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Special Board of Aldermen 09-21-2021 Page 16

like some plans do but everybody has a mix of, you know, real estate and equity.

Alderman Lopez

And that 18 years of catch up planned?

Marty Karlon, Director of Communications and Legislative Affairs

The amortization for 2039 is Statutory. So that's something that's in the law in terms of the investment decisions in the

determination of the assumed rate of investment return the Board or the Investment Committee deals with that. So
there's sort of a bifurcation on the funding versus investments.

Alderman Lopez
That 100% is that all in the amortization plan?
Marty Karlon, Director of Communications and Legislative Affairs

That that's in the Statute. Yes, the statutory. The details of the plan are but the funding goal is enshrined in the Statute.

Alderman Lopez

And is that a product of your office or is that a product of State legislation?
Marty Karlon, Director of Communications and Legislative Affairs

State legislation. We as a Bboard at NHRS doesn't take sides on the benefit increases, or decreases, or things like that.
That's a central function left of the plan sponsor, which is the State. We'll run the numbers for proposals, but we typically
don't advocate for or against outcomes unless they're really fiduciary challenging to us or would be tax violations and
things like that.

Alderman Lopez

Right and | think it's important to gauge your influence on this so that we can figure out who we should be talking about.
President Wilshire

All set Alderman Lopez?

Alderman Lopez

Yep, thank you.
Alderman Schmidt

Thank you, Madam President. The reason | was really glad when | heard that you were going to be here today was |
wanted to make it make it clear that what happens when we get a bill of $29 million? Property taxes go up. That's how
we fund this. This last year when you only made 1.1%, a lot of people here lost money. A lot of people here lost their
jobs. There's people who can't pay their rent. This is hard on us. This is not the time for this to go up and I'm very, very
disappointed that there's this goal of 100% when we're talking about people. When we're talking about them staying in
their houses. That's the real issue that | see in this entire thing. | see how you're stuck because of what the legislature
has done and we should work on that. But we also have to understand that we're people at this point and this is very,
very important to us at this horseshoe. Thank you.

Alderman Jette

Thank you, Madam President. So | echo the Mayor's comment that he doesn't want to shoot the messenger. We
understand that you're the messengers but | have several questions. One is when you first started talking, you talked
about how we were the second largest participant in the retirement system. | think I've heard you say that Manchester is
separate. Is Manchester not in the State retirement system?

Special Board of Aldermen 09-21-2021 Page 17
Marty Karlon, Director of Communications and Legislative Affairs

City employees only have a separate plan in Manchester much like your Public Works folks do in Nashua. But the
teachers, police, and fire who work in Manchester are part of NHRS.

Alderman Jette

Okay. My second question is to Alderman Lopez’s question. This idea of 100% funding did you say that that's a
decision that the legislature made that you have nothing to say about that? Is that correct?

Jan Goodwin, Executive Director of NH Retirement System

It is a decision that the legislature made, Sir, and speaking as fiduciaries even though we're not Board members we are
staff, and that does make us fiduciaries. It is the right thing for the plan to do to have a goal of being 100% funded.

Alderman Jette

Okay. So that may be ideal but do you know what banks are required when banks lend out money and they have a
liability to their borrowers? Do they have to hold 100% of those assets? Do you know?

Jan Goodwin, Executive Director of NH Retirement System

No. Banks are subject to different rules and regulations than pension funds are because they’re different types of
enterprises.

Alderman Jette

Do you have any idea what percentage banks are required to hold?
Jan Goodwin, Executive Director of NH Retirement System

| personally do not know.

Alderman Jette

| don't know either but | suggest it’s a lot less than 100%. | pick the same is true of insurance companies. This idea of
100%, you know, being an ideal | understand from what you're saying that the legislature has made this decision but it
does not seem in spite of you're saying that it's the right thing to do, | don't think anybody else does it. So I'm not sure
how right a thing it is to do. And it's an easy decision to make for the legislature when at the same time the legislature
has opted out of funding this at all. They've gone from 40 - 35% to zero. So it's easy for them to say you're to fund this
at 100% but we're not going to contribute anything. | know it's not your decision and I'm not trying to shoot the
messenger but it's a hard for me and | don't know if you can justify it, but it's hard for me to find a justification for this
position. | echo what my other fellow Aldermen have said. This is really hurting not only Nashua but all the cities and
towns. Thank you

President Wilshire
Alderwoman Lu? Alderwoman Lu? Is there anyone else that has questions?
Alderman O'Brien

Thank you, Madam President. | really want to thank you folks and for coming down here. | hope you don't really feel
that you're in the middle of a lion's den, you know and if you did, | apologize. But | think the other Aldermen have really,
truly express their opinion. What you’re going to do with it, | don't know/. As a State Representative as well, | appreciate
the non-partisanship of the New Hampshire Retirement System. You guys do not take sides to the political games that
exist up there. You try to do your best to advise the legislature and I'm under the impression at times the real problem
with the New Hampshire Retirement System is 400 legislatures and it seems.

Last year, | wrote a Bill to put in just 15%, or excuse me, 5% to get back to the 35. Just 5%. It was defeated. Nashua is
dealing with cities and towns up there that don't employ the amount of firefighters, and police, and teachers that we do.
We have some schools, elementary schools that’s probably bigger than some SAUs in some communities. They might

Special Board of Aldermen 09-21-2021 Page 18

have a handful of teachers. We've got more than a handful in this town.

So | don't know what message you can bring back. I've already banged my head against the wall up there in Concord. |
am proud of my fellow delegation that has gone up there and | did have to support that 5% trying to get it back into the
pension system. But that 5% would have helped the Nashua taxpayer and that's what we're really talking about here.
These other people from the hinterlands of, you know, wherever they have cows, and barns, and everything great for
them. We in the city have broad shoulders down here and we're expected to put out fires, and manage a police
department, and educate children that come from other communities, and everything. So things are going good but we
would appreciate some support from Concord but we're not getting it. | just hope in the future, and like | say, I'm very
appreciative coming here like this but in the future, | don't know what you can do. | mean as a legislator we will try more.

I've seen games and I'll ask you just one final question if | may. When you have a pension system, people is dumped by
percentages. So if a police officer, or a firefighter, or a teacher what they get paid a percentage goes into the pension
system. It's the same percentage in Canaan as it is in Nashua. What he withdraws is based upon that percentile that he
puts into the system. So | heard on the legislative floor that it is what Nashua pays its employees. It has nothing to do
with that if we follow the law of percentages. Am | correct?

Jan Goodwin, Executive Director of NH Retirement System

Yes. The contributions are based on the salaries and it's the same percent for each of the participants in the plan
whether it's Nashua, or Portsmouth, or any other city or town. It's the same percent.

Alderman O’Brien

Yeah and | thank you for that answer because a lot of our teachers that do yeoman work within our school system, the
firefighters, the police officers that accepts their duties, and a lot of work realize that and unfortunately | think every State
Rep. in the room has heard that before echoed in the chamber up there. Oh it's what you guys pay in Nashua has
nothing to do with it. It's strictly the larger percentages. Thank you.

President Wilshire

Alderman Dowd.

Alderman Dowd

Yeah just two quick things. One - several people asked me if the State of New Hampshire has a lot of - | hate to use the
term “elderly” cuz | probably fall on it but | don't know how that shifting are we getting younger or older which would affect

the pension, particularly people that are retiring.

But the other question | have is when you say 100% funded, that means that you have enough money in the plan that if
every single person working today retired today, you could pay them their pension? Is that's correct?

Jan Goodwin, Executive Director of NH Retirement System

Yes.

Alderman Dowd

Major companies — thousands of them, as I've looked at them - don't get to 100% because not everybody that they have
is eligible for retirement for a long time. So there's a vast number of people in the retirement system that couldn't retired
if they wanted to. So to have the money to pay them for retirement for the major companies in the United States doesn't
make sense. So why have that money? So why are our States different in that they feel they need a dollar for every
person that could possibly is in the system for retirement, they can't retire till they reach 20 years. To me, that doesn't
make sense either.

Again, by the way, I'm not here to shoot the messenger. We appreciate your being here and we're just using you as a
conduit to get some information back to Concord.

Marty Karlon, Director of Communications and Legislative Affairs

Thank you for having us. It was very civil and a good conversation and if hopefully we had some answers. It may not

Special Board of Aldermen 09-21-2021 Page 19

have been the answers you wanted to hear, but, you know, trying to give you some answers. With the 100% funding, it
is in the abstract but, you know, there's not a magic day where you're 100% funded and you're 100% funded forever.
You could be 100% funded one day and 95 or 102 the following day depending on, you know, how the quarterly
eamings report did what it did to Wall Street.

When you talk about paying out the benefits not all at once, but you over the lifetime of all these generations of public
employees, and you're talking about somebody who can enter the plan in their 20s, or the 30s, work 20, 30, even 40
years, and then live another 20, 30, 40 years, and that's the horizon that you're looking at. A lot can happen in 60 to 70
years, you know, in the world. So if you're not shooting to be fully funded, you're much more vulnerable to shocks and
disruptions that it's gonna cost more to fund the plan than if you were in a stronger financial position. So, you know, |
think it's fair to say, you know, 100 is the goal. We may or may not be there because of layered amortization and maybe
always carrying a debt forward but if you think of it, you know, as a kink in the hose, this is this balloon that unfortunately
you folks are all dealing with in your budget right now. But getting through this pain and having the discipline to pay this
back up to a better funding ratio will prevent it from happening again in the future. Hopefully, you know, there's certainly
going to be a State in New Hampshire, as the Mayor alluded to, and | certainly hope there’s always going to be a
Nashua. The town where my kids grew up, people are going to want to live here like they still do now | believe.
Alderman Dowd

By the way, can you tell me what percentage of the people that are in the State retirement plan are eligible to retire?
Marty Karlon, Director of Communications and Legislative Affairs

Not off the top of my head. Basically if you're reached the minimum age requirements to retire, you can retire. So folks
who are older than 60 on the employee and teacher side can retire now if they're that old and the police and fire is age
and service requirements for folks that range anywhere from age 45 with 20 years to age 52 % with 25 years for the
newer hire. So there's always a pool but we don't tend to look at that and have a handy stat for you. | could research that
if you're interested in though.

Alderman Dowd

So you also alluded to that you're going to have a year-end report very soon?

Marty Karlon, Director of Communications and Legislative Affairs

Yeah those come out in December - the investment and the financial report.

Alderman Dowd

Not until December?

Marty Karlon, Director of Communications and Legislative Affairs

So we get these numbers from the actuary usually around Halloween or early November and then to finish the reports so
that the funded ratio and that information will be available.

Alderman Dowd

So do we get copies when that's available?

Marty Karlon, Director of Communications and Legislative Affairs
Sure.

Alderman Dowd

Thank you.

President Wilshire

Alderman Clemons.

Special Board of Aldermen 09-21-2021 Page 20
Alderman Clemons

Thank you, Madam President. | just wanted to give my two cents for whatever its worth. Probably worth a lot less in the
retirement system but. So my feeling on this is that the, you know, | understand the goal of the 100% and getting there.

| actually agree with it to an extent but the issue is, is that, and this is what Alderman Schmidt was referring to, and that is
that you also have to live in reality. The reality right now is that, you know, people are hurting still from the pandemic.
The pandemic still going on. You have a number of Aldermen here participating from home, myself included, just to be
overly cautious. So you still have an economy that's recovering. The biggest part of it, though, is to me the fact that the
State doesn't contribute a dime to this system. So, you know, | think that, in my opinion you know, we have a perfect
storm that happened this year. Certainly | can understand the argument that, you know and in theory, had the pension
plan been fully funded, that this wouldn't have been as drastic as a year or as tough for Nashua or other cities and towns
because we would have had that higher funding source.

But on the other hand, that's an artificial thing that was created via Statute because in all reality, the legislature could
have decided to relax some of those burdens that came down to Nashua in a number of different ways. They could
have, you know, not to overuse the phrase “kick the can down the road” but certainly they could have, you know, at least
delayed that 100% implementation to kind of give people who are living here in reality a break. | think it's incumbent
upon the legislature and it’s incumbent upon the people who are voting to understand who they're voting for and what
they stand for because people's livelihoods, and their taxes, and things like that it makes a difference. So when you hear
people, you know, that are putting these goals and they stick by them 100% no matter what, sometimes that's not the
way to go.

In my opinion, you want somebody in office who's going to be flexible. You want somebody who's going to understand
that things change and you need to be able to change with the times. So you know, | think we have some good people
from Nashua up there in that legislature but kind of what Alderman O’Brien said, | think some of the people in the rest of
the State, | don't think they understand the difficulties that some of us here in Nashua or another cities are facing. So it's
a little disappointing but regardless, that's my two cents and | appreciate the time. Thank you.

President Wilshire

Anyone else have any questions, comments? Seeing none.

Mr. Karlon and Miss Goodwin thank you so much for being here this evening. We really appreciate you taking the time
to come down to Nashua and explain to us the pension system. So thank you very much for being here.

Marty Karlon, Director of Communications and Legislative Affairs

Thanks for having us.

Jan Goodwin, Executive Director of NH Retirement System

Thank you for all the good questions.
President Wilshire

Thank you.

UNFINISHED BUSINESS

Motion to Forward to the Ballot the Citizens Petition Relative to a Citizens Petition Seeking to Amend the City Charter
Relative to the Nomination and the Confirmation of Appointments to the Nashua Board of Police Commissioners

MOTION BY ALDERMAN HARRIOTT-GATHRIGHT TO FORWARD TO THE BALLOT THE CITIZENS PETITION
RELATIVE TO A CITIZENS PETITION SEEKING TO AMEND THE CITY CHARTER RELATIVE TO THE
NOMINATION AND THE CONFIRMATION OF APPOINTMENTS TO THE NASHUA BOARD OF POLICE
COMMISSIONERS BY ROLL CALL

ON THE QUESTION

Special Board of Aldermen 09-21-2021 Page 21
Alderman Dowd

Just for clarification through Corporation Counsel, it's | believe the legal opinion of legal counsel that we have no option
but to vote yes on this.

Steve Bolton, Corporation Counsel

The Board of Aldermen is required to order it placed on the ballot.
Alderman Dowd

That's what | was trying to get.

President Wilshire

Alderman Jette.

Alderman Jette

Thank you, Madam President. At the public hearing, former Alderman and County Commissioner Mike Soucy made the
assertion that our City Charter requires | think it's 10% of registered voters. He said that the Petition did not have a
sufficient amount of signatures and that basically that we could not put this on the ballot. | would through you | would like
to ask Corporation Counsel whether he has a response to that and can we be assured that we're doing the right thing by
moving this forward.

Steve Bolton, Corporation Counsel

I'll give you every assurance | can. The fact is the legislature which established the City Charter and less special act
regarding the Police Commission to begin with has more recently pursuant to the Constitution and the amendment to the
Constitution that was made in 1964 relative to city charters adopted locally has passed RSA chapter 49-B, which
provides as the Constitution authorizes, a way for municipalities to amend their charters.

In our case, the City Charter and 49-B:5 specifically deals with the percentage and the percentage of what is needed for
a citizens petition to reach the ballot and it's 15% of the total votes cast in the last municipal election. That is the current
law. What was done decades ago in the past by a different legislature has been superseded. Our City Clerk has gone
through the signatures and has certified to you that that 15% threshold was reached. So | don't know what analysis that
former police officer, former firefighter, former alderman, county commissioner Soucy is using. | don't know where he got
his legal education but | do not understand at all where he comes up with the idea that he has.

Alderman Jette

Thank you very much for that. It's probably just because, you know, when people look at our Charter as it's listed in our
online or in Charter itself, you know, says what he says it said but as you pointed out, it has been amended, you know,
by subsequent action by the legislature and perhaps even the Supreme Court has expressed an opinion about this. It
makes me think that in the future if we're re-elected, maybe two years from now at the next municipal election, we might
consider asking the voters whether or not they would authorize a Charter Commission that could look at our present
Charter so that when people look at the Charter it would be nice for the Charter to say what the current law is and not
say something that's different or there has been amended by the legislature. | Know the legislature can always amend it
but at least, you Know, we ought to have a Charter that when we look at it, you know, as much as possible states exactly
what the law is and not mislead people about what it is or require that they have to hire a lawyer to get an opinion about
what it means. | think our Charter needs updating so that it says what it means and it means what it says so that people
can look at it and understand it. But thank you for making that clear. Thank you.

Alderman Lopez

With respect Alderman Jette, | don't know if you need a Charter Commission on that and we have the Facebook
comment section. They can handle that for us.

Alderman Jette

I'm sorry. | didn't | didn't hear you. | didn't understand you.

Special Board of Aldermen 09-21-2021 Page 22
Alderman Lopez

| said we have the Facebook comments section that can handle it.

Alderman Jette

Oh. Good point. Thank you.

Alderman Clemons

Thank you Madam President. Through you to Cooperation Counsel, my question is hypothetically, what would happen if
this motion failed?

Steve Bolton, Corporation Counsel

You could all go to jail. | don't think that would happen but theoretically was how you prefaced your question. You're
required by law to put this on the ballot.

Alderman Clemons
So may | continue?
President Wilshire
Yes.

Alderman Clemons

What happens if you know we don't vote on it? | mean it seems to me that | guess | don't understand why it's taking an
action of this Board if it's just something that automatically has to happen.

Steve Bolton, Corporation Counsel

Well Alderman Clemons that's a good question for State Representatives.

President Wilshire

If we only knew one.

Steve Bolton, Corporation Counsel

Because you had the public hearing that's required by law last week. | will tell you that RSA 49-B:5, V, B says within
seven days after the public hearing, the municipal officers — and that term is defined and in Nashua’s case it means the
Board of Aldermen - the municipal officers shall file with the municipal clerk a report containing the proposed petition
amendment and shall order the proposed amendment to be placed on the ballot at the next regular municipal election.
So that's what the legislature has said. This Board has to order it placed on the ballot. So why it isn’t automatic, | don't
know. The legislature in its great wisdom required YOU to order it placed on the ballot.

President Wilshire

You all set Alderman Clemons.

Alderman Clemons

Yep.

President Wilshire

Okay. Any further discussion? Seeing none, would the Clerk please call the roll?

A viva voce roll call was taken to which resulted as follows:

Special Board of Aldermen 09-21-2021 Page 23

Yea: Alderman O’Brien, Alderman Dowd, Alderman Caron, Alderman Lopez,

Alderman Jette, Alderman Schmidt, Alderman Laws, Alderman Cleaver,

Alderman Harriott-Gathright, Alderman Wilshire 10
Nay: Alderman Clemons 1
MOTION CARRIED
ADJOURNMENT

MOTION BY ALDERMAN O’BRIEN THAT THE SEPTEMBER 21, 2021, SPECIAL MEETING OF THE BOARD OF
ALDERMEN BE ADJOURNED, BY ROLL CALL

A viva voce roll call was taken to adjourn the Special Board of Aldermen meeting which resulted as follows:
Yea: Alderman O’Brien, Alderman Dowd, Alderman Caron,

Alderman Clemons, Alderman Jette, Alderman Schmidt,

Alderman Laws, Alderman Cleaver, Alderman Harriott-Gathright,

Alderman Wilshire 10
Nay: Alderman Lopez 1
MOTION CARRIED

The meeting was declared adjourned at 8:53 p.m.

Attest: Susan Lovering, City Clerk

Past - 1967:
In the beginning...

» RSA 100-A enacted, establishing NHRS

¢ Consolidates four separate plans for teachers,
police officers, firefighters and employees of
the state and political subdivisions

° Creates Group | for teachers and employees
and Group Il for police officers and firefighters,
each with its own benefit structure

o State pays 40% of employer contributions on
behalf of teachers

9/20/2021

Past - 1977:
The Employer Subsidy

» State reduces employer contribution subsidy
for teachers to 35% from 40%

> State creates 35% employer contribution
subsidy for police officers and firefighters
employed by political subdivisions

» Subsidy remained in place until it was
reduced beginning in 2009 and then
eliminated in 2011

Past - 1983:
Heads | win, tails you lose

» Legislature creates Special Account to fund

future COLA and OPEB benefits

e Funded by ‘excess earnings’ - or ‘gain-sharing’ -
when investment return exceeded the assumed rate
of return by a set percentage

° Subsequently determined to be in contravention of
the Internal Revenue Code as it shifted funds from
the pension trust and contributed to a structural
unfunded liability

9/20/2021