2022 Annual Comprehensive Financial Report

CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2022

Public Employees' Retirement Association (Continued) D. Pension Costs (Continued) NOTE 13 – PENSION PLANS (CONTINUED) 2. Police and Fire Fund Pension (PEPFF) Costs (Continued)

The State of Minnesota is not included as a non-employer contributing entity in the Police and Fire Pension Plan pension allocation schedules for the $9 million in fire state aid. The City recognized $44,883 for the year ended December 31, 2022 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. The State of Minnesota is included as a non-employer contributing entity in the Police and Fire Retirement Plan Schedule of Employer Allocations and Schedule of Pension Amounts by Employer, Current Reporting Period Only (pension allocation schedules) for the $9 million in direct state aid. Police and Fire Plan employers need to recognize their proportionate share of the State of Minnesota’s pension expense (and grant revenue) under GASB 68 special funding situation accounting and financial reporting requirements. For the year ended December 31, 2022, the City recognized pension expense of 1,845,871 for its proportionate share of Police and Fire Fund’s pension expense. In addition the City recognized an additional $183,865 for the year ended December 31, 2021 as pension expense (and grant revenue) for its proportionate share of the State of Minnesota’s contribution of $9 million to the Police and Fire Fund. At December 31, 2022, the City reported its proportionate share of the Police and Fire Plan's deferred outflows of resources and deferred inflows of resources, from the following sources:

Deferred Inflows of Resources

Deferred

Outflows of Resources $ 1,387,404 13,056,354

Differences between expected and actual experience

$

387,186 436,289

Changes in actuarial assumptions

Net difference between projected and actual earnings on plan

investments

312,582 556,637 617,564

-

Changes in proportion

292,527

Contributions to PEPFF subsequent to the measurement date

-

$ 15,930,541

$ 1,116,002

The $556,637 reported as deferred outflows of resources 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, 2023. 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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