12-07-2020 Council Packet - Laserfiche WebLink

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City of Orono, Minnesota Notes to the Financial Statements December 31, 2019 Note 4: Defined Benefit Pension Plans - Statewide (Continued) The following changes in actuarial assumptions and plan provisions occurred in 2019: General Employees Fund Changes in Actuarial Assumptions The mortality projection scale was changed from MP-2017 to MP-2018. Changes in Plan Provisions The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The State’s special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. Police and Fire Fund Changes in Actuarial Assumptions The mortality projection scale was changed from MP-2017 to MP-2018. Changes in Plan Provisions There have been no changes since the prior valuation. The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a regular basis of the long-term expected rate of return using a building-block method in which best-estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Asset Class Domestic Equity 35.5 % 5.10 % Private Markets 25.0 5.90 Fixed Income 20.0 0.75 International Equity 17.5 5.90 Cash Equivalents 2.0 - Total 100.00 % Target Expected Real Allocation Rate of Return Long-term F. Discount Rate The discount rate used to measure the total pension liability in 2019 was 7.50 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at rates set in Minnesota statutes. Based on these assumptions, the fiduciary net position of the General Employees Fund and the Police and Fire Fund were projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Changes in Plan ProvisionsChanges in Plan Provisions There have been no changes since the prior valuation.There have been no changes since the prior valuation. The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonablenessThe State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness --term expected rate of return using a buildingterm expected rate of return using a building--block method in which bestblock method in which best expected future rates of return are devexpected future rates of return are developed for each major asset class.ped for each major asset class.These ranges are combined to produce an These ranges are combined to produce an term rate of return by weighting the expected future rates of return by the targetterm rate of return by weighting the expected future rates of return by the target asset allocation asset allocation The target allocation and best estimates of The target allocation and best estimates of geometricgeometric real rates of return for each major asset class are real rates of return for each major asset class are summarized in the following table: 81