Finance Committee - 4/17/2019 Page 5
Mr. Griffin
| could probably address the impact to the City itself and I'll do that first and then maybe turn it over to Mr.
Mcintire. But the employer rates were held constant this year for the most part. There was a little increase in
the teacher amounts. It is complicated, but there’s a 5 year average of returns and the year that was dropped
was a bad year; and the most recent year as Mr. Mcintire indicated was a good year. So the rates are
stabilizing, it is the liability that is still a large liability and is trying to get funded within a 30 year window.
But the impact to the City of a 15% State contribution to teachers, police and fire is about $3 million dollars that
when the Mayor had his meeting with you folks that are in the legislature, it’s a big number, it’s a $3 million
dollar number which coincidentally kind of matches the increase in the health cost. So it’s a very important
number for the City but maybe Mr. McIntire who follows more the larger level and then gets the apportionment
can speak to that. The two definitely go together.
Mr. McIntire Well | was going to turn back to the actual page the liability is on it, probably isn’t necessary.
Certainly any contribution that would come from an external party, external to the City of Nashua would almost
immediately begin to bring that liability down and over time | think it would even escalate the rapidness that
liability could come down.
Alderman Klee
Relative the debt and the rapid payout, when you say rapid pay out you are meaning that we are paying it off
earlier than expected so if we had a 15 year we might be paying it off in 11 or 12 years?
Mr. McIntire Great question that’s not what | mean. What! mean by that is that as an example you know you
issue bonds and some of those bonds have a 10 year life or 20 year life and it is going to vary. But in total if
you had $50 million dollars in debt, just you use some round numbers then credit rating agencies and financial
institutions they are going to want to see you paying off about 75% of that within a 10 year period. So when |
talk about how rapid you are paying it out, are you paying out 75% of your bonds, not early, but is the schedule
that they are termed to be, will you pay off 75% of your outstanding bonds that your balance sheet date within
a 10 year period. That's what | mean by a rapid pay out schedule; you are not paying them early.
Alderman Klee
So we are exceeding the 75% that would be required or are we just up to that, at least the 75%?
Mr. McIntire The 75% was a number for conversational purposes that | put out there to try to illustrate that it
wasn’t so much paying it early — 75% is a rapid pay out. You are in that ballpark. | don’t want to sit here and
tell you are at 75%; | wanted to hopefully simplify it a little bit. That’s really the measure that rating agencies
like to see is how rapid are you paying it out. Really not so much are you paying it early.
Alderman Klee
Ok thank you very much.
Mayor Donchess
In fact we don’t necessarily have the option of paying early in the sense that to pay early you got so called call
the bonds, meaning you pay people before they are anticipating being paid. Most of our bonds don’t authorize
that which is attractive really to the bond holder really, because they don’t want to be bought out early. They
don’t want to be bought out early because they know they’ll only get bought out early if they are in
advantageous position.
