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City of Orono, Minnesota
<br />Notes to the Financial Statements
<br />December 31, 2019
<br />Note 4: Defined Benefit Pension Plans - Statewide (Continued)
<br />Annuities, disability benefits and survivor benefits are increased effective every January 1. Beginning January 1, 2019, the
<br />postretirement increase will be fixed at 1 percent. Recipients that have been receiving the annuity or benefit for at least 36
<br />months as of the June 30 before the effective date of the increase will receive the full increase. For recipients receiving
<br />the annuity or benefit for at least 25 months but less than 36 months as of the June 30 before the effective date of the
<br />increase will receive a reduced prorated increase.
<br />C. Contributions
<br />Minnesota statutes chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be
<br />modified by the state Legislature.
<br />General Employees Fund Contributions
<br />Coordinated Plan members were required to contribute 6.50 percent of their annual covered salary in fiscal year 2019 and
<br />the City was required to contribute 7.50 percent for Coordinated Plan members in fiscal year 2019. The City’s
<br />contributions to the General Employees Fund for the year ending December 31, 2019, 2018 and 2017 were $144,815,
<br />$129,021 and $122,479, respectively.The City’s contributions were equal to the required contributions for each year as
<br />set by state statute.
<br />Police and Fire Fund Contributions
<br />Police and Fire member’s contribution rates increased from 10.80 percent of pay to 11.30 percent and employer rates
<br />increased from 16.20 percent to 16.95 percent on January 1, 2019. The City’s contributions to the Police and Fire Fund
<br />for the years ending December 31, 2019, 2018 and 2017 were $411,298, $370,490 and $358,655, respectively. The City’s
<br />contributions were equal to the required contributions for each year as set by state statute.
<br />D. Pension Costs
<br />General Employees Fund Pension Costs
<br />At December 31, 2019, the City reported a liability of $1,476,182 for its proportionate share of the General Employees
<br />Fund’s net pension liability. The City’s net pension liability reflected a reduction due to the State of Minnesota’s
<br />contribution of $16 million to the fund in 2019. The State of Minnesota is considered a non-employer contributing entity
<br />and the State’s contribution meets the definition of a special funding situation. The State of Minnesota’s proportionate
<br />share of the net pension liability associated with the City totaled $45,831. The net pension liability was measured as of
<br />June 30, 2019, and the total pension liability used to calculate the net pension liability was determined by an actuarial
<br />valuation as of that date. The City’s proportionate share of the net pension liability was based on the City’s contributions
<br />received by PERA during the measurement period for employer payroll paid dates from July 1, 2018 through
<br />June 30, 2019 relative to the total employer contributions received from all of PERA’s participating employers. At
<br />June 30, 2019, the City’s proportionate share was 0.0267 percent which was an increase of 0.0011 from its proportion
<br />measured as of June 30, 2018.
<br />City's Proportionate Share of the Net Pension Liability 1,476,182$
<br />State of Minnesota's Proportionate Share of the Net Pension
<br />Liability Associated with the City 45,831
<br />Total 1,522,013$
<br />For the year ended December 31, 2019, the City recognized pension expense of $181,924 for its proportionate share of
<br />the General Employees Plan’s pension expense. In addition, the City recognized an additional $3,432 as pension
<br />expense (and grant revenue) for its proportionate share of the State of Minnesota’s contribution of $16 million to the
<br />General Employees Fund.
<br />ContributionsContributions
<br />Police and Fire member’s contribution rates increased from 10.80 percent of pay to 11.30 percent and employer rates Police and Fire member’s contribution rates increased from 10.80 percent of pay to 11.30 percent and employer rates
<br />increased from 16.20 percent to 16.95 percent on January 1, increased from 16.20 percent to 16.95 percent on January 1, 20192019..The The City’s contributions to the City’s contributions to the Po
<br />for the years ending December 31, for the years ending December 31, 2019,20182018 and 2017and 2017 were $411,298were $411,298,$370,490$370,490 and $358,655and $358,655, respecti, respecti
<br />ributions were equal to the required contributions for each year as set by ributions were equal to the required contributions for each year as set by state statute.statute.
<br />Pension CostsPension Costs
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