2025 Annual Comprehensive Financial Report

CITY OF SHAKOPEE

NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2025

Public Employees' Retirement Association (Continued) NOTE 14 – PENSION PLANS (CONTINUED)

D. Pension Costs (Continued)

2. Police and Fire Fund Pension (PEPFF) Costs

The State of Minnesota contributed $18 million to the Police and Fire Fund in the plan fiscal year ended June 30, 2025. The contribution consisted of $9 million in direct state aid that meets the definition of a special funding situation and $9 million in supplemental state aid that does not meet the definition of a special funding situation. The $9 million direct state aid was paid on October 1, 2024. The direct state aid payment will increase by $17.7 million which was paid on October 1, 2025. Thereafter, by October 1 of each year, the state will pay $26.7 million to the Police and Fire Fund until the fund is 110% funded for a minimum of three consecutive years (on an actuarial value of assets basis). The $9 million in supplemental state aid will continue until the fund and the State Patrol Plan (administered by the Minnesota State Retirement System) are 100% funded for three consecutive years (on an actuarial value of assets basis). The State of Minnesota’s proportionate share of the net pension liability associated with the City totaled $217,107. contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2024 through June 30, 2025 relative to the total employer contributions received from all of PERA’s participating employers. The City’s proportionate share was 0.5345% at the end of the measurement period and 0.4683% for the beginning of the period. At December 31, 2025 the City reported a liability of $6,263,020 for its proportionate share of the Police and Fire Fund’s net pension liability. The net pension liability was measured as of June 30, 2025, 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 proportionate share of the net pension liability was based on the City’s

City's proportionate share of the net pension liability

$

6,263,020

State of Minnesota's proportionate share of the net pension liability associated with the City

217,107

Total

$

6,480,127

For the year ended December 31, 2025, the City recognized pension expense of $1,128,255 for its proportionate share of the Police and Fire Plan’s pension expense. The City recognized $105,047 as grant revenue and pension expense for its proportionate share of the State of Minnesota’s contribution of $9 million to the Police and Fire special funding situation.

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