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REPORT OF THE FINANCE COMMITTEE

APRIL 4, 2018

A meeting of the Finance Committee was held on Wednesday, April 4, 2018, at 7:00 p.m. in the Aldermanic
Chamber.

Mayor Jim Donchess, Chairman, presided.

Members of the Committee present: Alderman Michael B. O’Brien, Vice Chair
Alderwoman-at-Large Shoshanna Kelly
Alderman-at-Large Brandon Michael Laws
Alderman Patricia Klee
Alderman June M. Caron
Alderman Linda Harriott-Gathright
Alderman Ken Gidge
Alderman Jan Schmidt

Also in Attendance: Dan Kooken, Purchasing Manager
John Griffin, CFO/Comptroller
Scott McIntire, Principal Melanson Heath
James Vayo, Downtown Specialist
Captain Eric Nordengren, Nashua Police Department

PUBLIC COMMENT - None
PRESENTATION
Melanson Heath & Company - 2017 Annual Audit and Comprehensive Annual Finance Report (CAFR)

John Griffin, CFO

John Griffin, CFO — here to my right is Scott McIntire, he is the Principal of Melanson Heath who performs our
audit. | would like to say that from my perspective the audit went very well this year. | have been here for 8
years and we've had excellent audits over those past eight years. My hat is off to the accounting staff on the
internal side and all the departments that work very well with our team as well as Mr. MclIntire’s audit
management team led by Ed Boyd. So without any further ado, Scott McIntire.

Scott McIntire

Good evening and thank you very much for the invitation to come in tonight and give a quick walk through of
our audit of your financial statements. It’s for the year end of June 30, 2017. Mr. Griffin indicated that Ed Boyd
leads the management team. Ed and | work very closely. He was just feeling a little bit under the weather
tonight and | thought it might be best for him not to be out at a public meeting not feeling well. He was a very
key and integral part of this engagement.

It’s our objective tonight to just give you a quick walk through of the audit process and to touch base on your
comprehensive annual financial report. It’s in excess of 200 pages and it is not our objective to go through
certainly even every other page in that document. What we would like to do is hit the high points that are in
there and also draw your attention to some places that might be an opportunity to go back to and look at a later
point in time to perhaps refresh your memory as to why certain key account balances may have changed.

There is what we call a Governance Letter in here addressed to the Mayor and the Board of Aldermen. It
really summarizes some of the next few things that | am going to talk about, which really is how our audit of

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your financial statements went. From our perspective, it went very well. To put that it even the most basic
terms that | can think of, is to tell you that we found the books and records to be in good working order. Key
balance sheet accounts like your cash balances and your bank accounts, tax receivables, long-term debt
accounts payable; we found all of these accounts to be reconciled on a regular and timely basis. As a result of
that test work that we did on your account reconciliations, we did not need to propose any significant audit
entries as a result of the procedures we performed here in Nashua.

That is summarized in what we call the Governance Letter as a required communication. When | talk about
the key components of that Governance Letter it’s informing you of how the audit went and if there were
significant audit entries that were needed. There is some disclosure in there on one of the pages that indicate
that no significant audit entries were needed. There is also a disclosure in there that indicates that there were
no disagreements between the City and our firm and how to apply generally accepted accounting principles
that are really established by the Government Accounting Standards Board.

The last really required communication; again it is documented in that Governance Letter is to speak with the
committee about estimates. There certainly are estimates in your Comprehensive Annual Financial Report. In
our opinion the two most significant deals with a couple of actuarially determined liabilities, the City’s Net
Pension Liability and your Net OPEB Obligation, OPED being an acronym for the “Other Post Employment
Benefit” so it is benefits other than pension. Both of those liabilities, and we will look at those and talk quickly
about them, | certainly can answer many questions, if there are questions on them. But those liabilities are
estimates but they are based on actuarially science and standards that are followed by your actuaries in
determining what those liabilities are in your financial statements.

With that quick overview, if | could get into your comprehensive annual financial report. The first pages of
numbers that I’m going to look at really begins on Page 32 but | did want to point out and | am going to touch
base on Page 16, 17 and 18, only because that is our opinion on your financial statements. Everything else in
this document belongs to Nashua but Pages 16, 17, and 18 is our opinion. It goes on for essentially 3 pages
because it tells you that audit standards that we followed and the types of procedures that we did in our test
work here in Nashua and the results of that are highlighted under the Opinion Paragraph on Page 17. In our
opinion your financial statements are totally in accordance with GAAP or Generally Accepted Accounting
Principles for local governments here in the United States. It’s a clean opinion; technically it would be called
an Unmodified Opinion. It is not anything new but it really is, in our opinion, one of the highlights of this
communication is to be able to report to you that your financial statements are totally in accordance with
Generally Accepted Accounting Principles here in the United States.

Now following that is Management’s Discussion and Analysis or MDA and it goes from Pages 19 all the way
over to Page 31. This is what | was referring to earlier as a great resource to go back to at a later point in time
to perhaps recall why certain key account balances may have changed. | can certainly take any questions that
the committee may have on that. That takes us to Page 32. Before | start talking about this page | would want
to take the opportunity to remind the committee that there are essentially two perspectives in here. You have a
long-term perspective financial statement and a more short-term perspective. The pages that we are looking
at here are Page 32 in the Operating Statement on the long-term perspective is 33 and 34. These are the
long-term perspectives financial statements. We are going to get to the General Fund in a minute. When | talk
about this page the primary focus that I’d like to remind the committee about is a couple of the liabilities that |
said were estimates, the Net Pension Liability and the Net OPEB Liability. They are present on this long-term
basis balance sheet. They are really not going to be present on the General Fund Balance Sheet which we will
get to in a minute.

So again, on Page 32, the focus on this page is in the first column of numbers and probably about two-thirds of
the way down the page in the Non-Current Liability Section you see a net pension liability with the State of New
Hampshire. That is the New Hampshire Retirement System. You see a $267 million dollar liability on
Nashua’s financial statements, because that is your proportional share of the unfunded liability at the New
Hampshire Retirement System. | wanted to point this out, it’s obviously a significant account balance and it
goes back a couple of fiscal years to 2015 when the accounting standards changed and brought this liability

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on. Previously, it was probably disclosed on or around Page 100, it was kind of buried in the footnotes of your
financial statements.

A few years ago the accounting standards changed and essentially what happened is they didn’t look at it as
an unfunded liability of the system; they looked it as an unfunded liability of the underlying employers. Nashua
is approximately a 5% contributor to the plan, it’s a little bit more complicated than this, so essentially 5% of the
overall unfunded liability is required to be presented on your financial statement. A little more complicated than
that but hopefully that at least outlines how the amount is determined. That amount fluctuates significantly, for
example, that $267 million dollar liability, it is up about $70 million dollars over the prior year. So because
investment returns and assumption changes can be made, that liability can fluctuate significantly.

As an illustration, | just mentioned the assumption changes. Prior to this fiscal year, it was assumed that there
would be a 7.5% discount rate or return on the investments and the plan lowered that down to 7.25%. We
think that was probably a good idea but as those investment returns are projected to be lower, liability is going
to go up. When that liability goes up, if you look at the second number up from the bottom in this first column
of numbers, you see that unrestricted net position. It is in parenthesis, indicating that the liability and other
restricted net positions components outweigh the assets. Again, | want to make sure that | stress that this is
not the General Fund perspective. This is the long-term perspective balance sheet. So that negative or deficit
of $172 million is really driven by the Net Pension Liability that we saw about two-thirds of the way down the

page.

Right above that Net Pension Liability is net your OPEB, OPEB again standing for Other Post Employment
Benefits and “other” means things other than pension. An example would be certain retiree health care. You
will note that has a June 30, 2017 actuarially determined liability of almost $27 million dollars. That’s
incrementally being brought on to your balance sheet. There are going to be some changes with respect to
how that is reported effective June 20, 2018 but | did want to point out that liability as well.

Over to the General Fund which really is on Page 35 and it really represents the first place that most readers of
your financial statements are going to turn to. The Net Pension Liability and the OPED, that gathers a lot of
attention, but really most readers in some respects, rating agencies and financial institutions as well, are really
going to focus on the short-term perspective or the City’s General Fund which is the first column of numbers on
Page 35. When | say “short-term perspective” the basis of accounting for your General Fund Balance Sheet
technically it’s called Modified Accrual Basis, but it’s really much more similar to a cash basis. There are some
differences that are outlined in the footnotes and | can speak to them, but it’s very similar to a cash basis
balance sheet. Again, on Page 35 the focus here on the short-term perspective is on your unassigned fund
balance, which is the third number up from the bottom on that first column of numbers on Page 35.

As of June 30, 2017 it had an account balance of $28,339,000.00. It is virtually unchanged from the prior year,
it was just over, literally just over $28 million in the prior year. So it’s virtually unchanged showing a nice
stability in that key account balance. There is not a lot of fluctuation and it also represents about 10.8% of your
expenditures. Now the City does have a fund balance policy which requires a minimum of that 10% for liquidity
purposes, for cash flow funding and things like that. So you close June 30, 2017 just slightly above that
minimum level and certainly the $28 million dollars in that unassigned fund balance represents a solid general
fund balance sheet as of June 30, 2017.

There are a couple of other accounts | would want to point out on this page. Right above the Unassigned
Balance you have an Assigned Fund Balance of slightly more than $13 million. The majority of that represents
fund balance that the City is using towards its Fiscal Year 18 Budget. Above that you have the Committed
Fund Balance of about $8.7 million dollars. That includes essentially two things; some escrowed funds and the
Capital Reserve Funds. They may be tracked separately in the City’s general ledger outside the General
Fund, but for formal reporting purposes your Capital Reserve Funds are combined with your General Fund and
shown as Committed Fund Balance.

On Page 35 the first place that almost all readers are going to turn to and look at is that Unassigned Fund
Balance, again the $28.3 million is virtually unchanged from the prior year and represents a solid balance

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sheet and that $28.3 represents approximately 10.8% - is a 10.8% of your General Fund Expenditures which is
a little bit more than the fund balance policy requires. Over on Page 37, you see the General Fund, | will call it
the Operating Statement that first column of numbers on Page 37. The key number here is also the third
number up from the bottom. Again, Page 37 shows a positive $2.6 million dollars, very simply inflows of
revenues exceeded the outflows of expenditures by about $2.6 million dollars. Now to understand the why of
how that happened really the best place to focus on is over two more pages into the document on Page 39,
which represents your General Fund Budget and Actual Statement. This isn’t going to tie out exactly to the
number we saw on Page 37, but it is going to get pretty close and the differences represent timing issues that
are all disclosed in the footnotes to your financial statements.

On Page 39 your General Fund Budget & Actual Comparative Schedule the column on the right, the variance
with the final budget, shows some positive and negative variances. About half-way down the page you see
total revenues and other sources with a positive balance of $5.3 million dollars. That essentially means your
revenue collections exceeded the budget by $5.3 the majority of that in the auto permits category. That $5.3 is
very consistent with the prior year as well. About two-thirds of the way down the page you see Total
Expenditures & Other Uses of about $1.4 million fairly consistent amongst the general government, public
safety, those types of categories. But overall, that $1.4 million in unspent appropriations that is significantly
higher than the prior year. The prior year that number was $42,000.00 and for FY17 it jumped up to about $1.4
million dollars. Now collectively those two add up to the number in the lower right hand corner of about $6.7 or
$6.8 million dollars. On my copy here right above that $6.7 | have the Use of Assigned Fund Balance of $3.6
million highlighted and that is because for Fiscal Year 17 the City chose to that $3.6 million from its fund
balance and apply it towards the FY17 Operating Budget. So it really is as if you planned on the outflows of
resources exceeding the inflows by that $3.6 million.

On this page to sort of tie it back in a little bit with your Operating Page which was Page 37, if one takes that
$6.8 million dollars and subtracts the use of your Unassigned Fund Balance of $3.6 you get a total of about
$3.1 million in positive operating results which is a lot closer to the $2.7 that you have on Page 37. The
footnotes to this and the reason for the differences really represents the timing of when encumbrances are
actually disbursed and when escrows are actually disbursed. They are considered the equivalent of
expenditure on Page 39 but not on Page 37. There are all sorts of note disclosures in your footnotes that tie
those things together. What | tried to do was take the budget and actual comparative schedule which is
probably one of the most readable financial pages in this entire document and reconcile it back to the GAAP or
Generally Accepted Accounting Principles Operating Statement.

Following that there are pages on your Enterprise Funds, both balance sheets, income statements and cash
flow schedules, a wealth of footnotes disclosures on basically every account balance that you would see on
these balance sheets is going to be disclosed. The cash position, the long-term debt position, the
amortization, how rapidly you are paying out your long-term debt as well as more pages than most readers
want to see on note disclosures on Net Pension Liability and some of the related accounts that go along with
the Net Pension Liability.

| failed to mention when we were talking about that | talked about how the liability went up significantly, well,
another asset also if that liability went up significantly an asset went up pretty much the same amount and the
impact of that will be amortized over a number of years. | can explain that a little bit more if the committee
would like. What | will do at this point in time, | Know there is a busy agenda, | will step back, sort of remind
about the Governance Letter where | indicated that our audit that went well, did not need to propose any
significant audit entries. There are no disagreements on how to apply Generally Accepted Accounting
Principles and of course we have talked a little about the estimates. With that, I’ll turn it back to the Mayor and
try to answer any question that the committee may have.

Mayor Donchess

Alright, are there any questions for Mr. Mclntire?

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Alderman Laws

Thank you for that. | was wondering if there is a relationship between the pension liability on Page 32 and the
unassigned fund balance, if that is going to change over time. | mean is the pension liability going to increase
in the coming years? Is that something we should be concerned about? And does that mean that we have to
counteract how much the pension goes up by increasing the amount that we have in the unassigned fund?

Mr. McIntire

There is not a real relationship between the net pension liability on the page that you referenced and the
unassigned fund balance. It is no surprise that pension costs are being increased in the State and that is
because there is a funding schedule, | believe it goes out to 2039 that’s when this plan is scheduled to be fully
funded. But there really isn’t a link between the net pension liability and unassigned fund balance.

Alderman Gathright

You used the terminology “significant” can you explain to me what would make something significant?
Mr. Mcintire

Great question. In general it would be a material amount and by that it would in our judgement it could affect
how someone interprets these statements. If there was a $10,000.00 reclassification and | don’t believe that
there was, but if we needed to propose an entry that had the City move a $10,000.00 accounts payable from
one fund to another, when you look at this report, that’s probably | would view that as an insignificant entry,
because for the most part it is reclassification. Also, it probably isn’t going to impact how these statements are
viewed by most readers. Does that help?

Alderman Gathright

Yes.

Mayor Donchess

What is the percentage of funding the percent solvent that the State Pension Fund is? It used to be around
60%.

Mr. McIntire

| should know that off the top of my head but if you give me just a second. For those that are curious, I’m
turning to Page 130. It is just slightly more than 58%.

Mayor Donchess
And that is of June 30, 2017?

Mr. McIntire

Another great question. The Net Pension Liability that we are talking about that is presented on your financial
statements as of June 30, 2017 is actually measured as of June 30, 2016. It greatly helps with the timing of
getting actuarial reports and getting audited financial statements on a timely basis. Gratefully, the standards
permit the City and all cities and towns to capture that liability as of a year earlier because the actuary has to
perform test data on it. We have to perform test work on it. So that liability and the percentage | referenced
Mr. Mayor of 58% is actually as of June 30, 2016.

Finance Committee - 4/4/2018 Page 6

Mayor Donchess

What was it as of June 30, 2015 do you still have that?
Mr. McIntire

| do. It’s also on Page 130. There are three years there and that is how long these new accounting standards
have been present. As of June 30, 2016 it was slightly more than 65%.

Mayor Donchess
As of June 30, 2015?

Mr. McIntire

Yes.

Mayor Donchess

That’s a little depressing.
Mr. McIntire

May | sir? | recognize that and | kind of have become a little used to it. I’ve made some notes in preparing and
| want to make sure | put it in perspective. Nashua certainly isn’t the only one with that liability. As | indicated
there is a funding schedule out there that has the plan becoming fully funded, | do believe it’s in 2039. Sure
that is a little ways off but it is on a funding schedule. The other point | like to make to perhaps put it in context,
| indicated that before a couple of years ago when these new accounting standards came into place, | think |
said it was probably in the disclosure somewhere around Page 100. Rating agencies and financial institutions
knew where to go find that buried on Page 100. So they have always known that Nashua and the cities and
towns in New Hampshire and across the country had this pension liability. When it showed up in on the
balance sheet just a couple years ago, it surprised a lot of people but it really didn’t surprise the rating
agencies and financial institutions because they knew where to go find the disclosure in the notes. Hopefully
that provides a little more perspective. And again, the General Fund, most readers are still going to focus on
the General Fund.

Mayor Donchess

So the State’s objective is to bring the percentage of funding as visa vie the liabilities to 100% by 2039 as Mr.
McIntire suggested. Now as a result, most of the $23 million dollars that we are paying to the State Pension
System has nothing to do with the current employees. It has to do with recapitalizing the system, trying to build
up the capital that they have. | think they have about $7.5 billion in assets. They want to get to $12.5 billion.
Of course each year the pension system pays out benefits and takes in money. According to the Executive
Director of the Pension System, about 80% of the money we are paying in is for the recapitalization. So if we
were just paying pensions for current employees, we wouldn’t be paying $23 million we would paying more like
$5 million. How this happened | don’t really totally understand how they could have let this happen. But there
was a time 20 years ago or so, maybe a little more, where the pension was more than 100% funded. They
reduced contributions and made a lot of bad decisions and the result was what we see now. The people today
are paying the price for those bad decisions in that we are trying to recapitalize the system.

The reason that our pension liability went up $2 million dollars in the current fiscal year over the previous one is
that, as Mr. McIntire said, they reduced the assumed rate of return for these on-going years from 7.5% to
7.25% and that increased our bill by nearly 10% up to $23 million dollars. Those of us who have to pay this
really ask the question, given that the State of New Hampshire and the City of Nashua really never are going to
come to an end, why is it So important to build this up to 100% when it requires such an incredible sacrifice in

Finance Committee - 4/4/2018 Page 7

the present? For GM Pension, they might go out business, there might come a day when they have to pay
everything with nothing else coming in. That’s very unlikely if the United States continues as a country that is
very unlikely ever to occur, that New Hampshire would go out of existence or something like that. And if you
ask them, it’s not like they have nothing in the bank. They have $7.5 billion dollars. | think it is correct to say
that they have enough with no further contribution to pay about 10 years of benefits. So even if no one ever
paid anything else in, they could still carry on for 10 years. So that just shows you, it’s not like they are near
the edge or something like that.

When this requires such a severe sacrifice, nearly 10% of the City Budget is going into this, we are paying
higher taxes, we are giving up improvements in education and other services as well all to meet this goal of
100% when we know as a fact the day is never going to come when they really need to pay out all the benefits
because there always be more money coming in. Having been at the legislature a number of times on this and
some bills combined with the State’s decision that they are no longer to meet their obligation to pay 35% of
municipal pension costs, it’s very frustrating to try and deal with the issue. The legislators who are mostly in
control with the committee heads, David Hess’ committee, | forget what the name of the committee is right
now, but they are not that sympathetic to the municipal plight. They are mostly focused on this 100% goal,
kind of an abstraction really.

In fairness to them there is pressure from the financial industry, these accounting standards, the rating
agencies, to move to 100%. So they are under pressure but still for those who pay the bills, it's not a
comfortable situation.

Alderman O’Brien

Thank you Mr. Mayor. Mr. Mayor, | first would like to say | think you gave a very fair and accurate description
of what is going on. But my question is, just making us going to 2039 at 100% the wizards of Concord also cut
back on a lot of benefits, so newer people that are into the pension system aren’t getting the same benefits.
Nashua has a fairly good attrition rate as people have their careers and move on. Can we see something in
the future, some relief because of those changes or what they enacted up in Concord probably will give us no
relief at all.

Mr. McIntire

That’s a tough question for me to answer and | can see Mr. Alderman you are on Page 130, that for the
fluctuation from June 30, 2016 where the percent being funded is down to 58% is remembering that is
measured as of June 30, 2016. It is widely expected and | think the report just came out a couple of weeks
ago what your liability will be in June 2018. | suspect, given investment returns, that percentage comes back
up again. As the independent auditor to opine on whether or not your financial statements are in according
with Generally Accepted Accounting Principles | usually stay away from — thank you — you look like you might
be in agreement with me being ok.

Alderman O’Brien
| think | understand sir. Thank you.

Mayor Donchess

And they did reduce, there’s a two tier benefit program for City employees, particularly in Group 2. People
after a certain date, 2010 or something around then, they do not have the same level of pension benefits as
those already in the system.

Finance Committee - 4/4/2018 Page 8
Alderman O’Brien

And if | may Mr. Mayor, to me it is a dangerous situation where eventually you are going to be last person
receiving the old style benefit and then you have a whole bunch of people who basically had a lot taken away
from them. It’s going to be difficult as it goes on into the future.

Alderwoman Kelly

Yes | was wondering if you could just go over quickly on Page 38 where you talked about the issue of bonds
and then also the repayment. How are we doing as a City? How do we compare to other cities?

Mr. McIntire

Just before | address that question, Page 38, | talked a little about how there is really two perspectives of
accounting in here. There is long-term perspective or the full accrual basis of accounting and short-term
perspective which is modified accrual or essentially cash. On Page 38 in basic terms reconciles the two
different income statements or Statements of Revenues & Expenditures. The question here talks about
repayment of debt and how it deals with new issues as well. About a third of the way down the page you start
seeing some numbers in the millions. And | have on my notes here a couple of numbers circles. About a third
of the way down, Issuance of General Obligations Bonds and it’s in parenthesis, of $12.3 million dollars. Very
simply, in Fiscal Year 2017 you issued $12.3 in new general obligation bonds. Two rows below that you have
the repayment of debt. Debt issuances that go back some point in the past you are paying back $15.5 or you
paid back $15.5 during Fiscal Year 17. Very simply, you are paying off more debt in 2017 than you took on.

Another way to look at this and | realize that this wasn’t part of the question, but the third number down from
the top on this page is your depreciation expense. How much did the assets that in all likelihood were acquired
by issuing bonds, those assets depreciated at about $16.5 million dollar and again referencing back to the
repayment of debt, slightly further down the page of $15.5. You see a nice relationship there, certainly there is
approximately $1 million dollar difference, but | have seen in other statements where the assets are
depreciating at a much faster rate than they are actually being paid off. There is some nice balance here that
you see on this page.

Now comparing it with other communities, that is extraordinarily difficult because communities are of all shapes
and sizes. A comment that | might add that hopefully might address some of your question deals with how
rapid communities pay off their debt. And again, this disclosure in here on that somewhere in the footnotes
and in general credit rating agencies will look at how much you have but more importantly how much of that
debt are you paying off in the next 10 years. | don’t have that number at my fingertips but | think you are quite
high, | think you are in the 70% to 74% in being paid off in 10 years. That | think would be viewed from a credit
rating agency standpoint as a rapid payout of your long-term bonds payable.

Alderwoman Kelly

Thank you very much.

Mayor Donchess

Are there any other questions?

Alderman Klee

I’m not sure if you can answer this but going back to Page 130 when we were talking about the 100% funding
of the pension plan and so on — | know that the State wants to do 100% for whatever the reasons are, for good

credit ratings and so. But what would be common for most businesses or municipalities or States? Is it like
85% or 90%, what would be good practice?

Finance Committee - 4/4/2018 Page 9
Mr. McIntire

They really run the gamut. For example and | am not trying to avoid your question, in New Hampshire virtually
all are involved in the one state system and you see the numbers on Page 130. Our firm does some work in
Massachusetts where probably one-third of the communities have their own pension plan. We have done
some work in Vermont where they have their own plans. A lot of it quite frankly depends upon the
demographics of certain communities. Some of those plans in Massachusetts are 88% to 94% funded. |
actually have one that is scheduled to be fully funded in about 3 years. There are other plans that we audit
with some of our Massachusetts communities that are below the percentage that you see on Page 130. There
really is a wide variation.

Mayor Donchess

The City does operate a single pension fund for Public Works. Public Works employees are the only
employees in Nashua that are not in the State System. We have a pension board, the last | learned, it’s in the
mid-80s% - the percentage of the liabilities that are funded was in the mid-80%s. There might have been a
little bit of a change, but obviously it’s in good shape as compared with this.

Alderman Klee

The question | am looking for is for credit rating, obviously 100% is going to give you a great credit rating, but
to maintain a good credit rating, that’s what I’m looking for. What are they looking for? Are they looking for an
80%, 85%? Obviously they are, for the most, they are not going to look for 45% for the credit rating.

Mr. McIntire

They probably are going to look as your unassigned fund balance and they are going to look at the
demographics of the community. Of course, the Net Pension Liability is going to come into play but that’s
going to be down on their check list of the things they are going to look at it. They are going to look at
management; they are going to look at policies and procedures that you have. If your unassigned fund
balance represented 10.8% of your expenditures, if that was fluctuating greatly, up one year, way down the
next back up a little bit. Those things probably even if it was one year got up to almost 11% but in the past it
fluctuated tremendously, that probably would not be viewed favorably. Remember that key unassigned fund
balance number didn’t really change and it’s been quite steady for a couple of years. I’m trying to focus in that
there is undoubtable a rating agency that will look at that pension liability but | truly think they are going to
focus on the unassigned fund balance and the other characteristics of the community.

Alderman Klee

Thank you. My concern was that | didn’t want to lose our good standing.

Mr. McIntire

The question and hopefully my answer contributes to what | said earlier as far as making sure | put it in
context. We think there we would be remiss if we didn’t talk about it because it is a significant liability. But |
think there are some factors that like me answering your question about rating agencies are more going to
focus on unassigned fund balance. Hopefully that puts it in perspective a little bit.

Alderman Klee

It does, thank you.

Mayor Donchess

Any other questions or comments?

Finance Committee - 4/4/2018 Page 10

Alderman O’Brien

Yes thank you Mr. Mayor. | just want to say that as the liaison to the BPW pension board you are again pretty
accurate. We are in the mid-80’s in the funding and everything is going well with that, we have a great Board
as Mr. Griffin can say. We mostly work with Mr. Fredette, what is the company? But they are great advisors
and we meet monthly and we are meeting all the obligations. So it’s going very good on that end.

Mayor Donchess

They should have hired Alderman O’Brien to run the State system, we’d probably be better off.
Alderman O’Brien

| am content right where | am right now.

Mayor Donchess

If they had done that 20 years ago, maybe we'd be in better shape. Any other questions? Well thank you very
much for your presentation. As usual, a very good job.

COMMUNICATIONS

From: John L. Griffin, CFO/Comptroller
Re: Independent Auditors Presentation — April 4, 2018

There being no objection, Mayor Donchess accepted the communication and placed it on file.

From: Dan Kooken, Purchasing Manager
Re: NPD Purchase of Lenco Bearcat (Value: $301,309)

MOTION BY ALDERWOMAN KELLY TO ACCEPT, PLACE ON FILE AND AUTHORIZE THE PURCHASE
FROM LENCO ARMORED VEHICLES IN THE AMOUNT OF $301,309. FUNDS ARE AVAILABLE IN
DEPARTMENT 150 POLICE; CERF

ON THE QUESTION

Mayor Donchess

It would be helpful if you would introduce yourself to the committee and then just tell us a little bit about what
this purchase is.

Captain Eric Nordengren

Good evening Mr. Mayor, my name is Eric Nordengren and | am a Captain of the Nashua Police Department.
So this purchase is to replace our current Bearcat. Our current Bearcat is a 2003 vehicle and was the 6" ever
produced, it’s the first actually in New Hampshire. And with any type of mechanical or any type of vehicle we
are starting to experience on-going mechanical issues with it and being the purpose that it is intended for, it
obviously is becoming an issue as far as the reliability. Ve need that vehicle to be reliable obviously at all
times for the nature of what it is going to be asked to do; responding to critical incidents, any type of problem
that is going on in the City that requires a strong Police presence or SWAT Team response. The Bearcat is a
vehicle that we really rely on very heavily and that runs a gamut of warrant service to large venue protection is
now something what we use it for.