2019 City of Shakopee Comprehensive Annual Financial Report

CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2019

NOTE 14 – PENSION PLANS (CONTINUED) Public Employees' Retirement Association (Continued) D. Pension Costs (Continued)

Pension Expense

Year Ending December 31, 2020

Amount

$

(268,308) (643,620) (1,950,328)

2021 2022 2023 2024

44,703 84,775

$

(2,732,778)

Total

Component Unit’s General Employees Fund Pension Costs

For the year ended December 31, 2019, the Commission recognized pension expense of $482,271 for its proportionate share of General Employees Fund's pension expense. In addition, the Commission recognized an additional $8,225 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota's contribution of $16 million to the General Employees Fund. Post-retirement benefit increases were changed from 1.0 percent per year with a provision to increase to 2.5 percent upon attainment of a 90 percent funding ratio to 50 percent of the Social Security Cost of Living Adjustment, not less than 1.0 percent and not more than 1.5 percent, beginning January 1, 2019. At December 31, 2019, the Commission reported a liability of $3,532,888 for its proportionate share of the General Employees Fund's net pension liability. The Commission's net pension liability reflected a reduction due to the State of Minnesota's contribution of $16 million to the fund in 2019. The State of Minnesota is considered a non-employer contributing entity and the State's contribution meets the definition of a special funding situation. The State of Minnesota's proportionate share of the net pension liability associated with the Commission totaled $109,829. The net pension liability was measured as of June 30, 2019, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The Commission's proportion of the net pension liability was based on the Commission's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2018, through June 30, 2019, relative to the total employer contributions received from all of PERA's participating employers. At June 30, 2019, the Commission's proportion share was 0.0639 percent, which was a decrease of 0.0006 percent from its proportion measured as of June 30, 2018.

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