Special Board of Aldermen 09-21-2021 Page 3
The following year, and this was sort of wending parallel tracks through the courts. There was a Supreme Court case
Sununu v. NHRS and obviously Sununu the elder. The issue there was whether the Executive Council could approve
NHRS contracts for vendors, and investments, and such, and the court found that we are not an executive branch
agency and we're operating for the exclusive benefit of the members. So that sort of got us farther removed from the
hurly burly of State government in the Executive Branch.
Alderman O’Brien
One question, Madam President, if | may
President Wilshire
Alderman O'Brien.
Alderman O’Brien
Yes. Mr. Karlon are you sharing the screen? Did you get the program working?
Marty Karlon, Director of Communications and Legislative Affairs
It's still frozen. So...
Alderman O’Brien
Okay cuz | took this — I’ve received some text. Since it's still frozen, | took it down to go back on. Did you want to back
up where it's still frozen?
Marty Karlon, Director of Communications and Legislative Affairs
Probably not. It’s just my file is open here and | suspect...
Alderman O’Brien
Okay. That's why | took it down. Okay. Thanks you Madam President.
Marty Karlon, Director of Communications and Legislative Affairs
(inaudible) that even opening one of my own files has become problematic. We haven't been out on the road, obviously,
very much in the past year and a half either. Good break for a question because the next slide is “1991 Digging the
Hole”. This is a really significant slide and I'm probably going to talk more about it than | need to but this is sort of an
extremely important issue that kind of led us down the path we were.
So it a little bit further back in the late ‘80s, we had a couple of very strong investment years in excess of 25% in back to
back years and there was some (inaudible) in the legislature in 88 — °89 to increase or improve benefits for our
membership in Group | and Group II include creating a medical subsidy benefit that was initially only for Group |. What
happened is the way our rates are cycled, the State is on a two year budget cycle and that follows our rate cycle. So the
1989 valuation is what would ultimately lead to the 1992 - ‘93 fiscal year rates. So in the interim between 1989 and
91, you know we had a recession across the country. New Hampshire was hit particularly hard and | recognize several
of you from when | lived in Nashua and you were around back then. Banks were closing left and right on Main Street,
condos were underwater, and there were a lot of pressures on both the State and local governments. | think Nashua
was even also impacted by a revaluation that sort of shifted the tax burden because the commercial property had
dropped so much.
So you know as that was coming, the rates for ’92 — ‘93 we're going to be on a percentage increase basis significantly
higher than they were in prior years. | mean they were still much lower than they are an absolute percentage is now, you
know, but even that increase was difficult for policymakers to want to undertake in the recession. So there was
legislation adopted in 1991 that did a few things. It changed the actuarial method - the way the actuarials crunched the
numbers to develop the rates to an open group aggregate. It was an actuarial methodology that was allowed at the time
and it stretched liabilities out over a much farther period. So it lowered, you know, the rates in the short term but it was
sort of design where you'd almost never catch up. They also by legislation set our assumed rate of return at an
extremely high level and this was going to be sort of a temporary stopgap solution to get the '92 — ‘93 rates recertified.
