2018 City of Shakopee Comprehensive Annual Financial Report

CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2018

NOTE 13 –PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) Police and Fire Fund Pension Costs

At December 31, 2018, the City reported a liability of $5,126,965 for its proportionate share of the Police and Fire Fund's net pension liability. The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportion of the net pension liability was based on the City's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2017, through June 30, 2018, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2018, the City's proportion share was 0.4810 percent. For the year ended December 31, 2018, the City recognized pension expense of $658,837 for its proportionate share of the Police and Fire Fund's pension expense. The City also recognized $43,290 for the year ended December 31, 2018 as revenue and an offsetting reduction of net pension liability for its proportionate share of the State of Minnesota’s on-behalf contributions to the Police and Fire Fund. Legislation passed in 2013 required the State of Minnesota to begin contributing $9 million to the Police and Fire Fund each year, starting in fiscal year 2014. At December 31, 2018, the City reported its proportionate share of the Police and Fire Plan's deferred outflows of resources and deferred inflows of resources, and its contributions subsequent to the measurement date, from the following sources:

Deferred Outflows of Resources

Deferred Inflows of Resources

Differences between expected and actual experience

$

206,715

1,244,565 $

Changes in actuarial assumptions

6,386,725

7,547,560

Net difference between projected and actual earnings on plan investments

-

1,100,563

Changes in proportion

209,308 436,222

21,534

Contributions to PEPFF subsequent to the measurement date

-

Total

7,238,970 $

9,914,222 $

Deferred outflows of resources totaling $436,222 related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2019. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense on the following page.

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