12,352, ,079, Selflnsurance Trust Fund: Selflnsurance Trust Fund: Cash and Investments - Treasurer B-2 516, ,094, Reserve for Payment of Insur. Claims B-16 ~16,198}3 1,094, Total Selflnsurance Trust Fund 516, ,094, Total Self Insurance Trust Fund Developer's Escrow Trust Fund: Developer's Escrow Trust Fund: Cash and Investments - Treasurer B-2 2,014, ,646, Developer's Escrow Funds B-16 2,014, ,646, l 42.8 l Total Developer's Escrow Trust Fund 2,014, ,646, Total Developer's Escrow Trust Fund 2,014, ,646, LOSAPFund: LOSAPFund: Cash and Investments - Trustee B 518, , Res. for LOSAP Funds Held by Trustee B j_l8, , Total LOSAP Fund Total LOSAP Fund $ 45,356, $ $ 45,356, $ 45,657, Note: See Notes to Financial Statements

29 Exhibit - B- 1 TOWNSHIP OF EDISON MIDDLESEX COUNTY. NEW JERSEY ASSESSMENT TRUST FUND STATEMENT OF FUND BALANCE- REGULATORY BASIS FOR THE YEAR ENDED DEC Balance - December 31, 2015 B $ 1, Balance - December 31, 2016 B $ ======= Note: See Notes to Financial Statements -23-

30 Exhibit - C TOWNSHIP OF EDISON MIDDLESEX COUNTY. NEW JERSEY GENERAL CAPITAL FUND BALANCE SHEET- REGULATORY BASIS DECEMBER31, 2016 AND 2015 BALANCE BALANCE ASSETS REF. DEC DEC Cash and Investments - Treasurer C-2 $ 14,254, $ 11,509, Accounts Receivable: Edison Free Public Library C-4 64, , Insurance Proceeds Receivable C-18 66, , Grants Receivable C , , Deferred Charges to Future Taxation: Funded C-6 45,202, ,961, Unfunded C-7 44,413, ,658, LIABILITIES, RESERVES AND FUND BALANCE $ 104,230, $ 111,488, General Serial Bonds C-12 $ 43,192, $ 48,521, Green Trust Loans Payable C , , NJ Environmental Infrastructure Loan Payable C-11 1,370, ,561, Bond Anticipation Notes C-9 41,950, ,031, Due to Current Fund C-5 3, Improvement Authorizations: Funded C-8 21, ,248, Unfunded C- 8 11,951, ,635, Reserve for Encumbrances C-8 3,750, ,980, Reserve for: Capital Im prov. Fund C , , Grants Receivable C-14 51, , Acquistion of Property for and Construction of Parking Facilities C , , Payment of Future Debt Service Costs C-17 97, , Fund Balance C $ 104,230, $ 111,488, Bonds And Notes Authorized but not Issued C-19 $ 2,463, $ 16,627, Note: See Notes to Financial Statements - 24-

31 TOWNSHIP OF EDISON MIDDLESEX COUNTY. NEW JERSEY Exhibit - C-1 GENERAL CAPITAL FUND STATEMENT OF CHANGE IN FUND BALANCE REGULATORY BASIS FOR THE YEARENDEDDECEMBER REF. Balance - December 31, 2015 c $ 143, Increased by: Cash Receipts - Premium on BAN Sale C-2 499, Cash Receipts - Premium on Bond Sale C-2 222, Funded Improvement Authorizations Cancelled C-8 2,423, ,146, Decreased by: Appropriated to 2016 Budget Revenue Cancelled Funded Capital Ordinances C-2 2,436, Note Sale Premium C-2 643, ,289, Balance - December 31, 2016 c 3,079, $ 210, Note: See Notes to Financial Statements -25-

32 TOWNSIBP OF EDISON MIDDLESEX COUNTY. NEW JERSEY Exhibit- D WATER UTILITY FUND BALANCE SHEET- REGULATORY BASIS DECEMBER AND 2015 BALANCE BALANCE LIABILITIES, RESERVES BALANCE BALANCE ASSETS REF. DEC DEC AND FUND BALANCE REF. DEC DEC Operating Fund: Operating Fund: Cash and Investments - Treasurer D-5 $ 27, $ Due to Current Fund D-9 $ 1.80 $ 5.04 Due to Water Utility Capital Fund D-10 14, , , , Accrued Interest Payable D-13 13, , , , Fund Balance D Total Operating Fund Total Operating Fund 27, , Capital Fund: Capital Fund: N 0\ Fixed Capital D-11 6,978, ,978, Serial Bonds Payable D , , Due from Water Utility Operating Fund D Reserve for: Amortization D-7 6,165, , 108, Deferred Res. for Amortization D-12 16, , Fund Balance D Total Capital Fund 6,993, ,993, Total Capital Fund 6,993, ,993, $ 7,020, $ 7,021, $ 7,020, $ 7,021, There were no Water Utility Bonds and Notes Authorized but not Issued at December 31, 2016 or Note: See Notes to Financial Statements

33 Exhibit - D-1 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY WATER UTILITY OPERATING FUND STATEMENT OF OPERATIONS AND CHANGES IN FUND BALANCE REGULATORY BASIS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 REVENUE AND OTHER INCOME REF Deficit (General Budget) D-3 $ $ Total Revenue , EXPENDITURES Debt Service D Total Expenditures Excess/Deficit in Revenues FUND BALANCE Balance - Beginning of Year D Fund Balance - End of Year D $ 0.32 $ 0.32 Exhibit - D-2 WATER UTILITY CAPITAL FUND STATEMENT OF FUND BALANCE - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER Balance - December 31, 2015 D $ 14, Balance - December 31, 2016 D $ 14, ======== Note: See Notes to Financial Statements -27 -

34 Exhibit - D-3 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY WATER UTILITY OPERA TING FUND STATEMENT OF REVENUES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER31, 2016 Deficit (General Budget) 2016 REALIZED REF. BUDGET IN 2016 D-1,D-5 $ 89, $ 89, $ 89, $ 89, EXCESS OR (DEFICIT) $ (0.02) $ (0.02) REF. D-4 D-l,D-5 Note: See Notes to Financial Statements -28-

35 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY Exhibit - D-4 WATER UTILITY OPERA TING FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, BUDGET BUDGET AFTER MODIFICATION PAID OR CHARGED EXPENDED ENCUMBERED RESERVED UNEXPENDED BALANCE CANCELLED Debt Service: Payment of Bond Principal Interest on Bonds $ 56, $ 32, , $ 32, , $ 32, $ $ $ $ $ 89, $ $ $ 0.02 ~ Disbursed Accrued Interest on Bonds Ref. D-5 D-13 D-3 D-3 $ D-1 56, , D-1 89, Note: See Notes to Financial Statements

36 VJ 0 TOWNSHIP OF EDISON MIDDLESEX COUNTY. NEW JERSEY SEWER UTILITY FUND BALANCE SHEET - REGULATORY BASIS DECEMBER 31, 2016 AND 2015 BALANCE BALANCE LIABILITIES, RESERVES ASSETS REF DEC !2EC. 31,2015 AND FUND BALANCE Operating Fund: Operating Fund: Cash and Investments - Treasurer E-5 $ IO $ 9,022, Liabilities: Appropriation Reserves 10,739, ,022, Reserve for Encumbrances Due to Sewer Capital Fund Reserve for MCIA Purchase Payments Receivables with Offsetting Reserves: Sewer Rent Overpayments Sewer Rents Receivable E-7 9, , Accounts Payable Sewer Rent Liens Receivable E-8 37, , Accrued Interest Payable Sewer SIU Sampling Charge Receivable I Reserve for Receivables Reserve for Sewer Lien Foreclosure Fund Balance Total Operating Fund 10,788, Total Operating Fund BALANCE Exhibit-E BALANCE REF. DEC31.20l6 DEC E-4,E-19 $ 3,902, $ 1,271, E-4,E , , E-9 4,246, ,887, E , E-16 92, , E-18 30, E-20 18~, , ,639, ,232, Reserve 48, , E-17 5, , E , 788, ,092, Capital Fund: Capital Fund: Serial Bonds Cash and Investments - Treasurer E-5 993, , Bond Anticipation Notes Fixed Capital E-11 11,936, ,834, Encumbrances Payable Fixed Capital Authorized & Uncompleted E-13 5,164, ,965, Improvement Authorizations Due from Sewer Utility Operating Fund E-12 4,246, ,887, Funded Unfunded Total Capital Fund 22,340, ,676, Capital Improvement Fund Reserve for Downpayment on Improvements Reserve for Amortization Deferred Reserve for Amortization Fund Balance $ 33, 128, $ 32,769, Total Capital Fund E-10 5,099, ,369, E-14 7,600, ,600, E-21 67, ,576, E , , E-21 4,996, ,931, E , , E , , E-23 2,904, ,670, E , , E-2 229, , ,340, ,676, $ 33,128, $ 32, 769, There were Bonds and Notes Authorized but not Issued on December 31, 2016 and 2015 in the amount of$1,027, and $742,450.00, respectively (See Exhibit - E-26). Note: See Notes to Financial Statements

37 Exhibit - E-1 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY SEWER UTILITY OPERA TING FUND STATEMENT OF OPERATIONS AND CHANGE IN FUND BALANCE REGULATORY BASIS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 REVENUE AND OTHER INCOME REF Sewer Rents E-3 $ 18,868, $ Miscellaneous Revenues E-3 228, Accounts Payable Cancelled Unexpended Balance of Approp. Reserves E-19 1,210, Total Revenue : ,726, , : EXPENDITURES Operating: Salaries and Wages E-4 1,847, Other Expenses E-4 14,420, Capital Improvements E-4 1,710, Debt Service E-4 590, Deferred Charges and Statutory Expenditures E-4 426, Deficit in Operations in Prior Years E-4 Refunds of Prior Year Revenues E-5 2, Total Expenditures : l Excess in Revenues 1,309, ,847, ,178, , , , , :435: , FUND BALANCE Balance - Beginning of Year E 784: Fund Balance - End of Year E $ 2:094: $ Note: See Notes to Financial Statements - 31-

38 TOWNSHIP OF EDISON MIDDLESEX COUNTY. NEW JERSEY Exhibit - E-2 SEWER UTILITY CAP IT AL FUND STATEMENT OF CHANGE IN FUND BALANCE REGULATORY BASIS FOR THE YEAR ENDED DECEMBER Balance - December 31, 2015 REF. E $ 86, Increased by: Premium on Sale of Refunding Bonds E , Balance - December 31, 2016 E $ 229: Note: See Notes to Financial Statements - 32-

39 Exhibit - E-3 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY SEWER UTILITY OPERA TING FUND STATEMENT OF REVENUES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2016 REF BUDGET REALIZED IN 2016 EXCESS OR (DEFICIT) Sewer Rents Miscellaneous E-1 $ E-1,E-5 19,395, $ 18,868, , $ (526,807.60) 228, $ 19,395, $ 19,097, $ (298, ) REF. E-4 ANALYSIS OF REALIZED REVENUES Ref. Sewer Rents: Sewer Rents Receivable: 2016 Cash Collections: Collector Sewer Rent Overpayments Applied E-7 E-7 18,161, , E-3 $ 18,868, Miscellaneous Revenues: Interest & Costs on Rents Sewer Connection Fees Misc. Revenues E-5 E-5 E-5 78, , E-3 $ ==2=2=8,=7=00=.8=0= Note: See Notes to Financial Statements -33-

40 TOWNSHIP OF EDISON MIDDLESEX COUNTY. NEW JERSEY Exhibit - E-4 SEWER UTILITY OPERA TING FUND STATEMENT OF EXPENDITURES - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER EXPENDED UNEXPENDED 2016 BUDGET AFTER PAID OR BALANCE BUDGET MODIFICATION CHARGED ENCUMBERED RESERVED CANCELLED Operating: Salaries and Wages $ 1,847, $ 1,847, $ 1,653, $ $ 194, $ Other Expenses 4,320, ,320, ,228, , , Middlesex County Utilities Authority Charges 10,500, ,500, ,014, ,085, , Capital Improvements: Capital Improvement Projects 1,710, ,710, , ,655, Debt Service: Payment of Bond Principal 248, , , VJ Interest on Bonds 199, , , *"' Interest on Notes 142, , , Deferred Charges and Statutory Expenditures: Statutory Expenditures: Contribution to: Public Employees Retirement System 251, , , Social Security System (O.A.S.I.) 150, , , Unemployment Compensation Insurance 25, , , $ 19,395, $ 19,395, $ 14,912, $ 180, $ 3,902, $ 400, Ref. E-3 E-3 E-1 E, E-1 E, E-1 Disbursed E-5 $ 14,570, Accrued Interest on Bonds E $ 14,912, Note: See Notes to Financial Statements

41 Exhibit- F TOWNSHIP OF EDISON MIDDLESEX COUNTY. NEW JERSEY PUBLIC ASSISTANCE FUND COMPARATIVE BALANCE SHEET- REGULATORY BASIS DECEMBER AND DECEMBER BALANCE DEC. 31, ASSETS REF Cash and Invest. - Treasurer F-1 $ $ BALANCE DEC. 31, 2015 $ $ LIABILITIES AND RESERVES Reserve for Public Assistance F-4 $ $ 4.;..3=24..;..9..;...4..;..9_ $ 43,4 74.l 0 $ ==4=3=,2=49=.4=9= Note: See Notes to Financial Statements - 35-

42 Exhibit- G TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY STATEMENT OF GOVERNMENTAL FIXED ASSETS REGULATORY BASIS DECEMBER 31, 2016 AND 2015 BALANCE DECEMBER 31, 2016 BALANCE DECEMBER 31, 2015 Governmental Fixed Assets: Land Buildings and Improvements Vehicles, Machinery and Equipment Total Governmental Fixed Assets $ 116,480, ,811, ,023, $ 175,314, $ 116,480, ,811, ,817, $ 173,108, Investment in Governmental Fixed Assets $ 175,314, $ 173,108, Nots: See Notes to Financial Statements - 36-

43 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY NOTES TO FINANCIAL ST A TEMENTS YEAR ENDED DECEMBER 31, 2016 Note 1: FORM OF GOVERNMENT The Township is managed under the Mayor - Council form of government authorized under Plan E of the "Faulkner Act of 1950". This form of government, adopted in 1957 by Township voters, provides for the direct election of the Mayor and seven council members for staggered four-year terms. This form of government provides for the administrative function of government under the Mayor, supported by a Business Administrator and various department heads, and for the legislative function under the Municipal Council. Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity Except as noted below, the basic financial statements of the Township of Edison include every board, body, officer or commission supported and maintained wholly or in part by funds appropriated by the Township of Edison, as required by N.J.S.A. 40A:5-5. Accordingly, the basic financial statements the Township of Edison do not include the operations of the municipal library, first aid organizations or volunteer fire companies. B. Description of Funds The accounting policies of the Township of Edison conform to the accounting principles applicable to municipalities, which have been prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. 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 this method of accounting, the Township of Edison accounts for its financial transactions through the following separate funds: Current Fund - resources and expenditures for governmental operations of a general nature, including Federal and State grant funds, except as otherwise noted. Trust Fund - receipts, custodianship and disbursement of funds in accordance with the purpose for which each reserve was created. Pursuant to the provisions of NJ.S.A. 40A:4-39, the financial transactions of the Housing and Community Development Act of 1974 funds are reported within the Trust Fund. In addition, the financial transactions of the following funds and accounts are also reported within the Trust Fund: Animal Control Trust Fund Landfill Closure Escrow Funds Unemployment Compensation Trust Fund Dedicated Law Enforcement Trust Fund Self-Insurance Trust Fund Developer Escrow Trust Funds Dedicated Open Space Fund -37 -

44 NOTES TO FINANCIAL STATEMENTS Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D): B. Description of Funds (Cont'd.) General Capital Fund - resources, including Federal and State Grants in aid of construction, and expenditures for the acquisition of general capital facilities, other than those acquired through the Current Fund, including the status of bonds and notes authorized for said purposes. Debt obligations authorized in conjunction with the Township's conversion to the state's fiscal year are also accounted for in the General Capital Fund. Water Utility Fund - resources and expenditures for the operations and acquisition of capital facilities of the municipally owned Water Utility. See Note 12 for information relating to the privatization of water delivery services for periods commencing after June 30, Sewer Utility Fund - resources and expenditures for the operations and acquisition of capital facilities of the municipally owned Sewer Utility. Public Assistance Fund - receipt and disbursement of funds that provide assistance to certain residents of the Township pursuant to Title 44 of New Jersey Statutes. The Governmental Accounting Standards Board (GASB) is the accepted standards-setting body for establishing governmental accounting and financial reporting principles. GASB's Codification of Governmental Accounting and Financial Reporting Standards recognizes three fund categories as appropriate for the accounting and reporting of the financial position and results of operations in accordance with generally accepted accounting principles (GAAP) to provide detailed information about the governmental unit. This structure of funds differs from the organization of funds prescribed under the regulatory basis of accounting utilized by the Township. The resultant presentation of financial position and results of operations in the form of basic financial statements is not intended to present the general purpose financial statements required by GAAP. The regulatory basis of accounting utilized by the Township for financial reporting is inconsistent with the provisions and standards established by Statement 34 of the GASB. Accordingly, the Township has not implemented the provisions of GASB Statement 34. C. Basis of Accounting Basis of Accounting and Measurement Focus - The basis of accounting as prescribed by the Division of Local Government Services for its operating funds is generally a modified cash basis for revenue recognition and a modified accrual basis for expenditures. The operating funds utilize a "current financial resources" measurement focus. The accounting principles and practices prescribed for municipalities by the Division differ in certain respects from generally accepted accounting principles (GAAP) applicable to local government units. The most significant is the reporting of entity-wide financial statements, which are not presented in the accounting principles prescribed by the Division. The other more significant differences are as follows: Revenues - Revenues are recorded as received in cash except for regulatory reimbursements and grant funds, which are due from other governmental units. State and Federal grants, entitlements and shared revenues received for operating purposes are realized as revenues when anticipated in the Township budget. Receivables for property taxes, water utility consumer charges and sewer utility consumer charges are recorded with offsetting reserves within the Current Fund, Water Utility Fund and Sewer Utility Fund, respectively. Other amounts that are due to the Township, which are susceptible to accrual are recorded as receivables with offsetting reserves

45 NOTES TO FINANCIAL STATEMENTS Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D): C. Basis of Accounting (Cont'd.) These reserves are liquidated and revenues are recorded as realized upon receipt of cash. GAAP requires the recognition of revenues for general operations in the accounting period in which they become available and measurable, with the exception of utility consumer charges, which should be recognized in the period they are earned and become measurable. Expenditures - For purposes of financial reporting, expenditures are recorded as "paid or charged" or "appropriation reserves". Paid or charged refers to the Township's "budgetary" basis of accounting. Generally, these expenditures are recorded when an amount is encumbered for goods or services through the issuance of a purchase order in conjunction with the encumbrance accounting system. Reserves for unliquidated encumbrances at the close of the year are reported as a cash liability. Encumbrances do not constitute expenditures under GAAP. Appropriation reserves refer to unexpended appropriation balances at the close of the year. Appropriation reserves are automatically created and recorded as a cash liability, except for amounts, which may be cancelled by the governing body. Appropriation reserves are available until lapsed at the close of the succeeding year, to meet specific claims, commitments or contracts incurred and not recorded in the preceding fiscal year. Lapsed appropriation reserves are recorded as income. Generally, unexpended balances of budget appropriations are not recorded as expenditures under GAAP. Expenditures for compensated absences, i.e. accumulations of earned but unused vacations and sick leave, are recorded in the accounting period in which the payments are made. GAAP requires that expenditures be recorded in the governmental (Current) fund in an amount that would normally be liquidated with available financial resources, and that expenditures be recorded in the enterprise (Water Utility and Sewer Utility) fund on a full accrual basis. For the purposes of calculating the results of Current Fund operations, the regulatory basis of accounting utilized by the Township requires that certain expenditures be deferred and raised as items of appropriation in budgets of succeeding years. These deferred charges include the two general categories of overexpenditures and emergency appropriations. Overexpenditures occur when expenditures recorded as "paid or charged" exceed available appropriation balances. Emergency appropriations occur when, subsequent to the adoption of a balanced budget, the governing body authorizes the establishment of additional appropriations based on unforeseen circumstances or for other special purposes as defined by statute. Overexpenditures and emergency appropriations are deducted from total expenditures in the calculation of operating results and are established as assets for Deferred Charges on the Current Fund balance sheet. GAAP does not permit the deferral of overexpenditures to succeeding budgets. In addition, GAAP does not recognize expenditures based upon the authorization of an appropriation. Instead, the authorization of special purpose expenditures, such as the preparation of tax maps or the revaluation of assessable real property, would represent the designation of fund balance. The Local Budget Law (N.J.S.A. 40A:4-1 et seq.) requires that certain operating transfers between funds, such as transfers from the Current Fund and Utility Operating Funds to a Self-Insurance Trust Fund, transfers of anticipated operating surpluses among the Current Fund, Water Utility Fund and Sewer Utility Fund, transfers from utility operating funds to capital funds (to finance capital projects) and transfers from the Current Fund to the Trust Funds or General Capital Fund are required to be included in the Township's annual budgets as budget appropriations. Expenditures are recorded upon the adoption of the budget for any legally required transfers, and upon the determination of availability of funds for any discretionary transfers. Under GAAP, operating transfers are not recognized as expenditures

46 NOTES TO FINANCIAL STATEMENTS Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D): C. Basis of Accounting (Cont'd.) Property Acquired for Taxes - Foreclosed property is recorded in the Current Fund at the assessed valuation when such property was acquired and is fully reserved. GAAP requires such property to be recorded in governmental fixed assets at the lower of cost or fair market value. Self Insurance Reserves - Charges to self insurance reserves are recorded when payments of claims and related expenses are made. Increases to self insurance reserves are recorded from budgetary appropriations in the accounting period in which budgetary expenditures are recorded. Earnings on investments and miscellaneous reimbursements are credited to reserves when received in cash. GAAP requires that liabilities for incurred claims be recorded as determined actuarially, and that operating transfers to self insurance funds not exceed the amount determined. Interfunds - Interfund receivables in the Current Fund are recorded with offsetting reserves, which are created by charges to operations. Income is recognized in the accounting period the receivables are liquidated. GAAP does not require the establishment of an offsetting reserve. Inventories of Supplies - The cost of inventories of supplies for all funds are recorded as expenditures at the time individual items are purchased. The cost of inventories are not included on the various balance sheets. Although the expenditure method of accounting for purchases of supplies is in accordance with GAAP, the cost of inventory on hand at the close of the year should be reported on the balance sheet with an offsetting reserve for conformity with GAAP. Sale of Municipal Assets - Cash proceeds from the sale of Township owned property may be realized as revenue or reserved until utilized as an item of revenue in a subsequent year budget. Any year-end balances of reserved proceeds are reported as a cash liability in the Current Fund. At December 31, 2014, the Township had no reserved proceeds. GAAP requires that revenue be recognized in the accounting period that the terms of the sales contracts become legally enforceable. Defeasance of Utility Debt - The funding by a third party of an irrevocable trust fund established for the purpose of debt defeasance pursuant to an agreement under the provisions of the New Jersey Water Supply Public-Private Contracting Act (NJSA 58:26-19 et seq.) is recorded as an increase to the Reserve for Amortization account. GAAP requires recognition of this funding arrangement as a deferred item, which would be amortized following the maturity schedule of the bonds. Governmental Fixed Assets - Property and equipment acquired by the Current, Community Development Block Grant and General Capital Funds are recorded as expenditures at the time of purchase and are not capitalized. Property and equipment acquired by the Water Utility Fund and Sewer Utility Fund are recorded in their respective capital accounts at cost and are adjusted for dispositions and abandonments. Contributions in aid of construction are not capitalized. The balances in the Reserve for Amortization and Deferred Reserve for Amortization accounts in the Water Utility Capital Fund and Sewer Utility Capital Fund represent charges to operations for the costs of acquisitions of property, equipment and improvements plus any costs funded from sources other than bonded debt of the utility. The utility does not record depreciation on fixed assets. GAAP does not require the establishment of a reserve for amortization for utility fixed assets, but does require the recognition of depreciation of these assets as an operating expense of the utility. Grants Received - Federal and state grants, entitlements or shared revenues received for purposes normally financed through the Current Fund are recognized when anticipated in the Township's Budget. GAAP requires such revenues to be recognized in the accounting period when they become susceptible to accrual, reduced by an allowance for doubtful accounts. -40-

47 NOTES TO FINANCIAL STATEMENTS Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D): C. Basis of Accounting (Cont'd.) Disclosures About Pension Liabilities - The Township has included information relating to its allocated shares of the net pension liabilities of the state sponsored, cost-sharing, multiple employer defined benefit pension plans in which it participates in Note 9 and the accompanying required supplementary information. As the Township does not present entity-wide financial statements, it does not present on the face of its financial statements its proportionate share of the net pension liability of the defined benefit plans in which its employees are enrolled. GAAP requires the recognition of the net pension liability and associated deferred inflows and deferred outflows of financial resources in the entity-wide financial statements. Recent Accounting Standards GASB issued Statement No. 72, "Fair Value Measurement and Application" in February This Statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This Statement provides guidance for determining a fair value measurement for financial reporting purposes. The requirements of this Statement are effective for financial statements for periods beginning after June 15, GASB issued Statement No. 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 Statements 67 and 68" in June The objective of this Statement is to improve the usefulness of information about pensions included in the general purpose external financial reports of state and local governments for making decisions and assessing accountability. GASB issued Statement No. 74, "Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans" in June The objective of this Statement is to improve the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB) included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. This Statement is effective for financial statements for fiscal years beginning after June 15, GASB issued Statement No. 75, "Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions" in June The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. This Statement is effective for fiscal years beginning after June 15, GASB issued Statement No. 76, "The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments" in June The objective of this Statement is to identify-in the context of the current governmental financial reporting environment-the hierarchy of generally accepted accounting principles (GAAP). The "GAAP hierarchy" consists of the sources of accounting principles used to prepare financial statements of state and local governmental entities in conformity with GAAP and the framework for selecting those principles. The requirements of this Statement are effective for financial statements for periods beginning after June 15,

48 NOTES TO FINANCIAL ST A TEMENTS Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D): C. Basis of Accounting (Cont'd.) Recent Accounting Standards (cont'd.) GASB issued Statement No. 77, "Tax Abatement Disclosures" in August Financial statements prepared by state and local governments in conformity with generally accepted accounting principles provide citizens and taxpayers, legislative and oversight bodies, municipal bond analysts, and others with information they need to evaluate the financial health of governments, make decisions, and assess accountability. This information is intended, among other things, to assist these users of financial statements in assessing (1) whether a government's current-year revenues were sufficient to pay for current-year services (known as interperiod equity), (2) whether a government complied with finance-related legal and contractual obligations, (3) where a government's financial resources come from and how it uses them, and (4) a government's financial position and economic condition and how they have changed over time. GASB issued Statement No. 78, "Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans" in December The objective of this Statement is to address a practice issue regarding the scope and applicability of Statement No. 68, Accounting and Financial Reporting for Pensions. This issue is associated with pensions provided through certain multiple-employer defined benefit pension plans and to state or local governmental employers whose employees are provided with such pensions. GASB issued Statement No. 79, "Certain External Investment Pools and Pool Participants" in December This Statement addresses accounting and financial reporting for certain external investment pools and pool participants. Specifically, it establishes criteria for an external investment pool to qualify for making the election to measure all of its investments at amortized cost for financial reporting purposes. An external investment pool qualifies for that reporting if it meets all of the applicable criteria established in this Statement. The specific criteria ad- dress (1) how the external investment pool transacts with participants; (2) requirements for portfolio maturity, quality, diversification, and liquidity; and (3) calculation and requirements of a shadow price. Significant noncompliance prevents the external investment pool from measuring all of its investments at amortized cost for financial reporting purposes. Professional judgment is required to determine if instances of noncompliance with the criteria established by this Statement during the reporting period, individually or in the aggregate, were significant. GASB issued Statement No. 80, "Blending Requirements for Certain Component Units - an amendment of GASB Statement No.14" in January The objective of this Statement is to improve financial reporting by clarifying the financial statement presentation requirements for certain component units. This Statement amends the blending requirements established in paragraph 53 of Statement No. 14, The Financial Reporting Entity, as amended. GASB issued Statement No. 81, "Irrevocable Split-Interest Agreements" in March The objective of this Statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. -42-

49 NOTES TO FINANCIAL ST A TEMENTS Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D): C. Basis of Accounting (Cont'd.) Recent Accounting Standards (cont'd.) GASB issued Statement No. 82, "Pension Issues-an amendment of GASB Statements No. 67, No. 68 and No. 73" in March The objective of this Statement is to address certain issues that have been raised with respect to Statements No. 67, Financial Reporting for Pension Plans, No. 68, Accounting and Financial Reporting for Pensions, and No. 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 Statements 67 and 68. Specifically, this Statement addresses issues regarding (I) the presentation of payrollrelated measures in required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements. GASB issued Statement No. 83, "Certain Asset Retirement Obligations" in November This Statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this Statement. The Township does not prepare its financial statements in accordance with generally accepted accounting principles. Unless these new standards are incorporated into the other comprehensive basis of accounting that is utilized by the Township through legislation or rulemaking they will not become part of the standards followed by the Township for financial reporting. The Division of Local Government Services has adopted rules which require full disclosure in the Notes to Financial Statements of OPEB related matters, as set forth in GASB Statement No. 45, based upon the GASB implementation schedule. See Note 17 for a description of matters relating to GASB 45. Note 3: DEFERRED COMPENSATION PLAN The Edison Township Deferred Compensation Plan was established pursuant to Section 457 of the Internal Revenue Code and P.L. 1977, C. 381; P.L. 1978,C. 39; and P.L. 1980, C. 78 of the Statutes of New Jersey. The Plan is an arrangement whereby a public employer may establish a plan and permit its employees to voluntarily authorize a portion of their current salary to be withheld and invested in one or more of the types of investments permitted under the governing regulations. The Township has engaged a private contractor to administer the plan. The Township passed a resolution on October 8, 1997 amending its plan in accordance with the amendments to Section 457 of the Code included in the Small Business Job Protection Act of This legislation eliminated provisions of the law that required compensation, which was deferred under the plan to remain the assets of the employer. The Plan amendment specifies that Plan assets are to be held "for the exclusive benefit of Plan participants and their beneficiaries". Accordingly, the financial statements of the Plan are not included in the Township's financial statements for the year ending December 31,

50 NOTES TO FINANCIAL STATEMENTS Note 4: DEBT, DEBT SERVICE AND STATUTORY DEBT CONDITION A. Summary of Municipal Debt for Capital Projects CY 2016 CY 2015 Issued: General: Bonds & Notes $ 86,513, $ 82,114, N.J.D.E.P. Green Trust Loans 639, , Water Utility: Bonds & Notes 797, , Sewer Utility: Bonds & Notes 12,699, ,969, Total Debt Issued Authorized but not Issued: General: Bonds & Notes 16,437, ,627, Sewer Utility: Bonds & Notes l 2 027A50.oo 342A50.00 Total Authorized but not Issued Net Bonds & Notes Issued and Authorized but not Issued $ $

51 NOTES TO FINANCIAL STATEMENTS Note 4: DEBT, DEBT SERVICE AND STATUTORY DEBT CONDITION (CONT'D.) A. Summary of Municipal Debt for Capital Projects (Cont'd.) Summarized below are the Township's individual bond and loan issues which were outstanding at December 31, 2016: Amount Issued Amount Outstanding Interest Rates Final Maturity General Improvement Debt Pension Refunding Bonds $10,000, $8,080, Genl. Oligation Bonds ,675, ,660, Genl. Oligation Refunding Bonds ,540, ,665, Tax-Exempt General Oligation Bonds ,564, ,057, Taxable General Oligation Bonds ,051, , Genl. Improvement Refunding Bonds ,860, ,860, Green Trust Program Loans 3,026, , NJ Environmental Infrastructure 1,211, , NJ Environmental Infrastructure 1,211, , NJ Environmental Infrastructure 450, , NJ Environmental Infrastructure 441, , Bond Anticipation Notes 1,900, ,900, Bond Anticipation Notes 29,904, ,904, Bond Anticipation Notes 10, 145, ,145, % 4.125% Various Various Various 4.000% 2.00% Various None Various None 2.00% 2.00% 1.50% Water Utility Debt Taxable Water Utility Bonds , , Various 2028 Sewer Utility Debt Sewer Utility Bonds Tax-Exempt Sewer Oligation Bonds Taxable Sewer Oligation Bonds Sewer Utility Refunding Bonds Bond Anticipation Notes 2,266, ,580, ,200, ,710, ,600, , Various 2,211, Various 992, Various 1,710, Various 7,600, % Total Debt for Capital Project Outstanding December 31, 2015 $

52 NOTES TO FINANCIAL STATEMENTS Note 4: DEBT, DEBT SERVICE AND STATUTORY DEBT CONDITION (CONT'D.) A. Summary of Municipal Debt for Capital Projects (Cont'd.) Summarized below are the Township's individual bond and loan issues which were outstanding at December 31, 2015: General Improvement Debt Amount Amount Interest Final Issued Outstanding Rates Maturity Pension Refunding Bonds $10,000, $8,510, Various 2023 Genl. Oligation Bonds ,675, ,175, % 2022 Genl. Oligation Refunding Bonds ,540, ,345, Various 2022 Tax-Exempt General Oligation Bonds ,564, ,559, Various 2028 Taxable General Oligation Bonds ,051, , Various 2028 Green Trust Program Loans 3,026, , % 2022 NJ Environmental Infrastructure 1,211, , Various 2022 NJ Environmental Infrastructure 1,211, , None 2022 NJ Environmental Infrastructure 450, , Various 2027 NJ Environmental Infrastructure 441, , None 2027 Bond Anticipation Notes 410, , % 2016 Bond Anticipation Notes 3,800, ,800, % 2016 Bond Anticipation Notes 15,646, ,646, % 2016 Bond Anticipation Notes 12,175, ,175, % 2016 Water Utility Debt Taxable Water Utility Bonds , , Various 2028 Sewer Utility Debt Sewer Utility Bonds ,266, ,971, Various 2037 Tax-Exempt Sewer Oligation Bonds ,580, ,334, Various 2028 Taxable Sewer Oligation Bonds ,200, ,063, Various 2028 Bond Anticipation Notes 7,600, ,600, % 2016 Total Debt for Capital Project Outstanding December 31, 2015 $96,8 I 6,

53 NOTES TO FINANCIAL STATEMENTS Note 4: DEBT, DEBT SERVICE AND STATUTORY DEBT CONDITION (CONT'D.) B. Summary of Statutory Debt Condition -Annual Debt Statements - CY 2016 The summarized statement of debt condition which follows is reported in accordance with the required method for preparation of the Annual Debt Statement and indicates a statutory net debt of: Gross Debt Deductions NetDebt Local School District Debt $4,440, $4,440, Water Utility Debt 797, , Sewer Utility Debt 13,727, ,727, General Debt 103,590, $122,554, $19:062, $ 103:492, $103,492, Net Debt $103,492, Divided by Equalized Valuation Basis per N.J.S.A. 40A:2-2 as amended $15,352,422, = %. EQUALIZED VALUATION BASIS 2014 Equalized Valuation Basis of Real Property 2015 Equalized Valuation Basis of Real Property 2016 Equalized Valuation Basis of Real Property $14,569,467, ,658,416, ,829,381, Average Equalized Valuation $15:352,422: BORROWING POWER UNDER N.J.S.A. 40A:2-6 AS AMENDED 3 1/2% of Equalized Valuation Basis Municipal Net Debt Remaining Borrowing Power $53 7,334, ,492: $433,842,

54 NOTES TO FINANCIAL STATEMENTS Note 4: DEBT, DEBT SERVICE AND STATUTORY DEBT CONDITION (CONT'D.) B. Summary of Statutory Debt Condition - Annual Debt Statements - CY 2015 The summarized statement of debt condition which follows is reported in accordance with the required method for preparation of the Annual Debt Statement and indicates a statutory net debt of: Gross Debt Deductions NetDebt Local School District Debt $5,385, $5,385, Water Utility Debt 854, , Sewer Utility Debt 13,312, ,312, General Debt 99,619, $119: 171, $19,551: $ $99,619, Net Debt $99,619, Divided by Equalized Valuation Basis per N.J.S.A. 40A:2-2 as amended $14,751,465, = %. EQUALIZED VALUATION BASIS 2013 Equalized Valuation Basis of Real Property 2014 Equalized Valuation Basis of Real Property 2015 Equalized Valuation Basis of Real Property $14,026,512, ,569,467' :658,416, Average Equalized Valuation $14: 751:465: BORROWING POWER UNDER N.J.S.A. 40A:2-6 AS AMENDED 3 1/2% of Equalized Valuation Basis Municipal NetDebt Remaining Borrowing Power $516,301, $416,681,

55 NOTES TO FINANCIAL STATEMENTS Note 4: DEBT, DEBT SERVICE AND STATUTORY DEBT CONDITION (CONT'D.) B. Summary of Statutory Debt Condition - Annual Debt Statements Green Trust Program Loans (Cont'd.) Date of Loan Agreement Loan Amount Interest Rate Semi-Annual Payment (Prin. & Int.) to Amortize Loan Principal Due Dates Number of Payments Final Payment W oodland_a ve Park II July 11, 2003 $712, % $44, July 11 & Jan July 11, 2022 Woodland Grove August 10, 2003 $281, % $20, Aug. 10 & Feb February 10, 2019 Date of Loan Agreement Loan Amount Interest Rate Semi-Annual Payment (Prin. & Int.) to Amortize Loan Principal Due Dates Number of Payments Final Payment Woodland Ave Park I October 26, 2007 $1,230, % $124, Oct 26 & Apr April 26, 2018 Mill Road Park October 26, 2007 $802, % $65, Oct 26 & Apr April 26, 2019 Pursuant to the provisions ofn.j.s.a. 40A:2-1 et seq. the combined outstanding principal of these loans, in the amount of $639, has been included in the calculation of the Township's statutory debt condition. -49-

56 NOTES TO FINANCIAL ST A TEMENTS Note 4: DEBT, DEBT SERVICE AND STATUTORY DEBT CONDITION (CONT'D.) B. Summary of Regulatory Debt Condition - Annual Debt Statements (Cont'd.) Deduction of Self-Liquidating Utility Debt for Statutory Net Debt (N.J.S.A. 40:2-45) The calculation of "Self-Liquidating Purpose" for the Sewer Utility, per N.J.S.A. 40A:2-45 is as follows: Cash Receipts from Fees, Rents or Other Charges for Year Deductions: Operating and Maintenance Costs Debt Service Debt Service Excess in Revenues 18,404, , , $19,097, ,998, $ The difference between the excess in revenues for debt statement purposes and the excess in revenues on a cash basis for the Sewer Utility Fund is as follows: Excess in Revenues - Cash Basis (E-1) $1,309, Deduct: Reserves Cancelled 1,210, Excess in Revenues per Debt Statement $ Cash Receipts from Fees, Rents or Other Charges for Year Deductions: Operating and Maintenance Costs Debt Service Excess in Revenues 16,982, , $17,943, ,435, $ The difference between the excess in revenues for debt statement purposes and the excess in revenues on a cash basis for the Sewer Utility Fund is as follows: Excess in Revenues - Cash Basis (E-1) $755, Deduct: Reserves Cancelled 247, Excess in Revenues per Debt Statement $

57 NOTES TO FINANCIAL STATEMENTS Note 4: DEBT, DEBT SERVICE AND STATUTORY DEBT CONDITION (CONT'D.) B. Summary of Regulatory Debt Condition -Annual Debt Statements (Cont'd.) The calculation of "Self-Liquidating Purpose" for the Water Utility, per N.J.S.A. 40A:2-45 is as follows: Cash Receipts from Fees, Rents or Other Charges for Year Deductions: Debt Service Excess in Revenues $89, , $ 0.00 The difference between the excess in revenues for debt statement purposes and the excess in revenues on a cash basis for the Water Utility Fund is as follows: Excess in Revenues - Cash Basis (D-1) $0.00 Excess in Revenues per Debt Statement Cash Receipts from Fees, Rents or Other Charges for Year Deductions: Debt Service Excess in Revenues $90, , $ 0.00 The difference between the deficit in revenues for debt statement purposes and the deficit in revenues on a cash basis for the Water Utility Fund is as follows: Excess in Revenues - Cash Basis (D-1) $0.00 Excess in Revenues per Debt Statement C. Schedule of Annual Debt Service for Principal and Interest for Bonded Debt Issued and Outstanding at December 31, 2016 General (1) Year Principal Interest Total 2017 $5,306,096 $1,774,607 $7,080, ,522,732 1,545,289 7,068, ,743,385 1,294,080 7,037, ,925,021 1,030,515 6,955, , ,670 6,925,326 Subtotal 28,663,890 6,403,161 35,067,

58 NOTES TO FINANCIAL STATEMENTS Note 4: DEBT, DEBT SERVICE AND STATUTORY DEBT CONDITION (CONT'D.) C. Schedule of Annual Debt Service for Principal and Interest for Bonded Debt Issued and Outstanding at December 31, 2016 (cont'd.) ,438, ,544 6,914, ,678, ,152 2,959, ,079, ,190 1,285, ,081, ,530 1,251, ,083, ,197 1,214,331 Subtotal 12,361,017 1,263,613 13,624,630 Year Princi12al Interest Total 2027 $1,083,134 $87,577 $1,170, ,083,966 43,859 1,127,825 Subtotal 2,167, ,436 2,298,536 Total $ $ $ C. Schedule of Annual Debt Service for Principal and Interest for Bonded Debt Issued and Outstanding for the Sewer Utility at December 31, 2016 Year Princi12al Interest Total 2017 $255,463 $186,906 $442, , , , , , , , , , , , ,723 Subtotal 1,328, ,913 2,175, , , , , , , , , , , , , ,939 89, ,829 Subtotal 1,924, ,932 2,509, ,939 73, , ,609 55, , ,000 37, , ,000 34, , ,000 30, ,000 Subtotal 1,146, ,617 1,377,

59 NOTES TO FINANCIAL STATEMENTS Note 4: DEBT, DEBT SERVICE AND ST A TUTORY DEBT CONDITION (CONT'D.) C. Schedule of Annual Debt Service for Principal and Interest for Bonded Debt Issued and Outstanding for the Sewer Utility at December 31, 2016 (cont'd.) Year Principal Interest Total ,000 25, , ,000 21, , ,000 17, , ,000 12, , ,000 7, ,500 Subtotal 575,000 84, , ,000 2, ,500 Subtotal 125,000 2, ,500 Total $5,099,807 $1,749,462 $6,849, 69 C. Schedule of Annual Debt Service for Principal and Interest for Bonded Debt Issued and Outstanding for the Water Utility at December 31, 2016 Year Principal Interest Total 2017 $58,440 $31,880 $90, ,939 30,127 90, ,437 28,329 89, ,936 25,871 88, ,434 23,354 87,788 Subtotal 307, , , ,933 20,776 86, ,431 18,139 85, ,930 15,441 84, ,428 12,685 83, ,926 9,779 81,705 Subtotal 344,648 76, , ,926 6,633 78, ,425 3,396 76,821 Subtotal 145,351 10, ,380 Total $797,185 $226,410 $1,023,

60 NOTES TO FINANCIAL STATEMENTS Note 4: DEBT, DEBT SERVICE AND REGULATORY DEBT CONDITION (CONT'D.) C. Schedule of Annual Debt Service for Principal and Interest for the New Jersey Environmental Infrastructure Trust Loan at December 31, 2016 State Trust Trust Year Principal Principal Interest Total 2017 $84, $95, $36, $216, , , , , , , , , , , , , , , , , Subtotal 425, , , , , , , , , , , , , , , , , , , , , , , , Subtotal 242, , , , Total $621, $870,QOO.OO $202, $1.763, C. Schedule of Annual Debt Service for Principal and Interest for the Green Acre Trust Loans at December 31, 2016 Year Principal Interest Total 2017 $242,635 $11,591 $254, ,363 6, , ,508 3,609 87, ,946 2,359 44, ,790 1,516 44,306 Subtotal 596,242 25, , , ,306 Subtotal 43, ,306 Total $ $26,445 $666,337 (1) Prior to the establishment of a separate Sewer Utility, the Township financed sewer infrastructure improvements through the issuance of General Debt. All such debt is included above. However, annual debt service on all sewer improvements is raised in the Annual Budget of the Dedicated Sewer Utility

61 NOTES TO FINANCIAL STATEMENT 4) DEBT. DEBT SERVICE AND STATUTORY DEBT CONDITION (CONT'D.) D. General Obligation Refunding Bonds. Series 2016 The Township issued $9,570,000 in General Obligation Refunding Bonds, Series 2016, dated August 31, Included in the $9,570,000 aggregate principal amount is $7,860,000 General Improvement Refunding Bonds, and $1,710,000 Sewer Utility Refunding Bonds. The plan ofrefunding and restructuring was to provide level debt service in future years as opposed to the existing payment schedules. The total amount of the Refunded Bonds equals $9,797,000 with maturities from 2020 through The interest rates range from 4.125% for the General Improvement Bonds and from 4.125% for the Sewer Utility Bonds to 4.250%. As a result, the Township will realize a total of$409,695 in debt service savings through The debt service savings provided for net present value costs of % of the refunded principal. The interest rates range from 4.000% for the General Obligation Refunding Bonds, Series 2016 from 2020 to maturity on June 1, 2022, and from 4.000% for the Sewer Utility Refunding Bonds, Series 2016 from 2020 to maturity on June 1, The outstanding debt service with respect to the Township's 2016 General Improvement Refunding Bonds is as follows: Year Principal Interest Total 2017 $ 314,400 $ 314, , , , , $ 2,380, ,800 2,646, ,525, ,700 2,693, ,955,000 59,100 3,014,100 $ 7,860,000 $ 1,437,800 $ 9,297,

62 NOTES TO FINANCIAL STATEMENT 4) DEBT, DEBT SERVICE AND STATUTORY DEBT CONDITION (CONT'D.) D. General Obligation Refunding Bonds, Series 2016 (cont'd.) The outstanding debt service with respect to the Township's 2016 Sewer Utility Refunding Bonds is as follows: Year Principal Interest Total 2017 $ 65,250 $ 65, ,250 65, ,250 65, $ 70,000 63, , ,000 60, , ,000 57, , ,000 55, , ,000 53, , ,000 50, , ,000 48, , ,000 45, , ,000 41, , ,000 37, , ,000 34, , ,000 30, , ,000 25, , ,000 21, , ,000 17, , ,000 12, , ,000 7, , ,000 2, ,500 $ 1,710,000 $ 861,625 $ 2,571,

63 NOTES TO FINANCIAL STATEMENTS Note 5: FUND BALANCES APPROPRIATED Fund balances at December 31, 2016 and 2015 were appropriated and included as anticipated revenue in their own respective funds for the year ending December 31, 2016 and 2015 as follows: Fund Balance Utilized in Utilized in December 31,2016 Succeeding budget Current Fund Budget Current Fund $10,844, $7,987, NIA Sewer Utility Fund 2,094, , None Water Utility Fund None Fund balances at December 31, 2015 and 2014 were appropriated and included as anticipated revenue in their own respective funds for the year ending December 31, 2015 and 2014 as follows: Fund Balance Utilized in Utilized in December 31,2015 Succeeding budget Current Fund Budget Current Fund $7,989, $3,736, NIA Sewer Utility Fund 784, None Water Utility Fund None Note 6: DEFERRED CHARGES TO BE RAISED IN SUCCEEDING BUDGETS Certain expenditures are required to be deferred to budgets of succeeding years. At December 31, 2016, the following deferred charges are shown on the balance sheets of the various funds: Balance Amount Balance December Raised To Succeeding 31, 2016 in 2017 Cancelled Years Current Fund: Special Emergency Authorization $2,857, $633, $900, $1,323, $2,857, $633,400,00 $200,000.0Q $1,323,

64 NOTES TO FINANCIAL ST A TEMENTS Note 7: DEPOSITS AND INVESTMENTS Deposits New Jersey statutes permit the deposit of public funds in institutions located in New Jersey which are insured by the Federal Deposit Insurance Corporation (FDIC), or by any other agencies of the United States that insures deposits or the State of New Jersey Cash Management Fund. N.J.S.A. 17:9-41 et. seq. establishes the requirements for the security of deposits of governmental units. The statute requires that no governmental unit shall deposit public funds in a public depository unless such funds are secured in accordance with the Act. Public depositories include Savings and Loan institutions, banks (both state and national banks) and savings banks the deposits of which are federally insured. The Government Unit Deposit Protection Act ("GUDPA") was amended, effective July 1, 2010, by P.L. 2009, c The amendments provide a greater level of security protection for covered deposits by increasing collateralization requirements and revising the enforcement protocol to allow for timely response in the event that a member bank shows signs of stress. Under the new law, collateralization of GUDPA deposits up to 75% of New Jersey capital is based on a sliding scale that requires the minimum of 5% collateral for Well Capitalized institutions to a maximum of 120% collateral for Critically Undercapitalized institutions. All unisured GUDPA deposits in excess of 75% of New Jersey capital require 100% collateral. If a public depository fails, the collateral it has pledged, plus the collateral of all other public depositories, is available to pay the full amount of their deposits to the Governmental Units. All collateral must be deposited with the Federal Reserve Bank, the Federal Home Loan Bank Board or a banking institution that is a member of the Federal Reserve System and has capital funds of not less than $25,000,000. The State of New Jersey Cash Management Fund is authorized by statute and regulations of the State Investment Council to invest in fixed income and debt securities, which mature within one year. Collateralization of Fund investments is generally not required. "Other Than State" participants contribute one tenth of one percent per year of the value of the aggregate units owned by them to establish a Reserve Fund, which is supplemented by the proportional interest of "Other Than State" participants in gains on investment transactions realized. The Reserve Fund is available to cover losses of "Other Than State" participants occasioned by the bankruptcy of an issuer of an investment held by the Fund and losses on sales of securities. At December 31, 2016 and 2015, the cash and cash equivalents and investments of the Township consisted of the following: Cash (Demand Accts.) Change Funds (On-Hand) State of NJ. Cash Mgmt. Fund US Treasury/Agency Obligations Money Market Funds Total $91,237, , ,838, $ $80,976, , ,479, ,269, $ During the period ended December 31, 2016 and 2015, the Township held investments in Certificates of Deposit and the State of New Jersey Cash Management Fund. Under criteria established in Governmental Accounting Standards Board Statement No. 9, the year-end balances in Certificates of Deposit, New Jersey Cash Management Fund and the New Jersey Proceeds Management Fund are considered to be cash equivalents under GAAP

65 NOTES TO FINANCIAL STATEMENTS Note 7: DEPOSITS AND INVESTMENTS The Township has implemented the disclosure requirements of Governmental Accounting Standards Board Statement No. 40 "Deposits and Investment Risk Disclosures" (GASB 40) an accordingly the Township has assessed the Custodial Risk, the Concentration of Credit Risk and Interest Risk of its cash and investments. (a) Custodial Credit Risk - The Township's deposits are exposed to custodial credit risk if they are not covered by depository insurance and the deposits are: uncollateralized with securities held by the pledging financial institution's trust department or agent but not in the depositor-government's name. The deposit risk is that, in the event of the failure of a depository financial institution, the Township will not be able to recover deposits or will not be able to recover collateral securities that are in possession of an outside party. The Township's investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered in the name of the Township and are held by either: the counterparty or the counterparty's trust department or agent but not in the Township's name. The investment risk is that, in the event of the failure of the counterparty to a transaction, the Township will not be able to recover the value of the investment or collateral securities that are in possession of an outside party. (b) Concentration of Credit Risk - This is the risk associated with the amount of investments that the Township has with any one issuer that exceeds 5 percent or more of its total investments. Investments issued or explicitly guaranteed by the U.S. government and investments in mutual funds, external investment pools, and other pooled investments are excluded from this requirement. ( c) Credit Risk - GASB 40 requires that disclosure be made as to the credit rating of all debt security investments except for obligations of the U.S. government or obligations explicitly guaranteed by the U.S. government. This is the risk that an issuer or other counterparty to an investment will not fulfill its obligation. In general, the Township does not have an investment policy regarding Credit Risk except to the extent outlined under the Township's investment policy. ( d) Interest Rate Risk - This is the risk that changes in interest rates will adversely affect the fair value of an investment. The Township does not have a formal policy that limits investment maturities as a means of managing its exposure to fair value losses arising from interest rate fluctuations. (e) As of December 31, 2016 and 2015, based upon the insured balances provided by the FDIC and NJGUDPA coverage, no amount of the Township's bank balances was considered exposed to custodial credit risk Investments New Jersey Statutes establish the following securities as eligible for the investment of Township funds: 1. Bonds or other obligations of the United States of America or obligations guaranteed by the United States; 2. Government money market mutual funds; 3. Any obligation that a federal agency or a federal instrumentality has issued in accordance with an act of Congress, which security has a maturity date not greater than 397 days from the date of purchase, provided such obligation bear a fixed rate of interest not dependent on any index or other external factor; 4. Bonds or other obligations of the Township or bonds or other obligations of school districts of which the Township is a part and within which the school district is located. -59-

66 NOTES TO FINANCIAL STATEMENTS Note 7: DEPOSITS AND INVESTMENTS (CONT'D.) 5. Bonds or other obligations having a maturity date of not more than 397 days from the date of purchase that are approved by the Division of Investment of the Department of Treasury for investment by local units; 6. Local government investment pools; 7. Deposits with the State of New Jersey Cash Management Fund established pursuant to section 1 of P.L. 1997,c. 281 (C.52:18A-90.4); or 8. Agreements for the repurchase of fully collateralized securities, if: a. the underlying securities are permitted investments pursuant to paragraphs (1) and (3); b. the custody of collateral is transferred to a third party; c. the maturity of the agreement is not more than 30 days; and d. the underlying securities are purchased through a public depository as defined in section 1 of P.L. 1970, c.236 (C.19:9-41) and for which a master repurchase agreement providing for the custody and security of the collateral is executed. Moody's S&P Investment Type Rating Rating Federal National Mortgage Assoc. AAA AA+ Federal Home Loan Mortgage AAA AA+ Federal Home Loan Bank AAA AA+ U.S. Treasury Notes AAA AA+ The Township's investments at year-end 2016 were as follow: Investment Maturities (in Years} Investment Type Total Fair Less than Value U.S. Treasury Bills $9,949, $1,778, $ 3,736, $4,434, FFCB 714, , , FNMA 2,144, , ,488, , FHLB 1,947, , ,129, , FHLM 1,600, , ,059, , Tenn Valley Auth Power 127, , Financing Corp 87, , FICO Strips 154, , The Township of Edison had the following depository accounts. All deposits are carried at cost plus accrued interest. The government does not have a deposit policy. Depository Account Insured--FDIC Insured-NJGUDPA (N.J.S.A. 17:941) Uninsured Total Bank Balance $ 750, ,607, ,969, $

67 NOTES TO FINANCIAL STATEMENTS Note 7: DEPOSITS AND INVESTMENTS (CONT'D.) Investments (Cont'd.) New Jersey Cash Management Fund -All investments in the Fund are governed by the regulations of the Investment Council, which prescribe specific standards designed to insure the quality of investments and to minimize the risks related to investments. In all the years of the Division of Investment's existence, the Division has never suffered a default of principal or interest on any short-term security held by it due to the bankruptcy of a securities issuer; nevertheless, the possibility always exists, and for this reason a reserve is being accumulated as additional protection for the "Other-than-State" participants. In addition to the Council regulations, the Division sets further standards for specific investments and monitors the credit of all eligible securities issuers on a regular basis. As of December 31, 2016, the Township had $131, on deposit with the New Jersey Cash Management Fund. Note 8: ASSESSMENT AND COLLECTION OF PROPERTY TAXES New Jersey statutes require that taxable valuation of real property be prepared by the Township Assessor as of October 1 in each year and filed with the County Board of Taxation by January 10 of the following year. Upon the filing of certified adopted budgets by the Township, Local School District, County and Special Districts, the tax rate is struck by the board based on the certified amounts in each of the taxing districts for collection to fund the budgets. Pursuant to statute, this process is to be completed on or before May 3, with a completed duplicate of the tax rolls to be delivered to the Township Tax Collector on or before May 13th. Tax bills are prepared and mailed by the Collector of Taxes of the Township annually and set forth the final tax for the tax year. The bill contains a credit for preliminary amounts billed previously with the balance payable in equal installments on August 1st and November 1st of the tax year. In addition, the property owner receives a preliminary bill for the succeeding year based on one half of the prior year's tax. The preliminary payments are due and payable on February 1st and May 1st. The New Jersey Statutes allow a grace period of 10 days for each payment period and the Township granted this option to taxpayers. Taxes become delinquent if not paid on the installment dates and become subject to interest penalties of 8% to 18% of the amount delinquent, and if a delinquency (including interest) is in excess of $10, and remains in arrears after December 31, an additional flat penalty of 6% shall be charged against the delinquency. If taxes are delinquent on or after April 1st of the succeeding year, the delinquent amount is subject to "Tax Sale" which places a tax lien on the property allowing the holder to enforce the tax lien by collection or foreclosure. New Jersey property tax laws establish a tax lien on real estate as of January 1st of the current tax year even though the amount due is not known

68 NOTES TO FINANCIAL STATEMENTS Note 9: PENSION PLANS Description of Plans - The State of New Jersey, Division of Pension and Benefits (the Division) was created and exists pursuant to N.J.S.A. 52:18A to oversee and administer the pension trust and other postemployment benefit plans sponsored by the State of New Jersey (the State). According to the State of New Jersey Administrative Code, all obligations of the Systems will be assumed by the State of New Jersey should the plans terminate. Each defined benefit pension plan's designated purpose is to provide retirement, death and disability benefits to its members. The authority to amend the provision of plan rests with new legislation passed by the State of New Jersey. Pension reforms enacted pursuant to Chapter 78, P.L included provisions creating special Pension Plan Design Committees for the Public Employees Retirement System (PERS) and the Police and Firemen's Retirement System (PFRS), once a Target Funded Ratio (TFR) is met, that will have the discretionary authority to modify certain plan design features, including member contribution rate; formula for calculation of final compensation or final salary; fraction used to calculate a retirement allowance; age at which a member may be eligible and the benefits for service or early retirement; and benefits provided for disability retirement. The committee will also have the authority to reactivate the cost of living adjustment (COLA) on pensions. However, modifications can only be made to the extent that the resulting impact does not cause the funded ratio to drop below the TFR in any one year of a projection period. The Division issues a publicly available financial report that includes the financial statements and required supplementary information for each of the plans. This report may be accessed via the Division of Pensions and Benefits website, at or may be obtained by writing to the Division of Pensions and Benefits, PO Box 295, Trenton, New Jersey, A. Public Employees' Retirement System (PERS) - The Public Employee Retirement System is a costsharing, multiple employer defined benefit pension plan as defined in GASB Statement No. 68. The Plan is administered by The New Jersey Division of Pensions and Benefits (Division). The more significant aspects of the PERS Plan are as follows: Plan Membership and Contributing Employers- Substantially all full-time employees of the State of New Jersey or any county, municipality, school district or public agency are enrolled in PERS, provided the employee is not required to be a member of another state-administered retirement system or other state pension fund or local jurisdiction's pension fund. Membership and contributing employers of the defined benefit pension plans consisted of the following at June 30, 2016: Inactive plan members or beneficiaries currently receiving benefits Inactive plan members entitled to but not yet receiving benefits Active plan members Total 171, , Contributing Employers - 1,713. Significant Legislation - Chapter 19, P.L. 2009, effective March 17, 2009, provided an option for local employers of PERS to contribute 50% of the normal and accrued liability contribution amounts certified for payments due in State Fiscal Year Such an employer will be credited with the full payment and any such amounts will not be included in their unfunded liability. The actuaries will determine the unfunded liability of PERS, by employer, for the reduced normal and accrued liability contributions provided under this law. This unfunded liability will be paid by the employer in level annual payments over a period of 15 years beginning with the payments due in the fiscal year ended June 30, 2012 and will be adjusted by the rate of return on the actuarial value of assets

69 NOTES TO FINANCIAL STATEMENTS Note 9. PENSION PLANS (CONT'D.) A. Public Employees' Retirement System (PERS) (Cont'd.) Pursuant to the provision of Chapter 78, P.L. 2011, COLA increases were suspended for all current and future retirees of PERS. Payrolls and Covered Wages: For the year ended December 31, 2016 the Township's total payroll for all employees was $65,005,371. Total PERS covered payroll was $17,387,755. Covered payroll refers to all compensation paid by the Borough to active employees covered by the Plan. However, due to systems limitations, covered payroll includes only "pensionable" payroll as reported to PERS. Specific Contribution Requirements and benefit provisions - The contribution policy is set by N.J.S.A 43:15A and requires contributions by active members and contributing employers. Pursuant to the provisions of Chapter 78, P.L. 2011, the active member contribution rate increased from 5.5% of annual compensation to 6.5% plus an additional 1 % phased-in over 7 years beginning in July The member contribution rate was 7.06% for State fiscal year The phase-in of the additional incremental member contribution rate takes place in July of each subsequent State fiscal year. Employers' contributions are based on an actuarially determined amount, which includes the normal cost and unfunded accrued liability. The annual employer contributions include funding for basic retirement allowances and noncontributory death benefits. The Township's cash basis contributions to the Plan for the years ended December 31, 2015 and 2016 were $2,151,069 and $2,162,717, respectively. Township Contributions are due and payable on April 1st in the second fiscal period subsequent to plan year for which the contribution requirements were calculated. Township payments to PERS for the years ending December 31, 2015 and 2016 consisted of the following: Normal Cost $ 358,105 $ 366,139 Amortization of Accrued Liability 1,656,514 1,686,669 Total Pension 2,014,619 2,052,808 NCGI Premiums 136, ,909 Total PERS Payment $ $ 2,162,111 The Township recognizes liabilities to PERS and records expenditures for same in the fiscal period that bills become due. The vesting and benefit provisions are set by N.J.S.A. 43:15A. PERS provides retirement, death and disability benefits. All benefits vest after ten years of service, except for medical benefits, which vest after 25 years of service or under the disability provisions of PERS. The following represents the membership tiers for PERS: Tier Definition 1 Members who were enrolled prior to July 1, Members who were eligible to enroll on or after July 1, 2007 and prior to November 2, Members who were eligible on or after November 2, 2008 and prior to May 22, Members who were eligible to enroll on or after May 22, 2010 and prior to June 28, Members who were eligible to enroll on or after June 28,

70 Note 9. PENSION PLANS (CONT'D.) NOTES TO FINANCIAL STATEMENTS A. Public Employees' Retirement System (PERS) (Cont'd.) Service retirement benefits of 1/55 1 h of final average salary for each year of service credit is available to tiers 1 and 2 members upon reaching age 60 and to tier 3 members upon reaching age 62. Service retirement benefits of 1/60 1 " of final average salary for each year of service credit is available to tier 4 members upon reaching age 62 and tier 5 members upon reaching age 65. Early retirement benefits are available to tiers 1 and 2 members before reaching age 60, tiers 3 and 4 with 25 or more years of service credit before age 62, and tier 5 with 30 or more years of service credit before age 65. Benefits are reduced by a fraction of a percent for each month that a member retires prior to the age at which a member can receive full early retirement benefits in accordance with their respective tier. Tier 1 members can receive an unreduced benefit from age 55 to age 60 if they have at least 25 years of service. Deferred retirement is available to members who have at least 10 years of service credit and have not reached the service retirement age for the respective tier. Pension Liabilities, Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions - The regulatory basis of accounting which is basis for the preparation of the Township's basic financial statements does not require or permit the inclusion of entity-wide, full accrual basis financial statements. Accordingly, the Township does not recognize pension liabilities for any current or prior period until the fiscal period in which such payments will become due and payable. At June 30, 2016, the PERS reported a net pension liability of $29,617,131,759 for its Local (Non-State) Employer Member Group. The Township's proportionate share of the net pension liability for the Local Employer Member Group that is attributable to the Township was $72,224,291 or %. At June 30, 2015, the PERS reported a net pension liability of $22,447,996,119 for its Local Employer Member Group. The Township's proportionate share of the net pension liability for the Local Employer Member Group that was attributable to the Township was $56,469,544 or %. Actuarial Assumptions- The collective total pension liability for the June 30, 2016 measurement date was determined by an actuarial valuation as of July 1, 2015, which was rolled forward to June 30, This actuarial valuation used the following actuarial assumptions: Inflation rate Salary Increases: Through 2026 Thereafter Investment rate of return 3.08% % Based on age % Based on age 7.65% Pre-retirement mortality rates were based on the RP-2000 Employee Preretirement Mortality Table for male and female active participants. For State employees, mortality tables are set back 4 years for males and females. For local employees, mortality tables are set back 2 years for males and 7 years for females. In addition, the tables provide for future improvements in mortality from the base year of 2013 using a generational approach based on the plan actuary's modified MP-2014 projection scale. Post-retirement mortality rates were based on the RP-2000 Combined Healthy Male and Female Mortality Tables (set back 1 year for males and females) for service retirements and beneficiaries of former members and a one-year static projection based on mortality improvement Scale AA. In addition, the tables for service retirements and beneficiaries of former members provide for future improvements in mortality from the base year of 2013 using a generational approach based on the plan actuary's modified MP-2014 projection scale. Disability retirement rates used to value disabled retirees were based on the RP-2000 Disabled Mortality Table (set back 3 years for males and set forward 1 year for females)

71 NOTES TO FINANCIAL STATEMENTS Note 9. PENSION PLANS (CONT'D.) A. Public Employees' Retirement System (PERS) (Cont'd.) The actuarial assumptions used in the July 1, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2011 to June 30, It is likely that future experience will not exactly conform to these assumptions. To the extent that actual experience deviates from these assumptions, the emerging liabilities may be higher or lower than anticipated. The more the experience deviates, the larger the impact on future financial statements. In accordance with State statute, the long-term expected rate of return on plan investments (7.65% at June 30, 2016) is determined by the State Treasurer, after consultation with the Directors of the Division of Investment and Division of Pensions and Benefits, the board of trustees and the actuaries. The long-term expected rate of return was determined using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic rates of return for each major asset class included in PERS 's target asset allocation as of June 30, 2016 are summarized in the following table: Long-Term Target Expected Real Asset Class Allocation Rate of Return Cash 5.00% 0.87% U.S. Treasuries 1.50% 1.74% Investment Grade Credit 8.00% 1.79% Mortgages 2.00% 1.67% High Yield Bonds 2.00% 4.56% Inflation-Indexed Bonds 1.50% 3.44% Broad US Equities 26.00% 8.53% Developed Foreign Equities 13.25% 6.83% Emerging Market Equities 6.50% 9.95% Private Equity 9.00% 12.40% Hedge Funds/ Absolute Return 12.50% 4.68% Real Estate (Property) 2.00% 6.91% Commodities 0.50% 5.45% Global Debt ex US 5.00% -0.25% REIT 5.25% 5.63% Discount Rate -The discount rate used to measure the total pension liability was 3.98% as of June 30, This single blended discount rate was based on the long-term expected rate of return on pension plan investments of 7.65% and a municipal bond rate of2.85% as of June 30, 2016 based on the Bond Buyer Go 20-Bond Municipal Bond Index, which includes tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made based on the contribution rate in the most recent fiscal year. The State employer contributed 30% of the actuarially determined contributions and the local employers contributed 100% of their actuarially determined contributions. Based on those assumptions, the plan's fiduciary net position was projected to be available to make projected future benefit payments of current plan members through Therefore, the long-term expected rate of return on plan investments was applied to projected benefit payments through 2034 and the municipal bond rate was applied to projected benefit payments after that date in determining the total pension liability

72 NOTES TO FINANCIAL STATEMENTS Note 9. PENSION PLANS (CONT'D.) A. Public Employees' Retirement System (PERS) (Cont'd.) Sensitivity of Net Pension Liability - the following presents the net pension liability of PERS participating employers as of June 30, 2016, calculated using the discount rates as disclosed above as well as what the collective net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage rate higher than the current rate: At 1 % Decrease At current discount rate At 1 % increase (2.98%) (3.98%) (4.98%) State $34,422,851,197 $29,390,685,705 $25,246,574,457 Local 36,292,338,055 29,617,131,759 24, 106, 170,190 PERS Plan Total $70,715,] 82,252 $59,007,817,464 $49,352,744,641 Components of Net Pension Liability - The components of the net pension liability for PERS, including the State of New Jersey, at June 30, 2016 is as follows: State Local Total Total Pension Liability $36,295,189,928 $49,474,698,146 $85,769,888,074 Plan Fiduciary Net Position 6,904,504,223 19,857,566,387 26, 762,070,610 Net Pension Liability $29,390,685,705 $29,617,131,759 $52,007,817,464 Collective Deferred Outflows of Resources and Deferred Inflows of Resources - Amounts reported as deferred outflows of resources and deferred inflows of resources (excluding employer specific amounts) related to pensions will be recognized in pension expense as follows: Year ending Total Amount $3,476,956 3,476,956 4,210,942 3,551,727 1,150,647 $15,867,228 Changes in Proportion - The previous amounts do not include employer specific deferred outflows of resources and deferred inflows of resources related to changes in proportion. These amounts should be recognized (amortized) by each employer over the average of the expected remaining service lives of all plan members, which is 5.57, 5.72 and 6.44 years for the 2016, 2015, and 2014 amounts, respectively. B. Police and Firemen's Retirement System (PFRS) - The Police and Firemen's Retirement System is a costsharing, multiple employer defined benefit pension plan as defined in GASB Statement No. 68. The Plan is administered by The New Jersey Division of Pensions and Benefits (Division). The more significant aspects of the PFRS Plan are as follows: - 66-

73 NOTES TO FINANCIAL STATEMENTS Note 9. PENSION PLANS (CONT'D.) B. Police and Firemen's Retirement System (PFRS) (Cont'd.) Plan Membership and Contributing Employers- Substantially all full-time county and municipal police or firemen and state firemen or officer employees with police powers appointed after June 30, 1944 are enrolled in PFRS. Membership and contributing employers of the defined benefit pension plans consisted of the following at June 30, 2016: Inactive plan members or beneficiaries currently receiving benefits Inactive plan members entitled to but not yet receiving benefits Active plan members 45, ,036 Total Contributing Employers Pursuant to the provision of Chapter 78, P.L. 2011, COLA increases were suspended for all current and future retirees of PFRS. For the year ended December 31, 2016 the Township's total payroll for all employees was $65,005,371. Total PFRS covered payroll was $34,491,789. Covered payroll refers to all compensation paid by the Borough to active employees covered by the Plan. However, due to systems limitations, covered payroll includes only "pensionable" payroll as reported to PFRS. Specific Contribution Requirements and benefit provisions - The contribution policy is set by N.J.S.A 43:16A and requires contributions by active members and contributing employers. Pursuant to the provisions of Chapter 78, P.L. 2011, the active member contributions rate increased from 8.5% of annual compensation to 10.0% in October Employers' contributions are based on an actuarially determined amount, which includes the normal cost and unfunded accrued liability. The annual employer contributions include funding for basic retirement allowances and noncontributory death benefits. The Township's cash basis contributions to the Plan for the years ended December 31, 2015 and 2016 were $8,670,655 and $8,803,587, respectively. Township Contributions are due and payable on April 1st in the second fiscal period subsequent to plan year for which the contribution requirements were calculated. Township payments to PFRS for the years ending December 31, 2015 and 2016 consisted of the following: Normal Cost $ 2,974,240 $ 2,951,488 Amortization of Accrued Liability 5,307,483 5,459,647 Total Pension 8,281,723 8,411,135 NCGI Premiums 388, ,452 Total PFRS Payment $ 8.670,655 $ 8,803,587 The vesting and benefit provisions are set by N.J.S.A. 43:16A. PFRS provides retirement as well as death and disability benefits. All benefits vest after ten years of service, except disability benefits, which vest after four years of service

74 NOTES TO FINANCIAL ST A TEMENTS Note 9. PENSION PLANS (CONT'D.) B. Police and Firemen's Retirement System (PFRS) (Cont'd.) The following represents the membership tiers for PFRS: Tier Definition 1 Members who were enrolled prior to May 22, Members who were eligible to enroll on or after May 22, 2010 and prior to June 28, Members who were eligible to enroll on or after June 28, 2011 Service retirement benefits are available at age 55 and are generally determined to be 2% of final compensation for each year of creditable service, as defined, up to 30 years plus 1 % for each year of service in excess of 30 years. Members may seek special retirement after achieving 25 years of creditable service, in which benefits would equal 65% (tiers 1 and 2 members) and 60% (tier 3 members) of final compensation plus 1 % for each year of creditable service over 25 years but not to exceed 30 years. Members may elect deferred retirement benefits after achieving ten years of service, in which case benefits would begin at age 55 equal to 2% of final compensation for each year of service. Pension Liabilities, Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions - The regulatory basis of accounting which is basis for the preparation of the Township's basic financial statements does not require or permit the inclusion of entity-wide, full accrual basis financial statements. Accordingly, the Township does not recognize pension liabilities for any current or prior period until fiscal period in which such payments will become due and payable. At June 30, 2016, the PFRS reported a net pension liability of $19,102,557,969 for its Non-State, Non Special Funding Situation Employer Member Group. The Township's proportionate share of the net pension liability for the Non-State, Non-Special Funding Situation Employer Member Group was $204,027,959 or %. At June 30, 2015, the PFRS reported a net pension liability of $16,656,514,197 for its Non-State, Non-Special Funding Situation Employer Member Group. The Township's proportionate of the net pension liability for the Non-State Non-Special Funding Situation Employer Member Group was $180,398,499 or %. Actuarial Assumptions- The collective total pension liability for the June 30, 2016 measurement date was determined by an actuarial valuation as of July 1, 2015, which was rolled forward to June 30, This actuarial valuation used the following actuarial assumptions: Inflation rate Salary Increases: Through 2026 Thereafter Investment rate of return 3.08% % Based on age % Based on age 7.65% Pre-retirement mortality rates were based on the RP-2000 Pre-Retirement mortality tables projected thirteen years using Projection Scale BB and then projected on a generational basis using the plan actuary's modified 2014 projection scales. Post-retirement mortality rates for male service retirements and beneficiaries are based the RP-2000 Combined Healthy Mortality Tables projected one year using Projection Scale AA and two years using the plan actuary's modified 2014 projection scales, which was further projected on a generational basis using the plan actuary's modified 2014 projection scales

75 NOTES TO FINANCIAL ST A TEMENTS Note 9. PENSION PLANS (CONT'D.) B. Police and Firemen's Retirement System (PFRS) (Cont'd.) Post- retirement mortality rates for female service retirements and beneficiaries were based the RP-2000 Combined Healthy Mortality Tables projected thirteen years using Projection Scale BB and then two years using the plan actuary's modified 2014 projection scales, which was further projected on a generational basis using the plan actuary's modified 2014 projection scales. Disability mortality rates were based on special mortality tables used for the period after disability retirement. The actuarial assumptions used in the July 1, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2010 to June 30, The long-term expected rate of return on plan investments (7.65% at June 30, 2016) is determined by the State Treasurer, after consultation with the Directors of the Division of Investment and Division of Pensions and Benefits, the board of trustees and the actuaries. The long-term expected rate of return was determined using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic rates of return for each major asset class included in PFRS's target asset allocation as of June 30, 2016 are summarized in the following table: Long-Term Target Expected Real Asset Class Allocation Rate of Return Cash 5.00% 0.87% U.S. Treasuries 1.50% 1.74% Investment Grade Credit 8.00% 1.79% Mortgages 2.00% 1.67% High Yield Bonds 2.00% 4.56% Inflation-Indexed Bonds 1.50% 3.44% Broad US Equities 26.00% 8.53% Developed Foreign Equities 13.25% 6.83% Emerging Market Equities 6.50% 9.95% Private Equity 9.00% 12.40% Hedge Funds/ Absolute Return 12.50% 4.68% Real Estate (Property) 2.00% 6.91% Commodities 0.50% 5.45% Global Debt ex US 5.00% -0.25% REIT 5.25% 5.63% Discount Rate -The discount rate used to measure the total pension liability was 5.55% as of June 30, This single blended discount rate was based on the long-term expected rate of return on pension plan investments of 7.65% and a municipal bond rate of 2.85% as of June 30, 2016 based on the Bond Buyer Go 20-Bond Municipal Bond Index, which includes tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers and the nonemployer contributing entity will be made based on the contribution rate in the most recent fiscal year. The State employer contributed 30% of the actuarially determined contributions and the local employers contributed 100% of their actuarially determined contributions

76 NOTES TO FINANCIAL STATEMENTS Note 9. PENSION PLANS (CONT'D.) B. Police and Firemen's Retirement System (PFRS) (Cont'd.) Based on those assumptions, the plan's fiduciary net position was projected to be available to make projected future benefit payments of current plan members through Therefore, the long-term expected rate of return on plan investments was applied to projected benefit payments through 2050, and the municipal bond rate was applied to projected benefit payments after that date in determining the total pension liability. Sensitivity of Net Pension Liability - The following presents the collective net pension liability of the participating employers as of June 30, 2016, calculated using the discount rate as disclosed above as well as what the collective net pension liability would be if it was calculated using a discount rate that is 1- percentage point lower or I-percentage-point higher than the current rate: At 1 % Decrease At current discount rate At 1 % increase (4.55%) (5.55%)* (6.55%) State $ 5,612,325,178 $ 4,710,744,193 $ 3,977,817,225 Local 26,699,770,118 20,706,699,056 15,819,710,095 PFRS Plan Total $32,312,025,226 $25,417,443,249 $19,721,521,320 *-Local Share includes $1,604,141,087 of Special Funding Situation allocated to the State of NJ as a nonemployer. Components of Net Pension Liability - The components of the net pension liability for PFRS, including the State of New Jersey, at June 30, 2016 is as follows: State Local Total Total Pension Liability $ 6,255,619,682 $43, 146,550,231 $49,402,169,913 Plan Fiduciary Net Position 1,544,875,489 22,439,851,175 23,984, 726,664 Net Pension Liability $ 4,110,144,193 $20,706,629,056 $25,417,443,242 Collective Deferred Outflows of Resources and Deferred Inflows of Resources - Amounts reported as deferred outflows of resources and deferred inflows of resources (excluding employer specific amounts) related to pensions will be recognized in pension expense as follows: Year ending Total Amount $8,448,698 8,448,698 12,071,453 6,870,321 68,276 $35,

77 NOTES TO FINANCIAL STATEMENTS Note 9. PENSION PLANS (CONT'D.) B. Police and Firemen's Retirement System (PFRS) (Cont'd.) Changes in Proportion - The previous amounts do not include employer specific deferred outflows of resources and deferred inflows of resources related to changes in proportion. These amounts should be recognized (amortized) by each employer over the average of the expected remaining service lives of all plan members, which is 5.58, 5.53, and 6.17 years for the 2016, 2015 and 2014 amounts, respectively. C. Defined Contribution Retirement System (DCRP) The Defined Contribution Retirement Plan (DCRP) is a multiple employer defined contribution plan as defined in GASB Statement No. 68. The Plan is administered by The New Jersey Division of Pensions and Benefits (Division). The more significant aspects of the DCRP are as follows: Plan Membership and Contributing Employers- Enrollment in the DCRP is required for state or local officials, elected or appointed on or after July I, 2007; employees enrolled in TPAF or PERS on or after July 1, 2007, who earn salary in excess of established "maximum compensation" limits; employees otherwise eligible to enroll in TPAF or PERS on or after November 2, 2008, who do not earn the minimum annual salary for tier 3 enrollment, but who earn salary of at least $5,000 annually; and employees otherwise eligible to enroll in TPAF or PERS after May 21, 2010, who do not work the minimum number of hours per week required for tier 4 or tier 5 enrollment, but who earn salary of at least $5,000 annually. At June 30, 2016, the membership in the DCRP, based on the information within the Division's database, was 46,557. Contribution Requirement and Benefit Provisions - State and local government employers contribute 3% of the employees' base salary. Active members contribute 5.5% of base salary. Eligible members are provided with a defined contribution retirement plan intended to qualify for favorable Federal income tax treatment under IRC Section 401(a), a noncontributory group life insurance plan and a noncontributory group disability benefit plan. A participant's interest in that portion of his or her defined contribution retirement plan account attributable to employee contributions shall immediately become and shall at all times remain fully vested and nonforfeitable. A participant's interest in that portion of his or her defined contribution retirement plan account attributable to employer contributions shall be vested and nonforfeitable on the date the participant commences the second year of employment or upon his or her attainment of age 65, while employed by an employer, whichever occurs first. For the year ended December 31, 2016 the Township's total payroll for all employees was $65,005,371. Total DCRP covered payroll was $626,752. Covered payroll refers to all compensation paid by the Township to active employees covered by the Plan. Township and employee contributions to the DCRP for the year ended December 31, 2016 were $18,801 and $37,108, respectively. D. Cumulative PERS and PFRS Deferred Outflows of Resources and Deferred Inflows of Resources Net Pension Deferred Deferred Total Pension Liability Outflows Inflows Expense PERS $ 72,224,291 $19,058,146 $3,190,868 $2,162,717 PFRS 204,027,959 43,777,366 7,869,921 8,803,587 Total $ 276,252,25Q $62,835,512 $11,060,782 $10,966,

78 NOTES TO FINANCIAL ST A TEMENTS Note 10: RISK MANAGEMENT A. Liability and Workers Compensation Summary of Risk Management Program The Township, together with the neighboring Townships of Woodbridge and Piscataway, formed the Central Jersey Joint Insurance Fund (CJJIF), effective July 1, During the most recent Fund Year, participants in the CJJIF also included the Township of Franklin and Hillsborough, each of Somerset County, the City of South Amboy and the Borough of Sayreville, each of Middlesex County, and the Borough of Belmar, Monmouth County. This Fund provides for a pooling of self-retained risks of insurable losses, as well as cost effective excess and reinsurance coverages. As part of Fund's program, reinsurance coverage relating to losses reported by the Township at June 30, 1998 was procured, and the Township will be required to contribute $227,000 per year towards the ultimate cost of settlement of these claims. The Township had previously operated a risk management program, which included significant self-insured risk retention, and had established a Self-Insurance Trust Fund to account for this activity. Reserves available in the Self Insurance Trust Fund may be utilized to make contributions towards the settlement of the residual claims or the Township may redirect these funds to any other lawful purpose. At December 31, 2016, the CJJIF reported net position unrestricted of $7,344,204. Summary of Risk Management Program The CJJIF provides the following coverages to its participants: 1. Workers' Compensation The Fund covers $300,000 Combined Single Limit (CSL) The Municipal Excess Liability Joint Insurance Fund (MEL) covers excess claims to the following limits: Workers' Compensation - statutory Employers' Liability - $6,700,000 excess of the Fund's $300,000 USL&H - Included in Workers' Compensation. Harbor Marine/Jones Act-Included in Employer's Liability. Incidental Foreign Workers Compensation - Included Communicable Disease Coverage - Included 2. General Liability The Fund covers $300,000 CSL The MEL covers excess claims to the following limits: General Liability - $4,700,000 CSL excess of the Funds' $300,000. The $3,250,000 excess of $1,750,000 layer is subject to a $3,250,000 per member local unit annual aggregate limit. Police Professional - Included in MEL excess General Liability limits. Employee Benefits Liability - Included in MEL excess General Liability limits. Good Samaritan Liability - Included in MEL excess General Liability limits Quasi Municipal Organization Liability. (Non-profit organizations included by a member local unit in the town's insurance program.) Emergency Service Units & Auxiliaries - Included in MEL excess General Liability limits

79 NOTES TO FINANCIAL STATEMENTS Note 10: RISK MANAGEMENT (CONT'D.) A. Liability and Workers Compensation (Cont'd.) Summary of Risk Management Program (Cont'd.) 2. General Liability (Cont'd.) Other - $4,700,000 CSL excess of the Funds' $300,000. The $3,250,000 excess of $1,750,000 layer is included in the MEL's General Liability $3,250,000 excess $1,750,000 per member local unit annual aggregate limit. Garage Keeper Liability- $1,700,000 CSL excess of the Funds' $300, The $250,000 excess of $1,750,000 layer is included in the MEL's General Liability $3,250,000 excess $1,750,000 per member local unit annual aggregate limit. Failure to Supply Liability- $4,700,000 CSL excess of the Funds' $300,000. The $3,250,000 excess of $1,750,000 layer is included in the MEL's General Liability $3,250,000 excess $1,750,000 per member local unit annual aggregate limit. Riot/Civil Commotion or Mob Action - $4,700,000 CSL excess of the Funds' $300,000. The $3,250,000 excess of $1,750,000 layer is included in the MEL's General Liability $3,250,000 excess $1,750,000 per member local unit annual aggregate limit. Dams (Class Ill and IV - Low Hazard) - $4,700,000 CSL excess of the Fund's $300,000. The $3,250,000 excess of $1,750,000 layer is included in the MEL's General Liability $3,250,000 excess $1,750,000 per member local unit annual aggregate limit. Dams (Class I and II - High Hazard) - $700,000 CSL excess of the Fund's $300,000. Subsidence Property Damage Liability - $3,450,000 CSL excess of the Fund's 300,000. The $2,000,000 excess of $1,750,000 layer is included in the MEL's General Liability and is subject to a $2,000,000 annual aggregate "all members" annual aggregate limit excess of the $1,750,000 each occurrence. There is no bodily injury liability sub-limit for subsidence. Sewer Back Up - $3,450,000 CSL excess of the Fund's 300,000. The $2,000,000 excess of $1,750,000 layer is included in the MEL's General Liability and is subject to a $2 million annual aggregate "all members" annual aggregate limit excess of the $1,750,000 each occurrence. There is no bodily injury liability sub-limit for sewer back up. Disinfecting Agents Release Hazard- $700,000 CSL excess of the Funds' $300,000. Skateboard Facilities - $4,700,000 CSL excess of the Funds' $300,000. The $3,250,000 excess of $1,750,000 layer is included in the MEL's General Liability $3,250,000 excess $1,750,000 per member local unit annual aggregate limit. (Note: Requires Fund approval) - 73-

80 NOTES TO FINANCIAL STATEMENTS Note 10: RISK MANAGEMENT (CONT'D.) A. Liability and Workers Compensation (Cont'd.) Summary of Risk Management Program (Cont'd.) 3. Automobile Liability The Fund covers $300,000 CSL for bodily injury liability, property damage liability and PIP. The Fund covers $15,000/$30,000/$5,000 for uninsured/underinsured motorist liability. The MEL covers Automobile Bodily Injury and Property Damage Liability claims excess of the Fund's $300,000 CSL limit in the MEL's excess General Liability limit, except that auto liability claims which penetrate the excess of $1,700,000 layer are not subject to the aggregation limitation. The JIF provides PIP limits of $250,000. The MEL does NOT provide excess PIP or Uninsured/Underinsured Motorists Coverage. 4. Non-Owned Aircraft The MEL covers $5,000,000 CSL for Bodily Injury and Property Damage Liability, and $5,000 medical expense for each passenger. 5. Public Official Liability (POL) The CJJIF, 100% commercially insured through QBE North America, covers $2,000,000 in the aggregate on a claims made basis per member municipality for each Fund Year, subject to a deductible and coinsurance as outlined below. There is a combined POL/EPL $2,000,000 per member local unit annual aggregate. $20,000 deductible per occurrence. Except that $75,000 deductible per occurrence applies for member local units with unfavorable loss experience. 20% coinsurance of the first $250,000 of the loss. Note: Member local units that qualify based upon certain criteria have options to purchase a lower deductible and coinsurance contribution. Newer members with adverse loss experience may be subject to higher deductible and coinsurance as provided by QBE North America

81 NOTES TO FINANCIAL STATEMENTS Note 10: RISK MANAGEMENT (CONT'D.) A. Liability and Workers Compensation (Cont'd.) Summary of Risk Management Program (Cont'd.) 6. Employment Practices Liability (EPL) The CJJIF, 100% commercially insured through QBE North America, covers $2,000,000 in the aggregate on a claims made basis per member municipality for each Fund Year, subject to a deductible and coinsurance as outlined below. There is a combined POL/EPL $2,000,000 per member annual aggregate. For member local units with approved EPL Loss Control/Risk Management Programs: $20,000 deductible per occurrence. Except that $75,000 deductible per occurrence applies for member local units with unfavorable loss experience. 20% coinsurance of the first $250,000 of the loss. For member local units without approved EPL Loss Control/Risk Management Programs: $100,000 deductible per occurrence, except that $150,000 deductible per occurrence applies for member local units with unfavorable loss experience. 20% coinsurance (no cap) 1st $2 million of loss (not imposed against optional limits). Note: Member local units that qualify based upon certain criteria have options to purchase a lower deductible and coinsurance contribution. Newer members with adverse loss experience may be subject to higher deductible and coinsurance as provided by QBE North America. 7. Optional Directors and Officers Liability (D & 0) - Fire Company & Emergency Service Units The CJJIF, 100% commercially insured with QBE North America, provides optional $1,000,000 or $2,000,000 annual aggregate limits for Fire Companies or Emergency Service Units, subject to optional deductibles of $1,000, $2,000 or $5,

82 Note 10: RISK MANAGEMENT (CONT'D.) NOTES TO FINANCIAL STATEMENTS A. Liability and Workers Compensation (Cont'd.) Summary of Risk Management Program (Cont'd.) 8. Property The Fund covers $50,000 per occurrence (Property & Time Element combined) less applicable member deductibles. The MEL retains and provides Excess Property Coverage at limits of $450,000 excess $50,000 per occurrence except for the following: Flood for locations wholly or partially within I 00 yr. Flood Zone Boiler & Machinery Named Storm The MEL serves as the lead agency for the purchase of additional excess property coverage at the following MEL statewide limits and sub-limits: Policy Limit - $125,000,000/occurrence for all coverage despite number of locations involved in an occurrence state-wide. Named Storm - $125,000,000/occurrence (120 Hours) Earth Movement - $75,000,000 annual aggregate (168 Hours) Flood - $75,000,000 (annual aggregate) except; Flood for locations wholly or partially within 100 yr. Flood Zone (SFHA): $2,500,000 per location building and contents $1,000,000 all outdoor property $1,000,000 for pumping stations Definition of Flood includes Storm Surge Asbestos Cleanup - $50,000 per occurance Equipment Breakdown - $125,000,000 Ammonia Contamination - $5,000,000 Spoilage - $5,000,000 Time Element - Included in the policy limit. Time Element sub-limits include: Business Interruption - Included (12 months) Extra Expense - $10,000,000 Tenant Relocation - $750,000 Leasehold Interest - $15,000,000 Tenant Prohibited Access - $1,000,000 (24 Hours) Service Interruption - $10,000,000 Loss of Rents - $15,000,000 Delay in completion - 60 days Extended Period of Liability days Utilities Member Owned-Property Damage and Time Element Combined - $125,000,000 Time Element Pass Through Utilities - Per Policy Sub-limit Time Element Power Generation Utilities - Not Covered Valuable Papers & Records (Incl. EDP Media/Software) - $10,000,000 Accounts Receivable - $10,000,000 Increased Construction Costs - $25,000,000 (Incl. Demolition) Transit - $1,000,000 per occurrence Fine Arts - $2,500,000 Land and Water Contamination Cleanup (limited) - $250,000 (annual aggregate) including removal and disposal - 76-

83 NOTES TO FINANCIAL STATEMENTS Note 10: RISK MANAGEMENT (CONT'D.) A. Liability and Workers Compensation (Cont'd.) Summary of Risk Management Program (Cont'd.) 8. Property (Cont'd.) Decontamination Costs - $250,000 Miscellaneous Unnamed Locations - $10,000,000 New Construction and Additions - $25,000,000 Including soft costs - $5,000,000 sub-limit Computer Systems Damage - $2,500,000 (24 Hours) Newly Acquired Locations - $25,000,000 per occurrence 90-Day Period Ingress/Egress - $5,000,000 (within I mile-30 Day Period) Debris Removal - $25,000,000 Expediting Expense - $10,000,000 Civil Authority - $5,000,000 (within 5 miles - 30 Day Period) Professional Fees including Architect/Engineering Fees - $1,250,000 Errors & Omissions - $10,000,000 Miscellaneous Personal Property - $10,000,000 Includes Outdoor Property - $10,000,000 Watercraft - $1,000,000-32' or less - ACY is not scheduled Vehicles - $15,000,000 (Property & TE combined). Excluded for Perils of Flood, Named Storm and Earth Movement Bridges and Dams - $10,000,000 (Property & TE combined). Excluded for Perils of Flood, Named Storm and Earth Movement Piers, Wharfs, Docks, Boardwalks, Bulkheads, Crossovers - $10,000,000 - Named Peril only Transmission and Distribution Lines - $10,000,000 (within a 1 mile radius of an insured location for overhead lines & 5 mile radius for underground lines) Clogging/Blocking of Pipes - $1,000,000 Off Premises Storage Under Construction - $250,000 Fire Department Service Charge - $250,000 Deferred Payments - $1,000,000 Land Improvements - $10,000,000 Off Premises Service Interruption - $10,000,000 (Excluding utilities 24 hour qualifying period)) Protection & preservation of Property - $10,000,000 (48 Hours BI) Research & Development - $10,000,000 (12 Hours) Impounded Water - $250,000 (30 Days) Tenant Prohibited Access - $1,000,000 Soft Costs - $5,000,000 Wind Turbine - $1,000,000 per occurrence Flood Aggregate Note: In no event shall the Zurich primary program aggregate for Flood and/or Surface Water exceed $50,000,000 in any one policy year. The MEL has an excess flood and earth movement policy on a quota share basis with several insurers that provide a combined limit of $25,000,000 excess of $50,000,000. As to Flood, the limit is excess of the $50,000,000 Zurich program Flood aggregate. It does not drop down over any SFHA sub-limits contained in the Zurich policy such as the $2,500,000 per location sub-limit

84 NOTES TO FINANCIAL STATEMENTS Note 10: RISK MANAGEMENT (CONT'D.) A. Liability and Workers Compensation (Cont'd.) Summary of Risk Management Program (Cont'd.) 8. Property (Cont'd.) The underlying SFHA sub-limits are the maximum amount of limit for those respective locations with loss or damage. This additional limit does not augment or add to any underlying SFHA sub-limits. However, loss or damage from Flood up to the underlying SFHA sub-limits for that respective location will be part of the $50,000,000 attachment point. The total statewide program annual aggregate for the peril of flood (for locations outside & wholly or partially within areas of the 100-Year flooding) is $75,000,000. Property Deductibles: The standard Member JIF retains and provides $50,000 per occurrence less member unit deductibles except for: Flood for locations wholly or partially within 100-year flood zone Boiler and Machinery Named Storm (Flood & Wind) The standard Member Local Unit (MLU) Deductible - $2,500/occurrence, except for: Flood for locations wholly or partially within 100-year flood zone Equipment Breakdown Named Storm (Flood & Wind) Equipment Breakdown coverage is subject to a member local unit $5,000 deductible per occurrence (MELJIF Retention $50,000 less JIF Retention) (Property & Time Element Combined). Flood Loss and/or surface water for locations with any part of the legal description within a SFHA (wholly or partially within 100 Yr. Flood Zone) as defined by FEMA is subject to separate deductibles of $500,000 each building for municipal buildings and $500,000 each building for municipal contents and $250,000 each building for housing authority buildings and $100,000 each building for housing authority contents or the National Flood Insurance Plans (NFIP) maximum available limits for municipalities and housing authorities respectively, whichever is greater, regardless of whether NFIP coverage is purchased. Vehicles, mobile equipment, pistol ranges and pumping stations are subject to the standard member local unit deductible. "Pumping Stations" include "lift stations and also include "wet wells" that are an integral part of the "pumping station". The flood loss deductible outside of the SFHA (100-year flood zone) is the standard member local unit deductible. All other property not eligible for NFIP is either defined as Outdoor or addressed elsewhere in the policy. "Named Storm" (Wind and Flood) as respects to covered property within Atlantic, Ocean, Monmouth & Burlington Counties located east of the Garden State Parkway and any covered property in Cape May County: Property Damage deductible: 1 % of the scheduled location value on file with the Company, per the property insured as of the date of the loss, for the Location where the direct physical loss or damage occurred, per occurrence

85 Note 10: RISK MANAGEMENT (CONT'D.) NOTES TO FINANCIAL STATEMENTS A. Liability and Workers Compensation (Cont'd.) Summary of Risk Management Program (Cont'd.) 8. Property (Cont'd.) Time Element deductible: I% of the full 12 months Gross Earnings or Gross Profit values that would have been earned following an occurrence by use of facilities at the Locations where the direct physical loss or damage occurred and all other Locations where Time Element loss ensues, per occurrence. The above Named Storm deductibles are subject to a minimum deductible of $500,000 for Property Damage and Time Element Combined per Location and maximum deductible of $1,000,000 per occurrence. "Named Storm" (Wind and Flood) as respects to covered property within Atlantic, Ocean, Monmouth & Burlington Counties located west of the Garden State Parkway and any covered property in the remaining counties, except Cape May County as noted above: JIF Retention $50,000: MELJIF Retention $500,000 less $50,000. The definitions of "Named Storm" and "Location" are per the definitions in the MEL policy form with Zurich. "Named Storm" is defined as any storm or weather disturbance that is named by the U.S. Oceanic and Atmospheric Administration (NOAA) or the U.S. National Weather Service or the National Hurricane Center of the Center or any comparable worldwide equivalent. Named Storm includes Storm Surge. Location is defined as: (1) as specified in the Schedule of Locations. If not specified in the Schedule of Locations then (2) A Location is a building(s) bounded on all sides by public streets, clear land space or open waterways, each not less than fifty feet wide; (3) A site tract of land occupied or available for occupancy with tangible property. As respects to the perils of Flood, Earth Movement and Named Storm, if there is a series of related events in which more than one of these perils causes direct physical damage to an insured property, a single deductible shall apply to these perils involved. The single deductible will not exceed the largest applicable for the perils of Flood, Earth Movement and Named Storm. In the event of a Joint Loss (Property and Equipment Breakdown), the higher deductible applies. Piers, wharfs, docks, floating docks, boardwalks, crossovers, bulkheads and buildings/structures thereon are covered for the perils of fire, lightning, explosion, smoke, windstorm, hail, riot, civil commotion, aircraft, vehicles, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action, watercraft, and malicious intent. Buildings constructed on pilings that are located wholly or partially within the Special Flood Zone Hazard (SFHA) designated zones V, VE, Vl-30 are excluded except for the perils of fire, lightning, explosion, smoke, windstorm, hail, riot, civil commotion, aircraft, vehicles, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action, watercraft, and malicious intent. Bridges and Dams and Equipment relating thereto are not covered for loss caused by or resulting from Flood, Earth Movement or Named Storm regardless of any other cause or event, whether or not insured under this Policy, contributing concurrently or is any other sequence to the loss

86 NOTES TO FINANCIAL STATEMENTS Note 10: RISK MANAGEMENT (CONT'D.) A. Liability and Workers Compensation (Cont'd.) Summary of Risk Management Program (Cont'd.) 9. Blanket Crime The JIF provides a limit for $50,000 less the member entity deductible of $2,500. Coverage includes Public Employee Dishonesty, Forgery and Alteration, Theft, Disappearance and Destruction, Robbery and Safe Burglary, and Computer Fraud with Funds Transfer. The MEL provides its member JIFs excess public employees bond coverage limits of $1,000,000 less the member JIF retention of $50,000 for Public Employee Dishonesty. 10. Excess Public Officials Crime Coverage The MEL provides excess employee dishonesty and faithful performance coverage (statutory positions only) for those employed positions which are required by law to be individually bonded and where they have not applied and have not been approved for coverage under the MELJIF Statutory Position Program at a limit of $1,000,000 less a member local unit's deductible, which is the higher of: (i) the amount said persons are required by Law to be individually bonded, whether or not such individual Bond is in place or (ii) the amount of the individual Bond in place. Each member local unit that has not applied for coverage under the MELJIF Statutory Position Bond is required to continue to purchase via the commercial market individual bonds providing primary coverage up to "at least the minimum limit required by law" for those employed positions required by law to be individually bonded. 11. Crime Statutory Position Bond The MEL provides employee dishonesty and faithful performance coverage for those employed positions, which are required by law to be individually bonded and where they have applied and been approved for coverage at a limit of $1,000,000 per occurrence per position less a member local unit's deductible of $1, Optional Excess Liability The MEL offers Optional Excess General Liability, including Police Professional Liability, Employee Benefits Liability, Quasi Municipal Organization Liability (Emergency Service Units and Auxiliaries only), and Automobile Liability (not including PIP or Underinsured/Uninsured Motorist Coverage) as follows: a. $2 million CSL and per member local unit annual aggregate excess of $5 million b. $5 million CSL and per member local unit annual aggregate excess of $5 million c. $5 million CSL and per member local unit annual aggregate excess of $10 million d. $10 million CSL and per member local unit annual aggregate excess of $10 million - 80-

87 NOTES TO FINANCIAL STATEMENTS Note 10: RISK MANAGEMENT (CONT'D.) A. Liability and Workers Compensation (Cont'd.) Summary of Risk Management Program (Cont'd.) 13. Optional Excess POL/EPL as follows: The MEL offers optional excess POL/EPL coverage as follows: a. $1 million CSL and per member local unit annual aggregate excess of $2 million b. $2 million CSL and per member local unit annual aggregate excess of $2 million c. $3 million CSL and per member local unit annual aggregate excess of $2 million d. $4 million CSL and per member local unit annual aggregate excess of $2 million e. $4 million CSL and per member local unit annual aggregate excess of $6 million 14. Environmental Impairment Liability The limits of liability as established in the E-JIF's Plan of Risk Management and coverage documents. 15. Cyber Liability The JIF, 100% commercially insured with XL Insurance, provides Third Party coverage including Media Communication, Network Security Liability and Private Liability and First Party coverage including Extortion Threat, Crisis Management Expenses and Private Notification Costs. The basic coverage provides the JIF limits of liability of $5,000,000each/$8,000,000 policy aggregate. The limits are JIF wide and shared amongst member local units of the JIF. There is a $1,500,000 sublimit each for 1) Privacy Notification Costs, 2) Regulatory Fines/Claims Expenses for Privacy Liability, 3) Extortion Damages for Extortion Threat and 4) Crisis Management Expenses. There is a $25,000 policy deductible. In addition to the base coverage there is also an option at limits of $5,000,000each/$8,000,000 policy aggregate at a $25,000 deductible. This optional coverage provides a $2,000,000 sub-limit each for 1) Privacy Notification Costs, 2) Regulatory Fines/Claims Expenses for Privacy Liability, 3) Extortion Damages for Extortion Threat and 4) Crisis Management Expenses. A 3rd option is available at limits of $5,000,000each/$8,000,000 policy aggregate at a $25,000 deductible. This optional coverage provides a $3,000,000 sub-limit each for 1) Privacy Notification Costs, 2) Regulatory Fines/Claims Expenses for Privacy Liability, 3) Extortion Damages for Extortion Threat and 4) Crisis Management Expenses. 16. Optional Individual Self-Insured Retentions - None - 81-

88 NOTES TO FINANCIAL STATEMENTS Note 10: RISK MANAGEMENT (CONT'D.) A. Liability and Workers Compensation (Cont'd.) Summary of Risk Management Program (Cont'd.) 17. Risk Retention Amounts for the Fund a. Workers' Compensation (all coverages) - $300,000 CSL b. General Liability (all coverages) - $300,000 CSL c. Employment Practices Liability - none, 100% commercially insured d. Non-Owned Aircraft - none e. Automobile Liability PD & BI - $300,000 CSL Underinsured/Uninsured - $15,000/$30,000 CSL PIP - $250,000 CSL f. Public Officials Liability - none, 100% commercially insured g. Optional Directors and Officials Liability - none, 100% commercially insured h. Property - $50,000 per occurrence less member deductibles i. JIF Blanket Crime - $50,000 less member deductible j. Optional Excess Liability - none provided by MEL k. Environmental Impairment Liability - none, other than the risk of E-JIF assessment. I. Residual Claims Liability - none, other than the risk of RCF assessment. m. MEL Crime - none provided by MEL n. Optional Excess POL/EPL - none provided by MEL o. Cyber Liability - none, 100% commercially insured. The Central Jersey Joint Insurance Fund, issues publicly available financial reports that include the financial statements and required supplementary information for insurance. The financial reports may be obtained by writing to the PERMA, 9 Campus Drive Suite 216, Parsippany, New Jersey

89 NOTES TO FINANCIAL ST A TEMENTS Note 10: RISK MANAGEMENT (CONT'D.) B. Employee Health Benefits The Township has contracted with Horizon Blue Cross/Blue Shield of New Jersey for the provision of health benefits to eligible Township employees and retirees. The financial arrangement with the insurer provides for payments of administrative fees, excess insurance premiums and actual claims costs, subject to the established self-insured limits. For the year ended December 31, 2016, the stop-loss attachment points were as follows: $200,000 per individual 125% of net projected claims of $1, per employee, per month aggregate The Township provides a prescription drug plan and a dental plan to eligible employees and retirees through self-insured programs and has engaged GS POPS and Horizon Healthcare Dental to administer each plan, respectively. In addition to the appropriations for these plans contained in the annual budgets of the Township, the Township has established an additional reserve for payments in the event claims during a fiscal year exceed the amounts budgeted. At December 31, 2016, the amount in this reserve was $173, Note 11: ACCRUED SICK AND VACATION BENEFITS The Township of Edison has established policies, which set forth the terms under which an employee may accumulate unused benefits. General Policy is as follows: NONUNION Existing employees upon retirement with twenty-five (25) years of pensionable service credit or employees who have attained the age of sixty (60) shall be paid lump sum equivalent salary (base and longevity, if applicable) for all: I. Accumulated unused sick leave 2. Unused vacation and current year personal days 3. Terminal leave (if eligible) Employees hired after December 23, 1992 shall be entitled to payment of sick leave at a rate equal to one half (1/2) of their daily rate of pay for accumulated unused sick time with said lump sum payment for sick leave, vacation, personal days and terminal leave to be capped at a maximum of fifteen thousand dollars ($15,000.00). Those employees covered by Ordinance , and hired after January 1, 1998 are not eligible for payment of the following: CARPENTERS 1. Accumulated unused sick leave 2. Unused vacation and current year personal days 3. Terminal leave (if eligible) Upon retirement, employees shall be paid one hundred (100%) percent of all unused sick days, to a maximum of Twelve Thousand Five Hundred Dollars ($12,500.00)

90 Note 11: ACCRUED SICK AND VACATION BENEFITS (CONT'D.) NOTES TO FINANCIAL STATEMENTS Each member shall be granted one and one-quarter ( 1 \4) sick days per month for a total of fifteen ( 15) days per year up to the time of termination of employment. Effective on January 1, 2010, each member shall be granted two thirds (2/3) sick days per month for a total of eight (8) days per year up which days shall not accrue from year to year. One day shall equal eight (8) hours, regardless of employee's work schedule. Members will be paid at the time of retirement or termination for one half (112) of the total amount of sick days accrued from the date of hire to December 31, 2004, if the termination occurs while in good standing. Calculation for entitlement under this article at retirement shall be based upon total hours accumulated times the rate of pay as of December 31, 2004, regardless of employee's work schedule or date of retirement. Payment made to each employee in accordance with this section shall not exceed Twenty-Thousand ($20,000) Dollars. In the event an employee utilizes any of this amount for sick time the payment at the time of retirement shall be reduced accordingly. 1) If termination occurs while in good standing, employees will be paid for one half of the total amount of sick leave accrued, up to 2184 hours, at the rate equal to the highest salary attained at the time of termination of employment by that employee, excluding overtime. Payments shall be made by lump sum on the day of termination of employment or the next payday thereafter. Employees will be paid the remaining accumulated sick leave as terminal leave. 2) Following a request of the employee, the Township may, in its discretion, subject to available appropriations, pay the total amount due for accumulated sick leave in one lump sum payment. 3) Effective January 1, 2003, no employee shall receive payment for sick leave at the time of retirement or termination in excess of 2184 hours or the amount of sick leave accumulated by the employee as of December 31, 2002, which ever is greater. NURSES As of December 31, 1999 employees no longer can carry over sick time to be paid. Sick time can be accumulated only for being sick. All sick time accumulated through December 31, 1999 and not used will be reimbursed in full at the time of retirement or separation, at the then prevailing rate of pay. DPW SUPERVISORS Payment of one hundred percent of all accumulated sick leave to a maximum of Twenty Thousand Dollars ($20,000.00). Any employee who has accumulated more than $20, in accumulated sick leave as of January 1, 2004 shall be capped at the amount as of that date calculated using 2004 rates of pay

91 Note 11: ACCRUED SICK AND VACATION BENEFITS (CONT'D.) AFSCME NOTES TO FINANCIAL STATEMENTS A. When an employee retires after twenty-five (25) years of service or the age of sixty (60), he/she will receive: % pay accumulated sick time not to exceed twenty thousand dollars ($20,000); and % pay for all accrued vacation time and any allowable remaining personal days. 3. Retirement payoff will be made within thirty (30) working days from the last day of employment. B. An employee who retires after fifteen (15) years of service, regardless of age will receive: I. Twenty (20) days of their accumulated sick time at full pay; and % pay for all accrued vacation time and any allowable remaining personal days. 3. Retirement payoff will be made within thirty (30) working days from the last day of employment. Thirteen (13) days paid sick leave each year shall be granted to all Employees, and the same shall be cumulative from year to year. Employees having not used one or more of their sick days for that year will have the option to be paid their current wage rate for up to six (6) of these unused days in lieu of accumulating same. Any employee who has more than six (6) days unused from a given year and wishes to be paid wages for their remaining days, in lieu of accumulating same, may be paid one (1) day's current rate of pay for every two (2) unused sick days. The purpose of this provision is that, at the end of each calendar year, an employee may elect to be paid for unused sick time. The rate of pay will be 100% for the first six (6) sick days unused, and 50% for next seven days of unused sick time. The employee must notify the Employer on January l0 1 h of his or her election, payment to be made in the first paycheck after February 15 1 h of the year. Upon retirement, employees shall be paid on hundred (100%) percent of all unused sick days, to a maximum of Ten Thousand Dollars ($10,000.00), or the total amount of accumulated sick time as of January 1 1, 2003 at 2003 rates, whichever is greater. Should the accumulated sick time of any employee fall below the $10, provided in this Article as a result of subsequent utilization, that employee will be limited by the $10, cap. Vacations - Vacation pay for permanent employees is accumulated in accordance with the approved schedules for their respective units. Vacation days shall be taken during the current year and shall not accumulate, except that vacation time may be carried over to the next succeeding year only. This_carryover provision is not applicable to Police and Fire Officers. An employee who has separated his/her employment in good standing shall be entitled in time or in pay to any earned vacation accumulated and not previously used. With the exception of the Police and Fire Departments, which maintain separate records for their employees, the payroll office maintains up-to-date records of each employee's status relating to earned and unused sick and vacation pay. At December 31, 2016, the total value of accumulated compensated absences, based upon then current pay rates, was $11,209,479. This total is not intended to represent amounts that will ultimately be paid to employees upon termination or retirement, as no adjustment has been made to reflect the limitations on lump sum payments. Expenditures for payment of accrued sick and vacation benefits are recorded in the period in which the payments are made

92 Note 12: PRIVATIZATION OF WATER DELIVERY SERVICES NOTES TO FINANCIAL STATEMENTS On June 25, 1997, the Township entered into an agreement with the Edison Water Company (the "Operator") for Operation, Maintenance and Management Services for the Township's Municipal Water System. This agreement sets forth an initial term of twenty (20) years and provides for up to two additional five year extensions at substantially similar terms. The agreement effectively provides for the privatization of the Township's water system for the term of the agreement. The agreement is permitted under the provisions of the New Jersey Water Supply Public-Private Contracting Act (NJSA 58:26-19 et seq.), and includes provisions, which freeze the base rate structure for an initial period (generally, through June, 2002) and limit rates during the remainder of the agreement, subject to Unforeseen Events. Upon the execution of the agreement, the Operator paid an initial concession fee of $4,954, to the Township. This amount was deposited to the Township's Current Fund and recorded as a component of Miscellaneous Revenues Not Anticipated for the year ended June 30, The agreement also requires the Operator to make scheduled payments to the Township during each year of the agreement. The scheduled payments, which will be received in varying amounts per year, total to $9,593,794 and will be recorded as Current Fund revenues upon receipt. The Township was not required to adopt a Water Utility Operating Budget for fiscal years, which commenced on or after July 1, 1998, and such budgets will not be required during the term of the agreement. Similarly, as the agreement anticipates that the Operator will maintain and improve the water system, no capital projects relating to the system are anticipated in the Township's Capital Budget Program. However due to the issuance of debt, the Township has adopted a budget for the repayment of principal and interest on the debt. Note 13: INTERFUNDS The following interfund balances remained on the balance sheet date at December 31, 2016: Interfunds Interfunds Fund Receivable Payable Current Fund $78, $1,579, Grant Fund 1,579, Trust Funds 20, , Water Utility Operating Fund 14, Water Utility Capital Fund 14, Sewer Utility Operating Fund 4,246, Sewer Utility Capital Fund 4,246, Total $5,238,221.Q7 $5,938, These interfund balances are not an indication that the respective fund cannot meet its obligation. The interfund amounts are reflective of year-end closing journals and adjustments. The balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. Transfers are used to (1) move revenues from the funds New Jersey Statute or budget requires collecting to fund the appropriation and the statute or budget to expend them

93 Note 14: LENGTH OF SERVICE A WARD PROGRAM (LOSAP) NOTES TO FINANCIAL ST A TEMENTS The Township has instituted a Length of Service Award Program (LOSAP) pursuant to Internal Revenue Code Section 457(e) and P.L. 1997, c.388 as amended by P.L 2001, c.272. The Program provides for fixed annual contributions to a deferred income account for volunteer firefighters and first aid and rescue squad members who meet specified service criteria. The Township sponsors the Program, which is administered by a private contractor. The LOSAP section of this document includes the statutorily required review report for the Program. Note 15: DEFERRED CHARGES - TAX APPEALS During 2012 and 2015, in response to the significant potential budgetary impact of tax appeal settlements, the Township petitioned and received approvals from the Local Finance Board of the Department of Community Affairs to issue debt to finance the tax refunds caused by these settlements over a five-year period for 2012 approvals and over a six-year period for the 2015 approval. The amounts approved were $9,500,000 and $12,175,000 respectively. At December 31, 2016, the unfunded balance of these authorizations was $12,635,833 and consisted of $12,045,833 of Bond Anticipation Notes and $590,000 of Authorized but Unissued Notes, which are reported as part of the Township's General Capital Fund. The required appropriation of $3,929,167 for 2017 funding was included in the Township's 2017 Budget. Note 16: CONTINGENT LIABILITIES A. Supplemental Insurance Assessments As a constituent member of the Central Jersey Joint Insurance Fund (the "CJJIF"), the Township of Edison, together with the other Members of the CJJIF, is jointly and severally responsible for the timely payment of Supplemental Assessments levied with the approval of the CJJIF Commissioners. During 2015, the Fund waived the billing of Supplemental Assessments to its Participants. However, Supplemental Assessment installment payments were billed to participants in The Supplemental Assessment due on December 31, 2015 and the installment billing due in 2016 for the Township of Edison is $1,351,450 and $204,776, respectively. B. Litigation Pending or Threatened At December 31, 2016, the Township had litigation pending. The majority of this litigation involves claims against the Township relating to matters that traditionally would be covered through the procurement of workers' compensation and liability insurance policy coverages. As more fully described in Note 10, the Township has participated in a joint insurance fund since June The Township also has a significant number of outstanding property tax assessment appeals pending before the State Tax Court. Those matters, as with all matters, are being vigorously defended and settled when prudent. The Township has addressed in its Budget, and has implemented procedures in accordance with the applicable State finance and budget statutes and regulations to satisfy refunds and/or credits required by settlements and/or judgments for State Court Tax Appeals. It is expected that the settlements and/or judgments for these matters in the aggregate will result in significant reductions to assessed values and require refunds and/or credits that would be material to the Township's financial position

94 Note 17: POST EMPLOYMENT BENEFIT PLANS OTHER THAN PENSION PLANS NOTES TO FINANCIAL STATEMENTS The Township of Edison provides its retirees with health benefits, which are fully funded by the Township. These benefits are negotiated for through each bargaining unit's contract. In order to receive fully paid health benefits, retirees must have been enrolled in the Public Employees Retirement Fund or the Police and Firemen's Retirement Fund for 25 years. Retirees receive the same type of health insurance coverage that they were receiving prior to retirement. The annual cost of post-retirement health benefits has not been calculated. The contribution requirements of plan members and the participating agencies are established and may be amended by the MCJHIF Commissioners. The Township's annual postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The following table shows the components of the Township's annual OPEB cost for the year, any amounts contributed to the plan and the Township's net OPEB obligation. For 2016, the Township's annual OPEB cost (expense) of $29,506,664 was more than the ARC of $25,602, Total Total Net OPEB obligation - beginning of year $86,760,224 $70,358,681 Annual required contribution (ARC) 25,602,454 25,279,676 Interest on Net OPEB Obligation 3,904,210 3,166,141 Annual OPEB Cost 29,506,664 28,445,817 Less: Contributions 14,977,716 12,044,273 Net OPEB obligation - end of year $101,289,172 $86,160, Total $52,612,135 25,779,304 2,367,546 28,146,850 10,400,304 $70,358,681 The funded status of the plan for the Township as of December 31, 2015, is as follows: Actuarial accrued liability (AAL) Actuarial value of plan assets Unfunded actuarial accrued liability (UAAL) Funded ratio (actuarial value of plan assets/ AAL) Covered payroll (active plan members) UAAL as a percentage of covered payroll Total $287,176, $ % $64,536, % The projection of future benefits for an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the health-care cost trend

95 NOTES TO FINANCIAL STATEMENTS Note 17: POST EMPLOYMENT BENEFIT PLANS OTHER THAN PENSION PLANS (CONT'D.) Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress presented as required supplementary information following the notes to the financial statements, presents trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan and includes the types of benefits provided at the time of each valuation and the historical pattern of sharing benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the December 31, 2015 actuarial valuation, the projected unit credit method was used. A rate of 4.50% was utilized as the discount rate and the amount of increase in the normal cost amount. The unfunded accrued liability is being amortized as a level dollar amount using an open period of thirty (30) years. Note 18: GOVERNMENTAL FIXED ASSETS The Township's governmental fixed assets are reported as follows: Balance Dec. 3 1, 2015 Increase Decrease Balance Dec. 31, 2016 Land Buildings and Improvements Vehicles, Machinery and Equipment $116,480,200 $ 20,811,200 35,817,260 1,971,676 $173, $ $ $116,480,200 20,811,200 1,085,155 35,817,260 $ $ Note 19: LONG TERM TAX EXEMPTIONS The Township provides for long-term tax exemptions, as authorized and permitted by New Jersey State Statutes. N.J.S.A. 40A:20-l et seq. sets forth the criteria and mechanism by which property taxes can and are abated. The exemptions provided by the Township are predominately for affordable housing projects. Taxes abated include municipal, local school and county taxes. The Township is required to remit five percent (5.00%) to the County for any payments received in lieu of taxes (PILOT payments). The Township PILOT billings in 2016 were $331,484 and taxes in 2016 that otherwise would have been due on these long-term tax exemptions amounted to $372,600, based upon the assessed valuations of the long-term tax exemptions properties

96 NOTES TO FINANCIAL STATEMENTS Note 20: SUBSEQUENT EVENTS Subsequent to December 31, 2016, the Township issued the following: Bond Anticipation Notes in the amount of $37,545,000 consisting of $29,765,000 BAN, $7,600,000 Sewer Utility BAN, and $180,000 Special Emergency Note. The BAN is dated February 10, 2017 and matures February 9, 2018 and has an interest rate of 2.00%. Tax Appeal Refunding BAN in the amount of $8,115,000. The BAN is dated February 10, 2017 and matures February 9, 2018 and has an interest rate of 1.75%. The Township appropriated $15,000,000 therefore authorized the issuance of $14,250,000 Bond and/or Notes dated January 25, 2017, for Various Capital Improvements. The Township appropriated $300,000 therefore authorized the issuance of $285,000 Bond and/or Notes dated January 25, 2017, for the Analysis of the Water and Sewer Systems. The Township appropriated $1,800,000 therefore authorized the issuance of $1,710,000 Bond and/or Notes dated January 25, 2017, for the Acquisition of a Warehouse Building. Ordinance was adopted on May 10, 2017 to rescind Ordinance The original ordinance appropriated $1,500,000 for the preparation of a Tax Map for the Township of Edison. The County of Middlesex has agreed to provide the Tax Map to the Township at no cost to the Township, thereby eliminating the need for funding by the Township. The Director of Finance has been authorized and directed to reflect the cancellation of the Appropriation in the financial records. The result is an addition to the 2017 Municipal Budget of $600,000 as a Special Item of Revenue and a decrease of $300,000 as an appropriation of debt service

97 PART II -REQUIRED SUPPLEMENTARY INFORMATION - 91-

98 Schedule 1 TOWNSHIP OF EDISON SCHEDULE OF THE TOWNSHIP'S SHARE OF THE NET PENSION LIABILITY PUBLIC EMPLOYEES RETIREMENT SYSTEM (Local Group) Township's Proportion Share of the Net Pension Liability % % % Township's Proportion Share of the Net Pension Liability $49,265,274 $56,469,544 $72,224,291 Township's Covered-Employee Payroll $ 16,335,690 $ 16,669,071 $ 17,387,755 Township's Proportionate Share of the Net Pension Liability as a percentage of the Covered-Employee Payroll % % % Plan Fiduciary Net Position as a percentage of the Total Pension Liability 42.74% 38.21% 31.20% * Amounts presented for each fiscal year were determined as of June

99 Schedule 2 TOWNSHIP OF EDISON SCHEDULE OF THE TOWNSHIP'S CONTRIBUTIONS PUBLIC EMPLOYEES RETIREMENT SYSTEM (Local Group) Last 10 Fiscal Years* Contractually Required Contribution $ 2,018,621 $ 2,151,069 $ 2,162,717 Contribution in Relation to Contractually Required Contribution $ (2,018,621) $ (2,151,069) $ (2, 162,717) Contribution deficiency (excess) $ $ $ Township's Proportionate Share of the Payroll $16,335,690 $16,669,071 $17,387,755 Contributions as a percentage of Covered Employee Payroll 12.36% 12.90% 12.44% *Amounts presented for each fiscal year were determined as of June

100 Schedule 3 TOWNSHIP OF EDISON SCHEDULE OF THE TOWNSHIP'S SHARE OF THE NET PENSION LIABILITY POLICE AND FIREMEN RETIREMENT SYSTEM (Non-State, Non-Special Funding Situation Employer Member Group) Proportion of the Non-State, Non-Special Funding Situation Employer Group Net Pension Liability attributable to the Township Share of the Liability of the State ofnew Jersey for the Net Pension Liability of the Non-State, Non-Special Funding Situation Employer Group % % l % $142,003,893 $180,398,499 $204,027,959 Township's Covered-Employee Payroll Share of the Liability of the State ofnew Jersey for the Net Pension Liability of the Non-State, Non-Special Funding Situation Employer Group as a percentage of the Township's Covered-Employee Payroll Plan Fiduciary Net Position as a percentage of the Total Pension Liability (See Note Below) $32,750,751 $33,419,134 $34,491, % % % 58.86% 52.84% 48.55% *Amounts presented for each fiscal year were determined as of June 30. Note: Percentages shown are Plan-wide, and include NPL and PFNP data that include employees of the State ofnew Jersey

101 Schedule 4 TOWNSHIP OF EDISON SCHEDULE OF THE TOWNSHIP'S CONTRIBUTIONS POLICE AND FIREMEN RETIREMENT SYSTEM (Non-State, Non-Special Funding Situation Employer Member Group) Last 10 Fiscal Years* Contractually Required Contribution $ 8,200,734 $ 8,670,655 $ 8,803,587 Contribution in Relation to Contractually Required Contribution $ (8,200, 734) $ (8,670,655) $ (8,803,587) Contribution deficiency (excess) $ $ $ Township's Proportionate Share of the Payroll $ 32,750,751 $ 33,419,134 $ 34,491,789 Contributions as a percentage of Covered Employee Payroll 25.04% 25.95% 25.52% *Amounts presented for each fiscal year were determined as of June

102 TOWNSHIP OF EDISON COUNTY OF MIDDLESEX, NEW JERSEY NOTES TO REQUIRED SUPPLEMENTARY PENSION INFORMATION DECEMBER 31, 2016 NOTE 1. CHANGES IN ASSUMPTIONS The following information is as abstracted from the State of New Jersey, Division of Pension and Benefits, Financial Statements and Supplementary Schedules report as of June 30, 2016, dated March 14, This information pertains to the RSI schedules of changes in net pension liability contained in that report. Changes in benefit terms - None Changes in assumptions - For 2016, the discount rate changed to 3.98%, the long-term expected rate of return changed to 7.65%, demographic assumptions were revised in accordance with the results of the July 1, June 30, 2014 experience study and the mortality improvement scale incorporated the plan actuary's modified MP-2014 projection scale. Further, salary increases were assumed to increase between 1.65% and 4.15% (based on age) through fiscal year 2026 and 2.65% and 5.15% (based on age) for each fiscal year thereafter. For 2015, the discount rate changed to 4.90%. In addition, the social security wage base was set at $118,500 for 2015, increasing 4.00% per annum, compounded annually and the 401(a)(l 7) pay limit was set at $265,000 for 2015, increasing 3.00% per annum, compounded annually, For 2014, the discount rate was 5.39%. Changes in benefit terms - None Changes in assumptions - For 2016, the discount rate change to 5.55%, the long-term expected rate of return changed to 7.65% and the mortality improvement scale incorporated the plan actuary's modified 2014 projection scale. Further, salary increases were assumed to increase between 2.10% and 8.98% (based on age) through fiscal year 2026 and 3.10% and 9.98% (based on age) for each fiscal year thereafter. For 2015, the discount rate changed to 5.79% and demographic assumptions were revised in accordance with the results of the July 1, June 30, 2013 experience study. For 2014, the discount rate was 6.32%

103 PART Ill- SINGLE AUDIT SECTION

104 HODULIK & MORRISON, P.A. CERTIFIED PUBLIC ACCOUNTANTS REGISTERED MUNICIPAL ACCOUNTANTS PUBLIC SCHOOL ACCOUNTANTS 1102 RARITAN A VENUE, P.O. BOX 1450 HIGHLAND PARK, NJ (732) (732) (FAX) ANDREW G. HODULIK, CPA, RMA, PSA ROBERTS. MORRISON, CPA, RMA, PSA MEMBERS OF: AMERICAN INSTITUTE OF CPA'S NEW JERSEY SOCIEIY OF CPA'S REGISTERED MUNICIPAL ACCOUNTANTS OF N.J. 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 Honorable Mayor and Members of the Municipal Council Township of Edison Middlesex County, New Jersey INDEPENDENT AUDITOR'S REPORT We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and audit requirements as prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. the financial statements - regulatory basis of the Township of Edison, County of Middlesex, New Jersey as of and for the year ended December 31, 2016, and the related notes to the financial statements, which collectively comprise the Township of Edison's financial statements and have issued our report thereon dated June 30, Our report was modified due to the departures from accounting principles generally accepted in the United States of America that, as disclosed in Note 2, are embodied in the regulatory basis of accounting that is followed by the auditee. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Township of Edison's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Township of Edison's internal control. Accordingly, we do not express an opinion on the effectiveness of the Township of Edison's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis

105 A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Township of Edison's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and audit requirements as prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. We also noted certain immaterial instances of noncompliance that we have reported to the management of the Township in the General Comments section of the Report of Audit as finding items We also noted other matters involving compliance and internal control over financial reporting that we have reported to management of the Township of Edison in the General Comments section of the Report of Audit. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance, Accordingly, this communication is not suitable for any other purpose.!#!ail i JI~, /.A. HODULIK & MORRISON, P.A. Certified Public Accountants Registered Municipal Accountants Highland Park, New Jersey June 30,

106 HODULIK & MORRISON,P.A. CERTIHED PUBLIC ACCOUNTANTS REGISTERED MUNICIPAL ACCOUNTANTS PUBLIC SCHOOL ACCOUNTANTS 1102 RARITAN AVENUE, P.O. BOX 1450 HIGHLAND PARK, NJ (732) (732) (FAX) ANDREW G. HODULlK, CPA, RMA, PSA ROBERTS. MORRISON, CPA, RMA, PSA MEMBERS OF: AMERICAN INSTITIITE OF CPA'S NEW JERSEY SOCIEI'Y OF CPA'S REGISTERED MUNICIPAL ACCOUNTANTS OF N.J. REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AW ARDS REQUIRED BY THE UNIFORM GUIDANCE Honorable Mayor and Members of the Municipal Council Township of Edison Middlesex County, New Jersey INDEPENDENT AUDITOR'S REPORT Report on Compliance for Each Major Federal Program We have audited the Township of Edison, County of Middlesex, New Jersey compliance with the types of compliance requirements described in the OMB Compliance Supplements that could have a direct and material effect on each of the Township of Edison's major federal programs for the year ended December 31, The Township of Edison's major federal programs are identified in the "Summary of Auditor's Results Section" of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of Township of Edison's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance 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; the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance); and audit requirements as prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Township of Edison's compliance with those requirements and performing such other procedures, as we considered necessary in the circumstances

107 We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination on the Township of Edison's compliance. Opinion on Each Major Federal Program In our opinion, the Township of Edison, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, Report on Internal Control Over Compliance Management of the Township of Edison is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of complian.ce, we considered the Township of Edison's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Township of Edison's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that a material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on requirements of Uniform Guidance. Accordingly, this report is not suitable for any other purposes. tlcld ~ 11~, /!!}. HODULIK & MORRISON, P.A. Certified Public Accountants Registered Municipal Accountants Highland Park, New Jersey June 30,

108 SCHEDULES OF EXPENDITURES OF FEDERAL AW ARDS -102-

109 TOWNSHIP OF EDISON M!DDLE~ X (;Ql!l:!IY J:l ll( J ll.~!d'. SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED DECEMBER Schedule A FEDERAL PASS-THROUGH FEDERAL GRANTOR/ CFDA GRANT ENTITY IDENTIFYING PRQGRAM TITLE NUMBER YEAR lfilm!illl. PROGRAM RECEIPTS CUMULATIVE OR AWARD OR REVENUE EXPENDITURES A.MQ.!.lliI RECOGNIZED EXPENDITURES DEC Department of Housing & Urban Development Direct Program: CDBG - Entitlement Grants Cluster Community Development Block Grant/Entitlement Grant Community Development Block Grant/Entitlement Grant Community Development Block Grant/Entitlement Grant Community Development Block Grant/Entitlement Grant Community Development Block Grant/Entitlement Grant NIA $ 71I/ NIA NIA /16 NIA NIA 613, $ $ $ , , , , , , , , , , , , , Total CDBG- Entitlement Grants Cluster , Housing Opportunities for Persons with AIDS NIA 1.405, , Total Housing Opportunities for Persons with AIDS ,221, Department of Community Affairs Community Development Block Grant - Superstonn Sandy , ,5I9.25 Department of Health and Human Services Pass-through St.ate of NJ Department of Health Public Health Emergency Preparedness - Influenza A-HINl Grant Public Health Emergency Preparedness - Influenza A-HINl Grant Pandemic Flu Grant I0/ / /01/07-06/30/ , , , , , , (JJ Department of Energy Energy Efficiency and Conservation Block Grant Program Department of Transportation: Highway Safety Cluster Pass-through State of NJ Department of Law and Public Safety Selective Enforcement Management- Highway Safety Grant Selective Enforcement Management- High\vay Safety Grant Alcohol Traffic Safety and Drunk Driving Prevention Incentive Grants Alcohol Traffic Safety and Drunk Driving Prevention Incentive Grants Alcohol Traffic Safety and Drunk Driving Prevention Incentive Grants Selective Enforcement Management - Drive Sober or Get Pull Over Labor Day Selective Enforcement Management - Drive Sober or Get Pull Over Labor Day Occupant Protection Grant - Click It or Ticket 20.6I6 08/14/09-08/13112 NIA /31/ /01/ /01/13-12/31/ / /31/ OIIOll I I Ol/Ol/16-I2/3! OI/ , , , , , , , , , , , , , , , , , , , , , , , , Highway Safety Cluster I , Department of Defense: Community Planning Assistance NIA 60, , Department of Homeland Security: Pass-through State of NJ Department of Law and Public Safety FEMA -Assitance to Firefighters Grant SAFER Grant - Staffing for Adequate Fire and Emergency Response Law Enforcement Block Grant - Technology NIA IOIOI/ NIA 2002 NIA 341, , ,392, , , ,392, , ,I29.26 Department of Justice: Pass-through St.ate of NJ Department of Law and Public Safety Bulletproof vest Partnership Grant-Justice Assistant Frant Edward Byrne Grant - Justice Assistant Grant Edward Byrne Grant - Justice Assistant Grant / I !3Ill , , , , , , , $ 975, $ 5,718, Footnotes: NOTE: See accompanying Notes to Schedules of Expenditures of Awards. The Township's federal grants are presented within the Tmvnship's overall financial statements on the modified accrual basis of accounting with accounting principles prescribed by the Division of Local Government Services, Department of Community Affairs, State ofnew Jersey, which is a comprehensive basis of accounting other than generally accepted accounting principles.

110 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY NOTES TO THE SCHEDULES OF EXPENDITURES OF FEDERAL AW ARDS DECEMBER 31, 2016 NOTE 1. GENERAL The accompanying schedules of expenditures of federal awards present the activity of all federa programs of the Township of Edison. The Township is defined in Note l(a) to the financial statements. All federal awards received directly from federal agencies, as well as federal awards passed through other government agencies is included on the schedule of expenditures of federal awards. NOTE 2. BASIS OF ACCOUNTING The accompanying schedules of expenditures of federal awards are presented using the modified accrual basis of accounting. NOTE 3. RELATIONSHIP TO GENERAL FINANCIAL STATEMENTS Unless specifically noted, the amounts reported in the accompanying schedules agree with amounts reported in the Township's financial statements. NOTE 4. RELATIONSHIP TO FEDERAL AND STATE FINANCIAL REPORTS Amounts reported in the accompanying schedules agree with the amounts reported in the related federal financial reports

111 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 2016 Schedule C Page 1of3 Section 1 - Summary of Auditor's Results Financial Statements Type of auditor's report issued: Unmodified (OCBOA) Internal Control over financial reporting: 1) Material weakness( es) identified? Yes X No 2) Significant deficiencies identified that are not considered to be material weaknesses? --- Yes X No Noncompliance material to general-purpose financial statements noted? Yes X No Federal Awards Internal Control over major programs: 1) Material weakness( es) identified? Yes =x'--_no 2) Significant deficiencies identified that are not considered to be material weaknesses? Yes X No --- Type of auditor's report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with OMB Uniform Guidance? Yes X No Identification of major programs: CFDA Number(s) Name of Federal Program or Cluster Community Development Block Grant Dollar threshold used to distinguish between type A and B programs: $750, Auditee qualified as low-risk auditee? Yes --- X No -105-

112 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 2016 (continued) Schedule C Page 2of3 Section 1 - Summary of Auditor's Results( cont'd.) State Awards - NOT APPLICABLE Dollar threshold used to distinguish between type A and type B programs: Auditee qualified as low-risk auditee? Yes --- No Type of auditor's report issued on compliance for major programs: Internal Control over financial reporting: 1) Material weakness(es) identified? Yes No 2) Significant deficiencies identified that are not considered to be material weaknesses? Yes No Any audit findings disclosed that are required to be reported in accordance with NJOMB Circular Letter Yes No ---- Identification of major programs: GMIS Number(s) Name of State Program -106-

113 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 2016 (continued) Schedule C Page 3of3 Section II - Financial Statement Findings Significant De(iciency(s) Current Fiscal Year - None Non-Compliance: Current Fiscal Year - None Section III - Federal Awards and State Financial Assistance Findings and Questioned Costs Significant Deficiency( s ): Current Fiscal Year - None Non-Compliance: Current Fiscal Year - None -107-

114 TOWNSHIP OF EDISON MIDDLESEX COUNTY, NEW JERSEY SUMMARY SCHEDULE OF PRIOR FINDINGS FOR THE YEAR ENDED DECEMBER 31, 2016 Schedule D Section 1 - Summary of Prior Year Findings Summary of Prior Year Findings None -108-

115 PART IV - SUPPLEMENTARY SCHEDULES -109-

116 CURRENT FUND -110-

117 Exhibit - A-4 SCHEDULE OF CURRENT FUND CASH AND INVESTMENTS CURRENT FUND Balance - December 31, 2015 A $39,262, Increased by Receipts: State of New Jersey (Ch. 20, P.L. 1976) Taxes Receivable Tax Title Liens Revenue Accounts Receivable Miscellaneous Revenue Not Anticipated Prepaid Taxes Interfund Receipts Various Payables and Reserves Tax Overpayments Special Emergency Note A-6 A-7 A-8 A-10 A-10 A-11 A-12,A-13 A-14 A-16 A , ,868, , , 742, , ,423, ,023, ,636, , , ,001, ,263, Decreased by Disbursements: Refunds: Prior Year Revenues Budget Expenditures Interfund Disbursements Various Payables and Reserves Appropriation Reserves Tax Overpayments Reserve for Tax Appeals Garbage District Taxes Special Emergency Note Local District School Taxes County Taxes A-1 A-3 A-12,A-13 A-14 A-15 A-16 A-17 A-19 A-20 A-21 A-21 41, ,370, ,109, ,506, ,210, , ,405, ,328, , ,548, ,678, Balance - December 31, 2016 A $382585:

118 Exhibit - A-5 SCHEDULE OF CHANGE FUNDS OFFICE Division of Tax Collections Municipal Court Police Records Clerk BALANCE DEC. 31, 2015 $ $ BALANCE DEC. 31, 2016 $ $ Ref. A A Exhibit - A-6 SCHEDULE OF DUE FROM/TO STATE OF NEW JERSEY SENIOR CITIZENS AND VETERANS DEDUCTIONS PER CHAPTER 73, P.L Balance - December 31, 2015 (Due to) A $ Increased by: 2016 Deductions Disallowed by Collector A-6 Payment Received A Senior Citizen and Veteran Deduction Disallowed A-1 33, , , Decreased by: Deductions Allowed Per Tax Billings 2016 Deductions Allowed by Collector A-6 A-6 539, , , , Balance - December 31, 2016 (Due to) A $ Analysis of Senior Citizens, Veterans and Disability Deductions Realized as Revenues in 2016 Deductions Allowed Per Tax Billings 20 I 6 Deductions Allowed by Collector A-6 A-6 $ 539, Less: 2016 Deductions Disallowed by Collector A-6 548, Amount Realized as Revenue - 20 I 6 A-7 $

119 SCHEDULE OF TAXES RECEIVABLE AND ANALYSIS OF PROPERTY TAX LEVY Exhibit- A-7 STATE FISCAL YEAR BALANCE DEC.31, 2015 ADDED BY COLLECTOR 2016 LEVY COLLECTIONS!BY COLLECTOR ST. SHARE 2016 SR.CITIZEN DEDUCTIONS TAX OVER PAYMENTS APPLIED REMITTED AND CANCELLED TRANSFER BALANCE TO TAX DEC. 31, TITLE LIEN 2016 CY2013 $ CY2014 CY , , , $ $ $ 7, , $ 12, , , , , , CY , , $ $ $368,263, $ $ $ $ $ 875, $ $ Ref. A Reserve Reserve A-2,A-11 A-2,A-4 A-2, A-6 A-2,A-16 Reserve A-8 A Ref. Analysis of2016 Property Tax Levv: VJ Tax Yield: General Purpose Tax Special District Tax Added Taxes (54: et seq.) Tax Levy: Local District School Tax: Levy (Abstract) Total Local District School Tax A ,274, , 736, ,252, $368,263, ,185, County Tax: County Tax (Abstract) County Open Space Preservation Due Cty. for Added & Omitted Taxes A-21 A-21 A-21 55,726, ,616, Total County Tax 60,548, Special District Taxes: Garbage District Taxes Added and Omitted A-19 A-19 9, 736, Total Special District Taxes 9,775, Local Tax for Municipal Purposes Minimum Library Tax Additional Taxes Levied A-2 A-2 84,457, ,221, ,075, Total Local Tax for Mun. Purposes $368,263,158.92

120 Exhibit - A-8 SCHEDULE OF TAX TITLE LIENS Balance - December 31, 2015 Increased by: Transfers from Taxes Receivable Interest and Costs Accrued by Sale of Tax Title Liens A A-7 250, Reserve 22, $ 840, , ,112, Decreased by: 2016 Collections - Collector Balance - December 31, 2016 A-2, A-4 A $ 1,108, Exhibit - A-9 SCHEDULE OF PROPERTY ACQUIRED FOR TAXES (AT ASSESSED VALUATION) Balance - December 31, 2015 Balance - December 3 1, 2016 A A $ 3,984, $ 3,984,

121 SCHEDULE OF REVENUE ACCOUNTS RECEIVABLE Exhibit -A-10 Page I of2 BALANCE ACCRUED CASH BALANCE REF. DEC. 31, RECEIPTS DEC Miscellaneous Revenues Anticipated: Alcoholic Beverage Licenses A-2 $ $ 120, , $ Licenses - Other A-2 484, , Fees & Permits A-2 15, ,200, ,178, , Municipal Court Fines & Costs A-2 768, , Interest & Costs on Taxes A-2 392, , Interest on Investments and Deposits A-2 295, , Latchkey Program Fees A-2 1,921, ,921, Cable TV Franchise Fees A-2 344, , Trailer Court Fees A-2 11, , False Alarm Fees A-2 83, , Host Community Benefits A-2 503, , NJS City Hotel Tax A-2 1,083, ,083, Vl '"""' Energy Receipts Tax A-2 16,042, ,042, Garden State Trust Fund A-2 15, , Uniform Fire Safety Act A-2 417, , Railroad Station Rent A-2 119, , Uniform Construction Code Fees A-2 4, 783, ,783, JFK Reimbursement for Dispatch Services A-2 232, , JFK Building Lease Payment A-2 63, , Payments in Lieu of Taxes - Tax Exempt A-2 295, , Edison Water Company- Contractual A-2 566, , Cell Tower Rents - Verizon A-2 82, , Sale of Liquor License A-2 412, , Community Contribution A-2 500, , Reserve for Payment of Debt Service A-2 189, , General Capital Fund Balance/Note Sale Premium A-2 643, , FEMA Reimbursement for January Snow Storm A-2 300, , Cancelled Funded Capital Ordinances A-2 2,436, ,436, Interfund - Sewer Utility/MCIA Reserve A-2 253, , Police Off-Duty Administration Fees - Due from Trust A-2 500, , , ,064, ,742, ,477.23

122 SCHEDULE OF REVENUE ACCOUNTS RECEIVABLE Exhibit - A-10 Page 2 of2 BALANCE ACCRUED CASH BALANCE REF. DEC. 31, RECEIPTS DEC. 3L2016 Miscellaneous Revenue Not Anticipated: Administrative Fee Senior Citizen and Veterans Reimbursement $ $ 7, $ 7, $ Cooperative Housing Inspection Fees 40, , Culver Bus Shelter Franchise Fees 5, , Durgavine Kenmore Donation 2, , EMT Ambulance Billings 1, , Health Charge Income 17, , MCIA 2015 Balance Credit 237, , Mercy 9 JFK Ambulance 4, , Middlesex County Red Flex Traffic Monitoring 1, , NJ FEMA Reimbursement for Storm Recovery 12, , NJS Motor Vehicle Inspection Fees 2, , NJ Homestead Rebate Mail Reimbursement 3, , NJ Turnpike Contributions - Call Response 3, , I-' I-' Police Application Fee 57, , ' Recycling Fees 35, , Sale of Abandoned Vehicles 29, , Solar Renewable Energy Credits 20, , Township Auction Proceeds 23, , Vending Machine Commission 4, , Verizon Annual Franchise Fee 5, , Miscellaneous 32, , A-2 547, , $ 15, $ 35,611, $ 35,289, $ 337, Ref. A Reserve A-4 A

123 Exhibit - A-11 SCHEDULE OF PREPAID TAXES REF. Balance - December 31, 2015 A $ 2,116, Increased by: Cash Receipts A-4 2,423, ,540, Decreased by: Transfer to Taxes Receivable A-7 2,116, Balance - December 31, 2016 A $ 2,423,

124 Exhibit- A-12 SCHEDULE OF INTERFUNDS RECEIVABLE Trust Animal Assessment General Water Other Control Trust CDBG Capital Operating REF. Total Fund Fund - Fund Fund Fund Fund Balance - December 31, 2014 A $ 576, $ 492, $ 18, $ 61, $ 3, $ 5.04 Increased by: Statutory Excess Reserve A-1 2, , Cash Disbursements A-4 20,269, , , ,210, ,847, , , , , ,213, Decreased by: I Cash Receipts A-4 20, 768, , , ,213, f--1 f Balance - December 31, 2015 A $ 78, $ 7, $ 2, $ 18, $ 49, $ - $ 1.80

125 Exhibit - A-13 SCHEDULE OF INTERFUNDS PAY ABLE Federal & State Grant REF. Total Fund Balance - December 31, 2015 A $1,145, $1,145, Increased by: 2016 Grant Fund Appropriations A-3 822, , Grants Receivable A-4 1,248, ,248, Grants Unappropriated A-4 5, , ,077, ,077, ,223, ,223, Decreased by: Realized as Revenue Budget A-2 803, , Cash Disbursed by Current Fund A-4 840, , ,643, ,643, Balance - December 31, 2016 A $1,579, $1,579,

126 CURRENT FUND SCHEDULE OF CHANGES IN VARIOUS PAY ABLE AND RESERVES Exhibit A-14 December 31, Cash Cash Transfer from December 31, 2015 Receipts Disbursements Approp Reserves 2016 Various Payables Due to State of NJ - BOCA Fees $ - $ 328, $ (328,764.00) $ - $ Due to State of NJ - Marriage License Fees , (11,380.00) 2, Due to Municipal Library 48, , , Accounts Payable 211, (133,997.56) 244, , , , (474,141.56) , Reserve for: 1--' Green Acres Debt 2, , N 0 Maintenance of Free Public Library 43, , ( 43,715.00) 43, Police & Firemen Pension 1, , Advanced Medical Claims 149, ,214, (1,959,354.36) 768, , Condominium Services 19, (1,231.20) 155, , Length of Service Award Program (LOSAP) 200, , Tax Maps 1,500, ,500, Towing and Impound Fees 35, (27,858.00) 7, Salary Adjustments 104, , ,021, ,293, (2,032, ) 923, ,205, Total $ 2,280, $ 1,636, $ (2,506,300.12) $ 1,325, $ 2,735, Ref. A A-4 A-4 A-15 A

127 SCHEDULE OF 2015 APPROPRIATION RESERVES Exhibit-A-15 Page 1 of6 BALANCE 2015 BALANCE AFTER PAID OR BALANCE DEC ENCUMB MODIFICATION CHARGED LAPSED GENERAL GOVERNMENT Office of the Mayor Other Expenses $ 3, $ $ $ - $ Municipal Council Other Expenses 19, , , Office of the Township Clerk Salaries and Wages 16, , , , Other Expenses 48, , , , DEPARTMENT OF ADMINISTRATION Office of the Business Administrator Other Expenses 19, , , , , Division of Communication Salaries and Wages 1, , , I Other Expenses 11, , , , ' N 1--' Division of Central Purchases Other Expenses: Postage , Centralized Stores 5, , , , , Division of Personnel Salaries and Wages 8, , , Other Expenses , , , , DEPARTMENT OF LAW Office of the Director Salaries and Wages Other Expenses 134, , , , DEPARTMENT OF FINANCE Office of the Director Salaries and Wages 126, , , Other Expenses 201, , , , Other Expenses -Audit Services 72, , ,

128 SCHEDULE OF 2015 APPROPRIATION RESERVES Exhibit- A-15 Page 2 of6 BALANCE 2015 BALANCE AFTER PAID OR BALANCE DEC ENCUMB MODIFICATION CHARGED LAPSED DEPARTMENT OF FINANCE (cont'd.) Division of Accounts and Controls Salaries and Wages $ 4, $ $ 4, $ - $ 4, Other Expenses 86, , , , Other Expenses - Data Processing 17, , , Division of Custody and Disbursements Salaries and Wages 41,23 l.37 41,23 l , Other Expenses 1, , , Division of Tax Collections Other Expenses 3, , , , , Division of Assessment Salaries and Wages 2, , , Other Expenses 91, , , , , I lo-" N DEPARTMENT OF RECREATION & PARKS Division of Recreation Other Expenses 21, , , , , Division of Public Buildings Other Expenses: Telephones 46, , , , , Heat, Light and Power 377, , , , , Division of Parks Salaries and Wages 147, , , , Other Expenses 6, , , , ,160.74

129 SCHEDULE OF 2015 APPROPRIATION RESERVES Exhibit - A-15 Page 3 of6 BALANCE 2015 BALANCE AFTER PAID OR BALANCE DEC. 31, 2015 ENCUMB MODIFICATION CHARGED LAPSED DEPARTMENT OF HEALTH AND HUMAN RESOURCES Division of Health Salaries and Wages $ 40, $ $ 40, $ 28, $ 11, Other Expenses 18, , , , , Division of Senior Citizen Services Salaries and Wages 10, , , Other Expenses 7, , , , , DEPARTMENT OF PUBLIC SAFETY Division of Police Salaries and Wages: Police 1,233, , , , Emergency Dispatch , , , , Police Vehicle Maintenance N Other Expenses: (;J Police 73, , , , , Emergency Dispatch , , , , , Police Vehicle Maintenance 74, , , , , Uniform Fire Safety Act Salaries and Expenses 4, , , Other Expenses 1, , , , , Division of Fire Salaries and Wages Fire 713, , , , Other Expenses: Fire 4, , , , , Fire Hydrant Service 147, , , , Aid to Volunteer Fire Companies

130 SCHEDULE OF 2015 APPROPRIATION RESERVES Exhibit -A-15 Page 4 of6 BALANCE 2015 BALANCE AFTER PAID OR BALANCE DEC. 31, 2015 ENCUMB MODIFICATION CHARGED LAPSED DEPARTMENT OF PUBLIC WORKS Office of the Director Salaries and Wages: Municipal Garage $ 91, $ $ 41, $ 10, $ 31, Other Expenses: Municipal Garage 15, , , , , Fuels & Lubricants for Municipally 344, , , , , Street Lighting 41, , , , , Division of Streets Salaries and Wages 148, , , , Other Expenses 2, , , , , Division of Public Buildings Salaries and Wages 265, , , , Other Expenses 8, , , , , Division of Sanitation... Salaries and Wages: N Street Cleaning and Refuse and Garbage Collection 220, , , , ioj::>. Other Expenses: Street Cleaning and Refuse and Garbage Collection 39, , , Public Defender (P.L. 1997,c.256) Salaries and Wages 29, , , Other Expenses 2, , , DEPARTMENT OF COMMUNITY DEVELOPMENT Salaries and Wages: Division of Planning and Zoning 5, , , Division of Engineering 52, , , Other Expenses: Division of Planning and Zoning 81, , , , Planning Board Zoning Board Adjustment , , , Rent Control Board 1, , , Environmental Commission Division of Engineering 56, , , , , UNCLASSIFIED Insurance: Group Insurance Plan for Employees 123, ,623, ,623, Other insurance and Surety bonds 120, , , , ,072.80

131 SCHEDULE OF 2015 APPROPRIATION RESERVES Exhibit- A-15 Page 5 of6 BALANCE 2015 BALANCE AFTER PAID OR BALANCE DEC. 31, 2015 ENCUMB MODIFICATION CHARGED LAPSED UNCLASSIFIED (cont'd.) First Aid Organizations-Aid and Maintenance Other Expenses $ 105, $ $ 105, $ 105, $ Emergency Management Services Other Expenses 11, , , Ethics Commission Condominium Services 155, , , Celebration of Public Events 8, , , , Municipal Court Salaries and Wages 12, , , Other Expenses 12, , , , , Uniform Construction Code Edison Constr. Enforcing Agency: I Salaries and Wages 145, , , , I-' Other Expenses 71, , , , , N CJl Employee Health Benefit Waivers Salaries and Wages 468, Total Operations Within "CAPS" 6,777, ,706, ,483, ,429, ,054, Contingent 32, , , , , Total Operations Including Contingent Within "CAPS" 6,810, ,713, ,524, ,437, ,086, DEFERRED CHARGES AND STATUTORY EXPENDITURES MUNICIPAL WITHIN "CAPS" Deferred Charges Prior Year Bills 6, , , Statutory Expenditures: Contribution to: Public Employees' Retirement System 9, , (49,831.31) 59, Social Security System (O.A.S.I.) 2, , (I 0,492.87) 13, Police and Firemen's Retirement System (214,494.17) 214, DCRP Employer Contributions 1, , , Total Deferred Charges and Statutory Expenditures Municipal Within "CAPS" {268: , Total General Appropriations for Municipal Purposes Within "CAPS" 6,824, ,720, ,544, ,169, ,375,097.99

132 SCHEDULE OF 2015 APPROPRIATION RESERVES Exhibit-A-15 Page 6 of6 BALANCE 2015 BALANCE AFTER PAID OR BALANCE DEC ENCUMB MODIFICATION CHARGED LAPSED OTHER OPERATIONS EXCLUDED FROM "CAPS" Maintenance of Free Public Library $ 170, $ 163, $ 334, $ 334, $ Length of Service Award Program (LO SAP) Other Expenses l()q, , , Total Other Operations Excluded from "CAPS" 270, , ~ Total General Appropriations $ 7,094, $ 1,884, $ 8,979, $ 5,535, $ 3,443, Ref. A A-18 A-I Appropriation Reserves A $ 7,094, Reserve for Encumbrances A-18 I ,... $ 8,979, N 0\ Cash Disbursements A-4 $ 4,210, Various Reserves A , Accounts Payable A , $ 5,535,924.29

133 Exhibit-A-16 SCHEDULE OF TAX OVERPAYMENTS Balance - December 31, 2015 A $ 494, Increased by: Cash Overpayments Collected - Collector A REF. Decreased by: Refunds A-4 429, Applied to Taxes Receivable A-7 659, ,370, ,088, Balance - December 31, 2016 A $ SCHEDULE OF RESERVE FOR TAX APPEALS Exhibit - A-17 Balance - December 31, 2015 A $ 5,968, Increased by: 2016 Budget Appropriation A ,968, Decreased by: State Tax Appeal Judgment Refunds A-4 5,405, Balance - December 31, 2016 A $ 2,562,

134 Exhibit - A-18 SCHEDULE OF RESERVE FOR ENCUMBRANCES REF. CURRENT FUND GRANT FUND Balance - December 31, 2015 A $ 1,884, Increased by: Charges to: 2016 Budget Appropriations A-3 1,834, State & Federal Grant Appropriations A-25 3,718, Decreased by: Transferred to 2015 Approp. Reserves A-15 1,884, Transferred to State & Federal Grant Appropriations A-25 1,884, Balance - December 31, 2016 A $ 1,834, $ 112, , , , $ Exhibit- A-19 SCHEDULE OF RESERVE FOR SPECIAL GARBAGE DISTRICT Balance - December 31, 2015 A $ 4,555, Increased by: 2016 Garbage District Tax Levy Added and Omitted Taxes A-l,A-2,A-7 A-l,A-2,A-7 9,736, ,775, Decreased by: Payments Balance - December 31, 2016 A-4 A 14,330, ,328, $ 4,002,

135 SCHEDULE OF SPECIAL EMERGENCY NOTE Exhibit - A-20 Balance - December 31, 2015 A $ 543, Increased by: Cash Receipts A-4 362, , Decreased by: Cash Disbursements A-4 543, Balance - December 31, 2016 A $ 362,

136 CURRENT FUND SCHEDULE OF TAXES PAY ABLE Exhibit A-21 Dec. 31, Taxes 2015 Levied Cash Dec. 31, Disbursements 2016 County - General $ County - Open Space County - Added & Omitted Local District School Taxes $ 55,726, ,616, , ,441, ,185, $ 55,726, $ 4,616, , ,185, ,441, Total $ 9,441, $ 267,733, $ 267,733, $ 9,441, Ref. A A-l,A-2,A-7 A-4 A -130-

137 SCHEDULE OF DEFERRED CHARGES Exhibit - A-22 BALANCE RESULTS OF RAISED IN BALANCE DEC CY 2016 CY 2016 BUDGET DEC Special Emergency Special Emergency - Accrued Sick $ 254, $ - $ 254, $ Special Emergency - Accrued Sick , , , Special Emergency - Accrued Sick , , , Special Emergency - Accrued Sick , , , VJ... Special Emergency- Accrued Sick , , Special Emergency - Tax Map ,200, , , Emergency Emergency Appropriation - EMS ,205, ,205, $ 4,253, $ 830, $ 2,226, $ 2,857, Ref. A A-3 A-3 A

138 Exhibit - A-23 SCHEDULE OF DUE FROM CURRENT FUND STATE AND FEDERAL GRANTS FUND Balance - December 31, 2015 A $ 1,145, Increased by: 2016 Budgeted Grant Appropriations Grant Proceeds Deposited to Current Fund Unapprop. Grants Deposited to Current Fund A-25 A-24 A , ,248, , ,077, Decreased by: 2016 Budgeted Grant Revenues Grants Expended by Current Fund A-24 A , ,223, ,643, Balance - December 31, 2016 A $ 1,579,

139 SCHEDULE OF STATE AND FEDERAL GRANTS RECEIVABLE STATE AND FEDERAL GRANTS FUND Exhibit - A-24 Page 1 of2 BALANCE 2016 BALANCE DEC. 31, BUDGET CASH DEC. 31, PROGRAM 2015 REVENUE RECEIPTS 2016 Edward Byrne Grant- JAG $ 26, $ $ 14, $ 12, Edward Byrne Grant - Local Solicitation 11, , Attorney General's Body Worn Camera (BWC) Assistance Prog. 62, , Body Armor Fund 15, , CDBG - Disaster Recovery Program 2, , Central Jersey Joint Insurance Fund - Safety Incentive Grant 2, , Clean Communities Grant 204, , Click It or Ticket 5, , I Drive Sober of Get Pulled Over Year End Crackdown Grant 2014/2015 5, , I-' Drive Sober of Get Pulled Over Labor Day Crackdown 5, , VJ VJ FEMA Fire SAFER Grant 300, , HMart 10, , Highway Safety Fund Grant 249, , , Jewish Renaissance Foundation - Summer Employment Prog 4, , JP Morgan Fire Prevention Grant 2, , Middlesex County Improvement Authority Recycling Grant 46, , Middlesex County Gateway to Theater Row Middlesex County LINCS 3, , Middlesex County Nutrition Program 6, , , Middlesex County Strengthening Families Booster Prog 5, , Municipal Alliance Grant 15, , , Municipal Alliance Program - Youth Service Commission Municipal Alliance Program - Competitive RF A Grant 5, , NJ DOD Community Planning Assistance 32, , NJ Dept of Health - Hepatitis Grant 1, , NJDL&PS - Pedestrian Safety Enforcement and Educ Grant 37, , , NJ DOT Municipal Aid Talmadge Rd Resurfacing Phase II 202, , NJ DOT - New Dover Road Resurfacing 75, , NJ DOT - Highway Safety Fund Grant 85, ,262.56

140 SCHEDULE OF STATE AND FEDERAL GRANTS RECEIVABLE STATE AND FEDERAL GRANTS FUND Exhibit - A-24 Page 2 of2 PROGRAM BALANCE 2016 DEC. 31, BUDGET 2015 REVENUE CASH RECEIPTS BALANCE DEC. 31, 2016 NJ DOT - Edison Train Station Grant Solid Waste Recycling Grant Middlesex County Art Grant Bulletproof Vest Partnership Grant W almart Grant Sustainable Jersey Small Grant Tobacco Settlement Grant US Dept of Energy AFG - FEMA Grant 450, , , , , , , , , , , , , , , , , , I... VJ *"' I $ 12397: $ 803: $ 1:248: $ 952, Ref. A A-2,A-23 A-23 A

141 SCHEDULE OF RESERVE FOR STATE AND FEDERAL GMNTS - APPROPRIATED Exhibit - A-25 Page 1 of2 BALANCE TRANSFERRED BALANCE DEC. 31, FROM /31115 PAID OR 12/31/16 DEC. 31, PROGRAM 2015 BUDGET!;;NCUMBRANCE CHARGED ENCUMBRANCE 2016 Alcohol Education and Rehabilitation Fund $ 5, $ 5, Attorney General Body Worn Camera Program 62, , Body Armor Fund Body Armor Fund , , Body Armor Fund , , , Body Armor Fund , , , Body Armor Fund , , Bulletproof Vest Partnership Grant 12, , Cablevision Public Education Government Access Grant 40, , Clean Communities Program (CY2010) 1, , (CY201 l) , , (CY2013) (CY2014) (CY2015) 15, , , (CY2016) 180, , , , I (CY2017) 204, , ~ Central Jersey JIF - Safety Incentive Grant 4, , , C;:l (JI Click It or Ticket 5, , Community Develop Block Grant - Disaster Recovery Program 2, , Conservation Resources Inc Grant 25, , Dismal Swamp Stewardship Contribution 50, , Drive Sober of Get Pulled Over Year Labor Day Crackdown 5, , Drive Sober of Get Pulled Over Year End Crackdown Grant 2014/15 4, , Drunk Driving Enforcement Fund 15, , , Edward Byrne Memorial Justice Asst Grant 12, , EMA/Bridges Teen Experiental Theater 5, , , Empire Recycling - Edison Environmental Comm Enhanced Equipment Grant 10, , Enhanced General Assistance Grant 12, , FEMA Fire SAFER Grant 438, , H-Mart Grant 12, , , , Hepatitis B Inoculations 5, , , NJ Department of Health- Hepatitis Highway Safety Fund Grant 8, , , , InfluenzaA-HlNI Grant 10, , Jewish Renaissance Found. - Summer Employment Prog 6, , Keep Middlesex Moving 5, , Local Law Enforcement Block Grant - Technology 44, , Middlesex County Art Grant 8, , , , , Middlesex County Cultural & Heritage Commission 2, ,100.00

142 SCHEDULE OF RESERVE FOR STA TE AND FEDERAL GRANTS - APPROPRIATED Exhibit - A-25 Page 2 of2 BALANCE TRANSFERRED BALANCE DEC. 31, FROM /31115 PAID OR 12/31116 DEC. 31, PROGRAM 2015 BUDGET ENCUMBRANCE CHARGED ENCUMBRANCE 2016 Middlesex County Improvement Authority Recycling Grant 92, , , Middlesex County Nutritional Program 15, , , , , Middlesex County Oak Crest Swim Club Grant 9, , Middlesex County Pedestrian Bike Grant 7, , Middlesex County Memorial Tower 300, , Middlesex County SEGIF Grant 1, , Middlesex County Gateway to Theater Row Municipal Alliance Program (SFY2006) 4, , (SFY2013) (SFY2014) (SFY2015) (SFY2016) 30, , , (SFY2017) 96, , , ,876.20,_. Municipal Alliance - Competitive RF A Grant 5, , NJ DOD - Community Planning Assistance 32, , C;.:l NJ DOT Discretionary Aid- New Dover Road Resurfacing 144, , ' NJ DOT Edison Train Station Grant 450, , NJ DOT Talmadge Road Resurfacing , , NJ Municipal Aid - Talmadge Road Resurfacing 150, , NJ Community Shuttle Grant 2, , OJJDP Title IIB Formula Grant 4, , Pandemic Flu Grant 5, , Pedestrain Safety Enforcement and Education Grant , , Public Health Priority Funding Act of 1977 (SFY2008) Safe and Secure Communities Program (CY2013) 8, , Smart Growth Cross Acceptance Grant 38, , Solid Waste Recycling Grant 70, , , , , Sustainable Growth New Jersey 2, , Sustainable Jersey Small Grant 10, , U.S. Fire Prevention & Safety Grant US Dept of Homeland Security AFG- FEMA Grant 54, , U.S. DOE - EECBG Program Emergency Management Assistance Grant 5, , Exxon Mobil Corporation Grant 2, , Middlesex County Quality of Life 4, , JP Morgan Fire Prevention Grant 2, , Walmart Grant 2, $ $ $ $ $ $ 2,445, Ref. A A-3,A-23 A-18 A-23 A-18 A

143 Exhibit - A-26 SCHEDULE OF RESERVE FOR STATE AND FEDERAL GRANTS - UNAPPROPRIATED BALANCE DEC. 31, CASH PROGRAM 2015 RECEIPTS BALANCE DEC. 31, 2016 Local Law Enforcement Block Grant $ $ Alcohol Education and Rehabilitation Fund Municipal Alliance Program $ , , $ , , $ 5, Ref. A A-23 A Exhibit - A-27 SCHEDULE OF UNALLOCATED RECEIPTS STATE AND FEDERAL GRANTS FUND Balance - December 31, 2015 A $ 1, Balance - December 31, 2016 A $

144 TRUST FUND -138-

145 SCHEDULE OF TRUST CASH AND INVESTMENTS - TREASURER Exhibit - B-2 Page 1 of2 HOUSING AND COMMUNITY DEVELOPMENT ACT LANDFILL CLOSURE - LOCAL ANIMAL CONTROL FUND TRUST-OTHER FUND OF 1974 ESCROW FUND REF. Balance- December 31, 2015 B $ 101, $ 23,093, $ 86, $ 1,500, Increased by Receipts: Collector B-3 31, Accts. Receivable - U.S. Dept. of Housing and Urban Development B-8 431, Reserve for Open Space B-9 823, Municipal Animal Shelter Fees B , Escrow Funds B-14 28, Other Reserves B-15 27,190, HUD Program Income B-16 51, Refunds on Redemp. of Tax Sale Prem. B-16 5,878, Reserve For Off Duty Public Safety B-16 2,769, Landfill Closure - Local Escrow Fund B , Interfunds B-17,B I >--' , , VJ \0 355, '792, , ,804, Decreased by Disbursements: Reserve for Open Space B-9 781, State Dog License Fees B-11 3, Expenditures Under R.S. 4: B , Escrow Funds B-14 3, Other Reserves Disbursed B-15 26,959, Refunds on Redemp. of Tax Sale Prem. B-16 6,528, Reserve For Off Duty Public Safety B-16 2,933, Commun. Develop. Block Grant Expends. B , Interfunds B-17,B , Balance- December 31, 2016 B $ 176, $ 22,094, $ 118, $ 1,804,

146 SCHEDULE OF TRUST CASH AND INVESTMENTS - TREASURER Exhibit - B-2 Page 2 of2 D.E.P. LANDFILL CLOSURE B.P.U LANDFILL CLOSURE SELF INSURANCE DEVELOPER'S ESCROW ESCROW FUND ESCROW FUND TRUST FUND TRUST FUND REF. Balance- December 31, 2015 B $ 4,399, $ 12,079, $ 1,094, $ 1,646, Increased by Receipts: Investment Income: D.E.P. Landfill Closure Escrow Fund B , B.P.U. Landfill Closure Escrow Fund B , Developer's Escrow Fund Deposits B , Interfunds B-17,B ,503, ,392, ,100, ,420, ;...-\ ""'" 0 Decreased by Disbursements: D.E.P. Reserves For Landfill Closure B-16 16, B.P.U. Reserves For Landfill Closure B-16 39, Payment of Insurance Claims & Costs B , Developer' s Escrow Fund B , , Balance - December 31, 2016 B $4,486, $12,352, $516, $2,014,880.11

147 Exhibit - B-3 SCHEDULE OF TRUST CASH - COLLECTOR ANIMAL CONTROL FUND Increased by: Dog Registrar B-7 $ 31, Decreased by: Paid to Treasurer B-2 $ 31, Exhibit - B-4 ANALYSIS OF ASSESSMENT TRUST CASH AND INVESTMENTS BALANCE DEC 31, 2015 Fund Balance $ 1, Due from Trust-Other Fund (20,063.00) Due to Current Fund $ $ $ BALANCE DEC 31, , (20,063.00) Ref. B B

148 Exhibit - B-5 SCHEDULE OF ASSESSMENT LIEN INTEREST AND COSTS Balance - December 31, 2015 B $ Balance - December 31, 2016 B $ Exhibit - B-6 SCHEDULE OF ASSESSMENT LIENS IMPROVEMENT DESCRIPTION BALANCE DEC 31, 2015 BALANCE DEC 31, Sanitary Sewers - Garfield, Ellis Pkwy. Area $ $ ===== B B -142-

149 Exhibit - B-7 SCHEDULE OF DUE FROM DOG REGISTRAR ANIMAL CONTROL FUND Increased by: Municipal Dog Licenses Decreased by: Paid to Collector B-13 B-3 $ 31, $ 31, SCHEDULE OF ACCOUNTS RECEIVABLE Exhibit - B-8 US DEPT OF HOUSING AND URBAN REF. Total DEVELOPMENT Balance - December 31, 2015 B $ 1,148, $ 965, HOUSING OPPORTUNITIES FOR PEOPLE WITH AIDS $ 183, Increased by: Community Develop. Block Grant Allotment Program Year 2016 B , , , ,684, ,500, , Decreased by: Cash Receipts B-2 431, Balance - December 31, 2016 B $ 12252, $ $

150 Exhibit - B-9 SCHEDULE OF RESERVE FOR OPEN SPACE Balance- December 31, 2015 B $ 3,296, REF. Increased by: Cash Receipts - Interest Earned on Investments B-2 10, Improvement Authorizations Cancelled B-2 812, , ,120, Decreased by: Cash Disbursements - Debt Service Principal and Interest B-2 781, Balance - December 31, 2016 B $ 3,338, SCHEDULE OF RESERVE FOR ASSESSMENTS, LIENS AND INTEREST AND COSTS ASSESSMENT TRUST FUND Exhibit - B-10 Assessment Liens: 1966 Sanitary Sewers - Garfield, Ellis Pkwy. Area Sanitary Sewers - Madeline Drive Area $ BALANCE DEC 31, $ BALANCE DEC 31, Assessment Lien Interest and Costs $ $ B B -144-

151 Exhibit - B-11 SCHEDULE OF DUE TO STATE OF NEW JERSEY ANIMAL CONTROL FUND Balance - December 31, 2015 REF. B $ Increased by: State Dog License Fees Collected B , Decreased by: Payments to State of New Jersey B Balance -December 31, 2016 B $ 6.60 Exhibit-B-12 SCHEDULE OF RESERVE FOR ENCUMBRANCES ANIMAL CONTROL FUND REF. Balance - December 31, 2015 B $25, Increased By: Charges to Reserve For Animal Control Expenditures B-13 76, Balance - December 31, 2016 B $102,

152 SCHEDULE OF RESERVE FOR ANIMAL CONTROL EXPENDITURES ANIMAL CONTROL FUND Exhibit - B-13 Balance - December 31, 2015 B $ 75, Increased by: Municipal Animal Shelter Fees Dog and Cat Licences Fees B-2 B-7 221, , , , Decreased by: Expenditures Under R.S. 4:19.l l Due to State of New Jersey Statutory Excess Due to Current Fund Encumbrances Payable B-2 B-11 B-18 B , , , , Balance - December 31, 2016 B 256, $ License Fees Collected: Amount $35, , $ Note: R.S. 4:19.11 "... there shall be transferred from such special account to the general funds of the municipality any amount then in such special account which is in excess of the total amount paid into such special account during the last two fiscal years next preceding." -146-

153 SCHEDULE OF OTHER ESCROW FUNDS TRUST-OTHER FUND BALANCE DECEMBER ,2015 INCREASES All Purpose Management Co. $4, Anthony Constr. Co Birchwood Estates (Temp. C ofo) Board of Health - Needy Families Brach (Performance Guarantee) 41, Buchanen - Minnie Veal Center Caintree Construction Co. 3, Center Valley Homes (Wst. Hms. Monuments) College Park Env. Investigation 4, Concord Homes (In Lieu of Performance Bond) Conrail 5, Constr. - Widening of Woodland Ave. 21, Crime Prevention Fund Cyzner, Irv-escrow & grading 2, Dan Barrie Realty (In Lieu of Perf. Bond) Dan Barrie Realty (In Lieu ofmaint. Bond) 3, Dan Barrie (In Lieu of Bond- Nanci Terr.) 1, Dan-Lap Realty (Dolco Pizza Site) 1, Denwick Inc. (Temp. C ofo) 4, Donation - Fire Department 2, Donation - Public Library 2, Donation - Police Department Donation - Oak Tree Pond Flag - Provident Bank Donation - Bullet Proof Vests Donation - Animal Shelter Donation - Stenukinas Donation - Fishing Derby Recreation Donation - Exxon Fire Safety Program 1, Donation - Edison Rescue Squad - J. Keane Donation - Edison Senior Center Donation - Edison Township EMS Drummond Develop. Co Edgewood Property Edison 911 Memorial Fund Donations Edison Manor (Monuments) Edison Tower Restoration (Pavers) Edison Tower Donation - C.Dammers 1, Eliz. Van Sickle (Sidewalks) 1, F arraro Constr. (Paving) Festival Donations Fire Donation - Dedicated for Fire Equip Fire Donation - Commerce Bank 1, Fire Donations Fire Escrows 1, Fire Fines & Penalties Firestone Builders (In Lieu of Bond) Ford Motors - Reuse of Property 2, Ford Motors - Environmental Escrow Funds 70, Fred Adams (Curbs) Gash (In Lieu of Bond) Glendale Properties - Off Site Improvement 40, Goodstanding Escrow 5, Graphics Materials Groveland Development (In Lieu) Guaranteed Constr-shade trees Guaranteed Constr-trees H.B. Snyder Sr. (In Lieu of Bond) 2, Hands-On-Science Hartz Mountain 5, Hawkeye (In Lieu oflmprov.) 6, Health Fair Deposits DECREASES 3, Exhibit - B-14 Page 1 of4 BALANCE DECEMBER $4, , , , , , , , , , , , , , , , , , , , , , , , , , ,

154 Exhibit - B-14 Page 2 of 4 SCHEDULE OF OTHER ESCROW FUNDS TRUST-OTHER FUND BALANCE DECEMBER 2016 INCREASES 2016 DECREASES BALANCE DECEMBER 31, 2016 Heatherwood Villas Sec. III (Monuments) Heatherwood Villas (Monuments) Homeless Donation Indian Festival Deposits Irene Builder (In Lieu ofmaint. Bond) J. Appezzaro Inc. (Grading, Curbs) J. Morris Constr. (In Lieu of Perf. Bond) J. Wagner - Curbing Jade Dynasty (Landscaping) James Hansen (Curbs and Gutters) John Leahy-in lieu of bond Jos. a. Hall (In Lieu of Bond) Kelliko Constr. (Monuments) Krauzers Realty - Fencing, Landscape Lenguy Constr. Co. (Paving, Trailer Removal) L'Honmedieu Donation (Van Purchase) Mathews (Improvements) Memorial Day Parade Donations Menlo Park Museum Menlo Park Plaza-held in escrow Metroplex (Temp. C of 0 Hometown Bank) Milcsik/Kalman (Site Improv., Sidewalks) Mili Develop. Corp. Phili Estates Mithilesh Metha- Escrow for 265 Wood Ave. Monument Escrow Fund Morris Ind. Builders (Landscaping) Mr.Fix-it Program New Durham Ind. Park (Offsite Improv.) (In Lieu ofmaint. Bond) N.J. Newsdealer Holding Co. O'Connor Mgmt. (Menlo Park-Oross) Paltuco Ind. Inc. (In Lieu ofmaint. Bond) Petracca (In Lieu of Bond - Monuments) Phil Damico (Landscaping) Quality Care Before/After School R. Catena - Construction Upgrade to Main St. Sal Pezzello-curbs & gutters Senior Citizens-Donations South View Develop. (Monuments Spragers/FHC Serv. Inc. S. Prasa-In Memory Stacie Ann Builders (In Lieu ofmaint. Bond) Summit Assoc. (Monuments) Talmadge Realty Assoc. Tax Collector Receipts-unallocated Torsiello Constr. (Install Curbs) Vaccaro (In Lieu of Maintenance Bond) Visco-Heatherwood Villas Visco-Heatherwood Villas IV Visco-Heatherwood Villas (In Lieu of Bond) Visco - In Lieu of bond Walter Ostergaard (Sidewalks) Wigwam (Woodside - Grading) Municipal Court-unallocated Municipal Court-unclaimed bail $ , , , , , , , , , , , , , , , , , , , , , (801.60) , , , , , , , $ , , , , , , , , , , , , , , , , , , , , , (801.60) , , , , , , ,

155 Exhibit - B-14 Page 3 of4 SCHEDULE OF OTHER ESCROW FUNDS TRUST-OTHER FUND BALANCE DECEMBER INCREASES Sidewalk Waiver Fund-Abdul Aziz $7, Sidewalk Waiver Fund-Ajay Kakar $5, Sidewalk WaiverFund-Alaguraj B498, L12AB 5, Sidewalk Waiver Fund-Alfred Cackowski 6, Sidewalk Waiver Fund - Anda Builders 9, , Sidewalk Waiver Fund - Ashkay Patel 3, Sidewalk Waiver Fund - Ashok Patel 3, Sidewalk Waiver Fund - CJ Construction 2, Sidewalk Waiver Fund - Consolidated C.C. 3, Sidewalk Waiver Fund - Custom Pro Corp 10, Sidewalk Waiver Fund - Dominick Guido 2, Sidewalk Waiver Fund - Edgewood Estates Builder 4, Sidewalk Waiver Fund - Emerald Invest 7, Sidewalk Waiver Fund - Erez Shimoni 2, Sidewalk Waiver Fund - Ferraro Construction 21, Sidewalk Waiver Fund- Fox & Foxx 21, Sidewalk Waiver Fund - Frank Zappia 1, Sidewalk Waiver Fund - Hawkeye 6, Sidewalk Waiver Fund - Home Plus 1, Sidewalk Waiver Fund - Island Home 3, Sidewalk Waiver Fund - J. Burro 3, Sidewalk Waiver Fund - J. Grabowsili 1, Sidewalk Waiver Fund - J. lmperiale 1, Sidewalk Waiver Fund - JC Construction 1, Sidewalk Waiver Fund- James Keane 10, Sidewalk Waiver Fund - Jayshree P Vyas 2, Sidewalk Waiver Fund - Jeffery Coleman 6, Sidewalk Waiver Fund - John Rossiter 12, Sidewalk Waiver Fund - Jose Correia 3, Sidewalk Waiver Fund- Knock on Wood 8, Sidewalk Waiver Fund - Kula Construction 8, Sidewalk Waiver Fund - Leonard Construction 7, Sidewalk Waiver Fund-Liberty Property LT 17, Sidewalk Waiver Fund - Manor Homes 5, Sidewalk Waiver Fund- M. Bacalhau 3, Sidewalk Waiver Fund - M. Donato 2, Sidewalk Waiver Fund - MBA Hotel 1, Sidewalk Waiver Fund - Mihir Patel 1781 Woodland 5, Sidewalk Waiver Fund - Millenium Properties 6, Sidewalk Waiver Fund - Moda Painting 2, Sidewalk Waiver Fund - NJ General Contr 2, Sidewalk Waiver Fund - N. 1st Millenium Properties 6, Sidewalk Waiver Fund - Narendar Reddy 6, Sidewalk Waiver Fund - Nico Home Improvement 3, Sidewalk Waiver Fund - Northside Associates 3, Sidewalk Waiver Fund- Pagoda Homes 3, Sidewalk Waiver Fund - Paydar Construction 6, Sidewalk Waiver Fund - Pin Oak Builders 5, Sidewalk Waiver Fund - R Lipson 1, Sidewalk Waiver Fund - River View 2, Sidewalk Waiver Fund - S. Maher 1, Sidewalk Waiver Fund - Shabco Construction 31, Sidewalk Waiver Fund - Suburban R. Estates 3, Sidewalk Waiver Fund - Syed Ali 6, Sidewalk Waiver Fund - V. Homesile 4, Sidewalk Waiver Fund - Vishl Patel 1, DECREASES BALANCE DECEMBER $7, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,250.00

156 Exhibit - B-14 Page 4 of4 SCHEDULE OF OTHER ESCROW FUNDS TR.UST-OTHER FUND BALANCE BALANCE DECEMBER DECEMBER 31, 2015 INCREASES DECREASES 31,2016 Sidewalk Waiver Fund - William Gianpolo $6, $6, Sidewalk Waiver Fund - Zemol Construction 10, , BAJR Develop. (Site Improvement) BSS (Site Improv.) 4, , Clara Barton Manor (Gulya - Site Improv.) 20, , Edison Constr. Co. (Site lmprov.) 1, , Frederick Hill (Site Improvement) 1, , Garden St. Bldg. (Site Improv.) 5, , Garlotti Const-site improvement 8, , Garlotti Const-site improvement 8, , Gus Leontarakis-site improv 2, , Laura Estates (Site Improvements) 1, , Modular Structures (Site Improv.) 29, , Morris Comp. (Site Improv.) 15, , OTR Assoc. (Site Improvement) 10, , Pribula (Site Improv.) 2, , Price Club (Site Improvements) 5, , Sudan Constr. (Site Improv.) TOTAL $ $ $ $ Ref. B B-2 B-2 B 858, , $3, ,

157 Exhibit - B-15 SCHEDULE OF OTHER RESERVES TRUST- OTHER FUND BALANCE BALANCE PURPOSE DEC 31,2015 INCREASES DECREASES DEC Washington Park Apartments $ 138, $ $ 138, $ Accrued Sick Leave 198, , , , Affordable Housing 4,067, ,096, , ,398, Dedicated Municipal Alliance Funds 12, , , , Engineering Insp. 83, , Environmental Trust Donations 12, , , , Fall Family Spectacular 17, , , , Federal Forfeited Property 273, , , , Fire Fines 28, , , , Flexible Spending Account 21, , , , Law Enforcement Expenditures 168, , , Park Improvements 228, , , Parking Offense Adjudication Act 5, , Payroll Deductions and Contributions 731, ,031, ,123, , Performance Bonds 4,055, ,433, ,493, ,995, Public Defender Fees 27, , , , Recreation Trust 112, , , , Seized Assets 2, , Snow Removal 131, , Street Openings 295, , , , Towing Fees 15, , Tax Lien Foreclosure Interest Trust 327, , Tree Fund 75, , , , Tree Planting Escrow 680, , , , Tower Homes Security Deposits Unemployment Comp. Claims 452, , , , $ 12,162, $ 27,190, $ 26,959, $ 12,393, REF. B B-2 B-2 B -151-

158 SCHEDULE OF CHANGES IN VARIOUS RESERVES Exhibit B-16 BALANCE CASH BALANCE Ref. DEC INCREASES DISBURSEMENTS ADJUSTMENTS DEC Reserve for: Housing and Commununity Development B $ 712, $ 535, $ (387,538.85) $ 208, $ 1,069, Housing Opportunities for People With AIDS B 183, , Deposit for Redemption of Tax Sale Premiums B 5,901, ,878, (6,528, ) 5,252, Off-Duty Police B 361, ,769, (2,933,656.62) 198, D.E.P. Landfill Closure Costs B 4,399, , (16,817.93) 4,486, Edison Landfill Closure Trust-Local B 1,500, , ,804, B.P.U. Landfill Closure Costs B 12,079, , (39,997.12) 12,352, Payment of Insur. Claims B 1,094, , (584,135.40) 516, Developer's Escrow Funds B 1,646, , (405,287.72) 2,014, Total $ 27, $ 10,684, $ (I 0, ) $ $ ,875.80,... c.n Housing and Commununity Development B-8 $ 716, Cash Receipts B-2 9,968, N. $ 10,684, B-2 Prior Year Encumbrance B $ 277, Current Year Encumbrance B (68,466.34) - $ 208,872.45

159 Exhibit - B-17 SCHEDULE OF INTERFUNDS RECEIVABLE Total Due from Trust Other Assessment Fund Balance - December 31, 2015 B $ 20, $ 20, Balance - December 31, 2016 B $ 20, =$===2=0=,0=63=.0=0= -153-

160 Exhibit - B-18 SCHEDULE OF INTERFUNDS PAYABLE Due to Due to Due to Current Fund Due to Assessment Due to Current Fund Animal Current Fund Trust Fund Current Fund REF. Total -- Assessment Fund Control Fund Trust Other Trust Other CDBG Fund Balance - December 31, 2015 B $593, $18, $492, $20, $61, Increased by: Cash Receipts B-2 58, , , Statutory Excess Due to Current Fund B-13 2, , I ;--.> (J] 60, , , , , , , , , Decreased by: *'" Cash Disbursements B-2 554, , , , , , Balance - December 31, 2016 B $98, $18, $2, $7, $20, $49,838.36

161 GENERAL CAPITAL FUND -155-

162 SCHEDULE OF GENERAL CAPITAL CASH AND INVESTMENTS - TREASURER REF. Exhibit - C-2 Balance - December 31, 2015 c $ 11,509, Increased by Receipts: Premium on Bond and BAN Sales C-1 722, lnterfunds Advanced C-5 19,397, Deferred Charges - Unfunded C-7 12,380, Bond Anticipation Notes C-9 41,950, Capital Improvement Fund C , Payment of Future Debt Costs C-17 97, Decreased by Disbursements: Fund Balance C-1 3,079, Interfunds Advanced C-5 20,213, Improvement Authorizations C-8 17,040, Bond Anticipation Notes C-9 32,031, Payment of Future Debt Service Costs Realized in 2016 Budget C ,299, ,808, ,554, Balance - December 31, 2016 c $ 14l254l

163 ANALYSIS OF GENERAL CAPITAL CASH AND INVESTMENTS Exhibit - C-3 BALANCE BALANCE DEC DEC. 31,2016 Fund Balance $ 143, $ 210, Grants Receivable/Reserve (177,513.95) (177,513.95) Due to Current Fund 3, Due from Free Public Library (64,178.00) (64,178.00) Insurance Proceeds Receivable (66,850.00) (66,850.00) Capital Improvement Fund 62, , Reserve for Encumbrances 9,980, ,750, Reserve for Acquistion of Property for and Construction of Parking Facilities 182, , Payment of Future Debt Service 189, , CAP NO. IMPROVEMENT AUTHORIZATIONS General Improvements: 312 Constr. of Drainage Improve. 311, Amboy Ave. Revitalization Project 63, Various Improvements 104, Various Capital Improvements 63, Amboy A venue Revitalization 2, Various Capital Improvements 1, Various Capital Improvements 216, Various Park Improvements 206, Acquisition of Open Space 812, Various Capital Improvements 53, Various Capital Improvements 303, , Various Capital Improvements 964, Various Improvements to Inman Ave and Tingly Land Railroad Crossing 75, Various Capital Improvements 174, (171,944.00) Various Roof Repairs and related improvements 125, Various Capital Improvements 73, General Refunding Bonds of tax appeals 21, , General Refunding Bonds of tax appeals 32, Various Capital Improvements 45, , Various Capital Improvements 10, , Contractually Required Severance Liabilities (543,600.00) (362,400.00) Various Capital Improvements 4,355, ,302, General Refunding Bonds of tax appeals 73, , Acquisition of Vehicles and Equipment Repaving and Reconstruction of Various Roads (2,808,330.00) 115, Acquisition of Fire Vehicles and Equipment Various Capital Improvements (3,482,622.26) 6,486, General Refunding Bonds of2016 { $ $ Ref. c c ( ) Denotes Deficit

164 SCHEDULE OF ACCOUNTS RECEIVABLE EDISON FREE PUBLIC LIBRARY Exhibit - C-4 Balance - December 31, 2015 Balance - December 31, 2016 c c $ 64, $ SCHEDULE OF INTERFUNDS RECEIVABLE/PAY ABLE Exhibit - C-5 Balance - December 31, 2015 (Due to) c Current Fund $ 3, Increased by: Cash Receipts - Interest on Investments Cash Receipts - Interfunds Advanced Cancelled Improvement Authorization C-2 C-2 C-8 60, ,337, , ,210, ,213, Decreased by: Cash Disbursements C-2 20,213, Balance - December 31, 2016 (Due from) c $ SCHEDULE OF DEFERRED CHARGES TO FUTURE TAXATION - FUNDED Exhibit - C-6 Balance - December 31, 2015 c $ 50,961, Increased by: General Oblig Refunding Bonds C-12 7,860, Decreased by: 2016 Budget Approp. to Pay Bonds: General Serial Bonds Green Acres Loan Payable NJ Environmental Infrastructure Loan C-12 C-13 C-11 13,189, , ,821, ,618, Balance - December 31, 2016 c $ 45,202,

165 Exhibit - C-7 SCHEDULE OF DEFERRED CHARGES TO FUTURE TAXATION UNFUNDED CAP NO. IMPROVEMENT DESCRIPTION DATE OF BALANCE ORDINANCE DEC AUTHOR FUNDING CANCELLED BALANCE DEC ANALYSIS OF BALANCE -DEC BOND ANTICIPATION NOTES EXPENDITURES UNEXPENDED BALANCE OF IMPROV. AUTH. General Improvements: I I-' (JJ \0 373 Amboy Avenue Revitalization Project 384 Amboy Avenue Revitalization 391 Various Capital Improvements 392 Various Capital Improvements Various Capital Improvements General Refunding Bonds of tax appeals General Refunding Bonds of tax appeals Various Capital Improvements Various Capital Improvements Contractually Required Severance Liabilities Various Capital Improvements General Refunding Bonds of2015 -tax appeals Repaving and Reconstruction of Various Roads Various Capital Improvements General Refunding Bonds of $ 109, /15/ , /24/05 33, , , /28/08 753, /28/11 1,000, /24/12 3,800, /12 1,504, ,285, /23/13 543, /14 11,371, ,175, /22/15 3,333, ,925, $ 48, , 133, $ 9,133, , ,900, , ,029, ,860, $ 12, $ 997, $ 109, , , , , , , ,900, ,504, ,285, , ,371, ,145, ,333, ,925, , $ , , ,900, ,504, ,285, ,371, ,145, ,333, ,925, $ $ 109, , , , , , , , $ 810, $ I 653, Ref c C-8 C-2 C-8 c Improvement Authorization - Unfunded Less: Unexpended Proceeds ofban's Issued - Ordinance $ 11,951, , , ,302, , , ,486, $ 1,653,199.57

166 SCHEDULE OF IMPROVEMENT AUTHORlZA TIONS Exhibit - C-8 CAP ORDINANCE BALANCE-DEC /31/15 PAIDOR 12/31/16 BALANCE-DEC NO. IMPROVEMENT DESCRIPTION DATE amq!.llii FUNDED UNFUNDED AUTHORIZED ENCUMB CHARGED ENCUMB CANCELED FUNDED UNFUNDED General Improvements: 312 Constr. of Drainage Im prov. 06/13/90 $205, (Amended 9/6/01) 09/06/01 945, $311, , Amboy A venue Revitalization 9/22/00/ Project ,868, ,52Ll3 $109, ,52U3 $109, Various Improvements 04/12/01 8,436, , , Various Capital Improvements 02/26/03 6,244, , , Amboy A venue Revitalization 07/23/03 355, , , , , Various Capital Improvements 12/22/03 1,886, , , Various Capital Improvements 04/14/04 5,374, , , Various Park Improvements 09/09/04 2,187, , , Acquisition of Open Space 01/26/05 1,349, , , Various Capital Improvements 02/24/05 6,129, , , , , Various Capital Improvements ,342, , , /14/06 400, , , Various Capital Improvements 04/11/07 7,009, , , , , , Various Improvements to Inman Ave and Tingly Land Railroad Crossing ,310, , , Various Capital Improvements 04/28/08 4,068, , , , , , , ,43Ll Various Roof Repairs and related improvements 10/28/09 913, , , , , I Various Capital Improvements 10/27/10 1,140, , , , , I General Refunding Bonds of tax appeals 12/28/11 5,000, , , , I-' General Refunding Bonds of tax appeals 10/ ,500, , , Q"\ Various Capital Improvements 12/12/12 6,080, , , , , , Various Capital Improvements 09/09/13 2,400, , , , , Various Capital Improvements 07/23/14 11,940, ,355, ,535, ,654, , ,302, General Refunding Bonds of tax appeals 01/28/15 12, 175, , , , Acquisition of Vehicles and Equipment 1,500, Repaving and Reconstruction of Various Roads ,500, , ,637, ,522, , , Acquisition of Fire Vehicles and Equipment 500, Various Capital Improvements 09/09/15 11,500, ,442, ,057, ,378, ,634, ,486, General Refunding Bonds of /09/16 11,100, , ,135, , $3,248, $ $ $ $ $3, $ $ ~, Ref c c c C-2 c c c Due to Open Space Fund C-5 $812, Deferred Charges to Future Taxation - Unfunded C-7 $9,133, , Reserve for Payment of Future Debt Service C-17 2,423, $9, $4,234,298.44

167 SCHEDULE OF BOND ANTICIPATION NOTES Exhibit - C-9 ORD. NO. IMPROVEMENT DESCRIPTION DATE OF ORIGINAL DATE OF DATE OF INTEREST ISSUE ISSUE MATURITY RATE BALANCE B.A.N.S BALANCE DEC ISSUED DECREASED DEC General Refunding Bonds of tax appeals General Refunding Bonds of tax appeals Various Capital Improvements Various Capital Improvements Various Capital Improvements Various Capital Improvements General Refunding Bonds of tax appeals Repaving and Reconstruction of Various Roads Various Capital Improvements 04/26/12 12/20/12 02/11/ % 04/ /11/16 02/10/ % 04/11/14 02/11/16 02/ % 04/11/14 02/ % /11/16 02/10/ % /11/16 02/10/ % 02/11/16 02/ /10/ % /10/ % $ 410, $ 410, $ 3,800, ,900, ,800, ,900, , , , , ,504, ,504, ,504, ,504, ,285, ,285, ,285, ,285, ,371, ,371, ,371, ,371, ,175, ,145, , 175, ,145, ,333, ,333, (),925, ,925, Ref. $ 32,031, $ 41,950, $ 32,031, $ 41,950, c C-2 C-2 c I I-' I-' '

168 SCHEDULE OF CAPITAL IMPROVEMENT FUND Exhibit - C-10 Balance - December 31, 2015 c $ 62, Increased by: 2016 Budget Approp. C-2 750, Balance - December 31, 2016 c $ 812,

169 SCHEDULE OF INFRASTRUCTURE TRUST LOAN PAY ABLE Exhibit - C-11 BALANCE BALANCE DATE OF AMOUNT OF INTEREST MATURITIES OF LOANS DEC. 31, DEC. 31, DESCRIPTION ISSUE ISSUE RATE YEAR AMOUNT 2015 DECREASED 2016 New Jersey Environmental Infrastructure Trust 2002 A Loan 11/07/02 $1,180, % 2017 $70, $ 565, $ 70, $ 495, % , % , % , % , % , New Jersey Environmental Infrastructure Trust 2006 A Loan 11/07/06 450, o/o-4.125% , , , , %-5.00% , % , New Jersey Environmental I...,. Infrastructure Fund 2002 A Loan 11/07/02 1,227, % , , , , \ VJ 0.00% , % , % , % , % , New Jersey Environmental Infrastructure Trust 2006 A Loan 11/07/06 441, % , , , , % , % , % , % , % , % , % , % , % , $ $ $ Ref. c C-6 c Paid $ 174, De-Obligated 16, $ 190,929.37

170 SCHEDULE OF SERIAL BONDS - GENERAL CAPITAL FUND Exhibit C-12 Page I of2 MATURITIES OF BONDS DATE OF ORIGINAL OUTSTANDING- DEC INTEREST BALANCE BALANCE PURPOSE ISSUE ISSUE DATE AMOUNT RATE DEC INCREASED DECREASED D :C Pension Refunding Bonds of $10,000, /15/17 $470, % $8,510, $430, $8,080, /15/18 530, % ,230, % ,320, % ,420, % ,510, % 03/15/23 1,600, % General Improv. Bonds of ,675, / ,605, % 18, 175, ,515, ,660, / ,770, % ,285, % General Obligation Refunding Bonds, Series ,540, /01/17 1,665, % 11,345, ,680, ,665, /01/18 1,655, % ,655, % ,650, % ,645, %... 0\ ,395, %,i::. I Tax-Exempt General Obligation Bonds /13/13 I 0,564, /01/17 502, % 9,559, , ,057, /01/18 502, % 08/ , % 08/ , % 08/01/21 506, % 08/ , % 08/ ,004, % 08/ ,004, % 08/ ,004, % 08/01/26 1,004, % 08/ ,004, % 08/ ,003, %

171 SCHEDULE OF SERIAL BONDS- GENERAL CAPITAL FUND Exhibit C-12 Page 2 of2 MATURITIES OF BONDS DATE OF ORIGINAL OUTSTANDING- DEC INTEREST BALANCE BALANCE PURPOSE ISSUE ISSUE DATE AMOUNT RATE DEC INCREASED DECREASED DEC Taxable General Obligation Bonds /13/13 1,051, / , % 932, , , /01/18 65, % 08/01/19 67, % 08/01/20 68, % 08/01/21 70, % 08/01/22 71, % 08/ , % 08/ , % 08/ , % 08/01/26 78, % 08/ , % 08/01/28 80, % I 1--' 0\ (JJ General Improvement Refunding Bonds, Series /31/16 7,860, ,380, % 7,860, ,860, / ,525, % ,955, % $48,521, $ $13,189, $ Ref. c C-6 C-6 c Bonds Paid $5,124, Bonds Refunded 8,065, ,189,961.09

172 GREEN ACRES TRUST LOANS PAYABLE - GENERAL CAPITAL FUND Exhibit - C-13 DRAWDOWN ANNUAL PAYMENTS* INTEREST BALANCE BALANCE PURPOSE DATE AMOUNT YEAR AMOUNT RATE DEC DECREASED DEC (1) Woodland Ave. Park I $ 1,230, $ 124, % $ 301, $ 118, $ 182, , (2) Woodland Ave. Park II 07/ll/03 712, , % 288, , , (3) Woodland Grove 08/10/03 281, , % 67, , , , (4) Mill Road Park , , % 220, , , , $ $ 237, $ 639, I,... ' I * Annual Payments are due in semi-annual installments of each year. Loan Amortization Schedule reflects a 2% interest rate. (1) -Annual Payments are due in semi-annual installments on October 26 and April 26. Ref. c C-6 c (2) -Annual Payments are due in semi-annual installments on July 11 and January 11. (3) - Annual Payments are due in semi-annual installments on August IO and February 10. (4) -Annual Payments are due in semi-annual installments on October 26 and April 26.

173 Exhibit - C-14 SCHEDULE OF RESER VE FOR GRANTS RECEIVABLE Balance - December 31, 2015 Balance - December 31, 2016 REF. c c $ 51, $ 51, Analysis of Ordinance Number Green Acres 391 D.O.T. Stony Road East 379 $ 16, $ 51, Exhibit - C-15 SCHEDULE OF DUE FROM VARIOUS GRANTOR AGENCIES GRANTS RECEIVABLE GENERAL CAPITAL FUND Balance Ordinance December 31, Number 2015 Receivables: Green Acres 391 $ 16, D.O.T. Stony Road East , Local Domestic Preparedness Grant , ADA Improvements , Purchase of Closed Caption System , D.O.T. Municipal Aid-Amboy Ave , D.O.T. Municipal Aid- Grove Ave 387 7, D.O.T. Municipal Aid - Central, Winthrop & Ovington , Homeland Security Grant , $ 228, Balance December 31, 2016 $ 16, , , , , , , , , $ 228, Ref. c c

174 Exhibit - C-16 SCHEDULE OF RESERVE FOR ACQUISITION OF PROPERTY FOR AND CONSTRUCTION OF PARKING FACILITIES Balance - December 31, 2015 Balance - December 31, 2016 c c $ 182, $ 182, Exhibit - C-17 SCHEDULE OF RESERVE FOR PAYMENT OF DEBT SERVICE COSTS Balance - December 31, 2015 c $ 189, Increased by: Cash Receipts C , Decreased by: Anticipated Revenue C Balance - December 31, 2016 c $ 97, Exhibit - C-18 SCHEDULE OF INSURANCE PROCEEDS RECEIVABLE Balance - December 31, 2015 Balance - December 31, 2016 c c $ 66, $ 66,

175 SCHEDULE OF BONDS AND NOTES Exhibit - C-19 AUTHORIZED BUT NOT ISSUED CAP. DATE OF BALANCE B.A.N.S B.A.N.S CASH BALANCE NO. IMPROVEMENT DESCRIPTION ORDINANCE DEC AUTHORIZED FUNDING ISSUED REDEEMED RECEIPIS CANCELLED DEC General Improvements: 373 Amboy Avenue Revitalization Project 09/22/00 $ 28, $ 28, Amboy A venue Revitalization Project 05/15/0I 80,837.8I 80, Amboy Avenue Revitalization , , Various Capital Improvements , , Various Capital Improvements I , , Various Capital Improvements 04/28/08 753, , General Refunding Bonds of201 I - tax appeals 12/28/11 590, , , , General Refunding Bonds of tax appeals ,900, ,900, ,800, Various Capital Improvements 12/ ,504, ,504, Various Capital Improvements ,285, ,285, Contractually Required Severance Liabilities 10/ , , , Various Capital Improvements ,371, ,371, General Refunding Bonds of tax appeals 01/28/15 2,029, ,145, ,175, Repaving and Reconstruction of Various Roads ,333, ,333, Various Capital Improvements ,925, ,925, General Refunding Bonds of , $ $ 9,133, $ 12,199, $ 41,950, $ 32,031, $ 181, $ 997, $ 2,463, I,... ' ' Ref FootnoteC

176 WATER UTILITY FUND -170-

177 Exhibit - D-5 SCHEDULE OF WATER UTILITY CASH AND CASH AND INVESTMENTS - TREASURER REF. OPERATING FUND Balance - December 31, 2015 D $ 28, Increased by Receipts: Deficit (General Budget) D-3 89, Due to Current Fund - Interest Earned D Decreased by Disbursements: 2016 Budget Appropriations D-4 56, Interfunds Payable Returned D Accrued Interest Payable D-13 33, , , Balance - December 3 1, 2016 D $ ANALYSIS OF WATER UTILITY CAPITAL CASH AND INVESTMENTS Exhibit - D-6 BALANCE BALANCE DEC. 31, DEC. 31, Fund Balance $ 14, $ 14, Due from Water Operating Fund (14,411.32) (14,411.32) $ $ D D

178 Exhibit - D-7 SCHEDULE OF RESERVE FOR AMORTIZATION WATER UTILITY CAPITAL FUND Balance - December 31, 2015 D $ 6, 108, Increased by: Serial Bonds Paid by Operating Budget D Balance - December 31, 2016 D $ 6,165, Exhibit - D-8 SCHEDULE OF DUE TO/FROM WATER UTILITY OPERA TING FUND WATER UTILITY CAPITAL FUND Balance - December 31, 2015 D $ 14, Balance - December 31, 2016 D $ 14,

179 Exhibit - D-9 SCHEDULE OF DUE TO/FROM CURRENT FUND WATER UTILITY OPERATING FUND REF. Total Due to Current Fund Balance - December 31, 2015 D $ 5.04 (Due to) Increased by: Cash Receipts D Decreased by: Cash Disbursements D Balance - December 31, 2016 D $ 1.80 (Due to) $ $ 1.80 SCHEDULE OF DUE TO WATER UTILITY CAPITAL FUND WATER UTILITY OPERATING FUND Exhibit - D-1 0 Balance - December 31, 2015 D $ 14, Balance - December 31, 2016 D $ 14,

180 Exhibit - D-11 SCHEDULE OF FIXED CAPITAL WATER UTILITY CAP IT AL FUND A 142B 142C 142D 142E BALANCE DEC. 31, ACCOUNT 2015 Pumping Sys. Land $ 1, Other Distrib. 6, Springs and Wells 39, Intake and Supply Main 57, Chemical Treatment Plant Pumping Station Structure 60, Elect. Power Equip. 20, Trans. Main and Accessories 298, Storage, Reservoirs, Tanks and Standpipe 19, Distrib., Mains and Accessories 4,089, Meters, Meter Boxes and Vaults 489, Fire Hydrants 78, General Structures 124, General Equipment 104, General Office Equip. 10, General Shop Equip. 28, General Store Equip. 1, Autos-Trucks 260, Misc. Equipment 81, Engineering and Supervision 193, Legal Expend. During Constr. 36, Int. During Constr. 38, Misc. Constr. Exp. 33, Rights-of-Way 8, Improvement and Replenishment of Water Main 18, Construction, Reconstruction and Improvement to the Vineyard Road Water Loop Closure and Various Other Extensions and Loop Closures 16, Improvement to the Water Distribution System 858, $ 6,978, BALANCE DEC. 31, 2016 $ 1, , , , , , , , ,089, , , , , , , , , , , , , , , , , , $ 6,978, Ref. D D -174-

181 Exhibit - D-12 SCHEDULE OF DEFERRED RESERVE FOR AMORTIZATION WATER UTILITY CAPITAL FUND CAP NO. 014 IMPROVEMENT DATE OF BALANCE DESCRIPTION ORDINANCE DEC. 31,2015 Construction, Reconstruction and Improve. to Vineyard Road Water Loop Closure and Various other Revisions, Extensions and Loop Closures $ 16, $ 16, BALANCE DEC. 31,2016 $ 16, $ 16, Ref. D D -175-

182 Exhibit - D-13 SCHEDULE OF ACCRUED INTEREST ON BONDS AND NOTES WATER UTILITY OPERA TING FUND REF. Balance - December 31, 2014 D $ 13, Increased by: Accrued Interest Charged to: 2015 Budget Appropriation D-4 32, , Decreased by: Cash Disbursements D-5 33, Balance - December 31, 2015 D $ 13, Analysis of Balance - December : Principal Outstanding 12/31/16 Interest Rate Amount Taxable Bonds $ 797, Various 08/01/16 12/ months $ 13,

183 SCHEDULE OF SERIAL BONDS - WATER UTILITY CAPITAL FUND Exhibit - D-14 MATURITIES OF BONDS DATE OF ORIGINAL OUTSTANDING- DEC. 31,2016 INTEREST BALANCE BALANCE PURPOSE ISSUE ISSUE DATE AMOUNT RATE DEC DECREASED DEC Taxable Water Utility Bonds /13/13 $ 963, /01117 $ 58, % $ 854, $ 56, $ 797, /01/18 59, % 08/01/19 61, % 08/01/20 62, % 08/01/21 64, % 08/01/22 65, % 08/01/23 67, % 08/01/24 68, % 08/01/25 70, % 08/01/26 71, % 08/01/27 71, % 08/01/28 73, % I!--" $ 854, $ 56, $ 797, '.:] '.:] Ref. D D-7 D

184 SEWER UTILITY FUND -178-

185 Exhibit - E-5 SCHEDULE OF SEWER UTILITY CASH AND INVESTMENTS - TREASURER REF. OPERA TING FUND CAPITAL FUND Balance - December 31, 2015 E $ 9,022, $ 988, Increased by Receipts: Premium on Sale of Refunding Bonds E , Miscellaneous Revenues E-3 228, Sewer Utility Collector E-6 18, 750, Due from Sewer Capital Fund E-9 1,731, Refunding Bonds E-10 1,710, Bond Anticipation Notes E-14 7,600, I "'""' ~ 20, 710, ,452, I 29, 733, ,440, Decreased by Disbursements: Refunds of Prior Year Revenues E- 1 2, Budget Expenditures E- 4 14,570, Due to Current Fund E- 9 3,373, Due to Sewer Operating Fund E-12 1,731, Bond Anticipation Notes E-14 7,600, Reserve for MCIA Purchase Payments E , Appropriation Reserves E , Accrued Interest Payable E , Improvement Authorizations E , ,994, ,447, Balance - December 31, 2016 E $ 10,739, $ 993,305.73

186 Exhibit - E-6 SCHEDULE OF SEWER UTILITY CASH - COLLECTOR Increased by Receipts: Sewer Rents Sewer Rent Overpayments E- 7 E-16 18,161, , $ 18, 750, Decreased by: Paid to Treasurer: Sewer Utility Fund E-5 $ 18,750,

187 Exhibit - E-7 SCHEDULE OF SEWER RENTS RECEIVABLE Balance - December 31, 2015 Increased by: 2016 Sewer Service Charges E Reserve $ 40, ,845, Decreased by: 2016 Collections: Collector Sewer Rent Overpayments Applied Transfers to Sewer Rent Liens E-3, E-6 E-3, E-16 E-8 18,161, , , ,886, ,876, Balance - December 31, 2016 E $ 9, Exhibit - E-8 SCHEDULE OF SEWER RENT LIENS Balance - December 31, 2015 E $ 28, Increased by: Transfers from Sewer Rents Receiv. Interest & Costs Accrued by Sale E-7 Reserve 8, , Balance - December 31, 2016 E $ 37,

188 Exhibit - E-9 SCHEDULE OF INTERFUND PAY ABLE Due to Sewer Capital REF. Total Fund Balance - December 31, 2015 E $ 5,887, $ 5,887, Increased by: Cash Receipts E- 5 1,731, ,731, ,619, ,619, Decreased by: Cash Disbursements E- 5 3,373, ,373, Balance - December 31, 2016 E $ 4,246, $ 4,

189 SCHEDULE OF SERIAL!;lONDS - SEWER UTILITY CAPITAL FUND Exhibit - E-10 MATURITIES OF BONDS DATE OF ORIGINAL OUTSTANDING- DEC INTEREST BALANCE BALANCE PURPOSE ISSUE ISSUE DATE AMOUNT RATE DEC INCREASED DECREASED DE~ Sewer Utility Bonds $ 2,266, /01/17 $ 60, % $ 1,971, $ 1,786, $ 185, , % 06/ , % Tax-Exempt Sewer Utility Bonds /13/13 2,580, / , % 2,334, , ,211, / , % 08/01/19 123, % , % 08/01/21 123, % 08/01/22 123, % 08/01/23 245, % 08/ , % 08/01/25 245, % , % 08/ , % 08/ , % Taxable Sewer Utility Bonds /13/13 1,200, / , % 1,063, , , / , % 08/01/19 76, % , % I 08/01/21 80, % C1J ""'"' ,ll % VJ , % 08/ , % 08/ , % , % , % , % Sewer Utility Refunding Bonds ,710, , % 1,710, ,710, , % 06/ , % , % , % 06/01/ , % , % 06101/ , % , % 06/01/33 ll0, % 06/01/34 115, % 06/01/35 120, % , % $ 5, $ I $ I 980, $ Ref E E-5 E-23 E E-23 Bonds Paid $ 248, E-23 Bonds Refunded _b73 l, $ 1,980,097.12

190 Exhibit - E-11 SCHEDULE OF FIXED CAPITAL BALANCE DEC TRANSFERRED FROM FIXED CAPITAL AUTH & UNCOMPL BALANCE DEC Pump Station Improvements Wastewater Collection System Improvements to Sewer System Purchase of Vehicles and Equipment Water and Sewer System Engineering Costs Miscellaneous Costs $ 5,877, $ 63, , 183, ,519, , , , $ 6,834, $ E E-13 $ 5,940, , 183, ,519, , , , $ 11,936, E Exhibit - E-12 SCHEDULE OF DUE TO SEWER UTILITY OPERATING FUND Balance - December 31, 2015 E $ 5,887, Increased by: Serial Bonds E-5 Decreased by: Improvement Authorizations E ,619, Balance - December 31, 2016 E $ 4,246,

191 Exhibit - E-13 SCHEDULE OF FIXED CAPITAL AUTHORIZED AND UNCOMPLETED SEWER UTILITY CAPITAL FUND ORD. NO. IMPROVEMENT DESCRIPTION BALANCE DEC FIXED CAPITAL AUTHORIZED TRANSFERRED TO FIXED CAPITAL BALANCE DEC.31,2016 Improvement of Pump Station, Renovations and Upgrades at the West Side, Evergreen and National Road Pump Stations $ 79, $ 63, $ 15, Wastewater Collection System ,200, ,183, , Improvements to Sewer System , , , Purchase of Vehicles and Equipment , , , Various Sewer Improvements ,000, ,257, ,742, Analysis of Water and Sewer System $ $ $ $ $ E E-21 E-11 E -185-

192 SCHEDULE OF BOND ANTICIPATION NOTES Exhibit - E-14 OED. NO. IMPROVEMENT DESCRIPTION DATE OF ORIGINAL ISSUE DATE OF ISSUE DATE OF MATURITY INTEREST RATE BALANCE DEC B.A.N.S ISSUED DECREASED BALANCE DEC Various Sewer Improvements 02113/15 02/11/16 02/10/ % $ 7,600, $ 7,600, $ 7,600, $ 7,600, $ 7,600, $ 7,600, $ 7,600, $ 7,600, Ref. E E- 5 E-5 E f--' (Y) 0\

193 Exhibit - E-15 SCHEDULE OF RESERVE FOR MCIA LEASE PURCHASE PAY ABLE Balance - December 31, 2015 E $ 253, Decreased by: Appropriated to 2016 Budget Revenue E-5 $ 253, Exhibit - E-16 SCHEDULE OF SEWER RENT OVERPAYMENTS Balance - December 31, 2015 E $ 211, Increased by: Cash Overpayments Collected - Collector E-6 588, Decreased by: Applied to Sewer Rents Receivable Balance - December 31, 2016 E-7 E 799, $

194 SCHEDULE OF RESERVE FOR SEWER LIEN FORECLOSURES Exhibit - E-1 7 Balance - December 31, 2015 E $ 5, Balance - December 31, 2016 E $ SCHEDULE OF ACCOUNTS PAYABLE Exhibit - E-18 Balance - December 31, 2015 E $ Increased by: Transfer from 2015 Appropriation Reserves E Balance - December 31, 2016 E $ 30,

195 SCHEDULE OF 2015 APPROPRIATION RESERVES SEWER UTILITY OPERA TING FUND Exhibit-E-19 BALANCE BALANCE 12/31/15 AFTER PAID OR BALANCE DEC. 31, 2015 ENCUMB. MODIFICATION CHARGED LAPSED OPERATING: Salaries and Wages $ 205, $ 205, $ 546, $ 340, Other Expenses 49, , , , Middlesex County Utilities Authority Charges 552, , , MCUA Additional Usage Fees 449, , , CAPITAL IMPROVEMENTS: Capital Improvement Projects 150, , , STATUTORY EXPENDITURES: Social Security (O.A.S.I.) 13, , , I (;:; ""'"' \0 $ 1,271, $ 485, $ 1,756, $ 546, $ 1,210, I Ref. E E E-5 E Appropriation Reserves E $ 1,271, Encumbrances Payable E 485, $ 1,756, Cash Disbursements E-5 $516, Accounts Payable E-18 30, $ 546,829.97

196 SCHEDULE OF ACCRUED INTEREST ON BONDS AND NOTES SEWER UTILITY OPERA TING FUND Exhibit - E-20 Page 1 of2 REF. Balance - December 31, 2015 E $ 123, Increased by: Accrued Interest Charged to: 2016 Budget Appropriations E-4 342, , Decreased by: Cash Disbursements E-5 277, Balance - December 31, 2016 E $ 188, Analysis of Balance - December 31, 2016: Principal Outstanding Interest 12/31/16 Rate From To Period Amount Bonds $ 60, % 12/01/16 12/31/16 1 month $ , % 12/01/16 12/31/16 1 month , % 12/01/16 12/31/16 1 month , % 12/01/16 12/31/16 1 month , % 12/01/16 12/31/16 1 month , % 12/01/16 12/31/16 1 month , % 12/01/16 12/31/16 1 month , % 12/01/16 12/ month , % 12/ / month , % 12/ / month , % 12/ / month , % 12/ /31/16 1 month , % 12/01/16 12/ month , % 12/ / month , % 12/01/16 12/ month , % 12/ /31/16 1 month , % 12/01/16 12/ month , % 12/ / month , % 12/01/16 12/ month , % 12/01/16 12/31/16 1 month , % 12/ /31/16 1 month

197 SCHEDULE OF ACCRUED INTEREST ON BONDS AND NOTES SEWER UTILITY OPERA TING FUND Exhibit - E-20 Page 2 of2 Analysis of Balance - December 31, 2016: (cont'd.) Principal Outstanding Interest 12/31/2016 Rate From To Period Amount Bonds $ 122, % 08/01/16 12/31/16 5 months $ 1, , % 08/01/16 12/31/16 5 months 1, , % 08/01/16 12/31/16 5 months 1, , % 08/01/16 12/31/16 5 months 1, , % 08/ /31/16 5 months 1, , % 08/01/16 12/31/16 5 months 1, , % 08/01/16 12/31/16 5 months 3, , % 08/01/16 12/ months 3, , % 08/01/16 12/31/16 5 months 3, , % 08/01/16 12/31/16 5 months 4, , % 08/01/16 12/31/16 5 months 4, , % 08/01/16 12/31/16 5 months 4, Bonds 72, % 08/01/16 12/31/16 5 months , % 08/01/16 12/31/16 5 months , % 08/01/16 12/31/16 5 months 1, , % 08/01/16 12/31/16 5 months 1, , % 08/01/16 12/31/16 5 months 1, , % 08/01/16 12/31/16 5 months 1, , % 08/01/16 12/31/16 5 months 1, , % 08/01/16 12/ months 1, , % 08/01/16 12/31/16 5 months 1, , % 08/01/16 12/31/16 5 months 1, , % 08/01/16 12/31/16 5 months 1, , % 08/01/16 12/ months 1, BAN's 7,600, % 02/11/16 12/31/ months 133, $ $

198 SCHEDULE OF IMPROVEMENT AUTHORIZATIONS SEWER UTILITY CAPITA! F!JND Exhibit-E-21 ORD. NO. IMPROVEMENT DESCRIPJION ORDINANCE DATE AMOUNT BALANCE DECEMBER FUNDED UNFUNDED 2016 AUTHOR. 12/31/15 ENCUMB PAID OR CHARGED 12/31/16 ENCUMB CANCELLED BALANCE DECEMBER 31, 2016 FUNDED UNFUNDED Improvement of Pump Station Renovation and Upgrades At The West Side, Evergreen and National Road Pump Stations 07/14/93 $ 2,685, $ 15, $ 15, Wastewater Collection System ,200, $ 16, $ 16, Improvements to Sewer System /11/07 266, $ 4, $ 4, Purchase of Vehicles and Equipment /28/08 420, , , , , Various Sewer Improvements /23/14 8,000, ,912, ,560, $ 1,730, , ,692, General Sewer Refimding Bonds ,966, $ 1,966, ,746, $ 219, Analysis of Water and Sewer System /27/16 300, , I $ $ $ $ $ $ $ $ $ I--' \!) N Ref. E E E E E-23 E E Fixed Capital Authorized & Uncompleted Reserve for Amortization E-13 E-23 $ 300, ~ Cash Disbursements Due from Sewer Utility Operating Fund E-5 E-12 $ 2,266, $ 115, $ 3,489,010.22

199 Exhibit - E-22 SCHEDULE OF CAPITAL IMPROVEMENT FUND Balance - December 31, 2015 Decreased by: Appropriated to Finance Improvement Authorization Balance - December 31, 2016 E E-24 E $ 524, , $ 509, Exhibit - E-23 SCHEDULE OF RESERVE FOR AMORTIZATION Balance - December 31, 2015 E $ 2,670, Increased by: Improvement Authorizations Canceled Utility Bonds Paid Refunding Bonds E-21 E-10 E , , , 731, ,199, Decreased by: Improvement Authorizations Balance - December 31, 2016 E-21 E 4,870, ,966, $ 2,904,

200 Exhibit - E-24 SCHEDULE OF DEFERRED RESERVE FOR AMORTIZATION BALANCE IMPROVEMENT DESCRIPTIC DEC Repair, Replacement and Improve. to the Sewer System $ 17, Various Sewer Improvements 400, Analysis of Water and Sewer System $ 417, FIXED CAPITAL AUTHORIZED $ 15, $ 15, BALANCE DEC $ 17, , , $ 432, Ref. E E-22 E Exhibit - E-25 SCHEDULE OF DOWN PAYMENTS ON IMPROVEMENTS Balance - December 31, 2015 E $ 400, Balance - December 31, 2016 E $ 400,

201 Exhibit - E-26 SCHEDULE OF BONDS AND NOTES AUTHORIZED BUT NOT ISSUED REFUNDING ORD. BALANCE 2016 BONDS BAN'S BAN'S BALANCE NO. IMPROVEMENT DESCRIPTION DEC AUTHORIZED ISSUED ISSUED RE12EEMED CANCELLED DEC Improvement of Pump Station Renovation and Upgrades At the West Side, Evergreen and National Road Pump Stations $ 152, $ $ $ $ 152, Repair, Replacement and Improvs. to the Sewer System 337, , Wastewater Collection System 50, , Wastewater Collection System , , \0 CJl 8 Improvements to Sewer System Purchase of Vehicles and Equipment , , Various Sewer Improvements ,600, ,600, General Sewer Refunding Bonds ,966, ,710, , , Analysis of Water and Sewer System , , $ 742, $ 2,251, $1,710, $ 7,600, $ 7, $ $ 1,064, Footnote E

202 PUBLIC ASSISTANCE FUND -196-

203 Exhibit - F-1 SCHEDULE OF PUBLIC ASSISTANCE CASH AND INVESTMENTS - TREASURER REF. P.A.T.F. #1 Total Balance - December 31, 2015 $ 43, $ 43, Increased by Receipts: Interest Earned F-2,F Balance - December 31, 2016 F $ $

204 Exhibit - F-2 PUBLIC ASSISTANCE FUND SCHEDULE OF REVENUES FOR THE YEAR ENDED DECEMBER 31, 2016 P.A.T.F. ACCT. #1 P.A.T.F. ACCT.#2 FUND TOTAL Other Revenues Interest Earned $ $ $ Total Revenues $ $ ======= $ F- 1 Exhibit - F-3 PUBLIC ASSISTANCE FUND SCHEDULE OF EXPENDITURES FOR THE YEAR ENDED DECEMBER P.A.T.F. P.A.T.F. ACCT. #1 ACCT. #2 FUND TOTAL Total Expenditures =$======$=======$===== Exhibit - F-4 PUBLIC ASSISTANCE FUND SCHEDULE OF RESERVE FOR PUBLIC ASSISTANCE FOR THE YEAR ENDED DECEMBER Balance - December 31, 2015 F $ 43, Increased by: Interest Earned F Balance - December 31, 2016 F $ 43,

205 PARTV-SUPPLEMENTARYDATA -199-

206 LENGTH OF SERVICE A WARD PROGRAM (LOSAP) -200-

207 HODULIK & MORRISON, P.A. CERTIFIED PUBLIC ACCOUNTANTS REGISTERED MUNICIPAL ACCOUNTANTS PUBLIC SCHOOL ACCOUNT ANTS 1102 RARITAN AVENUE, P.O. BOX 1450 HIGHLAND PARK, NJ (732) (732) (FAX) ANDREW G. HODULIK, CPA, RMA, PSA ROBERTS. MORRISON, CPA, RMA, PSA MEMBERS OF: AMERICAN INSTITUTE OF CPA'S NEW JERSEY SOCIETY OF CPA'S REGISTERED MUNICIPAL ACCOUNTANTS OF N.J. Honorable Mayor and Members of the Municipal Council Township of Edison County of Middlesex, New Jersey INDEPENDENT ACCOUNTANT'S REVIEW REPORT We have reviewed the accompanying statement of assets, liabilities and net assets of the Township of Edison Length of Service Award Program (LOSAP) as of December 31, 2016 and 2015, and the related statement of revenues, expenses and other changes in net assets for the year then ended. A review includes primarily of inquires of the administration of the Township and analytical procedures applied to financial data. A review is substantially less in scope than an audit in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. The administration of the Township of Edison is responsible for the preparation and fair presentation of the financial statements. Our responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require us to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. We believe that the results of our procedures provide a reasonable basis for our report. The Length of Service Award Program is a Township sponsored program and has no separate legal status or existence. The program prepares its financial statements in conformity with accounting principles and practices prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, which is a comprehensive basis of accounting other than generally accepted accounting principles. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with the accounting principles and practices prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. :JJ,rlJd; 11~, I.I. HODULIK & MORRISON, P.A. Certified Public Accountants Registered Municipal Accountants Highland Park, New Jersey June 30,

208 TOWNSHIP OF EDISON LENGTH OF SERVICE AWARD PROGRAM (LOSAP) STATEMENT OF ASSETS, LIABILITIES AND NET ASSETS AS AT DECEMBER 31, 2016 Exhibit-A Assets Investments, at fair value Total Assets $ 5_1...;.<8,--8 _17_.6 0_ $ 518, ====== Net Assets Restricted Total Net Assets $ 5_1_8,._8_17_.6_0_ $ ==5=1=8,=8=17=.6=0= See Accompanying Notes and Accountant's Review Report -202-

209 Exhibit - B SCHEDULE OF LENGTH OF SERVICE AW ARD PROGRAM (LOSAP) STATEMENT OF REVENUES, EXPENSES AND OTHER CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2016 Balance - December 31, 2015 $ 486, Restricted Net Assets Contributions 31, Interest Earned 3, Appreciation 9, Withdraw ls (11,671.32) Increase in Net Assets Balance - December 31, 2016 $ 518, See Accompanying Notes and Accountant's Review Report -203-

210 TOWNSHIP OF EDISON LENGTH OF SERVICE AW ARD PROGRAM (LOSAP) NOTES TO FINANCIAL ST A TEMENTS YEAR ENDED DECEMBER 31, 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Nature of Activities The Length of Service Award Program is a Township sponsored program and has no separate legal status or existence. The program prepares its financial statements in conformity with the accounting principles and practices prescribed by the Division of Local Government Service, Department of Community Affairs, State of New Jersey, which is a comprehensive basis of accounting other than generally accepted accounting principles. The Township of Edison Length of Service Award Program (LOSAP) is a qualified plan under Internal Revenue Code Section 457(e) and pursuant to P.L. 1997, c.388. The Township established the LOSAP Program for the 5 Edison Volunteer Fire Companies and the Edison 3 First Aid and Rescue Squads on June 26, 2002 through Ordinance # LOSAP provides for fixed annual contributions to a deferred income account for volunteer firefighters and first aid and rescue squad members who meet specified service criteria. LOSAP shall provide for annual contribution to each eligible member that meets the criteria as provided in the LOSAP Point System. The Township of Edison sponsors LOSAP through an annual award appropriated through the municipal budget. B. Basis of Presentation The accounting policies of the Township of Edison (the "Township"), Length of Service Award Program (LOSAP) (the "Program") conform to the accounting principles and practices prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. C. Description of Program The Program was created in accordance with the Internal Revenue Code Section 457. The Program is offered to all volunteer members that meet the criteria set by the Township, and provides for fixed annual contributions for all eligible members. The deferred compensation is not available to volunteer members until termination, retirement, death, or unforeseeable emergency. Earnings of the Program and contributions by the Township are subject to vesting provisions of the plan and are exempt from income taxes until distribution to the participating volunteers. The Program is offered by the Township to the participants through Variable Annuity Life Insurance Company (V ALIC). All amounts of compensation deferred under the Program, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights, are (until paid or made available to the volunteer or other beneficiary) solely the property and rights of the Township (without being restricted to the provisions of benefits under the Program), subject only to the claims of the Township's general creditors. Participant's rights under the Program are equal to those of general creditors of the Township in an amount equal to the fair market value of the deferred account for each participant

211 NOTES TO FINANCIAL STATEMENTS NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) C. Description of Program (Cont'd.) In accordance with standards established by the Governmental Accounting standards Board, the Program balances are displayed in the Trust Fund of the Township. The Program is tax exempt in Internal Revenue Code Section 457. D. Amount of Contribution The LOSAP shall provide for annual contributions of $1, to each eligible member who shall be within the top 50% of responders in each volunteer organization. NOTE 2: QUALIFICATIONS The LOSAP shall provide for annual contributions for each eligible member who meets the criteria as follows: Shall provide for annual contributions of $1, to each eligible member who shall be within the top 50% ofresponders in each volunteer organization. The estimated cost of the program has been calculated to be $100, for regular annual services. Eligible members will be ranked annually on an organizational list based upon the number of calls responded to. The LOSAP shall provide for annual contributions of $1, to each eligible member who shall be within the top 50% of responders in each volunteer organization. Eligible members shall be those who: a) Provide services on an ambulance at least one night a week or an equivalent forty ( 40) hours a month during weekdays or weekends; b) Attend at least fifty (50) percent of all regularly scheduled and special drills/training exercises (not less than twelve (12) a year) averaging two hours each; c) Recertify every other year for CPR; d) Complete forty-eight (48) hours of New Jersey State approved continuing education credits every three years; e) Attend annual refresher courses in hazardous material, infectious disease control and ambulance safety; f) Attend annually an EMT-D refresher course; g) Attend at least twenty-five (25) percent of all regularly scheduled and special meetings of the squad, missing no more than three in a row

212 OTHER SUPPLEMENTARY DATA -206-

213 TOWNSHIP OF EDISON MIDDLESEX!;;OUNTY NEW JERSEY COMBINED BALANCE SHEET ALL FUNDS FOR THE YEARENDINQDE!;;EMBER MEMORANDUM ONLY TOTALS WATER SEWER PUBLIC DEC.31, DEC.31, CURRENT GENERAL UTILITY UTILITY ASSISTANCE GOVERNMENTAL 2016 ~ ASSETS FUND TRUST FUND!;;APITAL F!ft:!D FUND FUND f!.!.lli:l FIXED ASSETS Cash and Invesnnents $38,586, $43,564, $14,254, $27, $11,732, $43, $108,208, $104,857, Plan Assets Held by Trustee 518, , , Special Emergency Note Accounts Receivable: State and Federal Grants 952, ,252, , ,434, ,775, Due from State ofn.j. Taxes, Assmts., Liens and Utility Charges 1,125, , ,174, , Interfund Loans 1,658, , , ,246, ,938, ,644, Other Accounts Receivable 337, , , , Property Acquired for Taxes at Assessed Value 3,984, ,984, ,984, Deferred Charges to Revenue of Succeeding Years 2,857, ,857, ,253, Deferred Charges to Future Taxation General Capital 89,616, ,616, ,619, Fixed Assets - General 175,314, ,314, ,108, Fixed Capital - Utilities 6,978, ,936, ,914, ,813, N Fixed Capital Author. and Uncompl. - 0 'l Utilities 5,164, , 164, ,965, I Total Assets $ $ $ $ $ $ $ $ $421, LIABILITIES, RESERVES AND FUND BALANCE Bonds, Loans and Notes Payable 87, 153, , ,699, $100,650, ,816, Special Emergency Note 362, , , Prepaid Taxes, Assmts. and Utility Charges 2,423, ,423, ,116, Tax, Assmt. Lien and Utility Charge Overpayments 281, , , , Appropriation Reserves 5,368, ,902, ,270, ,366, Budgetary Encumb./ Accts. Payable 2,449, , , 750, , ,648, ,603, County Taxes Payable Local District School Taxes Payable 9,441, ,441, ,441, Other Liabilities 1, ,252, ,143, , ,097, ,508, ,450, Amts. Pledged to Specific Purposes 11,221, ,948, , , ,218, ,276, Escrow Funds 884, , , Improvement Authorizations 11,973, ,097, ,070, ,914, Interfund Loans 1,579, , , ,246, ,938, ,644, lnvesnnents in Goverrunental Fixed Assets 175,314, ,314, , 108, Res. for Amort. of Costs of Fixed Capital Acquired or Author. 6,181, ,337, ,518, ,213, Reserve for Certain Assets Acquired or Receivable and Inventories 5,526, , ,575, ,522, Fund Balance , ,323, ,394, ,020, Total Liabilities, Reserves and Fund Balance $49,501, $ $I $7,020, $33,128, $ $ $414,595, $421,601,371.27

214 COMPARATIVE STATEMENT OF OPERATIONS AND CHANGEINFUNDBALANCE-CURRENTFUND REVENUE AND OTHER YEAR2016 INCOME REALIZED AMOUNT % Fund Balance Utilized $3,736, % Miscellaneous - From Other Than Local Property Tax Levies 36,038, % Collection of Delinquent Taxes and Tax Title Liens 15, % Collection of Current Tax Levy 367,148, % Other Credits to Income 3,997, % Total Income 410,936, % YEAR2015 AMOUNT % $10,000, % 30,212, % 45, % 352,506, % 4,411, % 397,176, % EXPENDITURES Budget Expenditures: Municipal Purposes 127,622, % Special District Taxes 9, 775, % County Taxes 60,548, % Local School Taxes 207,185, % Other Charges to Income 44, % Total Expenditures 405,175, % 128,390, % 9,315, % 57,302, % 199,182, % 145, % 394,336, % Excess Revenues 5,761, ,839, Add: Expenditures Included Above Which are by Statute Deferred Charges to Succeeding Years 830, Statutory Excess to Fund Balance 6,591, Fund Balance January 1 7,989, ,580, ,419, ,258, ,731, ,989, Less: Utilization as Anticipated Revenue 3,736, Fund Balance December 31 $10,844, ,000, $7,989,855.54

215 STATEMENT OF OPERATIONS AND CHANGE IN FUND BALANCE - SEWER UTILITY OPERATING FUND REVENUE AND OTHER YEAR2016 YEAR2015 INCOME REALIZED AMOUNT % AMOUNT % Collection of Sewer Rents $ 18,868, % $ 17,726, % Sewer Connection Fees 101, % 115, % Interest and Costs on Sewer Rents 78, % 63, % Miscelaneous Revenues 48, % 37, % Deficit (General Budget) Other Credits to Income 1,210, % % Total Income 20,307, % 18,191, % EXPENDITURES Budget Expenditures: Operating 16,268, % 16,025, % Debt Service 590, % 453, % Capital Improvements 1,710, % 550, % Deferred Charges and Statutory Expenditures 426, % 405, % Deficit in Operations in Prior Years 1, % Other Charges to Income 2, % Total Expenditures 18,998, % 17,435, % Excess In Revenues 1,309, , Fund Balance January Fund Balance December 31 $ 2:094: $ 784,

216 COMPARATIVE SCHEDULE OF TAX RATE INFORMATION Tax Rate: Apportionment of Tax Rate: Municipal: OJ Municipal Library ~ County: < 2 l Local School: Assessed Valuation (Taxable): 2016 $7.066, $7, $7,028, (I) Includes Open Spaces Tax for 2013 < 2 l Includes Open Spaces Tax Note: Under the provisions of Chapter 73, L.1976 (R.S. 54:4-46. l ), the County Board of Taxation estimated the amount of Veterans' and Senior Citizens' tax deductions, etc., to be $539, for the year COMPARISON OF TAX LEVIES AND COLLECTION CURRENTLY A study of this tabulation could indicate a possible trend in future tax levies. A decrease in the percentage of current collection could be an indication of a probable increase in future tax levies. CURRENTLY Percentage Cash of Year TaxLevv Collections Collection CY 2016 $ 368,263,159 $ 367,148, % CY , 112, ,506, % CY ,068, I,685, % DELINQUENT TAXES AND TAX TITLE LIENS This tabulation includes a comparison, expressed in percentage, of the total of delinquent taxes and tax title liens, in relation to the tax levies of the last three years. Amount of Amount of Percentage Tax Title Delinquent Total of Year Liens Taxes Delinquent Tax Levy CY 2016 $ 1,108,498 $ 17,370 $ 1,125, % CY ,174 36, , % CY ,222 62, , % -210-

217 PROPERTY ACQUIRED FORT AX TITLE LIEN LIQUIDATION The value of property acquired by liquidation of tax title liens on December 31, on the basis of the last assessed valuation of such properties was as follows: Amount CY 2016 CY 2015 CY 2014 $ 3,984, ,984, ,984, COMPARISON OF SEWER UTILITY LEVIES AND COLLECTIONS Fiscal SEWER UTILITY Year Levies Collections* CY 2016 $ 18,845, $ 18,868, CY , 755, , 726, CY ,952, ,920, *Include collections against prior year balances. COMPARATIVE SCHEDULE OF FUND BALANCES Utilized in Budget of Year Succeeding Ended Balance Year (1) CY 2016 $ 10,844, $ 7,987, Current Fund CY ,989, ,736, CY ,731, ,000, Water Utility CY 2016 $ 0.32 None Operating Fund CY None CY None Sewer Utility CY 2016 $ 2,094, $ 262, Operating Fund CY , None CY , None Transferred to Current Fund in Succeeding Year NIA NIA NIA None None None None None None

218 TOWNSHIP OF EDISON COUNTY OF MIDDLESEX, NEW JERSEY REQUIRED SUPPLEMENTARY INFORMATION POSTEMPLOYMNET HEALTH BENEFITS SCHEDULE OF FUNDING PROGRESS Actuarial Valuation Date Actuarial Value of Assets Actuarial accrued Unfunded AAL Funded Liabilitv CAAL) (UAAL) Ratio Covered Payroll UAALas a Percentage of Covered Pavroll 12/31/08 $ - $ 208,850,224 $ 208,850, % $ 68,249, % 12/31/11-264,749, ,749, % 67,566, % I N... N I 12/31/15-287,176, , 176, % 64,536, %

219 OFFICIALS IN OFFICE AND SURETY BONDS The following officials were in office on December 31, 2016: NAME TITLE AMOUNT OF BOND NAME OF CORPORATE SURETY Thomas Lankey - Mayor Michael Lombardi Alvaro Gomez Joseph Coyle (from June22, 2016) Robert Diehl Ajay Patil Leonard D. Sendelsky Sapana Shah Robert Karabinchak (to May 25, 2016) - Council President - Council Vice President - Councilperson - Councilperson - Councilperson - Councilperson - Councilperson - Councilperson Maureen Ruane - Business Administrator $1,000, Blanket Municipal Excess Liability Joint Insurance Fune William Northgrave, Esq. - Director of Law, Township Attorney 1,000, Blanket Municipal Excess Liability Joint Insurance Fun1 Thomas Bryan Nicholas Fargo Denise Halliwell - Chief of Police - Chief Financial Officer, Director of Finance - Director of Parks & Recreation 1,000, Blanket 1,000, ,000, Blanket Municipal Excess Liability Joint Insurance Fun1 Municipal Excess Liability Joint Insurance Fune Municipal Excess Liability Joint Insurance Fun1 ~ Jay P. Elliot CJ.) - Health Officer, Director of Health & Human Resources - Director of Public Works 1,000, Blanket Municipal Excess Liability Joint Insurance Fune Cheryl Russomanno Lina Vallejo Victoria Riddle Gary Price Kelly Sommer Laura Popick John Soltesz - Township Clerk, Supervisor of Elections Tax Collector, Tax Search Officer - Tax Assessor - Presiding Municipal Magistrate - Court Administrator - Purchasing Agent - Construction Code Official 1,000, Blanket 1,000, ,000, Blanket 1,000, Blanket 1,000, Blanket 1,000, Blanket 1,000, Blanket Municipal Excess Liability Joint Insurance Fune Municipal Excess Liability Joint Insurance Fun1 Municipal Excess Liability Joint Insurance Fune Municipal Excess Liability Joint Insurance Fune Municipal Excess Liability Joint Insurance Fun1 Municipal Excess Liability Joint Insurance Fun1 Municipal Excess Liability Joint Insurance Fun1 All of the above bonds were examined and found to be properly executed.

220 PART VI-GENERAL COMMENTS AND RECOMMENDATIONS -214-

221 TOWNSHIP OF EDISON COUNTY OF MIDDLESEX, NEW JERSEY YEAR ENDED DECEMBER 31, 2016 GENERAL COMMENTS An audit of the financial accounts and transactions of the Township of Edison, County of Middlesex, New Jersey, for the year ended December 31, 2016, has been completed. The General Comments are herewith set forth: Scope of Audit The audit covered the financial transactions of the Finance Department and the other various offices and departments collecting fees within the Township of Edison, County of Middlesex, New Jersey. The audit did not and could not determine the character of services rendered for which payment had been made or for which reserves had been set up, nor could it determine the character, proper price or quantity of materials supplied for which claims had been passed. Cash on hand was counted and cash and investment balances were reconciled with independent certifications obtained directly from the depositories. Revenues and receipts were established and verified as to source and amount insofar as the records permitted. INTERNAL CONTROL MATTERS In planning and performing our audit of the financial statements of Township of Edison, County of Middlesex, New Jersey as of and for the year ended December 31, 2016, in accordance with auditing standards generally accepted in the United States of America, we considered the Township's internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Township's internal control. Accordingly, we do not express an opinion on the effectiveness of the Township's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity's financial statements that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity's internal control

222 GENERAL COMMENTS INTERNAL CONTROL MATTERS (CONT'D.) With respect to the reporting of internal control matters, standards require that only a significant deficiency and/or a material weakness need be reported in writing to management and those charged with governance. The control deficiencies reported are not considered to be material weaknesses. In addition, these control deficiencies are not required to be reported in writing, however, control deficiencies are presented to management and those charged with governance in this report as a means to present those matters identified in review of the Township's internal controls and as a means to inform management and those charged with governance as to the auditing standards requirements with respect to internal controls. As indicated below, we identified certain deficiencies in internal control that we consider to be control deficiencies. In addition, during our audit, we noted certain matters involving the internal control and other operational matters that are presented for your consideration. This letter does not affect our report dated June 30, 2017 on the financial statements of the Township of Edison. Our comments and recommendations, which have been discussed with appropriate members of management, are intended to improve the internal control or result in other operating efficiencies. Control Deficiencies: We consider the following deficiencies to be control deficiencies in internal control: Segregation of Duties Conditions exist whereby the same person may collect, record and deposit cash receipts in the following offices - Licenses & Permits, Recreation, Animal Shelter, Engineering, Police Records Clerk, Health, and Construction Code. This condition is the result of the staffing levels of the respective offices Documentation of Components oflnternal Control As required by Statement on Auditing Standards No. 115, a new standard with an implementation schedule, which covers audits of financial statements for periods ending on or after December 15, 2006, entities subject to audit are required to provide independent auditors with documentation of the various components of its internal controls. The Township should consider documenting the various components of its internal controls

223 GENERAL COMMENTS INTERNAL CONTROL MATTERS (CONT'D.) Controls for Tracking of Compensated Absences The Township's payroll processing system is the logical focal point for internal controls over the record keeping function for accumulated sick and vacation days. The system is capable of tracking days earned, used and remaining, and can provide a payroll by payroll record to each employee of days used. The mathematical integrity of the system and its reporting capabilities make the system's control features superior to any alternative recordkeeping process. However, and as has been the practice for many years, we noted that the Police and Fire Divisions maintain the "official" records of compensated absences earned, used and available for each of their employees. These off-system records may be subject to the risk that errors and omissions in the entries of activity could occur and remain undetected, as the payroll or finance offices perform no formal proofs. The Township has purchased a new financial/human resource module (Edmunds) software that includes record keeping of compensated absences that has been fully implemented with the exception as discussed more fully in a subsequent comment, no effort has been undertaken to bring the tracking of police and fire compensated absences under the umbrella of the new system. OTHER MATTERS Contracts and Agreements Required to be Advertised Per N.J.S.A. 40A: 11-4 N.J.S.A. 40A: 11-4 states "every contract awarded by the contracting agent for the provision or performance of any goods or services, the cost of which in the aggregate exceeds the bid threshold, shall be awarded only by resolution of the governing body of the contracting unit to the lowest responsible bidder after public advertising for bids and bidder therefore, except as is provided otherwise in this act or specifically by any other law. The governing body of a contracting unit may, by resolution approved by a majority of the governing body and subject to subsections b. and c. of this section, disqualify a bidder who would otherwise be determined to be the lowest responsible bidder, if the governing body finds that it has had prior negative experience with the bidder. The governing body of the Municipality has the responsibility of determining whether the expenditures in any category will exceed $17, within the fiscal year. Where question arises as to whether any contract or agreement might result in violation of the statute, the Township Counsel's opinion should be sought before a commitment is made. On September 28, 2015, the Local Public Contracts Law was amended, effective on July 1, The amendment addresses the bid threshold (Section 7, N.J.S.A. 40A:l 1-3), thereby increasing the amount from $36, to $40, under which a contract may be awarded without public advertising for those municipalities that have appointed a Qualified Purchasing Agent. The maximum bid threshold remains at $17, for those municipalities that do not have a Qualified Purchasing Agent. The minutes indicate that bids were requested by public advertising for the following items:

224 OTHER MATTERS Contracts and Agreements Required to be Advertised Per N.J.S.A. 40A: 11-4 (cont'd.) Although the Township does have a QPA, the bid threshold has been set by the governing body at $17,500. Materials and Supplies: Tires and Tubes; Ground Materials; Brine/Pre-Treated Rock Salt, Uniforms for various personnel; Automotive Parts and Accessories; Construction Materials; Promotional Items, Trophies and Awards; Office Supplies; Lubricants, Fluids and Antifreeze Equipment: Refuse Collection Vehicles; Mobile Video Recorders; (2) Fire Pumpers; Traffic Warning/Street Signs; Ford F-250 with Plow and Spreader; Freightliner Medium Duty Dump Box and Spreader with Snow Plow; Broadcast Hardware; Street Sweeper; Playground Equipment Installation; Side Mount Stainless Steel Pumper Contracts: Printing Services; Emergency Sanitary Collection System Repairs; Emergency Traffic Signal Repairs; Collision Repairs; Maintenance and Repair for Heavy Duty Vehicles; Veterinary Care Services; Emergency Bypass Connections and Wet Well Rehabilitation for Pump Stations; Talmadge Road Resurfacing (Phase II); Curb and Sidewalk Replacement Program; Road Resurfacing Program Phase I (Various Streets); Emergency Pump Station Repairs; Elevator Maintenance and Repair; Pavement Milling and Tack Coating State Approved Contracts for the Following Purchases: Computer Equipment; Janitorial and Hardware Supplies; Portable Radios and Accessories; Snow Plow Parts and Grader and Loader Blades; Body Armor Vests; Emergency Notification System; Cellular Phone Service and Wireless Cards; Practice Ammunition; 911 Phone System Upgrade; Thermal Imaging Cameras The minutes indicate that resolutions were adopted and advertised authorizing the awarding of contracts or agreements for "Professional Services" per N.J.S.A. 40A: Inasmuch as the system of records did not provide for an accumulation of payments for categories for the performance of any work or the furnishing or hiring of any materials or supplies, the results of such an accumulation could not reasonably be ascertained. Disbursements were reviewed, however, to determine whether any clear-cut non-compliance existed. Our review revealed that no violations existed. Any interpretation as to possible violation ofn.j.s.a. 40A: 11-4 and N.J.A.C. 5:30-14 would be in the province of the municipal solicitor

225 GENERAL COMMENTS Pay-to-Play and Business Registration Requirements An anomaly exists in the "Pay-to-Play" statutes when they are matched with the LPCL requirements to determine compliance requirements. The threshold for Pay-to-Play is set at $17,500 with no escalator provision. At the time c.271 was enacted, the bid threshold per LPCL was also set at $17,500. However, effective July 1, 2005, the bid threshold was increased to $21,000. Subsequent adjustments by the Governor pursuant to the enabling statute. This created a gap for compliance, as under c.271, a contract not awarded using a fair & open process and exceeding $17,500 triggers the filing of additional documentation relating to ownership of the contracting entity and disclosure of political contributions. Since "Pay-to-Play" laws cover all contracts (not just professional services as some believe) any contract (or aggregation of purchases of similar goods or services) that does not meet "fair and open" standards requires the Township to obtain the necessary c.271 documents. The provisions of c.271 became effective on January 1, One of the beneficial aspects of the Township's decision to operate its procurement function using a bid threshold of $17,500 is that the "Pay-to-Play" threshold and LPCL threshold remain in synch. Collection oflnterest on Delinquent Taxes and Assessments The statute provides the method for authorizing interest and the maximum rates to be charged for the nonpayment of taxes or assessments on or before the date when they would become delinquent. The governing body, on January 27, 2016, adopted a resolution authorizing interest to be charged on delinquent taxes and assessments, as follows: 8% Interest on Amounts up to $1, on Delinquent Tax and Assessment Accounts: 18% Interest on Amounts from $1, and above on Delinquent Tax and Assessment Accounts: Ten (10) Day Grace Period An examination of the collector's records indicated that interest on delinquencies was calculated in accordance with the foregoing resolution, for items tested. Employee Health Benefits The Township provides a prescription drug plan and a dental plan to eligible employees and retirees through self-insured programs and has engaged GS POPS and Horizon Healthcare Dental to administer each plan, respectively. In addition to the appropriations for these plans contained in the annual budgets of the Township, the Township has established an additional reserve for payments in the event claims during a fiscal year exceed the amounts budgeted. At December 31, 2015, the amount in this reserve was $149, During 2016, the claims paid during the year exceeded the amounts budgeted and as a result an amount of $745,184.79, net of refunds was charged to the reserve. In addition, an amount of $768, was transferred from the appropriation reserve balance. The balance remaining at December 31, 2016 is $173,

226 GENERAL COMMENTS Employee Health Benefits (cont'd.) As claims made in self-insured programs generally require days to be processed and disbursed from Township accounts it is likely that the remaining reserve balance would not be sufficient to fund the "runout" costs of claims incurred at December 31, 2016, but not paid. If the existing reserve balance is not adequate to liquidate unpaid claims at year-end, an unrecorded contingent liability would exist. Should the Township seek to revert to a premium based, risk transfer method of providing employee health coverage, the excess of ultimate "run-out" claims paid over the reserve balance at such time would need to be included in the budget appropriations for the first year of policy coverage in addition to the policy premiums for the year. We recommend that the Township review its policy with regards to adequately budgeting the appropriate amount for employee health benefits. Delinquent Taxes and Tax Title Liens A tax sale was held on December 19, 2016, and was complete. Properties that were in bankruptcy proceedings were excluded from the sale. The status of these properties should be monitored to assure that the Township protects its right to collect delinquent taxes and that these properties are exposed to tax sale proceedings at the earliest legal date. The following comparison is made of the number of tax title liens receivable for December 31, 2016 and for the last two years: Total Tax Sewer Year Liens Liens Liens CY CY CY The Township maintains a foreclosure program for tax title liens that become subject to In Rem Foreclosure. Subject liens have been assigned to attorneys and are in process of foreclosure. State Tax Appeals Based upon adjudication or settlement of taxpayer appeals filed with the New Jersey Tax Court, during 2015 the Township of Edison paid refunds on State Tax Appeals in excess of $5,400, Of this total, $2,000,000 had been funded through current year budget appropriations and "set-asides" from current tax collections. To provide funding for the refunds, the Township sought and received approval from the Local Finance Board to finance up to $12,175,000 of tax appeal settlement refunds over a five-year period. An additional appropriation of $2,000,000 was included in the Township's 2017 budget. The Township paid down $2,029,167 of the funding and issued Bond Anticipation Notes in the full amount of $10,145,

227 GENERAL COMMENTS State Tax Appeals (cont'd.) Based upon the provisions of the Tax Levy Cap Law, it has become increasingly difficult to fund the reserve for tax appeals through the budgetary process. Accordingly, the funding of the reserve will likely be the result of assessor certifications of tax collections from properties under appeal that have been reserved. This alternate funding procedure is permitted by N.J.S.A. 54:3-27. Unfortunately, this method of funding results in a dollar for dollar reduction in the Current Fund Balance available for budget balancing. Although the Township has dramatically increased its provision for tax appeal losses, these efforts have not kept pace with the decline in the value of the Township's commercial and industrial ratable base. Furthermore, a large volume of appeals remains outstanding for the 2016 and 2017 assessment years. The harsh reality for the Township is that the impact of the economic recession on the commercial and industrial tax base has been so severe that the tax appeal costs and settlements will demand an ever-increasing percentage of the Township's financial resources unless or until statutory relief is provided or a significant economic rebound occurs. On a more positive note, data relating to 2016 and 2017 tax appeals indicate significant stabilization in the ratable base and decreased loss exposure relating to tax appeals for these years. Interfund Balances At December 31, 2016, the balance sheets of the following funds include interfunds payable: Current Fund: Due to Grant Fund Trust-Other Fund: Due to Current Fund Due to Trust Assessment Fund Animal Control Fund: Due to Current Fund Assessment Trust Fund: Due to Current Fund Housing and Community Development Fund: Due to Current Fund Water Operating Fund: Due to Current Fund Due to Water Capital Fund Sewer Operating Fund: Due to Sewer Capital Fund $1,579, , , , , , , ,246,

228 GENERAL COMMENTS Interfund Balances (cont'd.) The amounts payable by the Sewer Capital Fund represents the cash transferred from the Operating Fund to finance capital projects of the Utility. If permanent financing of this project through the issuance of debt is not contemplated, the Township should consider a budget appropriation to eliminate the loan and finance the sewer project from the fund balance of the Water Operating Fund. Subsequent to the balance sheet date, the Township liquidated the majority of the interfunds. As a result, no recommendation is made. Investment of Idle Funds The chief financial officer had most of the idle funds of the Township invested in the interest-bearing investments or accounts from January 1, 2016 to December 31, Earnings from the investments are shown as revenue in the various accounts of the Township as of December 31, The investment program instituted by the finance officer was complete with minimal balances remaining in demand accounts. This policy complied with N.J.S.A. 40A: 5-14 in all respects. All investments held by the Township were directly confirmed as of December 31, Purchase Order System and Encumbrance System The Township budgetary operation is on a full encumbrance system with the exception of payrolls and other direct costs. All purchases are made directly by the purchasing department or subsequently confirmed on an emergency basis. Test of the system disclosed that compliance during 2016 was good. It was noted that there was a large amount of confirming orders during the year. Confirming order is the term given to a procurement transaction when a commitment to purchase is made by an employee prior to the submission of a requisition, the formal approval of management to purchase, the determination that the funds are available to pay for the contemplated purchase, and the determination that all requisite compliance requirements have been addressed prior to the commitment of funds. Confirming orders are often the root cause of a variety of compliance problems, and most significantly, can result in overexpenditures of appropriations. Management should meet with the departmental personnel in the departments that are most frequently circumventing established purchase order procedures to identify any conditions that are making compliance difficult and effect any necessary changes or educate the staff to assure proper planning and expected time lines. Blanket orders and other outstanding encumbrances were reviewed at the close of the year, and adjustments and cancellations were made where appropriate to reflect actual commitments outstanding for budgetary control. Compliance to certification of availability of funds was reviewed and found to be good. It is recommended that the use of confirming orders for procurement cease

229 GENERAL COMMENTS Other Officials Collecting Fees Our reviews of the records maintained for other officials collecting fees were designed to determine that minimum levels of internal controls and accountability were met, that cash receipts were deposited or turned over to the Treasurer's accounts within a 48-hour period as required by N.J.S.A. 40A: 5-15, that amounts charged were in accordance with the provisions of the Township Code and that monthly financial reports are being submitted to the Finance Department timely. There were no exceptions noted for items tested. Payment of Claims The examination did not and could not determine the character of services rendered for which payment had been made or for which reserves had been set up, nor could it determine the character, proper price or quantity of materials supplied for which claims had been passed. Authorization for payment of claims is delegated to the Director of Finance and bill lists are submitted to the Township Council for approval and recorded as a supplement to the official minutes. Claims were examined on a test basis for the year under review and were found to be in good order. Sewer Utility Fund The Sewer Utility operations for 2016 as shown on Exhibit "E-1" resulted in excess revenues of $1,309, The calculation of excess revenues for the purpose of preparing the Annual Debt Statement resulted in an excess of $99,065.68, which allows for the total deductions of the Sewer Utility's authorized debt of $13,727, in the calculation of statutory net debt. A reconciliation of excess revenues from operations (Exhibit E-1) and the excess in revenues for debt statement purposes is included in Note 4 of the "Notes to Financial Statements". Water Utility Fund The operation of the Township's water supply facilities was privatized as of July 1, 1997, for a minimum period of twenty years. The financial records of the Water Utility indicate that at the time of privatization, that over $955,000 of capital costs had been temporarily financed with loans from the Township's sewer utility. This situation limits the use of sewer operating surplus to finance system improvements. Since there is no revenue stream to finance these costs, the Division of Local Government Services has indicated that the Township needed to address this matter in the SFY 2010 budget. However, during 2013 the Township decided to permanently finance these projects. These payments will increase the amounts required to be funded through the Township's general budget

230 GENERAL COMMENTS Personnel Records The Township's personnel records have been maintained on a proprietary software package built "inhouse" by former employees. This software is not integrated into the payroll system, and has had several issues relating to functionality and database maintenance. A review of these records revealed that the Township has not been able to maintain accurate records of employees eligible to receive health benefits. The Township had the capability to compile a list of employees, active and retired, their dependents, and their coverage type. The program has not been working properly, and as a result it has not been maintained in over four years. Essentially, this software problem has precluded the maintenance of a master list of those eligible for benefits. However, the absence of such a list would not eliminate the Township's ability to review claims for proprietary, as it could verify information to active employees and recent retirees from the payroll system. However, the internal problem was compounded by the lack of detailed lists of claims paid by their health insurance carrier and as a result, there was no existing verification procedure to assure that claims were being paid only for active employees, eligible retirees, or those paying for COBRA coverage. The Township has continued to request and receive the detailed lists of claims being paid in order to verify the accuracy of their health insurance bills. We suggest that the Township continue to review their system and procedures to insure they maintain the capability to verify the accuracy of their insurance bills and to verify the accuracy of all covered lives. We also noted that the terms of employment for a few management level employees have been established through individual employment agreements. The Township currently consults with its benefits experts and legal advisors to assure that there are no conflicts with the anti-discrimination provisions of the internal revenue code. We suggest that such consultations be memorialized by a writing as evidence of due diligence regarding compliance with anti-discrimination requirements for any employee with a negotiated employment agreement. Financial and Budgetary Records The Township maintains a detailed, computerized subsidiary ledger for each of its budgets. The software package permits the entry of non-cash charges and adjustments. These adjusting entries are made in the general journal and are recorded in the general ledger control account. In the current year audit, we noted that, the payroll costs are required to be posted manually into the financial accounting records from payroll distribution reports. Revisions to the Township's payroll system are currently ongoing and include efforts to fully integrate the systems and to properly train employees on the use of the system. Condition of Records -Tax Collector's Office The condition of the records maintained by the Division was good. Computerized cash receipt records were proved to manual controls daily and in total monthly. The Comptroller obtains relevant reports relating to billings, cash collections and balances from the Tax Collector each month and proves general ledger balances to these records

231 GENERAL COMMENTS Dedication by Rider During the prior audit, we noted several Trust Fund reserves in which Dedication by Rider resolutions had not been prepared. Corrective actions have been taken in Payroll Records The condition of the records maintained by the Payroll Department was good. There were no exceptions for the items tested. In the prior year audit, it was noted that there were certain reports including payroll registers that were requested that were not provided for audit. During the current year, all reports that were requested were provided for audit. Condition of Records - Finance Office The condition of the records maintained by the Division was good. Computerized cash receipt records and cash disbursement records were proved on a monthly basis. Bank reconciliations are performed monthly and proofed to the general ledger. Implementation of P.L. 2007, c.92 Changes During 2007, the State enacted legislation that impacted the Township during its SFY 2009 budget and required a review of the status of the current employee rolls. This legislation created a new retirement program for certain classes of employees that is a defined contribution retirement program rather than the defined benefit programs that the existing PERS and PFRS systems represent. The law also precludes pension system participation for professionals providing services under professional services agreements. Of additional significance is the provision within this legislation that caps future accumulations of sick and vacation pay that may be paid to employees at separation from service, and limits carryovers of unused vacation days to one year except for circumstances of declared statewide emergencies. It is essential that both the Human Resource and Payroll divisions be fully conversant with the provisions of this legislation to assure that new employees are properly enrolled and that compensated absences are capped as required. Implementation of P.L. 2011, c.78 Of even greater significance, P.L. 2011, c. 78, requires public employees to contribute to the cost of postemployment health benefit costs if they had not accrued a minimum of 20 years of service in a state administered retirement system as of June 28, Contributions would be required from employees taking retirement in 2015 without attaining "normal retirement" status. More importantly, as any employee achieving normal retirement status after June 28, 2016 will be required to make contributions of post-retirement health care cost. It is essential that a process be established to identify retirees with a contribution requirement and establish rules for the billing of such costs and the timely payment of such contributions to retain benefits eligibility. Accounting for Compensated Absences Earned and Used In the prior year audit, we noted that at a minimum, the Township should review its current employee roster and identify any current employees who may be required to migrate to the new pension program, and identify positions and personnel that, in the event of a break in service as defined in the law, would also be forced out of the existing system

232 GENERAL COMMENTS Accounting for Compensated Absences Earned and Used (cont'd.) The status of any employee subject to state licensure and not specifically exempted form the law must be reviewed, in the context of both the IRS regulations for determination of employee/independent contractor status and the provisions of this legislation. In this environment, the notes to future financial statements relating to the accumulated liability should include dual reporting; First, the total value of days earned and unused available to employees as leave, and, Second, the maximum terminal leave payments that would be required at the close of each year based upon the new limitations imposed by this law. We would also suggest that the utilization of sick days continued to be monitored to determine if this new legislation has the unintended consequence of increased utilization of sick days. Should utilization of sick days increase, the Township could face additional overtime costs or a need to increase staffing levels. The Township has begun the process mentioned above. Computerized spreadsheets are used to show the information on a department-by- department level. The individuals within the department are then shown with the number of hours and the calculated balances. However, the police and fire departments continue to maintain their own records and have not integrated into the new financial/human resources module (Edmunds) software. Administration and Accounting for State Grant Programs During 2016, the Township operated programs, which were funded in whole or in part by state or federal grant awards. As part of the acceptance of these funds, the Township is required to make assurances to the grantor agency that it will comply, in its general operations as well as in the operation of grant funded programs, with various laws and regulations. In addition, the individual grant contracts impose specific compliance requirements for the operations of each program. The examination of these grant programs indicated that the Township has expended grant funds during 2015 for the purposes authorized and no material weaknesses in the internal control system or material instances of noncompliance were noted. The acceptance of grant funds also places additional requirements upon the Township with respect to the Township's system of internal controls. Based upon the matrix of requirements applicable to a specific grant, the Township's internal controls are required to include systems and policies and procedures designed to ensure compliance with the applicable requirements. We noted that the Township continues to carry unexpended balances of state awards that are several years old. This condition may have resulted from the decentralized management of the various grant programs. In the current environment, it is possible that grant program coordinators may have reported expenditures that were not charged to grant program appropriations. We suggest that the Township continue to monitor prior year unexpended grant funds and proper disposition should be made in compliance with the terms of grant awards. In accordance with OMB Uniform Guidance and NJ OMB Circular 15-08, the responsibility of preparing the Schedules of Federal Awards and State Financial Assistance is that of the Township. At a minimum, the schedule shall (1) list individual federal or state programs by agency, and (2) provide total awards expended for each individual Federal or State program and the CFDA or State account number. The audit procedures, which were applied in the tests of grant programs, did not disclose material instances of noncompliance with the terms and conditions of the grant agreements and assurances made in acceptance of these grant funds