Finance Committee - 3/15/2017 Page 3
came from motor vehicle collections. You also had some strong building permit revenue as well as some
rental income that contributed to the collection of $6.1 million more in revenue than the budget anticipated.
On the expenditure side of the equation, the bottom half of this page, the number just above the bottom
number of just short of $43,000, represents unspent or unencumbered appropriations that were provided for to
the various departments. That number is significantly down from the prior year. There are some specific
reasons for that. Right at the end of Fiscal Year 2016, the city took approximately $900,000 and put it into a
pension reserve fund and put another $700,000 in to the CERF fund. Without those two actions taken, that
unspent appropriation would have been much more consistent with prior years. Collectively, the $6.1 million in
excess revenues and the $43,000 in unspent appropriations gives you a total budgetary performance
compared to budget of $6,171,000 in favorable operating results. That number needs to be softened a little bit
because that increase that you see doesn’t really translate to the unassigned fund balance essentially
remaining the same as the prior year. It went up by about $400,000. What has to be factored in on page 40 is
one of the financing sources. In the revenue section, about halfway down, you will see other sources. You
see $5.1 million. That’s the use of fund balance where the budget was balance and expected to use $5.1
million that was already in the treasury, already in fund balance from the beginning of the year. Since those
dollars were already present at the start of the fiscal year, you almost have to take this $6 million that is in the
lower right hand corner and soften it by the use or the draw on the fund balance so you come down to a net
number of approximately $1 million in budgetary performance. The revenues and expenditures were a positive
$6.1 million but you then have to subtract the use of the fund balance, the drawing on the reserve because you
expected the outflows of resources to exceed the inflows of resources. That gives approximately a million
dollar net number that gets distributed amongst the various fund balance components that we saw on the
general fund balance sheet.
Following that, there is three or four pages on enterprise funds and some pages on your fiduciary funds,
followed by a wealth of footnote disclosures from cash position to investment disclosures to the debt position.
It shows you the debt amortization schedules in your footnotes, which | know have been mentioned quite
recently as the city has a rapid payout of its debt. There was a letter that we issued that | understand was
provided to the committee. It’s a four-page letter that we refer to in our profession as a governance letter.
Auditing standards require us to communicate certain things. Many of those things that | orally communicated
are documented in this letter. It summarizes what | tried to articulate here for you orally tonight. With that, |
will turn it back to the Mayor and do my best to try to answer any questions that the committee may have.
Alderman Cookson
| have last year’s CAFR as well as this year’s CAFR. I'll refer to page 33. |’m looking at your net pension
liability, State of New Hampshire. That number is $198.5 million. Last year’s number for that same line item
was $184.9 million. The difference between those two numbers is going to be explained by what?
Mr. McIntire
The liability that is present on your June 30, 2016 CAFR, the state system has an actuary valuation and the
unfunded piece gets essentially allocated to all of the contributing members. You're approximately a 5%
member. It’s not quite this simple, but it’s not much more difficult. Approximately 5% of the unfunded liability
gets allocated to the City of Nashua. The liability that is present in your June 30, 2016 CAFR is actually
measured as of June 30, 2015, which means your June 30, 2015 CAFR for that liability was measured as of
June 30, 2014. The increase in that liability comes from a number of factors. The biggest one deals with
investment performance. If the contribution requirements to the members are all based on expected earnings
and certain other assumptions. When those assumptions or interest earnings aren’t achieved that liability is
going to go up. If the system was expected, to use very simple numbers, a million dollars in investment
income and only generated $750,000 that’s going to increase the liability that gets distributed by Nashua and
all of the members. The big piece that drives the increase in that liability are the investment returns and
various assumptions that are involved in the actuary valuation.
