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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 Actuarial assumptions used in 1he June 30, 2019 valuation were based on 1he results of actuarial experience studies. The most recent four-year experience study in 1he General Employees Plan was completed in 2019. The most recent four-year experience study for Police and Fire Plan was completed in 2016. The following changes in actuarial assumptions and plan provisions occurred in 2019: General Employees Fund Changes in Actuarial Assumptions: The mortality projection scale was changed from MP-2017 to MP-2018. Changes in Plan Provisions: The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The State's special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031. Police and Fire Fund The mortality projection scale was changed from MP-2017 to MP-2018. The State Board of Investment, which manages 1he investments of PERA, prepares an analysis of1he reasonableness on a regular basis of 1he long-term expected rate of return using a building-block me1hod in which best-estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting 1he expected future rates of return by 1he target asset allocation percentages. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in 1he following table: F. Target Long-Term Expected Asset Class Allocation Real Rate of Return Domestic equity 35.5% 5.10% International equity 17.5% 5.30% Fixed Income 20.0% 0.75% Private markets 25.0% 5.90% Cash equiwlents 2.0% 0.00% Totals ~ DISCOUNT RATE The discount rate used to measure 1he total pension liability in 2019 was 7 .5%. The projection of cash flows used to determine 1he discount rate assumed 1hat contributions from plan members and employers will be made at 1he rate set in Minnesota statutes. Based on 1hese assumptions, 1he fiduciary net position of 1he GERF and 1he PEPFF was projected to be available to make all projected future benefit payments of current plan members. Therefore, 1he long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine 1he total pension liability. CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2019 G. PENSION LIABILITY SENSITIVITY The following presents 1he City's proportionate share of1he net pension liability for all plans it participates in, calculated using 1he discount rate disclosed in 1he preceding paragraph, as well as what 1he City's proportionate share of1he net pension liability would be ifit were calculated using a discount rate I percentage point lower or I percentage point higher 1han 1he current discount rate: City's proportionate share of the GERF net pension liability City's proportionate share of the PEPFF net pension liability I% Decrease in Discount Rate (6.5%) Discount Rate (7.5%) $3,617,426 $2,200,453 $5,926,920 $2,711,539 B. PENSION PLAN FIDUCIARY NET POSmON 1 % In.crease in Discount Rate (8.5%) $1,030,460 $52 Detailed information about each pension plan's fiduciary net position is available in a separately-issued PERA financial report 1hat includes financial statements and required supplementary information. That report may be obtained at www.mnpera.org. I. PENSION EXPENSE Pension expense recogniz.ed by 1he City for 1he year ended December 31, 2019 is as follows: GERF PEPFF Fire Pension Plan (Note 8) Total $263,581 406,851 44,225 $714.657 Note 8 DEFINED BENEFIT PENSION PLAN -FIRE DIVISION A. PLAN DESCRIPTION The Lino Lakes Public Safety Department -Fire Division participates in 1he Statewide Volunteer Firefighter Retirement Plan (SVF), an agent multiple-employer lump-sum defined benefit pension plan administered by 1he Public Employees Retirement Association of Minnesota (PERA). The SVF plan covers volunteer firefighters of municipal fire departments or independent nonprofit firefighting corporations 1hat have elected to join 1he plan. At December 31, 2019 (measurement date), 1he plan covered 24 active firefighters and zero vested terminated fire fighters whose pension benefits are deferred. The plan is established and administered in accordance wi1h Minnesota Statutes, Chapter 353G. IV-30