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) F. Discount Rate

The discount rate used to measure the total pension liability in 2018 was 7.5 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 those assumptions, the fiduciary net position of the General Employees Fund and the Police and Fire Plan was 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. G. Pension Liability Sensitivity

The following table presents the City's proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the current discount rate:

1% Decrease in Discount Rate (6.5%)

1% Increase in Discount Rate (8.5%)

Discount Rate (7.5%)

City's proportionate share of the General Employees Fund net pension liability Commission's proportionate share of the General Employees Fund net pension liability

$

9,421,243

$

5,797,232

$

2,805,713

$

5,815,026

$

3,578,196

$

1,731,756

1% Decrease in Discount Rate (6.5%)

1% Increase in Discount Rate (8.5%)

Discount Rate (7.5%)

City's proportionate share of the Police and Fire Fund net pension liability

10,992,534 $

$

5,126,965

$

276,383

H. Pension Plan Fiduciary Net Position Detailed information about each pension plan's fiduciary net position is available in a separately-issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained on the Internet at www.mnpera.org. I. Public Employees Defined Contribution Plan (Defined Contribution Plan) Four Council Members of the City are covered the Defined Contribution Plan, a multiple-employer deferred compensation plan administered by PERA. The Defined Contribution Plan is a tax qualified plan under Section 401(a) of the Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until time of withdrawal. 83