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NOTE 9—DEFINED BENEFIT PENSION PLANS—STATE-WIDE(CONTINUED) CHANGES IN PLAN PROVISIONS • The period of time needed for benefit recipients to receive their first benefit increase was reduced by one year(from 36 months to 24 months for a full increase). • The January 1, 2026 benefit increase changed from 1.00 percent to 3.00 percent; subsequent January 1 increases will be 1.00 percent. • The threshold to end the $9.0 million annual state aid contribution changed from the earlier of July 1,2048 or 90.00 percent funded for both PERA Police&Fire and MSRS State Patrol for three consecutive years to 100.00 percent funded for both PERA Police&Fire and MSRS State Patrol for three consecutive years (on an actuarial value of assets basis). • The threshold to end the additional$9.0 million annual state aid contribution changed from the earlier of July 1, 2048 or 100.00 percent funded for a minimum of three consecutive years to 110.00 percent funded for a minimum of three consecutive years(on an actuarial value of assets basis). • An additional $17.7 million in direct state aid will be paid annually each October 1 beginning October 1,2025 through June 30, 2048. • Joint and survivor actuarial equivalent factors were updated to reflect changes in assumptions. G. Discount Rate The discount rate used to measure the total pension liability in 2025 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 Fund and the Police and Fire Fund 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. H. Pension Liability Sensitivity The following table presents the City's proportionate share of the net pension liability(asset) for all plans it participates in, calculated using the discount rate disclosed in the preceding section, as well as what the City's proportionate share of the net pension liability(asset)would be if it were calculated using a discount rate 1.00 percentage point lower or 1.00 percentage point higher than the current discount rate: 1%Decrease in Current 1%Increase in Discount Rate Discount Rate Discount Rate (6.00%) (7.00%) (8.00%) City's proportionate share of the GERF net pension liability(asset) $ 2,703,387 $ 1,113,035 $ (177,099) City's proportionate share of the PEPFF net pension liability(asset) $ 4,656,349 $ 1,777,089 $ (587,238) I. 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. -58-