Finance Committee

Pennichuck Corporation and Subsidiaries
Notes to Financial Statements

97

23.

24.

25.

Abatements

There are several cases pending before the Board of Tax and Land Appeals and Superior Court
in regard to alleged discrepancies in property assessments. According to the City’s counsel,
the probable outcome of these cases at the present time is indeterminable.

Grants

21.

22.

liability as these respective employees are included only in the City’s plan that does not
have assets held in a trust for future OPEB liabilities.

Self-Insurance

The City self-insures against claims for workers compensation, general liability, property,
long-term disability, and employee health coverage. Annual estimated requirements for
claims are provided in the City’s annual operating budget.

Health Insurance

OPEB Expense and Deferred Outflows of Resources and Deferred (Inflows) of Resources
Related to OPEB

For the year ended June 30, 2021, the City recognized an OPEB expense of $4,694,079. At
June 30, 2021, the City reported deferred outflows and (inflows) of resources related to OPEB
from the following sources:

Deferred Deferred
Outflows of (Inflows) of
Resources Resources
Differences between expected and actual
experience $ 667,879 $ (5,639,344)
Changes of assumptions 5,496,932 -
Total $ 6,164,811 $ (5,639,344)

teacher retiree ends when the retiree is eligible for Medicare. The following table shows the
Explicit and Implicit Liability amounts:

Explicit Implicit Totals
Current Retirees $ 0.1 million $ 8.5 million $ 8.6 million
Future Retirees 4.9 million 41.5 million 46.4 million
Totals $ 5.0 million $ 50.0 millon $ 455.0 million

Sensitivity of the Total OPEB Liability to Changes in the Discount Rate

The actuarial assumptions used in the valuation were based on the results of an actuarial
experience study as of June 30, 2010.

Discount Rate

The discount rate used to measure the total OPEB liability was 2.19%. The projection of
cash flows used to determine the discount rate assumed that contributions from plan
members will be made at the current contribution rate.

Changes in the Total OPEB Liability
The following summarizes the changes to the total OPEB liability for the past year.

Plan Membership

At June 30, 2020, the following employees were covered by the benefit terms:

Inactive employees or beneficiaries

currently receiving benefit payments 835
Active employees 2,554
Total 3,389

Funding Policy

The City’s funding policy includes financing the implicit subsidy on a pay-as-you-go basis,

as required by statute.

Actuarial Assumptions and Other Inputs

The total OPEB liability was determined

by an actuarial valuation as of June 30, 2020, using

Sensitivity of the Net NHRS Medical Subsidy OPEB Liability to Changes in the Discount
Rate
The following presents the net OPEB liability calculated using the discount rate of 6.75%,
as well as what the net OPEB 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 discount
rate:

Current
1% Discount 1%
Decrease Rate Increase

$ 25,448,565 $ 23,435,551 $ 21,687,860

required to contribute. The State Legislature has the authority to establish, amend, and
discontinue the contribution requirements of the Medical Subsidy plan.

Actuarial Assumptions and Other Inputs
Actuarial assumptions are the same as the New Hampshire Retirement System, which is

disclosed in Note 19.

Net OPEB Liability, Expense, and Deferred Outflows and (Inflows)

The City’s proportionate share of the net NHRS Medical Subsidy (net OPEB liability) as
of the measurement date of June 30, 2020 was $23,435,551.

New Hampshire Retirement System Medical Subsidy Plan Description

General Information about the OPEB Plan

The following OPEB disclosures for the New Hampshire Retirement Medical Subsidy Plan
are based on an actuarial valuation performed as of June 30, 2019, using a measurement
date of June 30, 2020.

Plan Description
In addition to the OPEB plan discussed previously, the City participates in the New