Net debt $23,385,213 divided by equalized valuation basis per N.J.S.A. 40A:2-2 as amended of $1,753,184,813 equals 1.45%.

(A) The Township guarantees bonds of Mercer County Improvement Authority to finance school facilities for lease to the Ewing Township School Board.

Borrowing Power under N.J.S.A. 40A:2-6 as Amended

3 1/2% of equalized valuation basis (municipal)	$ 61,361,468
New Debt	25,385,214
Remaining borrowing power	$ 35,976,254

The foregoing debt information is in agreement with the Annual Debt Statement filed by the Treasurer.

The following is a schedule of annual debt service for principal and interest on general bonded debt (excluding bond anticipation notes), and green trust loan issued and outstanding to maturity:

Green Trust Program Loans - The Township has contracted with the State of New Jersey, Department of Environmental Protection for Green Trust Program Loans to fund a portion of the costs incurred in the construction of Banchoff Park and Municipal Complex projects.

The loans relating to Banchoff Park and Municipal Complex are payable in semi annual installments of principal and interest of $40,782 and mature between 2008 and 2014. The loans bear interest at the rate of 2% per annum.

New Jersey Environmental Infrastructure Trust Loan ? The Township has contracted with the state of New Jersey, Department of Transportation to fund a portion of the costs incurred in the reconstruction of various roads and the stabilization of Shabakunk Creek.

NOTE D - DEFEASED DEBT

On May 1, 1998, the Township issued General Obligation Refunding Bonds in the aggregate amount of $6,025,000 with interest rates from 3.70% to 4.82%. The 1998 General Obligation Refunding Bonds mature in principal amounts ranging from $120,000 to $910,000 commencing November 1, 1998 and maturing on November 1, 2012, with interest payable November 1, 1998 and semiannually thereafter on the first days of May and November in each year until maturity. The net proceeds of the 1998 General Obligation Refunding Bonds, after paying issuance costs of $135,541 were $6,101,361.

The net proceeds from the issuance of the 1998 General Obligation Refunding Bonds were used to purchase U.S. Government Securities which were deposited in an irrevocable trust with an escrow agent to pay principal of $3,625,000 of the Fiscal Year Adjustment Bonds (Series 1991) and to pay principal of $1,950,000 of the Fire District #2 Land lease obligation and $31,665 of the Fire District #2 Equipment lease obligation.

The advance refunding with respect to the principal amount of Fiscal Year Adjustment Bonds (Series 1991) met the requirements of an insubstance defeasance and such bonds were removed from the Township's bonds payable.

As a result of the advance refunding, the Township reduced its total future debt service requirements by $88,172 which resulted in an economic gain of $126,861, representing the net present value of the debt service savings.

Current fund balances were appropriated and included as anticipated revenue in the succeeding year's budget for the past five years as follows:

Assessment Trust Fund Balances were appropriated and included as anticipated revenue in the succeeding year's Current Fund Budget as follows:

General capital fund balances were appropriated and included as anticipated in the succeeding year's Current Fund Budget as follows:

NOTE F - PROPERTY TAXES

Assessment of Tax:

New Jersey statutes require that taxable valuation of real property be prepared by the Township Tax Assessor as of October 1 in each year and filed with the County Board of Taxation by January 10 of the following year. Upon the filing of certified adopted budgets by the Township of Ewing, Local School District and County, the tax rate is struck by the Board based on the certified amounts in each of the taxing districts. Pursuant to statute, this process is to be completed on or before May 3, with a completed duplicate of the tax rolls to be delivered to the Township of Ewing Tax Collector on or before May 13th.

Collection of Tax:

Taxes become a lien on property as of January 1. The tax bills are prepared and mailed by the Collector of Taxes of the Township of Ewing semi-annually in January and July. The January tax bill, which is payable in equal installments on February 1 and May 1, is an estimated bill based on amounts due to the various taxing districts during the first six months of the calendar year. The municipal portion of the tax is based on the municipal rate for the current fiscal year.

The July tax bill, which is due in equal installments on August 1 and November 1, represents the actual total tax for the year less the amount billed in January. A complete breakdown of the tax levy for each taxing district is included on the July bill.

Taxes become delinquent if not paid on the installment dates and become subject to interest penalties of 8% to 18% of the amount delinquent. If taxes are delinquent on or after April 1st of the succeeding year, the delinquent amount is subject to "Tax Sale" which places a tax lien on the property allowing the holder to enforce the tax lien by collection or foreclosure. New Jersey property tax laws establish a tax lien on real estate as of January 1st of the current tax year even though the amount due is not known.

NOTE G - SCHOOL TAXES

The Local District Tax Levy for SFY 2000 was $35,464,935.

NOTE H - COUNTY TAXES

The Local District Tax Levy for SFY 2000 for county taxes was $10,846,179.

NOTE I - PENSIONS

Employees who are eligible for a pension plan, are enrolled in one of three pension systems administered by the Division of Pensions, Department of the State of New Jersey. The three State-administered plans are: (1) the Public Employees' Retirement System; (2) the Consolidated Police and Firemens' Pension Fund, and (3) the Police and Firemens' Retirement System. The division annually charges municipalities and other participating governmental units for their respective contributions to the plans based upon actuarial calculations. A portion of the cost is contributed by the employees. The Township's share of pension costs for all three plans amounted to $1,054,682 and $811,540 for the years ended June 30, 2000 and 1999, respectively. Employees are also covered by the Federal Insurance Contribution Act.

NOTE J - UNEMPLOYMENT COMPENSATION INSURANCE

Effective January 1, 1978, most municipal employees became eligible for unemployment compensation insurance (N.J.S. 43:21-3 et seq.). The Township had elected to provide a selfinsured plan whereby the municipal cost and employee contributions are deposited in a trust fund from which claims are paid. However, as of April 1, 1994, the Township has discontinued its policy of self-insuring for unemployment compensation insurance and all contributions are remitted directly to the State of New Jersey. Any claims by former employees are prorated for payment based on time served prior and subsequent to April 1, 1994. Claims totaling $4,612 were paid during the year ended June 30, 2000. As of June 30, 2000, the fund balance totaled $32,282.

NOTE K -WORKER'S COMPENSATION INSURANCE

The Township maintains a self-insurance plan for worker's compensation insurance which is administered as a trust by an insurance agency. An annual current fund appropriation is made to the trust and claims are paid from the trust. Interest earned is also added to the trust. As of June 30, 2000, there was a deficit of $56,696 in the trust fund. The 2000 appropriation was $450,000. Claim payments amounted to $339,249, net of refunds. In fiscal year 2001, $400,000 was appropriated to cover future payments on existing claims and to provide for the deficit at June 30, 2000.

The following information was obtained from the insurance agency's reports:

NOTE L - PENDING LITIGATION

The Township was named as a defendant in litigation, which was filed in March, 1995 and was pending in Superior Court of New Jersey. The suit related to a contract between the Township and the Township of Hopewell regarding the use of sewer lines. The plaintiff, a developer, was seeking damages of approximately $3.5 million plus a future reduction in sewer fees together with a refund of $375,000. The case was settled in January 2000 without any admission of liability or payment by the Township but the settlement calls for a reduction in future sewer rates for plaintiffs to the level paid by other users who do not reside within the Township.

The Township has also been named in several other suits. It is counsel's opinion that any liability resulting from these other lawsuits would be covered by insurance and existing Township reserves.

NOTE M - GENERAL CASUALTY AND LIABILITY INSURANCE

The Township is self-insured for both casualty and liability insurance. As of June 30, 2000 the Self-Insurance Trust totaled $123,190. During the year ended June 30, 2000, $0 was appropriated in the current budget and claims, net of recoveries, amounted to $10,518.

NOTE N - TAX APPEALS

At June 30, 2000, properties with assessed taxes aggregating $281,807 were pending tax appeal. Based on prior experience of the percentage lost on tax appeals, management believes the reserve for tax appeals is adequate to cover any potential losses. The Township had a reserve for tax appeals at June 30, 2000 in the amount of $25,000.

NOTE O - UNUSED SICK LEAVE. VACATION BENEFITS AND POST RETIREMENT BENEFITS

The Township has permitted employees to accrue sick leave pay which may be taken as time off or paid at a later date. Each year a provision is made in the budget to cover the estimated annual cost of such payments. In 2000, $14,000 was appropriated. Budget expenditures were $14,000 in SFY 2000.

The Townships policy with respect to unused vacation is to permit employees to carry-over such vacation for one year unless approved otherwise by the council.

The total balance of unused sick and vacation time benefits amounts to approximately $1,550,027 and $556,850 respectively, at June 30, 2000. Such amounts are not included in accrued liabilities at June 30, 2000.

The Township provides post retirement health benefits for retired Township employees who served the Township for 25 or more years, permanent Township employees retired on a disability pension, and their dependents pursuant to State of New Jersey Statute Chapter 88. During the year ended June 30, 2000, $275,450 was appropriated. Budget expenditures were $275,430 in SFY 2000. The Township fiends the benefits on a pay-as-you-go basis. At June 30, 2000, 61 retired employees were eligible for such benefits.

NOTE P - COMMITMENTS

The majority of the Township employees are represented through the following collective
bargaining units:

All contracts are presently under negotiation.

MERCER COUNTY IMPROVEMENT AUTHORITY

As of June 30, 2000 the Township of Ewing has an outstanding obligation to the Mercer County Improvement Authority (MCIA) in the amount of $1,020,347. The fiscal year 2001 municipal budget has allocated sufficient funds to liquidate this indebtedness. However, no additional funds have been budget for obligations that will arise out of operations during fiscal year 2001.

The MCIA through arrangements with the Township of Ewing administration has sanctioned the manner in which the obligations are being paid and budgeted.

It is the intention of the Township of Ewing to liquidate all indebtedness to the MCIA in future budgets.

EWING LAWRENCE SEWERAGE AUTHORITY

As of June 30, 2000 the Township of Ewing has an outstanding obligation to the Ewing Lawrence Sewerage Authority (ELSA) in the amount of $1,454,115.81. The fiscal year 2001 municipal budget has allocated sufficient funds to liquidate this indebtedness. However, the fiscal year 2001 budget has not allocated sufficient funds for the obligation to ELSA that will arise out of operations during fiscal year 2001.

It is the intention of the Township of Ewing to liquidate all indebtedness to ELSA in future budgets.

NOTE Q- DEFERRED CHARGES TO BE RAISED IN SUCCEEDING BUDGETS

Certain expenditures are required to be deferred to budgets of succeeding years. At June 30, the following deferred charges are shown on the balance sheets of the various funds.