Finance Committee - 3/15/2017 Page 4
Alderman Cookson
The investment returns, what are we seeing historically from the New Hampshire Pension System?
Mr. McIntire
A lot of that information is disclosed in the financial statements of the state’s plan. I’m not really prepared to
speak to that tonight; | would be speculating and | don’t really like to do that. As you pointed out there was
approximately a $13.6 million increase in this liability. Typically as a liability goes up, there’s recognition of an
expense and therefore a corresponding decrease in equity or net position. The GASB has made it a little more
difficult than that. This $13.6 million increase in the net pension liability is predominantly driven by investment
performance. The accounting treatment for this is when that liability goes up, the impact to expense gets
amortized into your financial statements over approximately a 4-5 year period. This $13.6 million in liability is
going to impact pension expense on your accrued based financial statements over the next 4-5 years. Prior to
the implementation of the pension standards for June 30, 2015, the accumulation involved a smoothing of the
assets. That’s no longer permissible, but | think in some respects they achieve the same end game by
smoothing out the impact to expense over a 4-5 year period.
Alderman Cookson
The $13.5 million increase in the pension liability, and yet your unrestricted is basically a $2 million difference
from last year. Can you speak to that?
Mr. McIntire
It’s very much a lot of what we just talked about. This $13 million increase in the net pension liability, we talked
about how the impact gets amortized over the next 4-5 years. If you look on page 33 in that first column of
numbers, right before the total assets and deferred outflows, you have those related to pensions at $29.2
million, as that liability went up so did that deferred outflow of resources. If you are looking at just a balance
sheet, the liabilities went up and the assets went up. That deferred outflow is not technically an asset but that’s
getting more technical than | should. That $29 million is going to be amortized over the next 4-5 years. Over
the 4-5 years, absent anything else changing, that $29 million will get amortized into expense and ultimately
reduce that second number up from the bottom.
Alderman Cookson
You magnify that portion of page 33, deferred outflows of resources. Last year’s CAFR only indicates that as a
single line. This year you have broken it out. You have it related to pensions and then another category of
basically $854,000. What does other mean?
Mr. McIntire
It deals with a bond refunding that is also being amortized. It’s close to being called an asset but it’s something
that is technically a little bit different. We did this year break out deferred outflows because we anticipated this
type of a conversation. Often times the liability can go way up, but in your case it really didn’t impact
unrestricted net position. It was laying the ground work for hopefully illustrate this for users of the financial
statements.
Alderman Cookson
| want to go to page 36 and ask a question with regard to the unassigned fund balance. The statement of 11
percent of your general fund expenditures. The $28 million is being divided by which number?
