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CITY OF LAKE ELMO, MINNESOTA NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2023 63 NOTE 3 DEFINED BENEFIT PENSION PLANS – STATEWIDE (Continued) Changes in Plan Provisions: • Additional one-time direct state aid contribution of 19.4 million will be contributed to the Plan on October 1, 2023. • Vesting requirement for new hires after June 30, 2014 was changed from a graded 20-year vesting schedule to a graded 10-year vesting schedule, with 50 percent vesting after five years, increasing incrementally to 100 percent after 10 years. • A one-time, non-compounding benefit increase of 3.00 percent will be payable in a lump sum for calendar year 2024 by March 31, 2024. • Psychological treatment is required effective July 1, 2023, prior to approval for a duty disability benefit for a psychological condition relating to the member’s occupation. • The total and permanent duty disability benefit was increased, effective July 1, 2023. Discount Rate The discount rate used to measure the total pension liability in 2023 was 7.00 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at rates set in Minnesota Statutes. Based on these assumptions, the fiduciary net position of the General Employees and Police and Fire Plans were projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Pension Liability Sensitivity The following table presents the City's proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate one percentage point lower or one percentage point higher than the current discount rate: Pension Plan Fiduciary Net Position Detailed information about each pension plan’s fiduciary net position is available in a separately issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained on the Internet at www.mnpera.org. NOTE 4 DEFINED BENEFIT PENSION PLAN – FIREFIGHTERS RELIEF ASSOCIATION Plan Description Firefighters of the City of Lake Elmo are members of the Lake Elmo Firefighters Relief Association. The Association is the administrator of the single-employer defined benefit pension plan available to firefighters. The plan is administered pursuant to Minnesota Statutes Chapter 69, Chapter 424A, and the Association’s by-laws. As of the most recent valuation date, membership includes 19 active participants and 11 inactive members who are entitled to future benefits. The plan issues a stand-alone financial statement. 6.00% $ 2,097,210 6.00%836,021$ 7.00%1,185,480$ 7.00%421,356$ 8.00%435,548$ 8.00%80,446$ 1% Increase in Discount Rate Current Discount Rate 1% Decrease in Discount Rate Sensitivity Analysis Net Pension Liability at Different Discount Rates General Employees Fund Police and Fire Fund