COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended December 31, 2020 TOWNSHIP OF MIDDLETOWN BUCKS COUNTY, PENNSYLVANIA COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED DECEMBER 31, 2020 Prepared by the Middletown Township Finance Department Under the Direction of: Mega Bhandary Director of Finance TOWNSHIP OF MIDDLETOWN BUCKS COUNTY, PENNSYLVANIA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended December 31, 2020 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal ....................................................................................................... i-vii Organizational Chart ....................................................................................................... viii List of Elected and Appointed Officials ........................................................................... ix Map of Bucks County, Pennsylvania ...................................................................................x Certificate of Achievement for Excellence in Financial Reporting ................................... xi FINANCIAL SECTION Independent Auditors’ Report .......................................................................................... 3-5 Management’s Discussion and Analysis ....................................................................... 6-20 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position ................................................................................... 22-23 Statement of Activities..............................................................................................24 Fund Financial Statements: Balance Sheet - Governmental Funds .......................................................................25 Reconciliation of the Balance Sheet for Governmental Funds to the Statement of Net Position ......................................................................26 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds ......................................................................27 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ...........28 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund ................................................29 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Investment Fund ..........................................30 Statement of Net Position - Proprietary Funds .........................................................31 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds ............................................................................32 Statement of Cash Flows - Proprietary Funds ..........................................................33 Statement of Fiduciary Net Position - Fiduciary Funds............................................34 Statement of Changes in Fiduciary Net Position - Fiduciary Funds .........................35 Notes to Financial Statements………………………………………………………36-77 Required Supplementary Information: Schedule of Changes in the Net Pension Liability and Related Ratios - Police Pension Plan ..................................................................................79 Schedule of Contributions - Police Pension Plan .....................................................80 Schedule of Changes in the Net Pension Liability and Related Ratios - Non-Uniform Pension Plan ......................................................................81 Schedule of Contributions – Non-Uniform Pension Plan .........................................82 Schedule of Changes in the Net OPEB Liability and Related Ratios - Other Post Employment Benefits .............................................................83 Schedule of Contributions – Other Post Employment Benefits ...............................84 Combining and Individual Fund Statements and Schedules: Major Governmental Funds .........................................................................................86 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - Capital Reserve Fund............................................................87 Non-Major Governmental Funds………………………………………………. .. 88-89 Combining Balance Sheet - Non-major Governmental Funds ............................. 90 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Non-major Governmental Funds ....................................................91 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Street Lighting Fund .........................................92 Budget and Actual - Fire Protection Fund .......................................................93 Budget and Actual - Park and Recreation Fund ...............................................94 Budget and Actual - Ambulance and Rescue Fund .........................................95 Budget and Actual - Road Machinery Fund ....................................................96 Budget and Actual - Fire Hydrant Fund ..........................................................97 Budget and Actual - State Highway Aid Fund ................................................98 Budget and Actual – Debt Service Fund ..........................................................99 Proprietary Funds………………………………… ..............……………………….100 Schedule of Revenues, Expenses, and Changes in Net Position - Budget and Actual - Country Club Fund .......................................................101 Schedule of Revenues, Expenses, and Changes in Net Position - Budget and Actual - Farm Fund ………………………………………….. ..102 Fiduciary Funds………………………………………… .........................................103 Combining Statement of Net Position - Fiduciary Funds ....................................104 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Fiduciary Funds .............................................................................105 Statement of Changes in Assets and Liabilities - Township Escrow Funds ........106 STATISTICAL SECTION Statistical Section Contents...……………………………………………………….108 Net Position by Component………………………………………………………... 109 Changes in Net Position………………………………………………………. 110-111 Fund Balances of Governmental Funds……………………………………………. 112 Changes in Fund Balances of Governmental Funds………………………….......... 113 Tax Revenues by Source, Governmental Funds…………………………………… 114 Assessed and Estimated Actual Value of Taxable Property……………………….. 115 Property Tax Rates - Direct and Overlapping Governments………………….…… 116 Property Taxpayers………………………………………………………………… 117 Property Tax Levies and Collections………………………………………………. 118 Legal Debt Margin Information …………………………………………………... 119 Ratios of Outstanding Debt by Type………………………………………………..120 Ratios of Net General Bonded Debt Outstanding…………………………………. 121 Computation of Direct and Overlapping Bonded Debt………………………….… 122 Demographic and Economic Statistics…………………………………………….. 123 Principal Employers ……………………………………………………………….. 124 Full-Time Equivalent Municipal Employees by Function/Program……………….. 125 Operating Indicators by Function/Program…………………………………………126 Capital Asset Statistics by Function/Program………………………………………127 INTRODUCTORY SECTION May 26, 2021 To the Board of Supervisors and the Citizens of the Township of Middletown: The Comprehensive Annual Financial Report of the Township of Middletown, County of Bucks, Commonwealth of Pennsylvania, for the year ended December 31, 2020 is hereby submitted. This report was prepared by the Township’s Finance Department in conformity with generally accepted accounting principles and audited in accordance with generally accepted auditing standards by Bee Bergvall & Co., Certified Public Accountants. The responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the Township’s management staff. To the best of my knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds and account groups of the Township. All disclosures necessary to enable the reader to gain an understanding of the Township’s financial activities have been included. The organization, form, and contents of this Comprehensive Annual Financial Report and the accompanying financial statements and statistical tables were prepared in accordance with standards established by the Governmental Accounting Standards Board (GASB), the Government Finance Officers’ Association (GFOA), The American Institute of Certified Public Accountants (AICPA), and the Second Class Township Code of the Commonwealth of Pennsylvania. U.S. generally accepted accounting principles require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of a Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with the report. The MD&A can be found immediately following the report of the Independent Auditors. Financial Entity Middletown Township provides a full range of municipal services. These services include police and fire protection; construction and maintenance of streets, storm sewers and other