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Past - 2008:
Rebuilding the Foundation

» Legislature enacts HB 1645

° Establishes Independent Investment Committee

° Transfers $250 million from Special Account to
Pension Trust

° Changes method of funding the Medical Subsidy
and freezes the 8% escalator for four years

° Revises definition of earnable compensation

° Followed by litigation; AFT v State of NH

Past - 2009:
Unfunded Mandate?

» Legislature reduces subsidy to political
subdivisions for teacher, police officer and
firefighter employer contributions from 35%,
to 30% in FY 10 and 25% in FY 11
© Followed by litigation in 2010; City of Concord v

State of NH
° Legislature in 2011 repealed subsidy entirely and
provided one-time $3.5M appropriation

9/20/2021

Past - 2011:
Back to the Drawing Board

>» HB 2 enacted
e increases contribution rates for all members by 2% -
2.5% of payroll
° Changes benefit provisions for some current
members and all future members by:

- Increasing retirement ages and reducing benefit
formulas for non-vested and future members

- Amending definition of earnable compensation

- Increasing AFC from 3 to 5 years for some members
° Limits on working after retirement
e Changes the composition of the Board of Trustees
° Foliowed by litigation; PFFNH v State of NH (1&2)

Past - 2012-2016:
The Court Speaks

» NH Supreme Court decides in favor of the State

of NH in four separate cases

° Against the City of Concord in its claim that
eliminating the employer contribution subsidy was
effectively the imposition of an unfunded mandate

° Against PFFNH (1&2) and AFT in their claims that
increasing member contributions, revising the
definition of earnable compensation, and eliminating
or reducing benefits represented an unconstitutional
breach of contract rights

» Adopts, for the first time, the
unmistakability doctrine’

9/20/2021

Past - 2017:
Decennial Commission Redux

» Decennial Commission meets for several months
and generates recommendations, some of which
are subsequently the basis for legislation
° Revisions to Working After Retirement provisions,
limiting the number of hours that can be worked and
simplifying the approach

° Adoption of layered amortization, a mechanism to
reduce volatility by amortizing future asset gains or
losses over 20-year periods

° One-time $500 retiree payment

° Increasing terms of NHRS Trustees from 2 to 3 years,

mitigating turn-over and creating more continuity

Past - 2017:
Decennial Commission Redux

» Decennial Commission also hires the Center for
Retirement Research at Boston College to assess

NHRS, which found:

° NHRS uses among the most conservative assumptions
for mortality and rate of return in comparison to other
large state and local plans

° NHRS investment returns exceed most other plans

° NHRS benefits are modest compared to other plans

° Total government costs for NHRS was about 15% of
payroll compared to a national average of about 18%

° UAAL growth since 2007 was driven by losses in great
financial crisis, level~percent amortization, and

reductions to assumed rate of return

9/20/2021

Present -
Most Recent Facts & Figures

> $11+ billion in Assets

> Unfunded Liability of $6 Billion; 12 years into
a 30-year amortization

> Funded Ratio of 61.0%

» 48,479 members

> 39,612 benefit recipients

> $860 million in annual pension and medical

subsidy benefits
° Nearly 80% of recipients live in NH

Present -
Most Recent Facts & Figures

Active Members and Benefit Recipients, 2011-20

e Active members af Benefit Recipients

9/20/2021

NOW, THEREFORE, in consideration of said AGREEMENT and other good and valuable considerations, it
is hereby agreed and acknowledged by and between OWNER and ENGINEER to amend the AGREEMENT,
as follows:

The AGREEMENT shall be further amended to include this Amendment, a copy of which shall be attached
thereto and made a part thereof.

1. Paragraph IV (A) (1-2) shall be MODIFIED as follows;
A. Method of Payments Amounts of Fees

1. Payment to the ENGINEER, for services rendered, shall be according to the following schedule:

For the Dry Well Valve and Pipe Replacement Engineering Design, monthly billing based on
hours and ENGINEER’s actual direct labor rates time a factor of 2.96 rates-bytabor- category
with-mark-up and incidental expenses in accordance with the attached Exhibit B —- Fee Schedule.

For the Wash Press Chute Modifications and the Screening Garage Odor Control Engineering Design,
monthly billing based on hours and ENGINEER’s actual direct labor rates time a factor of 3.01 rates

bytaber-categerywithtmark-up and incidental expenses in accordance with the attached Exhibit B -
Amendment 1 Fee Schedule.

2. The OWNER agrees to pay and the ENGINEER agrees to accept for all services under
Exhibit A, Dry Well Valve and Pipe Replacement Phase | Preliminary Design of the AGREEMENT,
a fee not to exceed

One Hundred Five Thousand Eight Hundred and 00/100 Dollar ($105,800.00).

The OWNER agrees to pay and the ENGINEER agrees to accept for all services under Exhibit
A- Amendment 1, Wash Press Chute Modifications and the Screening Garage Odor Control Design of
AMENDMENT 1, a fee not to exceed

Seventy-Eight Thousand Three Hundred and 00/100 Dollars ($78,300.00).

The OWNER agrees to pay and the ENGINEER agrees to accept for all services an
amended fee not to exceed:

One Hundred Eighty-Four Thousand One Hundred and 00/100 Dollars($184,100.00)

Page 2 of 3

Present -
Most Recent Facts & Figures

Assets in Billions: June 30, 2011 to present

y
__f,

$111132
$9.208 $9.134
$8.293 $8.874
$7.414 $7.530 $7.460

sh $5.774 poses

6/3G/11 630/12 6/30/13 GIFQI14 GlFOIIS $= G30/16 6/30/17 GIO/FB Gi30/19 Gi30/20 6/30/21"

"unaudited

Present -
Most Recent Facts & Figures

100 * Funded ratio relative to peers - FY 2010-19
80 —g 2h 76.0 95-5 44g FP PPP Pt 2

; rare

60 —p S85 574-561 567 580.7 592 60.0 O13 663.6 cos
A A A

400 =

20 _

a

2010 =2011 20120 2013) «2014 «2015 2016 «2017 2018 2019
-o-NHRS -o—Avg.

Ay Oenotes reduction fo assumed rate of return Source NASRA, Nov, 2020

9/20/2021

9/20/2021.

Present -
Most Recent Facts & Figures

| ~—-:20-Year Investment Performance

230% : 15.0%
' 17.6% 209%
0% j 145% 8 / en
i 1% i | woo%
- 35% ir 50%
= B «oll | . | om
i 5o%
1% 54% 00%
15.0%
181% 20.0%
2001 2002 2002 2004 2005 2006 2007 2008 2009 2010 2011 2012 2011 2014 21S 2016 2017 2018 2019 2020
Fuca Year
Suctee Data Tome-neqghted arrtual rétetns [rat of feesi piowded by NEPC LLC
Present -
Most Recent Facts & Figures
Member Pension: | Pension: | UAAL as a% | Medical Total
Category Normal UAAL of Total Subsidy Employer
Cost Pension Cost Rate
Emp. ~ State 2.58% | 11.17% 81.2% 0.78% 14.53%
Emp. - P. Sub. | a5e% | 11.17% 81.2% 0.31% 14.06%
Teacher 2.82% | 16.66% 85.5% 1.54% 21.02%
Police 6.72% | 23.95% 78.1% 3.21% 33.88%
Fire 7.07% | 22.71% 76.3% 3.21% 32.99%
Member Contribution Rates: Employee/ Teacher: 7%, Police: 11.55% Fire 11.8%
Member share of normal cost: Employee: 73%; Teacher: 71%; Police: 63%, Fire: 63%

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9/20/2021

Present -
What’s Important

» NIRS’ six common elements of a successful

plan:

° Employer contributions that pay the full amount of
the annual required contribution, and that maintain
stability in the contribution rate over time;

e Employee contributions to help share pian cost;

° Benefit improvements actuarially valued before

adoption and properly funded upon adoption;

Cost of living adjustments granted responsibly;

“Anti-spiking” measures in place;

° Economic actuarial assumptions that can reasonably

be expected to be achieved over the long term

o

oO

Present -
What’s Important

>» NHRS has a constitutional and statutory

foundation which is designed to protect its

financial future

° Constitutional protections of Part |, Article 36-a
assure that contribution rates are actuarially sound
and paid by employers; and, that the pension trust is
used solely for the benefit of NHRS members

e Statutory provisions of 100-A have been amended to
address structural issues which undermined the
financial security of the system

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Future -

Projected Contribution Rates

Total NHRS Contribution Rate as a Percent of Payroll

MUAAL Core foten

faz O25 ro ft
Fncal Year [nding june 30

Future -
Paying d

own the UAAL

L

Funding Progress, 2020-41

000

120.0%

100.0%

80.0%

60.0%

40.0%

20.0%

0.0%

GAS

9/20/2021

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9/20/2021

Future -
Paying down the UAAL

a TT i
Partidpants Teachers & State Employees Employees, Teachers, Police, Fire
Active Members 40,395 48,479
Retirees / Beneficiaries 37,151 39,612
Average Pension $23,143 joe dd as PR 85 $20,841
Requires normal cost to be funded on a
sound actuarial basis. new unfunded Requires employer
liabilities funded over 20 years ! contribution rates be based upon sound
State Constitution (layered). any benefit improvements actuarial
must be fully paid for in the yeac they valuation and practice and paid in full
pees: are passed
31-year closed (1997-2028); Layered 20 30-year closed (2010-2039);
Amortization of UAAL year amortization of new gains and losses Layered 20-year amortization of new gains and
beginning in F¥ 97 - losses beginning in FY 19
Actuarial Method | _Entry Age Normal Entry Age Normal
Assumed rate of 6.755 6.75%
Investment return *
Funded Ratlo
at start of SIRAFY 96) 57.4% (FY10)

82.4% 61.0%

|}.

Future -
Issues to Watch

» Legislative
° Benefit changes
° COLA
° Alternative retirement plans
» Economic
° Assumed rate of return
° Short- and long-term market outlook
° Interest rates/Inflation
» Demographic
° School-age population
° ‘Graying’ of NH

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