01-24-2022 Council Packet - Laserfiche WebLink

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City of Orono, Minnesota Notes to the Financial Statements December 31, 2020 Note 4: Defined Benefit Pension Plans - Statewide (Continued) As a result, the State of Minnesota is included as a non-employer contributing entity in the Police and Fire Retirement Plan Schedule of Employer Allocations and Schedule of Pension Amounts by Employer, Current Reporting Period Only (pension allocation schedules) for the $4.5 million in direct state aid. Police and Fire Plan employers need to recognize their proportionate share of the State of Minnesota’s pension expense (and grant revenue) under GASB 68 special funding situation accounting and financial reporting requirements For the year ended December 31, 2020, City recognized pension expense of $327,169 for its proportionate share of the Police and Fire Fund’s pension expense. In addition, the City recognized an additional $20,758 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota’s contribution of $4.5 million to the Police and Fire Fund. At December 31, 2020, the City reported its proportionate share of the Police and Fire Plan’s deferred outflows of resources and deferred inflows of resources from the following sources: Deferred Deferred Outflows Inflows of Resources of Resources Differences Between Expected and Actual Economic Experience 132,233$ 171,801$ Changes in Actuarial Assumptions 1,064,951 1,890,693 Net Difference Between Projected and Actual Earnings on Plan Investments 94,496 - Changes in Proportion 135,168 191,268 Contributions to PEPFP Subsequent to the Measurement Date 244,555 - Total 1,671,403$ 2,253,762$ The $244,555 reported as deferred outflows of resources related to pensions resulting from the City’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2021. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: (245,621)$ (795,526) 126,085 124,879 (21,730) Thereafter (15,001) 2021 2022 2023 2024 2025 E. Actuarial Assumptions The total pension liability in the June 30, 2020 actuarial valuation was determined using the following actuarial assumptions: Inflation 2.50% per year Active Member Payroll Growth 3.25% per year Investment Rate of Return 7.50% Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors and disabilitants were based on RP-2014 tables for males or females, as appropriate, with slight adjustments to fit PERA’s experience. Cost of living benefit increases after retirement for retirees are assumed to be 1.25 percent per year for General Employees Plan and 1.0 percent per year for Police and Fire Plan.