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Special Board of Aldermen Public Hearing Page 3
Chairman Dowd

I’m going to call out the various departments. If you have a question concerning that particular
department, please come down to the microphone, state your name and address, and ask your
question.

101 MAYOR'S OFFICE
Fred Teeboom

My name is Fred Teeboom, 24 Cheyenne Drive. I’m going to comment on the budget. | have in my
hand 56-A the Charter. It says we’re going to comment on the budget and not just your little agenda.
Your agenda starts on page 59. I'd like to address some other things in the budget before we get to
page 59.

First of all on the resolution itself — R-17-098. I’m going to go into detail because there’s a lawsuit
against the city. There’s two lawsuits against the city but R-17-098 in the bottom paragraph says:
“Based on the combined annual budget of $265 million, you have $1.9 million under the cap.” It is
false and |’m going to test further subject to litigation. The fact is this budget is $8.1 million above the
cap.

I'd like to address first of all page 21. Page 21 deals with the funds. You'll see that under line item
52050 pension expense. Last year that pension expense was $21.7 million. This year, it’s $23.9
million. There was a presentation made, various presentations made and even the Mayor pointed out
as of the New Hampshire Retirement System points out in their literature that 70 percent on average
of that amount of money, the total amount of money collected by the State is designed to have the
State pension fund 100 percent funded. Nobody funds the pension fund 100 percent. As a taxpayer,
| resent the fact that the State insists on that. The cost to the Nashua taxpayers is enormous. You
still have $24 million at least $18 million if not more is used to get 100 percent funding of the New
Hampshire pension fund about 20 years from now. Not only is that a problem, the other problem is
the New Hampshire Retirement System itself admits that the pension fund is mismanaged by $900
million. Who is blamed? Did anybody get called before some State committee, State House, State
Senate, the Governor held accountable for a $900 million mismanagement that we are now paying
for? The retirees covered by this expense the $900 million haven’t paid a penny towards the $900
million. Guess who has to make up the $900 million mismanagement? Us the taxpayers.

My tax bill now is $7,000. It ain’t easy to pay $7,000 but | can afford it because | tried to take care of
some retirements. A lot of people can’t afford their tax bill. The average tax bill in Nashua average
over 28,000 properties is $7,000. The average residential tax bill is around $6,400. So why do we
have to pay for $900 million of mismanagement? Why do we have to pay for 100 percent funding?
Why did the City of Nashua even buy into the State system? The City of Nashua — and | think when
Donchess was Mayor, the city belonged to its own system. That was before your time. Sometime
the city bought into the State system and the reason bought into the State system is the State said
we’re going to contribute 35 percent towards your bill. Twenty-five percent to 50 percent today is
nothing. The State contributes not a penny. We’re on our own, is funding 100 percent. We all know
the funding that’s mismanagement and | resent it. | also advise the city to not pay the bill. To only
pay what the city is liable for which is about $6 million. You can ask for the listing of all the retirees.
Look how much money they earn. The city refused to do it. You know you sued the State because
you felt they didn’t pay you enough for the education grant. Why aren't you suing the State when you
know that they have mismanaged the pension fund?

Now the Aldermen say hey we have nothing to do with this. If you look why we’re paying $24 million
— that’s 8 percent of the $300 million total budget. That’s a lot of money. We had the previous Chief

Special Board of Aldermen Public Hearing Page 4

the Fire Department. He is now making $140,000 a year. His highest pay when he left the city was
$124,000. Former Chief of Police Seusing is now getting $139,000 a year. His highest pay when he
left the city compensation was $131,000. Both of these individuals are making more retirement than
the highest paid in the highest year just before they retire. We have sitting alderman he retired and
his money was $93,000 when he retired. That was his highest pay. He is now earning $121,000 a
year. You said thank you. | don’t thank him. We have to pay for it. | have to pay for that. Do you
know what his severance pay was? You can accumulate sick leave. You can accumulate vacation
time. Fire Chief Soucy left with $84,000 cash. That’s in addition to his retirement. Chief of Police
Seusing left with $81,000 cash and said thank you. He left with $65,000 in cash. These are
unacceptable conditions. These are union contracts negotiated and approved by you the Mayor and
approved by the aldermen. They are unacceptable. You say well we have nothing to do with it. You
have a lot to do with it.

Now | want to talk about page 21 the benefits which was also mentioned. That’s my first question
because the question wasn’t really answered. The benefits went up from $23,662,000 — by the way
that number does not match the 2007 budget book number. It’s off by $6,700. You may want to
check that. | don’t know why that number is in 2007 into 08. The proposed budget book don’t match
the numbers in the adopted budget book that you may want to look at line item 52300. But now that
line item reads $27,301,000. Almost a $4 million increase. The first question is why did the benefits
in this city go up by $4 million?

Mayor Donchess

Mr. Teeboom the city is self-insured. So we do not pay any insurance company to provide benefits.
The city pays the medical costs for all city employees. Now the city does pay two different insurance
carriers in order to administer the benefits but that is a very small number — like $500,000 or
something compared to the total amount of benefits which we’re budgeting here $27 million. The
estimated amount of health costs which we will pay out based upon the experience we’ve had over
the last few years is based upon the opinion of the expert that we have is that we will pay out in fiscal
18 $27 million for health benefits for the employees that we have. So it is important | think that we
give as close to an accurate number as we possibly can and that is the number that we’ve come up.

Fred Teeboom

That was not the question.

Mayor Donchess

You said why are they up | thought.
Fred Teeboom

Yeah | can read $27 million just like you can which you just did. The question is why did it go up $4
million? What's the reason for that?

Mayor Donchess

One think | think for the last couple of years, the city was optimistic. Now these are always just
projections because it’s not like an insurance company sends you a bill with a specific number and
agrees to cover everything. These are projections or estimates. The city was optimistic over the last
couple of years and as a result actually paid out more in health benefits than was budgeted. It had to
draw on the healthcare reserves. In order to avoid doing that again, the most conservative approach
is to not be so optimistic and budget what we expect we will have to pay out.

Special Board of Aldermen Public Hearing Page 5
Fred Teeboom

Is it paid to be self-insured?

Mayor Donchess

Yes, definitely.

Fred Teeboom

Do you have the numbers on that?

Mayor Donchess

We can have Mr. Budreau who is the personnel person come up and discuss that but | think we
believe we saved millions of dollars as a result of being self-insured.

Fred Teeboom
I'd like to see it. I’ve never seen the percent.

Mayor Donchess

Because a health insurance company is going to be paying the same claims. It’s just that they will
have a margin of error and profit on top of the claims that they pay out. The benefits of being self-
insured are considerable.

Fred Teeboom

$4 million.

Mayor Donchess

| think Mr. Budreau can compare us to some other municipalities where we do pretty well as
compared with what other people are paying. | don’t know if you want to have him address that now
or when the personnel comes up. He can come up now and do that if you want.

Fred Teeboom

Let him do that now. I’m not going to stick around. I’m not worried about the little line items. I’m
interested in the big ticket items.

Director Budreau

I’m Larry Budreau the Human Resources Director for the city. What question would you like me to
address?

Fred Teeboom

Explain to me on page 21 you see the benefits...

Special Board of Aldermen Public Hearing Page 6

Mayor Donchess

Well | think the first question was do we save money as a result of being self-insured and how much
might that be?

Fred Teeboom

Okay we can.

Director Budreau

| reviewed comparable data from seven communities in Southern New Hampshire, including
Manchester. Six of them are fully insured or actually participating through Healthtrust therefore
they're paying a premium. Manchester is also self-insured. Our per employee per month rates are at
the lowest of any of those organizations. We have an upside and none of them do except for
Manchester. They upside meaning that if we’re paying what we call premium equivalence which are
less than those other communities and we have the potential of not spending all that money because
we’re self-insured as the Mayor said.

Fred Teeboom

Have you prepared what we’re paying in previous years to 2017, 2016, 2015 being insured against
the self-insured and show let’s say consistently below the cost of being insured through an insurance
company?

Director Budreau

So our costs have increased in the last four or five years by no more than 5 percent per year. The
two carriers that would do business with Harvard Pilgrim and Anthem, they maintain that same
measure for their entire book of business and that’s averaged 9 percent between the two carriers for
the same period of time. So we’ve been increasing it 5 percent while they’ve increased it 9.

Fred Teeboom

So we can verify that.

Director Budreau

Oh yes.

Fred Teeboom

So we'll verify that.

Director Budreau

| can provide exhibits through the Board of Aldermen or whatever is appropriate.

Fred Teeboom

I'd also like to see is some historical data with the insurance company is going forward independent

population that we insure versus what our costs and are we consistently below the costs if we were
not self-insured. I'll tell you $4 million is a hell of a bite.

Special Board of Aldermen Public Hearing Page 7
Director Budreau

| think it’s critical before | leave to let you know that this is the first time that the rates have increased
since July of 2013. If you were to take a look of the appropriation for the last several years, it’s been
relatively flat. So you really have to look at it it’s not a year to a year increase of $4 million but the
first increase in the appropriation since fiscal 2014.

Fred Teeboom

Show the comparison. One other question on page 18, line item 191. The schools went up for
$137.9 million to $141.4 million. That’s not the full cost of schools because the full cost of schools
are closer to $160 million if you look at the MS2. (inaudible) Just look at these costs, that almost a
$4 million increase. That’s 2.58 percent. It is well above even your guideline Mayor. This is way
above any spending cap, an inflation calculation of 1.4 percent. That happens to be 2.58 percent. Do
you have an explanation for that? Line item 191.

Mayor Donchess

Yes the figures you're looking at include pension and benefit costs which for the sake of analyzing
year to year costs of operations are not included in the guidelines that | gave. If you look at
operations only, the guideline | gave for the school was 1.9 percent which could accomplish various
things. That’s what they did. | cut the budget by $100,000 to achieve the 1.9 percent. What they got
for that was they were able to budget for full day kindergarten and the Superintendent had proposed
that in order to do that, two | think critical services be removed because here original budget was a
little bit below this. One was the Clearway High School to bring that in house at a savings of
$300,000. Number two, to eliminate teaching coaches — two of them. After hearing from the
community regarding the value of the Clearway High School which is operated by the Adult Learning
Center and has been for a least a couple of decades effectively | thought and based upon the need to
make sure that our young teachers develop to the fullest extent that they can, the teaching coaches
are also critical. So | gave them a guideline which enabled them to put the full day kindergarten
without cutting Clearway or the teaching coaches. That’s why the budget is up. The numbers you’re
looking at include the benefits of a pension that we’ve already talked about.

Fred Teeboom

So when you gave them the 1.9 percent, you were aware that there could be additional increases
because the pension had doubled in costs.

Mayor Donchess

Yes.

Fred Teeboom

You still gave them the 1.9 percent.

Mayor Donchess

Yes we’ve been talking about the pension problems for many months now. As the year progressed, it
became obvious that the amount of money that we would need to actually pay the health benefits was
going to be higher than last year. Now last year at the end the amount budgeted — when | say last
year, | really mean our current fiscal year.

A regular meeting of the Board of Aldermen was held Tuesday, June 28, 2016, at 7:30 p.m. in the Aldermanic
Chamber.

President Brian S. McCarthy presided; City Clerk Patricia D. Piecuch recorded.
Prayer was offered by City Clerk Patricia D. Piecuch; Alderman Siegel led in the Pledge to the Flag.

President McCarthy

Before | ask the Clerk to take the roll, Alderman Caron is participating by telephone and under the
terms of the state law that allows her to do that, she needs to explain why she can’t attend, if she can
hear us, and who she is with, if anyone.

Alderman Caron stated the reason she could not attend, confirmed that she could hear the proceedings and
stated who was present with her.

President McCarthy
Acknowledged that those present could hear Alderman Caron as well.

The roll call was taken with 15 members of the Board of Aldermen present; Alderman June M. Caron
was not in attendance but participated in the meeting via telecommunication.

Mayor James W. Donchess and Corporation Counsel Steven A. Bolton were also present.

President McCarthy

Before we begin | am going to recognize Alderman Wilshire to make a motion so we can accept
procedural motions without the roll call vote.

MOTION BY ALDERMAN WILSHIRE THAT THE RULES BE SO FAR SUSPENDED AS TO
ALLOW FOR THE ACCEPTANCE OF PROCEDURAL ACTIONS WITHOUT OBJECTION

A Viva Voce Roll Call was taken, which resulted as follows:
Yea: Alderman Wilshire, Alderman Clemons, Alderman Deane, 15
Alderman Cookson, Alderman Dowd, Alderman Caron,
Alderman Siegel, Alderman Schoneman, Alderwoman Melizzi-Golja,
Alderman McGuinness, Alderman LeBrun, Alderman Moriarty,
Alderman O’Brien, Alderman Lopez, Alderman McCarthy
Nay: 0
MOTION CARRIED

REMARKS BY THE MAYOR

Mayor Donchess

First | wanted to mention a couple of items on the agenda. The primary one is the city budget which is before
you tonight. The Budget Review Committee has considered this and worked very hard in doing so and are
recommending that it be passed and | hope you will follow their recommendation. Having served on the
Budget Review Committee while on the Board of Aldermen, it was a very difficult job especially during the
months of May and June particularly for those who are working and can’t sleep late the morning after. This
year | did propose the budget for the first meeting in May which has been the custom but next year it is my goal
to propose the budget for the second meeting in April in the hopes that it will make the schedule for the Budget
Review Committee a little bit easier

Special Board of Aldermen Public Hearing Page 8
Fred Teeboom

When you had these discussions is it discussion the school department affected the enrollment is
about 20 percent...the enrollment today in the schools is just about 20 percent below than it was in
the year 2000.

Mayor Donchess

Well that might be but the main cost of education is salaries for educators including teachers and
paras and to some degree administrators. At this point, Nashua is about 50" among the school
districts in New Hampshire as far as teacher's pay goes. It’s not like we’re paying so much more.
There are 50 districts in New Hampshire that pay more than us. The cost would be much higher had
those reductions in enrollments not occurred but certainly as | said, there are districts like Concord. |
think their average pay is like $12,000 or $15,000 more than ours. Then there are 49 districts
approximately between Concord and us.

Fred Teeboom

There’s 180 districts there. So if we’re 50, it’s 130 below us.

Mayor Donchess

That’s correct.
Fred Teeboom

The other point | wanted to make...

Mayor Donchess

But Nashua has probably of those districts probably among the highest cost of living because we’re
on the Massachusetts border. Real estate prices are higher than much of New Hampshire — not all of
it but much of it. So the cost of living here is a little higher than many of those districts that pay more.

Fred Teeboom

If you wanted to cut costs, if you really wanted to manage it so go along with the flow, assess the fact
that the enrollment is down by 20 percent. Many of these elementary schools have empty
classrooms. Almost empty classrooms. You can close at least one school. In 2006, there was a
(inaudible) study and the summaries were kind of whitewashed because they basically said they can
close the school — Mount Pleasant particularly which is right next to Amherst Street. Today you can
close two schools. Each of these elementary schools cost between $4 — 6 million to operate.

Nobody has ever followed through the idea if you have that much reduction in children going to
school, why don’t you close the school? We've got 18 buildings. We have 12 elementary schools.

Mayor Donchess

Well that might be something that the school department, the School Board, should consider and at
least think about and analyze. That is a decision that is up to the Board of Education. Of course |
would want to get their input. The expansion to full day kindergarten will — we could have them come
up but | don’t think it is correct that there are many, many empty classrooms. The expansion to full
day kindergarten will take up some classroom space.

Special Board of Aldermen Public Hearing Page 9
Fred Teeboom

I’m glad you brought that up. Not all of us and many of us are not enthused about the fact that we’re
not pushing full time kindergarten.

Mayor Donchess

Well there were people who weren't enthused when we went to half day kindergarten. To be in 21°
Century America to attract young families to be a community where jobs/employers want to locate,
you really need to have full day kindergarten.

Fred Teeboom

First of all, lm not so sure we want all these jobs to be located here. | don’t quite see the benefit in
that because the city is getting pretty filled up. Second of all, there are studies that | cited to the
School Board — there’s School Board members here that can attest to that — that cited full time
kindergarten is not of benefit to a lot of kids because they can’t be structured into full time classes for
6, 7 hours and no one has shown anything past the third grade ever that there’s a benefit past the
third grade. But we’re spending over $1 million more. More than a $1 million. | forgot the exact
number - $1.1 million or something like that for full time kindergarten. We're saving 10 teachers that
are switching from teaching elementary school to kindergarten. If you want to save money if it’s all so
terrible, why are we saving the jobs of 10 teachers? Now | feel for the 10 teachers but they can
maybe get a job in one of these higher paid districts. Why should we take elementary teachers and
put them into kindergarten to push this full time kindergarten agenda? I’ve maintained part of the
reason is to fill up this empty class space because Superintendent Brown is here. Why don’t you
have her answer that question?

Mayor Donchess

| don’t agree with your analysis regarding the benefits of full day kindergarten. | disagree even more
strongly with respect to your statement that we do not want to add jobs to this community. If we want
a declining, suffering, spiraling down community, yeah then we don’t want jobs. If we want a growing,
vibrant community which will be successful in the future, we need to add as many jobs as we possibly
can.

Fred Teeboom

It’s a theory the more jobs bring in the more vibrant a community? Is that the theory?

Mayor Donchess

If you want economic growth, you need jobs and we need to add certainly more than McDonald’s or
minimum wage. What we need are high skilled jobs value at a job that pay well with a pay families
that pay the employee sufficiently to support their family, provide a good education, and a college
education for their kids. VWe’ve made progress there but we should make more progress.

Fred Teeboom

Now you're talking about high paying jobs as opposed to jobs. It’s very likely that low paying job
people come in and want to (inaudible). | raised five kids. None of them went to kindergarten that
was paid for and they went full time. They didn’t go full time but part time. You can have
philosophical ideas but here we’re talking about budgets and trying to not keep adding more and

Special Board of Aldermen Public Hearing Page 10

more money. $4 million more to the education budget. $4 million more to the pension budget. $4
million more to the benefits budget and misrepresentation of the spending cap. All right. That’s
enough for now. Thank you.

Chairman Dowd

Is there anyone else that would like to speak to the first 59 pages of the budget or the Mayor’s
Office?

Paula Johnson

Good evening. My name is Paula Johnson. | still live here in Nashua. Mayor there was an editorial
back in the Telegraph on May 2" that questioned you. Just how tight is Nashua’s budget? |
happened to read this while | was on vacation. | really was in shock to find out about the $200,000
that you want to give to allow people to become volunteers in this city. We have 15 aldermen to
make decisions for us. Not always in the best interest of the constituents but we elected them and
we pay them $5,000. Now unless the cost has gone up but | still believe its $5,000 a year. We want
to get people more involved. I’m not paying somebody to get involved here. | don’t know what their
background is. | don’t know what they want to do.

Mayor Donchess

Ms. Johnson that’s a misunderstanding. The proposal is not to pay anyone to get involved. It’s that
we don’t pay any volunteers.

Paula Johnson

Then are you telling me the media is lying here is fake on what they reported?
Mayor Donchess

They don’t say we’re paying volunteers. If they said that, that’s completely mistaken.
Paula Johnson

$200,000 for a citizen’s lead pilot program that will allow volunteers to draft plans for city projects and
put them up for a vote. Someone is getting paid for that $200,000.

Mayor Donchess

No wait. The way that that would work but before we get too deeply into it, the Budget Committee did
recommend a change there. The way that would work is first of all it's not an increase in the budget.
Right now we operate a capital improvements budget where we make improvements where we
budget community improvements — swimming pools, sidewalks, various reserve funds where we need
to do building maintenance and things like that. The way that the process has worked — and the
budget last year was around $1.2 million and this its’ a little more. So the budget is not up because of
this.

Paula Johnson

I’m not saying it is.

Special Board of Aldermen Public Hearing Page 11

Mayor Donchess

You asked so I’m going to explain it. It’s not up because of the proposal. Normally what happens is
that the Mayor — in this case that’s me — proposes after hearing from the departments proposes to
the Board of Aldermen which project we should undertake. Now what I’ve suggested that out of that
$1.2 million, citizens be allowed to make suggestions and vote on projects that would be proposed to
the Board of Aldermen. Still have to be approved by them. So it’s just another way of proposing
projects. The people would not get paid. If you look at the results of this process around the country
and we would definitely not be the first city in the country or the first city in New England. There are
numerous cities in New England that do this already. In those places where they do it, the results at
least from what | see are pretty positive.

Number one, they come up with projects that the officials don’t necessarily think of. They might be
aware of a building that needs improvement, or a sidewalk, or might have a different idea as to what’s
important. Secondly, the number of people participating and voting on these things is going up in
every community where they’re doing it. So the thousands of people in some communities end up
voting. Third, the cities that do it are increasing the amount that they allocate to this process every
year. They’re not decreasing, they’re increasing because they see it as a big success. Obviously
there is disagreement about this. Some aldermen feel that the money would be better spent
elsewhere and maybe they’re right. All I’m saying is that no volunteers get paid. It’s not an increase.
It’s just a different way of allocating money in a budget that’s similar to last years and that it’s an
attempt to get more people, maybe hundreds or thousands of people involved in thinking about city
budgeting that aren’t involved now. Wouldn't you like to propose something for your neighborhood
and maybe be able to vote on it?

Paula Johnson

You know Mayor, | have proposed things for my neighborhood. My alderman is sitting right here and
when | came in| spoke to the Chief of Police about my neighborhood. The fact that for two years
already | have asked if the Police could please come down because by Ledgewood Hills, the cars
keep running the red light. It is completely red and they just keep going through in each direction.
I’ve asked to propose this. As a matter of fact, | was speaking to the Chief of Police when | came in
and alderman made a comment to me about being fired up. Of course I’m a little fired up about it
because | pay taxes in this city. We don’t see any results right at that corner and all the money
seems to go with the police for this opioid epidemic which we understand. There has to be some
money that goes for the rest of the people in this city. Yeah | was a little bit fired up but so is
everybody. You heard several at the town hall style meeting because of the fact we can’t get any
police over there. | would like to see maybe that $200,000 that you want to put in this to have the
police sit out there and a lot of traffic lights in this city that these people are so rude that they keep
running the red lights and somebody is going to get killed somewhere. Then it’s already been
complained about.

Mayor Donchess

Well you may get your wish because the Finance Committee recommended that that $200,000 go to
police overtime. You may get your wish. Alderman Siegel made the proposal. It was adopted by the
Finance Committee. Now | like the proposal | made but if you’re going to switch the money, | think
police overtime is a good place to put it.

Paula Johnson

| thank that the police just need to get out there and we need to focus on something else other than
this opioid crisis because we all live in the city and we all need the police protection. It’s a sad thing