Discharge to bodies of water after treatment is normal. Pictured is a normal activated sludge plant, which should be capable of treating effectively. That's the clarifier top left, chlorine contact on right, aeration/digesters on bottom.
It isn't primitive. An imhoff tank and lagoon is primitive, but even those are perfectly capable of treating wastewater. It's almost always that there is more flow now than the plant is designed to handle.
If they are staying within permit, it probably allows more inflow than the plant can handle and has too loose of restrictions on the outflow tests if it is causing harm to the lake.