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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2022 <br /> <br /> <br /> <br /> <br />At December 31, 2022, the City reported its proportionate share of the PEPFF’s deferred outflows <br />of resources and deferred inflows of resources related to pensions from the following sources: <br /> <br />Deferred Outflows Deferred Inflows <br />of Resources of Resources <br />Differences between expected and <br /> actual economic experience $630,217 $ - <br />Changes in actuarial assumptions 6,063,283 63,313 <br />Net collective between projected and <br /> actual investment earnings 143,467 - <br />Changes in proportion 167,766 317,544 <br />Contributions paid to PERA <br /> subsequent to the measurement date 257,286 - <br />Total $7,262,019 $380,857 <br /> <br />The $257,286 reported as deferred outflows of resources related to pensions resulting from City <br />contributions subsequent to the measurement date will be recognized as a reduction of the net <br />pension liability in the year ended December 31, 2023. Other amounts reported as deferred <br />outflows and inflows of resources related to pensions will be recognized in pension expense as <br />outflows: <br /> <br />Year Ended Pension <br />December 31, Expense <br />2022 $1,186,616 <br />2023 1,293,840 <br />2024 1,137,543 <br />2025 2,123,662 <br />2026 882,215 <br />Thereafter - <br /> <br />The net pension liability will be liquidated by the general, rookery activity center, water, sewer, and <br />storm water funds. <br /> <br /> <br />E. ACTUARIAL ASSUMPTIONS <br /> <br />The total pension liability in the June 30, 2022 actuarial valuation was determined using an <br />individual entry-age normal actuarial cost method and the following actuarial assumptions: <br /> <br />Inflation 2.25% per year <br />Investment Rate of Return 6.50% <br /> <br />The long-term investment rate of return is based on a review of inflation and investment return <br />assumptions from a number of national investment consulting firms. The review provided a range <br />of investment return rates deemed to be reasonable by the actuary. An investment return of 6.50% <br />was deemed to be within that range of reasonableness for financial reporting purposes. <br /> <br />Benefit increases after retirement are assumed to be 1.25% for the GERF. The PEPFF benefit <br />increase is fixed at 1.00% per year and that increase was used in the valuation. <br />69