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Budgetary Basis

The general fund final appropriation appearing on the “Budget and Actual” page of the
fund financial statements represents the final amended budget after all reserve fund
transfers and supplemental appropriations.

Budget/GAAP Reconciliation

The budgetary data for the general fund is based upon accounting principles that differ from
generally accepted accounting principles (GAAP). Therefore, in addition to the GAAP
basis financial statements, the results of operations of the general fund are presented in
accordance with budgetary accounting principles to provide a meaningful comparison to
budgetary data.

The following is a summary of adjustments made to the actual revenues and other sources,
and expenditures and other uses, to conform to the budgetary basis of accounting.

Other Other
Financing Financing

General Fund Revenues Expenditures Sources (Uses)
Revenues/expenditures/transfers
(GAAP Basis) $ 289,500,908 $ 282,769,057 $ 9,435,132 $ (9,016,783)
To record use of fund balance - - 4,750,000 -
Reverse effect of activity
appropriated in prior year - (5,398,622) - 2,937,706
Add end-of-year appropriation
carryforwards to expenditures - 8,545,457 - -
Reclass transfers - 6,557,987 - 6,557,987
Reclass County assessment to
custodial finds 11,993,150 11,993,150 - -
Reverse unbudgeted capital lease - (6,671,814) (6,671,814) -
Reverse unbudgeted refinding
activity - - (1,733,231) 1,733,231
Reverse nonm-budgeted revenues
and expend:tures (capital reserves) (20,729) - 629,611 (3,515,936)
Other - 141,064 - 63,025

Budgetary Basis $ 301,473,329 $ 297,936,279 $ 6,409,698 $ (1,240,770)

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Deficit Fund Batance
Certain individual funds reflected deficit balances as of June 30, 2021.

Nonmajer Governmental Funds:

Fire Projects $ (1,293,023)
Public Works Projects (4,848,536)
City Building Projects (718,590)
Property Revaluation Projects (621,844)
School Department Projects (8,575,489)

Total $ (16,057,482)

It is anticipated that the deficits in these funds will be eliminated through future bond
proceeds.

Deposits and Investments

Custodial Credit Risk — Deposits

Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not
be returned to it. RSA 48:16 states that “deposits in any one bank shall not at any time exceed
the sum of its paid-up capital and surplus, except that a City with a population in excess of
50,000 is authorized to deposit funds in a solvent bank in excess of the paid-up capital surplus
of said bank.” The City’s investment policy for custodial credit risk related to deposits
requires collateral on all deposits and short-term investments (in excess of FDIC). Pledged
collateral must be in writing and held at an independent third-party institution.

As of June 30, 2021, the City’s entire bank balance was fully insured or collateralized.

Custodial Credit Risk - Investments

Custodial credit risk for investments is the risk that in the event of a failure of the counterparty
(e.g., broker-dealer) to a transaction, a government will not be able to recover the value of
the investment or collateral securities that are in the possession of another party. The City’s
investments are exposed to custodial risk. The City’s investment policy limits its exposure to
custodial credit risk by requiring that all security transactions entered into by the City be
conducted on a delivery-versus-payment basis to ensure that securities are deposited in an
allowable financial institution prior to the release of funds. Securities will be held by an
independent third-party custodian selected by the City as evidenced by safekeeping receipts
in the City’s name. The safekeeping institution shall annually provide a copy of their most
recent report on internal controls.

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Investments at June 30, 2021 included the following:

U.S. Treasury Obligations $ 14,949,928
U.S. Government Agencies 10,914,022
Corporate Bonds 5,249,591
Equity Securities 64,409,001
Mutua! Funds 17,342,639
Long-term Certificates of Deposit 6,556,929

Total $ 119,422,110

Credit Risk

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation
to the holder of the investment. State law employs the prudent person rule whereby
investments are made as a prudent person would be expected to act, with discretion and
intelligence, to seek reasonable income, preserve capital, and, in general, avoid speculative
investments. The City’s investment policy is to minimize credit risk by limiting investments
in fixed income securities rated at A or above by Standard & Poor’s (S&P).

Concentration of Credit Risk

The City’s investment policy limits investments to 5% of the total portfolio in a specific
issuer (excluding U.S. treasuries, government agency securities) except for investments
under the direction of the Board of Trustees and the Board of Public Works Pension Fund.
The City does not have an investment in one issuer, other than U.S. Treasury bonds and
notes, greater than 5% of total investments. The Board of Public Works Pension Fund has
no investments greater than 5% of total investments.

Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the
fair value of an investment. Generally, the longer the maturity of an investment, the greater
the sensitivity of its fair value to changes in market interest rates. The City’s formal
investment policy does not limit investment maturities as a means of managing its exposure
to fair value losses arising from increasing interest rates.

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Information regarding the quality and maturity dates of fixed income securities is as
follows:

Average Average
Total Duration Rating
U.S. Treasury Obligations $ 14,949,928 4.83 Aaa
U.S. Government Agencies $ 10,914,022 3.08 Aaa
Corporate Bonds $ 5,249,591 7.29 Al

Foreign Currency Risk
Foreign currency risk is the risk that changes in foreign exchange rates will adversely affect
the fair value of an investment. The City does not have formal investment policies related

to foreign currency risk.

Fair Value

The City categorizes its fair value measurements within the fair value hierarchy established by
Governmental Accounting Standards Board Statement No. 72 Fair Value Measurement
and Application (GASB 72).

The hierarchy is based on the valuation inputs used to measure the fair value of the asset
and give the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs
(level 3 measurements). The hierarchy categorizes the inputs to valuation techniques used
for fair value measurement into three levels as follows:

¢ Level |] — inputs that reflect quoted prices (unadjusted) in active markets for identical
assets or liabilities that the fund has the ability to access at the measurement date.

e Level 2 — inputs other than quoted prices that are observable for an asset or liability
either directly or indirectly, including inputs in markets that are not considered to be
active. Because they must often be priced on the basis of transactions involving similar
but not identical securities or do not trade with sufficient frequency, certain directly held
securities are categorized as level 2.

e Level 3 — unobservable inputs based on the best information available, using
assumptions in determining the fair value of investments and derivative instruments.

In instances where inputs used to measure fair value fall into different levels in the fair
value hierarchy, fair value measurements in their entirety are categorized based on the
lowest level input that is significant to the valuation.

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The City has the following fair value measurements as of June 30, 2021:

Fair Value Measurements Using:

Quoted prices
in active Significant Significant
markets for observable unobservable
identical assets inputs inputs
Description (Level 1) (Level 2) (Level 3)
Investments by fair value level:
Debt securities
U.S. Treasury Obligations $ 14,949,928 $ - $ 14,949,928 $ -
U.S. Government Agencies 10,914,022 - 10,914,022 -
Corporate Bonds §,249,591 - §,249,591 -
Equity Securities 64,409,001 64,409,001 - -
Mutual Funds 17,342,639 - 17,342,639 -
Total $ 112,865,181

Equity securities classified in Level | are valued using prices quoted in active markets for
those securities.

U.S. Treasury securities, U.S. Government agency securities, corporate bonds, and mutual
funds classified in Level 2 are valued using standard inputs consisting of benchmark yields,
reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark
securities, bids, offers, where available, and reference data including market research
publications.

Property Taxes Receivable

The City bills property taxes semi-annually, in May and November. Property tax revenues
are recognized in the fiscal year for which taxes have been levied to the extent that they become
available, i.e., due or receivable within the current fiscal year and collected within the current
period or within 60 days of year-end.

Property taxes billed and collected in advance of the year for which they are levied, and
are recorded as a prepaid tax Itability.

Property taxes are due in July and December. Taxes paid after the due, date accrue interest
at 8% per annum. In April of the following calendar year, the Tax Collector executes tax
liens on properties that have unpaid taxes. The lien is recorded on the delinquent taxpayer’s
property at the Registry of Deeds. The tax liens accrue interest at 14% per annum. If the
lien is not redeemed within a two-year redemption period, the property may be conveyed
to the City by deed.

Property tax receivables at June 30, 2021 consist of the following:

Allowance
Gross for Doubtful Net
Amount Accounts Amount

Levy of 2020 $ 17,045,310 $ - $ 17,045,310
Tax Liens 7,076,507 (2,735,935) 4,340,572
Subtotal property taxes 24,121,817 (2,735,935) 21,385,882
Tax deeded property 331,942 - 331,942
Total $ 24,453,759 $ (2,735,935) $ 21,717,824

User Fee Receivables

Receivables for user charges at June 30, 2021 consist of the following:

Allowance
Gross for Doubtful Net
Amount Accounts Amount
Wastewater user charges $ 4,302,228 $ (191,875) $ 4,110,353
Solid waste user charges 326,164 - 326,164
Total $ 4,628,392 $ (191,875) $ 4,436,517

Intergovernmental Receivables

This balance represents reimbursements requested from Federal, State, and Local agencies for

expenditures incurred in fiscal 2021,

Interfund Receivables/Payables and Transfers In/Out

Although self-balancing funds are maintained, most transactions flow through the general
fund. In order to obtain accountability for each fund, interfund receivable and payable
accounts must be utilized. All remaining balances resulted from the time lag between the
dates that (1) interfund goods and services are provided or reimbursable expenditures
occur, (2) transactions are recorded in the accounting system, and (3) payments between

funds are made.

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Funds:

General Fund
Debt Service Fund

Nonmajor Governmental Funds:
Police grants
Fire grants
Community health and services grants
Parks and recreation grants
Transit grants
Community Development Block grants/Home grants
Community Development division grants
Homeland security grants
Other city grants
Food services
School grants
City revolving finds
School revolving finds
Other trust funds
Fire projects
Public works projects
Community and economic development projects
Property revaluation projects
School department projects
Technology projects
City building projects
City-wile communications projects
Hydroekectric projects
Police projects
Cemetery permanent funds
Library permanent finds
Enterprise finds:
Wastewater
Solid Waste

Internal service find:
Employee benefits find
Property and casualty find

Fiduciary find types:
Pension trust
Private purpose

Total

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The following is an analysis of the June 30, 2021 balances in interfund receivable and
payable accounts:

Due From Due To

Other Funds Other Funds

$ 23,143,552 $ 49,953,425
4,313,001 -

- 101,311

- 174,493

- 335,477
11,762 -
581,849 -

- 315,725
160,828 -
5,728,944 -
3,824 -
23,100 -

- 3,708,314
12,025,585 -
2,039,103 -

- 1,428,883

- 1,293,023

- 856,383
397,926 -

- 621,844

- 8,195,489
158,283 -

- 685,614
97,295 -
3,534,809 -
2,344,501 -

- 462,443

- 4,896

- 12,522,847
8,918,707 -
12,990,869 -
4,655,665 -

- 314,719

- 154,717

$ 81,129,603

$ 81,129,603

The City reports interfund transfers between many of its funds. The City’s routine transfers
include transfers made to move (1) unrestricted revenues or balances that have been
collected or accumulated in the general fund to other funds based on budgetary
authorization, and (2) revenues from a fund that by statute or budgetary authority must
collect them to funds that are required by statute or budgetary authority to expend them.
The sum of all transfers presented in the table agrees with the sum of interfund transfers
presented in the governmental fund financial statements.

The following is an analysis of interfund transfers made in fiscal year 2021:

Funds: Transfers In Transfers Out
General Fund $ 743,100 $ 7,283,552
Nonmajor Governmental Funds:

Police grants 76,824 393
Transit grants $38,352 30
Community Development Block grants/Home grants 11,975 -
Community Development division grants 64,518 -
Homeland security grants 250,000 -
School grants - 38,510
City revolving funds - 127,519
Other trust funds 256,751 150,000
Public works projects 75,000 325,000
Community and economic development projects 325,000 -
Property revaluation projects 31,652 -
City buildmg projects - 231
Cemetery permanent funds - 683,168

Total Nonmajor funds 1,630,072 1,324,851
Enterprise finds:

Wastewater - 150,000
Solid waste - operations 5,748,376 -
Solid waste - capital 486,855 -

Total Enterprise funds 6,235,231 150,000
Intemal service funds:

Property and casualty fund 150,000 -

Total Intermal Service Funds 150,000 -

Total $ 8,758,403 $ 8,758,403

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The following is a detailed analysis of general fund transfers made in fiscal year 2021:

General Fund Transfers In:

Income Transfer from Cemetery Permanent funds $ 426,417
Transfer from School Impact Fees Fund 150,000
Surplus Transfer from Police and Fire Outside Detail Fund 127,519
Excess Matching Funds from Grant Funds 39,164
Total General Fund Transfers In $ 743,100
General Fund Transfers Out:
Solid Waste Operating Subsidy $ 5,748,376
Matching funds for Nashua Transit Grants 538,352
Solid Waste Capital Equipment Purchases 486,855
Matching funds - Governor's Economic Relief & Recovery Grant 250,000
Matching funds - Police Violence Against Women Grant 76,824
Matching funds - NHDOT Safe Routes to School Grant 75,000
Matching funds - NHDES Exotic Species Program Grant 39,518
Transier to City Building Improvement Capital Project Fund 31,652
Matching funds - NHDOT Sidewalk/Bike Lane Upgrades Grant 25,000
Matching funds - Community Development Block Grant 11,975
Total General Fund Transfers Out $ 7,283,552

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8. Capital Assets

Capital asset activity for the year ended June 30, 2021 was as follows (in thousands):

Beginning Ending
Balance Increases § Decreases — Balance
Governmental Activities
Capital assets, being depreciated:
Buildings and improvements $ 297,968 $§ 3,107 $ (2.006) $ 299.069
Machinery and equipment 83.464 10,201 (1.036) 92.629
Infrastructure 150,029 10,463 : 160,492
Total capital assets. being depreciated $31,461 23.771 (3.042) $52,190
Less accumulated depreciation for:
Buildings and improvements (141,193) (7,412) 150 (148.455)
Machinery and equipment (49,746) (7,414) 842 (56.318)
Infrastructure (49,003) (5,809) - (54.812)
Total accumulated depreciation (239,942) (20,635) 992 (259,585)
Total capital assets, being depreciated, net 291,519 3,136 (2,050) 292.605
Capital assets, not being depreciated:
Land 31,116 723 - 31.839
Construction in progress 10,825 30,284 (3,033) 38,076
Total capital assets, not being depreciated 41,941 31,007 (3,033) 69.915
Govemmental activities capital assets. net $ 333,460 § 34,143 $ (5.083) $ 362.520
Beginning Ending
Balance Increases Decreases Balance
Business-Type Activities
Capital! assets, being depreciated:
Buildings $ 85.168 § - $ - $ 85.168
Land improvements 25,348 530 - 25,878
Machinery and equipment 54.438 3.483 (25) 57.896
Infrastructure 141,834 1,819 - 143,653
Total capital assets, being depreciated 306.788 5,832 (25) 312,595
Less accumulated depreciation for:
Buildings (47,455) (1,766) - {49,221}
Land improvements (13,301) (1,281) : (14,582)
Machinery and equipment (36,559) (2,731) 25 (33,265)
Infrastructure (54,988) (2,951) - (57,939)
Total accumulated depreciation (146,303) (8,729) 25 (155.007)
Total capital assets, being depreciated, net 160.485 (2,897) - 157,588
Capital assets, not being depreciated:
Land 232 - - 232
Construction in progress 16,400 7,839 (3,951} 20,288
Total capital assets, not being depreciated 16.632 7.839 (3,951) 20,520
Business-type activities capilalassets.net § 177117 $ 4942 $ (3.951) $ 178.108

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