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18.

Unavailable revenues are reported in the governmental funds balance sheet in connection
with receivables for which revenues are not considered available to liquidate liabilities of
the current year.

Taxes levied in advance are reported in the governmental funds balance sheet and
government-wide statement of net position in connection with subsequent year property tax
revenue collections which are not available for use in the current year.

Gains on refunding bonds are reported in the government-wide statement of net position
in connection with the unamortized amount of gains resulting from the refunding of long-
term bonds.

Governmental Funds — Balances

Fund balances are segregated to account for resources that are either not available for
expenditure in the future or are legally set aside for a specific future use.

The City implemented GASB Statement No. 54 (GASB 54), Fund Balance Reporting and
Governmental Fund Type Definitions, which enhances the usefulness of fund balance
information by providing clearer fund balance classifications that can be more consistently
applied and by clarifying existing governmental fund type definitions,

The following types of fund balances are reported at June 30, 2021:

Nonspendable

Represents amounts that cannot be spent because they are either (a) not in spendable form
or (b) legally or contractually required to be maintained intact. This fund balance
classification includes general fund reserves for tax deeds and nonmajor governmental fund
reserves for the principal portion of permanent funds.

Restricted

Represents amounts that are restricted to specific purposes by constraints imposed by
creditors, grantors, contributors, or laws or regulations of other governments, or constraints
imposed by law through constitutional provisions or enabling legislation. This fund balance
classification includes amounts restricted for future debt service, various special revenue
funds, capital project funds, and the income portion of permanent funds.

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Committed

Represents amounts that can only be used for specific purposes pursuant to constraints
imposed by resolution of the City’s Board of Aldermen. The City Charter designated the
Board of Aldermen as its appropriating authority. This fund balance classification includes
general fund escrows for non-lapsing appropriations, capital reserve funds set aside by Board
of Alderman resolution for future capital acquisitions and improvements (now reported as
part of the general fund per GASB 54), various special revenue funds, and capital project
funds. A similar action is needed to modify or rescind a commitment.

Assigned

Represents amounts that are constrained by the City’s intent to use these resources for a
specific purpose. A portion of this fund balance classification represents an amount applied
by the Board of Aldermen to reduce the next year’s tax rate. In addition, this fund balance
classification includes general fund encumbrances (purchase orders) that have been
established by various City departments for the expenditure of current year budgetary
financial resources upon vendor performance in the subsequent budgetary period. The City’s
Revised Ordinances (NRO) permits the Chief Financial Officer to make assignments.

Unassigned

Represents amounts that are available to be spent in future periods and temporary deficit
balances in nonmajor governmental funds.

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Following is a breakdown of the City’s fund balances at June 30, 2021:

Debt Nonmajor Total
General Service Govemmental Governmental
Fund Fund Funds Funds
Nonspendable
Reserved for tax deeds $ 331.942 $ - $ - § 331,942
Nonexpendable cemetery permanent funds - - 21,616,894 21,616,894
Nonexpendable library permanent funds - - 6,337,944 6,337,944
Nonexpendable other permanent funds - . 249,292 249,292
Total Nonspendable 331,942 - 28,204, 130 28,536,072
Restricted
For future debt service - 4313.00] - 4,313,001
Police grants - - 41,109 41,109
Community health & services grants - - 129,711 129,711
Parks & recreation grants - - 11,762 11,762
Transit grants - - 971,183 971,183
CDBG/HOME grants - - 75,195 75,195
Community Development division grants - - 332,511 332,511
Other public safety grants - - 206,339 206,339
Other City grants = 5 3,824 3,824
Food services - - 232,553 232,553
School grants - - 2 2
City revolving funds - - 841,408 841.408
Public warks projects ” - 4.085.181 4,085,181
Community and Economuc development projects - - 10.569 10,569
School department proyects - - 380,000 380,000
Technology projects - - 158,283 158,283
City-wide communications projects - - 97,295 97,295
Hydroelectric projects - - 3,534,809 3,534,309
Police projects - - 2,344,501 2,344,501
Cemetery expendable permanent funds - . 1,148,985 1,148,985
Library expendable permanent funds . - 1,025,100 1,025,100
Other expendable permanent funds - - 17,534 17,534
Total Resineted ” 4,313,001 15,647,854 19,960,855
Committed
For continuing appropnations 10,689,378 - - 10,689,378
School capital funds 1,128,453 - - 1,128,453
City capital funds QI7LSI7 - - OAT OTF
City revolving funds - . 13,211,714 {2,211,714
School revolving funds . . 2,035,544 2,035,544
Other trust funds - . 6,278,919 6,278,919
Community and economic development projects - - 387,357 387,357
City building projects - - 32,976 32,976
Total Commatied 20,989,808 - 20,946,510 41,956,318
Assigned
For next year's tax rate 4,000,000 - - 4,000,000
For encumbrances 3,032,807 - - 3,032,807
For overlay contingency 1,500.000 - - 1,500,000
For unfunded liabilities 8,655,000 - - $,655,000
Total Assigned 17,187,807 - - 17,187,807
Unassigned
General Fund 31,693,902 . - 31,693,902
Deficits . - (16,057,482) (16,057,482)
Total Unassigned 31,693,902 . (16,057 482) 15,636,420
Total Fund Balance $ 70,203,459 $ 4313,001 $ 48,741,012 $ 123,257,472

Th

19.

Retirement System

New Hampshire Retirement System

The City follows the provisions of GASB Statement No. 68, Accounting and Financial
Reporting for Pensions — an amendment of GASB Statement No. 27, with respect to the
State of New Hampshire Retirement System (NHRS).

The following pension disclosures for the New Hampshire Retirement System pension plan
are based upon an actuarial valuation performed as of June 30, 2019, using a measurement
date of June 30, 2020.

Plan Description

Full-time employees participate in the New Hampshire Retirement System (NHRS), a cost-
sharing, multiple-employer defined benefit contributory pension plan and trust established
in 1967 by RSA 100-A:2 and qualified as a tax-exempt organization under Sections 401 (a)
and 501(a) of the Internal Revenue Code. The plan is a contributory, defined benefit plan
providing service, disability, death, and vested retirement benefits to members and their
beneficiaries. Substantially all full-time state employees, public school teachers and
administrators, permanent firefighters, and permanent police officers within the State of New
Hampshire are eligible and required to participate in the system. Full-time employees of
political subdivisions, including counties, municipalities, and school districts, are also
eligible to participate as a group if the governing body of the political subdivision has
elected participation.

The New Hampshire Retirement System, a Public Employees Retirement System (PERS),
is divided into two membership groups. State or local employees and teachers belong to Group
I, Police officers and firefighters belong to Group J. All assets are held in a single trust and
are available to each group. Additional information is disclosed in the NHRS annual! report
publicly available from the New Hampshire Retirement System located at 54 Regional Drive,
Concord, New Hampshire 03301-8507 or from their website at www.nhrs.org.

Benefits Provided
Group | benefits are provided based on creditable service and average final salary for the
highest of either three or five years, depending on when service commenced.

Group II benefits are provided based on age, years of creditable service, and a benefit
multiplier depending on vesting status as of January 1, 20!2. The maximum retirement
allowance for Group II members vested by January 1, 2012 (45 years of age with 20 years
of service or age 60 regardless of years of creditable service) is the average final
compensation multiplied by 2.5% multiplied by creditable service. For Group II members
not vested by January 1, 2012, the benefit is calculated the same way but the multiplier

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used in the calculation will change depending on age and years of creditable service, as
follows:

Years of creditable service as of Minimum Minimum Benefit
January 1, 2012 Age Service Multiplier
At least 3 but less than 10 years 46 21 2.4%
At least 6 but less than 8 years 47 22 2.3%
At least 4 but less than 6 years 48 23 2.2%
Less than 4 years 49 24 2.1%
Contributions

Plan members are required to contribute a percentage of their gross earnings to the pension
plan, for which the contribution rates are 7% for employees and teachers, 11.55% for police,
and 11.80% for fire. The City makes contributions to the pension plan equal to the amount
required by Revised Statutes Annotated 100-A:16, III, which is 11.17% for employees,
17.80% for teachers, 28.43% for police and 30.09% for fire. The City’s contributions to
NHRS for the year ended June 30, 2021 was $23,356,118, which was equal to its annual
required contribution.

Summary of Significant Accounting Policies

For purposes of measuring the net pension liability, deferred outflows of resources and
deferred inflows of resources related to pensions, and pension expense, information about
the fiduciary net position of the NHRS and additions to/deductions from NHRS’ fiduciary
net position have been determined on the same basis as they are reported by NHRS. For
this purpose, benefit payments (including refunds of employee contributions) are
recognized when due and payable in accordance with benefit terms. Investments are
reported at fair value.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred
(inflows) of Resources Related to Pensions

At June 30, 2021, the City reported a liability of $320,002,458 for its proportionate share
of the net pension liability. The net pension liability was measured as of June 30, 2020, and
the total pension liability used to calculate the net pension liability was determined by an
actuarial valuation as of June 30, 2019. The City’s proportion of the net pension liability
was based on a projection of the City’s long-term share of contributions to the pension plan
relative to the projected contributions of all participating employers, actuarially determined.
At June 30, 2020, the City’s proportion was 5.00%.

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For the year ended June 30, 2021, the City recognized pension expense of $47,883,163. In
addition, the City reported deferred outflows of resources and deferred (inflows) of
resources related to pensions from the following sources:

Deferred Deferred
Outflows of (Inflows) of
Resources Resources

Differences between expected and actual experience $ 8,641,616 $ (3,435,910)

Changes of assumptions 31,654,591 -
Net difference between projected and actual earnings
on pension plan investments 19,792,498 -
Changes in proportion and differences between
contributions and proportionate share of contributions 4,370,601 (5,259,270)
Contributions subsequent to the measurement date 23,356,118 -
Total $ 87,815,424 $ (8,695,180)

The amounts reported as deferred outflows of resources related to pensions resulting from
contributions subsequent to the measurement date will be recognized as a reduction of the
net pension liability in 2022. Other amounts reported as deferred outflows of resources and
deferred (inflows) of resources related to pensions will be recognized in pension expense
as follows:

Year ended June 30:

2022 $ 10,781,524
2023 14,948,284
2024 15,347,400
2025 14,686,918

Total $ 55,764,126

Actuarial Assumptions and Other Inputs
The collective total pension lability in the June 30, 2019 actuarial valuation was
determined using the following actuarial assumptions:

Inflation 2.00%, previously 2.50%

Wage inflation 2.75%, previously 3.25%

Salary increases 5.60% average, including inflation

Investment rate of return 6.75%, net of investment expenses, including inflation,
previously 7.25%

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Mortality rates were updated to be based on the Pub-2010 Healthy Retiree Mortality Tables
with credibility adjustments for each group (police and fire combined) and projected fully
generational mortality improvements using Scale MP-2019.

Actuarial assumptions also reflect benefit changes resulting from CH 340 laws of 2019
(HB 616), which grants a one-time, 1.5% COLA on the first $50,000 of an annual pension
benefit to members who retired on or before July 1, 2014, or any beneficiaries of such
member who is receiving a survivorship pension benefit. The COLA will take effect on the
retired member’s first anniversary date of retirement occurring after July 1, 2020. The
adjustment shall become a permanent addition to the member’s base retirement allowance.

The actuarial assumptions used in the June 30, 2019 valuation were based on the results of
the most recent actuarial experience study, which was for the period July 1, 2016 — June 30,
2019.

Target Allocations

The long-term expected rate of return on pension plan investments was selected from a
best estimate range determined using the building block approach. Under this method, an
expected future real return range 1s calculated separately for each asset class. These ranges
are combined to produce the long-term expected rate of return by weighting the expected
future real rates of return net of investment expenses by the target asset allocation
percentage and by adding expected inflation. The target allocation and best estimates of
arithmetic real rates of return for each major class are summarized in the following table:

Weighted Average
Average Long-
Target Term Expected
Allocation Real Rate of
Asset Class Percentage Return
Large cap equities 22.50 % 3.71%
Small’mid cap equities 7.50 4.15%
Total domestic equities 30,90
Int'l equities (unhedged) 13.00 3.96%
Emerging int'l equities 7.00 6.20%
Total international equities 20.00
Core bonds 9.00 0.42%
Global multi-sector fixed income 10.00 1,66%
Absolute return fixed income 6.00 0.92%
Total fixed income 25.00
Private equity 10.00 TAY
Private debt 5.00 4.81%
Total alternative investments 15.00
Real estate 10.00 2.95%
Total 100.00 %

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Discount Rate

The discount rate used to measure the total pension liability was 6.75%. The projection of
cash flows used to determine the discount rate assumed that the plan member contributions
will be made at the current contribution rate and that employer contributions will be made
at rates equal to the difference between actuarially determined contribution rates and the
member rate. For purposes of the projection, member contributions and employer service
cost contributions are projected based on the expected payroll of current members only.
Employer contributions are determined based on the pension plan’s actuarial funding policy
and as required by RSA 100-A:16. Based on those assumptions, the pension plan’s fiduciary
net position was projected to be available to make all projected future benefit payments to
current plan members. Therefore, the long-term expected rate of return on pension plan
investments was applied to all periods of projected benefit payments to determine the total
pension liability.

Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the
Discount Rate

The following presents the City’s proportionate share of the net pension liability calculated
using the discount rate of 6.75%, as well as what the City’s proportionate share of the net
pension liability would be if it were calculated using a discount rate that is one percentage-
point lower or one percentage-point higher than the current rate:

1% Current 1%
Decrease Discount Rate Increase

$414,272,949 $320,002,458 $242,970,985

Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in the
separately issued NHRS financial report.

Public Works Employees’ Retirement System

The City follows the provisions of GASB Statement No. 67, Financial Reporting for
Pension Plans and GASB Statement No. 68 Accounting and Financial Reporting for
Pension, with respect to the employees’ retirement funds.

The following pension disclosures for the Public Works Employee’s Retirement System
pension plan are based upon an actuarial valuation performed as of July 1, 2020, using a
measurement date of June 30, 2021.

Plan Description

All Public Works employees of the City are members of the Public Works Employees’
Retirement System (the System), a single-employer, defined benefit PERS. Eligible
employees must participate in the System. The pension plan provides pension benefits and
death and disability benefits to employees reaching age 60, provided they have
accumulated 10 years of service. A City ordinance passed in 1947 established the System
which is administered by a five-member Board of Trustees. Amendments to benefit

8]

provisions are made by the Board of Trustees with the concurrence of the Board of
Aldermen. The Public Works Employees’ Retirement System does not issue independent
financial statements. Administrative costs are financed by Trust earnings.

Membership of each plan consisted of the following at July 1, 2020, the date of the latest
actuarial valuation:

inactive plan members or beneficiaries receiving benefits 112
Inactive plan members entitled to but not yet
receiving benefits 10
Active plan members _167_
Total 289
Benefits Provided

The System provides for retirement and death benefits. The retirement allowance benefit
is up to a maximum 65% of final compensation reduced proportionately for creditable
services less than 25 years (30 if hired after July 1, 2010). Benefit payments are based upon
a member’s age and length of creditable service. Members become fully vested after 10
years of creditable service. A retirement allowance may be received upon reaching ago 60
with 10 years of credited service or upon attaining 25 years (30 years if hired after July 1,
2010) of continuous service with the Board of Public Works. The plan also provides for
early retirement for 65% of final compensation reduced by 0.555% for each month between
age 60 and the member’s early retirement date. In addition, the System provides for
disability retirement allowance if age 60 or older with a minimum of 10 years of creditable
service, 65% (60% if under age 60) of final compensation reduced proportionately for
creditable service less than 25 years (30 years if hired after July 1, 2010).

The death allowance benefits are based upon creditable service and classification. Members
become vested after 10 years of creditable service. Employee contributions must be left in
the plan for the deferred vested benefit to be payable. Pre-retirement spouse benefits are paid
at 50% of the benefit to which the member would have been entitled had the member retired
on the date of death, when accidental death benefits are not payable, and if the member has
10 or more years of service.

Post-Retirement benefits of $3,000 are paid to beneficiaries of retired members upon the
death of the retired member. Accidental death benefits are 65% of final compensation to
spouse until death or remarriage, or dependent child to age 18, or dependent parent for life.

Contributions

The City employees each contribute 9.15% of their base salary, as specified by ordinance. The
City’s contribution is determined by the actuarial valuation. The City’s contribution to the
System for the year ended June 30, 2021 was $907,292, which was equal to its annual
required contribution.

B2

Summary of Significant Accounting Policies

The accounting policies of the System as reflected in the accompanying financial
statements for the year ended June 30, 2021 conform to generally accepted accounting
principles for public employee retirement systems (PERS). The more significant
accounting policies of the System are summarized below.

Basis of Accounting
Contributory retirement system financial statements are prepared using the accrual basis of

accounting. Plan member contributions are recognized as revenue in the period in which the
members provide services to the employer. Employer contributions are recognized when due
and the employer has made a formal commitment to provide the contributions. Benefits
and refunds are recognized when due and payable in accordance with the terms of the plan.

Investment Policy

Investments are reported at fair value in accordance with requirements. System assets are
managed on a total return basis with a long-term objective of achieving and maintaining a
fully funded status for the benefits provided through the pension plan.

Rate of Return

For the year ended June 30, 2021, the annual money-weighted rate of return on pension
plan investments, net of pension plan investment expenses, was 25.65%. The money-
weighted rate of return expresses investment performance, net of investment expense,
adjusted for the changing amounts actually invested.

Net Pension Liability

For purposes of measuring the net pension liability, deferred outflows of resources and
deferred inflows of resources related to pensions, and pension expense, information about
the fiduciary net position of the System and additions to/deductions from System’s
fiduciary net position have been determined on the same basis as they are reported by
System. For this purpose, benefit payments (including refunds of employee contributions)
are recognized when due and payable in accordance with benefit terms. Investments are
reported at fair value.

Net Pension Liability of the City
The components of the net pension liability of the City on June 30, 2021 were as follows:

Total pension liability $ $3,572,475
Plan fiduciary net position (53,315,130)
Employers’ net pension liability $ 257,345

Plan fiduciary net position as a
percentage of total pension liability 99.52%

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