2024 Annual Comprehensive Financial Report

CITY OF SHAKOPEE

NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2024

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position or Equity (Continued)

7. Deferred Outflows/Inflows of Resources

In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until that time. The City has two items that qualify for reporting in this category. The City presents deferred outflows of resources on the Statement of Net Position for the deferred charge related to pensions and other postemployment benefit resources. The Commission has one item that qualifies related to pensions. Accordingly, the items, deferred pension resources and deferred other postemployment benefit resources, are reported only in the statement of net position. These items result from actuarial calculations and current year pension contributions and OPEB contributions made subsequent to the measurement dates. In addition to liabilities, the statement of financial position and fund financial statements will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The governmental funds report unavailable revenues from three sources: property taxes, special assessments, and intergovernmental revenue. The City recognizes a deferred lease receivable under both the modified accrual and full accrual basis. Resources received in advance is reported in both the governmental fund financial statements and within the government-wide financial statements. This item are reported for amounts that have been received before time requirements are met, but after all other eligibility requirements have been met. The Commission presents deferred inflows of resources related to pensions, leases receivable and regulatory collections. The City presents deferred inflows of resources on the Statements of Net Position for deferred inflows of resources related to pensions and other postemployment benefit resources. Deferred inflows of resources related to pensions results from the net difference between projected and actual earnings on plan investments, changes in proportionate share and the differences between expected and actual economic experience. Vacation and sick leave benefits are recorded as expenditures in the Employee Benefits Internal Service Fund and governmental funds when the obligations have matured and are expected to be liquidated with expendable financial resources. The liability for compensated absences reported in the government-wide and proprietary fund statements consists of unpaid, accumulated annual vacation, sick and compensatory balances. The liability has been calculated using the vesting method, in which leave amounts for employees eligible to receive termination payments and used sick leave during the year are included and an additional liability for nonvested leave that the employer considers more likely than not that the nonvested leave will be used. The current portion of this liability is based on an estimate of the cost during the upcoming year. 8. Compensated Absences

57