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HomeMy Public PortalAbout2021 Audit ReportBOROUGH OF FRANKLIN LAKES BERGEN COUNTY, NEW JERSEY REPORT OF AUDIT YEAR ENDED DECEMBER 31, 2021 Exhibits A A-1 A-2 A-3 B C C-1 D D-1 D-2 D-3 E 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 BOROUGH OF FRANKLIN LAKES TABLE OF CONTENTS PART I -Report on Audit of Financial Statements and Supplementary Schedules Independent Auditor's Report Financial Statements Comparative Balance Sheets -Regulatory Basis -Current Fund Comparative Statements of Operations and Changes in Fund Balance - Regulatory Basis -Current Fund Statement of Revenues -Regulatory Basis -Current Fund Statement of Expenditures-Regulatory Basis-Current Fund Comparative Balance Sheets -Regulatory Basis -Trust Funds Comparative Balance Sheets -Regulatory Basis -General Capital Fund Comparative Statements of Changes in Fund Balance -Regulatory Basis - General Capital Fund Comparative Balance Sheets -Regulatory Basis -Sewer Utility Fund Comparative Statements of Operations and Changes in Fund Balance - Regulatory Basis -Sewer Utility Operating Fund Statement of Revenues -Regulatory Basis -Sewer Utility Operating Fund Statement of Expenditures -Regulatory Basis -Sewer Utility Operating Fund Comparative Balance Sheets -Regulatory Basis -General Fixed Assets Account Group Notes to Financial Statements Supplementary Schedules Current Fund Statement of Current Cash -Collector-Treasurer Statement of Change Fund Statement of Petty Cash Statement of Grants Receivable Statement of Due to State of New Jersey- Senior Citizens' and Veterans' Deductions Statement of Taxes Receivable and Analysis of Property Tax Levy Statement of Tax Title Liens Statement of Revenue Accounts Receivable Statement of Appropriation Reserves Statement of Encumbrances Payable Statement of Reserve for Grants -Appropriated Statement of Reserve for Grants -Unappropriated Statement of Prepaid Taxes Statement of Tax Overpayments Statement of County Taxes Payable Statement of Local District School Taxes Payable Statement of Regional High School Taxes Payable Statement of Reserves for Tax Appeals Pending Statement of Fees Payable Statement of Reserve for Recreation Online Fees Statement of Reserve for Covid-19 Reimbursements 1-3 4-5 6-7 8-11 12-17 18-19 20 21 22 23 24 24 25 26-61 62 63 63 64 65 66 67 68 69-71 72 73 73 74 74 75 75 75 76 76 76 76 Exhibits 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 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 D-4 D-5 D-6 BOROUGH OF FRANKLIN LAKES TABLE OF CONTENTS (Continued) Supplementary Schedules (Continued) Trust Funds Statement of Trust Cash -Collector-Treasurer Statement of Reserve for Animal Control Expenditures Statement of Due to State of New Jersey-Animal Control Trust Fund Statement of Reserve for Affordable Housing-Other Trust Fund Statement of Payroll and Deductions Payable-Trust Fund Statement of Due to Current Fund -Other Trust Fund Statement of Miscellaneous Reserves-Other Trust Fund Statement of Reserve for Escrow Deposits -Other Trust Fund Statement of Due to State of New Jersey-Unemployment Trust Fund Statement of Reserve for Expenditures-Unemployment Trust Fund Statement of Assessment Receivable -Assessment Trust Fund Statement of Due to Current Fund -Assessment Trust Fund Statement of Due to General Capital Fund -Assessment Trust Fund General Capital Fund Statement of Cash -General Capital Fund Analysis of General Capital Cash Statement of Grants Receivable Statement of Deferred Charges to Future Taxation-Funded Statement of Deferred Charges to Future Taxation -Unfunded Statement of General Serial Bonds Statement of Improvement Authorizations Statement of Encumbrances Payable Statement of Capital Improvement Fund Statement of Reserve for CO AH-RCA Debt Statement of Reserve for Future Capital Projects Statement of Reserve for Payment of Debt Statement of Bonds and Notes Authorized But Not Issued Sewer Utility Fund Statement of Cash-Treasurer Statement of Sewer User Fees Receivable Statement of 2020 Appropriation Reserves 77 78 79 79 80 80 81 81 82 82 83 84 84 85 86 87 88 89 90 91 92 92 93 93 93 94 95 96 96 BOROUGH OF FRANKLIN LAKES TABLE OF CONTENTS (Continued) Part II -Government Auditing Standards 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 Schedule of Expenditures of Federal Awards, Schedule A Schedule of Expenditures of State Financial Assistance, Schedule B Notes to Schedules of Expenditures of Federal Awards and State Financial Assistance Schedule of Findings and Responses Part III Comparative Statement of Operations and Changes in Fund Balance - Current Fund Comparative Statement of Operations and Changes in Fund Balances - Sewer Utility Fund Comparative Schedule of Tax Rate Information Comparison of Tax Levies and Collection Delinquent Taxes and Tax Title Liens Comparative Schedule of Fund Balances Officials in Office and Surety Bonds General Comments Recommendations 97-98 99 100 101 102 103 104 105 105 106 106 107 108-109 110 BOROUGH OF FRANKLIN LAKES COUNTY OF BERGEN PART I REPORT ON AUDIT OF FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES YEAR ENDED DECEMBER 31, 2021 LERCH / VINCI & BLISS / LLP DIET ER P. LERCH, CPA, RMA, PSA GARY J. VINC I, CPA, RMA, PSA JEFFREY C. BLISS, CPA, RMA, PSA PAULJ. LERCH, CPA, RMA, PSA JULI US B. CONSONI, CPA, PSA ANDREW D. PARENTE, CPA, RMA, PSA Honorable Mayor and CERT IFIED PUB LI C ACCOUNT AN TS REG ISTERED MUN ICIPA L ACCOUN T ANTS INDEPENDENT AUDITOR'S REPORT Members of the Borough Council Borough of Franklin Lakes Franklin Lakes, New Jersey Report on the Audit of Financial Statements Opinions ELI ZABET H A SH ICK, CPA, RMA, PSA ROBERT W HAAG, CPA, RMA, PSA DEBRA GOL LE, CPA MARK SACO, CPA ROBERT LERCH, CPA CHR ISTOPHER VINC I, CPA, PSA CHR ISTI NA CU IFFO, CPA We have audited the accompanying balance sheets -regulatory basis of the various funds and account group of the Borough of Franklin Lakes, as of December 31, 2021 and 2020, and the related statements of operations and changes in fund oalattce----=---re-grrlatnry basis for the-ye-ars th-en-ended, and the related statement ofTevenues~regofatory-basis and statement of expenditures -regulatory basis of the various funds for the year ended December 31, 2021, and the related notes to the financial statements. Unmodified 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 account group of the Borough of Franklin Lakes as of December 3 1, 2021 and 2020, and the results of operations and changes in fund balance -regulatory basis of such funds for the years then ended and the respective revenues -regulatory basis and expenditures -regulatory basis of the various funds for the year ended December 31, 2021 in accordance with the financial accounting and reporting provisions and practices prescribed by the Division of Local Government Services, Department of Community Affairs , State of New Jersey as described in Note 1. 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 section of our report, the financial statements referred to above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of each fund of the Borough of Franklin Lakes as of December 31, 2021 and 2020, or changes in financial position, or, where applicable, cash flows for the years then ended. Basis.for Opinions W e conducted our audits in accordance with auditing standards gene rally accepted in the United States of America, the sta nd ards applicable to financial audits contained in Government Auditing Standards issued by the Comptro ll er Genera l of the United States and the audit requirements prescribed by the Division of Local Government Services, Depa11rnent of Community Affairs, State of New Jersey. Our responsibilities under those standards are fut1her described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Borough of Franklin Lakes and to meet our other ethical responsibilities , in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 17-17 RO UT E 208 · FAIR LAWN, NJ 07410 · T ELEPHO N E (201) 79 1-7 100 · FACS IMI LE (201) 79 1-3035 WWW.LV~CPA.COM Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As described in Note 1 of the financial statements, the financial statements are prepared by the Borough of Franklin Lakes on the basis of the financial accounting and reporting provisions and practices that demonstrate compliance with the regulatory basis of accounting and budget laws prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to meet the financial reporting requirements of the State of New Jersey for municipal government entities. The effects on the financial statements of the variances between the regulatory basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material and pervasive. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with the financial accounting and reporting provisions and practices that demonstrate compliance with the regulatory basis of accounting and budget laws prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey as described in Note 1. 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 misstatements, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Borough of Franklin Lakes' ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor's Responsibilities for the Audit of Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards and audit requirements prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards and audit requirements prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, we: • Exercise professional judgement and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit 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 Borough of Franklin Lakes' internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Borough of Franklin Lakes' ability to continue as a going concern for a reasonable period of time. 2 We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control -related matters that we identified during the audit. Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements of the Borough of Franklin Lakes as a whole . The supplementary schedules listed in the table of contents, schedule of expenditures of federal awards and schedule of expenditures of state financial assistance are presented for purposes of additional analysis and are not a required part of the financial statements of the Borough of Franklin Lakes . Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary schedules listed in the table of contents, schedule of expenditures of federal awards and schedule of expenditures of state financial assistance are fairly stated, in all material respects, in relation to the financial statements as a whole on the basis of accounting described in Note 1. Other Information Management is responsible for the other information included in the report of audit. The other information comprises the supplementary data and letter of comments and recommendation section but does not include the financial statements and our auditor's repo1t thereon. Our opinions on the financial statements do not cover the other information , and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected..materiaLmisstatem.ent ofthe otherinfo.rmatio_n_exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 28, 2022 on our consideration of the Borough of Franklin Lakes' internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely 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 effectiveness of the Borough of Franklin Lakes' internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Borough of Franklin Lakes' internal control over financial reporting and compliance. ~·· /~· / 7k c!~/ CH, VINCI & BLISS LP ertified Public Accountants Fair Lawn, New Jersey June 28, 2022 3 Registered i-a Ace , (mtants e . erch Registered Munici al Accountant RMA Number CR00398 BOROUGH OF FRANKLIN LAKES COMPARATIVE BALANCE SHEETS -REGULATORY BASIS CURRENT FUND AS OF DECEMBER 31, 2021 AND 2020 ASSETS Reference Cash Change Fund Grants Receivable Receivables and Other Assets With Full Reserves Delinquent Property Taxes Tax Title Liens Revenue Accounts Receivable Due from Other Trust Fund Due from Assessment Trust Fund Total Assets The Accompanying Notes are an Integral Part of these Financial Statements 4 A-4 A-5 A-7 A-9 A-10 A-11 B-7 B-13 2021 $ 7,493,253 700 561,903 8,055,856 255,146 27,146 14,629 70 2,090 299,081 $ 8,354,937 $ $ EXHIBIT A Page 1 2020 6,872,376 700 590,908 7,463,984 503,772 13,387 8,584 222 2,518 528,483 7,992,467 BOROUGH OF FRANKLIN LAKES COMPARATIVE BALANCE SHEETS -REGULATORY BASIS CURRENT FUND AS OF DECEMBER 31, 2021 AND 2020 (Continued) LIABILITIES, RESER YES AND FUND BALANCE Reference Appropriation Reserves A-3, A-12 Encumbrances Payable A-13 Reserve for Grants -Appropriated A-14 Reserve for Grants -Unappropriated A-15 Prepaid Taxes A-16 Tax Overpayments A-17 Due to County for Added & Omitted Taxes A-18 Reserve for Tax Appeals A-21 Fees Payable A-22 Due to State of NJ -Senior Citizens/Veterans Deductions A-8 Reserve for Recreation Online Fees A-23 Reserve for COVID-19 Reimbursements A-24 Total Liabilities Reserve for Receivables and Other Assets A Fund Balance A-1 Total Liabilities, Reserves and Fund Balance The Accompanying Notes are an Integral Part of these Financial Statements 5 2021 $ 743,290 461,787 630,868 581,905 917,432 5,602 204,183 55,135 16,569 5,693 3,214 3,625,678 299,081 4,430,178 $ 8,354,937 EXHIBIT A Page 2 2020 $ 708,623 885,142 610,554 834,920 7,061 171,214 55,135 16,588 5,193 3,214 72,014 3,369,656 528,483 4,094,328 $ 7,992,467 BOROUGH OF FRANKLIN LAKES EXHIBIT A-1 Page 1 COMPARATIVE STATEMENTS OF OPERATIONS AND CHANGES IN FUND BALANCE - REGULATORY BASIS -CURRENT FUND FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 Reference REVENUE AND OTHER INCOME REALIZED Fund Balance Utilized Miscellaneous Revenue Anticipated Receipts from Delinquent Taxes Receipts from Current Taxes Non-Budget Revenue Other Credits to Income: Unexpended Balances of Appropriation Reserves Prior Year Interfunds Returned EXPENDITURES Budget Appropriations Operations Salaries and Wages Other Expenses Capital Improvements Municipal Debt Service Deferred Charges and Statutory Expenditures County Taxes Due County for Added Taxes Local District School Taxes Regional High School Tax Refund of Prior Year Revenue Refund of Prior Year Taxes Interfunds Established Less: Expenditures Included Above to Deferred Charges Adjusted Expenditures Statutory Excess to Fund Balance (Brought Forward) The Accompanying Notes are an Integral Part of these Financial Statements 6 A-2 A-2 A-2 A-2 A-2 A-12 A A-3 A-3 A-3 A-3 A-3 A-18 A-18 A-19 A-20 A-4 A-4 A 2021 $ 2,000,000 5,162,425 497,698 73,427,055 184,137 440,110 2,740 81,714,165 6,263,535 8,472,449 1,400,000 1,605,900 1,541,500 11,069,466 204,183 29,407,906 19,291,656 1,655 117,905 2,160 79,378,315 79,378,315 2,335,850 $ 2020 1,100,000 4,533,619 532,262 71,217,069 537,010 209,812 21,042 78,150,814 5,994,566 7,977,525 300,000 1,459,831 1,963,717 10,853,729 171,214 28,405,982 19,048,893 1,987 120,344 76,297,788 462,000 75,835,788 2,315,026 BOROUGH OF FRANKLIN LAKES EXHIBIT A-1 Page 2 COMPARATIVE STATEMENTS OF OPERATIONS AND CHANGES IN FUND BALANCE - REGULATORY BASIS -CURRENT FUND FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (Continued) Reference Statutory Excess to Fund Balance (Carried Forward) FUND BALANCE, January 1 Decreased by: Utilized as Anticipated Revenue FUND BALANCE, December 31 The Accompanying Notes are an Integral Part of these Financial Statements 7 A A-1 A 2020 $ 2,335,850 $ 2,315,026 4,094,328 6,430,178 2,000,000 2,879,302 5,194,328 1,100,000 $ 4,430,178 $ 4,094,328 BOROUGH OF FRANKLIN LAKES STATEMENT OF REVENUES -REGULATORY BASIS CURRENT FUND FOR THE YEAR ENDED DECEMBER 31, 2021 Anticipated Reference Budget FUND BALANCE ANTICIPATED A-1 $ 2,000,000 MISCELLANEOUS REVENUES Licenses Alcoholic Beverages A-11 $ 10,000 Other A-2 13,900 Fees and Permits A-2 137,050 Fines and Costs -Municipal Court A-11 214,000 Interest and Costs on Taxes and Assessments A-2 162,700 Interest on Investments and Deposits A-2 377,300 Outside Police Employment A-11 70,000 Abandoned Property Fees A-11 64,400 Uniform Construction Code Fees A-11 840,000 Energy Receipts Tax A-11 1,775,732 Watershed Moratorium Offset Aid A-11 5,969 Shared Service -Borough of Oakland A-11 56,850 Public and Private Programs Offset with Appropriations Recycling Tonnage Grant A-7 Clean Communities Grant A-7 Drunk Driving Enforcement Grant A-7 3,922 Body Armor Replacement Program A-7 1,912 Drive Sober or Get Pulled Over A-7 CDBG -Handicap Improvements -Sr. Center A-7 Distracted Driving A-7 Private Donations A-7 100 Other Special Items of Revenue Uniform Fire Safety Act A-11 18,600 Cable T.V. Franchise Fee A-11 184,666 Lease of Land for Monopole-Sprint Co A-11 114,300 Recreation Program Fees A-11 154,900 Recycling Revenue A-11 6,000 VFW Parking Permits A-11 2,800 Reserve for Future Capital Projects A-11 119,300 Library Reimbursement A-11 189,700 Rental Fees -Community Center/ Field A-11 16,000 Child Care Facility Rent A-11 46,200 PILOT -Municipal A-11 54,400 Reserve for COVID Reimbursement A-24 67,325 Reserve for Payment of Debt A-11 121,463 Total Miscellaneous Revenues A-1 4,829,489 The Accompanying Notes are an Integral Part of these Financial Statements 8 Added by N.J.S.A. 40A:4-87 $ 18,319 29,938 5,923 15,000 5,957 20,400 95,537 EXHIBIT A-2 Pagel Excess or Realized (Deficit) $ 2,000,000 $ 10,000 $ 17,982 4,082 170,641 33,591 178,857 (35,143) 143,138 (19,562) 431,199 53,899 138,217 68,217 36,000 (28,400) 893,301 53,301 1,775,732 5,969 57,088 238 18,319 29,938 3,922 1,912 5,923 15,000 5,957 20,500 18,482 (118) 184,666 116,914 2,614 201,858 46,958 89,724 83,724 2,770 (30) 119,300 197,970 8,270 7,000 (9,000) 30,090 (16,110) 45,268 (9,132) 67,325 121,463 5,162,425 237,399 BOROUGH OF FRANKLIN LAKES STATEMENT OF REVENUES -REGULATORY BASIS CURRENTFUND FOR THE YEAR ENDED DECEMBER 31, 2021 (Continued) Anticipated RECEIPTS FROM DELINQUENT TAXES AMOUNT TO BE RAISED BY TAXES FOR SUPPORT OF MUNICIPAL BUDGET Local Tax for Municipal Purposes Minimum Library Tax Total General Revenue Non-Budget Revenue Reference Budget A-1, A-9 _$ __ 5_03~, 7_0_0 A-2 11,314,062 A-2 1,445,696 12,759,758 $ 20,092,947 A-1,A-2 The Accompanying Notes are an Integral Part of these Financial Statements 9 $ Added by N.J.S.A. 40A:4-87 95,537 $ Realized EXHIBIT A-2 Page2 Excess or (Deficit) 497,698 _$ -~<~6,_00~2) 12,913,148 1,599,086 1,445,696 14,358,844 1,599,086 22,018,967 $ 1,830,483 184,137 BOROUGH OF FRANKLIN LAKES STATEMENT OF REVENUES -REGULATORY BASIS CURRENT FUND FOR THE YEAR ENDED DECEMBER 31, 2021 (Continued) Reference ANALYSIS OF REALIZED REVENUES Allocation of Current Tax Collections Revenues from Collections A-9 Less: Allocated to School and County Taxes A-18, A-19, A-20 Balance for Support of Municipal Budget Appropriations Add Appropriation "Reserve for Uncollected Taxes" A-3 Amount for Support of Municipal Budget of Appropriations A-2 Licenses -Other Borough Clerk A-11 Board of Health A-11 A-2 Fees and Permits -Other Tax Collector A-11 Police Department A-11 Fire Prevention A-11 Planning Board A-11 Board of Health A-11 A-2 Interest and Costs on Taxes and Assessments Cash Receipts A-11 Due from Assessment Trust Fund B-13 A-2 Interest on Investments and Deposits Cash Receipts A-11 Due from Other Trust Fund B-7 A-2 The Accompanying Notes are an Integral Part of these Financial Statements 10 $ $ $ $ $ $ $ $ $ EXHIBIT A-2 Page 3 73,427,055 59,973,211 13,453,844 905,000 14,358,844 1,484 16,498 17,982 660 11,625 27,574 46,450 84,332 170,641 141,048 2,090 143,138 431,129 70 431 199 BOROUGH OF FRANKLIN LAKES STATEMENT OF REVENUES -REGULATORY BASIS CURRENT FUND FOR THE YEAR ENDED DECEMBER 31, 2021 (Continued) Delinquent Taxes Taxes Receivable Tax Title Liens ANALYSIS OF NON-BUDGET REVENUES Insurance Dividends/Refunds Bravo -Housewives Fee Road Openings Tree Specialist Fee Sale of Municipal Assets Police Department -Accident Reports/Firearms/ID Public Defender's Applications Administrative Fee -Senior CitizensNeterans Deductions Miscellaneous Reference A-9 A-10 A-2 A-1,A-2 The Accompanying Notes are an Integral Part of these Financial Statements 11 $ $ $ $ EXHIBIT A-2 Page4 491,426 6,272 497,698 21,760 4,800 6,800 12,700 35,000 3,279 2,400 880 96,518 184,137 BOROUGH OF FRANKLIN LAKES STATEMENT OF EXPENDITURES -REGULATORY BASIS CURRENT FUND FOR THE YEAR ENDED DECEMBER 31, 2021 Appropriations Budget After Expended Paid or Budget Modification Charged Reserved GENERAL APPROPRIATIONS OPERATIONS WITHIN "CAPS" General Government General Administration Salaries and Wages $ 321,150 $ Other Expenses 132,900 Mayor & Council Salaries and Wages 35,000 Other Expenses 19,800 Municipal Clerk Salaries and Wages 126,680 Other Expenses 68,000 Financial Administration Salaries and Wages 197,110 Other Expenses 42,100 Audit Services Other Expenses 49,500 Revenue Administration (Tax Collection) Salaries and Wages 78,600 Other Expenses 14,250 Tax Assessment Administration Salaries and Wages 40,150 Other Expenses 13,355 Reserve for Tax Appeals 100,000 Legal Services (Legal Department) Other Expenses 160,000 Engineering Services and Costs Salaries and Wages 54,035 Other Expenses 52,500 Land Use Administration Planning Board Salaries and Wages 4,600 Other Expenses 16,090 Zoning Board of Adjustment Salaries and Wages 3,300 Other Expenses 9,000 Zoning Official Salaries and Wages 17,990 Other Expenses Insurance Unemployment Insurance 5,000 General Liability 217,000 Worker's Compensation 201,000 Employee Group Health 1,754,252 Other Insurance Premiums 25,000 Health Benefit Waiver 65,000 The Accompanying Notes are an Integral Part of these Financial Statements 12 321,150 $ 315,594 $ 5,556 149,400 148,957 443 35,000 34,500 500 19,800 16,820 2,980 126,680 125,642 1,038 68,000 61,482 6,518 203,110 201,371 1,739 27,100 23,875 3,225 49,500 45,354 4,146 80,600 73,392 7,208 14,250 13,344 906 40,150 39,033 1,117 13,355 7,570 5,785 100,000 100,000 148,050 118,109 29,941 55,285 55,030 255 58,500 55,218 3,282 4,680 4,675 5 19,090 18,774 316 3,300 2,294 1,006 9,000 5,347 3,653 17,990 17,987 3 5,000 5,000 217,000 210,804 6,196 201,000 201,000 1,686,152 1,600,570 85,582 25,000 18,978 6,022 68,000 65,620 2,380 EXHIBIT A-3 Page I Cancelled BOROUGH OF FRANKLIN LAKES STATEMENT OF EXPENDITURES -REGULATORY BASIS CURRENT FUND FOR THE YEAR ENDED DECEMBER 31, 2021 (Continued) Appropriations Budget After Expended Paid or Budget Modification Charged Reserved GENERAL APPROPRIATIONS (Cont'd.) OPERATIONS WITHIN "CAPS" (Cont'd) Public Safety Police Department Salaries and Wages $ 3,347,700 $ Other Expenses 373,825 Office of Emergency Management Salaries and Wages 7,175 Other Expenses 9,575 Ambulance Service Other Expenses 87,375 Fire Department Salaries and Wages 6,100 Other Expenses 197,300 Uniform Fire Safety Salaries and Wages 53,875 Other Expenses 238,100 Municipal Court Salaries and Wages 146,500 Other Expenses 14,075 Municipal Court Public Defender Salaries and Wages 8,500 Municipal Prosecutor's Office Salaries and Wages 19,500 Public Works Streets and Road Maintenance Salaries and Wages 1,171,885 Other Expenses 642,900 Solid Waste Collection Other Expenses 541,500 Buildings and Grounds Other Expenses 332,000 Vehicle Maintenance (including Police) Other Expenses 265,000 Shade Tree Salaries and Wages 28,000 Other Expenses 17,000 Health and Human Services Board of Health Salaries and Wages 60,990 Other Expenses 135,300 Animal Control Services Other Expenses 15,000 Parks and Recreation Recreation Services and Programs Salaries and Wages 179,710 Other Expenses 251,050 Senior Citizens Programs Other Expenses 4,500 The Accompanying Notes are an Integral Part of these Financial Statements 13 3,320,020 $ 3,239,931 $ 80,089 333,825 326,329 7,496 7,175 7,175 9,575 5,622 3,953 87,375 60,878 26,497 6,100 3,383 2,717 197,300 193,054 4,246 54,455 54,452 3 238,100 237,315 785 146,500 136,135 10,365 14,075 5,680 8,395 8,500 8,346 154 19,600 19,222 378 1,171,885 1,158,540 13,345 642,900 580,485 62,415 541,500 519,976 21,524 408,000 341,995 66,005 265,000 257,089 7,911 28,000 14,559 13,441 17,000 16,947 53 60,990 60,861 129 135,300 114,978 20,322 15,000 13,310 1,690 190,710 187,435 3,275 251,050 204,224 46,826 4,500 4,500 EXHIBIT A-3 Page 2 Cancelled BOROUGH OF FRANKLIN LAKES STATEMENT OF EXPENDITURES -REGULATORY BASIS CURRENT FUND FOR THE YEAR ENDING DECEMBER 31, 2021 (Continued) A1212ro12riations Ex12ended Budget After Budget Modification GENERAL APPROPRIATIONS (Cont'd.) OPERATIONS WITHIN "CAPS" (Cont'd) Environment Commission Other Expenses $ 2,000 $ 2,000 Celebration of Public Events Other Expenses 72800 Cable T.V. Committee Other Expenses 2,000 UNIFORM CONSTRUCTION CODE APPROPRIATIONS OFFSET BY DEDICATED REVENUES (NJAC5:23-4-17) CODE ENFORCEMENT AND ADMINISTRATION Uniform Construction Code Enforcement Functions Building Inspector Salaries and Wages 219,060 Other Expenses 65,775 Other Code Enforcement Functions Electrical Inspector Salaries and Wages 64,575 Plumbing Inspector Salaries and Wages 27,150 UN CLASSIFIED: UTILITY EXPENSES AND BULK PURCHASES Electricity 165,000 Street Lighting 27,500 Telephone 48,000 Water 35,000 Gasoline 80,000 Landfill/Solid Waste Disposal Costs 316,000 Telecommunications 19,000 Total Operations Within "CAPS" 13,121,657 Total Operations including Contingent - Within "CAPS" 13,121,657 Detail: Salaries and Wages 6,219,335 Other Expenses 6,902,322 The Accompanying Notes are an Integral Part of these Financial Statements 14 72,800 2,000 219,060 65,775 69,795 27,150 165,000 28,500 55,000 35,000 97,500 316,000 19,000 13,115,157 13,115,157 6,217,885 6,897,272 Paid or Charged $ 1,169 $ 70,911 110 216,140 47,846 69,788 27,150 129,649 26,261 52,089 29,788 92,717 284,639 12,211 12,407,054 12,407,054 6,065,460 6,341,594 EXHIBIT A-3 Page 3 Reserved Cancelled 831 1,889 1,890 2,920 17,929 7 35,351 2,239 2,911 5,212 4,783 31,361 6,789 708,103 708,103 152,425 555,678 BOROUGH OF FRANKLIN LAKES CURRENT FUND STATEMENT OF EXPENDITURES -REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2021 (Continued) Appropriations Budget After Expended Paid or Budget Modification Charged Reserved GENERAL APPROPRIATIONS (Cont'd.) DEFERRED CHARGES AND STATUTORY EXPENDITURES -MUNICIPAL WITHIN "CAPS" Statutory Charges Public Employees Retirement System Social Security System (O.A.S.I.) DCRP Employer Contribution Police & Firemen's Retirement System Total Deferred Charges & Statutory Expenditures -Municipal Within "CAPS" Total General Appropriations for Municipal Purposes Within "CAPS" OPERATIONS-EXCLUDED FROM "CAPS" Other Operations Municipal Library NJ DEP Stormwater Permit Total Other Operations Excluded from "CAPS" Interlocal Municipal Service Agreements Enhanced 911 Service -Northwest Bergen Central Dispatch Other Expenses Borough of Oakland Construction Code Offical Salaries and Wages Other Expenses Total Interlocal Municipal Service Agreements $ 435,000 285,000 15,000 800,000 1,535,000 14,656,657 1,445,696 8,000 1,453,696 8,810 45,650 11,200 65,660 $ The Accompanying Notes are an Integral Part of these Financial Statements 15 435,000 290,000 16,500 800,000 1,541,500 14,656,657 1,445,696 8,000 1,453,696 8,810 45,650 11,200 65,660 $ 422,097 285,911 11,119 788,926 1,508,053 13,915,107 1,445,696 6,299 1,451,995 8,803 45,618 11,200 65,621 $ 12,903 4,089 5,381 11,074 33,447 741,550 1,701 1,701 7 32 39 EXHIBIT A-3 Page4 Cancelled BOROUGH OF FRANKLIN LAKES STATEMENT OF EXPENDITURES-REGULATORY BASIS CURRENT FUND FOR THE YEAR ENDED DECEMBER 31, 2021 (Continued) Appropriations Budget After Budget Modification GENERAL APPROPRIATIONS (Cont'd.) OPERATIONS -EXCLUDED FROM "CAPS" (Cont'd.) Public and Private Programs Offset by Revenues State of New Jersey Recycling Tonnage Grant $ 18,319 Clean Communities Grant 29,938 Municipal Alliance on Alcoholism and Drug Abuse County Share Local Share Private Donations $ 100 20,500 Drive Sober/Get Pulled Over Grant 5,923 Drunk Driving Enforcement Fund 3,922 3,922 MC Alcohol Edu, Rehab & Enfor Fund Grant 2021 Distracted Driving 5,957 Body Armor Replacement Program 1,912 1,912 Handicap Improvement 15,000 Total Public and Private Programs Offset by Revenues 5,934 101,471 Total Operations Excluded from "CAPS" 1,525,290 1,620,827 Detail Salaries & Wages 45,650 45,650 Other Expenses 1,479,640 1,575,177 CAPITAL IMPROVEMENTS EXCLUDED FROM "CAPS" Capital Improvement Fund 1,400,000 1,400,000 Total Capital Improvements -Excluded from "CAPS" 1,400,000 1,400,000 MUNICIPAL DEBT SERVICE -EXCLUDED FROM "CAPS" Payment of Bond Principal 1,380,000 1,380,000 Payment of Bond Anticipation Notes Interest on Bonds 226,000 226,000 Interest on Notes Total Municipal Debt Service - Excluded from "CAPS" 1,606,000 1,606,000 Total General Appropriations Excluded from "CAPS" 4,531,290 4,626,827 The Accompanying Notes are an Integral Part of these Financial Statements 16 $ Expended Paid or Charged 18,319 29,938 20,500 5,923 3,922 5,957 1,912 15,000 101,471 1,619,087 $ 45,618 1,573,469 1,400,000 1,400,000 1,380,000 225,900 1,605,900 4,624,987 EXHIBIT A-3 Page 5 Reserved Cancelled 1,740 32 1,708 $ 100 100 1,740 100 BOROUGH OF FRANKLIN LAKES STATEMENT OF EXPENDITURES -REGULATORY BASIS CURRENT FUND FOR THE YEAR ENDED DECEMBER 31, 2021 (Continued) Appropriations Expended Subtotal General Appropriations Reserve for Uncollected Taxes Total General Appropriations Budget as Adopted Added by N.J.S. 40A:4-87 Cash Disbursements Encumbrances Payable Appropriated Grant Reserves Reserve for Uncollected Taxes Reference A-2 A-2 Budget $ 19,187,947 905,000 $ 20,092,947 A-2 A-4 A-13 A-14 A-2 Budget After Modification $ 19,283,484 905,000 $ 20,188,484 $ 20,092,947 95,537 $ 20,188,484 The Accompanying Notes are an Integral Part of these Financial Statements 17 Paid or Charged $ 18,540,094 $ 905,000 $ 19,445,094 $ $ 17,992,111 446,512 101,471 905,000 $ 19,445,094 Reserved 743,290 743,290 A EXHIBIT A-3 Page 6 Cancelled $ 100 100 ASSETS BOROUGH OF FRANKLIN LAKES COMPARATIVE BALANCE SHEETS -REGULATORY BASIS TRUST FUNDS AS OF DECEMBER 31, 2021 AND 2020 Reference 2021 EXIDBITB Page 1 ANlMALCONTROLTRUSTFUND Cash B-2 $ 14,106 $ 10,600 --~- OTHER TRUST FUND Cash ASSESSMENT TRUST FUND Cash Assessments Receivable UNEMPLOYMENT INSURANCE TRUST FUND Cash Total Assets B-2 B-2 B-13 B-2 The Accompanying Notes are an Integral Part of these Financial Statements 18 3,919,027 3,919,027 23,308 93,800 117,108 40,596 40,596 3,221,109 3,221,109 13,022 104,514 117,536 37,350 37,350 $ 4,090,837 $ 3,386,595 BOROUGH OF FRANKLIN LAKES COMPARATIVE BALANCE SHEETS -REGULATORY BASIS TRUST FUNDS AS OF DECEMBER 31, 2021 AND 2020 (Continued) Reference LIABILITIES, RESERVES AND FUND BALANCE ANIMAL CONTROL TRUST FUND Due to State of NJ B-4 Reserve for Animal Control Expenditures B-3 OTHER TRUST FUND Payroll Deductions and Withholdings Payable B-6 Due to Current Fund B-7 Reserve for: Affordable Housing B-5 Miscellaneous Reserves B-8 Escrow Deposits B-9 ASSESSMENT TRUST FUND Due to Current Fund B-13 Due to General Capital Fund B-14 Reserve for Assessments B-12 UNEMPLOYMENT INSURANCE TRUST FUND Due to the State of New Jersey B-10 Reserve for Unemployment Insurance Claims B-11 Total Liabilities, Reserves and Fund Balance The Accompanying Notes are an Integral Part of these Financial Statements 19 2021 $ 11 14,095 14,106 29,621 70 875,917 1,068,951 1,944,468 3,919,027 2,090 21,218 93,800 117,108 40,596 40,596 $ 4,090,837 $ $ EXHIBITB Page2 2020 631 9,969 10,600 31,985 222 603,280 796,925 1,788,697 3,221,109 2,518 10,504 104,514 117,536 5,152 32,198 37,350 3,386,595 BOROUGH OF FRANKLIN LAKES COMPARATIVE BALANCE SHEETS -REGULATORY BASIS GENERAL CAPITAL FUND AS OF DECEMBER 31, 2021 AND 2020 Reference 2021 ASSETS Cash C-2,C-3 $ 1,008,182 Grants Receivable C-4 52,500 Due from Assessment Trust Fund B-14 21,218 Deferred Charges to Future Taxation -Funded C-5 9,995,000 Deferred Charges to Future Taxation -Unfunded C-6 32,566 Total Assets $ 11,109,466 LIABILITIES, RESERVES AND FUND BALANCE Serial Bond Payable C-7 $ 9,995,000 Improvement Authorizations Funded C-8 315,284 Unfunded C-8 17,119 Encumbrances Payable C-9 173,192 Capital Improvement Fund C-10 113,356 Reserve for Payment of Debt C-13 53,267 Reserve for COAH -RCA Debt C-11 230,732 Reserve for Future Capital Projects C-12 200,802 Fund Balance C-1 10,714 Total Liabilities, Reserves and Fund Balance $ 11,109,466 $ $ $ There were bonds and notes authorized but not issued on December 31, 2021 and 2020 of $32,566 and $131,096, respectively (Exhibit C-14). The Accompanying Notes are an Integral Part of these Financial Statements 20 EXHIBIT C 2020 2,289,403 10,504 11,375,000 131,096 11,375,000 355,305 17,119 811,357 436,839 4,923 347,272 288,333 169,855 13,806,003 EXHIBIT C-1 BOROUGH OF FRANKLIN LAKES COMPARATIVE STATEMENTS OF CHANGES IN FUND BALANCE -REGULATORY BASIS GENERAL CAPITAL FUND FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 Reference Balance, January 1 C Increased by: Assessment Collections B-15 Decreased by: Appropriated to Finance Improvement Authorizations C-8 Balance, December 31 The Accompanying Notes are an Integral Part of these Financial Statements 21 2021 $ 169,855 10,714 180,569 169,855 $ 10,714 2020 $ 105,741 10,504 169,855 $ 169,855 BOROUGH OF FRANKLIN LAKES COMPARATIVE BALANCE SHEETS -REGULATORY BASIS - SEWER UTILITY OPERA TING FUND AS OF DECEMBER 31, 2021 AND 2020 ASSETS Operating Fund Cash Accounts Receivable Total Operating Fund Total Assets LIABILITIES, RESERVES AND FUND BALANCE Operating Fund Appropriation Reserves Reserve for Receivable Fund Balance Total Operating Fund Total Liabilities, Reserves and Fund Balance The Accompanying Notes are an Integral Part of these Financial Statements 22 Reference D-4 D-5 D-3, D-6 D-5 D-1 2021 $ 230,557 2,309 232,866 $ 232,866 $ 12,170 12,170 2,309 218,387 232,866 $ 232,866 EXHIBITD 2020 $ 204,029 1,489 205,518 $ 205,518 $ 24,976 24,976 1,489 179,053 205,518 $ 205,518 EXHIBIT D-1 BOROUGH OF FRANKLIN LAKES COMPARATIVE STATEMENTS OF OPERATIONS AND CHANGES IN FUND BALANCE- REGULATORY BASIS -SEWER UTILITY OPERA TING FUND FOR THE YEAR ENDED DECEMBER 31, 2021 AND 2020 Reference 2021 2020 Revenue and Other Income Realized Surplus Anticipated Sewer User Fees Sewer Connection Fees Non-Budget Revenue Other Credits to Income Unexpended Balances of Appropriation Reserves Expenditures Budget Appropriations Operating Excess of Revenues Over Expenditures Fund Balance, January 1 Utilized as Anticipated Revenue Fund Balance, December 31 The Accompanying Notes are an Integral Part of these Financial Statements 23 D-2 D-2, D-5 D-2 D-2 D-6 D-3 D D $ 22,900 $ 45,000 92,323 91,618 41,116 25,344 1,919 1,063 24,976 30,118 183,234 193,143 121,000 130,000 121,000 130,000 62,234 63,143 179,053 160,910 241,287 224,053 (22,900) (45,000) Anticipated Fund Balance Sewer User Fees Sewer Connection Fees Non-Budget Revenue BOROUGH OF FRANKLIN LAKES STATEMENT OF REVENUES -REGULATORY BASIS SEWER UTILITY OPERATING FUND FOR THE YEAR ENDED DECEMBER 31, 2021 2021 Reference Budget D-1 $ 22,900 $ D-1, D-4 91,600 D-1, D-4 6,500 $ 121,000 Reference D-3 $ 2021 Realized 22,900 92,323 41,116 156,339 1,919 158,258 STATEMENT OF EXPENDITURES -REGULATORY BASIS SEWER UTILITY OPERA TING FUND FOR THE YEAR ENDED DECEMBER 31, 2021 EXHIBITD-2 Excess or (Deficit) $ 723 34,616 $ 35,339 EXHIBITD-3 Appropriation Expended Operating Other Expenses $ $ Reference Budget as Adopted D-2 Cash Disbursements D-4 Budget 121,000 121,000 D-2 Budget After Modification $ 121,000 $ 121,000 D-2 $ 121,000 The Accompanying Notes are an Integral Part of these Financial Statements 24 $ $ $ Paid or Charged 108,830 108,830 108,830 Reserved $ 12,170 $ 12,170 D ASSETS Land BOROUGH OF FRANKLIN LAKES COMPARATIVE BALANCE SHEETS -REGULATORY BASIS GENERAL FIXED ASSETS ACCOUNT GROUP AS OF DECEMBER 31, 2021 AND 2020 2021 $ 39,242,900 Buildings and Improvements 13,210,897 Vehicles 6,511,919 Machinery and Equipment 5,123,291 Total Assets $ 64,089,007 FUND BALANCE EXHIBITE 2020 $ 39,242,900 13,210,897 6,401,803 4,176,745 $ 63,032,345 Investment in General Fixed Assets $ 64,089,007 $ 63,032,345 The Accompanying Notes are an Integral Part of these Financial Statements 25 NOTES TO FINANCIAL STATEMENTS BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The Borough of Franklin Lakes (the "Borough") was incorporated in 1922 and operates under an elected Mayor and Council form of government. The Mayor is elected to a four-year term and the six council members are elected at- large, two each year for terms of three years. The Mayor is the Chief Executive Officer of the Borough and as such presides over all public meetings and makes appointments to various boards. The Borough Council exercises all legislative powers including final adoption of the municipal budget and bond ordinances and confirmation of the Mayor's appointments, and all executive authority which is not specifically provided to the Mayor, by state law. A Borough Administrator is appointed by the Borough Council and is responsible for the implementation of the policies of the Mayor and Council, for the administration of all Borough affairs and for the day to day operations of the Borough. The Borough Administrator is the Chief Administrative Officer for the Borough. The Borough's major operations include public safety, road repair and maintenance, sanitation, fire protection, recreation and parks, health services, and general administrative services. GASB requires the financial reporting entity to include both the primary government and component units. Component units are legally separate organizations for which the Borough is financially accountable. The Borough is financially accountable for an organization if the Borough appoints a voting majority of the organization's governing board and (1) the Borough is able to significantly influence the programs or services performed or provided by the organization; or (2) the Borough is legally entitled to or can otherwise access the organization's resources; the Borough is legally obligated or has otherwise assumed the responsibility to finance the deficits of, or provide financial support to, the organization; or the Borough is obligated for the debt of the organization. Component units may also include organizations that are fiscally dependent on the Borough in that the Borough approves the budget, the issuance of debt or the levying of taxes. The Borough is not includable in any other reporting entity as a component unit. The financial statements contained herein include only those boards, bodies, officers or commissions as required by NJS 40A:5-5. Accordingly, the financial statements of the Borough do not include the municipal library, volunteer fire department and volunteer ambulance squad, which are considered component units under GAAP. Complete financial statements of the above component units can be obtained by contacting the Treasurer of the respective entity. B. Description of Regulatory Basis of Accounting The financial statements of the Borough of Franklin Lakes have been prepared on a basis of accounting in conformity with accounting principles and practices prescribed or permitted by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the "Division") which is a regulatory basis of accounting other than accounting principles generally accepted in the United States of America (GAAP). 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 Borough accounts for its financial transactions through separate funds, which differ from the fund structure required by GAAP. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. GASB has adopted accounting statements to be used by governmental units when reporting financial position and results of operations in accordance with accounting principles generally accepted in the United States of America. (GAAP). The municipalities in the State of New Jersey do not prepare financial statements in accordance with GAAP and thus do not comply with all of the GASB pronouncements. 26 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Basis of Presentation -Financial Statements The Borough uses funds, as required by the Division, to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial administration by segregating transactions related to certain Borough functions or activities. The Borough also uses an account group, which is designed to provide accountability for certain assets that are not recorded in those Funds. The Borough has the following funds and account group: Current Fund -This fund is used to account for the revenues and expenditures for governmental operations of a general nature and the assets and liabilities related to such activities, including Federal and State grants not accounted for in another fund. Trust Funds -These funds are used to account for assets held by the government in a trustee capacity. Funds held by the Borough as an agent for individuals, private organizations, or other governments are recorded in the Trust Funds. Animal Control Trust Fund -This fund is used to account for fees collected from dog and cat licenses and expenditures which are regulated by NJS 4: 19-15 .11. Other Trust Fund -This fund is established to account for the assets and resources, which are held by the Borough as a trustee or agent for individuals, private organizations, other governments and/or other funds. These funds include dedicated fees/proceeds collected, developer deposits, payroll related deposits and funds deposited with the Borough as collateral. Assessment Trust Fund -This fund is used to account for special benefit assessments levied against properties for specific purposes. Unemployment Insurance Trust Fund -This fund is used to account for employee and employer contributions for the purpose of providing unemployment benefits to former eligible employees. General Capital Fund -This fund is used to account for the receipt and disbursement of funds used and related financial transactions related to the acquisition or improvement of general capital facilities and other capital assets, other than those acquired in the Current Fund. Sewer Utility Fund -This fund is used to account for the revenues and expenditures for the operation of the Borough's sanitary sewerage system and the assets and liabilities relative to such activities. General Fixed Assets Account Group -This account group is used to account for all general fixed assets of the Borough. The Borough's infrastructure is not reported in the account group. Comparative Data -Comparative data for the prior year has been presented in the accompanying financial statements in order to provide an understanding of changes in the Borough's financial position and operations. However, comparative data have not been presented in all statements because their inclusion would make certain statements unduly complex and difficult to understand. Reclassifications -Certain reclassifications may have been made to the December 31, 2020 balances to conform to the December 31, 2021 presentation. 27 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Basis of Presentation-Financial Statements (Continued) Financial Statements -Regulatory Basis The GASB Codification also requires the financial statements of a governmental unit to be presented in the basic financial statements in accordance with GAAP. The Borough presents the regulatory basis financial statements listed in the table of contents which are required by the Division and which differ from the basic financial statements required by GAAP. In addition, the Division requires the regulatory basis financial statements listed in the table of contents to be referenced to the supplementary schedules. This practice differs from reporting requirements under GAAP. D. Measurement Focus and Basis of Accounting The accounting and financial reporting treatment is determined by the accounting principles and practices prescribed by the Division in accordance with the regulatory basis of accounting. Measurement focus indicates the type of resources being measured. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements. The Borough of Franklin Lakes follows a modified accrual basis of accounting. Under this method of accounting, revenues, except State/Federal Aid, are recognized when received and expenditures are recorded when incurred. The accounting principles and practices prescribed or permitted for municipalities by the Division ("regulatory basis of accounting") differ in certain respects from accounting principles generally accepted in the United States of America (GAAP) applicable to local government units. The more significant differences are as follows: Cash and Investments -Cash includes amounts in demand deposits as well as short-term investments with a maturity date within three months of the date acquired by the government. Investments are reported at cost and are limited by N.J.S.A. 40A:5-15.1 et seq. GAAP requires that all investments be reported at fair value. Inventories -The costs of inventories of supplies for all funds are recorded as expenditures at the time individual items are purchased. The costs of inventories are not included on the various balance sheets. GAAP requires inventories to be recorded as assets in proprietary-type funds. Property Tax Revenues/Receivables -Real property taxes are assessed locally, based upon the assessed value of the property. The tax bill includes a levy for Municipal, County, and School purposes. The bills are mailed annually in June for that calendar year's levy. Taxes are payable in four quarterly installments on February 1, May 1, August 1, and November 1. The amounts of the first and second installments are determined as one-quarter of the total tax levied against the property for the preceding year. The installment due the third and fourth quarters is determined by taking the current year levy less the amount previously charged for the first and second installments, with the remainder being divided equally. If unpaid on these dates, the amount due becomes delinquent and subject to interest at 8% per annum, or 18% on any delinquency amount in excess of $1,500. A penalty ofup to 6% of the delinquency may be imposed on a taxpayer with a delinquency in excess of $10,000 who fails to pay that delinquency prior to the end of the fiscal year in which the charges become delinquent. The school levy is turned over to the Board of Education as expenditures are incurred, and the balance, if any, must be transferred as of June 30, of each fiscal year. County taxes are paid quarterly on February 15, May 15, August 15 and November 15, to the County by the Borough. When unpaid taxes or any municipal lien, or part thereof, on real property, remains in arrears on April first in the year following the calendar year levy when the same became in arrears, the collector in the municipality shall, subject to the provisions of the New Jersey Statutes, enforce the lien by placing the property on a standard tax sale. The Borough also has the option when 28 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Measurement Focus and Basis of Accounting (Continued) Property Tax Revenues/Receivables (Continued) unpaid taxes or any municipal lien, or part thereof, on real property remains in arrears on the 11 th day of the eleventh month in the fiscal year when the taxes or lien became in arrears, the collector in the municipality shall, subject to the provisions of the New Jersey Statutes, enforce the lien by placing property on an accelerated tax sale, provided that the sale is conducted and completed no earlier than in the last month of the fiscal year. The Borough may institute annual in rem tax foreclosure proceedings to enforce the tax collection or acquisition of title to the property. In accordance with the accounting principles prescribed by the State of New Jersey, current and delinquent taxes are realized as revenue when collected. Since delinquent taxes and liens are fully reserved, no provision has been made to estimate that portion of the tax receivable and tax title liens that are uncollectible. GAAP requires property tax revenues to be recognized in the accounting period when they become susceptible to accrual (i.e., when they are both levied and available), reduced by an allowance for doubtful accounts. Miscellaneous Revenues/Receivables -Miscellaneous revenues are recognized on a cash basis. Receivables for the miscellaneous items that are susceptible to accrual are recorded with offsetting reserves on the balance sheet of the Borough's Current Fund. GAAP requires such revenues to be recognized in the accounting period when they become susceptible to accrual (i.e., when they are both measurable and available). Utility Revenues/Receivables -Utility charges are levied quarterly based upon a flat service charge and if applicable, an excess consumption or usage charge. Revenues from these sources are recognized on a cash basis. Receivables that are susceptible to accrual are recorded with offsetting reserves on the balance sheet of the Borough's sewer utility operating fund. GAAP requires such revenues to be recognized in the accounting period when they become susceptible to accrual, reduced by an allowance for doubtful accounts. Grant and Similar Award Revenues/Receivables -Federal and State grants, entitlements or shared revenues received for purposes normally financed through the Current Fund are recognized when anticipated in the Borough's budget. GAAP requires such revenues to be recognized as soon as all eligibility requirements imposed by the granter or provider have been met. Interfunds -Interfund receivables in the Current Fund are recorded with offsetting reserves, which are created by charges to operations. Income is recognized in the year the receivables are liquidated. Interfund receivables in the other funds are not offset by reserves. GAAP does not require the establishment of an offsetting reserve for interfunds and, therefore, does not recognize income in the year liquidated. Deferred Charges -Funded and unfunded debt authorizations for general capital projects are also recorded as deferred charges and represent permanent long-term debt issues outstanding (funded) and temporary debt issues outstanding or unissued debt authorizations (unfunded), respectively. GAAP does not permit the recording of deferred charges for funded and unfunded debt authorizations. Appropriation Reserves -Appropriation reserves are recorded as liabilities and are available, until lapsed at the close of the succeeding year, to meet specific claims, commitments or contracts incurred during the preceding year. Lapsed appropriation reserves are recorded as additions to income. Appropriation reserves do not exist under GAAP. 29 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Measurement Focus and Basis of Accounting (Continued) Expenditures -Expenditures are recorded on the "budgetary" basis of accounting. Generally, expenditures are recorded when an amount is encumbered for goods or services through the issuance of a purchase order in conjunction with an encumbrance accounting system. Outstanding encumbrances at December 31, are reported as a cash liability in the financial statements. Unexpended or uncommitted appropriations, at December 31, are reported as expenditures through the establishment of appropriation reserves unless cancelled by the governing body. GAAP requires expenditures to be recognized in the accounting period in which the fund liability is incurred, if measurable, except for unmatured interest on general long-term debt, as well as expenditures related to compensated absences and claims and judgements, which are recognized when due. Encumbrances -Contractual orders outstanding at December 31, are reported as expenditures and liabilities through the establishment of an encumbrance payable. Encumbrances do not constitute expenditures or liabilities under GAAP. Compensated Absences -Expenditures relating to obligations for unused vested accumulated vacation and sick leave are not recorded until paid; however, municipalities may establish and budget reserve funds subject to NJSA 40A:4-39 for the future payment of compensated absences. GAAP requires that the amount that would normally be liquidated with expendable available financial resources be recorded as an expenditure in the operating funds and the remaining obligations are recorded as a long-term obligation in the government-wide financial statements. Tax Appeals and Other Contingent Losses -Losses arising from tax appeals and other contingent losses are recognized at the time a decision is rendered by an administrative or judicial body; however, municipalities may establish reserves transferred from tax collections or by budget appropriation for future payments of tax appeal losses. GAAP requires such amounts to be recorded when it is probable that a loss has been incurred and the amount of such loss can be reasonably estimated. General Fixed Assets -In accordance with NJAC 5:30-5.6, Accounting for Governmental Fixed Assets, the Borough of Franklin Lakes has developed a fixed assets accounting and reporting system. Fixed assets are defined by the Borough as assets with an initial, individual cost of $2,000 and an estimated useful life in excess of two years. Fixed assets used in governmental operations (general fixed assets) are accounted for in the General Fixed Assets Account Group. Public domain ("infrastructure") general fixed assets consisting of certain improvements other than buildings, such as roads, bridges, curbs and gutters, streets and sidewalks and sewerage and drainage systems are not capitalized. General Fixed Assets purchased after December 31, 2015 are stated as cost. Donated fixed assets are recorded at estimated fair market value at the date of donation. General Fixed Assets purchased prior to December 31, 2015 are stated as follows: Land and Buildings Machinery and Equipment 30 Assessed Value Historical Cost BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Measurement Focus and Basis of Accounting (Continued) General Fixed Assets (Continued) No depreciation has been provided for in the financial statements. Expenditures for construction in progress are recorded in the General Capital Fund until such time as the construction is completed and put into operation for general fixed assets. GAAP requires that capital assets be recorded in proprietary-type funds as well as the government-wide financial statement at historical or estimated historical cost if actual historical cost is not available. In addition, GAAP requires depreciation on capital assets to be recorded in proprietary-type funds as well as in the government-wide financial statements. Use of Estimates -The preparation of financial statements requires management of the Borough to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of accrued revenues and expenditures during the reporting period. Accordingly, actual results could differ from those estimates. NOTE 2 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgets and Budgetary Accounting -An annual budget is required to be adopted and integrated into the accounting system to provide budgetary control over revenues and expenditures. Budget amounts presented in the accompanying financial statements represent amounts adopted by the Borough and approved by the State Division of Local Government Services as per N.J.S.A. 40A:4 et seq. The Borough is not required to adopt budgets for the following funds: General Capital Fund Trust Funds ( except Assessment Trust Fund) The governing body is required to introduce and approve the annual budget no later than February 10, of the fiscal year. The budget is required to be adopted no later than March 20, and prior to adoption must be certified by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. The Director of the Division of Local Government Services, with the approval of the Local Finance Board may extend the introduction and approval and adoption dates of the municipal budget. The budget is prepared by fund, function, activity and line item (salary or other expense) and includes information on the previous year. The legal level of control for appropriations is exercised at the individual line item level for all operating budgets adopted. The governing body of the municipality may authorize emergency appropriations and the inclusion of certain special items of revenue to the budget after its adoption and determination of the tax rate. During the last two months of the fiscal year, the governing body may, by a 2/3 vote; amend the budget through line item transfers. Management has no authority to amend the budget without the approval of the governing body. Expenditures may not legally exceed budgeted appropriations at the line item level. During 2021 and 2020 the Borough Council increased the original budget by $95,537 and $498,520, respectively. The increase for 2021 was funded by additional aid allotted to the Borough. The increase for 2020 was funded by additional aid allotted to the Borough as well as an emergency appropriation for COVID expenses. In addition, the governing body approved several budget transfers during 2021 and 2020. 31 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 3 CASH DEPOSITS AND INVESTMENTS The Borough considers petty cash, change funds, cash in banks, certificates of deposit and deposits with the New Jersey Cash Management Fund as cash and cash equivalents. A. Cash Deposits The Borough's deposits are insured through either the Federal Deposit Insurance Corporation (FDIC), National Credit Union Share Insurance Fund (NCUSIF), Securities Investor Protection Corporation (SIPC) or New Jersey's Governmental Unit Deposit Protection Act (GUDPA). The Borough is required to deposit their funds in a depository which is protecting such funds pursuant to GUDPA. The New Jersey Governmental Unit Deposit Protection Act requires all banks doing business in the State of New Jersey to pledge collateral equal to at least 5% of the average amount of its public deposits and 100% of the average amount of its public funds in excess of the lesser of 75% of its capital funds or $200 million for all deposits not covered by the FDIC or NCUSIF. Bank balances are insured up to $250,000 in the aggregate by the FDIC for each bank. NCUSIF insures credit union accounts up to $250,000 in the aggregate for each financial institution. SIPC replaces cash claims up to a maximum of $250,000 for each failed brokerage firm. At December 31, 2021 and 2020, the book value of the Borough's deposits were $12,729,729 and $12,648,589 and bank and brokerage firm balances of the Borough's deposits amounted to $13,232,588 and $12,820,372, respectively. The Borough's deposits which are displayed on the various fund balance sheets as "cash" are categorized as: Depository Account Insured $ Bank Balance 2021 2020 13,232,588 $ 12,820,372 =========== Custodial Credit Risk -Deposits -Custodial credit risk is the risk that in the event of a bank failure, the government's deposits may not be returned to it. The Borough does not have a formal policy for custodial credit risk. As of December 31, 2021 and 2020, the Borough's bank balances were not exposed to custodial credit risk. B. Investments The Borough is permitted to invest public funds in accordance with the types of securities authorized by N.J.S.A. 40A: 5-15 .1. Investments include bonds or other obligations of the United States or obligations guaranteed by the United States of America, Government Money Market Mutual Funds, 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 that such obligations bear a fixed rate of interest not dependent on any index or other external factor; bonds or other obligations of the Borough or bonds or other obligations of the school districts which are a part of the Borough or school districts located within the Borough, Bonds or other obligations, having a maturity date of not more than 397 days from the date of purchase, issued by New Jersey school district, municipalities, counties, and entities subject to the "Local Authorities Fiscal Control Law, "(C.40A:5A-l et seq.); Other bonds or obligations having a maturity date not more than 397 days from the date of purchase may be approved by the Division of Investments in the Department of the Treasury for investment by local units; Local Government investment pools, deposits with the State of New Jersey Cash Management Fund established pursuant to section 1 of P.L. 1977, c.281 (C.52: 18A-90.4); and agreements for the repurchase of fully collateralized securities, if transacted in accordance with NJSA 40A:5-15.l (8a-8e). As of December 31, 2021 and 2020 the Borough had no outstanding investments. Interest earned in the General Capital Fund, Assessment Trust Fund, Animal Control Fund and certain Other Trust Funds are assigned to the Current Fund in accordance with the regulatory basis of accounting. 32 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 4 TAXES RECEIVABLE Receivables at December 31, 2021 and 2020 consisted of the following: Current Property Taxes Tax Title Liens $ $ 2021 255,146 $ 27,146 282,292 2020 503,772 13,387 51 159 In 2021 and 2020, the Borough collected $497,698 and $532,262 from delinquent taxes, which represented 96% and 97%, respectively of the prior year delinquent taxes receivable balance. NOTE 5 DUE TO/FROM OTHER FUNDS As of December 31, interfund receivables and payables that resulted from various interfund transactions were as follows: 2021 Due from Other Funds Current Fund $ 2,160 Trust Fund: Other Trust Assessment Trust General Capital Fund 21,218 Total $ 23,378 Due to Other Funds $ 70 23,308 $ 23,378 Due from Other Funds $ 2,740 10,504 2020 Due to Other Funds $ 222 13,022 $ 13,244 $ 13,244 ======== The above balances are the result of revenues being received or expenditures being paid by one fund on behalf of another. The Borough expects all interfund balances to be liquidated within one year. 33 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 6 FUND BALANCES APPROPRIATED Under the regulatory basis of accounting, fund balance in the Current Fund is comprised of cash surplus ( fund balance) and non-cash surplus (fund balance). All or part of cash surplus as of December 31 may be anticipated in the subsequent year's budget. The non-cash surplus portion of fund balance may be utilized in the subsequent year's budget with the prior written consent of the Director of the Division of Local Government Services if certain guidelines are met as to its availability. Fund balances at December 31, which were appropriated and included as anticipated revenue in their own respective fund's budget for the succeeding year were as follows: Fund Fund Balance Utilized Balance Utilized December 31, in Subsequent December 3 1, in Subsequent 2021 Year's Budget 2020 Year's Budget Current Fund Cash Surplus $ 3,868,275 $ 2,450,000 $ 3,503,420 $ 2,000,000 Non-Cash Surplus 561,903 590,908 $ 4,430,178 $ 2,450,000 $ 4,094,328 $ 2,000,000 Sewer Utility Operating Fund Cash Surplus $ 218,387 $ 45,100 $ 179,053 $ 22,900 Non-Cash Surplus $ 218,387 $ 45,100 $ 179,053 $ 22,900 34 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 7 FIXED ASSETS General Fixed Assets The following is a summary of changes in the general fixed assets account group for the years ended December 31, 2021 and 2020. Balance Balance, December 31, December 31, 2020 Increases Decreases 2021 2021 Land $ 39,242,900 $ 39,242,900 Buildings and Improvements 13,210,897 13,210,897 Vehicles 6,401,803 $ 223,581 $ 113,465 6,511,919 Machinery and Equipment 4,176,745 1,017,975 71,429 5,123,291 $ 63,032,345 $ 1,241,556 $ 184,894 $ 64,089,007 Balance Balance, December 31, December 31, 2019 Increases Decreases 2020 2020 Land $ 39,242,900 $ 39,242,900 Buildings and Improvements 13,210,897 13,210,897 Vehicles 6,264,855 173,631 $ 36,683 6,401,803 Machinery and Equipment 4,000,212 239,878 63,345 4,176,745 $ 62,718,864 $ 413,509 $ 100,028 $ 63,032,345 35 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 8 MUNICIPAL DEBT The Local Bond Law governs the issuance of bonds and notes used to finance capital expenditures. General obligation bonds have been issued for general capital fund projects. All bonds are retired in serial installments within the statutory period of usefulness. Bonds issued by the Borough are general obligation bonds, backed by the full faith and credit of the Borough. Bond anticipation notes, which are issued to temporarily finance capital projects, must be paid off within ten years and four months or retired by the issuance of bonds. The Borough's debt is summarized as follows: 2021 2020 Issued General Bonds and Notes $ 9,995,000 $ 11,375,000 Less Funds Temporarily Held to Pay Bonds and Notes (283,999) (352,195) Net Debt Issued 9,711,001 11,022,805 Authorized But Not Issued Bonds and Notes General 2,480 101,010 Assessment 30,086 30,086 Net Bonds and Notes Issued and Authorized But Not Issued $ 9,743,567 $ 11,153,901 36 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 8 MUNICIPAL DEBT (Continued) Statutory Net Debt The statement of debt condition that follows is extracted from the Borough's Annual Debt Statement and indicates a statutory net debt of .220% and .255% at December 31, 2021 and 2020, respectively. Gross Debt Deductions Net Debt 2021 General Debt $ 10,027,566 $ 283,999 $ 9,743,567 School Debt 6,421,073 6,421,073 Total $ 16,448,639 $ 6,705,072 $ 9,743,567 Gross Debt Deductions Net Debt 2020 General Debt $ 11,506,096 $ 352,195 $ 11,153,901 School Debt 6,873,723 6,873,723 Total $ 18,379,819 $ 7,225,918 $ 11,153,901 Statutory Borrowing Power The Borough's remaining borrowing power under N.J.S. 40A:2-6, as amended, at December 31, was as follows: 3-1/2% of Equalized Valuation Basis (Municipal) Net Debt Remaining Borrowing Power 2021 $ 154,886,322 $ 9,743,567 $ 145,142,755 $ 37 152,954,955 11,153,901 141,801,054 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 8 MUNICIPAL DEBT (Continued) A. Long-Term Debt The Borough's long-term debt consisted of the following at December 31: General Obligation Bonds The Borough levies ad valorem taxes to pay debt service on general obligation bonds. General obligation bonds outstanding at December 31 are as follows: $5,055,000, 2014 Bonds, due in annual installments of $270,000 to $460 ,000 through September 1, 2029, interest at 2.00% $4,400,000, 2017 Refunding Bonds, due in annual installments of $935,000 through March 1, 2023, interest at 4.00% $5,025,0ff0~-TOW73on s, ue in annual installments of $225,000 to $375,000 through September l, 2035, interest at 1.00%-1.625% $ $ 3,325,000 $ 3,590,000 1,870,000 2,760,000 4,800,000 5,025,000 9,995,000 $ 11,375,000 ============a- The Borough's principal and interest for long-term debt issued and outstanding as of December 31, 2021 is as follows: Calendar General Year Principal Interest Total 2022 $ 1,430,000 $ 181,850 $ 1,611,850 2023 1,455,000 136,800 1,591,800 2024 810,000 109,950 919 ,950 2025 810,000 97,250 907,250 2026-2030 3,615,000 295,750 3,910,750 2031-2035 1,875,000 86,719 1,961,719 Total $ 9,995,000 $ 908,319 $ 10,903,319 38 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 8 MUNICIPAL DEBT (Continued) Changes in Long-Term Municipal Debt The Borough's long-term capital debt activity for the years ended December 31, 2020 and 2019 were as follows: Balance, Balance, Due December 31, December 31, Within 2020 Additions Reductions 2021 One Year 2021 General Capital Fund Bonds Payable $ 11,375,000 $ $1,380,000 $ 9,995,000 $ 1,430,000 Balance, Balance, Due December 31, December 31, Within 2019 Additions Reductions 2020 One Year 2020 General Capital Fund Bonds Payable $ 7,450,000 $5,025,000 $1,100,000 $ 11,375,000 $ 1,380,000 NOTE 9 CONSTRUCTION AND OTHER SIGNIFICANT COMMITMENTS As of December 31, the Borough had the following commitments with respect to unfinished capital projects: Capital Project 2021 2021 Road Program Public Safety Radio System 2020 2020 Road Program Pumper Fire Apparatus $ $ 39 Commitment 80,598 76,150 384,424 388,842 Estimated Date of Completion/ Acquisition 2022 2022 2021 2021 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 10 OTHER LONG-TERM LIABILITIES A. Compensated Absences Under the existing policies and labor agreements of the Borough, certain employees and bargaining units are permitted to be compensated for one-half ( 1/2) of their unused sick days from the previous calendar year. Carryover days not paid in the succeeding calendar year are forfeited. These amounts, which have not been determined and are considered immaterial to the financial statements, are not reported either as an expenditure or liability. Changes in Other Long-Term Liabilities Under the regulatory basis of accounting, certain other long-term liabilities which may be considered material to the financial statements are not reported either as an expenditure or a liability. However, under the regulatory basis of accounting, these other long-term liabilities and related information are required to be disclosed in the footnotes to the financial statements in conformity with the disclosure requirements of the Governmental Accounting Standards Board. The Borough's changes in other long-term liabilities for the years ended December 31, 2021 and 2020 were as follows: Balance, Balance, December 31, December 31, 2020 Additions Reductions 2021 2021 Net Pension Liability -PERS (1) $ 6,390,345 $ 6,390,345 Net Pension Liability-PFRS (1) 9,114,267 $ 9,114,267 Net OPEB Liability 17,390,679 $ 672,353 16,718,326 Total Other Long-Term Liabilities $ 32,895,291 $ $ 672,353 $ 32,222,938 Balance, Balance, December 31, December 31, 2019 Additions Reductions 2020 2020 Net Pension Liability -PERS $ 7,160,950 $ 770,605 $ 6,390,345 Net Pension Liability -PFRS 8,670,115 $ 444,152 9,114,267 Net OPEB Liability 16,378,579 1,012,100 17,390,679 Total Other Long-Term Liabilities $ 32,209,644 $ 1,456,252 $ 770,605 $ 32,895,291 (1) GASB Statement Number 68 Pension financial information was not provided by the State's Division of Pensions and Benefits as of the date of audit. 40 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 11 EMPLOYEE RETIREMENT SYSTEMS The State of New Jersey sponsors and administers the following contributory defined benefit public employee retirement systems (retirement systems) covering substantially all state and local government employees which includes those Borough employees who are eligible for pension coverage. Police and Firemen's Retirement System (PFRS) -established in July 1944, under the provisions of N.J.S.A. 43: 16A to provide coverage to substantially all full time county and municipal police or firemen and State firemen appointed after June 30, 1944. Membership is mandatory for such employees. PFRS is a cost-sharing multi- employer defined benefit pension plan with a special funding situation. For additional information about PFRS, please refer to the State Division of Pension and Benefits (Division's) Comprehensive Annual Financial Report (CAFR) which can be found at www.state.nj.us/treasury/pensions. The vesting and benefit provisions are set by N.J.S.A. 43:16A. PFRS provides retirement benefits 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. The following represents the membership tiers for PFRS: Tier 1 2 3 Definition Members who were enrolled prior to May 22, 2010 Members who were eligible to enroll on or after May 22, 2010 and prior to June 28, 2011 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% (tier 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. Public Employees' Retirement System (PERS) -established in January 1955, under the provisions of N.J.S.A. 43: I SA to provide coverage to substantially all full-time employees of the State or any county, municipality, school district, or public agency provided the employee is not a member of another State-administered retirement system. Membership is mandatory for such employees. PERS is a cost-sharing multi-employer defined benefit pension plan. For additional information about PERS, please refer to the State Division of Pension and Benefits (Division's) Comprehensive Annual Financial Report (CAFR) which can be found at www.state.nj.us/treasury/pensions. The vesting and benefit provisions are set by N.J.S.A. 43:lSA. PERS provides retirement, death, and disability benefits. All benefits vest after ten years of service, except for medical benefits, which, if applicable, vest after 25 years of service or under the disability provisions of PERS. The following represents the membership tiers for PERS: Tier 1 2 3 4 5 Definition Members who were enrolled prior to July 1, 2007 Members who were eligible to enroll on or after July 1, 2007 and prior to November 2, 2008 Members who were eligible to enroll on or after November 2, 2008 and prior to May 22, 2010 Members who were eligible to enroll on or after May 22, 2010 and prior to June 28, 2011 Members who were eligible to enroll on or after June 28, 2011 41 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 11 EMPLOYEE RETIREMENT SYSTEMS (Continued) Public Employees' Retirement System (PERS) (Continued) Service retirement benefits of 1155 th of final average salary for each year of service credit is available to tier 1 and 2 members upon reaching age 60 and to tier 3 members upon reaching age 62. Service retirement benefits of 1160th 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 tier 1 and 2 members before reaching age 60, tier 3 and 4 members with 25 or more years of service credit before age 62, and tier 5 members 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 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 a least 25 years of service. Deferred retirement is available to members who have at least ten years of service credit and have not reached the service retirement age for the respective tier. The State of New Jersey sponsors and administers the following defined contribution public employee retirement program covering certain state and local government employees which include those Borough employees who are eligible for pension coverage. Defined Contribution Retirement Program (DCRP) -established under the provisions of Chapter 92, P.L. 2007 and Chapter 103, P.L. 2008 to provide coverage to elected and certain appointed officials, effective July 1, 2007 and employees enrolled in PERS on or after July 1, 2007 who earn in excess of established annual maximum compensation limits (equivalent to annual maximum wage for social security deductions). This provision was extended by Chapter 1, P.L. 2010, effective May 21, 2010, to new employees (Tier 2) of the PFRS and new employees who would otherwise be eligible to participate in PERS and do not earn the minimum salary required or do not work the minimum required hours but earn a base salary of at least $5,000 are eligible for participation in the DCRP. Membership is mandatory for such individuals with vesting occurring after one (1) year of membership. DCRP is a defined contribution pension plan. Other Pension Funds The state established and administers a Supplemental Annuity Collective Trust Fund (SACT) which is available to active members of the State-administered retirement systems to purchase annuities to supplement the guaranteed benefits provided by their retirement system. The state or local governmental employers do not appropriate funds to SACT. The cost of living increase for PFRS and PERS are funded directly by each of the respective systems, but are currently suspended as a result of reform legislation. According to state law, all obligations of each retirement system will be assumed by the State of New Jersey should any retirement system be terminated. The State of New Jersey, Department of the Treasury, Division of Pensions and Benefits, issues publicly available financial reports that include the financial statements and required supplementary information of each of the above systems, funds, and trust. The financial reports may be accessed via the New Jersey, Division of Pensions and Benefits website at www.state.nj.us/treasury/pensions. Measurement Focus and Basis of Accounting The financial statements of the retirement systems are prepared in accordance with U.S. generally accepted accounting principles as applicable to governmental organizations. In doing so, the Division adheres to reporting requirements established by the Governmental Accounting Standards Board (GASB). The accrual basis of accounting is used for measuring financial position and changes in net position of the pension trust funds. Under this method, contributions are recorded in the accounting period in which they are legally due from the employer or plan member, and deductions are recorded at the time the liabilities are due and payable in accordance with the terms of each plan. The accounts of the Division are organized and operated on the basis of funds. All funds are accounted for using an economic resources measurement focus. 42 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 11 EMPLOYEE RETIREMENT SYSTEMS (Continued) Investment Valuation The Division oflnvestment, Department of the Treasury, State of New Jersey (Division oflnvestment) manages and invests certain assets of the retirement systems. Prudential retirement is the third-party administrator for the DCRP and provides record keeping, administrative services and investment options. Investment transactions are accounted for on a trade or investment date basis. Interest and dividend income is recorded on the accrual basis, with dividends accruing on the ex-dividend date. The net increase or decrease in the fair value of investments includes the net realized and unrealized gains or losses on investments. The State of New Jersey, Department of the Treasury, Division of Investment, issues publicly available financial reports that include the financial statements of the State of New Jersey Cash Management Fund. The financial report may be obtained by writing to the State of New Jersey, Department of the Treasury, Division of Investment, P.O. Box 290, Trenton, New Jersey 08625-0290, or at www.state.nj/treasury/doinvest. Collective Net Pension Liability The collective net pension liability of the participating employers for local PERS at June 30, 2021 was not available and for June 30, 2020 is $16.4 billion and the plan fiduciary net position as a percentage of the total pension liability is 58.32% at June 30, 2020. The collective net pension liability of the participating employers for local PFRS at June 30, 2021 was not available and for June 30, 2020 is $14.9 billion and the plan fiduciary net position as a percentage of total pension liability is 63.52% at June 30, 2020. The total pension liabilities were determined based on actuarial valuations as of July I, 2019 which were rolled forward to June 30, 2020. Actuarial Methods and Assumptions In the July I, 2019 PERS and PFRS actuarial valuations, the actuarial assumptions and methods used in these valuations were described in the Actuarial Assumptions and Methods section of the Actuary's report and are included here in this note to the financial statements. The pension systems selected economic and demographic assumptions and prescribed them for use for purposes of compliance with GASB Statement No. 68. The Actuary provided guidance with respect to these assumptions, and it is their belief that the assumptions represent reasonable expectations of anticipated plan experience. Employer and Employee Pension Contributions The contribution policy is set by laws of the State of New Jersey and contributions are required by active members and participating employers. Plan members and employer contributions may be amended by State of New Jersey legislation, with the amount of contributions by the State of New Jersey contingent upon the annual Appropriations Act. As defined, the various retirement systems require employee contributions for 2021 and 2020 based on I 0.0% for PFRS, 7.50% for PERS and 5.50% for DCRP of employee's annual compensation. For PFRS and PERS, which are cost sharing multi-employer defined benefit pension plans, employers' contributions are based on an actuarially determined amount, which includes the normal cost and unfunded accrued liability. In the DCRP, which is a defined contribution plan, member contributions are matched by a 3% employer contribution. All contributions made by the Borough for 2021, 2020 and 2019 were equal to the required contributions. 43 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 11 EMPLOYEE RETIREMENT SYSTEMS (Continued) Employer and Employee Pension Contributions (Contributions) During the years ended December 31, 2021, 2020 and 2019, the Borough, was required to contribute for normal cost pension contributions, accrued liability pension contributions and non-contributory life insurance premiums the following amounts which equaled the required contributions for each respective year: Year Ended December 31 PFRS PERS DCRP 2021 $ 788,926 $ 422,097 $ 11,119 2020 740,917 387,125 10,639 2019 675,637 393,401 10,190 In addition for the years ended December 31, 2021, 2020 and 2019 the Borough contributed for long-term disability insurance premiums (LTDI) $-0-, $1,380 and $1,380, respectively for PERS. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions The regulatory basis of accounting requires participating employers in PERS and PFRS to disclose in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions, (GASB No. 68) their proportionate share of the collective net pension liability, collective deferred outflows of resources, collective deferred inflows of resources and collective pension expense excluding that attributable to employer-paid member contributions. Under GASB Statement No. 68 local governmental employers are required to provide certain financial information based on a measurement date no earlier than the end of the employer's prior fiscal year. The GASB 68 financial information from the State's Division of Pensions and Benefits to be reported for the year ended December 31, 2021 for the measurement date of June 30, 2021 was not available as of the date of audit. Accordingly, the State's Division of Local Government Services issued Local Finance Notice 2021-10 which authorized and permits New Jersey municipalities to present the most recent available audited GASB 68 financial information to be incorporated into the audit and remain in compliance with the regulatory basis of accounting disclosure requirements for notes to the financial statements. As such the GASB 68 financial information for the year ended December 31, 2021 is not presented in the notes to the financial statements. The employer allocation percentages presented are based on the ratio of the contributions made as an individual employer toward the actuarially detennined contribution amount to total contributions to the plan during the fiscal years ended June 30, 2020 and 2019. Employer allocation percentages have been rounded for presentation purposes. Public Employees Retirement System (PERS) At December 31, 2020, the Borough reported a liability of $6,390,345 for its proportionate share of the PERS net pension liability. The net pension liability was measured as of June 30, 2020 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2019. The Borough's proportionate share of the net pension liability was based on the ratio of the Borough's contributions to the pension plan relative to the total contributions of all participating governmental entities during the measurement period. As of the measurement date of June 30, 2020, the Borough's proportionate share was 0.03238 percent, which was a decrease of 0.00736 percent from its proportionate share measured as of June 30, 2019 of 0.03974 percent. 44 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 11 EMPLOYEE RETIREMENT SYSTEMS (Continued) Public Employees Retirement System (PERS) (Continued) For the year ended December 31, 2020, the pension system has determined the Borough's pension expense to be $157,417 for PERS based on the actuarial valuations which is less than the actual contribution reported in the Borough's financial statements of $387,125. At December 31, 2020, the Borough's deferred outflows of resources and deferred inflows ofresources related to PERS pension which are not reported on the Borough's financial statements are from the following sources: 2020 Deferred Deferred Outflows Inflows of Resources of Resources Difference Between Expected and Actual Experience $ 116,358 $ 22,599 Changes of Assumptions 207,310 2,675,698 Net Difference Between Projected and Actual Earnings on Pension Plan Investments 218,427 Changes in Proportion and Differences Between Borough Contributions and Propo1iionate Share of Contributions 264,226 304,973 Total $ 806,321 $ 3,003,270 At December 31, 2020 the amounts reported as deferred outflows of resources and deferred inflows of resources related to PERS pension will be recognized in pension expense (benefit) as follows: Year Ending December 31, Total 2021 $ (761,835) 2022 (729,658) 2023 (482,542) 2024 (183,357) 2025 (39,557) Thereafter $ (2,196,949) 45 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 11 EMPLOYEE RETIREMENT SYSTEMS (Continued) Public Employees Retirement System (PERS) (Continued) Actuarial Assumptions The Borough's total pension liability reported for the year ended December 31, 2020 was based on the June 30, 2020 measurement date as determined by an actuarial valuation as of July 1, 2019, which was rolled forward to June 30, 2020. This actuarial valuation used the following actuarial assumptions, applied to all periods in the measurement date: Inflation Rate: Price Wage Salary Increases: Through 2026 Thereafter Investment Rate of Return Mortality Rate Table 2.75% 3.25% 2.00-6.00% Based on Years of Service 3.00%-7.00% Based on Years of Service 7.00% Pub-2010 Assumptions for mortality improvements are based on Society of Actuaries Scale MP for 2020. The actuarial assumptions used in the July 1, 2019 valuations were based on the results of an actuarial experience study for the period July 1, 2014 to June 30, 2018. 46 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 11 EMPLOYEE RETIREMENT SYSTEMS (Continued) Pension Liabilities, Pension Expense, and Def erred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) Public Employees Retirement System (PERS) (Continued) Long-Term Expected Rate of Return The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rate of return ( expected returns, net of pension plans 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 real rates of return for each major asset class included in the pension plans' target asset allocation as of June 30, 2020, as reported for the year ended December 31, 2020 are summarized in the following table: Asset Class Risk Mitigation Strategies Cash Equivalents U.S. Treasuries Investment Grade Credit US Equity Non-US Developed Markets Equity Emerging Markets Equity High Yield Real Assets Private Credit Real Estate Private Equity Discount Rate Target Allocation 3.00% 4.00% 5.00% 8.00% 27.00% 13.50% 5.50% 2.00% 3.00% 8.00% 8.00% 13.00% 2020 Long-Term Expected Real Rate of Return 3.40% 0.50% 1.94% 2.67% 7.71% 8.57% 10.23% 5.95% 9.73% 7.59% 9.56% 11.42% The discount rate used to measure the total pension liabilities of the PERS plan was as follows: Calendar Year 2020 2019 Measurement Date June 30, 2020 June 30, 2019 Discount Rate 7.00% 6.28% 47 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 11 EMPLOYEE RETIREMENT SYSTEMS (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) Public Employees Retirement System (PERS) (Continued) Discount Rate (Continued) The following table represents the crossover period, if applicable, for the PERS defined benefit plan: Period of Projected Benefit Payments for which the Following Rates were Applied: Long-Term Expected Rate of Return Sensitivity of Net Pension Liability All Periods The following presents the Borough's proportionate share of the PERS net pension liability as of December 31, 2020 calculated using the discount rate of 7. 00%, as well as what the Borough's proportionate share of the PERS net pension liability would be if it were calculated using a discount rate that is I-percentage-point lower 6.00% or 1-percentage- point higher 8.00% than the current rate: 1% Current 1% Decrease Discount Rate Increase 2020 (6.00%) (7.00%) (8.00%) Borough's Proportionate Share of the PERS Net Pension Liability $ 8,044,378 $ 6,390,345 $ 4,986,853 The sensitivity analysis was based on the proportionate share of the Borough's net pension liability at December 31, 2020. A sensitivity analysis specific to the Borough's net pension liability was not provided by the pension system. 48 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 11 EMPLOYEE RETIREMENT SYSTEMS (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions Public Employees Retirement System (PERS) (Continued) Pension Plan Fiduciary Net Position Detailed information about the PERS pension plan's fiduciary net position is available in the separately issued financial report from the State of New Jersey, Department of the Treasury, Division of Pension and Benefits. The financial report may be accessed via the New Jersey, Division of Pensions and Benefits, website at www.state.nj.us/treasmy/pensions. Police and Firemen's Retirement System (PFRS) At December 31, 2020 the Borough reported a liability of $9,114,267 for its proportionate share of the PFRS net pension liability. The net pension liability was measured as of June 30, 2020 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2019. The Borough's proportionate share of the net pension liability was based on the ratio of the Borough's contributions to the pension plan relative to the total contributions of all participating governmental entities during the measurement period. As of the measurement date of June 30, 2020, the Borough's proportionate share was 0.07054 percent, which was a decrease of 0.00031 percent from its proportionate share measured as of June 30, 2019 of 0.07085 percent. For the year ended December 31, 2020, the pension system has determined the Borough pension expense to be $542,256 for PFRS based on the actuarial valuations which is less than the actual contribution reported in the Borough's financial statements of $740,917. At December 31, 2020, the Borough's deferred outflows of resources and deferred inflows of resources related to PFRS pension which are not reported on the Borough's financial statements are from the following sources: 2020 Deferred Deferred Outflows Inflows of Resources of Resources Difference Between Expected and Actual Experience $ 91,887 $ 32,710 Changes of Assumptions 22,936 2,443,480 Net Difference Between Projected and Actual Earnings on Pension Plan Investments 534,412 394,120 Changes in Proportion and Differences Between Borough Contributions and Proportionate Share of Contributions 915,192 Total $ 1,564,427 $ 2,870,310 49 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 11 EMPLOYEE RETIREMENT SYSTEMS (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) Police and Firemen's Retirement System (PFRS) (Continued) At December 31, 2020 the amounts reported as deferred outflows of resources and deferred inflows of resources related to PFRS pension will be recognized in pension expense (benefit) as follows: Year Ending December 31, Total 2021 $ (765,934) 2022 (401,455) 2023 (55,781) 2024 (73,542) 2025 (9,171) Thereafter $ (1,305,883) Actuarial Assumptions The Borough's total pension liability reported for the year ended December 31, 2020 was based on the June 30, 2020 measurement date as determined by an actuarial valuation as of July 1, 2019, which was rolled forward to June 30, 2020. This actuarial valuation used the following actuarial assumptions, applied to all periods in the measurement date: Inflation Rate: Price Wage Salary Increases: Through Thereafter Investment Rate of Return Mortality Rate Table 2020 2.75% 3.25% All Future Years 3.25%-15.25% Based on Years of Service Not Applicable 7.00% Pub -2010 Assumptions for mortality improvements are based on Society of Actuaries Scale MP for 2020. The actuarial assumptions used in the July 1, 2019 valuations were based on the results of an actuarial experience study for the period July 1, 2013 to June 30, 2018. 50 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 11 EMPLOYEE RETIREMENT SYSTEMS (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Def erred Inflows of Resources Related to Pensions (Continued) Police and Firemen's Retirement System (PFRS) (Continued) Long-Term Expected Rate of Return The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rate of return ( expected returns, net of pension plans 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 real rates of return for each major asset class included in the pension plans' target asset allocation as of June 30, 2020, as reported for the year ended December 31, 2020 are summarized in the following table: Asset Class Risk Mitigation Strategies Cash Equivalents U.S. Treasuries Investment Grade Credit US Equity Non-US Developed Markets Equity Emerging Markets Equity High Yield Real Assets Private Credit Real Estate Private Equity Discount Rate Target Allocation 3.00% 4.00% 5.00% 8.00% 27.00% 13.50% 5.50% 2.00% 3.00% 8.00% 8.00% 13.00% 2020 Long-Term Expected Real Rate of Return 3.40% 0.50% 1.94% 2.67% 7.71% 8.57% 10.23% 5.95% 9.73% 7.59% 9.56% 11.42% The discount rate used to measure the total pension liabilities of the PFRS plan was as follows: Calendar Year 2020 2019 Measurement Date June 30, 2020 June 30, 2019 Discount Rate 7.00% 6.85% 51 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 11 EMPLOYEE RETIREMENT SYSTEMS (Continued) Pension Liabilities, Pension Expense, and Def erred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) Police and Firemen's Retirement System (PFRS) (Continued) Discount Rate (Continued) The following table represents the crossover period, if applicable, for the PFRS defined benefit plan: Period of Projected Benefit Payments for which the Following Rates were Applied: Long-Term Expected Rate of Return Sensitivity of Net Pension Liability 2020 All Periods The following presents the Borough's proportionate share of the PFRS net pension liability as of December 31, 2020 calculated using the discount rate of 7.00% as well as what the Borough's proportionate share of the PFRS net pension liability would be if it were calculated using a discount rate that is I-percentage-point lower 6.00% or 1-percentage- point higher 8.00% than the current rate: 1% Current 1% Decrease Discount Rate Increase 2020 (6.00%) (7.00%) (8.00%) Borough's Proportionate Share of the PFRS Net Pension Liability $ 12,120,099 $ 9,114,267 $ 6,617,694 The sensitivity analysis was based on the proportionate share of the Borough's net pension liability at December 31, 2020. A sensitivity analysis specific to the Borough's net pension liability was not provided by the pension system. 52 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 11 EMPLOYEE RETIREMENT SYSTEMS (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) Police and Firemen's Retirement System (PFRS) (Continued) Special Funding Situation -PFRS Under N.J.S.A. 43:16A-15, the Borough is responsible for their own PFRS contributions based on actuarially detennined amounts, except where legislation was passed which legally obligated the State to make contributions if certain circumstances occurred. The legislation which legally obligates the State is as follows: Chapter 8, P.L. 2000, Chapter 318, P .L. 2001, Chapter 86, P .L. 2001, Chapter 511, P .L. 1991, Chapter 109, P .L. 1979, Chapter 24 7, P .L. 1993 and Chapter 201, P .L. 2001. The amounts contributed on behalf of the Borough by the State under this legislation is considered to be a special funding situation as defined by GASB Statement No. 68 and the State is treated as a nonemployer contributing entity. Accordingly, the Borough's proportionate share percentage of the net pension liability, deferred outflows and inflows detennined under GASB Statement No. 68 is zero percent and the State's proportionate share is 100% for PFRS under this legislation. At December 31, 2020, the State's proportionate share of the net pension liability attributable to the Borough for the PFRS special funding situation is $1,414,493. For the year ended December 31, 2020, the pension system has detennined the State's proportionate share of the pension expense attributable to the Borough for the PFRS special funding situation is $160,304 which is more than the actual contribution the State made on behalf of the Borough of $108,844. At December 31, 2020 (measurement date June 30, 2020) the State's share of the PFRS net pension liability attributable to the Borough was 0.07054 percent, which was an increase of 0.00031 percent from its proportionate share measured as of December 31, 2019 (measurement date June 30, 2019) of 0.07085 percent. The State's proportionate share attributable to the Borough was developed based on actual contributions made to PFRS allocated to employers based upon covered payroll. These on-behalf contributions have not been reported on the Borough's financial statements. Pension Plan Fiduciary Net Position Detailed infonnation about the PFRS pension plan's fiduciary net position is available in the separately issued financial report from the State of New Jersey, Department of the Treasury, Division of Pension and Benefits. The financial reports may be accessed via the New Jersey, Division of Pensions and Benefits, website at www.state.nj.us/treasury/pensions. 53 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 12 POST-RETIREMENT MEDICAL BENEFITS OPEB Liabilities, OPEB Expenses and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB Plan Description The Borough provides a postemployment healthcare plan (OPEB) for its eligible retirees and their spouses. The plan is a single-employer defined benefit healthcare plan administered by the Borough. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No.75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Benefits Provided The Borough provides postretirement healthcare insurance benefits for retirees and their dependents who meet certain eligibility requirements. Employees Covered by Postemployment Benefits At December 31, 2021 and 2020, the following employees were covered by postemployment health care benefits: Active Employees Inactive Employees or Beneficiaries Currently Receiving Benefits Inactive Employees Entitles to But Not Yet Receiving Benefits 2021 10 32 42 2020 10 32 42 At December 31, 2021 and 2020, the Borough's total OPEB liabilities were $16,718,326 and $17,390,679, respectively. Net OPEB liability was measured as of December 31, 2021 and December 31, 2020, respectively, and the OPEB liability was determined by an actuarial valuation as of those dates. For the years ended December 31, 2021 and 2020, the Borough has determined it's OPEB expense to be $552,955 and $688,055, respectively, based on the actuarial valuations which is less than the actual contributions for 2021 and more than the actual contributions reported in the Borough's financial statements of $630,389 and $592,171, respectively. 54 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 12 POST-RETIREMENT MEDICAL BENEFITS (Continued) OPEB Liabilities, OPEB Expenses and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued) Actuarial Assumptions The Borough's total OPEB liability reported for the year ended December 31, 2021 was based on the December 31, 2020 measurement date as determined by an actuarial valuation as of December 31, 2020 which was rolled forward to December 31, 2021. The total OPEB liability reported for the year ended December 31, 2020 was based on the December 31, 2019 measurement date as determined by an actuarial valuation as of December 31, 2019, which was rolled forward to December 31, 2020. This actuarial valuation used the following actuarial assumptions, applied to all periods in the measurement date: 2021 2020 Inflation Rate 2.5% 2.5% Salary Increases 2.5% 2.5% Discount Rate 2.1% 2.12% Healthcare Cost Trend Rates 5.5% 5.6% Retirees' Share of Benefit-Related Costs The discount rate was based on the Bond Buyer 20 Index for 2021 and Bond Buyer 20 Index for 2020. Mortality rates for 2021 and 2020 were based on the Mortality Table for Males or Females, as appropriate, respectively, with adjustments for mortality improvements based on Scale and RP 2000 combined Healthy Male Mortality Rates set forward one year and adjusted for generational improvement. 55 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 12 POST-RETIREMENT MEDICAL BENEFITS (Continued) OPEB Liabilities, OPEB Expenses and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued) Changes in the Total OPEB Liability The change in the Borough's OPEB liability for the years ended December 31, 2021 and 2020 based on measurement dates of December 31, 2021 and December 31, 2020, respectively are as follows: Total OPEB Total OPEB Liability Liability 2021 2020 Balance -Beginning of Year $ 17,390,579 $ 16,378,579 Changes for the Year: Service Cost 28,576 28,576 Interest on the Total OPEB Liability 363,653 443,636 Changes of Benefit Terms Differences Between Expected and Actual Experience Changes in Assumptions (533,074) 971,941 Benefit Payments {531,408) (432,153) Net Changes (672,253) 1,012,000 Balance -End of Year $ 16,718,326 $ 17,390,579 Changes of assumptions for 2021 reflect a change in the discount rate from 2.12 percent in 2020 to 2.06 percent in 2021. Changes in assumptions for 2020 reflect a change in the discount rate from 2.74 percent in 2019 to 2.12 percent in 2020. 56 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 12 POST-RETIREMENT MEDICAL BENEFITS (Continued) OPEB Liabilities, OPEB Expenses and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued) Sensitivity of Net OPEB Liability to Changes in the Discount Rate The following presents the Borough's net OPEB liability as of December 31, 2021 and 2020 calculated using the discount rate of 2.06% and 2.12%, respectively, as well as what the Borough's net OPEB liability would be if it were calculated using a discount rate that is I-percentage-point lower 1.06% and 1.12%, respectively or I-percentage-point higher 3 .06% and 3 .12%, respectively than the current rate: 1% Current 1% Decrease Discount Rate Increase 2021 (1.06%) (2.06%) (3.06%) Net OPEB Liability $ 18,666,412 $ 16,718,326 $ 15,089,016 1% Current 1% Decrease Discount Rate Increase 2020 (1.12%) (2.12%) (3.12%) Net OPEB Liability $ 19,002,833 $ 17,390,579 $ 15,995,274 Sensitivity of Net OPEB Liability to Changes in the Healthcare Trend Rate The following presents the Borough's net OPEB liability as of December 31, 2021 and 2020 calculated using the healthcare trend rates as disclosed above as well as what the Borough's net OPEB liability would be if it were calculated using healthcare trend rates that are I-percentage-point lower or I-percentage-point higher than the current rate: 1% Healthcare Cost 1% Decrease Trend Rates Increase 2021 (1.06%) (2.06%) (3.06%) Net OPEB Liability $ 18,666,412 $ 16,718,326 $ 15,089,016 1% Healthcare Cost 1% Decrease Trend Rates Increase 2020 Net OPEB Liability $ 15,941,378 $ 17,390,579 $ 19,096,175 57 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 12 POST-RETIREMENT MEDICAL BENEFITS (Continued) OPEB Liabilities, OPEB Expenses and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB (Continued) Special Funding Situation Under GASB Statement No. 75 local governmental employers are required to provide certain financial information based on a measurement date no earlier than the end of the employer's prior fiscal year. The GASB 75 financial information from the State's Division of Pensions and Benefits to be reported for the year ended December 31, 2021 for the measurement date of June 30, 2021 was not available as of the date of audit. Accordingly, the State's Division of Local Government Services issued Local Finance Notice 2021-10 which authorizes and permits New Jersey municipalities to present the most recent available audited GASB 75 financial information to be incorporated into the audit and remain in compliance with the regulatory basis of accounting disclosure requirements for notes to the financial statements. As such the GASB 75 financial information for the year ended December 31, 2021 is not presented in the notes to the financial statements. Under N.J.S.A. 43:3C-24 the Borough is responsible for their own OPEB contributions based on actuarially determined amounts, except where legislation was passed which legally obligated the State to make contributions if certain circumstances occurred. The legislation which legally obligates the State is as follows: Chapter 330, P.L. 1997 and Chapter 271, P.L., 1989. Under Chapter 330, P.L. 1997, the State pays the premiums or periodic charges for the qualified local police and firefighter retirees and dependents equal to 80 percent of the premium of periodic charge for the category of coverage elected by the qualified retiree under the State managed care plan or a health maintenance organization participating in the program providing the lowest premium or periodic charge. The State also provides funding for retiree health benefits to survivors of local police officers and firefighters who die in the line of duty under Chapter 271, P.L. 1989. The amounts contributed on behalf of the Borough by the State under this legislation is considered to be a special funding situation as defined by GASB Statement No. 75 and the State is treated as a nonemployer contributing entity. Accordingly, the Borough's proportionate share percentage of the net pension liability, deferred outflows and inflows determined under GASB Statement No. 75 is zero percent and the State's proportionate share is 100% of OPEB under this legislation. At December 31, 2020, the State's proportionate share of the net OPEB liability attributable to the Borough for the OPEB special funding situation is $5,396,209. For the year ended December 31, 2020 the plan has determined the State's proportionate share of the OPEB expense attributable to the Borough for the OPEB special funding situation is $268,625. At December 31, 2020, (measurement date June 30, 2020), the State's share of the OPEB liability attributable to the Borough was 0.09879 percent, which was an increase of 0.01829 percent from its proportionate share measured as of December 31, 2019 (measurement date June 30, 2019) of 0.08050 percent. The State's proportionate share attributable to the Borough was developed based on eligible plan members subject to the special funding situation. This data takes into account active members from both participating and non-participating employer locations and retired members currently receiving OPEB benefits. OPEB Plan Fiduciary Net Position Detailed information about the OPEB plan's fiduciary net position is available in the separately issued financial report from the State of New Jersey, Department of the Treasury, Division of Pension and Benefits. The financial reports may be accessed via the New Jersey, Division of Pensions and Benefits, website at www.state.nj.us/treasury/pensions. NOTE 13 RISK MANAGEMENT The Borough is exposed to various risks of loss related to general liability, automobile coverage, theft of, damage to and destruction of assets; errors and omissions; injuries to employees; termination of employees and natural disasters. The Borough has obtained commercial insurance coverage to guard against these events to minimize the exposure to the Borough should they occur. 58 BOROUGH OF FRANKLIN LAKES NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 13 RISK MANAGEMENT (Continued) The Borough of Franklin Lakes is a member of the Bergen County Municipal Joint Insurance Fund (BJIF) and Municipal Excess Liability Joint Insurance Fund (MEL). The joint insurance funds are both an insured and self- administered group of municipalities established for the purpose of insuring against property damage, general liability, motor vehicles and equipment liability and worker's compensation. The Funds are risk-sharing public entity pools. The BJIF and MEL coverage amounts are on file with the Borough. The relationship between the Borough and respective insurance funds is governed by a contract and by-laws that have been adopted by resolution of each unit's governing body. The Borough is contractually obligated to make all annual and supplementa1y contributions to the insurance funds, to report claims on a timely basis, to cooperate with the management of the funds, its claims administrator and attorneys in claims investigation and settlement, and to follow risk management procedures as outlined by the funds. Members have a contractual obligation to fund any deficit of the funds attributable to a membership year during which the municipality was a member. The funds provide its members with risk management services, including the defense of and settlement of claims, and established reasonable and necessary loss reduction and prevention procedures to be followed by the members. Complete financial statements of the funds can be obtained by contacting the respective fund's Treasurer. There has been no significant reduction in insurance coverage from the previous year nor have there been any settlements in excess of insurance coverage in any of the prior three years. The Borough has elected to fund its New Jersey Unemployment Compensation Insurance under the "Benefit Reimbursement Method". Under this plan the Borough is required to reimburse the New Jersey Unemployment Trust Fund for benefits paid to its former employees and charged to its account with the State. The Borough is billed quarterly for amounts due to the State. The following is a summary of Borough contributions, employee contributions, reimbursements to the State for benefits paid and the ending balance of the Borough's unemployment compensation trust fund for the current and previous two years: Year Ended Employee Amount Ending December 31 Contributions Reimbursed Balance 2021 $ 8,623 $ 225 $ 40,596 2020 12,883 6,611 32,198 2019 7,766 7,086 25,926 NOTE 14 CONTINGENT LIABILITIES The Borough is a party defendant in some lawsuits, none of a kind unusual for a municipality of its size and scope of operation. In the opinion of the Borough's Attorney, the potential claims against the Borough not covered by insurance policies would not materially affect the financial condition of the Borough. Pending Tax Appeals -Various tax appeal cases were pending in the New Jersey Tax Court at December 31, 2021 and 2020. Amounts claimed have not yet been determined. The Borough is vigorously defending its assessments in each case. Under the accounting principles prescribed by the Division of Local Government Services, Department of community Affairs, State of New Jersey, the Borough does not recognize a liability, if any, until these cases have been adjudicated. The Borough expects such amounts, if any, could be material. As of December 31, 2021 and 2020, the Borough reserved $55,135 and $55,135, respectively in the Current Fund for tax appeals pending in the New Jersey Tax Court. Funding of any ultimate liability would be provided for in succeeding years' budget or from fund balance. Federal and State Awards -The Borough participates in a number of federal and state programs that are fully or partially funded by grants received from other governmental units. Expenditures financed by grants are subject to audit by the appropriate grantor government. If expenditures are disallowed due to noncompliance with grant program regulations, the Borough may be required to reimburse the grantor government. As of December 31, 2021 and 2020, significant amounts of grant expenditure have not been audited by the various grantor agencies but the Borough believes that disallowed expenditures, if any, based on subsequent audits will not have a material effect on the overall financial position of the Borough. 59 BOROUGH OF FRANKLIN LAKES NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 15 FEDERAL ARBITRAGE REGULATIONS The Borough is subject to Section 148 of the Internal Revenue Code as it pertains to the arbitrage rebate on all tax- exempt obligations, both long and short-term debt. Under the 1986 Tax Reform Act, the Internal Revenue Service (IRS) required that all excess earnings from investment proceeds be rebated to the IRS. Arbitrage, for purposes of these regulations, is defined as the difference between the yield on the investment and the yield on the obligations issued. If there are excess earnings, this amount may be required to be rebated to the IRS. At December 31, 2021 and 2020, the Borough had no estimated arbitrage earnings due to the IRS. NOTE 16 INFECTIOUS DISEASE OUTBREAK-COVID-19 PANDEMIC The World Health Organization declared a pandemic following the global outbreak of COVID-19, a respiratory disease caused by a new strain of coronavirus. On March 13, 2020, the President of the United States declared a national emergency to unlock federal funds and assistance to help states and local governments fight the pandemic. Governor Phil Murphy, of the State of New Jersey, also declared a public health emergency on March 9, 2020 and instituted mandatory measures via various executive orders to contain the spread of the virus, including closing schools and nonessential businesses and limiting social gatherings. These measures, which altered the behaviors of businesses and people, had negative impacts on regional, state and local economies. The Governor, pursuant to various executive orders, then implemented a multi-stage approach to restarting New Jersey's economy. The declaration of the state of emergency and of a public health emergency was terminated by the Governor, by executive order, on June 4, 2021. Also, on June 4, 2021, the Governor signed into law Assembly Bill No. 5820 which terminates most of the Governor's pandemic-related executive orders in early July. The remaining executive orders ( dealing with coronavirus testing and vaccinations, moratoriums on evictions and utility shutoffs and various other matters) will terminate on January 1, 2022. On January 11, 2022, the Governor reinstated, via Executive Order No. 280, the state of emergency and declared a new public health emergency in response to a surge in cases tied to new variants of COVID-19, in particular the Omicron variant. Such public health emergency was set to expire 30 days from January 11, 2022, but was later extended, via Executive Order No. 288, for an additional 30 days on February 10, 2022. In the event of substantial increases in COVID-19 hospitalizations, spot positivity or rates of transmission, the Governor is empowered to impose more restrictive measures than currently in place. In order to provide additional means for local governmental units to address the financial impact of the COVID-19 outbreak, the Governor signed into law P.L. 2020 c. 74 ("Chapter 74") on August 31, 2020. Chapter 74, which took effect immediately, adds two new purposes to the list of special emergency appropriations which may be raised by municipalities or counties over a five year period ( either through the issuance of special emergency notes or raised internally without borrowing): (1) direct COVID-19 response expenses; and (2) deficits in prior year's operations attributable to COVID-19 (the beginning of the five year repayment schedule is delayed by one year for these new purposes). Upon approval by the Director of the Division of Local Government Services, New Jersey Department of Community Affairs, in cases of significant fiscal distress, the five year period may be extended to up to ten years. In addition, the statute permits school districts and public authorities to issue debt with a maximum five year maturity schedule for direct COVID-19 expenses. Chapter 74 provides for State supervision of all local government unit borrowings. The statute also grants the Director the authority to modify municipal budgeting rules concerning anticipated revenues in order to lessen the impact of revenue reductions due to COVID-19. The Borough of Franklin Lakes' finances and operations may be materially and adversely affected as a result of the continued spread of COVID-19 through reduced or delayed revenue streams, which include the collection of property taxes, which are the Borough of Franklin Lakes' primary revenue source for supporting its budget. The Borough of Franklin Lakes cannot predict costs associated with a potential infectious disease outbreak like COVID-19 such as operational costs to clean, sanitize and maintain its facilities, or costs to operate remotely and support Borough functions and critical government actions during an outbreak or any resulting impact such costs could have on the operations of the Borough. However, as of the date of audit, even though the Borough finances and operations had certain reduced revenue streams due to the COVID-19 outbreak, the overall finances and operations of the Borough have not been materially and adversely affected due to the COVID-19 outbreak. 60 BOROUGH OF FRANKLIN LAKES NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 NOTE 16 INFECTIOUS DISEASE OUTBREAK-COVID-19 PANDEMIC (Continued) The degree of any such impact on the operations and finances of the Borough cannot be predicted due to the dynamic nature of the COVID-19 outbreak, including uncertainties relating to its (i) duration, and (ii) severity, as well as with regard to what actions may be taken by governmental and other health care authorities to contain or mitigate its impact. The continued spread of the outbreak could have a material adverse effect on the Borough and its economy. The Borough is monitoring the situation and will take such proactive measures as may be required to maintain its functionality and meet its obligations. The American Rescue Plan Act of 2021, H.R. 1319 (the "Plan"), signed into law by President Biden on March 11, 2021, comprises $1.9 trillion in relief designed to provide funding to address the COVID-19 pandemic and alleviate the economic and health effects of the COVID-19 pandemic. The Plan includes various forms of financial relief including up to a $1,400 increase in direct stimulus payment to individuals and various other forms of economic relief, including extended unemployment benefits, continued eviction and foreclosure moratoriums, an increase in the child tax credit, an increase in food and housing aid, assistance grants to restaurants and bars, and other small business grants and loans. The Plan provides funding for state and local governments to offset costs to safely reopen schools during the COVID-19 pandemic and to subsidize COVID-19 testing and vaccination programs. In addition, the Plan includes $350 billion in relief funds to public entities, such as the Borough. The Borough will receive $1,163,810 from the Plan in two equal payments. On May 24, 2021, the Borough received its first installment of funds under the Plan in the amount of $581,905. The Borough utilized these funds in the 2022 budget to replace lost public sector revenue. The deadline to obligate the funds is December 31, 2024 and to spend them is December 31, 2026. 61 CURRENT FUND BOROUGH OF FRANKLIN LAKES STATEMENT OF CURRENT CASH -COLLECTOR-TREASURER Balance, December 31, 2020 Increased by Receipts: Taxes Receivable Non-Budget Revenue Due from State of NJ -Senior Citizens' and Veterans' Deductions Tax Title Lien Redemption Grants Receivable Unappropriated Grants Revenue Accounts Receivable Petty Cash Receipts from Other Trust Fund Receipts from Trust Assessment Fund Fees Payable Prepaid Taxes Reserve for Recreation Online Fees Tax Overpayments COVID-19 Reimbursements Decreased by Disbursements: 2021 Budget Appropriations 2020 Appropriation Reserves Encumbrances Payable County Taxes Payable Local District School Tax Payable Regional High School Taxes Payable Fees Payable Petty Cash Tax Overpayments Refunded Reserve for Recreation Online Fees Reserve for State and Federal Grants -Appropriated Reserve for COVID-19 Reimbursements Refund of Prior Year Revenue Refund of Prior Year Taxes Balance, December 31, 2021 $ 62 73,257,072 184,137 44,000 6,272 130,476 581,905 4,991,469 500 222 2,518 52,226 700,421 159,848 68,972 5,060 17,992,111 1,130,348 23,307 11,240,680 29,407,906 19,291,656 52,245 500 70,430 159,848 65,882 9,748 1,655 117,905 EXHIBIT A-4 $ 6,872,376 80,185,098 87,057,474 79,564,221 $ 7,493,253 Office Borough Clerk Tax Office Municipal Court Board of Health Construction Code Borough Clerk Recreation BOROUGH OF FRANKLIN LAKES STATEMENT OF CHANGE FUND STATEMENT OF PETTY CASH 63 EXHIBIT A-5 Balance, Balance, December 3 1, December 31, 2020 2021 $ 100 $ 100 200 200 100 100 100 100 200 200 700 $ 700 EXHIBIT A-6 Received from Treasurer Returned to Treasurer $ $ 400 $ 100 400 100 500 $ 500 ~=~~ EXHIBIT A-7 BOROUGH OF FRANKLIN LAKES STATEMENT OF GRANTS RECEIVABLE Balance, Balance, December 31, Revenue Cash December 31, 2020 Accrued Receipts 2021 Clean Communities Grant $ 29,938 $ 29,938 Recycling Tonnage Grant 18,319 18,319 Municipal Alliance Program $ 15,858 $ 15,858 Drunk Driving Enforcement Fund 3,922 3,922 Distracted Driving 5,957 5,957 Body Armor Replacement Program 1,912 1,912 Franklin Lakes Rec Foundation CDBG -Handicap Accessible Ramps 15,000 15,000 Private Donation 20,500 20,500 Drive Sober or Get Pulled Over 5,923 5,923 Alcohol Education and Rehabilitation FEMA -Fire Department SAFER Grant 548,727 29,005 519,722 ANJEC Open Space Grant 500 500 NJUCF Reforestation & Tree Planting 25,823 25,823 $ 590,908 $ 101,471 $ 130,476 $ 561,903 Cash Collections $ 130,476 64 BOROUGH OF FRANKLIN LAKES STATEMENT OF DUE TO STATE OF NEW JERSEY SENIOR CITIZENS' AND VETERANS' DEDUCTIONS Balance, December 3 1, 2020 Increased by: Received in Cash from State $ Decreased by: Senior Citizens' Deductions Per Tax Billings Veterans' Deductions Per Tax Billings Senior Citizens' and Veterans' Deductions Allowed by Tax Collector Balance, December 31, 2021 65 EXHIBIT A-8 $ 5,193 44,000 44,000 49,193 3,000 39,750 750 43,500 $ 5,693 °' °' BOROUGH OF FRANKLIN LAKES STATEMENT OF TAXES RECEIVABLE AND ANALYSIS OF PROPERTY TAX LEVY Balance, Added and December 31, 2021 Omitted Year 2020 !&.YY Taxes 2020 $ 503,772 503,772 2021 $ 72,548,973 $ 1,335,434 $ 503,772 $ 72,5j8,973 $ 1,335,434 Analysis of 2021 Property Tax Levy TAX YIELD General Purpose Tax Added and Omitted Taxes (54:4-63.1 et seq.) TAX LEVY Local District School Tax (Abstract) Regional High School Tax (Abstract) County Tax (Abstract) County Open Space Tax Due County for Added and Omitted Taxes Local Tax for Municipal Purposes (Abstract) Minimum LibnuyTax Additional Tax Levied $ 29,407,906 19,291,656 10,628,150 441,316 204,183 11,314,062 1,445,696 1,151,438 Collected In 2020 $ 617,909 $ 617,909 $ 72,548,973 1,335,434 $ 59,973,211 13,91_1_,196 2021 $ 491,426 491,426 72,765,646 $ 73,257,072 $ 73,884,407 $ 73,884,407 Senior Citizens' and Veterans' Deductions Allowed Cancelled -$ 2,648 2,648 $ 43,500 191,873 $ 43,500 $ 194,521 EXHIBIT A-9 Transfer to Tax Balance, Title December 31, Liens 2021 $ 9,698 $ 9,698 10,333 255,146 $ 20,031 $ ---255,146 Balance, December 31, 2020 Increased by: BOROUGH OF FRANKLIN LAKES STATEMENT OF TAX TITLE LIENS Transferred from Current Taxes Receivable Transferred from Delinquent Taxes Receivable Decreased by: Tax Title Lien Redemptions Balance, December 31, 2021 67 EXHIBIT A-10 $ 13,387 10,333 9,698 33,418 6,272 $ 27,146 EXHIBIT A-11 BOROUGH OF FRANKLIN LAKES STATEMENT OF REVENUE ACCOUNTS RECEIVABLE Balance, Balance, December 3 1, Accrued Collected in December 31, 2020 2021 2021 2021 Borough Clerk Licenses Alcoholic Beverages $ 10,000 $ 10,000 Other 1,484 1,484 Board of Health Licenses 16,498 16,498 Fees and Permits 84,332 84,332 Tax Collector Fees and Permits 660 660 Planning Board Fees and Permits 46,450 46,450 Fire Prevention Fees and Permits 27,574 27,574 Police Department Fees and Permits 11,625 11,625 Uniform Construction Code Fees and Permits 893,301 893,301 Municipal Court Fines and Costs -Municipal Court $ 8,584 184,902 178,857 $ 14,629 Interest and Costs on Taxes and Assessments 141,048 141,048 Interest on Investments and Deposits 431,129 431,129 Outside Police Employment 138,217 138,217 Abandoned Property Fees 36,000 36,000 Energy Receipts Tax 1,775,732 1,775,732 Watershed Moratorium Offset Aid 5,969 5,969 Shared Service -Borough of Oakland 57,088 57,088 Uniform Fire Safety Act 18,482 18,482 Cable T.V. Franchise Fee 184,666 184,666 Lease of Land for Monopole-Sprint Co 116,914 116,914 Recreation Program Fees 201,858 201,858 Recycling Revenue 89,724 89,724 VFW Parking Permits 2,770 2,770 Reserve for Future Capital Projects 119,300 119,300 Library Reimbursement 197,970 197,970 Rental Fees -Community Center/ Field 7,000 7,000 Child Care Facility Rent 30,090 30,090 PILOT -Municipal 45,268 45,268 Reserve for Payment of Debt 121,463 121,463 $ 8,584 $ 4,997,514 $ 4,991,469 $ 14,629 68 EXHIBIT A-12 Page 1 BOROUGH OF FRANKLIN LAKES STATEMENT OF APPROPRIATION RESERVES Balance, Balance Paid December 31, Encumbrances After or Balance GENERAL GOVERNMENT 2020 Restored Transfers Modification Charged Lapsed General Administration Salaries and Wages $ 5 $ 5 $ 5 Other Expenses 19,758 $ 12,090 $ (8,375) 23,473 $ 17,143 6,330 Mayor & Council Salaries and Wages 1,250 1,250 1,250 Other Expenses 9,556 1,102 10,658 1,741 8,917 Municipal Clerk Salaries and Wages 847 847 847 Other Expenses 3,148 4,165 7,313 3,950 3,363 Financial Administration Salaries and Wages 1,297 1,297 1,297 Other Expenses 982 2,976 2,000 5,958 5,942 16 Audit Services Other Expenses 4,117 4,117 1,200 2,917 Revenue Administration (Tax Collection) Salaries and Wages 254 254 254 Other Expenses 1,703 947 2,650 1,804 846 Tax Assessment Administration Salaries and Wages 771 771 771 Other Expenses 352 168 520 263 257 Reserve for Tax Appeals 100,000 100,000 100,000 Legal Services (Legal Department) Other Expenses 13,880 23,692 1,400 38,972 38,922 50 Engineering Services and Costs Salaries and Wages 2 2 2 Other Expenses 13,769 9,847 23,616 10,703 12,913 Planning Board Salaries and Wages 1,200 1,200 1,200 Other Expenses 3,371 142 3,513 2,343 1,170 Zoning Board of Adjustment Salaries and Wages 5 5 5 Other Expenses 2,420 510 2,930 510 2,420 Zoning Official Salaries and Wages Other Expenses Insurance Worker's Compensation 2,861 49,551 52,412 49,551 2,861 General Liability 51,291 51,291 51,291 Employee Group Health 7,234 156 7,390 5,864 1,526 Unemployment Insurance Other Insurance Premiums 1,691 1,691 1,691 Health Benefits 7,515 7,515 7,515 69 EXHIBIT A-12 Page2 BOROUGH OF FRANKLIN LAKES STATEMENT OF APPROPRIATION RESERVES Balance, Balance Paid December 31, Encumbrances After or Balance GENERAL GOVERNMENT (Cont'd) 2020 Restored Transfers Modification Charged Lapsed Police Salaries and Wages $ 9,673 $ 9,673 $ 9,673 Other Expenses 49,337 $ 174,081 223,418 $ 222,321 1,097 Office of Emergency Management Other Expenses 5,853 1,491 7,344 3,336 4,008 Ambulance Service Other Expenses 14,642 13,358 28,000 16,781 11,219 Fire Department Salaries and Wages 2,529 2,529 2,529 Other Expenses 25,294 58,976 84,270 64,939 19,331 Uniform Fire Safety Salaries and Wages 8,241 8,241 8,241 Other Expenses 2,575 1,144 3,719 1,144 2,575 Municipal Court Salaries and Wages 5,595 5,595 5,595 Other Expenses 6,641 1,671 8,312 1,875 6,437 Municipal Court Public Defender Salaries and Wages 504 504 504 Municipal Prosecutor Salaries and Wages 2,158 2,158 2,158 Streets and Road Maintenance Salaries and Wages 5 5 5 Other Expenses 99,163 106,901 $ (35,000) 171,064 117,013 54,051 Solid Waste Collection Other Expenses 85,000 85,000 85,000 Buildings and Grounds Other Expenses 20,064 112,217 10,675 142,956 142,956 Vehicle Maintenance Other Expenses 8,747 27,001 25,000 60,748 46,562 14,186 Shade Tree Salaries and Wages 15 15 15 Other Expenses 2,577 4,500 7,077 4,722 2,355 Board of Health Salaries and Wages 26 26 26 Other Expenses 6,291 43,121 10,500 59,912 59,801 111 Animal Control Services Other Expenses 405 1,200 1,605 1,185 420 Recreation Services and Programs Salaries and Wages 1,456 1,456 1,456 Other Expenses 43,856 16,648 60,504 36,011 24,493 70 EXHIBIT A-12 Page 3 BOROUGH OF FRANKLIN LAKES STATEMENT OF APPROPRIATION RESERVES Balance, Balance Paid December 31, Encumbrances After or Balance GENERAL GOVERNMENT (Cont'd) 2020 Restored Transfers Modification Charged Lapsed Celebration of Public Events Other Expenses $ 17,729 $ (17,700) $ 29 $ 29 Environment Commission Other Expenses 2,438 2,438 2,438 Cable T.V. Committee Other Expenses 2,001 $ 10 2,01 I $ 10 2,001 Building Inspector Salaries and Wages 5,332 5,332 5,332 Other Expenses 11,394 2,013 13,407 2,567 10,840 Electrical Inspector Salaries and Wages 1,133 1,133 1,133 Plumbing Inspector Salaries and Wages 4 4 4 Unclassified Electricity 34,102 22,008 56,110 25,402 30,708 Street Lighting 2,325 2,605 4,930 2,605 2,325 Telephone 4,123 1,990 6,113 190 5,923 Telecommunications 6,282 1,025 7,307 762 6,545 Water 5,599 3,315 8,914 2,084 6,830 Gasoline 18,293 1,124 19,417 5,719 13,698 Landfill/ Solid Waste Disposal Costs 57,533 20,539 11,500 89,572 89,562 10 Statutory Expenditures: Contribution to: Social Security System 11,095 11,095 11,095 PERS 6,495 6,495 1,246 5,249 PFRS 83 83 83 DCRP Employer Contribution 4,361 4,361 4,361 Interlocal Municipal Service Agreements Enhanced 911 Service -Northwest Bergen Central Dispatch Other Expenses 70 70 70 Matching Funds for Grants Municipal Library NJ DEP Stormwater Permit 1,985 3,260 5,245 5,245 Emergency Authorization -COVID 19 147 147 147 Municipal Alliance on Alcoholism and Drug Local Share 2,462 2,462 2,462 $ 708,623 $ 861,835 $ $ 1,570,458 $ 1,130,348 $ 440,110 Appropriation Reserves $ 708,623 Encumbrances Payable 861,835 $ 1,570,458 Cash Disbursements $ I, 130,348 71 BOROUGH OF FRANKLIN LAKES STATEMENT OF ENCUMBRANCES PAYABLE Balance, December 31, 2020 Increased by: Charges to 2021 Budget Appropriations Charges to Appropriated Grant Reserves Decreased by: Restored to Appropriation Reserves Cash Disbursements Balance, December 31, 2021 72 EXHIBIT A-13 $ 446,512 15,275 861,835 23,307 $ 885,142 461,787 1,346,929 885,142 $ 461,787 BOROUGH OF FRANKLIN LAKES STATEMENT OF RESERVE FOR GRANTS -APPROPRIATED Balance, Transfer from December 31, 2021 Budget 2020 Appropriations Expenditures Recycling Tonnage Grant $ 10,639 $ 18,319 $ 110 Drunk Driving Enforcement 13,149 3,922 Drive Sober or Get Pulled Over 1,908 5,923 5,923 Distracted Driving 5,957 5,957 Clean Communities Grant 40,532 29,938 20,123 Municipal Alliance -State 3,653 Municipal Alcohol Ed/Rehabilitation 1,713 Private Donation 4,652 20,500 Dog Park Donations 17 Citizens Corp. -CERT Trailers 700 Murphy Grant -OEM Building Improvements 7,427 480 Body Armor Replacement Program 2,430 1,912 2,208 ANJEC 2020 Open Space Stewardship 1,500 1,498 NJUCD Reforestation & Tree Planting 540 395 2019 Franklin Lakes Rec Foundation 7,801 CDBG -Handicap Improvements -Sr Center 15,000 15,000 Meyer Foundation -FLPD Cars and Software 2,834 FEMA -Fire Department Safer Grant 511,059 29,463 $ 610,554 $ 101,471 8 Cash Disbursements $ 65,882 Encumbrances Payable 15,275 $ 81,157 STATEMENT OF RESERVE FOR GRANTS-UNAPPROPRIATED Balance December 31, 2020 Increased by Cash Receipts American Rescue Plan Balance December 31, 2021 73 EXHIBIT A-14 Balance, December 31, 2021 $ 28,848 17,071 1,908 50,347 3,653 1,713 25,152 17 700 6,947 2,134 2 145 7,801 2,834 481,596 EXHIBIT A-15 $ 581,905 $ 581,905 Balance, December 3 1, 2020 Increased by: Collection of2022 Taxes Decreased by: Applied to 2021 Taxes Balance, December 31, 2021 Balance, December 31, 2020 Increased by: Taxes Overpaid Decreased by: Tax Overpayments Refunded Balance, December 31, 2021 BOROUGH OF FRANKLIN LAKES STATEMENT OF PREPAID TAXES STATEMENT OF TAX OVERPAYMENTS 74 EXHIBIT A-16 $ 834,920 700,421 1,535,341 617,909 $ 917,432 EXHIBIT A-17 $ 7,061 68,972 76,033 70,431 $ 5,602 Balance, December 31, 2020 Increased by: 2021 County Tax Levy BOROUGH OF FRANKLIN LAKES STATEMENT OF COUNTY TAXES PAYABLE $ 2021 County Open Space Tax Levy 2021 County Added and Omitted Taxes Decreased by: Payments Balance, December 3 1, 2021 10,628,150 441,316 204,183 STATEMENT OF LOCAL DISTRICT SCHOOL TAXES PAYABLE Increased by: Levy -Calendar Year 2021 Decreased by: Payments STATEMENT OF REGIONAL HIGH SCHOOL TAXES PAYABLE Increased by: Levy -Calendar Year 2021 Decreased by: Payments 75 $ $ EXHIBIT A-18 171,214 11,273,649 11,444,863 11,240,680 204,183 EXHIBIT A-19 $ 29,407,906 $ 29,407,906 EXHIBIT A-20 $ 19,291,656 $ 19,291,656 BOROUGH OF FRANKLIN LAKES STATEMENT OF RESERVES FOR TAX APPEALS PENDING Balance, December 31, 2020 Balance, December 31, 2021 Balance, December 3 I, 2020 Increased by: Cash Receipts DCA Training Fees Marriage Licenses Decreased by: Cash Disbursements DCA Training Fees Marriage Licenses Balance, December 31, 2021 STATEMENT OF FEES PAYABLE $ 50,551 1,675 50,645 I 600 STATEMENT OF RESERVE FOR RECREATION ONLINE FEES Balance, December 31, 2020 Increased by: Cash Receipts Decreased by: Cash Disbursements Balance, December 3 I, 2021 STATEMENT OF RESERVE FOR COVID-19 REIMBURSEMENTS Balance, December 31, 2020 Increased by: Cash Receipts Decreased by: Budgeted Revenue to Current Fund Cash Disbursements Balance, December 31, 2021 $ 76 67,325 9 749 EXHIBIT A-21 $ $ 55,135 55,135 EXHIBIT A-22 $ 16,588 52,226 68,814 52,245 $ 16,569 EXHIBIT A-23 $ 3,214 159,848 163,062 159,848 EXHIBIT A-24 $ 72,014 5,060 77,074 77,074 $ TRUST FUND EXHIBITB-2 BOROUGH OF FRANKLIN LAKES STATEMENT OF TRUST CASH -COLLECTOR-TREASURER Unemployment Animal Control Trust Fund Other Trust Fund Assessment Trust Fund Insurance Trust Fund Balance, December 31, 2020 $ 10,600 $ 3,221,109 $ 13,022 $ 37,350 Increased by Receipts: Animal Control Fees $ 8,664 State License Fees 1,205 Payroll Deposits $ 8,621,431 Miscellaneous Reserves 2,118,885 Assessment Receivable $ 10,714 Interest on Assessments 2,090 Reserve for Affordable Housing 297,416 Developers Escrow 529,612 --..) Payment from Current Fund --..) Employee Unemployment Contributions $ 8,623 Interest Earned on Escrow Accounts 70 9,869 11,567,414 12,804 8,623 20,469 14,788,523 25,826 45,973 Decreased by Disbursements: Miscellaneous Reserves 1,846,859 Reserve for Affordable Housing 24,779 Expenditures Under R.S. 4:19-15.11 4,527 Payroll Deductions 8,623,795 Due to State ofNJ -Animal Control Fees 1,836 Due to State of NJ -Unemployment 5,377 Payments to Current Fund 222 2,518 Payments to General Capital Fund Escrow Deposits 373,841 6,363 10,869,496 2,518 5,377 Balance, December 31, 2021 $ 14,106 _l___]__,919,027 $ 23,308 $ 40,596 BOROUGH OF FRANKLIN LAKES STATEMENT OF RESERVE FOR ANIMAL CONTROL EXPENDITURES ANIMAL CONTROL TRUST FUND Balance, December 3 1, 2020 Increased by: Animal Control Fees Collected Payment from Current Fund Decreased by: Cash Disbursements Noncash adjustment Balance, December 31, 2021 $ 8,664 4,527 11 EXHIBIT B-3 $ 9,969 8,664 18,633 4,538 $ 14,095 Licenses Fees Collected 78 Year 2020 2019 $ Amount 7,845 9,227 $ 17,072 Balance, December 31, 2020 Increased by: Noncash Adjustment 2021 State Fees Collected Decreased by: BOROUGH OF FRANKLIN LAKES ST ATE ME NT OF DUE TO ST ATE OF NEW JERSEY ANIMAL CONTROL TRUST FUND $ Payments to State of New Jersey Balance, December 31, 2021 ST ATE ME NT OF RESERVE FOR AFFORDABLE HOUSING OTHER TRUST FUND Balance, December 31, 2020 Increased by: Cash Receipts $ Decreased by: Cash Disbursements Balance, December 31, 2021 79 EXHIBITB-4 $ 631 11 1,205 1,216 1,847 1,836 $ 11 EXHIBITB-5 $ 603,280 297,416 297,416 900,696 24,779 24,779 $ 875,917 BOROUGH OF FRANKLIN LAKES STATEMENT OF PAYROLL AND DEDUCTIONS PAYABLE OTHER TRUST FUND Balance, December 31, 2020 Increased by: Payroll Deposits Decreased by: Payroll Deductions Remitted Balance, December 31, 2021 Balance, December 31, 2020 Increased by: Interest on Escrow Accounts Decreased by: Payments to Current Fund Balance, December 31, 2021 STATEMENT OF DUE TO CURRENT FUND OTHER TRUST FUND 80 EXHIBIT B-6 $ 31,985 8,621,431 8,653,416 8,623,795 $ 29,621 EXHIBITB-7 $ 222 70 292 222 $ 70 EXHIBITB-8 BOROUGH OF FRANKLIN LAKES STATEMENT OF MISCELLANEOUS RESERVES OTHER TRUST FUND Balance, Balance, December 31, December 31, 2020 Receipts Disbursements 2021 Tax Sale Premiums $ 656,620 $ 613,100 $ 437,600 $ 832,120 Tax Sale Certificate Redemptions 343 300,120 300,119 344 Parking Offenses Adjudication Act 158 42 200 Off Duty Police Fees 23,980 1,052,048 1,063,082 12,946 Public Safety Trust Fund 900 900 Monuments 15,125 15,125 Municipal Alliance Program 3,640 1,500 1,240 3,900 Flexible Spending Account 14,476 21,625 22,694 13,407 Town Fair Celebration 20,658 5,012 15,646 Open Space Recreation Trust I I Mayor's Wellness Program 43,478 10,418 6,493 47,403 Franklin Lakes Centennial 96,500 7,800 88,700 Memorial Pond Donations 23,349 2,819 20,530 Beautification Pond 5,730 5,730 Municipal Court Deposits 1,177 1,177 Police Dept -Unclaimed Money 1,165 183 1,348 Miscellaneous Reserves 9,474 9,474 $ 796,925 $ 2,118,885 $ 1,846,859 $ 1,068,951 EXHIBITB-9 STATEMENT OF RESERVE FOR ESCROW DEPOSITS OTHER TRUST FUND Balance, Balance, December 3 I, December 3 I, 2020 Receipts Disbursements 2021 Escrow Bonds $ 649,324 $ 111,500 $ 42,000 $ 718,824 Engineering / Legal Fees 147,419 66,617 40,845 I 73,191 Soil Deposits 632,806 273,965 167,214 739,557 Tree Escrow Fund 47,637 14,605 34,238 28,004 Street Escrow 18,000 18,000 Accutrak -Engineering/Legal Fees 293,Sll 62,925 89,544 266,892 $ 1,788,697 $ 529,612 $ 373,841 $ 1,944,468 81 BOROUGH OF FRANKLIN LAKES STATEMENT OF DUE TO STATE OF NEW JERSEY UNEMPLOYMENT INSURANCE TRUST FUND Balance, December 31, 2020 Increased by: Unemployment Claims Decreased by: Payments to State of New Jersey Balance, December 3 1, 2021 STATEMENT OF RESERVE FOR EXPENDITURES UNEMPLOYMENT INSURANCE TRUST FUND Balance, December 31, 2020 Increased by: Employee Contributions $ 8,623 Decreased by: Unemployment Claims 225 Balance, December 31, 2021 82 EXHIBIT B-10 $ 5,152 225 5,377 5,377 $ EXHIBIT B-11 $ 32,198 8,623 40,821 225 $ 40,596 Ordinance Number Improvement Description 1819 Improvements to Harriet Place BOROUGH OF FRANKLIN LAKES STATEMENT OF ASSESSMENT RECEIVABLE ASSESSMENT TRUST FUND Balance Date of Due December 31, Confirmation Dates 2020 9/15/2020 9/15/2020-2029 $ 104,514 $ $ 104,651 $ 83 EXHIBIT B-12 Balance Balance December 31, Pledged to Collected 2021 Res_erve 10,714 $ 93,800 $ 93,800 10,714 $ 93,800 $ 93,800 Balance, December 31, 2020 Increased by: Interest on Assessments Decreased by: Payment to Current Fund Balance, December 31, 2021 BOROUGH OF FRANKLIN LAKES STATEMENT OF DUE TO CURRENT FUND ASSESSMENT TRUST FUND STATEMENT OF DUE TO GENERAL CAPITAL FUND ASSESSMENT TRUST FUND Balance, December 31, 2020 Increased by: Collections on Assessments Due to Capital Balance, December 31, 2021 84 EXHIBIT B-13 $ 2,518 2,090 4,608 2,518 $ 2,090 EXIDBIT B-14 $ 10,504 10,714 $ 21,218 GENERAL CAPITAL FUND BOROUGH OF FRANKLIN LAKES STATEMENT OF CASH -GENERAL CAPITAL FUND Balance, December 31, 2020 Increased by: Grants Receivable Grant Proceeds Deferred Charges Unfunded Reserve for Payment of Debt Reserve for Future Capital Projects Current Fund Budget Appropriation Capital Improvement Fund Grant Reimbursements Decreased by: Improvement Authorizations Encumbrances Payable Current Fund Anticipated Revenue Reserve for Payment of Debt -COAH Reserve for Payment of Debt Reserve for Future Capital Projects Balance, December 31, 2021 $ 85 EXHIBITC-2 $ 2,289,403 157,500 98,530 53,267 31,769 1,400,000 268,162 2,009,228 4,298,631 2,238,329 811,357 116,540 4,923 119,300 3,290,449 $ 1,008,182 Fund Balance BOROUGH OF FRANKLIN LAKES ANALYSIS OF GENERAL CAPITAL CASH Capital Improvement Fund Due from Assessment Trust Fund Grants Receivable Encumbrances Payable Reserve for Future Capital Projects Reserve for COAH -RCA Debt Reserve for Payment ofBANs Improvement Authorizations: Ord. No. 1369 1428 1601 1617/1637 1717 1727 1738/1796 1744 1763 1770 1778/1801 1803 1808 1815 1818 1829 1831/1848 1832/1839 1225/1259 1316/1346 1747 General Improvements Haledon Reservoir Phase II Ambulance Building Groundwater Study DPW Vehicles and Huron Road Improv Various Capital Improvements Old Mill Road Improvements Acquisition of Real Property 2018 Road ImprovementsN arious Improvements Fire Department and DPW Equipment and Truck Police Handicap Restrooms Improvements to Vichiconti Way Synthetic Turf Field Various Street Improvements and Parking Lots Refurbishment ofDPW Bathroom/ Purch DPW Equip Acquisition of Fire Apparatus 2020 Road Improvements & Tennis Court Improvements to Old Mill Road/Sidewalk FD Portable Radios 2021 Road Program Radio System and Equipment Local Improvements Improvement to Wildwood Ave Improvements to Ryerson Road Improvements to Harriet Place 86 EXHIBITC-3 Balance, December 31, 2021 $ 10,714 113,356 (21,218) (52,500) 173,192 200,802 230,732 53,267 480 7,182 1,703 276 1,025 (255) 28,748 4,531 (2,225) 34,055 6,547 19,123 11,114 3,084 126,995 599 59,292 2,974 (12,967) 5,360 2,196 $ 1,008,182 Ord. No. 1848 Improvement Description 2021 Road Program Analysis of Balance Pledged to Ordinance BOROUGH OF FRANKLIN LAKES STATEMENT OF GRANTS RECEIVABLE Balance, December 3 1, 2021 Grant 2020 Award $ 210,000 87 EXHIBITC-4 Balance, December 3 I, Receipts 2021 $ 157,500 $ 52,500 $ 52,500 EXHIBITC-5 BOROUGH OF FRANKLIN LAKES STATEMENT OF DEFERRED CHARGES TO FUTURE TAXATION -FUNDED Balance, December 31, 2020 Decreased by: Serial Bonds Paid by Budget Appropriation Balance, December 31, 2021 88 $ 11,375,000 $ 1,380,000 1,380,000 $ 9,995,000 00 \0 EXHIBITC-6 BOROUGH OF FRANKLIN LAKES STATEMENT OF DEFERRED CHARGES TO FUTURE TAXATION -UNFUNDED Ord. No. 1727 1763 1815 Improvement Description General Improvements Acquisition of Real Property Police Handicap Restrooms 2020 Road Improvements & Tennis Court Local Improvements 1225/1259 Improvements to Wildwood Ave 1316/1346 Improvements to Ryerson Road Balance, December 31, 2021 $ 2020 Authorizations 255 2,225 98,530 20,836 9,250 $ 131,096 =$==== $ $ Grant PrQceeds 98,530 Balance, December 31, 2021 $ 255 2,225 20,836 9,250 Analysis of Balance. Decembe_d L 2_Q2 l Bond Anticipation Note Unexpended Improvement Expenditures Authorization $ 255 $ 2,225 12,967 7,869 9,250 98,530 $ 32,566 =$===== $ 15,447 $ 17,119 Improvement Authorizations -Unfunded $ 17)19 'D 0 Pm:pose General Improvements Refunding Bonds General Improvements Date of Issue 9/1/2014 3/1/2017 9/1/2020 BOROUGH OF FRANKLIN LAKES STATEMENT OF GENERAL SERIAL BONDS Original Issue Outstanding Maturities December 31, 2021 Date Amount 5,055,000 9/1/2022 270,000 295,000 460,000 9/1/2023 9/1/2024-2029 935,000 225,000 350,000 Interest Rate 2.00% 2.00% 2.00% 4.00% 1.00% 1.00% 4,400,000 3/1/2022-2023 5,025,000. 9/1/2021-2023 9/1/2024-2029 9/1/2030-2035 375,000 1.375-1.625% $ $ Balance, December 3 1, 2020 3,590,000 2,760,000 5,025,000 11,375,000 Increas~_d $ Paid by Budget Appropriation Decreas.ed $ 265,000 $ 890,000 225,000 $ 1,380,000 $ $ 1,380,000 EXHIBIT C-7 Balance, December 3 1, 2021 3,325,000 1,870,000 4,800,000 9,995,000 Ord. No. General Improvements Improvement Description 1369 Haledon Reservoir Phase II 1428 Ambulance Building Groundwater Study 1601 DPW Vehicles and Huron Road lmprov 1617/1637 Various Capital Improvements 1717 Old Mill Road Improvements 1738/1796 2018 Road ImprovcmentsNarious Improvements 1744 Fire Department and DPW Equipment and Truck 1770 Improvements to Vichiconti Way Synthetic Turf Field >D 1778/1801 Various Street Improvements and Parking Lots -1803 Refurbishment of DPW Bathroom/ Purch DPW Equip 1808 Acquisition of Fire Apparatus 1815 2020 Road Improvements & Tennis Court 1818/1823 Improvements to Old Mill Road/Sidewalk 1829 FD Portable Radios 1831/1848 2021 Road Program 1832/1839 Radio System and Equipment Local Improvements 1225/1238/ Improvements to Wildwood Ave 1316/1346 Improvements to Ryerson Road 1747 Improvements to Harriet Place BOROUGH OF FRANKLIN LAKES STATEMENT OF IMPROVEMENT AUTHORIZATIONS Balance. Ordinance December 31 2020 Capital Date Amount Funded Unfunded Surplus $ 185.000 $ 480 2008 37,000 7.182 7/15/2014 280.000 l,703 2/17/15, 8/18/15 686,900 276 8/1/2017 198,250 1,025 4/17/2018, 7/1/19 1,880,000 31,578 6/19/2018 328,500 4,531 2/19/2019 880,000 34,055 4/16/2019. 8/20/19 1,888.000 72,711 9/3/2019 155,000 19,123 11/12/2019 750,000 13,620 4n12020 1,717,800 31,030 5/19/20. 11/17/20 147,800 130,435 246.500 9/21/2021 1,300.000 $ 169,855 5/4/2021 825.000 2002 100,000 7,869 2005 118.750 5,360 9.250 8n12018 120.000 2.196 355,305 ~ $ 169.855 EXHIBIT C-8 2021 Authorizations Capital Balance. Grants Improvement Paid or Authorizations December 31. 2021 Receivable Fund Charged Cancelled Funded Unfunded $ 480 7.182 l,703 276 1,025 $ 2,830 28.748 4,531 34,055 66.164 6,547 19,123 2.506 11,114 27,946 3.084 3.440 126,995 $ 246.500 245,901 599 $ 210,000 920.145 1,240,708 59,292 825.000 822,026 2.974 $ 7,869 5,360 9,250 2.196 $ 210.000 $ 1.991.645 $ 2,411,521 $ $ 315.284 ~ Cash Disbursements $ 2,238,329 Encumbrances Payable ~ 192 2.4.!.!.,_521 BOROUGH OF FRANKLIN LAKES STATEMENT OF ENCUMBRANCES PAYABLE Balance, December 31, 2020 Increased by: Charges to Improvement Authorizations Decreased by: Cash Disbursements Balance, December 31, 2021 STATEMENT OF CAPITAL IMPROVEMENT FUND Balance, December 31, 2020 Increased by: Budget Appropriation Reimbursement on Fully Funded Ordinance -Ord. 1829 Reimbursement on Fully Funded Ordinance -Ord. 1848 Decreased by: Appropriation to Finance Improvement Authorizations Ord. 1831/1848 Ord. 1832/1839 Ord. 1829 Balance, December 31, 2021 92 $ 1,400,000 234,162 34,000 920,145 825,000 246,500 EXHIBIT C-9 $ 811,357 173,192 984,549 811,357 $ 173,192 EXHIBIT C-10 $ 436,839 1,668,162 2,105,001 1,991,645 $ 113,356 Balance, December 31, 2020 Decreased by: BOROUGH OF FRANKLIN LAKES STATEMENT OF RESERVE FOR COAH -RCA DEBT Budgeted Revenue to Current Fund Balance, December 31, 2021 STATEMENT OF RESERVE FOR FUTURE CAPITAL PROJECTS Balance, December 3 1, 2020 Increased by: Cash Receipts -Sumise Senior Living -Contribution in Lieu of Paving Decreased by: Budgeted Revenue to Current Fund Balance, December 31, 2021 STATEMENT OF RESERVE FOR PAYMENT OF DEBT Balance, December 31, 2020 Increased by: Cash Receipts -County of Bergen -Ord. 1815 Cash Receipts -Borough of Oakland -Ord. 1815 Decreased by: Budgeted Revenue to Current Fund Balance, December 3 1, 2021 93 $ 44,537 8,730 EXHIBIT C-11 $ 347,272 116,540 $ 230,732 EXHIBIT C-12 $ 288,333 31,769 320,102 119,300 $ 200,802 EXHIBIT C-13 $ $ 4,923 53,267 58,190 4,923 53,267 EXHIBIT C-14 BOROUGH OF FRANKLIN LAKES STATEMENT OF BONDS AND NOTES AUTHORIZED BUT NOT ISSUED Balance, Funded by Balance December 31 2021 Ord. December 31, 2021 Grant Assessment General Assessment No. Improvement Description 2020 Authorizations Proceeds Collections Capital Fund Trust Fund General Improvements 1727 Acquisition of Real Property $ 255 $ 255 1763 Police Handicap Restrooms 2,225 2,225 1815 2020 Road Improvements & Tennis Court 98,530 $ 98,530 '° .,,_ Local Improvement 1225/1259 Improvement to Wildwood Avenue 20,836 20,836 $ 1316/1346 Improvement to Ryerson Road 9,250 9,250 - $ 131,02§_ $ $ 98,530 $ $ 32,566 $ SEWER UTILITY FUND Balance, December 31, 2020 Increased by: Sewer User Fees Sewer Connection Fees Nonbudget Revenue Decreased by: 2021 Budget Appropriations Balance, December 31, 2021 BOROUGH OF FRANKLIN LAKES SEWER UTILITY STATEMENT OF CASH -TREASURER 95 EXHIBITD-4 Operating $ 204,029 $ 92,323 41,116 1,919 135,358 339,387 108,830 $ 230,557 BOROUGH OF FRANKLIN LAKES SEWER UTILITY STATEMENT OF SEWER USER FEES RECEIVABLE Balance, December 31, 2020 Increased by: Sewer User Fees Billed Decreased by: Collections Balance, December 31, 2021 STATEMENT OF 2020 APPROPRIATION RESERVES Balance, December 31, Balance After Paid or 2020 Modification Charged Operating Other Expenses $ 24,976 $ 24,976 $ 24,976 $ 24,976 96 EXHIBITD-5 $ $ 1,489 93,143 94,632 92,323 2,309 EXHIBITD-6 Balance Lapsed $ 24,976 $ 24,976 BOROUGH OF FRANKLIN LAKES PART II GOVERNMENT AUDITING STANDARDS DIETER P. LERC H, CPA, RMA, PSA GARY J VINC I, CPA, RMA, PSA JEFFREY C. BLISS, CPA, RMA, PSA PAU LJ LERCH , CPA, RMA, PSA JULIUS B. CO NSON I, CPA, PSA ANDREW D. PARENTE, CPA, RMA, PSA LERCH / VINCI & BLISS / LLP CERT IFI ED PUB LI C ACCOUNT AN TS REG ISTERED M UNICIPAL ACCO UNT ANTS ELI ZA BETH A SH ICK, CPA, RMA, PSA ROBERT W. HAAG, CPA, RMA, PSA DEBRA GOL LE, CPA MARK SACO , CPA ROBERT LERC H, CPA CHRISTOPHER VINC I, CPA, PSA CHRIST INA CUI FFO, CPA 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 Honorable Mayor and Members of the Borough Council Borou gh of Franklin Lakes Franklin Lakes , New Jersey We have audite d, in accordance with the auait1ng 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 audit requirements prescribed by the Division of Local Government Services, Department of Community Affairs , State of New Jersey, the financial statements -regulatory basis of the Borough of Franklin Lakes as of and for the year ended December 31 , 2021, and the related notes to the financial statements, and have issued our report thereon dated June 28 , 2022. Our repoti on the financial statements -regulatory basis was modified to indicate that the financial statements were not prepared in accordance with accounting principles generally accepted in the United States of America but rather prepared in accordance with the regulatory basis of accounting prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, which is a basis of accounting other than accounting principles generally accepted in the United States , to meet the financial reporting requirements of the State of New Je rsey for municipal government entities as described in Note 1. Report on Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the Borough of Franklin Lakes ' internal control over financial rep01iing (internal control) as a basis for designing 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 Borough of Franklin Lakes' internal control. Accordingly, we do not express an opinion on the effectiveness of the Borough of Franklin Lakes' 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 a combination of deficiencies , in internal control, such that there is a reasonable possibility that a material misstatement of the Borough 's financial statements will not be prevented, or detected and corrected on a timely basis . 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 ch arged with go vernance. 17-17 ROUTE 208 · FA IR LAWN, NJ 074 10 · TELEP HONE (20 1) 791 -7 100 · FACS IMIL E (20 1) 79 1-3035 WWW.LVBCPACOM 97 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 . Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the Borough of Franklin Lakes' financial statements are free from 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 financial statements. 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. However, we noted a certain matter that is not required to be rep01ted under Government Auditing Standards that we repo1ted to management of the Borough of Franklin Lakes in Part III of this repo1t entitled "Letter of Comments and Recommendations" 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 Borough of Franklin Lakes' internal control or on compliance. This repo1t is an integral patt of an audit performed in accordance with Government Auditing Standards in considering the Borough of Franklin Lakes' internal control and compliance. Accordingly, this communication is not suitable for any other purpose . Fair Lawn, New Jersey June 28, 2022 98 µ ✓-; /fat ;_if RCH, VINCI & BLISS, LLP Certified Public Accountants Registered Municip Accountant RMA Number CR0 398 SCHEDULE A BOROUGH OF FRANKLIN LAKES SCHEDULE OF EXPENDITURES OF FEDERAL AW ARDS FOR THE YEAR ENDED DECEMBER 31, 2021 Federal State Grant Balance, Balance, (MEMO) CFDA Project Award 2021 January 1, Revenue December 31, Cumulative Number Number Amount Receipts 2021 Realized Expended 2021 Expenditures U.S. Department of Homeland Security Passed Thru State Dept. of Law and Public Safety C.E.R.T. Trailers 97.042 2013-066-1200-100-726 $ 700 $ 700 $ 700 FEMA -Fire Department SAFER Grant 97.083 NIA 624,000 29,005 511,059 $ 29,463 481,596 $ 142,404 U.S. Dept of Treasury (Passed through County of Bergen) Coronavirus Relief Fund 21.019 NIA 534,014 72,014 72,014 462,000 American Rescue Plan Act 21.027 NIA 1,163,810 581,905 - 'D $ 583,773 $ $ _ 29,463 $ 554,_310 'D This schedule was not subject to single audit in accordance with U.S. Uniform Guidance. See Accompanying Notes to Schedules of Expenditures of Federal Awards and State Financial Assistance SCHEDULE B BOROUGH OF FRANKLIN LAKES SCHEDULE OF EXPENDITURES OF STA TE FINANCIAL ASSISTANCE FOR THE YEAR ENDED DECEMBER 31, 2021 Balance, Balance, (MEMO) Grant 2021 January 1, Revenue December 31, Cumulative State Grant Program Account Number Year Award Receipts 2021 Realized Expended 2021 Expenditures Department of Environmental Protection Recycling Tonnage Grant 042-752-6020 2020 $ 15,900 $ 10,639 $ 10,639 $ 5,261 2021 18,319 $ 18,319 $ 18,319 $ 110 18,209 110 Clean Communities Grant NIA 2019 30,534 13,003 13,003 17,531 2020 27,529 27,529 27,529 2021 29,938 29,938 29,938 20,123 9,815 20,123 NJUCF Reforestation & Tree Planting NIA 2019 25,823 540 395 145 25,678 ANJEC 2020 Open Space Stewardship NIA 2020 1,500 1,500 1,498 2 Department of Law and Public Safety Drunk Driving Enforcement Fund NIA 2016 4,063 1,811 1,811 2,252 2017 4,546 4,546 4,546 2018 3,650 3,650 3,650 0 2019 3,142 3,142 3,142 0 2021 3,922 3,922 3,922 3,922 Body Armor Replacement Program NIA 2020 2,430 2,430 2,208 222 2,208 2021 1,912 1,912 1,912 1,912 Drive Sober or Get Pulled Over NIA 2020 5,466 1,908 1,908 3,558 2021 5,923 5,923 5,923 5,923 5,923 Distracted Driving NIA 2021 5,957 5,957 5,957 5,957 5,957 Municipal Alcohol Education and Rehabilitation NIA 2017 643 643 643 2018 659 659 659 2019 161 161 161 2020 250 250 250 CDBG -Handicap Improvements -Sr Center NIA 2021 15,000 15,000 15,000 15,000 Department of Human Services - Passed Thru County of Bergen Municipal Alliance NIA 2019 9,876 3,653 3,653 6,223 $ 76,064 $ 80,971 $ 51,214 ~821 This schedule is not subject to audit in accordance with NJ 0MB 15-08. See Accompanying Notes to Schedules of Expenditures of Federal Awards and State Financial Assistance NOTES TO THE SCHEDULES OF EXPENDITURES OF FEDERAL AW ARDS AND STATE FINANCIAL ASSISTANCE BOROUGH OF FRANKLIN LAKES NOTES TO THE SCHEDULES OF EXPENDITURES OF FEDERAL AW ARDS AND STATE FINANCIAL ASSISTANCE YEAR ENDED DECEMBER 31, 2021 NOTE 1 GENERAL The accompanying schedules present the activity of all federal awards and state financial assistance programs of the Borough of Franklin Lakes. The Borough is defined in Note l(A) to the Borough's financial statements. All federal financial assistance received directly from federal agencies, as well as federal awards and state financial assistance passed through other government agencies is included on the schedules of expenditures of federal awards and state financial assistance. NOTE 2 BASIS OF ACCOUNTING The accompanying schedules are prepared and presented using the regulatory basis of accounting as prescribed for municipalities by the Division of Local Government Services, Department of Community Affairs, State of New Jersey which differ in certain respects from accounting principles generally accepted in the United States of America (GAAP) applicable to local government units. This basis of accounting is described in Note 1 to the Borough's financial statements. NOTE 3 RELATIONSHIP TO FINANCIAL STATEMENTS Amounts reported in the accompanying schedules agree with amounts reported in the Borough's financial statements. Financial assistance revenues are reported in the Borough's financial statements on a basis of accounting described above as follows: Federal State Total Current Fund $ $ 80,971 $ 80,971 ----- Total $ $ 80,971 $ 80,971 ======= NOTE 4 RELATIONSHIP TO FEDERAL AND STATE FINANCIAL REPORTS Amounts reported in the accompanying schedules may not necessarily agree with the amounts reported in the related federal and state financial reports due to timing differences between the Borough's fiscal year and grant program year. 101 BOROUGH OF FRANKLIN LAKES SCHEDULE OF FINDINGS AND RESPONSES FOR THE YEAR ENDED DECEMBER 31, 2021 Part I -Summary of Auditor's Results Financial Statements Type of auditors' report issued on financial statements Internal control over financial reporting: 1) Material weakness( es) identified 2) Significant deficiency(ies) that are not considered to be material weakness( es)? Noncompliance material to the financial statements noted? Federal Awards Section NOT APPLICABLE State Awards Section NOT APPLICABLE Modified _____ yes _____ yes _____ yes 102 X no X none X no BOROUGH OF FRANKLIN LAKES PARTID SUPPLEMENTARY DATA LETTER OF COMMENTS AND RECOMMENDATIONS YEAR ENDED DECEMBER 31, 2021 BOROUGH OF FRANKLIN LAKES SUPPORTING DATA COMPARATIVE STATEMENT OF OPERATIONS AND CHANGES IN FUND BALANCE - CURRENT FUND Year 2021 Year 2020 Amount Percent Amount Percent REVENUE AND OTHER INCOME REALIZED Fund Balance Utilized $ 2,000,000 2.45 % $ I, 100,000 1.41 % Miscellaneous -From Other Than Local Property Tax Levies 5,346,562 6.54 5,070,629 6.49 Collection of Delinquent Taxes and Tax Title Liens 497,698 0.61 532,262 0.68 Collection of Current Tax Levy 73,427,055 89.86 71,217,069 91.13 Other Credits 442,850 0.54 230,854 0.30 Total Income 81714165 100.00 % 78150814 100.00 % EXPENDITURES Budget Expenditures Municipal Purposes 19,283,384 24.29 % 17,695,639 23.33 % County Taxes 11,273,649 14.20 11,024,943 14.54 Local District School Taxes 29,407,906 37.05 28,405,982 37.46 Regional School Taxes 19,291,656 24.30 19,048,893 25.12 Other Expenditures 121,720 0.15 122,331 0.16 Less: Expenditures Included Above To Deferred Changes (462,000) (0.61) Total Expenditures 79,378,315 100.00 % 75,835,788 100.00 % Excess in Revenue 2,335,850 2,315,026 Fund Balance, January I 4,094,328 2,879,302 6,430,178 5,194,328 Less Utilization as Anticipated Revenue 2,000,000 1,100,000 Fund Balance, December 31 178 $ 4,094,328 103 BOROUGH OF FRANKLIN LAKES SUPPORTING DATA COMPARATIVE STATEMENT OF OPERATIONS AND CHANGES IN FUND BALANCE - SEWER UTILITY FUND Year 2021 Year 2020 Amount Percent Amount Percent REVENUE AND OTHER INCOME REALIZED Surplus Anticipated $ 22,900 12.50 % $ 45,000 23.30 % Sewer User Fees 92,323 50.39 91,618 47.44 Sewer Connection Fees 41,116 22.44 25,344 13.12 Non-Budget Revenue 1,919 1.05 1,063 0.55 Other Credits to Income 24,976 13.63 30,118 15.59 Total Income 183 234 100.00 % 193 143 100.00 % EXPENDITURES Budget Expenditures Operating 121,000 100.00 130,000 100.00 Total Expenditures 121,000 100.00 % 130,000 100.00 % Excess in Revenue 62,234 63,143 Fund Balance, January 1 179,053 160,910 241,287 224,053 Less: Utilization as Anticipated Revenue (22,900) (45,000) Fund Balance, December 31 $ 218,387 $ 179,053 104 BOROUGH OF FRANKLIN LAKES SUPPORTING DATA Comparative Schedule of Tax Rate Information Tax Rate Appo1tionment of Tax Rate Municipal County County Open Space Local School Regional High School Library Assessed Valuation 2021 2020 2019 Comparison of Tax Levies and Collection 2021 $1.662 .259 .244 .010 .674 .442 .033 $4,365,160,800 $1.648 .257 .243 .010 .661 .443 .034 $4,297,626,000 2019 $1.642 .250 .246 .011 .650 .451 .034 $4.245,681.000 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. Percentage of Year Tax Levy Cash Collections Collection 2021 $ 73,884,407 $ 73,427,055 99.38% 2020 71,938,653 71,217,069 99.00% 2019 70,775,463 69,821,834 98.65% 105 BOROUGH OF FRANKLIN LAKES SUPPORTING DATA 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 December 31 Tax Title Delinquent Total of Year Liens Taxes Delinquent Tax Levy 2021 $27,146 $255,146 $282,292 0.38% 2020 13,387 503,772 517,159 0.72% 2019 12,600 546,481 559,081 0.79 Comparative Schedule of Fund Balances Utilized Balance, in Budget of Year December 3 1, Succeeding Year Current Fund 2021 $4,430,178 $2,450,000 2020 4,094,328 2,000,000 2019 2,879,302 1,100,000 2018 3,927,650 2,390,000 2017 4,374,345 2,109,000 Sewer Utiliry Fund 2021 $218,387 $45,100 2020 179,053 22,900 2019 160,910 45,000 2018 123,658 25,000 2017 108,810 106 BOROUGH OF FRANKLIN LAKES SUPPORTING DATA OFFICIALS IN OFFICE AND SURETY BONDS The following officials were in office during the period under audit: Frank Bivona Dennis Bonagura Charles Kahwaty Gail Kelly Joseph Cadicina Ann Swist Gregory Hart Gail M. Rulli William G. Pike William T. Smith Chiesa, Shahinian & Giantomasi, P.C. Meena Sivakumar Edmund Brown Boswell Engineering Francis J. Leddy, Jr. Stacey Gambuti Beth De Vries John Wittekind, Jr. Title Mayor Council President Councilman Councilwoman Councilman Councilwoman Business Administrator Borough Clerk Chief Financial Officer Borough Attorney Bond Counsel Tax Collector Tax Assessor Borough Engineer Municipal Court Judge Court Administrator Violations Clerk Construction Code Official/Zoning Officer (1) Municipal Excess Liability Joint Insurance Fund Blanket Bond $1,000,000 107 Corporate Surety (I) (l) (1) (I) (1) (1) BOROUGH OF FRANKLIN LAKES LETTER OF COMMENTS AND RECOMMENDATIONS Our comments with respect to the examination and any error, omission, irregularity, violation of law, discrepancy or other nonconformity to the law or regulation found during the examination are herewith set forth. GENERAL COMMENTS Current Year Findings There are none. Contracts and Agreements Required to be Advertised for NJS 40A:11-4 NJS 40A: 11-4 states "Every contract or agreement, for the performance of any work or the furnishing or hiring of any materials or supplies, the cost or the contract price whereof is to be paid with or out of public funds not included within the terms of Section 3 of this act, shall be made or awarded only after public advertising for bids and bidding therefore, except as is provided otherwise in this act or specifically by any other law. No work, materials or supplies shall be undertaken, acquired or furnished for a sum exceeding in the aggregate $17,500, except by contract or agreement." During 2021, the Governing Body approved a resolution authorizing the bid threshold of $44,000 for the period of January 1, 2021 through December 31, 2021 as the Borough Administrator is a qualified purchasing agent. The Governing Body of the Municipality has the responsibility of determining whether the expenditures in any category will exceed the bid threshold within the fiscal year. Where question arises as to whether any contract or agreement might result in violation of the statute, the Borough Counsel's opinion should be sought before a commitment is made. The minutes indicate that bids were requested by public advertising for the following items: 2021 Road Program Parsons Pond Road Cell Tower Ground Lease In as much 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 violations existed. No such violations were detected. 108 BOROUGH OF FRANKLIN LAKES SUPPORTING DATA GENERAL COMMENTS (Continued) Collection of Interest on Delinquent Taxes and Assessments The statute provides the method for authorizing interest and the maximum rates to be charged for the non-payment of taxes or assessments on or before the date when they would become delinquent. The Governing Body on January 2, 2021 adopted the following resolution authorizing interest to be charged on delinquent taxes and assessments: "BE IT RESOLVED, by the Mayor and Council of the Borough of Franklin Lakes, New Jersey, County of Bergen that, for the year 2021, the rate of interest on delinquent taxes and assessment shall be fixed at the rate of eight (8%) percent per year on the first $1,500 of the delinquency and at the rate of eighteen (18%) percent per year on any amount of delinquency in excess of $1,500; except that no interest shall be charged if payment of any installment is made within the ten (10) days after the date upon which same became payable, and "BE IT FURTHER RESOLVED, that an additional penalty of six ( 6%) percent will be charged on any delinquency in excess of $10,000 if not paid by the end of the calendar year, and "BE IT RESOLVED, that interest be computed on delinquent taxes to the day payment is received in the Tax Collector's Office. It appears from our examination of the Collector's record that interest was collected in accordance with the foregoing resolution. Delinquent Taxes and Tax Title Liens The following comparison is made of the number of tax title liens receivable on December 31, of the last three years: Year 2021 2020 2019 Number of Liens 109 6 4 3 BOROUGH OF FRANKLIN LAKES SUPPORTING DAT A RECOMMENDATIONS There are none . Status of Prior Year 's Audit Findings/Recommendations A review was performed on the prior year recommendation and corrective action has been taken. I 10 p L · . ~ t!.c-;:; /2E§ VINCI & BU S, LLP Cettified Public Accountants Registered Municipal Accountants " eter Registered Municipal Accountant RMA Number CR00398