Finance Committee Page 6
March 2, 2016
this up because of the significance of it, it is with purpose that | tried to talk about the long-term perspective
financial statements and this which may be a little bit unfavorable to talk about it but then when you turn to the
general fund and you see the stability; | did try to talk about those as two distinct issues because one may
seem a little more unfavorable but as | indicated earlier the stability in that general fund balance sheet is
certainly a strength.
Alderman Cookson
Do you have the ability to share with us who manages the state pension fund?
Mr. Mcintire
| think it’s all on-line at the NHRES.ORG website. There are some great disclosures on there. We go to that
website all of the time to use their audited financial statements and the audit of the actuarial evaluation which
essentially allocates the liability to you and all the other employers. They have a whole page on their
investment returns and things like that.
Alderman Siegel
| recognize my question might not be specific to Nashua but what extent has the pension obligation gone up? |
know that it is reset every couple of years, an actuarial reset based on returns. What percentage are we going
up or down in our contribution?
Mr. McIntire
That’s a great question. Let me start with a little bit of background. As | indicated earlier, FY 2015 was the first
year that you were required to implement this net pension liability but of course in that implementation the
actuaries needed to determine the net pension liability at the beginning of the year so there could be the proper
income statement impact there. With GASB 67 and 68 and some of the restrictions on the actuarial
assumptions that can be used, it is widely anticipated that there will be significant swings in this liability. Again,
| say those two things as quick reminders because the answer to your question may surprise listeners in that
from June 30, 2014, to June 30, 2015; this net pension liability actually went down about $4 million. | have my
theories on that but | am not an actuary. My theory is for the period ending...the liability that you see present
here on your June 30, 2015, financial statements is actually measured as of June 30, 2014. It’s on your
balance sheet for June 30, 2015, but it really relates to the year prior and the timing of all of this getting done
and to be able to produce timely financial statements is why that’s permitted to be that way. The market
returns through June 30, 2014, as | recall, were quite favorable. For June 30, 2015, | am not sure if your
liability that will be present on this page on your June 30, 2016, financial statements. We've looked at the new
reports that have come out, the June 30, 2015, reports which will report your June 30, 2016, liability and if your
liability decreased in this report then the liability is going up for your next report.
Alderman Siegel
We are under the constraint of a spending cap so unfortunately that’s an external factor that we have to deal
with so anything above 1.5% in an increase is a big problem for us. It sounds like we have a big problem.
Mr. McIntire
Well, just remember that, and | tried to draw the distinction between the long-term perspective financial
statements and the short-term being your general fund, so there is a little bit of a distinction there but certainly
there have been a lot of legislative changes in the system in recent years that have put pressures on the local
communities, there’s no doubt about that.
