company,€¦ · east lampeter township management's discussionand analysis for the year ended...

EAST LAMPETER TOWNSHIP

Financial Statements

December31, 2013

WEINHOLD, NICKEL & COMPANY,LLPCertified Public Accountants

Reamstown, PA 17567

EAST LAMPETER TOWNSHIP

Table of Contents

December 31, 2013

Page

]NDEPENDENTAUDITORS'REPORT 2-

3

MANAGEMENT'SDISCUSSION AND ANALYSIS 4-

24

BASIC FINANCIAL STATEMENTS

StatementofNet Position- Modified Cash Basis 25

Statementof Activities- Modified Cash Basis 26 - 27

Balance Sheet- Governm.entalFunds- Modified Cash Basis 28

-29

Reconciliationof the GovernmentalFunds Balance Sheet to theStatementofNet Position- Modified Cash Basis 30

Statementof Revenues, Expenditures and Changes in Fund Balances-Governmental Funds- Modified Cash Basis 31

- 32

Reconciliationof the Governmental Fund StatementofRevenues, Expendituresand Changesin Fund Balance to the Statementof Activities - Modified Cash Basis 33

StatementofNet Position- Proprietary Fund - Modified Cash Basis 34

Statementof Revenue, Expenses and Changes in Net Position-ProprietaryFund- Modified Cash Basis 35 - 36

Statementof Cash Flows- ProprietaryFund- Modified Cash Basis 37 - 38

StatementofFiduciaryNet Position- Fiduciary Funds- Modified Cash Basis 39

Statementof Changes in Fiduciary Net Position- Fiduciary Funds- Modified Cash Basis 40

Notes to FinancialStatements 41 - 71

OTHER INFORMATION

Scheduleof Revenues, Expendituresand Changes in Fund Balances-Budget and Actual -

General and Major Special Revenue Funds- Modified Cash Basis 72 - 75

einliold,Nickel DeanA. Hoover,CPA

& C I I P Rªªdªl L. Goshert,CPAonipany,

CertifiedPublicAccountants & ConsultantsMichael L. Weinhold, CPA

RonaldE. Nickel, CPA

INDEPENDENTAUDITORS' REPORT

SupervisorsEast Lampeter TownshipLancaster,Pennsylvania

We have audited the accompanying financial statements of the governmental activities, the business-type

activities, each major fund, and the aggregate remaining fund information of East Lampeter Township,Pennsylvania, as of and for the year ended December31, 2013, which collectively comprise the Township'sbasic primary government financial statements as listed in the table of contents, and the related notes to thefinancial statements.

Management'sResponsibilityfor the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in

accordancewith the modified cash basis of accounting. This includes determining that the modified cashbasis of accounting is an acceptablebasis for the preparation of the financial statements in the circumstances.Management is also responsible for the design, implementation, and maintenance of internal control relevantto the preparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error.

Auditor's ResponsibilityOur responsibility is to express opinions on these financial statements based on our audit. We conducted ouraudit in accordance with auditing standards generally accepted in the United States of America. Those

standards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor'sjudgment, including the assessmentofthe risks of materialmisstatement of the financial statements, whether due to fraud or error. In making those

risk assessments, the auditor considers internal control relevant to the Township's preparation and fairpresentation of the financial statements in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal

control. Accordingly,we express no such opinion. An audit also includes evaluating the appropriateness ofaccountingpolicies used and the reasonableness of significantaccounting estimatesmade by management, as

well as evaluating the overall presentationof the financial statements.

We believe that the audit evidencewe have obtained is sufficient and appropriate to provide a basis for ouraudit opinions.

2

1360 RidgeAvenue, PO Box 610, Reamstown, PA 17567(717)336-3801 ? (717)733-1251 ? Fax: (717)336-8283

www.wnccpa.com

East LampeterTownshipPage 2

Basis for Adverse Opinion- ReportingEntityThe financial statements referred to above include only the primary governmentof East LampeterTownship,Pennsylvania, which consists of all funds, organizations, institutions, agencies, departments, and offices that

comprise the Township's legal entity. The fmancial statements do not include financial data for theTownship's legally separate component unit, which accounting principles generally accepted in the UnitedStates of America require to be reported with the financial data of the Township's primary government.

AdverseOpinion- ReportingEntityIn our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion -Reporting Entity paragraph, the primary governmentfinancial statements referred to above do not purport to,

and do not present fairly, the modified cash basis financial position of the reporting entity of East LampeterTownship, Pennsylvania, as of December 31, 2013, and the changes in modified cash basis financial positionand its cash flows, where applicable, for the year then ended in conformity with the modified cash basis ofaccounting as described in the notes to the financial statements.

Unqualified Opinions- Primary GovernmentIn our opinion, the financial statements referred to above present fairly, in all material respects, the respectivemodified cash basis financial position of the governmental activities, the business-type activities, each majorfund and the aggregate remainingfund information for the primary governmentof East LampeterTownship,Pennsylvania,as of December31, 2013, and respective changes in modified cash basis financial position and,

where applicable, cash flows thereof for the year then ended in conformity with the basis of accounting asdescribed in the notes to the financial statements.

Report on Other InformationOur audit was conducted for the purpose of forming opinions on the financial statements as a whole that

collectively comprise the Township's basic primary government financial statements. The budgetary

comparison information and management'sdiscussion and analysis are presented for purposes of additionalanalysis and are not a required part of the basic financial statements. Such information has not been subjectedto the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do notexpress an opinion or provide any assuranceon it.

Basis ofAccountingWe draw attention to the notes of the financial statements that describes the basis of accounting. Thefinancial statements are prepared on the modified cash basis of accounting, which is a basis of accountingother than accounting principles generally accepted in the United States of America. Our opinions are notmodifiedwith respect to that matter.

June 16, 2014

Reamstown, Pennsylvania

3

EAST LAMPETERTOWNSHIPManagement's Discussionand AnalysisFor the Year Ended December 31, 2013

INTRODUCTION

The following discussion and analysis of the financial performance of East Lampeter Townshipprovidesan overview of the Township's financial activities for the fiscal year ended December 31, 2013. This

should be read in conjunctionwith the financial statementsand other information that follow this section.

FINANCIALHIGHLIGHTS

? The Township's total ending net assets increasedby $0.58 million, from $4.34 million to $4.92

million, or 13.4% compared to 2012. Net assets for Business-Typeactivities (Sewer Services)decreased by 5.7%, from $1.45 million to $1.36 million. Governmental ending net assetsincreased 23.6%, from $2.89 million to $3.56 million.

? In 2013, Government-wide revenues increased by 9.6% and corresponding expendituresincreased by 6.5%.

? The Township'sGeneral Fund endedthe year of 2013 with a fund balanceof $2.28 million whichrepresents27.6% of the 2013 GeneralFund expenditures.

? The Township has met all of its required debt service payments and pension obligationsduring2013. Total debt outstanding (including lease rental obligations)decreased by 6.9% from $21.7

million to $20.2 million during 2012.

OVERVIEWOF THE FINANCIALSTATEMENTS

This discussion and analysis is intended to serve as an introduction to the Township's basic financialstatements. The Basic Annual Financial Report includes all activities for which East LampeterTownshipis responsible. This report is comprised of the basic financial statements and supplemental disclosures.Supplemental disclosures are presented to facilitate the reader's understandingof the basic financialstatements. The basic financial statementsare comprised of three components:

1. Government-widefinancial statements.2. Fund financial statements3. Notes to the financial statements

The Basic Annual Financial report contains other informationas well as the basic financialstatements.

Government-WideFinancial StatementsGovernment-widefinancial statements are designed to provide financial information for the governmentas a whole, except for fiduciary funds. Governmental activities and business-type activities of thetownship are presentedin separate columns and added together to show a total for the entire township.

? Governmental activities include most of the Township's basic services. These include: generalgovernment,police services, fire and ambulance,inspection, planning, and zoning, highways and

streets, culture and recreation, debt service, and miscellaneous expenses. These activities arefinanced by taxes, charges for services, investmentearnings, sale of assets, and state and countygrants.

4


Government-WideFinancial Statements (cont'd)? The only Business-type activity of the Township consists of providing sewer services. The

Townshipcharges a user fee to customersto cover the cost of operations.? These government-wide financial statements do not include the East Lampeter SewerAuthority, a

legally separate componentunit.

Fund Financial StatementsFund financial statements focus on the individual parts of the Township govemment. These

statements report the Township's operations in more detail than the government-wide reports. East

Lampeter Township has three types of funds: governmental funds, proprietary funds and fiduciaryfunds.

? Governmental funds are used to account for essentially the same functions reported as

governmentalactivities in the government-wide financial statements. These funds are concerned

with the financial resources received and expended during a fiscal period. The Township

maintains seven individual governmental funds. Three of these funds are consideredmajor funds

- the General Fund, the Capital Reserve Fund, and the Highway Aid Fund. Information on these

funds is presented separatelyon the Balance Sheet and the Statement of Revenues,Expenditures,

and Changes in Fund Balance. Data from the other four governmental funds are combined into a

single column and presented as Non- Major Funds. The four funds included in this column are:

Street Light Fund, Police ForfeitureFund, Debt Service Fund, and Parkland Capital Reserve.

? Proprietaryfunds, sometimes referred to as Enterprise Funds, are used to report the same

functions presentedas business-typeactivities in the government-wide financial statements. The

proprietary fund provides the same type of information as the government-wide financial

statements, only in greater detail. East LampeterTownship uses a proprietary fund to accountforits Sewer Fund activities and an Insurance Fund to account for medical insurance activities.

? Fiduciary funds are used to account for resources held for the benefit of parties outside the

government. Fiduciary funds are not reflected in the government-wide financial statementbecause the resources of those funds are not available to provide services to the Township's

citizens. The Fiduciary funds are used to account for the Township's two Pension Trust Funds-Police Pension,and the Non Uniform Pension.

Notes to the Financial StatementsThe notes to the financial statements provide additional information that is essential to a fullunderstandingof the data provided in the government-wideand the fund financial statements. The notes

to the financial statements can be found later in this report.

Other InformationIn addition to the basic financial statements and accompanying notes, this report also presents certain

optional other information including this Management's Discussion and Analysis and budgetary

comparisonschedules for the General Fund and the Highway Aid Fund. Detailed information regardingthe pension plans is included in the notes to these financial statements.

5

EAST LAMPETER TOWNSHIPManagement's Discussionand AnalysisFor the Year Ended December31, 2013

The diagram below illustrates the relationship between all the elements of the Basic AnnualFinancial Report.

Basic Annual Financial Report

Management's Basic OtherDiscussion Financial Information

and StatementsAnalysis

Government-wide Fund Financial Notes to theFinancial Statements Statements Financial

Statements

Summary DetailChart 1

BASIS OF ACCOUNTING

The Townshiphas elected to present its financial statements on a modified cash basis of accounting. As a

result of the use of this modified cash basis of accounting, certain assets and their related revenues (suchas accounts receivable and revenue billed for provided services not yet collected) and certain liabilitiesand their related expenses(suchas accountspayable and expenses for goods and services received but notyet paid, as well as accrued expenses and liabilities)are not recorded in these financial statements. The

only assets recorded are cash, investments and inter-fund receivables resulting from cash transactions.The township has made modificationsto the liability accounts to include inter-fund payables resultingfrom cash transactions, escrow deposits and selectedother liabilities. Such modificationsare both logicaland consistent with Generally Accepted Accounting Principles (GAAP) as to the recording of theseliabilities. Neither capital assets and the related depreciation nor long term debt has been recorded inthese financial statements.

GOVERNMENT-WIDEFINANCIAL STATEMENT ANALYSIS

Net Assets-ModifiedCash BasisThe Township's combined net assets, resulting from modified cash basis transactions, increasedby $0.6

million (13.4%), from approximately $4.3 million to $4.9 million between the end of 2012 and the end of2013.

6


ComparativeStatementofNet Position(in 000's)

Chart2 Governmental Business-type

Activities Activities Total2012 2013 2012 2013 2012 2013

Cash and Equivalents $ 3,057 $ 3,783 $ 1,417 $ 1,340 $ 4,474 $ 5,123

Investments 0 0 0 0 0 0

Internal Balances 33 (25) 32 25 65 0

Total Assets $ 3,090 $ 3,758 $ 1,449 $ 1,365 $ 4,539 $ 5,123

Other current liabilities 202 200 0 0 202 200

UnrestrictedNet Assets $ 2,888 $ 3,558 $ 1,449 $ 1,365 $ 4,337 $ 4,923

The graph below illustrates an increase in net position for govemmentalactivities and a decrease in netassets for business-typeactivities. Governmentalrevenues increased by $634 thousandand expendituresincreased by $557 thousand dollars during 2013 providing a 23.2% increase in Governmentalnet assets

contrasted with the previous year's 25.8% increase in net assets. Net assets of the township's business-type activities decreased by $84 thousandor 5.8%.

Net Position - Modified Cash Basis(in 000's)

B $3,55E

O $2,888

02012

0 $1,449 m $1,365 m2013

Governmental Business-Type

Graph 1

7

EAST LAMPETER TOWNSHIPManagement's Discussionand AnalysisFor the Year Ended December 31, 2013

Statement ofActivities-ModifiedCash Basis

To aid in the understandingof the Statement of Activities, some additional information is provided. Theformat is significantly different from a typical Statement of Revenues, Expenses, and Changes in FundBalance. The column identified as Direct Expenses shows the direct activity expenses. The columnentitled "Indirect Expenses Allocation" lists the applicable internal service costs. The total of these twocolumns is the expense for each activity. The revenues attributed to each activity are deducted to obtainthe net expense of each activity. The column identified as Governmental Activities shows the netexpense for each activity.

Government-widerevenues, excludingFiduciary Funds is $12.8 million for the year ended December31, 2013. Graph2 shows the source of all revenues for both governmentaland business-typ.e activities.

Government-wideRevenue Sourcesa Charges for Fees,

O Capital Grants andFines, and Services

Contributions $2,050,229

$995,812 16%

8%

B SewerServices$2,884,239

23%O Operating Grants

a UnrestrictedGrantsand Contributions

and Other' $172,8775Yo

1%

a Property Taxes N_ O OtherTaxes$2,379,516 $3,632,786

19% 28%

Graph 2

The largest type of revenue is General Revenues (revenuesnot allocable to a specific expense category)of $6.2 million. Taxes, Unrestricted Contributions, Sale of Assets, and Investment Earnings areconsidered General Revenues. The other categoriesare Charges for Sewer Services, Operating Grants andContributions, Capital Grants and Contributions, and a separate category including Charges for Fees,Fines, and Services. It is important to note that all taxes are classified as general revenue, even ifrestricted for a specific purpose.

8

EAST LAMPETER TOWNSHIPManagement's Discussionand AnalysisFor the Year Ended December 31, 2013

The following table shows the comparisonof revenues received in the years ended December 31, 2012

and December 31, 2013.

Comparisonof Government-Wide RevenueSources

Chart3 Increase

2012 2013 (Decrease)

Charges for Fees, Fines & Services

Sewer Services

OperatingGrants and Contributions

Capital Grants and Contributions

Unrestricted Grants and Contributions

Property Taxes

Other Taxes

InvestmentEarnings

Sale ofAssets

$ 1,602,030 $ 2,050,229 $ 448,199

2,488,470 2,884,239 395,769

629,289 675,723 46,434

522,648 995,812 473,164

156,027 154,999 (1,028)

2,396,836 2,379,516 (17,320)

3,860,027 3,632,786 (227,241)

6,563 5,654 (909)

13,428 12,224 (1,204)

Total Revenues $ 11,675,318 $ 12,791,182 $ 1,115,864

Total revenues collected in 2013 amounted to $12.8 million compared to $11.7 in 2012, an increase for2013 of $1.1 million or 9.6%. IncreasedChargesfor Services and the increase in Capital Grants receivedoffset the smaller decrease in tax revenues.

GovernmentalActivity expensesare presentednet of applicable revenues. This type of formathighlightsthe relative financial burden of each of the functions on the Township's taxpayers. It also identifies howmuch each function draws from the general revenues or, if it is self-financing,through fees, grants orcontributions. Graph 3 shows the net amount that the governmental functions draw from GeneralRevenue and reserves.

Net Cost of GovernmentalFunctions by TypeB Culture and E Debt Service B General

Recreation $724,959 Government$147,355 13% $521,492

3% 9%

O MiscellaneousO Highways and Expenditures

Streets $24,187$663,766 0%

11%

O Fire anriAmbulance

O Police$3,063,019

53%

Inspection,Planning & Zon

2o) Graph3

9

EAST LAMPETER TOWNSHIPManagement'sDiscussionand AnalysisFor the Year Ended December 31, 2013

Chart 4 shows the net amount that these functions draw from General Revenues in 2013 compared to thedraw down in 2012.

Net Cost of Township Governmental Activities - Modified Cash Basis

Chart 4 Increase


GeneralGovernment $ 697,302 $ 521,492 $ (175,810)

Police 3,526,229 3,063,019 (463,210)

Fire and Ambulance 192,522 496,708 304,186

Inspection, Planning, and Zoning 108,074 101,344 (6,730)

HighwaysandStreets 547,666 663,766 116,100

CultureandRecreation 206,069 147,355 (58,714)

DebtService 712,177 724,959 12,782

MiscellaneousExpenditures 43,703 24,187 (19,516)

Total $ 6,033,742 $ 5,742,830 $ (290,912)

General Government- net cost decrease due to increase in revenue from the Cable Franchisefee. Fees covering six quarters were collected in 2013 compared to two quarters collected in2012.

Police - the cost of self-funded health insurance decreased offset by a higher percentage of costreimbursement from contractedpolice servicesand DEA allocation increasedby over $200,000.

Fire and Ambulance- Townshipassisted with the purchaseof a fire department vehicle in 2013but not in 2012. New state mandates increasedWorkers' Compensation costs for volunteer firefighters. An increase in the Foreign Fire insurance premium tax allocated to the Township in2013 offset some of the increases.

Inspection,Planning and Zoning - cost of transitioning to a new zoning officer were partiallyoffset by a decrease in the cost of self-funded health insurance and increased revenues fromservices.

Highways and Streets -increase in the cost of road projects and snow removal were partially

offset by a decrease in labor costs, self-funded health insurance, and electricity costs as well as a

significant increase in the state allocationofHighwayAid funds.

Cultureand Recreation-no majorpark projectscompletedin 2013.

Debt Service-increasedprincipalpaid in 2013.

Miscellaneous Expenditures -included pension costs in 2012 which were charged to the

specificdepartment in 2013.

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EAST LAMPETERTOWNSHIPManagement'sDiscussionand AnalysisFor the Year Ended December 31, 2013

The Net Cost of Governmental Activities was funded by General Revenuesas shown below for the years

of 2012 and 2013.

Chart 5 Increase


Real Estate Taxes $ 2,396,836

Transfer Taxes 462,014

Earned Income Taxes 1,905,102

Earned Income Taxes-Non-resident 66,836

Local ServicesTax 685,440

Admissions Taxes 740,635

PURTA Tax 7,420

Recycling Grant 148,607

Sale of Assets 13,428

InvestmentEarnings 3,519

$ 2,379,516 $ (17,320)291,447 (170,567)

1,928,236 23,134

122,547 55,711

629,893 (55,547)660,663 (79,972)

7,400 (20)147,599 (1,008)

12,224 (1,204)3,728 209

Total General Revenues $ 6,429,837 $ 6,183,253 $ (246,584)

(Excluding Transfers)

Real Estate Taxes -decrease in taxable propertyassessments.

Earned Income Taxes -increase due to more timely disbursements.

Earned Income Taxes - Non-resident earned income tax higherthan projected.

Local Services Tax -decrease in employmentin Township.

Admissions Taxes - a business audit revealed an und.erpayment of 2011 taxes which wereremitted to the Township in 2012.

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FUND FINANCIAL STATEMENT ANALYSIS

A fund is a grouping of related accounts that is used to maintain control over resources that have been

segregated for specific activities. The Fund Financial Statement allows the presentation of source anduses and budgeting compliance within the specific fund. Traditional users of governmental financialstatements will find the Fund Financial Statements presentation more familiar. The funds of EastLampeter Township can be divided into three categories: Governmental funds, Proprietary funds andFiduciary funds. Each category can be viewed and analyzed independently. The balances due betweenthe individual funds on December 31, 2013 are presentedbelow.

Chart 6 Due to Due to Due toGeneral Sewer Capital Due to Total Due

Fund Fund Reserve Parkland From Fund

Due from General Fund $ 0 $ 25,198 $ 8,919 $ 9,500 $ 43,617

Due from StreetlightFund 15,575 0 0 0 15,575

Due from Police Forfeiture Fund 7,533 0 0 0 7,533

Total Due to Fund $ 23,108 $ 25,198 $ 8,919 $ 9,500 $ 66,725

GovernmentalFundsThe General Fund is the principal fund that includes all activities except those required to be accountedfor in another fund. Thus, it is always considered a major fund. Other funds are establishedto accountfor specific activitiesor attainingcertain objectivesin accordancewith special regulations,restrictions, orlimitations. The township has established separate funds to isolate project costs, and to control the

expenditure of certain grantmonies, contributionsand assessments.Graph 4 indicates the reserves held byeach governmental fund as ofDecember 31, 2013.

Governmental Fund BalancesDecember31, 2013

E Non-MajorFunds W General Fund

$257,917 $2,275,1278% 72%

W Highway Aid$140,937

5%

g Capital Reserve$482,043

15%

Graph4

12

EASTLAMPETERTOWNSHIPManagement'sDiscussion and AnalysisFor the Year Ended December 31, 2013

As of December 31, 2013, the total fund balance of all governmental funds was $3.2 million. The fundbalances equal the availablecash balances adjustedby the amounts due to/due from the other funds and

certain other liabilities. As of December 31, 2013, the General Fund (the largest governmental fund) had

a liability of $89 thousand for improvementguaranteeswhich are deposited into a separate cash account.In addition,escrows of $111 thousand are held to cover inspection costs of ongoingpermitted projects.

RevenuesThe revenues reported for all the governmental funds were $9.5 million in 2013, an increase of $.5

million over 2012. The revenues listed below; do not include other financing sources such as asset sales,

and refunds on prior years' expenditures. Operating transfers were not included in revenues. Followingis a comparison of the revenue changes by type.

Comparison ofRevenues Collected by Governmental Funds

(ExcludingOther FinancingSources)

December 2012 and 2013

Chart 7

2012 2013 Inc. (Dec.)

Property Taxes $ 2,396,836 $ 2,379,516 $ (17,320) -0.7%Transfer Taxes 462,014 291,447 (170,567) -36.9%Earned Income Tax 1,905,102 1,928,236 23,134 1.2%

Earned IncomeTax - Non-resident 66,836 122,547 55,711 83.4%

Local ServicesTax 685,440 629,893 (55,547) -8.1%AdmissionsTax 740,635 660,663 (79,972) -10.8%Licenseand Permits 109,553 343,437 233,884 213.5%

Fines and Forfeits 161,301 348,755 187,454 116.2%

Interest, Rents and Royalties 3,630 3,838 208 5.7%

Charges for Services 408,528 319,516 (89,012) -21.8%MiscellaneousRevenues 48,977 220,457 171,480 350.1%

IntergovernmentalRevenues 1,987,355 2,274,071 286,716 14.4%

Total Revenues $ 8,976,207 $ 9,522,376 $ 546,169 6.1%

Real Estate Taxes -lower taxable property assessments.Earned Income Taxes -more timely disbursements mandated by State Act 32; increase in

residents' earned income.Earned Income Taxes - Non-resident - employees of Township businesses from home districts

with no earned income tax is greater than expected.Local Services Tax - fewer employees within the Township.Admissions Taxes

-due to a 2012 audit of the revenues, some 2011 taxes were paid to Township

in 2012.Licenses and Permits -only two quarters of Cable Franchise Fees were collected in 2012. The

uncollected2012 quarters were collected in 2013.Fines and Forfeits-SubstantialDEA forfeiturespaid in 2013.

13

EAST LAMPETERTOWNSHIPManagement'sDiscussion and AnalysisFor the Year Ended December 31, 2013

Chargesfor Services- Employee contributions to the fitness room are included when expended.New equipmentpurchased in 2013. Other chargesremained somewhat constantfrom 2012.Miscellaneous Revenue - Witmer Fire Company and Lafayette Fire Company debt servicepayments are recorded as miscellaneous revenue to offset a portion of debt service cost. 2013 is

first year that Lafayettedebt required that principal be repaid. Debt is guaranteedby Township soit must be presented.Inter-governmentalRevenues

- a significant increase in Highway Aid funding from the state

available from increased state fees. Increase in the ForeignFire insurance premium tax allocatedto the Township which is forwarded to the Fire Companies.

Below is the percentageof revenues applicable to each fund for 2012 and 2013.

Revenue% Collected by Governmental Fund

(Not includingother Financing Sources)

Chart 8 2012 2013

GeneralFund 93.7% 89.4%

Capital Reserve 0.4% 2.3%

HighwayAid 4.1% 3.8%

Non-Major Funds 1.8% 4.5%

The increase in revenue percentage shown for Non-Major Funds is due to the increased forfeituresreceived from police participation in a Federal DEA program. The Capital Reserve Revenue percentageincreaseddue to a contribution from West Lampeter Township for their portion of a road improvement

project.

ExpendituresThe total expenditures reflected in GovernmentalFunds for the year ended December 31, 2013 was $9.5

million, an increase of $774 thousand or 8.8% from 2012. Refunds of prior year receipts were notincluded as expenditures.

14


Comparison of Expenditures by Governmental Funds

(Excluding Other FinancingUses)

December31, 2012 and 2013

Chart 9 Increase

2012 2013 (Decrease) % Change

GeneralGovernment

Police

Fire and Ambulance

Inspection,Planning,and Zoning

Public Works - Highways and Streets

Culture and Recreation

Debt Service

MiscellaneousExpenditures

$ 820,320 $ 939,056 $ 118,736 14.5%

5,182,776 5,239,066 56,290 1.1%

327,646 650,871 323,225 98.7%

222,060 243,477 21,417 9.6%

1,086,637 1,398,347 311,710 28.7%

230,216 181,966 (48,250) -21.0%760,581 842,867 82,286 10.8%

115,987 24,187 (91,800) -79.1%

Total Expenditures $ 8,746,223 $ 9,519,837 $ 773,614 8.8%

Police - Staff reduction from 37 officers to 35 officers were offset by salary increases and

resultingovertime costs. Additional transcriptioncosts required.

Fire and Ambulance -2013 Township assistance with the purchaseof a fire engine tanker and a

substantial increase in Workers' Compensation insurance due to State mandates.

Public Works- Highway and Streets -two major projects; a traffic signal and a major road

reconstruction.

Cultureand Recreation:- no majorpark initiatives in 2013 as in 2012.

DebtService: - Additional principal payment for loan secured for the LafayetteFire Company

Miscellaneous Expenditures - Non-uniformed pension costs formerly charged here are allocateddirectly to the related department.

Below is the percentageof expendituresapplicable to each governmental fund for 2012 and 2013.

Expenditure% Collected by Governmental Fund

(Not including other Financing Uses)

Chan 10 2012 2013

General Fund 90.8% 86.6%

Capital Reserve 0.3% 5.9%

Highway Aid 5.0% 4.5%

Non-Major Funds 3.9% 3.0%

15


Capital Reserve expenditures include the purchase of a tanker fire engine and a traffic signal installation.Highway Aid funds expended less in 2013 due to the postponement on the reflectivity work and fundingtraffic signal costs through the GeneralFund rather than with Highway Aid funds.

GeneralFund BudgetaryAnalysis

The original General Fund budget was not adjustedin 2013.

RevenuesTotal General Fund revenues (excluding other financing sources)projected for 2013 were $8.0 million.The actual revenues were $8.5 million, $.5 million (6.9%) greater than was anticipated.

Chart 11 VarianceBudgeted with FinalAmounts Actual Budget Percentage

Original and (Budgetary Positive over (Under)Final Basis) (Negative) budget

REVENUESTaxes $ 5,687,039 $ 6,012,302 $ 325,263 5.7%Licenses and Permits 203,000 343,437 140,437 69.2%Fines and Forfeits 149,000 133,948 (15,052) -10.1%Interest, Rents, and Royalties 3,110 3,568 458 14.7%

Intergovernmental Revenues 1,657,278 1,725,116 67,838 4.1%Charges for Services 262,647 289,459 26,812 10.2%

TOTAL REVENUES $ 7,962,074 $ 8,507,830 $ 545,756 6.9%

TaxesTownship Transfer taxes and wage taxes improved more than expected reflecting improvedeconomic activity.

Licenses and PermitsSix quarters of the Cable Television Franchise fees were received in 2013 instead of the budgetedfour quarters. Two of the quarters should have been received in 2012.

Fines and ForfeitsRates were increased for some fees reimbursed by Lancaster County.

Charges for Services (Inspection, Planning & Zoning,Public Safety, Highway and Streets,Pavilion Rent)Zoning and sub-divisionfees are slowly returning to previous levels. Reimbursementsfor theDEA officer have increased to cover the increased hours worked. The cost of these hours isincluded in Police expendituresshown below.

16


EXPENDITURESTotal expenditures were budgeted at $8.5 million. Actual expenditures were $8.2 million which is underbudget by $.3 million or 3.3%. A comparison of the budgeted amounts to actual expenditures incurred

follows.

Budgeted Variance withChart 12 Amounts Actual Final Budget Percentage

(Original and (Budgetary Positive (Over)UnderFinal) Basis) (Negative) budget

EXPENDITURESGeneral Government $ 953,016 $ 920,123 $ 32,893 3.5%

Police 5,375,319 5,153,219 222,100 4.1%

Fire and Ambulance 388,279 413,317 (25,038) -6.4%Inspection,Planning,Zoning, and other Public Safety 237,090 243,477 (6,387) -2.7%PublicWorks - Highway and Streets 685,510 621,704 63,806 9.3%

Culture and Recreation 184,625 179,666 4,959 2.7%

Debt Service 681,234 688,190 (6,956) -1.0%MiscellaneousExpenditures 22,419 25,182 (2,763) -12.3%

TOTAL EXPENDITURES $ 8,527,492 $ 8,244,878 $ 282,614 3.3%

General GovernmentPositive variance created by staff reductions with related savings in health insuranceand pensioncosts. Costs to update the ComprehensivePlan thoughbudgetedwere not incurred.

PolicePositivevariance created by staffreductions with related savings in health insurance and pensioncosts, partially offset by higher overtime costs. Lower than expected fuel costs and savings onvehicle purchases added to a positivevariance.

Public Works - Highway and StreetsPositive variance from reduced health insurance due to employee change of coverage, less

overtime required for snow and ice removal than budgeted, reduction of minor repairs expense;

more work done on majorproject paid through Highway Aid rather than minor projectsfinanced

throughGeneralFund.

As of December 31, 2013, the General Fund balance was $2.3 million, an increase of .9 million over the

expected balance of $1.4 million. The December 31, 2013 General Fund balance is 26% of projectedGeneral Fund2014 expenditures, well over the Township goal of 10%.

Highway Aid Fund BudgetaryAnalysis

Highway Aid Fund Budgeted Revenues were exceeded by 3.0%. The state allocationwas increased to

reflect higher taxes and fees collected at the state level.

17


Expenditures for 2013 exceed the budgetedamountby $23 thousand (5.8%) as shown on the next chart.

Budgeted Variance withAmounts Actual Final Budget Percentage

Chart 13 Original and (Budgetary Positive (Over)Under

Final Basis) (Negative) Budget

EXPENDITURES

EquipmentPurchases $ 17,375 $ 14,316 $ 3,059 17.6%

Salt 30,000 30,155 (155) -0.5%Signals, Signs, and Markings 60,000 39,778 20,222 33.7%

Highwayand Bridge Construction 258,398 305,001 (46,603) -18.0%Debt Service 38,915 38,915 0 0.0%

TOTALEXPENDITURES $ 404,688 $ 428,165 $ (23,477) -5.8%

The original budgeted expenditures for 2013 were $404,688 compares with actual expenditures of$428,165, an increaseof $23,477.

EquipmentPurchasesEquipmentpurchases include a paint machine gun and one half the cost of a trailer to haul roadequipment.

Signals, Signs, and MarkingsBudgeted engineering study of sign reflectivity requirements was postponed to 2014 due tohigher than anticipatedcosts for the Maple Avenue re-construction.

Highway and Bridge ConstructionThe bids for the Maple Avenuere-constructionwere higher than expected

ProprietaryFundsEast LampeterTownshipmaintains two Proprietary Funds. The Sewer Fund accounts for the operating

activities of the sewer distributionsystem within the Township. The Townshiphas an agreement withLancasterCity for final processing. The Insurance Fund accounts for Townshipself-funded employeehealth insuranceplans managedby the IIC, an inter-municipal cooperative comprised of over forty local

municipalities. If Township deposits to the fund are less than benefits paid, funds are paid by other coopmembers to cover the short fall. If Township deposits to the fund are more than coop requirements, any

remaining funds are returned to the Township.

18

EAST LAMPETER TOWNSHIPManagement'sDiscussion and AnalysisFor the Year Ended December31, 2013

Proprietary Funds (cont'd)

SewerFundAs of December 2013, the Sewer Fund maintained a net position of $1.3 million. Below is a comparison

of 2012 and 2013 sewer activity. Operating Net income increased by 24%. Revenue changes include a

rate increase of 8%, the elimination of fees for solid waste collections as the business moved from theTownship, and the addition of court costs charged for liens filed on delinquent accounts. Debt serviceexpenseoffset the increasedoperating income creating negativechange in position of $104,440.

SewerFund Revenues and Expenses - 2012 and 2013

Chart 14 Increase


Operating Revenues $ 2,488,470 $ 2,884,239 $ 395,769

Operating Expenses (1,538,052) (1,704,046) 165,994

Operating Net Income 950,418 1,1 80,193 229,775

Earningsof Investm.ents 3,044 1,926 (1,118)State Pension Aid Act 205 16,093 17,479 1,386

Capital Contributions 105,350 223,600 118,250

(TappingFees)

Debt Service Expense (1,258,308) (1,298,670) (40,362)

TransfersOut (196,197) (228,968) (32,771)

Change in Net Position $ (379,600) $ (104,440) $ 275,160

Insurance FundAs of December31, 2013, the Insurance Fund's net position was $432,303, consisting of the surplus from

medical claims. Operating Revenues consists of deposits from the General fund and the Sewer Fund andthird party insurance reimbursements. Township deposits are adequate to pay the claims in 2013.Operating Expenses consist of claims paid for employee medical coverage. Excess funds are held in an

unrestricted cash account maintained by the Insurance Cooperative to be distributed to the Township in

2014.

Comparison of 2012 and 2013 activity is presented below.

Internal Service Fund Activity - 2012 and 2013

Chartl5 Increase2012 2013 (Decrease)

Operating Revenues $ 1,085,480 $ 897,012 $ (188,468)OperatingExpenses 971,447 469,408 (502,039)Operating Income (Loss) 114,033 427,604 313,571

Refund ofPrior Year Revenue (25,788) (107,156) (81,368)InvestmentEarnings 0 0 0

Changein Net Assets $ 88,245 $ 320,448 $ 232,203

19


Fiduciary FundsThe two Pension Trust Funds - Police Pension and the Non-Uniformed Pension have combined NetPosition of $15.7 million, an increase of $.9 million (5.8%) from 2012. Pension funds balances are

recorded at cost and do not include unrealizedgains on held investments of $2.3 million and $4.5 millionfor the years ended December 31, 2012 and 2013 respectively.

FiduciaryFund Balances

December31, 2012 and 2013( in 000's)

$14,000m $12,533

$12,000

$10,000

$8,000 m Police Pension

$6,000

$4,0002012, $2,311 e 2013, $2,455

$2,000

-$0Graph 5

Chart 16 presents the additions and deductions to the funds for 2012 and 2013.

IncreaseChart 16 2012 2013 (Decrease)

AdditionsInterest and InvestmentEarnings $ 804,266 $ 676,678 $ (127,588)State PensionAid (Act 205) 368,339 372,899 4,560

TownshipContributrions 199,908 198,448 (1,460)

Employee Contributions 166,120 178,765 12,645

Total Additions 1,538,633 1,426,790 (111,843)

These resourceswere used as shown below:

Retirement Benefits Paid 338,914 402,409 63,495

AdministrativeExpenses 128,217 157,467 29,250

Total Deductions $ 467,131 $ 559,876 $ 92,745

The 2013 increase in unrealized gains of $2.2 million is not reflected in the total additions above. TwoPolice Officersand two non-uniformedemployees retired in 2013 producing the increase in retirementbenefits paid. Administrativeexpensesincrease as the value of the plans increase.

20

EAST LAMPETER TOWNSHIPManagement'sDiscussionand AnalysisFor the Year EndedDecember31, 2013

TransfersBetween Funds1. General administrativecosts, IT administrative costs and the administrative building costs are

accumulated in the General Fund. A percentage of these costs are determined to be

applicable to the Sewer Fund.2. A portion of the General Fund 2013 excess was transferredto Capital Reserve Fund to cover

the cost of future capital projects.3. A percentage of general administrative costs are determined to be applicable to the Streetlight

Fund to cover billing costs.

The chart below summarizes the effect of these transfers.Fund Transfer In Transfer Out

GeneralFund - Administrative $ 183,775

General Fund - IT Administrative 29,493

GeneralFund - AdministrativeBuilding 15,700

Sewer Fund $ 228,968

GeneralFund Adrninistrativecosts attributableto the Sewer Fund

Capital Reserve Fund $ 100,000

General Fund $ 100,000

General Fund Reserves transferred for futureprojects

GeneralFund $ 2,240

StreetlightFund $ 2,240

General Fund Administrativecosts attributable to the Streetlight Fund

Chart 17

There were no other transfers between funds.

CAPITAL ASSETS

? An established replacement schedule is followed for vehicle and technology equipmentreplacementsfor the Police Department.

? A new traffic signal was installed at Greenland Road and Route 30. A county grant andLancaster Mennonite Schoolsassisted with the funding.

? The intersection improvement project at Strasburg Pike and Windy Hill road continues. TheTownship paid the engineering, right of way, and utility relocation costs. Penn Dot will completethe actual construction which is scheduled to begin in June 2014. A county grant assisted theTownship with the engineering and related costs. West Lampeter Townshipcontributed 50% ofthese net costs paid by East LampeterTownship.

? Reconstruction of Maple Avenue was completed - funded with Highway Aid funds.? A paint machine gun was purchasedthrough the Highway Aid Fund.? Hydraulic shoring, two portable flow meters and a service truck were purchased through the

Sewer Fund in 2013.

? A trailer to haul equipment was purchased for Public Works with the cost shared betweenHighway Aid and the Sewer Department.

? The Township contributedone third of the cost of a tanker engine purchased by Bird-in-HandFire Company.

21

EAST LAMPETER TOWNSHIPManagement'sDiscussionand AnalysisFor the Year Ended December 31, 2013

LONG-TERMDEBTChart 18

2012 2013

AdministrativeBuilding $ 7,020,000 $ 6,530,000

Fire CompanyProjects 1,880,000 1,796,000

Road Grader 142,573 108,802

SewerCombination Truck 152,433 103,576

Sewer SystemImprovements 12,554,500 11,639,500

Total Debt $ 21,749,506 $ 20,177,878

Long-term DebtLong-term debt was incurred in previous years to finance the construction of the municipal building.During 2013, the Township paid fiscal fees of $37,047, interest of $161,143 and principal payments of$490,000.

A debt of $275,000 was incurred in 2002 to assist WitmerFire Companywith the purchaseof a vehicle.The fire companyis paying the entire cost of this loan. The balanceat the end of 2013 is $156,000.

The construction loan in the amount of $1,460,000which was secured to supportLafayette Fire Companyin the construction of a new fire hall was converted to a general obligation note in the amount of$1,710,000. Interest of $28,401 and principal payments of $70,000 were paid in 2013. The fire companyis paying the entire cost ofthis loan

An agreement to purchase a grader through an installment sale was approved on August 2011. The

agreement provides for five annual payments. Total payments amount to $194,092 of which $175,168

covers the cost of the grader and $19,410 is interest. Debt service payments for 2013 totaled $38,915.Payments are made with HighwayAid funds. Last payment is scheduledin 2016.

A sewer combinationtruck was acquired througha lease purchaseagreement in 2008. This truck replacesthe truck destroyed in a fire at the end of 2007. Total payments amount to $378,558 of which $330,000

covers the cost of the truck and $48,558 is interest. Debt service requirements for 2013: principal$48,857 and interest of $5,223. Payments are made through the sewer fund with the last paymentscheduled in 2015.

Lease RentalDebt.Improvementsto the sewer system are financed through the East Lampeter Sewer Authority,which is alegally separate component unit whose activities are not presented in these f'mancial statements. TheTownship has covenanted to annually appropriate sums sufficient to meet the Authority'sdebt service ifthe revenues from sewer operations or other monies of the Authority are not sufficient. The balance owedon these debts (LeaseRental Debt) as of the beginningof 2013 was $12.6 million. The total balance

owed on Lease Rental Debt as of December 31, 2013 is $11.6 million. The revenues and cash reserves ofthe sewer operationswere sufficient to meet the debt service requirement: principal of $915 thousand andinterest of $330 thousand.

22

EAST LAMPETER TOWNSHIPManagement'sDiscussion and AnalysisFor the Year Ended December 31, 2013

ECONOMICFACTORSAND NEXT YEAR'SBUDGET

East Lampeter Township continues to feel some effect of the weak national economy. Taxable propertyassessmentshave experienced slight declines due to assessmentappealsand exempt status requests. TotalGeneral Fund revenues are expected to remain stable in 2014, while 2014 expenditures are projectedtoincrease by about 5%. A 4% decrease in General Fund reserves is projectedwhich will maintain abalance of $2.2 million--25% of 2014 budgeted expenditures. With this positive financial position, theTownship will continue to be able to provide services with the high level of professionalism that the

residentsexpect.

Road Improvements Scheduled? Road projectsare selected as specified by the ten-year plan prepared and updatedannually by

the Township's engineering firm. Road projects are paid through grants, the Liquid Fuelsfunds received from the State and Capital ReserveFunds set aside for that purpose.

? Pennsylvania Department of Transportation will commence construction work at theintersection of Windy Hill Road and Strasburg Pike during 2014. The Township is

responsible for utility relocation currently underway and some additionalengineering work.? A cooperative StreetscapePlan is in development. A county grant and funds from Penn Dot

will finance the projectexcept for a small amount that will be paid through the Capital ReserveFund.

? State funding has been approved for the Automated Red Light Enforcement program alongRoute 30. Completion of the project is planned for 2014.

? Reconstructionof a culvert on Bowman Road is planned for 2014.

? ADA improvementsare required as part of the state improvementprojectof SR340. Cost ofthese improvementsis the responsibility of the township.

? The railroadcrossing on GreenfieldRoad is scheduledto be up-graded.? Construction plans will be developed for a sidewalk along Greenland Drive.? A study of the traffic flow in the Bridgeportarea will be performed. A Smart Transportation

Grantwill partially fund the study.? $250,000has been set aside for numerous yet to be determined paving projectsthroughoutthe

township.

Parkand Recreation Improvements? Approval has been granted to pursue a DCNR grant to obtain land for an additional park near

Mill Creek.

Administration Facilities? Safety glass will be installed betweenthe administrativereception area and the main lobby.? The HVAC computer software will be upgraded to better interface with developing

technology.

Major EquipmentPurchases? A proposed schedule of Township assistance with fire company apparatus purchases through

2029 has been approved by the Board of Supervisors. There is no commitment for assistance

with a purchase for the years 2014-2016. Assistance is scheduled in 2017.

23

EAST LAMPETERTOWNSHIPManagement's Discussion and AnalysisFor the Year Ended December 31, 2013

A careful analysis is made of all Township equipment purchases to ensure the best utilizationof funds.Safety concerns, maintenancecosts and manpowerefficiency are the main determining factors in makingequipment purchases.

? A belt loader will be purchased to assist the road crews with maintaining the roadways,specifically related to gutter cleaning.

? A stainless steel truck bed will be purchase to replace a steel bed that has rusted out.

CONTACTINGTHE TOWNSHIP'S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, customers, investors and creditors with a generaloverview of the Township's finances and to demonstrate the Township's accountabilityfor the money itreceives. Questions concerning this report or requests for additional financial information should bedirected to: Jeanne L. Glick CPA, Finance Director, East LampeterTownship,2250 Old Philadelphia Pike,Lancaster, PA 17602.

24

EAST LAMPETERTOWNSHIPStatement of Net Position - ModifiedCash Basis

December31, 2013

ASSETS

Governmental Business-type

Activities Activities Total

Current Assets:

Cash and Cash Equivalents $ 3,692,036 $ 1,340,206 $ 5,032,242

Restricted Cash and Cash Equivalents 90,807 0 90,807

Internal Balances (25,198) 25,198 0

Total Current Assets 3,757,645 1,365,404 5,123,049

TOTAL ASSETS $ 3,757,645 $ 1,365,404 $ 5,123,049

LIABILITIES

Governmental Business-type

Activities Activities TotalCurrentLiabilities:

Other CurrentLiabilities $ 199,796 $ 0 $ 199,796

Total CurrentLiabilities 199,796 0 199,796

TOTAL LIABILITIES 199,796 0 199,796

NET POSITION

Restricted for:State Highway Aid 140,937 0 140,937

Legal Restrictions to Parkland Projects 9,548 0 9,548

Legal Restrictionsto Police ForfeitureFunds 208,649 0 208,649

Debt Service 2,146 0 2,146

Unrestricted:

Unrestricted 3,196,569 1,365,404 4,561,973

TOTAL NET POSITION 3,557,849 1,365,404 4,923,253

TOTAL LIABILITIESAND NET POSITION $ 3,757,645 $ 1,365,404 $ 5,123,049

See Notes to Financial Statements.

25

EAST LAMPETERTOWNSHIPStatement of Activities - Modified Cash Basis

For the Year Ended December 31, 2013

IndirectDirect Expenses

Functions/Programs Expenses Allocation Expenses

Governmentalactivities:General Government $ 939,196 $ (27,557) $ 911,639

Police 5,240,575 (235,550) 5,005,025

Fire and Ambulance 650,871 0 650,871

Inspection,Planning and Zoning 244,127 (9,666) 234,461

Public Works - Highwaysand Streets 1,398,552 (21,431) 1,377,121

Culture and Recreation 181,966 (4,622) 177,344

Debt Service 842,867 0 842,867

MiscellaneousExpenditures 24,187 0 24,187

Total GovernmentalActivities 9,522,341 (298,826) 9,223,515

Business-type activities:Sewer Service 3,002,716 (21,622) 2,981,094

Total $ 12,525,057 $ (320,448) $ 12,204,609

General revenues:Taxes:

Property Taxes, Levied for General Purposes, NetOther Taxes Levied for General Purposes,Net

Grants, Subsidies,and ContributionsNot Restricted

InvestmentEarnings

Gain on Sale of Assets

Transfers - InternalActivity

Total General Revenues, Special Items,Extraordinary Items and Transfers

Change in Net Position

Net Position-Beginning

Net Position-Ending


26

Net (Expense) Revenue andProgram Revenues Changes in Net Assets

Charges for Operating CapitalFees, Fines Grants and Grants and Governmental Business-type

and Services Contributions Contributions Activities Activities Total

$ 363,967 $ 26,180 $ 0 $ (521,492) $ 0 $ (521,492)

1,402,190 326,059 213,757 (3,063,019) 0 (3,063,019)0 154,163 0 (496,708) 0 (496,708)

123,933 9,184 0 (101,344) 0 (101,344)144,040 20,360 548,955 (663,766) 0 (663,766)

16,099 4,390 9,500 (147,355) 0 (147,355)0 117,908 0 (724,959) 0 (724,959)0 0 0 (24,187) 0 (24,187)

2,050,229 658,244 772,212 (5,742,830) 0 (5,742,830)

2,884,239 17,479 223,600 0 144,224 144,224

$ 4,934,468 $ 675,723 $ 995,812 (5,742,830) 144,224 (5,598,606)

2,379,516 0 2,379,516

3,632,786 0 3,632,786

154,999 0 154,9993,728 1,926 5,654

12,224 0 12,224

228,968 (228,968) 0

6,412,221 (227,042) 6,185,179

669,391 (82,818) 586,573

2,888,458 1,448,222 4,336,680

$ 3,557,849 $ 1,365,404 $ 4,923,253

27

EAST LAMPETER TOWNSHIPBalanceSheet - Modified Cash Basis

GovernmentalFundsDecember 31, 2013

HighwayGeneral Fund Aid Fund

ASSETSCash and Cash Equivalents $ 2,406,771 $ 140,937

Restricted Cash and Cash Equivalents 88,661 0

Due from OtherFunds 23,108 0

TOTAL ASSETS $ 2,518,540 $ 140,937

LIABILITIESAND FUND BALANCES

LIABILITIESPayroll Withholdings $ 410 $ 0

Due to OtherFunds 43,617 0

Restricted Funds 199,386 0

TOTAL LIABILITIES 243,413 0

FUND BALANCESRestricted:

State Highway Aid 0 140,937

Legal Restrictionsto Parkland Projects 0 0

Legal Restrictions to Police ForfeitureFunds 0 0

Debt Service 0 0

Assigned to:

SpecificStreet Light Costs 0 0

Capital Projects 0 0

Unassigned 2,275,127 0

TOTAL FUND BALANCES 2,275,127 140,937

TOTAL LIABILITIES AND FUND BALANCES $ 2,518,540 $ 140,937

See Notes to Financial Statements.28

TotalCapital GovernmentalReserve Non Major Funds Funds

$ 473,124 $ 269,379 $ 3,290,2110 2,146 90,807

8,919 9,500 41,527

$ 482,043 $ 281,025 $ 3,422,545

$ 0 $ 0 $ 4100 23,108 66,7250 0 199,386

0 23,108 266,521

0 0 140,9370 9,548 9,5480 208,649 208,6490 2,146 2,146

0 37,574 37,574

482,043 0 482,0430 0 2,275,127

482,043 257,917 3,156,024

$ 482,043 $ 281,025 $ 3,422,545

29

EAST LAMPETERTOWNSHIPReconciliation of the GovernmentalFunds Balance Sheet

To the Statement ofNet Position - Modified Cash BasisDecember 31, 2013

Total Fund Balances - GovernmentalFunds $ 3,156,024

Amounts reported for governmentalactivities in the statement ofnet position are different because:

Internal service funds are used by managementto charge group insurance

to individual funds. Certain assets of the internal service fund

are included in governmentalactivities in the statementof net position. 401,825

Total Net Position - Governmental Activities $ 3,557,849

See Notes to FinancialStatements.

30

EAST LAMPETER TOWNSHIPStatement of Revenues, Expenditures and Changes

in Fund Balances - ModifiedCash Basis

GovernmentalFunds


HighwayGeneral Fund Aid Fund

REVENUESTaxes $ 6,012,302 $ 0

Licenses and Permits 343,437 0

Fines and Forfeits 133,948 0

Interest,Rents and Royalties 3,568 66

IntergovernmentalRevenues 1,725,116 364,314

Charges for Service 289,459 0

Miscellaneous Revenues 0 0

TOTAL REVENUES 8,507,830 364,380

EXPENDITURESGeneral Government 920,123 0

Police 5,153,219 0

Fire and Ambulance 413,317 0

Inspection,Planning, Zoning and Other Public Safety 243,477 0

Public Works - Highwaysand Streets 621,704 389,251

Culture and Recreation 179,666 0

Debt Service 688,190 38,915

MiscellaneousExpenditures 24,1 87 0

TOTAL EXPENDITURES 8,243,883 428,166

Excess (Deficiency)of RevenuesOver Expenditures 263,947 (63,786)

OTHER FINANCING SOURCES (USES)Sale of Fixed Assets 12,224 0

Refunds of Prior Years Expenditures 128,238 1,100

Interfund Transfers 131,208 0

Refund of Prior Year Receipts (995) 0

TOTAL OTHERFINANCINGSOURCES (USES) 270,675 1,100

Net Change in Fund Balances 534,622 (62,686)

Fund Balance - January 1, 2013 1,740,505 203,623

Fund Balance - December 31, 2013 $ 2,275,127 $ 140,937


31

Total

Capital GovernmentalReserve Fund Non Major Funds Funds

$ 0 $ 0 $ 6,012,302

0 0 343,437

0 214,807 348,755

149 55 3,838

184,641 0 2,274,071

32,049 100,557 422,065

0 117,908 117,908

216,839 433,327 9,522,376

18,297 636 939,056

0 85,847 5,239,066

237,554 0 650,871

0 0 243,477

302,506 84,886 1,398,347

2,300 0 181,966

0 115,762 842,867

0 0 24,187

560,657 287,131 9,519,837

(343,818) 146,196 2,539

0 0 12,224

0 0 129,338

100,000 (2,240) 228,968

0 (1,509) (2,504)

100,000 (3,749) 368,026

(243,818) 142,447 370,565

725,861 115,470 2,785,459

$ 482,043 $ 257,917 $ 3,156,024

32

EAST LAMPETER TOWNSHIPReconciliation of the Governmental Funds

Statementof Revenues, Expenditures and Changes in Fund BalanceTo the Statement of Activities - Modified Cash Basis

For the Year EndedDecember31, 2013

Total Net Change in Fund Balances - GovernmentalFunds $ 370,565

Amounts reported for governmentalactivities in the statementof activitiesare different because:

Internal service funds are used by management to charge group insurance toindividual funds. A portion of the net revenue of the internal servicefund is reported with governmentalactivities. 298,826

Change in Net Position of GovernmentalActivities $ 669,391

See Notes to FinancialStatements.

33

EAST LAMPETER TOWNSHIPStatementof Net Position - ModifiedCash Basis

ProprietaryFundsDecember31, 2013

ASSETSSewer InsuranceFund Fund

CurrentAssets:Cash and Cash Equivalents $ 1,309,728 $ 432,303

Due From Other Funds 25,198 0

Total Current Assets 1,334,926 432,303

TOTAL ASSETS $ 1,334,926 $ 432,303

NET POSITIONUnrestrictedReserves 1,334,926 432,303

TOTAL NET POSITION $ 1,334,926 $ 432,303

Reconciliationof Net Position to the Statement of Net Position:Net Position - Sewer Fund $ 1,334,926

Amounts reported for the business-type activities in the statement

of net position are d.ifferent becausecertain internal service fund

assets are includedwith business-typeactivities 30,478

Net Position of Business-TypeActivities $ 1,365,404


EAST LAMPETER TOWNSHIPStatement of Revenues, Expenses and Changes in Fund Net Position - Modified Cash Basis

Proprietary FundsFor the Year Ended December 31, 2013

Sewer InsuranceFund Fund

OPERATINGREVENUES:Wastewater/Sewerage Charges $ 2,851,155 $ 0

Other Charges for Services 0 897,012Rents and Royalties 1,105 0

Other OperatingRevenues 31,979 0

TOTAL OPERATING REVENUES 2,884,239 897,012

OPERATINGEXPENSES:Salaries 252,626 0

Employee Benefits 142,402 469,408Wastewater/SewerageCollection and Treatment 903,716 0

OtherPurchased Operating Goods and Services 405,302 0

Other PurchasedAdministrative Goods and Services 0 107,156

TOTAL OPERATING EXPENSES 1,704,046 576,564

OPERATING INCOME $ 1,180,193 $ 320,448

35

EAST LAMPETERTOWNSHIPStatement of Revenues, Expenses and Changes in Fund Net Position - Modified Cash Basis

Proprietary Funds - ContinuedFor the Year Ended December 31, 2013


NONOPERATING REVENUES (EXPENSES):Earningson Investments $ 1,926 $ 0

State Sources 17,479 0

Debt Service Expense (1,298,670) 0

TOTAL NONOPERATINGREVENUE/(EXPENSES) (1,279,265) 0

INCOME (LOSS)BEFORE CONTRIBUTIONS (99,072) 320,448

Capital Contributions- Tapping Fees 223,600 0

Transfers In (Out) (228,968) 0

CHANGE IN NET POSITION (104,440) 320,448

TOTAL NET POSITION-JANUARY1, 2013 1,439,366 111,855

TOTAL NET POSITION-DECEMBER31, 2013 $ 1,334,926 $ 432,303

Reconciliationof Change in Net Position to the Statementof Activities:Change in Net Position - SewerFund $ (104,440)

Amounts reported for the business-typeactivities in the statement ofactivitiesare different because a portion of the net revenue of certaininternal service funds are includedwith business-typeactivities 21,622

Change in Net Position of Business-TypeActivities $ (82,818)


36

EAST LAMPETER TOWNSHIPStatement of Cash Flows - Modified Cash Basis

Proprietary FundsFor the Year Ended December 31, 2013


Cash FlowsFrom Operating ActivitiesReceived from Users $ 2,851,155 $ 897,012Received from Other OperatingRevenue 33,084 0

Paymentsto Employees for Services (252,626) 0

Payments for EmployeeBenefits (142,402) (469,408)Payments for Sewerage Collectionand Treatment (903,716) 0Payments for Purchased Goods and Services (398,881) 0

Payments for Other Operating Expenses 0 (107,156)

Net Cash Provided by (Used for) Operating Activities 1,186,614 320,448

Cash Flows From Non-Capital Financing ActivitiesState Sources 17,479 0OperatingTransfers (Out) (228,968) 0

Net Cash (Used for) Non-CapitalFinancingActivities (211,489) 0

Cash Flows From Capital and Related FinancingActivitiesTapping Fees Received 223,600 0

Debt Service Paid on FinancingAgreements (1,298,670) 0

Net Cash (Used for) Capital and Related Financing Activities (1,075,070) 0

Cash Flows From Investing ActivitiesEarningson Investments 1,926 0

Net Cash Provided by Investing Activities 1,926 0

Net Increase (Decrease) in Cash and Cash Flows (98,019) 320,448Cash and Cash EquivalentsBeginningof Year 1,407,747 111,855

Cash and Cash Equivalentsat Year End $ 1,309,728 $ 432,303


37

EAST LAMPETERTOWNSHIPStatement of Cash Flows - Modified Cash Basis

Proprietary Funds - ContinuedFor the Year Ended December 31, 2013

Sewer InternalFund Service Funds

Operating Income (Loss) $ 1,180,193 $ 320,448

Adjustments to Reconcile Operating Income toNet Cash Provided by (Used for) OperatingActivities:Decrease in Due from Other Funds 6,421 0

Total Adjustments 6,421 0

Net Cash Provided by OperatingActivities $ 1,186,614 $ 320,448


38

EAST LAMPETERTOWNSHIPStatement of FiduciaryNet Position - Modified Cash Basis

FiduciaryFundsDecember 31, 2013

Pension

Trust Funds

ASSETSCash and Cash Equivalents $ 689,814

Investments 15,020,630

TOTAL ASSETS $ 15,710,444

NET POSITION HELD IN TRUST FORPENSIONBENEFITSRestricted $ 15,710,444

TOTAL NET POSITION $ 15,710,444


39

EAST LAMPETERTOWNSHIPStatement of Changes in FiduciaryNet Position - ModifiedCash Basis

FiduciaryFunds


Pension

Trust Funds

ADDITIONSContributions:

State Pension Aid $ 372,899Employee 178,765

TownshipContribution 198,448

Total Contributions 750,112

InvestmentIncome:Interest and Investment Eamings 676,678

Total InvestmentIncome 676,678

Total Additions 1,426,790

DEDUCTIONSAdministrativeExpense 157,467

Retirement BenefitsPaid 402,409

Total Deductions 559,876

Net Increase 866,914

Net PositionHeliinTrust for PensionBenefitsNet Position - January 1, 2013 14,843,530

Net Assets - December31, 2013 $ 15,710,444


40

EAST LAMPETER TOWNSHIPNotes to FinancialStatements

December 31, 2013

SUMMARYOF SIGNIFICANTACCOUNTINGPOLICIES

As discussed further under Measurement Focus and Basis of Accounting, these financial statements are

presentedon a modified cash basis of accounting, which is a basis of accounting other than accountingprinciples generally accepted in the United States of America (GAAP) establishedby the Governmental

Accounting Standards Board (GASB). These modified cash basis financial statements generallymeet the

presentation and disclosure requirements applicable to GAAP, in substance, but are limited to the

elements presented in the financial statements and the constraints of the measurementand recognitioncriteria of the modified cash basis of accounting.

FINANCIAL REPORTING ENTITY

East Lampeter Township is located in Lancaster County, Pennsylvania. The Township board ofsupervisors consists of five members elected by the public. The Township provided the following

services to its citizens: public safety, public works, cultural, recreation and communitydevelopment.

Management has applied the criteria set forth by GASB pronouncements in determining potentialcomponentunits. Generally,componentunits are legally separate organizationsfor which the Townshipis financially accountable. The Township is financially accountable for the entity if it appoints a votingmajority of the organization'sgoverningbody and is either able to impose its will on the entity or there is

a potential for the organization to provide a specific fmancial benefit to, or financial burden on, the

Township. Based upon the applicationof these criteria, the Townshiphad determined the following.

The East Lampeter Township Sewer Authority's governing board is appointed by the Township'sgoverning board. The Authority acquires, constructs, and improves the sewer collection system as

requested by the East Lampeter Township. The Authority serves as a financing authority for theTownship. The Township guarantees debt of the Authority. Since there is a potential for the Authority toimpose a specific financial burden on the Township and the Township has the ability to significantlyinfluenceoperations, it is considered to be a componentunit for financial reportingpurposes.

41

EAST LAMPETERTOWNSHIPNotes to Financial Statements - Continued

December 31, 2013

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

The above Authority has prepared and issued separate audited financial statements that have not been

included in these financial statements as required by GAAP. This activity would have been reported

under the proprietary fund type.

The financial statementfor the componentunit can be obtained at the Authorityoffice.

BASIS OF PRESENTATION

Government-Wide Financial StatementsThe Statement of Net Position and Statement of Activities display information about the reportinggovemment as a whole within the reporting limitations of the modified cash basis of accounting. They

include all funds of the reporting entity except for fiduciary funds. The statements distinguish between

governmental and business-typeactivities. Governmental activities generallyare financedthrough taxes,

intergovernmental revenues, and other non-exchange revenues. Business-type activities are financed in

whole or in part by fees charged to externalparties for goods or services.

Fund Financial StatementsFund financial statements of the reporting entity are organized into funds, each of which is consideredtobe a separateaccountingentity. Each fund is accounted for by providing a separate set of self-balancingaccounts that constitutes its assets, deferred outflows, liabilities, deferred inflows, net position or fundbalance, revenues, and expenditures or expenses. Funds are organized into three major categories:

governmental, proprietary and fiduciary. An emphasis is placed on major funds within the governmentaland proprietarycategories. A fund is considered major if it is the primary operating ftmd of the Township

or meets the followingcriteria:

a. Total assets, deferred outflows, liabilities, deferred inflows, revenues, or expenditures orexpenses of that individual governmental or enterprise fund are at least ten percent of the

correspondingtotal of all funds of that category or type, andb. Total assets, deferred outflows, liabilities, deferred inflows, revenues, or expenditures or

expenses of the individual governmental fund or enterprise fund are at least five percentof the

correspondingtotal for all governmental and enterprise funds combined.

42

EAST LAMPETER TOWNSHIPNotes to Financial Statements - Continued

December 31, 2013

SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES(cont'd)

The funds of the financial reportingentity are describedbelow:

GovernmentalFunds

General FundThe General Fund is the primary operating fund of the Townshipand is always classifiedas a majorfund. It is used to account for and report all financial resources not accounted for and reported in

another fund.

Special Revenue FundsSpecial Revenue Funds are used to account for and report the proceeds of the specific revenuesources that are either restricted or committedto expenditures for specified purposes other than debt

service or capital projects of the Township. The reporting entity includes the following specialrevenue funds:

Highway Aid- The Highway Aid Fund has been provided to record the state liquid fuels andhighway aid resources, which are used to providemaintenance and resurfacing to the streets andhighways of the Township.

Police Forfeiture Fund - The Police Forfeiture Fund has been provided to record the proceeds ofasset forfeitures received from the U.S. Drug Enforcement Agency. These monies are used tofund special projectsof the Township'sPolice Department.

Street Light Fund-The Street Light Fund has been provided to record the assessmentmade and

expenses incurred for providing street lighting to the Township.

CapitalProjectFundsCapital Project Funds are used to account for and report financial resources that are restricted,committedor assigned to expenditure for capital outlays, including the acquisitionor constructionofcapital facilities or other capital assets. The Capital Reserve Fund has been established to providemonies for future capital project improvements or replacements. The ParklandCapitalReserve andAcquisition Fund has been established to provide monies for Township Park development andimprovement.

43

EAST LAMPETER TOWNSHIPNotes to FinancialStatements - Continued

December31, 2013

SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES(cont'd)

Debt Service Funds

Debt service funds are used to account for and report financial resources that are restricted,

committed or assigned to expenditure for principal and interest on general long-term debt.

Of the seven individual governmentalfunds disclosed above, three of these funds are considered tobe major funds. They include the General Fund, the Highway Aid Fund and the Capital Reserve

Fund.

ProprietaryFund Types

Enterprise FundThe Enterprise Fund is used to account for operations that are financed and operated in a manner

similar to private business enterprises where the costs (expenses, including depreciation) ofproviding services to the general public on a continuing basis are financed through user charges.The Township uses the enterprisesfunds to account for its Sewer Fund.

The Township applies the provision of GASB Statement No. 62, Codification of Accounting andFinancial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPAPronouncements. GASB 62 incorporatesinto the GASB's authoritative literaturecertain accounting

and financial reporting guidance that is included in the following pronouncements issued on orbefore November 30, 1989, which does not conflict with or contradict GASB pronouncements:Financial Accounting Standards Board (FASB) Statements and interpretations, AccountingPrinciples Board Opinionsand Accounting ResearchBulletins of the American Institute of CertifiedPublic Accountants' (AICPA) Committeeon Accounting Procedure.

Internal Service FundsInternal service funds are used to provide for the benefits for Township employees on a cost-

reimbursement basis. The Township uses an internal service fund to accountfor its InsuranceFund.

44


December 31, 2013

SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (cont'd)

FiduciaryFunds

Trust and Agency FundsTrust and agency funds are used to report assets held in a trustee or agency capacity for others and

therefore are not available to supportTownship programs. The reporting focus is on net position and

changes in net position and are reported using accounting principles similar to proprietary funds.

Since by definition these assets are being held for the benefit of a third party (other local

governments, private parties, pension participants, etc.) and cannot be used to address activities orobligations of the government, these funds are not incorporated into the government-widestatements.

The Township uses the trust and agency funds to account for its Police Pension Fund and Non-Uniformed Pension Fund. These funds have been provided for the purpose of providing retirementfunds for the benefitof the qualified police officers and non-uniform employeesof the Township.

MEASUREMENTFOCUS AND BASIS OF ACCOUNTING

Measurement focus is a term used to describe what transactions or events are recorded within the variousfinancial statements. Basis of accounting refers to when and how transactions or events are recorded,regardless of the measurementfocus applied.

Measurement Focus

In the government-wideStatement ofNet Position and the Statementof Activities, both governmental andbusiness-like activities are presented using the economic resources measurement focus, within the

limitations of the modified cash basis of accounting, as defined in item b below.

In the fund financial statements, the current financial resources measurement focus or the economicresources measurement focus, as applied to the modified cash basis of accounting, is used as appropriate:

a. All governmental funds utilize a current financial resources measurement focus within thelimitations of the modified cash basis of accounting. Only current financial assets andliabilities are generally included on their balance sheets. Their operating statements presentsources and uses of available spendable financial resources during a given period. These funds

use fund balance as their measure of available spendable financial resources at the end of the

period.

45


December 31, 2013

SUMMARY OF SIGNIFICANTACCOUNTINGPOLICIES (cont'd)

b. The proprietary fund utilizes an economic resources measurement focus within the limitations

of the modifiedcash basis of accounting. The accounting objectivesof this measurement focus

are the determination of operating income, changes in net position, net financial position, and

cash flows. All assets, deferred outflows, liabilities and deferred inflows (whether current or

non-current, financial or non-financial) associated with their activities are reported within the

limitationsof the modified cash basis of accounting.

Basis of AccountingThe financial statements are presented on a modified cash basis of accounting, which is a basis ofaccountingother than GAAP as establishedby GASB. This basis of accountinginvolves modifications to

the cash basis of accountingto report in the statements of net position or balance sheets cash transactions

or events that provide a benefit or result in an obligation that covers a period greater than the period in

which the cash transactionor event occurred. Such reported balances include inter-fund receivables and

payables and escrowdeposit liabilities.

This modified cash basis of accountingdiffers from GAAP primarily because economic assets, deferred

outflows, liabilities, and deferred inflows that do not arise from a cash transaction or event are not

reported, and the measurement of reported assets and liabilities does not involve adjustmentto fair value.

If the Township utilized the basis of accounting recognized as generally accepted, the fund financial

statements for governmental funds would use the modified accrual basis of accounting, while the fund

financial statementsfor proprietary fund types would use the accrual basis of accounting. All government-

wide financials would be presentedon the accrual basis of accounting.

ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with professional standards requires managementto

make estimates and assumptions that affect certain reported amounts and disclosures. Actual results

could differ from those estimates.

46


December31, 2013

SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (cont'd)

FINANCIALPOSITION

Cash and Cash EquivalentsFor the purpose of financial reporting, cash and cash equivalents include all cash and investments withoriginal maturities of three months or less.

Investments

Investments classified in the fmancial statements consist of corporate bonds, U.S. Treasury Securities,Federal Agency Securities, and stocks held for pension benefits and are recorded in fiduciary funds.Investments are valued at cost as determined by Morgan Stanley.

Capital Assets

The Township'smodified cash basis of accounting reports capital outlays resultingfrom cash transactionsas expendedat the time payment is made, and does not capitalize the cost of capital assets. Accordingly,no depreciation has been reflected in the financial statements.

EncumbrancesEncumbrance accounting, under which purchase orders, contracts and other commitments for theexpenditures of monies are recorded in order to reserve that portion of the applicable appropriation, is notemployed.

Long-TermDebtLong-Term debt arising from cash basis transactions of governmental and proprietary funds is notreported as liabilities in the government-wideand fund financial statements. The debt proceeds are

reported as other financing sources and paymentofprincipal and interest reported as expenditures.

Net Position Classifications

Government-WideStatements

Net Position is classified and displayed in two components:

Restricted - Consists of restricted assets reduced by liabilities and deferred inflows orresources related to those assets with constraints placed on their use either by (1) externalgroups such as creditors, grantors, contributors, or laws and regulations of other governments;or (2) law through constitutional provisionsor enabling legislation.

47


December 31, 2013

SUMMARYOF SIGNIFICANTACCOUNTINGPOLICIES(cont'd)

Unrestricted- Net amount of assets, deferred outflows of resources, liabilities, and deferred

inflows and resources that do not meet the definition of "restricted".

It is the Township's policy to first use restricted net position prior to the use of unrestricted net

resources when an expense is incurred for purposes for which both restricted and unrestricted net

resources are available.

Fund Financial Statements

Governmental Fund. Statements

The difference among assets, deferred outflows, liabilities, and deferred inflows of governmentalfunds is reported as fund balance and classified as nonspendable, restricted, committed, assigned and

unassignedbased on the respectivelevel of constraint. These constraints are defined as follows:Governmental fund equity is classifiedas fund balance as follows:

Non-spendable- Amounts that cannot be spent either because they are in non-spendableform orbecause they are legally or contractuallyrequired to be maintained intact.

Restricted - Amounts that can be spent only for specific purposes because of constitutionalprovisions, charter requirements or enabling legislation or because of constraints that are

externally imposed by creditors, grantors, contributors, or the laws of regulations of other

governments.

Committed - Amounts that can be used only for specific purposes determinedby a formal action

of the Township Supervisors. The TownshipSupervisors are the highest level of decision makingauthority for the Township. Commitments may be established, modified, or rescinded onlythrough ordinancesor resolutions approved by TownshipSupervisors.

Assigned- Amounts that do not meet the criteria to be classified as restricted or committed but

that are intended to be used for specific purposes. Under the Township's adopted policy, the

TownshipSupervisors may assign amounts for specific purposes.

Unassigned-All other spendable amounts.

It is the Township's policy to first use restricted fund balances prior to the use of unrestricted fund

balanceswhen an expenditure is incurred for purposes for which both restricted and unrestricted fundbalances are available. It is also Township policy to use committed fund balances before assignedfund balances and assigned fund balancesbefore unassignedamounts when an expenditure is incurred

for purposesfor which amounts in those classifications are availableto be used.

48


December31, 2013

SUMMARYOF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

Proprietary FundsThe differenceamong assets, deferred outflows, liabilities and deferred inflows of proprietary funds is

reported as net position and classified in the same manner as the government-wide financial

statements, as previously described.

REVENUES, EXPENDITURES,AND EXPENSES

Program RevenuesIn the Statementof Activities, revenues that are derived directly from each activity or from parties outsidethe Township's taxpayers are reported as program revenues. The Township has the following programrevenues in each activity:

General Government -Licenses and permits, rents and royalties DEP program,emergencyoperations, and refund of prior year expenditures.

Police-Fines and forfeits, Act 120 (police), municipal pension state aid,alcoholic beverage licenses, Drug Enforcement Agency monies,drug task force, and public safety.

Fire and Ambulance - Foreign fire insurance.

Inspection, Planning andZoning - Building permits, mobile home permits, street encroachmentpermits, sanitation, and zoning and subdivision.

Public Works- Highways and streets- snow reimbursement, motor vehicle fuel

tax, special assessments,and grants.

CultureandRecreation- Recreation fees, specificdonations, and grants.

DebtService- Fire Company debt payments

Miscellaneous- Municipalpension state aid.

All other governmental revenues are reported as general. All taxes are classified as general revenueeven if restrictedfor a specific purpose.

49


December31, 2013

SUMMARYOF SIGNIFICANT ACCOUNTINGPOLICIES (cont'd)

Operating Revenues and Expenses

Operatingrevenues and expenses for proprietary funds result from providing services and producingand delivering goods and/or services. They also include all revenues and expenses not related to

capital and related financing,non-capital financing,or investingactivities.

INTERFUNDBALANCESAND TRANSFERS

Interfund balances within governmental activities and within business-typeactivities are eliminated on the

government-wide statement of net assets. Interfund balances which remain on the government-widestatement of net assets are those between governmental and business-type activities. These amounts are

reflected as "Internal Balances".

Flow of assets from one fund to another without a requirementfor repayment are reported as interfund

transfers. Interfund transfers are reported as other financing sources/uses in governmental funds and after

non-operating revenues/expensesin proprietary funds. Amounts reported as interfund transfers in the

fund financial statements are eliminated in the government-wideStatementof Activities except for the net

amountof transfers between governmentaland business-typeactivities,which are reported as Transfers -Internal Activities. Exchange transactions between funds are reported as revenues in the seller funds and

as expenditures/expenses in the purchaser funds. The effects of interfund services between funds, if any,

are not eliminated in the Statement of Activities.

CASH AND INVESTMENTS

In accordance with the Pennsylvania Second Class Township Code (State Code), the Township is

authorized to designateone or more banks or bank and trust companies as a depository or depositories forits funds. The balances are insured by the Federal Deposit Insurance Corporation(FDIC) up to $250,000.

If these funds are fully insured by the FDIC, the Township shall not require any additional bond,insurance or security to cover the amounts of deposits so insured. If these funds are not fully insured bythe FDIC, the funds shall be continuously secured by a pledge of direct obligations of the United States ofAmerica or of the Commonwealth,having an aggregate market value, exclusive of accrued interest, at alltimes at least equal to the balance on deposit.

Fiduciary Funds are authorized to invest in legal investments permitted under the PennsylvaniaFiduciaries InvestmentAct.

50


December31, 2013

CASH AND INVESTMENTS (cont'd)

Cash and investments as of December 31, 2013 are classified in the accompanying financial statements as

follows:

StatementofNet Position:Cash and Cash Equivalents $ 5,032,242Restricted Cash and Cash Equivalents 90,807

FiduciaryFunds:Cash and Cash Equivalents 689,814Investments 15,020,630

Total Cash and Investments $ 20,833,493

Cash and investments as ofDecember 31, 2013 consist of the following:

Cost MarketValue

Cash on Hand $ 508 $ 508

Deposits with Financial Institutions 3,435,686 3,435,686Depositswith.MorganStanley 689,814 689,814Investments:

PLGITState InvestmentPool 1,686,855 1,686,855

Morgan StanleyCorporate Bonds 6,552,124 6,433,061FederalAgency Securities 77,258 81,368Stock 8,391,248 13,010,970

Total Cash and Investments $ 20,833,493 $ 25,338,262

Investments with the Pennsylvania Local Government Investment Trust (PLGIT) are held in the name ofthe respective funds. Investmentsin PLGIT are reported at cost.

Pension funds include investments held with Morgan Stanley in money market funds, corporate bonds,Federal Agency Securities, and stocks. Investments are valuedat cost.

51


December31, 2013

CASHAND INVESTMENTS (cont'd)

CREDIT RISKCredit risk is the risk that an issuer or other counterpartyto an investmentwill not fulfill its obligations to

the holder of the investment.

The State Code requires the Township to invest funds consistent with "sound business practice":investmentsare made with discretionand intelligence,to seek reasonable income,preserve capital, and, in

general, avoid speculative investments. The Township has no investmentpolicy that would further limitits investment choices. Followingare the credit ratings as of the year end for each investment type:

Ratings as ofYear End

Exempt from

Investment Type Amount Disclosure AAA AA A BBB

State Investment Pool $ 1,686,855 $ 0 $ 1,686,855 $ 0 $ 0 $ 0

Corporate Bonds 6,552,124 0 0 513,049 2,818,019 3,221,056

FederalAgency Securities 77,258 77,258 0 0 0 0

Stock 8,391,248 8,391,248 0 0 0 0

$16,707,485 $ 8,468,506 $ 1,686,855 $ 513,049 $ 2,818,019 $ 3,221,056

CUSTODIALCREDITRISKCustodial credit risk for deposits is the risk that in the event of the failure of a depository financialinstitution, a government will not be able to recover deposits from an outside party. For investments it is

the risk that in the event of the failure of the counterpartyto a transaction, a governmentwill not be ableto recover the value of the investmentor collateral securities that are in the possessionof an outsideparty.The Township has no investmentpolicy that would further limit the exposure to custodialcredit risk fordepositsor investments than that required by the State Code.

As of December 31, 2013, $2,522,452 of the Township's deposits with fmancial institutions in excess offederal depository insurance limits were collateralized with securities held by the pledging financial

institution or held by the pledging financial institution's trust department or agent but not in the

government'sname. Cash depositsat December 31, 2013 include restricted cash of $90,807.

Investments with Morgan Stanley include securities uninsured and unregistered and held by the

counterparty, or held by the counterparty's trust department or by its agent but not held in the

government's name (this includes the portion of the carrying amount of any repurchase agreement that

exceedsthe market value of the underlyingsecurities).

52


December31, 2013

CASH AND INVESTMENTS (cont'd)

INTEREST RATE RISKInterest rate risk is the risk that changes in market interest rates will adversely affect the fair value of aninvestment. The Townshipdoes not have a formal investment policy that limits investment maturities as

a means of managing its exposure to fair value losses arising from increasing interest rates.

As of December 31, 2013, the Townshiphas the following investmentssubjectto interest rate risk:

Weighted Average

InvestmentType Amount Maturity Date

State Investment Pool $ 1,686,855 Less than 60 Days

CorporateBonds 6,552,124 4.73 years

FederalAgencySecurities 77,258 25.25 years

$ 8,316,237

CONCENTRATIONOF CREDIT RISKConcentrationof credit risk is the risk of loss attributed to the magnitude of a government'sinvestments

in a single issuer. The Township does not have formal investmentpolicy regarding concentration ofcredit risk but utilizes "sound business practice"in choosing investments mandatedby the State Code.

INTERFUNDBALANCES AND TRANSFERSInterfundbalances are as follows:

Due to the General Fund

FromNon-Major Funds $ 23,108

Due to Capital Reserve Fund

From the GeneralFund 8,919

Due to Non-Major Funds

From the General Fund 9,500

Due to SewerFund

From the GeneralFund 25,198

Grand Total $ 66,725

53


December31, 2013

INTERFUND BALANCES AND TRANSFERS(cont'd)

The amount due to the General Fund from Non-Major Funds represents reimbursements due for

expenditures paid on behalf of those funds. The amount due to the Capital Reserve Fund from theGeneral Fund represents reimbursements due for revenues collected on behalf of the Capital Reserve

Fund. The amount due to Non-Major Funds from the General Fund represents reimbursements due for

revenues collected on behalf ofNon-Major Funds. The amount due to the Sewer Fund from the General

Fund represents reimbursement due for revenues collected on behalfof the Sewer Fund.

For the purpose of the Township's fund financial statements, the interfundbalances are not eliminated.

Interfund transfers were as follows:

Amount

Transfersto the General Fund

From the SewerFund S 228,968

From Non-Major Fund 2,240

Transfers from the General Fund

To the Capital Reserve Fund (100,000)

InterfundTransfers $ 131,208

The transfer of $228,968 into the General Fund from the Sewer Fund and $2,240 into the General Fundfrom a Non-Major fund was for the allocation of administrativeexpenses. The transfer of $100,000 fromthe General Fund to the Capital Reserve Fund was for funding future capital expenditures.

NOTESRECEIVABLE

The debt service fund holds a note receivable of $156,000 from the Witmer Fire Company. Interest

payments are receivable semi-annually at a variable rate through November2022. At December 31, 2013interest is payable at a rate of 1.95% per annum. Principal becomes due and payable annually throughNovember2022.

The debt service fund holds a note receivable of $1,640,000 from the Lafayette Fire Company. Interest

payments are receivable semi-annually at a variable rate through February 2030. At December 31, 2013interest is payable at rate of .05% per annum. Principal becomes due and payable annually beginningFebruary 2013 and continues through February 2030.

The balance of these receivables are not presented as an asset on the financial statements under the

modified cash basis of accounting.

54


December 31, 2013

PROPERTYTAXES

Based upon assessed valuations provided by the County, the Township bills and collects property taxes.The schedule of property taxes levied for 2013 is as follows:

Tax Levy Date March 1, 2013

2% Discount Period March 1 - April 30, 2013

Face Payment Period May 1 - June 30, 2013

10% Penalty Period July 1 - December31, 2013

Lien Filing Date January 1, 2014

The tax rate for all purposes in 2013 was 1.6 mills ($1.60 per $1,000 assessed valuation).

EMPLOYEE GROUPINSURANCE

In 1991, the Township entered into an inter-governmental cooperation agreement with other

municipalities,in order to provide life, health, hospitalization, medical, surgical or accident insurance forTownship employees and th.eir dependents. Under this agreement the Township is entering into a

partially self-funded arrangement with a local insurance carrier. This arrangement requires monthlydeposits be placed in an account from which the insurance carrier can draw for claims made. Specificindividual losses for claims are limited to $30,000 per incident per fiscal year. In total, the Township'sliability is limited for each fiscal year to the amount that the Township is required to deposit based onindividual rates established at the beginning of the year. Depending on the claims incurred by otherparticipating municipalities, the Township may be responsible for a portion of excess claims incurred by

the other participants (but not to exceed the Township's overall limit of liability). As of December 31,

2013, funds totaling $432,303 remain in the accountand are restricted in nature. Activity related to this

agreement is reported in the insurance fund, an internalservice fund.

55

EAST LAMPETERTOWNSHIPNotes to FinancialStatements - Continued

December 31, 2013

PENSION TRUSTFUNDS

The Townshipmaintains two separate single-employerdefined benefit pension plans adoptedpursuanttoAct 600. Separate reports have not been issued for these plans. Combining statements for the pensiontrust funds are as follows:

Combining Statementof Fiduciary Net Position - Modified Cash Basis

December31, 2013

Police Non-UniformPension Pension Total

ASSETSCash and Cash Equivalents $ 586,160 $ 103,654 $ 689,814Investments 12,669,547 2,351,083 15,020,630

TOTAL ASSETS $ 13,255,707 $ 2,454,737 $ 15,710,444

NET POSITIONHELD IN TRUST FORPENSIONBENEFITS

Restricted 13,255,707 2,454,737 15,710,444

TOTAL NET POSITION $ 13,255,707 $ 2,454,737 $ 15,710,444

56


December31, 2013

PENSIONTRUST FUNDS (cont'd)

Combining Statementof Changes in Fiduciary Net Assets - ModifiedCash Basis

For the Year Ended December31, 2013

Police Non-UniformPension Pension Total

ADDITIONSContributions:

State PensionAid $ 287,443 $ 85,456 $ 372,899Employee 151,691 27,074 178,765

Township 168,513 29,935 198,448

Total Contributions 607,647 142,465 750,112

InvestmentIncome:Interestand Investment Earnings 570,119 106,559 676,678

Total Investment Income 570,119 106,559 676,678

Total Additions 1,177,766 249,024 1,426,790

DEDUCTIONSAdministrativeExpense 126,716 30,751 157,467

RetirementBenefitsPaid 327,844 74,565 402,409

Total Deductions 454,560 105,316 559,876

Net Increase 723,206 143,708 866,914

Net PositionHeld in Trust for Pension BenefitsNet Position - January 1, 2013 12,532,501 2,311,029 14,843,530

Net Position- December31, 2013 $ 13,255,707 $ 2,454,737 $ 15,710,444

The plans are governed by the Board of Township Supervisors which is responsible for the management

of plan assets. The Board of Township Supervisors has delegated the authority to manage certain planassets to Morgan Stanley. The plans provide retirement, disability and death benefits to plan members

and beneficiaries. A description of the plan participation and benefit provisionsfollows:

57

EAST LAMPETER TOWNSHIPNotes to Financial Statements- Continued

December31, 2013

PENSIONTRUSTFUNDS (cont'd)

NON-UNIFORMED PENSION PLAN DESCRIPTION

All full-time employees except police officers shall participate in the non-uniformed plan if they have

attained age 20½ and have performedsix months of continuous service.

Bligibility RequirementsNormal Retirement- the later of attained age 65 or five years after plan entry date.

Early Retirement- within ten years ofnormal retirementdate.

Vesting- 20% after three years of service, plus 20% per year thereafter, up to 100%.

RetirementBenefit1.9% of average compensation multiplied by accrued service, but no greater than 60% of average

compensation. Average compensation is the monthly average of total pay received for the five

consecutive years out of the ten latest years which give the highest average.

Survivor Benefit

If death occurs after a participant becomes partially vested, the amountpaid to the surviving spouse oreligible child equals the amount that would have been paid had the participant terminated

employment on the date of death, survived to his/her earliest retirement age and retired with a

qualifiedjoint and 50% survivor annuity in effect.

Other BenefitSingle sum death benefit is paid if the death of a participantoccurs prior to eligibility for the joint and50% survivor death benefit. A single sum death benefit equal to the participant'stransfervalue fromthe prior plan, increased with interest will be payable.

POLICE PENSIONPLAN DESCRIPTION

All police officers shall participate in the police pension plan if they are employed for not less than 40

hours per week at a definite salary.

Eligibility Requirements

Normal Retirement- attainment of age 50 with 25 years of service (for employees hired prior to

January 1, 1994- attainmentof age 50 with 20 years of service).

Vesting- 100% after twelve years of service.

58


December31, 2013

PENSION TRUSTFUNDS (cont'd)

RetirementBenefitAn amountequal to 50% ofaverage compensation multiplied by accruedbenefit adjustment,plus $20

per month multiplied by years of service in excess of 25 years (maximum shall not exceed $100 per

month). For officers hired prior to January 1, 1994, the service increment is $100 per month if morethan 21 years of service are completed. Average compensation is the monthly average of earnings

paid by the Township, excluding unused sick and vacation pay paid at termination over the fimal 36

months of employment.

Survivor Benefit

If death occurs out of or in course of employment, the monthly payment will be made to an eligiblespouse or dependentchild. The monthly payment shall be 100% of the participant's salary at the time

of death. If death does not arise out of, or in the course of employment, the monthly paymentwill be

50% of the benefit the member was receivingat the time of death, or would have been receiving had

he/she been retired at the time of death.

DisabilityBenefitService-Related - 50% ofmonthly salary on the date of total and permanent disability offset by Social

Security benefitspayable on account of the same illness or injury.

Post-retirementAdjustments

A 3% yearly maximum increasewith a 30% overall maximum increasewill be provided to retirement

participantsor beneficiaries receiving benefits whenever the Consumer Price Index changes at least

1%.

PLAN MEMBERSHIP

Pensionplan membership consistedof the followingas of January 1, 2013:

Police Non-uniformed

Pension Pension

Active employees 37 21

Retirees and Beneficiaries

currently receiving benefits 12 10

Terminatedemployees entitled to

benefitsbut not yet receivingthem 2 8

Total Membership 51 39

59


December 31, 2013


SUMMARY OF SIGNIFICANTACCOUNTING POLICIES

Basis of AccountingThe Township's policy is to prepare its pension financial statements using the cash basis of accounting.Consequently, certain investment income, contributions,and related assets are recognized when received

rather than when earned, and certain benefit paymentsand other expenditures are recognized when paid

rather than when the obligation is incurred. This practice differs from generally accepted accounting

principles,which require the accrual basis of accounting.

Valuation of InvestmentsInvestments with Morgan Stanley are in the form of cash and cash equivalents, corporate bonds, US

Governmentagency securities, and stock and are valuedat cost.

Investmentsthat Represent Five Percent or More ofNet Assets Available for Benefits

At December 31, 2013, 100% of the police and non-uniformedplan assets were invested with Morgan

Stanley.

Contributionsand Funding Requirements

Act 205 (asamended)requires that annual contributions to the non-uniformedand police pension plan be

based upon the Minimum Municipal Obligation (MMO), which is based on the plan's biennial actuarial

valuation (annual valuation for distressed plans). The MMO includes the normal cost, estimated

administrative expensesand an amortization contributionof the unfunded actuarial accrued liability, less

estimated member contributions, and a credit equal to 10 percent of the excess (if any) of the actuarial

value of assets over the actuarial accrued liability. The state provides an allocation of funds which mustbe used for pension funding. Any fmancial requirementestablished by the MMO which exceeds state and

member contributionsmust be fundedby the employer.

Currently, members of the non-uniformedand police pension plans are required to contribute 2.5% and

5.0% of compensation, respectively for 2013. The Township is required to contribute at an actuariallydetermined rate of 11.4% of annual covered payroll for the non-uniformedplan and 17.3% for the police

plan. The contribution requirements of plan members and the Township are established and may be

amended by the Board of Supervisorsas required based on actuarial computations.

Administrativecosts, which may include but are not limited to investment management fees and actuarial

services,are chargedto plans and funded through the MMO and/or plan earnings.

60


December 31, 2013


ScheduleofEmployer Contributions (including State Aid)

Police Pension

Calendar Annual Required Actual Percentage

Year Contribution Contribution Contributed

2008 522,230 522,230 100%

2009 571,752 571,752 100%

2010 468,650 468,530 100%

2011 513,749 513,749 100%

2012 447,535 447,535 100%

2013 455,956 455,956 100%

Non-uniformedPension

Calendar Annual Required Actual Percentage

Year Contribution Contribution Contributed

2008 85,164 85,164 100%

2009 92,955 92,955 100%

2010 99,064 99,064 100%

2011 104,421 139,910 134%

2012 120,712 120,712 100%

2013 115,391 115,391 100%

The annual required contributions listed above do not include amounts due from membercontributions.

61


December31, 2013

DEFERRED COMPENSATION PLAN

The Township maintains a deferred compensation plan that is available to all full-time employees. The

contribution levels are determined by the employees. Funds are invested by ICMA RetirementCorporationas directed by each employee. Funds are due to the employee upon retirementor termination -

of employment. The deferred compensation is not available to participantsuntil termination, retirement,death or unforeseeableemergency.

All amounts of compensation deferred under the plans, all property and rights purchased with those

amounts, and all income attributable to these amounts, property, or rights are held in trust for the

exclusive benefits of participants and theirbeneficiaries.

The Townshipdoes not maintain a fiduciary responsibility in the maintenance of these assets.

LONG-TERMDEBT

The following is a summary of long-termdebt transactions of the Township for the year ended December31, 2013:

Balance Issues or Paymentsof Balance Interest

January 1, 2013 Additions Expenditures December31, 2013 Paid

Governmental Fund Types

GeneralObligationNotes and Bonds $ 8,900,000 $ 0 $ 574,000 $ 8,326,000 $ 166,176

Lease PurchaseAgreements 142,573 0 33,771 108,802 5,145

CompensatedAbsences 289,974 18,910 0 308,884 0

Total GovernmentalFund Types 9,332,547 18,910 607,771 8,743,686 171,321

Proprietary Fund Types

Lease PurchaseAgreements 152,433 0 48,857 103,576 5,223

TotalAll Fund Types $ 9,484,980 $ 18,910 $ 656,628 $ 8,847,262 $176,544

Governmental fund obligations are generally liquidated by the General Fund when due, except for the

obligationson the lease purchase agreement. Those obligationsare satisfied by the Highway Aid Fund.Interest is reported as a direct expense of principal and interest on indebtedness on the statement ofactivities.

62


December31, 2013

LONG-TERM DEBT (cont'd)

General ObligationNotes and BondsThe Township is liable for a General Obligation Note dated September 26, 2002 in the amount of$275,000. The note owing to the Fulton Bank was obtained to assist Witmer Fire Company in the

purchase of firefighting equipment. Annual installments of principal and semi-annual installments ofinterest are payable throughNovember2022. Interestaccrues at 3.70% per annum for the first 61 monthsand 60% ofFulton Bank's prime rate (not to exceed 12%) for the remainderof the term of the note. As ofDecember 31, 2013, the interest rate is 1.95%.

The Township issued General Obligation Bonds dated November 1, 2002 in the principal amount of$6,000,000. In December 2006, the Township advancedrefunded bonds totaling $4,360,000. Principal

maturities for the remaining debt occur on November 15, 2007 through 2013. Interest rates vary from2.40% to 3.55% depending on the date of maturity. Interest is payable beginningMay 15, 2007. Interest

paymentscontinue November 15 and May 15 of each year thereafter to November 15, 2013. The averageannual debt service cost, after the advance refunding, is $198,989. This debt was satisfied in 2013.

The Township issued General Obligation Bonds dated September 20, 2011 in the principal amount of$4,650,000. Principal maturities occur on November 15, 2011 through 2028. Interest rates vary from2.50% to 3.75% depending on the date of maturity. Interest is payable beginningNovember 15, 2011.

Interestpayments continueNovember 15 and May 15 of each year thereafterto November 15, 2028. The

average annual debt service cost is $367,682.

The Township is a participant in PLGIT's Bond Pool Program. Issued through the Emmaus GeneralAuthority, the Township is liable for the following variable rate obligations:

The Township is liable for a General Obligation Note dated July 1, 1999 in the principal amount of$3,540,000. Principal maturities occur on February 1, 2000 through 2019. Interest rates vary weeklyand interest is payable beginning July 1999. Interest payments continue monthly thereafter toFebruary 1, 2019.

In addition, the Township is liable for a General Obligation Note dated October 1, 1999 in the

principal amount of $1,210,000. Principal maturities occur on February 1, 2000 through 2019.

Interest rates vary weekly and interest is payable beginning October 1999. Interest paymentscontinuemonthly thereafterto February 1, 2019.

Interest rates assessed participants in PLGIT's 1996 Bond Pool Program vary from 0.12% to 0.45%during2013.

63


December 31, 2013

LONG-TERMDEBT (cont'd)

These monies were obtained for planning, designing, construction and furnishing offices, publicworks facilities, park facilitiesand other capital projectsas enumeratedin the loan agreements.

The Township is liable for a General Obligation Note dated December 13, 2012 in the principalamount of $1,710,000. The note owing to PLIGT's Bond Pool Program was issued to refund the

General Obligation Note dated June 24, 2011 and provide additional monies to finance the

construction of a fire station for Lafayette Fire Company. Principal maturities occur on March 1,

2013 thru 2030. Interest rates vary weekly and interest is payable beginning January 2013. Interest

payments continuemonthly thereafter to March 1, 2030.

Interest rates assessed participants in PLGIT's 2000 Bond Pool Program vary from 0.05% to 0.24%

during2013.

In addition to interest, fiscal agent fees are payable monthly. Fees were charged at a rate of 1.65%

per annum for all payments in 2013. The Township is also responsible for any arbitrage rebates that

are calculated. Fees of $0 were paid in 2013 related to arbitrage rebate calculations.

Lease PurchaseAgreementsOn December 3, 2008, the Township signed a lease purchase agreement with Manufacturers and Traders

Trust Company for the purchase of a 2009 Volvo Sewer Combinationtruck. Quarterly installmentsof$13,520 include interest accrued at the rate of 3.89% per annum for a period of seven years.

On August 23, 2011, the Township signed a lease purchase agreement with John Deere Credit for the

purchase of a 2010 John Deere Grader. Annual payments of $38,818 begin August 2012 and continuethrough August2016. Payments include interest accrued at a rate of 3.55% per annum for a periodof five

years.

64

EAST LAMPETER TOWNSHIPNotes to Financial Statements- Continued

December31, 2013

LONG-TERM DEBT (cont'd)

Debt service requirements on general obligation notes, bonds and lease purchase agreements in future

years are:

GovernmentalActivities Business-TypeActivities

Principal Interest Principal Interest Total

2014 $ 643,989 $ 160,556 $ 50,786 $ 3,294 $ 858,625

2015 681,252 152,093 52,790 1,290 887,425

2016 703,561 143,029 0 0 846,590

2017 681,000 132,421 0 0 813,421

2018 712,000 122,972 0 0 834,972

2019-2023 2,408,000 472,038 0 0 2,880,038

2024 - 2028 2,350,000 202,547 0 0 2,552,547

2029 - 2030 255,000 86 0 0 255,086

Total Payments $ 8,434,802 $ 1,385,742 $ 103,576 $ 4,584 $ 9,928,704

Interest due on the General Obligation Note dated September 26, 2002 is computed at 1.95% (the rate in

effect at December31, 2013).

Interest due through PLGIT's 1996 Bond Pool Program is computed at 0.30% (the rate in effect atDecember31, 2013).

Interest due through PLGIT's 2000 Bond Pool Program is computed at 0.05% (the rate in effect atDecember31, 2013).

CompensatedAbsencesTownship employees are entitled to accumulate sick days. After five years of employment, policeofficers are entitled to half of all accumulated sick days upon termination subjectto a maximum of 720hours. Other employees are entitled to halfof all accumulatedsick days in excess of 60 days. Vacation

and personal time may not be accumulated.

65

EASTLAMPETERTOWNSHIPNotes to Financial Statements - Continued

December 31, 2013

LEASERENTALS

Fourth SupplementalAgreement of Lease-

East Lampeter Sewer AuthorityOn August 15, 2009 the Townshipentered into a supplemental agreementof lease with the East LampeterSewer Authority to lease certain sewage collection and transportation facilities. This agreementterminated lease rental obligationspayable under the Third Supplemental Agreement of Lease. Annuallease payments varying between $35,927 and $971,490 are due until the calendar year ending December

31, 2027. The lease payments correspond with bond obligations assumed by the Authority and

guaranteed by the Township with respect to the Sewer Revenue Bonds - Series of 2009. Annual lease

payments payable during the next five years are as follows:

Calendar On or Before On or Before

Year April 1, October 1, Total

2014 $ 109,945 $ 859,945 $ 969,890

2015 94,945 874,945 969,890

2016 83,245 888,245 971,490

2017 71,170 896,170 967,340

2018 57,764 912,764 970,528

Lease rentals payable subsequent to 2018 are as follows:

2019 - 2023 $ 1,401,681

2024 - 2027 1,133,663

Lease rentals of $970,265 were paid in 2013.

Fifth SupplementalAgreement of Lease-

East Lampeter Sewer AuthorityOn October 26, 2010 the Township entered into a supplemental agreement with the East Lampeter Sewer

Authority to lease certain sewage collection and transportation facilities. The Township has guaranteedthe payment of principal and interest on the Authority'sGuaranteed Sewer Revenue Note, Series of 2010

with a maximum aggregate principal amount of $6,000,000. Lease rental payments are due on or before

April 18' and October 13' of each year beginning in 2011 and concludingwith the year ending December31, 2023. As of December 31, 2013, the balance on the Sewer Revenue Note is $5,574,500. Lease

Rental payments can be adjustedto equal 100% of the Debt Service requirement on the outstanding Notedue and payable in a certain year.

66


December 31, 2013

LEASERENTALS (cont'd)

Based on the current outstanding debt and interest at 1.59% (the rate in effect at December 31, 2013)

annual lease payments are projectedas follows:

Calendar On or Before On or Before

Year April 1, October 1, Total

2014 $ 44,317 $ 244,317 $ 288,634

2015 42,727 252,727 295,454

2016 41,058 256,058 297,116

2017 39,349 269,349 308,698

2018 37,520 272,520 310,040

Lease rentals payable subsequentto 2018 are as follows:

2019 - 2023 $ 4,689,324

Lease rentals of $274,325were paid in 2013.

Other Inter-Municipal Waste Water TreatmentAgreementsThe Township has entered into an inter-municipal waste water treatment agreements with the City ofLancaster and Lancaster Area Sewer Authority. Both agreements provide that the Township will pay

quarterly sewage treatmentcharges based on their actual usage.

Due to a controversy over the methodof allocating sewage treatmentcosts, the Township has only paid a

portion of the bills received in 1992 through 2013. At December 31, 2013, the City of Lancaster has

billed $4,330,162 in sewage treatment and fixed charges, which have not been paid. This amount does

not include any potential interest owed. In 2012, the City of Lancaster has requestedarbitrationon this

matter. Final resolution is currentlypending.

67


December31, 2013

LEASE RENTALS (cont'd)

Other Lease AgreementsOn January 14, 2004, the East Lampeter Sewer Authority (ELSA) executed a ten-year lease for space on

which to construct and place a radio relay facility. A rent of $100 is incurred for the period up to andincluding 60 days after the issuance of a building permit. Thereafter, the Township is responsible for

monthly installments of $500 for 60 months, followed by another 60 months at $600 per month. Thelease will automatically be renewed for an additional 60 months at $700 per month unless the ELSA

notifies the owner of its intention not to renew no less than 90 days prior to the expiration of the initial orrenewal term. Annual lease rental payments payable during the next five years are as follows:

Calendar

Year Amount

2014 $ 4,800

There are no lease rentals payable subsequentto 2014.

Lease rentals of $6,600 were paid in 2013.

POST EMPLOYMENTHEALTHCAREPLANS

POLICE PLAN

Plan DescriptionThe Township administers a single-employerdefined benefit healthcare plan ("the Police Retiree HealthPlan"). The plan provides hospitalization and health benefits to fully retired police officers and theirspouses until the police officer is eligible for Medicare. Post retirementbenefits will be for the medicalinsurance and prescription drug plans with coverage at the same levels provided to active officers. The

police officer must notify the Township prior to retirement in order to be eligible. In the event that the

retired officer is employed by an employer who provides medical insurance and the retired officer is

eligible at any level of benefit, Townshipprovidedpost-retirementbenefits shall become secondaryto the

employer benefit. The retired officershall also be required to pay 50% of the Township's premiumcosts.Spouses are not covered if they have available health coverage through their employer. Spouses are

covered under the plan for a maximumof 15 years.

68


December31, 2013

POSTEMPLOYMENTHEALTHCAREPLANS (cont'd)

Funding PolicyThe contribution requirements are based on the level of coverage provided to active police officers.Currently, the Townshipis covering 100% of the cost of medical insuranceand prescription drug plans toits active police officers. The required contribution is based on projected pay-as-you-go financing

requirements.

ContributionsFor the year ending December 31, 2013, the Townshipcontributed $34,703 to the plan.

NON-UNIFORMPLAN

Plan DescriptionThe Township administers a single-employerdefined benefithealthcare plan ("the Non-UniformRetireeHealth Plan"). The plan provides hospitalization and health benefits to fully retired non-uniformemployees and their spouses until the employee is eligible for Medicare. Post-retirementbenefits are

provided for employees hired before January 1, 2007 and retired after January 1, 2001 with a monthlypension benefit, are at least 55 years of age, and have served the Township at least 20 years. Post-

retirementbenefits are providedfor employeeshired on or after January 1, 2007, retired with a monthlypension benefit, are at least 55 years of age, and have served the Township at least 25 years. Post-

retirement benefits will be for the medical insurance and prescription drug plans with coverage at the

same levels provided to active employees. The employee must notify the Townshipprior to retirementin order to be eligible. In the event that the retired employee is employedby an employerwho providesmedical insurance and the retired employee is eligible at any level of benefit, Township provided post-

retirementbenefits shall cease and the retired employee can not be reinstated. Spouses are not covered ifthey have available health coverage through their employer. Spouses are covered under the plan for a

maximumof 10 years.

Funding PolicyThe contribution requirements are based on the level of coverage provided to active non-uniformemployees. In 2013, the Township is covering 100% of the cost of medical insurance and prescriptiondrug plans to its active employees. The required contribution is based on projectedpay-as-you-gofinancing requirements.

ContributionsFor the year ending December 31, 2013, the Townshipcontributed $12,141 to the plan.

69


December 31, 2013

COMMITMENTSAND CONTINGENCIES

AUTOMATEDRED LIGHT ENFORCEMENTPROGRAM PROJECTThe Township has entered into a funding agreement with the Commonwealth of Pennsylvania for this

project. The Township has agreed to sponsor the US 30 Interactive Signal Responsive System at an

estimated cost of $75,000,which will be reimbursed in its entiretyby the Commonwealth.

TRANSPORTATIONENHANCEMENTPROGRAMThe Township has entered into an agreement with the Pennsylvania Departmentof Transportation todevelop streetscapeguidelines to create a more efficient corridor for tourists along US30. Federal funds

will be allocated for a portion of the allowable costs of the project up to a maximum of $70,000. The

Township has entered into a grant agreement with LancasterCounty to fund the program in an amount

not to exceed $75,000.

The Township has budgeted expenditures of $150,000 in the 2014 budget for the project.partiallyfinancedby the above Urban EnhancementFunds and the TransportationEnhancement Program.

REIMBURSEMENT AND MAINTENANCEAGREEMENTThe Townshiphas entered into an agreement to reimburse the Commonwealthof Pennsylvania for costs

of the installationofnew pedestrian facilities requiredas part of the State improvementsto SR340.

Estimated cost of the pedestrian facilities is $93,035 to be paid in monthly installments over one year tothe Commonwealth.

FIRE APPARATUS REPLACEMENTThe Township has agreed to assist the four Township fire companies in the purchase of fire apparatus

through 2029. On a rotating basis, the Township has agreed to reimburse the fire companies between

33.3% and 50% of the cost of approved apparatus. The Townshiphas no expenditure obligationfor 2014.

FEES FROM DEVELOPERSDevelopers are required to remit various fees to the Township to obtain final plan approval. These fees

may include fees in lieu of parkland, traffic study fees and similar charges. Some of these fees may be

refundable if not expended within a certain period of time.

LETTERS OF CREDITDevelopers and others are periodically required to issue an irrevocable letter of credit to secure the

completion of public improvements in accordance with Township ordinances and regulations. Theseletters of credit are released upon completionof the improvements. A developer may deposit the amount

of the required letter of credit into an interest bearingescrow account maintained by the Township. These

funds are refunded plus interest earned upon completionof the improvements.

70


December 31, 2013

SUBSEQUENTEVENTS

Managementhas evaluated events through June 16, 2014, the date the financial statements were availableto be issued.

71

EAST LAMPETER TOWNSHIPSchedule of Revenues,Expenditures and Changes in

Fund Balances, Budget and Actual - Modified Cash Basis

General and Major Special Revenue FundsFor the Year EndedDecember31, 2013

GENERAL FUNDVariance withFinal Budget

Budgeted Amounts Actual Positive

Original Final (Budgetary Basis) (Negative)

REVENUESTaxes $ 5,687,039 $ 5,687,039 $ 6,012,302 $ 325,263

Licenses and Permits 203,000 203,000 343,437 140,437

Fines and Forfeits 149,000 149,000 133,948 (15,052)

Interest,Rents and Royalties 3,110 3,110 3,568 458

IntergovernmentalRevenues 1,657,278 1,657,278 1,725,116 67,838

Charges for Service 262,647 262,647 289,459 26,812

TOTAL REVENUES 7,962,074 7,962,074 8,507,830 545,756

EXPENDITURESGeneralGovernment 953,016 953,016 920,123 32,893

Police 5,375,319 5,375,319 5,153,219 222,100

Fire and Ambulance 388,279 388,279 413,317 (25,038)

Inspection, Planning,Zoning

and Other Public Safety 237,090 237,090 243,477 (6,387)

Public Works - Highways and Streets 685,510 685,510 621,704 63,806

Culture and Recreation 184,625 184,625 179,666 4,959

Debt Service 681,234 681,234 688,190 (6,956)

MiscellaneousExpenditures 21,419 21,419 24,1 87 (2,768)

TOTAL EXPENDITURES 8,526,492 8,526,492 8,243,883 282,609

Excess (Deficiency)of Revenues

Over Expenditures $ (564,418) $ (564,418) $ 263,947 $ 828,365

See Notes to FinancialStatements.72

HIGHWAY AID FUNDVariance withFinal Budget



$ 0 $ 0 $ 0 $ 0

0 0 0 0

0 0 0 0

100 100 66 (34)354,875 354,875 364,314 9,439

0 0 0 0

354,975 354,975 364,380 9,405

0 0 0 0

0 0 0 0

0 0 0 0

0 0 0 0

365,773 365,773 389,251 (23,478)0 0 0 0

3 8,915 38,91 5 3 8,915 0

0 0 0 0

404,688 404,688 428,166 (23,478)

$ (49,713) $ (49,713) $ (63,786) $ (14,073)

73

EAST LAMPETER TOWNSHIPStatement of Revenue, Expenditures and Changes in Fund Balances, Budget and Actual

General and Major Special Revenue Funds - ContinuedFor the Year Ended December 31, 2013

GENERAL FUND

VariancewithFinal Budget



OTHER FINANCING SOURCES (USES)

Interfund Transfers $ 171,184 $ 171,184 $ 131,208 $ (39,976)

Sale/Compensationfor Fixed Assets 10,000 10,000 12,224 2,224

Refunds ofPrior Years Expenditures 60,000 60,000 128,238 68,238

Refunds of Prior Years Receipts (1,000) (1,000) (995) 5

TOTAL OTHER FINANCINGSOURCES (USES) 240,1 84 240,1 84 270,675 30,491

Net Change in Fund Balances (324,234) (324,234) 534,622 858,856

Fund Balance - January 1, 2013 1,740,505 1,740,505 1,740,505 0

Fund Balance--December31, 2013 $ 1,416,271 $ 1,416,271 $ 2,275,127 $ 858,856


HIGHWAY AID FUNDVariance withFinal Budget



$ 0 $ 0 $ 0 $ 0

0 0 0 0

0 0 1,100 1,100

0 0 0 0

0 0 1,100 1,100

(49,713) (49,713) (62,686) (12,973)

203,623 203,623 203,623 0

$ 153,910 $ 153,910 $ 140,937 $ (12,973)

75

company,€¦ · east lampeter township management's discussionand analysis for the year ended...

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