Special Board of Aldermen Page 2
January 22, 2017
the payments are. | calculated all of those out and | got a complete rundown of the entire list of retirees and
you can see how much the state pays and how much the Nashua School District employees pay and how
much Nashua city employees pay and you compute all of that out on spreadsheets and you'll find that indeed
the city’s part of both the pension fund and the medical subsidy is around $6 million and for this year alone
$21 million is 3 % times what it needs to pay the pension fund if you paid exactly what it's owed. Nobody is
saying that you should only pay for what you owe like social security you pay the money in and pay the money
out. They should have the money saved for the future. The point here is 3 % times, it’s a very large sum of
money and next year it will be more, it will be $24.2 million by my calculation and it will go up after that
because the rates are going to change, the rates that the State of New Hampshire tell you that you should pay
toward your retirement fund, the teachers, the police and the firemen. Finally, this is important, before the
state legislature there are six bills for the retirement. Three of those have a significant effect on the money
paid by local municipalities; HB369, HB425 and HB413 have a significant effect on what we pay for Nashua.
HB 369 recommends a 30-year period to pay and be (inaudible) from the liability; it wants to change that to
forty years. If you look at the information provided with the states analysis; that would have a payout to
Nashua of about $3.7 million. Our share of the state is about 7% of the state’s bill. Our retirement bill is
around $44 million and the states bill is about $659 million. That’s what we pay retirees, $44 million in Nashua
and $654.9 million is the state’s bill. So if you take the 7% and put it as our share because there is no reason
that share would change anytime soon, does it pay off in HB369 of $3.7 million for police, firemen and
teachers. HB425 changes the contribution, the investment rate from 7.25% back to 7.75%. That would save
Nashua taxpayers $3 million. | think that’s unrealistic, 7.75% is a very high number considering that last year
it was 1% but obviously you have to use a lot of money. You have a $700 billion retirement cash fund and you
vest that at 7.25% versus 7.75%, that’s a lot on money. HB413 says for the state to go back and contribute
15% and that would add $3.53 million. Alderman LeBrun is a sponsor of HB369 and HB425 with mostly
Hillsborough County people. LeBrun is not a sponsor of HB413 because | presume having 50% paid by state
means it stays with the taxpayers so it’s still a tax that needs to be paid. | recommend that you place in this
text that you support the state and HB369, HB425 and HB413 or any combination thereof. Finally, you
mention here why you need 100% funding. If you go to 80% funding, and | mentioned that in the article that |
wrote yesterday, it’s very simple, if our bill is $6 million, if our actual cost to pay retirees for the pensions fund
and the medical subsidy, the medical subsidy is a sizable amount of money, it’s $6 million and our bill is $21
million; the difference is $15 million. You have 80% funding and 60% funding now and if you go to 100%
funding you’ve cut that in half and make it 80% funding that comes across the board as an equal percentage it
would save $8 million. That’s a really big bang. Why be insistent on 100%, it’s not clear. The Board of
Trustee’s does not have it in the law, it’s not written in the law. Constitution Article 636 mentions that the
actuary rates have to be fully funded. If the actuary says 80% is fine and they set the rates based on 80% of
funding then that’s fully funded. The state constitution doesn’t mention 100% funding of a fund, in fact, state
law doesn’t mention 100% funding of a fund. It’s the actuaries’ and the bookkeepers and the retirement
systems that say it should be 100% funded. The state law should say funding at 80% and | wouldn’t see the
problem. Our payoff is enormous; it’s $8 million and $8 million next year and even more in the year after.
That’s my recommendations, thank you very much.
NEW BUSINESS — RESOLUTIONS
R-17-087
Endorser: Alderman-at-Large Brian S. McCarthy
SUPPORTING EFFORTS BY THE STATE LEGISLATURE TO REDUCE THE DOWNSHIFTING
OF COSTS ASSOCIATED WITH THE NEW HAMPSHIRE RETIREMENT SYSTEM
Given its first reading;
MOTION BY ALDERMAN WILSHIRE THAT THE RULE BE SO FAR SUSPENDED AS TO ALLOW FOR
THE SECOND READING OF R-17-087
MOTION CARRIED
Resolution R-17-087 given its second reading;
