2025 Annual Comprehensive Financial Report

CITY OF SHAKOPEE

NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025

NOTE 14 – PENSION PLANS (CONTINUED)

Public Employees' Retirement Association (Continued)

D. Pension Costs (Continued)

3. Component Unit’s General Employees Fund Pension Costs (Continued)

$231,054 reported as deferred outflows of resources related to pensions resulting from Commission contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2026. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows:

Year Ending December 31,

Pension Expense

Amount

2029 2028 2027 2026

$

(326,399) (499,065) (155,011) (261,634)

Total

$

(1,242,109)

E. Long-Term Expected Rate of Investment

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:

Target

Real Rate of Return Long-Term Expected

Asset Class

Allocation

Domestic Equity International Equity

16.5% 25.0% 33.5% 25.0%

5.30% 0.75% 5.10% 5.90%

Private Markets Fixed Income

Total

100.0%

90